Antitrust | Brunswick

Antitrust

Biden-Harris Administration's Next Steps on Tech

The course of tech antitrust enforcement during the Biden administration will be guided by two factors:

  1. The President’s appointment of the Assistant Attorney General (AAG) for Antitrust and the Chair and Commissioners of the FTC; and in the longer term: 2. Proposed legislation to amend the federal antitrust laws.

The new appointees will be important since the Biden administration, unlike that of his predecessor, was committed to leaving prosecutorial decisions in the hands of his enforcement officials with little or no White House interference. The talk about a Competition Tsar within the White House may suggest a change in course.

One thing is certain: Tech will be front and center of this administration’s antitrust enforcement agenda, and is a rare area of potential bipartisan alignment.

No DOJ antitrust lead yet. President Biden has not yet nominated the Assistant Attorney General, who will oversee the Department’s Antitrust Division. The appointment process may prove lengthy, as the president tries to reconcile different priorities. Some are calling for the appointee to be a woman and a person of color, while others want to make sure the chosen candidate is a progressive and not too close to Big Tech.

One appointment to note is that of Gene Kimmelman as Senior Counselor for the future AAG for the Antitrust Division. He is a well-known tech critic and a proponent of the progressive agenda.

Deadlocked commission. At the FTC, President Biden has nominated Columbia Law School Professor Lina Khan to the Commission. Khan has been a vocal critic of the consumer welfare paradigm that has characterized antitrust enforcement for the past forty years and is one of the principal spokespersons for a more populist approach to competition law. She was also instrumental in the House’s investigation and subsequent report into competition in digital markets.

Previously, Biden designated FTC Commissioner Rebecca Slaughter to serve as the Acting Chair. She is widely thought to be one of the frontrunners to head the agency. (Chairs serve at the pleasure of the president, but must be one of the confirmed Commissioners). If selected, Slaughter would be the first person to make the transition from Acting Chair to Chair within recent memory.

With FTC Commissioner Rohit Chopra’s nomination to the Consumer Financial Protection Bureau, Khan’s confirmation would still leave a vacancy on the Commission. With two members from each party and the requirement that enforcement actions be authorized by a majority of voting Commissioners, it is possible that the Commission could be deadlocked and unable to take action on some matters.

Policy and legislative changes. In any event, the direction of the enforcement is bounded by the statutes and case law. Unlike many jurisdictions, the U.S. agencies must win their cases in the federal courts.

Recognizing that a “progressive” agenda will be limited by the case law, legislators—most prominently, Senator Klobuchar—have introduced legislation to expand the powers of the agencies. Although Democrats hold effective majorities in both Houses of Congress, their margins are razor thin.

The Klobuchar bill addresses several important issues.

  1. Increased agencies’ enforcement budgets. This will pass; the precise amounts are open to speculation. At the margin, the enforcement agenda will be more robust without regard to changes in the law. This is motivated in part by the costs associated with bringing cases against Big Tech. Klobuchar may choose to pursue this as standalone legislation to secure rapid progress.

  2. Increased sanctions for antitrust violations. Aspects of this provision enjoy bipartisan support, e.g., confirmation of FTC ability to secure equitable relief. The novel move to monetary fines will be more controversial.

  3. Permission for vigorous enforcement. Change the requirement from requiring proof that a transaction “would substantially lessen competition” to “create an appreciable risk of materially lessening” competition. “Materially” is defined as “more than a de minimis amount.” If enacted, this would simply express the will of the Congress to lower the bar a bit. There is a reasonable likelihood of passage. It is not tech-focused but obviously would impact tech transactions.

  4. Burden of proof. Change the burden of proof in certain types of mergers, including all very large transactions, such that the merging parties would have to prove that the merger was not anticompetitive. Included are so-called “killer” acquisitions of start-ups and disruptive firms. Bipartisan support can be expected for aspects. But the provision to include very large deals without reference to competitive impact may be another matter. Again, this section poses issues for tech.

  5. Increased scrutiny for “dominant firms.” Outside of mergers, the draft legislation proposes the creation of a rebuttable presumption of illegality for exclusionary conduct undertaken by firms with a “dominant position.” This would mark a significant departure from the current U.S. approach and will likely be controversial. Here too tech is in the sights of the legislation, but this is true for many other sectors.

On the state side, several states, including Massachusetts, North Dakota, Arizona and New York are introducing anti-monopoly legislation aimed at Big Tech. North Dakota, the first to take on anti-competitive app store policies, was prompted to take action by the nonprofit the Coalition For App Fairness formed by Epic Games, Spotify, Match Group, and smaller startups. North Dakota’s effort failed; however, Arizona’s legislation is steadily advancing through the process.

KEY PEOPLE TO WATCH:

Merrick Garland, President Biden’s Attorney General, may play a very important role in the selection of the Assistant Attorney General for Antitrust and its deputies. Garland brings more antitrust experience to the job than many of his predecessors.

Professor Lina Khan is one of President Biden’s picks for a Commissioner role at the FTC. She is known for her critical scholarship on Big Tech companies and is a proponent of more active antitrust enforcement. Her age and professional background make her an unusual pick. As a first-time nominee, she will have to undergo extensive vetting before she can be confirmed by the Senate.

Karl Racine, the District of Columbia attorney general, is getting more attention as a candidate for chair of the FTC. In 2016, Racine had teamed up with the Utah AG, a Republican, to urge the FTC to reopen investigations into Google, a move that is seen today as a precursor of recent State action against Big Tech. Racine was also one of the AGs who sued Facebook in the wake of the Cambridge Analytica scandal.

Senator Amy Klobuchar (D-MN), Chairwoman of the Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights and Representative David Cicilline (D-RI), Chairman of the House Antitrust Subcommittee, will play important roles in guiding proposed antitrust legislation through the Congress.

Gene Kimmelman for a limited time as Senior Counselor for the AAG for the Antitrust Division. Kimmelman is a well-known Big Tech critic and a proponent of the progressive antitrust agenda. In recent years, he has advocated for antitrust cases against Big Tech and backed the creation of a digital regulatory agency.

Tim Wu, a Columbia Law professor and a vocal proponent of more active antitrust enforcement against Big Tech, is joining the National Economic Council to work on technology and competition policy. While the NEC doesn’t have a formal mandate for antitrust, he may play a de facto role of antitrust advisor to President Biden.