Two weeks ago, Federal Trade Commission (FTC) Chair Lina Khan testified to Congress that the agency “only bring[s] cases when the facts before us lead us to believe that there is a law violation under the existing laws.” This week, Assistant Attorney General for the Department of Justice’s Antitrust Division Jonathan Kanter confirmed that this approach is the appropriate one. In an answer to a question regarding if mergers can be good, he acknowledged that that “the most diplomatic answer…and the accurate one…is that my view doesn’t matter…our job is really to determine whether the merger [substantially] lessens competition or tends to create a monopoly…[which] is what we are trying to do in a very fact-oriented way.”
These “accurate” answers indisputably describe the roles of these agencies in enforcing antitrust law. The facts, and the facts alone, are supposed to lead agencies to properly identify law violations – not any external political agenda. Their continuous preaching about the importance of facts over their subjective beliefs in enforcing antitrust laws suggests that both Khan and Kanter are well aware of this reality. However, these agency heads brazenly contradict their promises to the public by using taxpayer dollars to pursue legally unsound cases that consistently lose in courts precisely due to their lack of any factual basis.
Under Lina Khan, the FTC has become an embarrassingly feckless agency that desperately attempts to block mergers solely because they benefit companies that are too big for the liking of progressive activists. This approach has caused Khan to waste resources on flimsy cases, leading to her losing all four of the merger cases that she has brought during her time as FTC chair. Despite testifying under oath to Congress that she only brings suits upon identifying a law violation based on the facts, Khan consistently loses these cases on the facts. For example, in a high-profile case challenging Meta’s acquisition of VR fitness app, Within, the Obama-appointed judge stated repeatedly throughout his opinion that the Court did not find a sufficient factual basis to even issue a preliminary injunction to block the merger.
This ruling came as no surprise to conscientious observers, as FTC staff lawyers and economists had previously warned Khan not to pursue this case precisely due to the insufficient factual basis supporting her case. Commissioner Christine Wilson even issued a powerful dissent citing three cases with a similar factual basis that all were legally sanctioned mergers. Even though the FTC attempted to censor Wilson’s discussion of the ethical problems raised by the case, Bloomberg later revealed that the FTC’s Designated Agency Ethics Official (DAEO) recommended that she recuse herself from the case due to her prior statements calling for the FTC to block any merger pursued by Meta. While Khan and progressive activists may frown at this legal reality, it is not presumptively illegal for Meta to pursue mergers just because they are a big company.
It appears, however, that Meta’s size was the only fact that Khan needed to pursue this suit. Khan’s skewed view of the law clearly mattered more than the law itself, as she never had a chance to win and subsequently lost as a result, wasting likely large sums of taxpayer dollars as a result of her crusade.
Khan’s loss to Microsoft similarly lacked an appropriate factual basis. In that case, Khan stubbornly continued to pour taxpayer dollars into the suit even though Microsoft addressed the alleged harm that would result from its acquisition of Activision by making a legally binding multi-year agreement to offer Call of Duty games on third-party gaming consoles. The Biden-appointed judge stated twice in her opinion that the FTC’s various arguments “ignored” the law. Once again, facts could not possibly have been the reason for a lawsuit that a liberal judge could not even allow to proceed on the merits, due to an insufficient legal and factual basis. Either Khan has a stunningly weak grasp on the law for an FTC chairwoman or the law does not dictate her agenda as much as she claims. Her history suggests it may be a mix of both.
This activist case selection does not differ much in Jonathan Kanter’s management of the DOJ’s Antitrust Division. While Kanter was able to get a trial on some allegations against Google’s practices, another Obama-appointed district judge dismissed multiple claims including allegations against Google’s treatment of “specialized search providers,” such as Yelp. Even though progressive activists, including comedian John Oliver, publicly signaled their belief that Google’s actions towards Yelp constituted anticompetitive behavior, none of those “facts” appeared to be legally convincing enough to even warrant a trial. In his decision, Judge Medhta went as far as to assert “simply put, there is no record evidence of in the relevant markets resulting from Google’s treatment of SVPs [specialized vertical providers]” (emphasis added). Kanter’s claims that he is choosing cases in a “very fact-oriented way” seems to markedly contradict reality, as his department continues bringing allegations against companies without providing any evidence supporting them. These suits may make progressive activists pleased, but, by Kanter’s own standards, they reflect an inaccurate way to enforce our laws.
This reckless approach to enforcement has major consequences. The most obvious result is the uncertainty such an unpredictable enforcement regime causes for businesses. Big companies will slow down innovation as they will become less willing to make risky investments in smaller companies pursuing nascent technologies. For startups, the effects are even worse. These companies will become less attractive to larger firms looking to acquire them and provide them with more resources to develop their technologies. As investors realize that smaller firms are unable to become acquired, they will be less likely to make any sizable investments. But the worst impacts fall on consumers. The lack of investment in startups will obviously slow down innovation. Additionally, as more taxpayer dollars are wasted on pursuing Khan’s legally unsound witch hunts, less resources exist within this “cash-strapped” agency for prosecuting more legitimate harms to competition and consumer protection.
Khan and Kanter must receive further scrutiny for their case selection and management of taxpayer dollars. Unfortunately, in the case of Khan, the FTC Chair has deflected attempts by Congress to hold her accountable as she pursues a larger lawsuit against Amazon that likely raises the same ethical quandaries as her pursuit against Meta. These attempts to avoid accountability only warrant more questions as Congress must work to protect American consumers and businesses from this agency run amuck.