Antitrust Agencies “Temporarily” Suspend Early Termination

The Federal Trade Commission, along with the Department of Justice, announced the temporary suspension of early termination for the premerger review process under the Hart-Scott-Rodino Act. Early termination is granted to merging parties when the antitrust agencies determine that the proposed transaction poses no anticompetitive threat. As of June 2024, the agencies have yet to reinstate the practice. During the 20 years prior to its suspension (2001 to 2020), 60 percent of all reported transactions received early termination and 77 percent of transactions requesting early termination received early termination.

Read more:
• Eleanor Tyler, “DOJ/FTC Early Termination Pause May Signal Changes,” Bloomberg Law, February 10, 2021.
• Fred Ashton, “Early Termination’s Termination: The First Full-Year Look from FTC and DOJ,” American Action Forum, January 17, 2024

Lina Khan Named Chair of FTC

The US Senate confirmed Lina Khan as an FTC Commissioner on June 15, 2021, by a vote of 69-28. President Biden departed from traditional norms by elevating Khan to Chair of the agency shortly after her confirmation. Presidents have typically announced whether an appointee to an independent agency will serve as chair when they are nominated. Lina Khan rose to prominence in large part due to her 2017 Yale Law Journal article entitled “Amazon’s Antitrust Paradox,” in which she argued that current antitrust framework is ill-equipped to tackle market power in the modern digital economy.

Read more:
• Patrick Strite, “An Unprecedented FTC Appointment,” Competitive Enterprise Institute, July 13, 2021
• Sam Bowman, “What Lina Khan’s Appointment Means for the House Antitrust Bills,” Truth on the Market, June 22, 2021
• Eric J. Savitz, “It’s Time to Stop Ignoring the Threat of Tech Regulation,” Barron's, June 21, 2021

Lina Khan Consolidates Power

During Lina Khan’s first meeting as Chair of the FTC, the Commission rescinded a bipartisan Statement of Enforcement Principles that was issued in 2015 during the Obama administration. The 2015 Policy Statement outlined how the Commission would exercise its power under Section 5 of the FTC Act to prohibit unfair methods of competition. It stipulated that the Commission would be guided by the consumer welfare standard and would evaluate practices and acts under a framework similar to the rule of reason. The Commission also voted to revise its Section 18 rulemaking authority under the Magnuson-Moss Act, without public input. The move consolidated power into the Chair by diminishing the role of the FTC’s chief administrative law judge.

Read more:
• Scott Lincicome, “Antitrust Is So Hot Right Now. Three Reasons It Should Cool Off,” Cato Institute, June 30, 2021.
• Editorial Board, “Lina Khan’s Power Grab at the FTC,” Wall Street Journal, July 5, 2021.
• Oliver Dunford, “The ‘New’ FTC Will Run Roughshod over the Rule of Law,” The Hill, August 9, 2021.

Withdrawal of Vertical Merger Guidelines

The Commission, by a vote of 3 to 2, withdrew the 2020 Vertical Merger Guidelines on September 15, 2021. These guidelines outlined how the antitrust agencies would assess potential anticompetitive effects of mergers between companies operating at different levels of the supply chain. The Department of Justice (DOJ), which jointly issued the guidelines with the FTC, released a statement the same day stating the Vertical Merger Guidelines would stay in place at the DOJ. Conflicting guidance from the two antitrust agencies caused confusion and uncertainty for American businesses. The FTC’s majority statement on the withdrawal roundly rejected the consideration of procompetitive effects in merger analysis, particularly when it comes to the elimination of double marginalization. Professors Carl Shapiro and Herbert Hovenkamp said that a number of these claims in the FTC’s statement were “flatly incorrect as a matter of microeconomic theory.”

Read more:
• Carl Shapiro and Herbert Hovenkamp, “How Will the FTC Evaluate Vertical Mergers?,” ProMarket, September 23, 2021.

Lina Khan's "Vision and Priorities for the FTC"

FTC Chair Lina Khan issued her “Vision and Priorities for the FTC” memorandum on September 22, 2021, emphasizing a focus on “power asymmetries” in the FTC’s future strategic approach. Part of that focus would be directed at harm faced by workers and competitors, a priority disconnected from the FTC’s primary mission to protect consumers. Some former FTC staff questioned the direction taken by the Chair’s memo. “Unfortunately, it lacks an appreciation for the limits of antitrust and consumer-protection law; it also would have benefited from greater regulatory humility,” said Alden Abbott, former general counsel of the FTC.

