WASHINGTON (Legal Newsline) - President Biden’s candidate to run the Justice Department’s antitrust division may face tough questioning at congressional hearings starting today, as business leaders and Republican lawmakers complain the administration is twisting antitrust law into a tool for vague social justice goals and income redistribution.
Antitrust attorney Jonathan S. Kanter is scheduled to appear before the Senate Judiciary Committee, which is expected to approve his nomination and pass it on to the full Senate, based on his extensive experience including a prior stint at the Federal Trade Commission.
Kanter will join Justice after the Biden Administration has already announced and begun implementing a new antitrust policy built around challenging mergers and acquisitions, based on the idea they give companies too much power to extract wage concessions from workers, harm the environment, and even diminish “democratic accountability.” In a July executive order, the president said “competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality.”
Businesses have already started complaining that the FTC is asking companies to answer questions about unionization, environmental policies and corporate governance in what were traditionally routine merger reviews. The new head of the FTC, Lina Kahn, is a 32-year-old academic previously best known for a law review article suggesting the emphasis on consumer welfare that has dominated antitrust law since the 1970s should be replaced with an older approach that takes into account the affects large companies have on smaller competitors.
The administration also placed Tim Wu, a Columbia Law School professor, on the National Economic Council. Wu is considered the chief architect of the “net neutrality” theory that would force big tech companies to allow competitors on their platforms. Before coming to the White House, Wu praised the FTC and state attorneys general who sued Facebook over alleged “buy-or-bury” tactics of acquiring competitors to get them off the market.
Given all this activity so far, critics may question whether Kanter will pursue an independent path at the Justice Dept. or take his lead from the administration, said Ashley Baker, director of public policy at the Committee for Justice, a conservative-leaning group that focuses primarily on judicial nominees.
“The administration has forged ahead with setting antitrust policy, issuing the executive order and implementing it, and they’ve done the whole thing without Kanter,” Baker said. “Does he view his job simply as implementing their policy objectives?”
One of Kanter’s first duties will be working with the FTC on a revision of vertical merger guidelines announced last month that could radically change how the government regulates mergers of companies engaged in different layers of the market, such as manufacturers and raw materials suppliers. Among other things, Justice is considering shifting the burden of proving whether a merger would hurt competition from the government onto companies.
Separately, the FTC is considering rescinding a 2015 statement about how it enforces Section 5 of the FTC Act, which governs “unfair methods of competition,” to eliminate the focus on consumer welfare and whether companies were unfairly raising prices. By broadening its approach, FTC officials could more easily target Big Tech companies like Google, which it is already suing, with enforcement actions over false advertising and other loosely defined claims.
The move drew criticism from Republican Sen. Mike Lee of Utah, a member of the Judiciary Committee who said it would “replace clarity with ambiguity in the midst of a fragile economic recovery.”
The Biden Administration’s change in direction on antitrust has the support of a constellation of academics and left-leaning nonprofits, but it is also supported in part by some conservative members of Congress like Sen. Josh Hawley, who also embraces the “big is bad” theory, at least when it comes to tech companies like Facebook and Twitter that he sees as unfairly censoring conservative speech.
It’s hardly surprising the Biden Administration is trying to use antitrust law to achieve its social-policy goals, said Robert Bork Jr., president of the Antitrust Education Project and son of one the leading proponents of the consumer welfare approach to the law.
“What may be more surprising is that some Republicans have tacitly gone along with these efforts in their support of antitrust overhauls,” Bork said. “Particularly those who support free markets should draw a red line at endorsing the practice of liberal social engineering into the government’s regulation of private businesses.”
Among the groups commenting on the FTC’s proposals is the Open Markets Institute - a group supported by eBay founder Pierre Omyidar’s charity - which says its mission is to “establish open, competitive markets that support a strong, just and inclusive democracy.”
The Omidyar Initiative granted $400,000 to Open Markets in 2018 and 2019, when its funding leaped to $5 million from $1.6 million in 2018, according to Internal Revenue Service records. The group is allied with the American Economic Liberties Project, whose directors include Jay Himes, co-chair of the antitrust practice at plaintiff law firm Labaton Sucharow. Private lawyers frequently follow behind the government with antitrust lawsuits based on information regulators have uncovered in enforcement actions.
The involvement of these groups drew the ire of FTC Commissioner Christine Wilson, a Republican nominee, who asked on Twitter: “Who wrote the checks that launched Open Markets?”