Federal Trade Commission (FTC) Chair Lina Khan and her Democratic colleagues on the FTC board recently approved an “omnibus resolution” which could increase the number of businesses forced to waste time and money “proving” to the agency and the Federal courts that their actions are not “anti-competitive.” The resolution allows FTC staffers to initiate investigations with the approval of only one commissioner, as opposed to a majority of the FTC board. A single commissioner only has to prove that the investigation concerns potentially illegal “collusive and coordinated conduct“ as well as proposed mergers, acquisitions, and related transactions. Similar resolutions were adopted in July and October of 2021, including cases involving Lina Khan’s Bête noires: “big tech,” hospitals, the pharmaceutical industry, and any other industry she decides to single out for “special attention.”
Requiring the approval of only one commissioner to launch an investigation obviously will increase the number of FTC investigations. This advances Commissioner Khan’s goal of expanding the use of antitrust to (in the words of one of one of her allies) “take charge of the entire economy.” This is why Khan has abandoned the “consumer welfare standard” for enforcing antitrust law in favor of a “holistic approach” to antirust, which allows her to expand the number, and purposes, of antitrust cases brought by the agency.
By increasing the number of cases filed, Khan and her allies can increase the cost of a merger or acquisitions. This will discourage mergers and acquisitions, even if market conditions suggest such a move would benefit the companies’ workers, investors, and consumers. These would decrease efficiency in the market and may even cause some companies to close because the only way they could have survived was via merger with a larger company.
Khan thinks mergers are almost always bad for consumers and workers, so she wants to use her power to make businesses reluctant to merge with, or acquire, another company... The FTC does not need to win all, or even a majority, of cases to make companies think twice before pursuing a merger or acquisition. It simply has to make companies think they will be brought before the FTC or hauled to federal court. Even if the companies win in court, the time and money spent defending themselves can turn a profitable merger or acquisition into a losing proposition.
“Big Tech” companies, who have made acquiring smaller companies a central part of their business’s strategy (while smaller companies make being acquired by a larger company an essential part of their business strategy) will definitely have a very important business decision that involves expanding their size second-guessed by the FTC. Khan became a progressive star while still in law school because of a law review article arguing for a more aggressive use of antitrust to counter the “threat of Amazon.” Since becoming FTC Chair, Khan has pursued numerous cases against big tech companies, and both Meta (Facebook; s parent company) and Amazon have requested she recuse herself from cases against them because of her biases toward “big tech.”
Forcing companies to spend time and money defending themselves from the FTC will take resources that could be used to develop new products and create new jobs. This will further damage the already fragile economy, which, depending on who you ask, may already be in a recession. Targeting acquisition in the tech sector and social media could stop the growth of new companies offering new products as investors may be less willing to back a tech startup if they think the FTC will stop them from getting a big payoff by selling the company to one of the big tech firms.
Fortunately, the Supreme Court has recently shown an interest in reining in federal agencies who adopt major policy changes without a clear basis for the new policies. Lina Khan’s agenda of using antitrust to “reshape the economy” appears to exceed the agency's congressional mandate. If the Courts fail to rein in the FTC, or if the FTC continues to launch investigation of mergers and acquisitions simply because the current FTC board wants to intimidate, Congress should use its powers of oversight and its powers to write the FTC budget with an eye on limiting the destruction wrought by Khan and her allies.