After months of partisan deadlock, this week Georgetown law professor and privacy scholar Alvaro M. Bedoya was confirmed by the Senate to serve as a member of the Federal Trade Commission (FTC). Bedoya’s confirmation gives FTC Chair Lina Khan a Democratic majority on the Commission and solidifies her ability to carry out a promised progressive antitrust agenda.
11 Months with FTC Chair Lina Khan
Chair Khan was sworn into her position nearly a year ago. For the first four months she benefited from a Democratic majority on the Commission, allowing her to implement policy changes and overcome resistance from Republican commissioners. Since losing the majority upon the resignation of Commissioner Rohit Chopra in October, Chair Khan has continued to give voice to an aggressive agenda, but the chair’s ability to execute on sometimes controversial ambitions has been hampered by the dissenting Republican commissioners. Commissioner Bedoya’s confirmation restores Chair Khan’s opportunity to reorient U.S. antitrust policy away from the bipartisan consensus that has evolved over the past 50 years.
Since taking office in June, Chair Khan has carried out a series of antitrust policy shifts and adopted changes at the FTC, including:
- Extending the indefinite suspension of grants of “early termination” for certain transactions under the Hart-Scott-Rodino (HSR) Act
- Calendaring Commission open meetings monthly with agendas that often cover areas of policy reform
- Directing FTC staff to use “compulsory process” to investigate designated “enforcement priorities,” including technology companies and healthcare businesses
the bipartisan Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act, and claiming that the FTC can pursue enforcement actions against “unfair methods of competition” under Section 5 of the FTC Act even if such methods do not violate a separate antitrust statute (e.g., the Sherman Act)
- Issuing “warning letters” to merging parties upon expiration of the 30-day statutory HSR waiting period that state that “the Commission’s investigation remains open and ongoing” and that the parties close at their peril
- Withdrawing from the jointly issued 2020 Vertical Merger Guidelines, claiming that the reliance on efficiencies in analyzing whether the merger is likely to harm competition is “theoretically and factually misplaced”
- Encouraging FTC staff to expand antitrust merger investigations to explore potential harm outside of the traditional antitrust analysis, including how transactions affect unionization; environmental, social and governance policies; franchising; and equity (including granular probes into the numbers and type of workers within a company), as well as whether noncompete agreements in worker contracts adversely affect competition
- Repealing the 1995 FTC Policy Statement and reinstating the practice of including “prior approval” requirements in consent orders settling merger investigation cases by the Commission (i.e., the acquiring party is required to obtain prior approval from the FTC for any acquisition, regardless of size, affecting the relevant market[s] for a minimum of 10 years)
- Alongside the Department of Justice (DOJ), launching a comprehensive review of the guidelines for both horizontal and non-horizontal transactions, which will include (1) assessing how the guidelines analyze whether a merger may “tend to create a monopoly,” specifically looking at data-aggregation strategies by digital platforms and market consolidation efforts by private equity firms, and (2) evaluating what types of evidence should be considered in evaluating nonprice effects
- Conducting listening forums, in addition to requesting comments from the public, on firsthand effects of mergers and acquisitions in commonly affected markets (e.g., food and agriculture, healthcare, media and entertainment, and technology) to inform the agencies’ redrafting of the merger guidelines
Expectations for Year 2 with FTC Chair Lina Khan
With a Democratic majority on the Commission, a projected significant funding increase from Congress, and a full year of experience, there is a full agenda Chair Khan is expected to pursue in her second year, including:
- Using competition rulemaking authority to extend the reach of Section 5 of the FCT Act and its bar on “unfair methods of competition,” which Chair Khan argues should reach beyond existing antitrust law
- Launching investigations and enforcement proceedings against consummated transactions, i.e., acting on the “warning letters,” to pursue novel theories of harm (which Chair Khan was unable to pursue in the absence of a Democratic majority)
- Utilizing compulsory process and opening in-depth investigations across a broader range of conduct and transactions, particularly in the technology and healthcare sectors
- Publishing stringent merger guidelines for horizontal and non-horizontal transactions, with particular focus on consumer-facing industries
- Lobbying Congress to pass legislation that would aggressively reform existing antitrust law, including provisions applying specifically to technology and life sciences industries
- Pursuing more enforcement actions and demanding more onerous divestitures and related commitments from merging parties within consent orders (e.g., requiring prior approval)
It is also likely that the DOJ, under the leadership of Assistant Attorney General Jonathan Kanter, will join the FTC in pursuing progressive changes to existing antitrust law and policy. Like Khan, Kanter has indicated repeatedly that he intends to pursue an enforcement agenda that goes well beyond those of his predecessors over the past several decades.
Key Takeaway: Winter Is Coming
A progressive majority on the FTC, in parallel with progressive leadership at the DOJ, will likely facilitate an ambitious expansion of antitrust enforcement activity over the coming year. These leaders’ new agenda that so far has largely been confined to talking points and preparations will now begin to take shape in more highly tangible ways. Companies should prepare for—and remain vigilant in—a new era in U.S. antitrust enforcement.