In the biggest move yet to follow recent Biden executive order, agency rescinds 1995 statement that Chair Lina Khan says ‘drains the already strapped resources of the commission and the agency staff’
Excerpt from “FTC votes to rescind merger policy in a possible blow to Big Tech”, Jon Swartz, MarketWatch
The Federal Trade Commission voted Wednesday to rescind a 1995 statement that loosened merger review reporting requirements, an apparent setback for Big Tech.
The 3-2 vote along party lines means that a company that had been stopped from proceeding with one transaction must give prior notice to the FTC if it considers a similar deal. The FTC could then stop the new deal without spending months investigating it.
“Without a prior approval, the commission [had to] initiate a new investigation and then go into court to block the deal anew,” FTC Chair Lina Khan said during the meeting, underscoring her point that the commission was not properly staffed to handle a tidal wave of prospective mergers. “This additional burden drains the already strapped resources of the commission and the agency staff.”
The FTC, which is in the process of resubmitting its objection to Facebook Inc.’s billion-dollar acquisitions of Instagram and WhatsApp, took the vote in the first significant action for antitrust scrutiny of Big Tech since President Joe Biden unleashed an executive order July 9 seeking new actions. The non-binding EO advises scrutiny of all mergers and acquisitions with “particular attention to the acquisition of nascent competitors.” The vote occurred hours after Salesforce.com Inc. CRM said it closed its $27.7 billion acquisition of Slack Technologies Inc.
Khan has pushed for new definitions of antitrust, with a target on Big Tech, and the companies have fought back. Facebook filed a petition on July 14 to have Khan recused from the agency’s ongoing antitrust lawsuit against the social-media company, after Amazon.com Inc.
Wednesday’s vote along party lines mirrors a push by Democrats to reshape antiquated antitrust law. To that end, Congress is working on six bills; Biden issued a nonbinding executive order covering the same ground; and the Biden administration has nominated Google critic Jonathan Kanter to head the Justice Department’s antitrust division.
“I think a lot about the deterrent effect that we need to be sending” to deter “clearly anticompetitive” mergers, FTC Commissioner Rebecca Slaughter, a Democrat, said.
Fellow Commissioner Christine Wilson, a Republican, said there was no evidence to dump the 1995 policy statement, and the change would cause uncertainty over deals.
The FTC has not indicated the scope of acquisitions that would be reportable, either by targeted market or specific products.
At least one antitrust expert questioned whether the FTC vote was ceremonial with little bite. “We have to remember that the FTC is horrendously under-resourced,” Bhaskar Chakravorti, dean of global business at The Fletcher School, Tufts University, told MarketWatch. “How is it even practical to carry out an Executive Order this broad and across so many different industries from app stores to hearing aids without new resources or new laws that make it easier for the regulators to do their jobs, and not get over-stretched or outpaced by the far better resourced big companies that are also more nimble and have more lawyers and investment bankers on call?”