Read more:
• Alden Abbott, “Khan's 'Vision and Priorities for the FTC' Statement Lack Humility and Strategic Insight,” Truth on the Market (blog), September 27, 2021.

Rohit Chopra Casts "Zombie" Votes before Leaving the FTC

Commissioner Rohit Chopra left the FTC to head the Consumer Financial Protection Bureau in October 2021. Days before his departure, Chopra reportedly cast over 20 votes via email that could remain active for up to two months. The controversial practice called “zombie” voting allows a commissioner to break a potential 2-2 tie even after leaving the Commission. Politico reported that the agency refused to provide a copy of the rules that govern these types of votes. Commissioners Christine Wilson and Noah Phillips criticized the use of a zombie vote to approve a policy statement on the use of prior approval provisions in merger orders, adding that “The policy at issue was announced without our participation.”

Read more:
• Jonathan H. Adler, “'Zombie' Voting at the Federal Trade Commission,” Reason, November 11, 2021.

FTC's Top Economist Resigns

FTC's Top Economist Resigns

The FTC’s Bureau of Economics director, Marta Wosinska, resigned from her post at the agency amid reports of internal disagreements regarding the production of a 6(b) study on pharmacy benefit managers (PBMs). The Chair’s office circulated a new draft of the proposed study at 9pm the night before the February 17 vote after commissioners expressed worry about the insufficient attention given to consumer prices in the first draft. But the second draft, which was broader than the first, lacked supporting documentation that typically accompanies such a proposal. A third draft was recirculated less than a half hour before the meeting, which failed with a vote of 2-2.

FTC Sues to Block Meta's Acquisition of Within Unlimited

The FTC filed suit to block Meta’s acquisition of virtual reality (VR) developer Within Unlimited, claiming that the deal would give Meta illegal market power in the “virtual reality dedicated fitness app market.” The initial complaint raised numerous questions regarding the Commission’s severely narrow market definition. The FTC narrowed its market definition to “dedicated” VR fitness apps, excluding other VR fitness apps that may only be incidental to fitness. Shortly after challenging the merger, Bloomberg reported that Chair Khan overruled career staff who recommended against bringing the case.

Read more:
• Ryan Young and Alex Reinauer, “Virtual Reality and the Relevant-Market Fallacy,” National Review, September 14, 2022.
• Ashley Baker, “The FTC Tries to Create Its Own Virtual Reality,” Committee for Justice, September 2, 2022.
• Editorial Board, “Lina Khan's Merger Metaverse,” Wall Street Journal, August 29, 2022.

FTC Rulemaking on Commercial Surveillance and Data Security

The FTC announced an Advanced Notice of Proposed Rulemaking (ANPR) on commercial surveillance and data security in August 2022. The ANPR discusses the purported institutional limitations of the FTC’s case-by-case adjudication when it comes to data privacy, suggesting that a new trade regulation rule is needed to provide a comprehensive regulatory regime. Svetlana Gans and Natalie Hausknecht, attorneys with the law firm Gibson Dunn, called it “one of the most ambitious rulemakings in agency history,” one that would go beyond just consumer privacy and could touch almost every corner of the US online economy. Both Commissioners Noah Phillips and Christine Wilson dissented, raising concern regarding the breadth of the ANPR as well as its attention to matters not typically addressed in past enforcement actions on unfair or deceptive acts or practices. Gans and Hausknecht say the potential rulemaking could face legal challenge under the major questions doctrine.

Read more:
• Kevin Frazier, “Return of the National Nanny or Restoration of the Cop on the Beat: The FTC's Impending Proposed Rule on Commercial Surveillance,” The Federalist Society, May 15, 2024.
• International Center for Law & Economics, “Commenting on the Comments: An Expert Take on the Direction of the FTC Privacy Rulemaking,” October 20, 2022.
• Chris D. Linebaugh, FTC Considers Adopting Commercial Surveillance and Data Security Rules, Congressional Research Service, LSB10839, October 12, 2022.

