FTC Chairman Lina Hahn defends antitrust record
Federal Trade Commission Chairwoman Lina Hahn defended her progressive approach to antitrust enforcement at an event Monday as the agency faced a barrage of criticism from the business community.
“The role of the FTC is not to have our personal philosophical beliefs about the merits of big versus small. It’s really about the statute,” Khan said during a question-and-answer session at The Economic Club of New York.
“Congress, in passing antitrust laws, has in many cases defined competition over monopoly,” Hahn said. “However, the statutes do not prohibit being a monopoly. They only prohibit becoming a monopoly through illegal tactics. So that’s what we’re looking at.”
Hahn later added that the FTC views mergers through a competition paradigm, “but there are certainly times when you need larger firms to be able to provide the types of services and the scale that we need.”
The remarks came less than a week after the FTC and the Justice Department’s Antitrust Division released their new merger guidelines, which mean a broader application of antitrust laws than the government has adopted in the recent past. For example, the new guidance, which is still in draft form, contains confirmation that regulators can consider the impact of competition for labor in certain cases, and can consider how a series of mergers could adversely affect competition, rather than considering individual mergers on their own.
While the new guidance is still not finalized as the agencies receive public comments, the new guidance has already drawn a backlash from the business community.
Neil Bradley, executive vice president and chief policy officer of the U.S. Chamber of Commerce’s business group, said in a statement that the guidelines are “designed to stop merger activity that would deprive smaller companies of access to the capital and expertise they need to grow and put American companies at a disadvantage compared to their global competitors.”
Khan noted that despite increased attention to enforcement actions to block mergers, they still refuse to take action on the vast majority of deals.
“Each year, antitrust agencies receive between 1,500 and 3,000 merger applications. Of that number, 98% pass without further questions from the agencies,” Khan said. “So about 2% of all deals even get what’s known as a second inquiry, which is a set of questions so we can do a deeper investigation. And even a smaller fraction end up leading to a legal challenge.”
Khan said the problems arise when there are deals “on the fringes” that agencies realize in retrospect led to less competition, causing a “course correction.”
Khan also defended the agency’s record in court when it comes to merger cases. She said that of the 13 to 20 cases brought by the agency — depending on the criteria used to count — the FTC has lost two in federal court.
“In the scheme of our merger control program, it’s normal to lose two,” Khan said, adding that the agency only brings cases if its authorities feel they can win, and if they don’t, they study how to improve them in the future.
Even with these losses, however, Hahn said there are some advantages to gaining additional clarity in case law. She pointed to an attempt to block the agency MetaAn example is the acquisition of virtual reality fitness developer Within Unlimited. Although the FTC lost its bid to block the deal, Hahn said the judge rejected some of Meta’s arguments about how the law should and shouldn’t apply.
Khan also responded to a criticism of the new merger guidance that the cases the agency cites to support its draft policies are old and outdated. She said even cases from the 1960s and 70s “are still regularly cited in today’s merger decisions.” That’s partly because the Supreme Court hasn’t heard merger cases all that often in recent decades, meaning “the old law is still good.”
She added that the merger filing form updates are not intended to create an additional burden on the companies, but rather to speed up the FTC’s review process rather than going back to the parties for more information.
Khan acknowledged that an initial public offering may be a less viable path for many businesses these days, saying the agency hears and considers arguments about the commercial necessity of an acquisition. However, much depends on the circumstances of each case. As an example, she said, “if you have a pharmaceutical deal that’s a very, very early-stage drug acquisition, it’s going to be different than an acquisition of a fully formed, very popular drug.”
Finally, Khan also addressed the low morale at the agency under her leadership.
“No doubt when I walked in, I think a lot of people said, ‘Oh, what’s she doing here?’ You know, a little less than my age,” said Khan, the agency’s youngest ever chairman, who was sworn in at 32. “I also think that my career has previously been focused on criticizing the approaches of previous administrations and the decisions made by previous FTCs, and I can definitely see how having that critic in that position could have caused some friction, and I think that I could have, and our team should have, done a much better job of making it clear that such criticisms of the Questions were in no way intended to impugn the integrity or to question the talent and the skill of our career staff.”
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SEE: How US antitrust law works and what it means for Big Tech
