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Is There An Antitrust Reform Coming Soon? What Will This Mean For Large Tech Firms?

Doyle, Barlow & Mazard PLLC

On March 18, 2021, the House Judiciary Committee’s Antitrust subcommittee had a hearing labeled “Reviving Competition, Part 3: Strengthening the Laws to Address Monopoly Power”. The hearing began with opening remarks from Representative David Cicilline (D-RI), who spoke about the limitations in current antitrust laws on the topic of market dominance, and remarks from Representative Ken Buck (R-CO) who spoke on how both political parties are willing to work together in numerous areas. The hearing encompassed six testimonies from witnesses Rebecca Kelly Slaughter, Acting Chairwoman of the Federal Trade Commission (“FTC”); Judge Diane P. Wood of the U.S. Court of Appeals for the Seventh Circuit; Phillip Weiser, Attorney General of Colorado; Dr. Mike Walker, Chief Economic Adviser for the United Kingdom Competition and Markets Authority (“CMA”); Noah Phillips, Commissioner at the FTC (Republican); and Doug Peterson, Attorney General of Nebraska.

For opening remarks, Rebecca Kelly Slaughter, the Acting Chair of the FTC, declared: “Aggressive enforcement using the FTC’s existing authority can and should be complemented by this committee’s work to sharpen antitrust laws and to impose broader market-wide restrictions that address pervasive anticompetitive conduct and conditions. I believe the FTC must push antitrust law forward through bold agency action.” Slaughter said, we must lay the groundwork for success for new theories and more aggressive enforcement.  Here, she touted the FTC’s recently announced working group to build a new approach to pharmaceutical mergers.  She suggested the FTC should consider bringing standalone Section 5 claims more frequently and called on more resources for the agency.

Slaughter conveyed her disappointment in the FTC’s decisions and actions on not suing Google back in 2013. “It’s incumbent on the FTC to bring hard cases in all areas, not just in tech, not just in platforms,” Slaughter stated. After her comments on harsher punishments for big companies that seem to weasel their ways out of antitrust laws, Slaughter called for higher tolerance for litigation risk, more specifically, declining a settlement that doesn’t entirely correct harm. She also communicated how we all must construct the basis for success in new models and more aggressive enforcement to be enacted.

The second witness, Judge Diane P. Wood stressed three crucial points in her argument. First, antitrust laws have always been concerned with intense economic power that congests flourishing competition and innovations. Second, exclusionary practices must be enforced. Third, it’s time to consider legislative changes in the remedies area of the statutes. Colorado Attorney General Phillip Weiser shared his thoughts on how courts have been hesitant in enforcing antitrust laws as well as enforcers showing an unwillingness to bring cases forward due to the Chicago school of antitrust, which only focuses on over-enforcement. This mindset is incorrect, according to Weiser, and he recommends having more enforcement cases and legislative action.

Commissioner Phillips underlined that today the antitrust agencies are engaged in vigorous enforcement and highlighted the number of enforcement actions in 2020, the highest number in decades. Today’s discussion concerns whether the law suffices.  Phillips stressed that antitrust laws protect competition.  They are not designed to address every problem large companies create.  “As you consider reform,” he told the subcommittee, “…I urge you to consider the impact on all business.”  And Phillips warned of unintended consequences.  He said government intervention is sometimes necessary but it can also get in the way.  “We can and do stop the bad ones [mergers], but over-regulating will also stop the good ones.”

After hearing from the witnesses and their remarks, the hearing went into a question and answer session for both sides of the hearing. The question and answer began with Representative David Cicilline speaking about a recent Politico report on the FTC’s choice to desert the Google case in 2013. He asked if we shouldn’t allow this to happen again, which Acting Chairwoman Slaughter retaliated that she asks for a complaint to be filed. Slaughter’s focus is further on the dangers of under-enforcement and inaction. With Slaughter as acting Chairwoman, the concern is that she will make some questionable enforcement decisions that push the envelope.

Representative David Cicilline fired at Commissioner Noah Phillips’s vote against FTC’s Facebook complaint. “My quibble with this case begins with the fact that these are transactions (Instagram and WhatsApp) that were brought to the attention of the FTC before I was there. No argument of fraud or anything like that. And for years the company was allowed to make decisions. So, a big part of this comes back to the integrity of the process,” Phillips retaliated.  He suggested that for the government to come back in, years later – and the longer you wait, the more investments the companies make – that presents a real issue.  “I can’t undo the fact that the agencies did what it did,” he said.  Phillips went further saying “I also think on the merits there are some questions to do with market definition and effects under Section 2 but I do think this broader framing is really important.  I wasn’t there when this happened – but it did happen.”

Neguse (D-CO) asked Commissioner Phillips whether he believes that the FTC’s approach to pharmaceutical mergers is working. Phillips was measured in his reply: “Some have suggested that it isn’t.  What I am interested in hearing is, what are the harms that folks think we’re missing?  Because I think if they exist, we should figure out what they are, figure out how to bring a case on them, and bring those cases.  That’s why I support the Chairwoman’s effort to convene a group of enforcers to think about what those additional harms may be.”  Neguse was less than thrilled with this answer.  He expressed his own view that the FTC’s approach to pharma deals is not working, which is why he shares Phillips’ enthusiasm about the working group convened recently by the FTC.  Asked to expound on that matter, Slaughter said she intends to look at innovation broadly and not just at pipeline products, for example.  Another area of concern is conduct: when two large companies that engage in anticompetitive conduct merge, what happens?  Slaughter is excited about the opportunity to partner with sister enforcers.

The key takeaways from this hearing are:

Acting Chairwoman is all about more aggressive antitrust enforcement. She spoke about her desire for the FTC to “go all in on litigation, even risky and costly litigation.”  She said that more cases should be brought under Section 5 of the FTC Act.  Moreover, Slaughter also believes that this aggressive enforcement can and should be complemented by Congress’s work to “sharpen antitrust laws and to impose broader market-wide restrictions that address pervasive anticompetitive conduct and conditions.”

Commissioner Phillips, meanwhile, is much more measured about his views on current enforcement. He urged the use of a scalpel in reforming the antitrust laws and warned against unintended consequences.  Phillips also cautioned that antitrust is not the appropriate tool to cure all ills such as concerns about content moderation, for example.

Given bipartisan concerns about gigantic tech firms and Democratic control of both chambers of Congress, a middle path may prove ultimately unnecessary if broader reform gets the requisite support.  However, the law ultimately shakes out, the next four years should see a renewed emphasis in challenging mergers.

By Lizzy Bensend, Spring Intern at Doyle, Barlow & Mazard PLLC.

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