FTC Section 5 Policy Statement

FTC Section 5 Policy Statement

The FTC issued new guidance explaining how it will exercise its Section 5 authority under the FTC Act which declares “unfair methods of competition” unlawful. The Policy Statement provides little clarity on how the agency will enforce its Section 5 authority but does adopt an “I know it when I see it” approach. It lists a series of subjective terms, such as coercive, exploitive, abusive, deceptive, predatory, restrictive, and exclusionary, that the FTC will use as criteria to determine if conduct is anticompetitive. In her dissenting statement, Commissioner Christine Wilson criticized the Policy Statement’s abandonment of two bedrock principles in antitrust: the rule of reason and the consumer welfare standard. She also expressed regret that the agency had not solicited public comments before adopting the policy statement.

Read more:
• Clyde Wayne Crews, “The Unfairness of the FTC's Policy Statement Regarding the Scope of Unfair Methods of Competition,” Competitive Enterprise Institute, November 14, 2022.
• Steven J. Cernak, “FTC Section 5 Statement: Less Guidance than Meets the Eye,” Truth on the Market, November 18, 2022.

FTC Seeks to Block Microsoft's Acquisition of Activision Blizzard

The FTC issued a complaint to block Microsoft’s $69 billion acquisition of video game developer Activision Blizzard on December 8, 2022, claiming that the transaction would enable Microsoft to withhold gaming content from competing consoles and stifle competition in the subscription and cloud-gaming market. The complaint narrowly defined the relevant product market as “High-Performance Consoles,” excluding by name the Nintendo Switch, gaming PCs, and mobile devices. Only Microsoft’s Xbox Series X|S and Sony’s PlayStation 5 were included. The FTC lays particular emphasis on the possibility that Microsoft could make one of Activision’s flagship titles, Call of Duty, an exclusive to its platforms, but this claim defies history and business rational. Tahmineh Dehbozorgi points to Microsoft’s 2014 purchase of Mojang, a developer most known for the game Minecraft. Since the acquisition, Minecraft is available on nearly all platforms and is the second best-selling video game of all time behind Tetris, which was released in 1984.

Read more ►

FTC Proposes Ban on Employee Noncompete Clauses

The FTC announced a proposed rulemaking on January 5, 2023, banning non-compete agreements in employment contracts. Historically governed by state law, noncompete clauses are typically limited in scope and duration. And they affect an estimated 30 million employees in the US. The proposed rule was the first attempt in decades to promulgate a regulation defining a specified “unfair method of competition” using Section 6(g) of the FTC Act, which states that the FTC has the power to “From time to time classify corporations and to make rules and regulations for the purpose of carrying out the provisions of this subchapter.” However, the FTC will waste valuable time and resources defending the rule in court, where it will likely be struck down.

Read more ►

FTC Probes Pepsi and Coca-Cola

The FTC launched a preliminary investigation into Coca-Cola and PepsiCo focused on price discrimination, Politico reported. The soft drink companies are purportedly facing an inquiry under a 1936 law called the Robinson-Patman Act, which forbids differentiated pricing between large and small retailers. The lesser-known statute has primarily remained dormant, having only been used twice by the FTC since 1988. Some describe the Robinson-Patman Act as an “anti-consumer welfare standard,” because it would force companies to raise prices on consumers to level the playing field for smaller retailers.

Read more:
• Jessica Melugin, “The FTC Soda Wars,” National Review, January 24, 2023.
• Fred Ashton, “Pepsi and Coke Targeted for Price Discrimination,” American Action Forum, January 30, 2023.

Court Rules Against FTC in Meta/Within

Court Rules Against FTC in Meta/Within

A federal court denied the FTC’s motion for preliminary injunction to block Meta from consummating its merger with virtual reality developer Within Unlimited, ruling that the agency did not meet its evidentiary burden. This was Lina Khan’s first at bat against one of the four “big tech” companies that she was meant to “rein in,” but she struck out. However, some pondered whether the FTC’s loss could be construed as a win. Chair Khan has said that she’s “not somebody who thinks that success is marked by a 100 percent court record.” She views court losses as indications to lawmakers that Congress needs to update antitrust law. Even worse, while the FTC failed to stop Meta’s acquisition, the court may have given Khan some favorable precedent for future challenges, which may be part of her strategy. Using taxpayer dollars to enforce the law is one thing. Using taxpayer dollars to change the law is quite another thing.

Read more:
• Editorial Board, “Lina Khan Chalks Up Another Defeat,” Wall Street Journal, February 6, 2023.
• Ryan Young and Alex Reinauer, “FTC Runs into the Judicial Wall,” National Review, February 21, 2023.

