Top Asset Managers Lobby Against FTC Antitrust Proposals

Major asset managers including Wellington Management and Fidelity have lobbied the Federal Trade Commission to modify a proposed rule aimed at exposing firms to increased antitrust scrutiny, according to a Wall Street Journal report. The proposed rule would require firms to file for antitrust review any time a manager’s collective funds (including mutual funds) reach certain thresholds, in some cases holdings of more than 10% of a company.  In its rulemaking notice the FTC proposed changes that would require certain acquiring entities to disclose additional information about their associates and to aggregate acquisitions in the same issuer across their associates when making certain filings. A proposed de minimis exemption would exempt the acquisition of 10% or less of an issuer’s voting securities when the acquiring person does not already have a competitively significant relationship with the issuer, a factor that has caused firms to challenge the definition of “competitor” and other terms used in the proposal. Critics, including industry trade group SIFMA, say the proposal invokes the “common ownership” theory of harm, which is highly disputed and lacks a causal relationship necessary to support a cause of action under the antitrust laws. Overall, industry trade groups contend that the FTC’s proposals increase cost and administrative burdens. According to a comment letter from SIFMA: “The aggregation rule would … significantly increase the number of HSR filings within the asset management industry. The filing fees and delay on investors’ acquisitions of securities would impair market efficiency and needlessly increase costs for retail investors, especially savers and retirees whose investments are their main source of income.” The ICI also criticized the aggregation proposal and also noted that it would increase cost and other burdens for mutual funds. On June 17, lawyers from Ropes & Gray will explore the FTC proposal in an MFDF webinar. Registration is available here.