Congress’ convening power was on full display when the House Judiciary Committee brought together the four CEOs of America’s most notable technology companies.
The committee was well-equipped to fulfill its legislative and oversight functions to advance the public interest in antitrust, which, as the U.S. Supreme Court recently observed, “is a central safeguard for the Nation’s free market structures.” When it comes to antitrust enforcement, however, the Department of Justice and the Federal Trade Commission have an unrivaled capacity and expertise for analyzing particular mergers and specific anticompetitive conduct.
Congress’ inquiry into “Online Platforms and Market Power,” is meant to focus on whether antitrust enforcement agencies have the right tools and if existing antitrust laws provide adequate guardrails to protect competition in the dynamic digital economy.
As someone who has spent her career in the field, I support regular evaluation of antitrust enforcement with the aim of improving its ability to predict, prevent, and address anticompetitive behavior in all sectors of the economy. But congressional hearings are no replacement for and provide no direct pathways to antitrust enforcement
Antitrust law has evolved as our understanding of market dynamics has gotten more sophisticated, and it should continue to adapt as we refine our predictive tools. If those tools suggest that competition will be harmed and consumers made worse off from the actions of any firm, antitrust enforcers should act.
There’s No Shortcut to Investigating, Proving Antitrust Violations
As a former acting chair and FTC commissioner, I saw first-hand that the FTC has the substantive legal tools that it needs to vigorously promote competition and protect consumers through antitrust enforcement, though it could use more resources and staffing to deploy those tools.
But hearings, like the one last week, are far different than enforcement. A successful antitrust case rests on three pillars: a secure foundation in the law, a solid factual basis, and strong economic evidence of an anticompetitive outcome. There are no short cuts to investigating and proving an antitrust violation.
Documents Were No ‘Smoking Gun’
Shortly before the hearing, some Facebook emails became public that some critics pointed to as proof that they targeted their competitors. But this was far from the smoking gun that some critics claim. After the hearing, the committee released documents it had obtained from all of the companies who testified. It makes for great theater, but let’s remember some important facts before jumping to any conclusions.
Many, if not most, of these documents will likely have been in the hands of enforcers, perhaps courts, and in many cases the public for years. That includes the Facebook ones that became public before the hearing.
In almost every business, there will be documents from executives that characterize other companies in many different terms, including as potential competitors. This is one important reason why the investigative process by the expert agencies exists—to separate conjecture from market facts backed by economic evidence of competitive impact.
For example, several previously well-publicized acquisitions were highlighted during the course of the hearing and some members tried to make hay of any documents they have about them. But a handful of documents alone does not provide an accurate view of any complex acquisition involving countless discussions nor its ultimate competitive effect.
What’s really important to remember is that in the regular course of their investigations, the FTC and DOJ (and many foreign agencies) conduct thorough reviews of conduct allegations and merger transactions at issue. These investigations include substantial document productions, econometric analysis, and witness testimony, as well as a detailed legal analysis, to determine if there will be an adverse competitive effect.
In some instances, a merger investigation includes a second request, as it did for Facebook’s acquisition of Instagram more than eight years ago. This prolongs a review by several months and typically results in the merging parties’ production of hundreds of thousands of documents, which are thoroughly reviewed before the agency arrives at its decision.
In technology markets, success is never guaranteed, innovation comes quickly and from unexpected places, and acquisitions are a normal part of doing business. It is a dynamic arena where new startups are emerging all the time.
In this competitive environment, large, publicly-traded companies have an obligation to consumers and their shareholders to be constantly on the lookout for new opportunities to make investments to innovate, whether that’s through the launch of new products or making acquisitions that bring new capabilities or technical improvements to their operations.
Important Predictability in Merger Reviews
As the Antitrust Modernization Commission noted in 2007—and as still holds true today—there is a strong public policy interest in ensuring a degree of predictability in our merger review regime.
There are large risks from undoing a consummated merger so long after the fact, which could leave a company unable to innovate or with higher costs and make consumer worse off. That’s why courts impose a high bar—including compelling evidence of a violation leading to a competitive problem that a break up will fix.
Whatever enforcement direction the agencies take, they should be careful not to create a kind of “antitrust double jeopardy” where previously cleared deals are subject to a “do-over” investigation solely due to a change in political winds.
The primary focus should be on getting it right the first time, based on provable facts and sound economics.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Maureen K. Ohlhausen was acting chairman and a commissioner of the Federal Trade Commission from 2012 to 2018. She is co-chair of the Global Antitrust and Competition Group at Baker Botts LLP and counts Facebook among her clients.