Christine Wilson Announces Her Resignation from the FTC

Commissioner Christine Wilson announced her plan to resign from her position at the FTC on February 14, 2023, in a special Valentine's Day op-ed for the Wall Street Journal. Commissioner Wilson underscored Chair Khan’s disregard for due process and the rule of law, accusing her of consolidating power, suppressing dissent, and pursuing a political agenda at the expense of the FTC’s integrity. “I have failed repeatedly to persuade Ms. Khan and her enablers to do the right thing, and I refuse to give their endeavor any further hint of legitimacy by remaining,” she wrote. Notability, Commissioner Wilson dissented from the Democratic commissioner’s decision affirming Chair Khan’s non-recusal in the Meta/Within Unlimited case, arguing on due process grounds that Khan’s prior advocacy against Meta created the appearance of unfairness. However, Wilson’s dissent was heavily redacted by the other commissioners. “Commission opinions commonly use redactions to prevent disclosure of confidential business information, but my opinion contained no such information.”

Read more:
• Jessica Melugin, “Not-So-Quietly Quitting: Wilson’s Resignation a Canary in the Coal Mine of the FTC,” National Review, February 22, 2023.
• Mark A. Jamison, “Why Christine Wilson’s Resignation from the FTC Matters,” The Hill, March 29, 2023.

FTC Asks for a Budget Increase

Amid historically low staff morale and a string of losing cases, the FTC submitted its annual budget request to Congress asking for $590 million for FY 2024, a $160 million increase from the previous year. Of that total, the FTC asked for $70 million to add more than 300 new full-time staffers.

Read more:
• Alex Reinauer, “FTC Budget Request: More Money, More Staff, and More Problems,” Competitive Enterprise Institute, March 20, 2023.
• Isaac Schick, “Don’t Give the Federal Trade Commission a Big Budget Just to Punish Big Firms,” Reason, April 7, 2023.
• Dr. Edward Longe, “Congress Shouldn’t Reward a Rogue Agency,” James Madison Institute, April 18, 2023.

FTC Lawyers Leave the Agency at Record Pace

Bloomberg Law reported that a record number of senior attorneys left the FTC during Lina Khan’s first two years as Chair. According to data acquired through a Freedom of Information Act request, 71 senior staff attorneys left the agency between 2021 and 2022. “That’s the highest number of departures in the category for a comparable two-year period since 2000.” The increase in departures raised concerns regarding the continued decline in staff morale at the FTC.

FTC Orders Illumina to Divest from Grail

FTC Orders Illumina to Divest from Grail

The FTC ordered Illumina to unwind its $7 billion merger with Grail, a developer of an early cancer detection test in April 2023. The Commissioner overruled an initial decision by an administrative law judge that dismissed the FTC’s administrative complaint in September 2022. They reasoned that the merger would harm competition in the US market for multi-cancer early detection (MCED) tests. This was a questionable ruling, as the market for MCED tests barely exists. Rejecting the merger likely deprived Americans new cancer detection technology. “We’ll never know which cancer patients’ lives might be saved by better early detection tests, but the FTC will be partially responsible for at least some avoidable deaths,” said Ryan Young, senior economist at CEI.

Read more ►

Chair Khan Refused Ethics Advice

Bloomberg reported on new revelations that FTC Chair Lina Khan ignored advice given by the FTC’s designated agency ethics official (DAEO) to recuse herself from the agency’s challenge to the Meta/Within merger. An unredacted memo revealed that the DAEO opined that “there is a reasonable appearance concern with participation in this matter.” House committee members soon accused Chair Khan of providing misleading testimony to Congress regarding her handling of the Meta/Within case.

Read more:
• Editorial Board, “Lina Khan’s Recusal Coverup,” Wall Street Journal, June 18, 2023.
• Elizabeth Nolan Brown, “FTC Chair Lina Khan Ignored Ethics Official’s Advice about Meta Case, then Said She Didn’t,” Reason, June 19, 2023.

FTC Sues Amazon for "Dark Patterns"

The FTC filed a suit in federal court against Amazon, accusing the tech company of using “dark patterns” to trick consumers into enrolling in Prime subscriptions as well as purportedly making it difficult for them to cancel their subscriptions. The complaint, while heavily redacted, made much to do about buttons and clicks on Amazon’s platform. Some buttons to enroll in Prime are described as “prominent,” while other buttons to decline offers are characterized as “inconspicuous.” Further, the FTC alleges the number of clicks required to cancel prime (five clicks on desktop; six clicks on mobile) is problematic and extraneous. Patrick Hedger, executive director for the Taxpayers Protection Alliance, pointed out that submitting a public comment on the FTC website took as many or more clicks.

