Mergers & Antitrust Law News

FTC’s McSweeny Is Open to Antitrust Changes

Sept. 25, 2017, 12:47 PM

By Alexei Alexis, Bloomberg BNA

Federal Trade Commission Commissioner Terrell McSweeny wants to “revitalize” antitrust enforcement but she warns that renewed enthusiasm for the issue won’t solve every concern about dominant companies like Amazon.com and Google.com.

Even with that caveat, she said in an interview with Bloomberg BNA that Congress could remove “antiquated” antitrust enforcement exemptions for industries such as the health care sector and ensure adequate resources for the FTC and the Justice Department’s antitrust division.

The FTC could also make some changes without Congress, such as reconsidering its guidelines on “vertical mergers” involving companies that don’t compete directly. “I think that’s an area we could definitely look at,” she said.

Some public interest advocates and Democrats are calling for a major antitrust overhaul, saying deficiencies in existing law have allowed companies such as Amazon, Google, and Facebook Inc. to become too powerful. McSweeny said some of those concerns, such as data privacy, are “not all appropriately addressed through competition.”

“I’m very hopeful that we’re in a moment where we can revitalize, not only antitrust enforcement, but also some of the consumer protection laws,” McSweeny said. “I guess the pitfall that I hope we avoid amidst all this renewed enthusiasm around antitrust is the conclusion that just strengthening antitrust laws is enough to address all of the issues that people are concerned about.”

The U.S. antitrust framework has come under growing attack in recent months, particularly in the wake of the FTC’s quick approval of Amazon’s $13.7 billion tie-up with Whole Foods Market Inc.

One such critic is Lina Khan, director of legal policy at the Open Markets Institute, which recently separated from the New America think tank over disagreements about Google’s influence.

Khan says the “consumer welfare” standard used by regulators to evaluate mergers is too focused on consumer prices and ignores other effects like wage stagnation.

“The idea that antitrust law was only intended to promote consumer welfare is historically untrue if you look at the legislative history,” Khan, who has written extensively about Amazon’s dominance, told Bloomberg BNA. “I think it’s an opportune moment to rethink where things went awry.”

The question will be highlighted at Sept. 25 event on market power hosted by the Roosevelt Institute, a left-leaning Washington think tank. McSweeny and Khan are slated to speak during a panel discussion on antitrust enforcement in the tech sector. On Sept. 28, McSweeny will address the Global Competition Review in New York.

McSweeny said her views contrast with those of acting FTC Chairman Maureen Ohlhausen, a Republican who advocates “regulatory humility” and has resisted calls for changes to the law or the current enforcement philosophy.

“As a person who believes strongly in progressive and aggressive antitrust enforcement, I’m glad to see antitrust emerging as an important part of economic policy, because I think it is,” McSweeny said.

Enforcement stepped up during the Obama administration, but the outlook under President Donald Trump is uncertain, she added.

Trump hasn’t yet announced any FTC appointments beyond naming Ohlhausen acting chairman shortly after his inauguration in January.

McSweeny was sworn in as a Democratic commissioner in 2014 under President Barack Obama. She is filling out former chairman Jon Liebowitz’s term, which expires this week. According to FTC rules, she can stay put until a replacement is installed. She says she intends to remain at the agency until then.

For now, she and Ohlhausen are the sole commission members in a normally five-member body. The two work well together, although they don’t share exactly the same regulatory ideas. They have publicly disagreed twice on competition — over Walgreens Boots Alliance Inc.'s proposal buy about half of Rite Aid Inc.'s chain stores, which cleared last week, and the FTC’s lawsuit against Qualcomm Inc. McSweeny supports the lawsuit against Qualcomm, while Ohlhausen opposes it. McSweeny wanted more investigation into Walgreens-Rite Aid, but Ohlhausen said the transaction didn’t pose competition problems.

McSweeny welcomes the calls for more regulation of dominant companies and said she is “very open” to a conversation about updating antitrust laws. That view is in contrast to conservatives and moderate practitioners who say the current law doesn’t need to change and is adaptable enough to tackle big tech companies that exercise leverage across markets.

But McSweeny said she doesn’t necessarily agree with “every single idea that’s being floated.” She also stressed that regulators now have a relatively “strong, flexible set of tools.”

The problem, she said, is that these tools aren’t always used.

She agrees with Khan’s statement that focusing solely on price doesn’t get at the whole impact of a merger or a company’s anticompetitive behavior.

“I think some are rightly critical of the people who view the consumer welfare standard in the narrowest possible way as a price-effects standard,” she said. “I happen to believe that you can be observing the consumer welfare standard and also be looking broadly at harms that include whether consumers are getting the benefit of innovation in the marketplace or better quality products.”

“This is not a shift that requires legislative changes,” she said. “I think there’s an open question as to whether the Trump administration will continue to use these tools effectively.”

However, some say that aggressive enforcement of the current standard, while a good start, may not be enough because it’s too restrictive compared with the original intent of Congress.

“I have come to the belief that legislation is necessary to remove the consumer welfare standard,” Marshall Steinbaum, a fellow and research director at the Roosevelt Institute, told Bloomberg BNA. “This is about the interpretation and enforcement of the antitrust laws having veered away from what was intended and what is necessary to ensure that the economy remains competitive.”


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