The Federal Trade Commission has thrown so much spaghetti at the wall to see what sticks, it’s made a royal mess of the U.S. antitrust kitchen. In the process, it’s infringing on economic rights that amount to property rights.
Even losing prominent legal challenges against mergers and acquisitions—Microsoft’s acquiring Activision, Illumina’s reacquiring its spinoff Grail, Amgen’s acquiring Horizon Therapeutics, Meta Platforms’s acquiring Within Unlimited—hasn’t deterred the FTC’s radical leadership from wholesale sowing chaos in antitrust policy and enforcement.
You don’t have to love the Big Tech targets among antitrust lawsuits, you can remain clear-eyed about Big Tech censorship of conservative, Christian and other viewpoints and still recognize that the Biden FTC’s weaponization is a serious problem.
A common thread in the FTC’s and DOJ's legal marauding is advancing theoretical or potential concerns of anticompetitiveness. The courts (including FTC’s own in-house administrative “court”) have insisted on evidence to substantiate Chairwoman Lina Khan’s and her allies’ speculative assertions.
The FTC alleged the Illumina-Grail tie-up would harm Grail’s competitors. The agency ignored the fact that Grail is a startup with a novel cancer blood test and no competitors in an emerging market. The FTC’s administrative law judge ruled against the commission, writing, “The Clayton Act protects competition, not competitors.”
Now the FTC and the Department of Justice have proposed onerous merger review guidelines. These appear intended to slow merger reviews way down, increase cost and time barriers for M&A deals, sweep in many more proposed mergers and discourage potential merging parties from combining.
The ante of extensive paperwork filing requirements just to get an initial review will jeopardize many constructive mergers and acquisitions from even being attempted.
Such a hard freeze of routine M&A will carry severe economic consequences, including keeping many a startup or early-stage firm from being acquired by a bigger firm. The smaller business won’t be able to scale up, lacking the practical resources to thrive, perhaps seeing its promising innovations never reach consumers.
The goal of the Biden administration, and Chairwoman Khan in particular, is borne out to be eradication of the Consumer Welfare Standard and imposition of far higher hurdles even for competitively neutral or consumer-beneficial tie-ups.
President Biden’s 2021 executive order and pretty much everything the Khan FTC has done inject factors irrelevant to consumer welfare. The result: less freedom to benefit from the fruits of one’s labors. This new antitrust order assaults free enterprise, which incorporates private property rights in the economic sphere.
The Justice Brandeis model of the earlier part of the 20th century made antitrust jurisprudence malleable to the point of unpredictability and its being less tethered to the rule of law. Things like company bigness, labor market impacts, effects on competitors, etc. counted, with little concern for the welfare of consumers.
That changed in the 1970s and 1980s, as courts adopted objective standards like hard economic data, precisely defined markets and demonstrable consumer harm or benefit.
The Antitrust Division of the U.S. Justice Department has also taken an activist, neo-Brandeisian turn. But DOJ is constrained by greater accountability to Congress as a cabinet department. The FTC, like independent agencies in general, lacks sufficient accountability. The proof of this is in the pudding.
Upon resigning as the sole remaining Republican commissioner, Christine Wilson decried as one reason among many for her resignation the “antitrust enforcement policy statement [of November 2022] asserting that the FTC could ignore decades of court rulings and condemn essentially any business conduct that three unelected commissioners find distasteful.”
The U.S. House of Representatives has launched extensive oversight efforts of the FTC’s excesses. (See here, here, here, and here, for example.) Rep. Scott Fitzgerald (R-Wisc.) has proposed legislation to suspend the FTC’s powers when there isn’t at least one commissioner from the other political party (which has been the case since February).
It’s past time to force Chairwoman Khan, her colleagues and fellow travelers to clean up the mess they’ve made.