Read more:
• Elizabeth Nolan Brown, “The Federal Trade Commission’s Latest Frivolous Antitrust Suit Takes Aim at Amazon,” Reason, June 22, 2023.

FTC Proposes Expansive Changes to the Hart-Scott-Rodino Form

The FTC, with the concurrence of the Justice Department’s Antitrust Division released a notice of proposed rulemaking to change the premerger notification form and instructions under the Hart-Scott-Rodino (HSR) Act, which requires companies to file with the FTC and Department of Justice when their merger meets certain size thresholds. The FTC estimates that the changes would quadruple the average paperwork hours from 37 hours to 144 hours, leading to $350 million in additional labor costs. While the FTC claims that the changes would lead to a more “effective and efficient” review process, past enforcement trends show that the bulk of the regulatory burden will be placed on the least concerning transactions.

Read more ►

Court Dismisses FTC Suit Against Microsoft

A federal district court in California denied the FTC’s preliminary injunction request to block Microsoft’s acquisition of game developer Activision Blizzard, finding the merger would more likely expand access to Activision content like Call of Duty, not foreclose it as the FTC alleged. The decision added to a string of court losses for FTC, raising questions about Chair Khan’s litigation strategies and her management of resources, personal, and taxpayer dollars. The judge’s opinion also cast doubt on the FTC’s market definition for “High-Performance Consoles,” in which the agency excluded Nintendo. “If the Court was the final decisionmaker on the merits, it would likely find Nintendo Switch part of the relevant market,” the judge wrote.

Read more ►

Antitrust Agencies Release Draft Merger Guidelines

The FTC and US Department of Justice together released the Draft Merger Guidelines in July 2023. The Mercatus Center’s Alden Abbott called the draft “an anti-merger manifesto.” The Draft Guidelines prioritized speculative harms while largely disregarding proven benefits. While focusing on the potential downsides of mergers, the Draft lacked proper consideration of potential gains in efficiency and consumer welfare. Many criticized the Draft Guidelines for its reliance on old case law and ignoring more modern precedent. Geoffrey Manne, president of the International Center for Law & Economics, pointed out that the average year of cases cited (weighted by the number of citations) is 1975.

Read more ►

FTC Files Antitrust Suit against Amazon

The FTC announced its long-awaited antitrust suit against Amazon in September 2023. Joined by 17 state attorneys general, the Commission’s complaint dubiously alleges that Amazon monopolizes both the “Online Superstore Market” and the “Online Marketplace Services Market.” Both market definitions rely on the view that online commerce does not compete with in person, brick-and-mortar commerce. Even so, the FTC excludes relevant online retailers as well.

Read more ►

FTC Proposes Rule to Ban

FTC Proposes Rule to Ban "Junk Fees"

The FTC announced a notice of proposed rulemaking that would prohibit so called “junk fees” on October 11, 2023. The Commission published an advance notice of proposed rulemaking back in November 2022, which received over 12,000 comments. The rule would require businesses to disclose all mandatory fees upfront in their advertised prices and provide complete information about all fees, including the amount, what they cover, and whether they are refundable. This has the “potential to clutter advertising, making it less effective and more confusing,” according to former FTC economist Mary Sullivan. The proposed rule may face legal challenge under the major questions doctrine if finalized.

Read more:
• James Broughel, “Biden’s Counterproductive Crusade Against Junk Fees,” Forbes, December 21, 2023.
• Devin Watkins, Comments of the Competitive Enterprise Institute on Trade Regulation Rule on Unfair or Deceptive Fees, Docket No. FTC-2023-0064, January 26, 2024.

2023 Merger Guidelines Finalized

The FTC, together with the Department of Justice, issued the 2023 Merger Guidelines. The final guidance represents an improvement from the draft version released five months prior, and the antitrust agencies did trim the number of guidelines from thirteen to eleven. However, the changes could be characterized as cosmetic, not substantive. The Merger Guidelines still rely on antiquated case law, ignoring the changes to the merger review process that occurred in the 1970s. Fortunately, the Guidelines are not rules and are thus not enforceable. The FTC and the DOJ will still have to persuade courts to follow them. However, their finalization may dissuade companies from pursuing mergers that would benefit competition, innovations, and consumers.

