Antitrust in the U.S. is based on the understanding that “free and open markets are the foundation of a vibrant economy.” From this foundation the FTC is charged with enforcing the current laws so that “aggressive competition” can bring about consumer benefits through the marketplace. However, recent shift in merger enforcement have left many questioning not only the efficacy of the agency but whether those in charge even have a desire to fulfill its mission.
The U.S. House of Representative Committee on the Judiciary recently released a report on the agency under the leadership of Chair Lina Kahn. In the report there were quotes by staff expressing their frustration and experiences regarding changes at the agency. The government report coincided with the release of a study by the American Consumer Institute (ACI), which used a dataset of merger filings and outcomes to track changes at the agency. The findings offer quantitative evidence for what the staff reported.
While poor management may seem more like personnel rather than a policy concern, lawmakers should be concerned when it appears to impact the effectiveness of the agency. The lack of delegation led to bottlenecks at the Chair’s office which “delayed several investigations,” and “harmed the FTC’s ability to function and hurt the morale of career staff who wanted to enforce the law.”
Such delays are reflected in the merger data used in the ACI report. Despite high-profile cases, the number of complaints brought are so far roughly half of what was brought under Trump’s term. While only considering one term under Biden the complaints are still far behind what would be needed to be on par with the two terms of the Obama and Bush administrations.
The posturing of tough enforcement isn’t limited to a lack of cases. The Hart-Scott-Rodino Act, requires that mergers over a certain size report the agreement to the FTC with the presumption that after the waiting period if no further action had been taken then the parties could merge. In 2021, the agency sent out warning letters for mergers that had passed the waiting period. In essence, the warning letters stated that the investigation wasn’t finished but the parties could continue “at their own risk.” The House report states that:
“Then-Commissioner Phillips publicly suggested that within the first six months of this practice over 50 letters were sent and raised the question of whether any of these investigations actually remained open or whether this approach was simply a tactic to scare businesses.”
Phillips appears to be correct as the investigations did not continue after the letters were sent. This type of posturing to intimidate businesses contributes to why the merger abandonment rate skyrocketed under the Biden administration. Roughly 23 percent of mergers end up abandoned compared to an average of 7 percent from recent administrations.
Unfortunately, the bottlenecks and scare tactics aren’t solely reflective of bad management or intimidation, but rather a fundamental misunderstanding that the agency is designed to enforce current laws. The agency is increasingly rumored to be pushing high profile and unwinnable cases to force Congress to act and change the existing laws. Staff reported frustrations over bringing unwinnable cases and leaving investigations open “even when staff had no viable theories of harm.”
Such actions support the narrative that Kahn’s plan is to lose in order to push Congress to pass new antitrust laws. According to the ACI report, the agency is losing cases at a rate more than 3 times that of previous administrations.
Unfortunately for Kahn these concerns aren’t going anywhere. The report documents that these concerns are at least partially shared by her staff with one manager being quoted as saying, “I’m not sure being successful (or doing things well) is a shared goal, as the chair wants to show that we can’t meet our mission mandate without legislative change.”
Political theatre has followed Kahn’s career at the FTC and it’s often difficult to determine what is political and what has substance. However, the concerns of the House report can’t be discarded as partisan bias or the opinions of a few disgruntled employees. The narratives painted through the interviews are reflected in the data on merger enforcement. Lawmakers need to take action to bring the agency back to its original intent to protect the American consumer.
Tirzah Duren is the Vice President of Policy and Research at the American Consumer Institute, a nonprofit educational and research organization. You can follow her on Twitter @ConsumerPal.