Genesis
Response
Penultimate
Finale
December 20th, 2021
I should first like to thank Ashley Baker for her well-constructed column that takes sharp issue with the decisions in the Biden administration, both as to his ill-conceived executive order on competition, and the dangerous institutional adventurism of his all-too energetic FTC head Lina Khan, in her effort to transform the FTC mandate, chiefly be undoing the 2015 one-page statement which did an excellent job of cabining the discretion open to the FTC in addressing the scope of the FTC’s statutory authority to attack various transactions on the grounds that they constitute “unfair methods of competition” that run afoul of Section 5 of the FTC. Act.
As I argued at the time, one of the virtues of that approach, as developed by then FTC Commissioner Josh Wright, was that it cabined administrative discretion by consciously linking the enforcement powers under the FTC Act to the general body of antitrust principles developed under the Sherman Act to deal with various forms of unfair competition. As I mentioned in my earlier post in July 2021, it is a constant risk to give any agency too many degrees of freedom by allowing them to embrace many ends at the same time. At that time, I referenced the dual mandate of the Federal Reserve to control both inflation and create jobs. At the time, inflation did not seem to be a large risk, but five months later, it has come to take over the center of attention at the Federal Reserve. But it would have done a better job on this if it had left the question of job creation to various areas of labor law, and concentrate its attention solely on its main mission.
The same is true with the FTC and the Department of Justice insofar as they invoke the antitrust laws. There is no distinctive connection in my view between the advancement of democratic accountability and the antitrust laws. It is of course proper to make the simple point that curbing monopoly power in the marketplace does nothing to offend democratic values in politics. But beyond that the connections that are asserted are small indeed. We face today serious questions about the role of large corporations in shaping political issues by their control of the means of transmission of information and “misinformation” that the public hears through a very small number of sites.
The concerns here are evident, but their direction is not. On the one hand, writers on the left talk about the necessity of keeping out bad information on the 2020 election, the proper treatment or treatments for COVID-19, the supposed dangers of global warming said to be attributable to the increased release of greenhouse gases into the environment. I am at a loss as to what role antitrust law plays in dealing with these debates, for the simple reason that it should not be in the business of taking sides in a set of profound substantive disagreements that fall outside its ken. There is an important set of constitutional principles at stake, of which the most vital is a preference for honest and vigorous debate over the suppression of ideals. But invoking some notion of “democratic accountability” tells us nothing as to how best to structure that debate or resolve the underlying substantive issues.
I regard Chairwoman Khan as an institutional imperialist, who will only add fuel to the fire by skewing her enforcement efforts. Thus, the FTC Strategic Plan for 2022-2026 lays out four “objectives” that guide its thinking:
Objective 2.1: Identify, investigate, and take actions against anticompetitive mergers and practices.
Objective 2.2: Engage in research, advocacy, and outreach to promote public awareness and understanding of fair competition and its benefits.
Objective 2.3: Collaborate with domestic and international partners check unfair methods of competition.
Objective 2.4: Advance racial equity, and all forms of equity, and support underserved and marginalized communities through the FTC’s competition mission.
What is utterly missing from these guidelines is any awareness that the FTC (or Congress) could overreach in their missions, and treat pro-competitive innovations, including many mergers, as though they were negative. But the FTC under Lina Khan is blind to these risks, and instead promotes a constant drumbeat that more extensive intervention is always in the public interest. Yet one of the key successes for any government agency is to be aware of the potential abuses of its own power, which it will not seek to curb if it maintains the attitude that the private market place is rife with some unspecified “abuses” that it is duty bound to guard against. Ashley makes reference to the high-handed action, rightly called-out by Thom Lambert, that the FTC took to prevent a group of academics (led by Adam Mossoff and myself) to file a brief to challenge the FTC’s rank amateurish approach in attacking the Illumina-GRAIL Merger, by ignoring the considerable empirical and theoretical evidence that downstream foreclosure in vertical mergers does not pose the systematic risks attributable to it by the FTC.
The overzealous behavior of the FTC is not limited solely to its enforcement actions, but also extends to its outreach and advocacy positions, which should seek to be as balanced as possible. I also take issue with the fourth of these objectives that posit special competition problems for underserved and marginalized communities.
The initial point here is that every member of these communities benefits from having access to a wide array of businesses. It does not take a special antitrust policy to be aware that zoning laws can be effectively used to keep large discount chains out of underserved neighborhoods. But there is no recognition on the part of this Report that there is a deep tension between better service to these communities and the supposed democratic benefits from giving small local firms protection against the same outsider firms that could increase choice and reduce price in these communities.
All of these potential dangers are linked to a single defect: A sense of institutional and individual arrogance about the proper scope of antitrust laws that leads the FTC and others in the Biden administration to trumpet their own positions without examining the alternatives. In public affairs, there are two kinds of errors, pushing too hard, and not pushing hard enough. In general, the former of these risks is the graver, not only because it consumes excessive amounts of public and private resources, but because it necessarily forecloses many forms of market adaptation to new industrial challenges. Matter of underenforcement can be corrected if the supposed harms become evident. The 2015 one-pager got the balance right. The FTC and the Biden administration are working helter-skelter to make matters worse.
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