Read more ►

FTC Proposes Changes to COPPA Rules

The FTC proposed changes to the Children Online Privacy Protection Act (COPPA) rule on December 20, 2023, over four years after initiating a review in 2019. The proposed rule would require a separate opt-in for targeting advertising, expand the scope of the existing rule to cover biometric data, and limit the use of push notifications. Several commentors argued that the proposed changes are inconsistent with the purpose and statutory text of COPPA and could be susceptible to a challenge under the First Amendment. According to Berin Szóka, president of TechFreedom, “COPPA has dodged First Amendment challenge because Congress was careful to avoid burdening sites that serve adults, but now the FTC proposes blurring that line in ways that invite litigation on both constitutional and textual grounds.”

Read more:
• “COPPA Rule Amendments Must Be Grounded in COPPA’s Text,” TechFreedom, March 12, 2024.
• Ben Sperry and Kristian Stout, Comments of the International Center for Law & Economics to the FTC on Children’s Online Privacy Protection Rule NPRM, March 11, 2024.
• Jim Harper, “Protection Children Online: Keep Parents in Charge,” American Enterprise Institute, March 19, 2024.

FTC Updates Government Shutdown Contingency Plan

The FTC revised its contingency plan for how it will operate in the case of a government shutdown. Notably, the agency would close its Premerger Notification Office (PNO) if Congress fails to fund the government. Under the Hart-Scott-Rodino Act, companies are required to file with the PNO before consummating a merger if the transaction meets certain size thresholds. Both the FTC and the Department of Justice (DOJ) still accepted HSR filings during the last two government shutdowns. The last shutdown, from December 22, 2018, to January 25, 2019, was the longest in US history. The 2018 government shutdown lasted 3 days. The antitrust agencies did suspend the granting of early termination under the HSR process during the last two shutdowns, but the FTC and DOJ have yet to resume the practice since February 4, 2021.

Read more:
• Alex Reinauer, “During Government Shutdowns, Lina Khan Shuts Down You,” Barron's, January 30, 2024.

House Judiciary Report: Abuse of Power, Waste of Resources, and Fear

The US House Judiciary Committee released an interim staff report detailing Lina Khan’s abuse of power and mismanagement as Chair of the Federal Trade Commission. Internal documents and interviews reveal a chaotic work environment with low morale, stifled communications, and concerns about Chair Khan’s decision making. Lina Khan also consolidated power in the chair to pursue a radical agenda to reorganize the American economy, which contributed to further mismanagement and waste of taxpayer funds.

Read more:
• Robert H. Bork Jr., “Internal Emails Show FTC’s Lina Khan Is Trying to Win by Losing,” The Hill, March 3, 2024.

FTC Challenges Kroger/Albertsons Merger

The FTC issued an administrative complaint to block a merger between grocery chains Kroger and Albertsons, which was initially announced in October 2022. The Commission claimed that the merger would substantially lessen competition among “supermarkets.” However, the agency narrowly defines its relevant market in the case to exclude competitors like Costco, Sam’s Club, Dollar General, Dollar Tree, Aldi, and Amazon. Further, the FTC argues that the merger would harm competition among union grocery labor, another instance of mission creep that departs from the consumer welfare standard. Dominic Pino with the National Review Institute points out that United Food and Commercial Workers International Union (UFCW), of which most unionized employees of the two stores are members, is one of the biggest opponents of the merger: “The illogic of the FTC’s complaint, combined with the obvious fact that the UFCW is part of the Democrats’ political coalition, ought to raise questions about why the Kroger/Albertsons is really being held up.”

Read more ►

FTC Releases Report on Supply Chains

FTC Releases Report on Supply Chains

The FTC released a staff report examining grocery supply chain disruptions during the COVID-19 pandemic. The report, entitled Feeding America in a Time of Crisis: The United States Grocery Supply Chain and the COVID-19 Pandemic, attempted to assess how these supply chain disruptions affect competition among retailers, wholesalers, and producers. Further, the report evaluated the effects on consumers and businesses. However, the FTC’s supply chain study taught us very little, according to Fred Ashton, Director of Competition Policy at the American Action Forum. The report seems to suggest that the FTC plans to revive Robinson-Patman Act enforcement, a move that would only promote higher prices for consumers and market inefficiencies. Ashton concludes that the study’s “methodology relied heavily on caveats and carveouts” and “failed to measure the effects on competition broadly.”

