The Pendulum Swings: Lina Khan’s Affirmation Listening to Signifies A Potential Shift Towards Elevated Antitrust Enforcement At The FTC – Anti-trust/Competitors Regulation

The appointment of Columbia Law Professor Lina Khan to the Federal Trade Commission last month sparked speculation over whether there might be a new era of antitrust enforcement under the Biden Administration. If confirmed, Ms. Khan would fill the vacant seat of former FTC Chairman Joseph Simon and provide one more vacancy to President Biden after Democratic Commissioner Rohit Chopra heads the Consumer Finance Protection Office. 1 Biden’s next appointment Expected soon Mark the move to a 3-2 Democratic majority in the commission and pave the way for a revitalized enforcement.2 During her confirmation hearing before the Senate Trade Committee last week, Ms. Khan gave further indications increased enforcement efforts at the FTC. 3

CHALLENGES FOR THE FTC

Ms. Khan was well received by the committee in large part because of bipartisan concerns about “big tech” companies.4 (See our previous posts on currently proposed legislation, including the Competition and Antitrust Reform Act of 2021 and the Breach of trust for the 21st century and breaking big tech acts, and Congressional investigations and hearings against big tech.) Antitrust concerns involving technology companies with dominant platforms were central to Ms. Khan’s scholarship and previous experience with agencies. Ms. Khan rose to prominence in the antitrust community and more widely after she published a student notice while she was in law school arguing that the focus of traditional antitrust enforcement was insufficient to solve problems raised by large tech companies with significant market power .5 Your work as Mr. Chopra’s FTC agent also conducted an empirical review of digital markets to determine whether antitrust laws are keeping pace with business realities and providing adequate protection.

At Ms. Khan’s hearing, the senators asked about their approach to social media giants, tech gatekeepers, a concentrated market for digital ads, and the privacy concerns associated with behavioral ad-based business models. In her replies, Ms. Khan frequently reverted to the deep information asymmetries that exist between technology firms and regulators. She suggested that the FTC must at least take additional steps to exercise its investigative powers and use its intelligence gathering skills to level the playing field – a field that contains proprietary black box algorithms that make it difficult for regulators or competitors to know what’s going on, and this also encourages the use and monetization of personal data.

A related challenge that Ms. Khan highlighted during the hearing was the general increase in concentration in a number of markets, not just the technology industry. Ms. Khan’s work has focused on monopoly and in particular situations where a company dominates one market and then adjacent markets and continues to expand into markets in other industries through vertical integration. Ms. Khan noted that this concentration and control of the delivery process exposes the “fragility” of markets affected by other highly concentrated markets.

Ms. Khan stated that making sure the FTC has the resources it needs to undertake the large-scale enforcement actions that may be required to respond to the increasing focus would be a problem going forward. She noted that antitrust authorities have “been slow to catch up” with the underlying business realities of how markets work and have been unable to keep up with the increasing size of companies, proposed mergers and the US economy in general. Ensuring that law enforcement agencies such as the FTC and the Justice Department Antitrust Division have adequate resources would be their top priority if confirmed.

THE WAY FORWARD

Ms. Khan outlined two possible ways the FTC could respond to highly concentrated markets. The FTC can enforce competition laws and ensure that markets are competitive through traditional enforcement measures, or it can recognize that there are certain economies of scale and network externalities that allow a few companies to dominate these markets and consider applying a different set of rules instead . Ms. Khan noted that the FTC should generally take one approach or the other, but that there is room for “reach”[ing] For a different set of tools “depending on the type of market involved. When Ms. Khan urged how she could use the FTC’s power to set rules to potentially” circumvent “court rulings, she remained diplomatic and stated that she did not I had a “philosophical view” as to whether the FTC could do this. Still, it was clear – both from what it said and from what it did not – that Ms. Khan would welcome new thinking at the Commission. It may not be this -traditional approach and this willingness to look Beyond the traditional enforcement tools that the Biden administration wants to implement at the FTC, Khan has earned the reputation of an anti-monopoly pioneer. 6

While it remains an open question what impact Ms. Khan’s antitrust heterodoxy could have on the Commission as a whole, some critics sense a neo-Brandeisian revolt that could lead to stronger enforcement – and legal battles. In fact, just last week a unanimous Supreme Court restricted the FTC’s power to seek certain remedies, specifically finding that FTC enforcement actions are non-refundable under Section 13 (b) of the Federal Trade Commission Act. 7 Ms. Khan’s more progressive approach to enforcement, if passed Commission-wide, could make antitrust disputes a more important battleground in federal courts for companies contesting an FTC enforcement measure or regulation. Another consideration is how the Commission can manage the possible rejection of Ms. Khan in any case where there is the appearance of partiality based on her previous work as a scientist and on the House of Representatives Antitrust Subcommittee.

When asked what she would do differently than the Obama administration’s merger review process, Ms. Khan stated that because of information asymmetries, but also because of the false assumption that the digital market is that fast and would do so, enforcement opportunities would naturally be missed by New entry and competition are disciplined. Ms. Khan now knew that there were significant externalities and said the current government needs to be much more vigilant in reviewing the merger. While Senator Blackburn asked for a more detailed answer to the question of what Ms. Khan would do differently after the hearing, Ms. Khan’s affirmation signals a clear departure from the Obama administration’s approach to mergers and acquisitions, particularly in the tech industry

It is also clear that as a commissioner, Mrs Khan would be an avid enforcer as she works to fuel market dynamism and widespread prosperity through antitrust laws. The Senate Commerce Committee hearing minutes remain open for two weeks. During this time, senators can ask candidates additional questions before they vote to help advance the nomination for the entire Senate.

Footnotes

1 Bryan Koenig, Law 360, March 22, 2021, available at: https://www.law360.com/articles/1367515/biden-officially-picks-amazon-critic-lina-khan-for-ftc-post.

2 Id.

3 Cat Zakrzewski, The Washington Post, Lina Khan’s nomination hearing heralds a new era of strong antitrust enforcement for the tech industry on April 21, 2021, available at: https://www.washingtonpost.com/technology/2021/04 / 21 / lina-khan-ftc-nomination-hearing /.

4 Id.

5 Lina M. Khan, Amazon Cartel Paradox, 126 Yale LJ 564 (2017).

6 David Streitfeld, New York Times, Amazon antitrust antagonist has a groundbreaking idea, September 7, 2018, available at: https://www.nytimes.com/2018/09/07/technology/monopoly-antitrust-lina- khan-amazon .html.

7 AMG Capital Mgmt., LLC v FTC, No. 19-508, 2021 US LEXIS 2108 (April 22, 2021).

8 See Zakrzewski, op. Cit., N.3.

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