Read more:
• Fred Ashton, “FTC’s COVID-19 Grocery Supply Chain Study Taught Us … Nothing,” American Action Forum, April 3, 2024.
• Daniel J. Gilman, “Antitrust at the Agencies Roundup: Supply Chains, Noncompetes, and Greedflation,” Truth on the Market, March 21, 2024.
• Daniel J. Gilman, “Antitrust at the Agencies Roundup: The Supply Chains, Part Deux,” Truth on the Market, March 29, 2024.

FTC Sues to Block Tapesty's Acquisition of Capri

The FTC sued to block Tapestry’s $8.5 billion acquisition of Capri Holdings on April 22, 2024, claiming that the transaction would eliminate competition in the “accessible luxury” handbag market. Tapestry owns brands like Coach and Kate Spade, while Capri controls Michael Kors. The Commission, once again, relied on a narrow relevant market definition in their challenge. In its administrative complaint, the FTC distinguished luxury handbag brands that don’t sell their products online, like Chanel and Hermes. Further, the complaint excludes luxury brands that have no-discounting policies, like Louis Vuitton, Prada, and Gucci, labeling them as “true luxury” handbags. And Lina Khan’s FTC, once again, departs from the consumer welfare standard by incorporating labor harms in their challenge to the merger.

Read more:
• George F. Will, “The FTC’s Trustbusting Is Getting Ridiculous. Luxury Handbags? Please.,” Washington Post, May 29, 2024.
• Tirzah Duren, “Do Chanel Buyers Shop at Walmart? What Say the FTC?,” Real Clear Markets, May 10, 2024.
• Editorial Board, “Lina Khan Wears Prada,” Wall Street Journal, April 28, 2024.

FTC Finalizes Rule Banning Noncompete Agreements

The FTC voted to issue a final rule banning noncompete agreements in employment contracts during a special open commission meeting on April 23, 2024. The Commission marked this particular open meeting as “special” presumably because the agency would not provide an open comment period, in contrast to the previous 25 meetings where members of the public were given one to two minutes to address the Commission. The final rule bans noncompete agreements for senior executives prospectively, but not retrospectively, meaning existing noncompetes with senior executives will remain enforceable but cannot be entered into once the rule goes into effect. For all other workers, the rule bans noncompetes both prospectively and retrospectively. Newly sworn in Commissions Andrew Ferguson and Melissa Holyoak dissented, arguing that the FTC lacked the authority to promulgate substantive rules defining unfair methods of competition.

Read more ►

Lina Khan Changes Tune on Amazon's Prices

Lina Khan Changes Tune on Amazon's Prices

The FTC filed to block the American Booksellers Association (ABA) from intervening in its antitrust suit against Amazon in May 2024. The move highlighted conflicting claims about prices set by Amazon. The ABA alleges harm caused by Amazon’s low prices, which they struggle to match. The FTC claims that Amazon harms consumers by raising prices. Some commentators point out that Lina Khan made similar arguments to that of the ABA’s in her preeminent law review article, “Amazon’s Antitrust Paradox.” Tom Hebert from Americans for Tax Reform writes, “In law school, Khan argued for bureaucrats to break up Amazon for low prices. As FTC chairwoman, Khan says Amazon’s prices are too high. What does Khan truly believe?”

Read more:
• Tom Hebert, “Lina Khan’s Amazon Flip-Flop,” National Review, June 5, 2024.
• Editorial Board, “Lina Khan’s Amazon Antitrust Paradox,” Wall Street Journal, May 28, 2024.

Antitrust Agencies Come to an Agreement on AI Probe

The FTC and Department of Justice came to an agreement on how they will divvy up investigative responsibilities when looking into the artificial intelligence (AI) industry. The Justice Department’s probe will focus on Nvidia, the leading manufacturer of AI chips. The FTC will take the lead on investigating ChatGPT-maker OpenAI as well as Microsoft’s investment in Inflection AI. CEI’s Jessica Melugin said, “These latest inquiries show that U.S. regulators continue to hobble this country in the race for global AI dominance. As China races ahead with enormous investments, the FTC and DOJ are throwing out roadblocks for our free enterprise system.”