Trump Transition at FTC Is No Reagan Revolution

Don’t call it a “comeback.” Those hoping for a Reagan-era-like return to economic sanity or regulatory humility in antitrust at the Federal Trade Commission should prepare for disappointment.

The “new” FTC has already decided to keep Biden-era merger guidelines. Chairman Andrew Ferguson explained in a press statement that “stability is good for the enforcement agencies.” If only the guidelines themselves were good for the efficient functioning of the U.S. economy. 

When the 2023 guidelines were introduced, they were widely criticized for discarding more than 40 years of economic learning in antitrust enforcement. To be fair, the guidelines are not binding law, and perhaps the Trump administration’s FTC will not take full advantage of the opportunities to kill good deals. But, given the experience of the last few years, there is a clear danger that it might. The FTC’s emphasis on stability is undermined by retaining guidelines that were so expansive on the question of what might be a violation that almost anything could run afoul of the law. Ferguson’s decision not to revoke the guidelines sent a warning that no industry can afford to overlook. 

Keeping the guidelines leaves the door open for blocking mergers and acquisitions that may benefit consumers and raise few, if any, serious competitive concerns. In all likelihood, it will mean that potential mergers or acquisitions that could benefit the economy, shareholders, and consumers will never leave the drawing board. 

Allowing constructive acquisitions is a key component in the proper functioning of a healthy economy. Specifically, innovative start-ups in the tech and biotech industries need the hope of being acquired by bigger companies to attract venture capital (VC) funding and return on investment. The resources and scale of large acquiring firms must be allowed to incentivize start-up innovation if the U.S. going to deliver growth for consumers. 

But, since 2021, global merger and acquisition activity has fallen, including in Silicon Valley. At least some of this decline can be attributed to the fear of heavy-handed and ideologically motivated intervention by the government. The pre-Biden, light-touch regulatory approach was one factor that fostered the growth of the “Magnificent Seven” companies, a handful-and-a-half of American enterprises with a market cap in excess of all the stocks in France, Germany, Italy, and the U.K. Repealing the 2023 Merger Guidelines would have been a good start to getting back to growth.    

Ferguson defended his decision, stating that “the wholesale rescission and reworking of guidelines is time consuming and expensive,” an unconvincing and inadequate excuse. He would have done better to have considered the cost to businesses of complying with the Biden-era Hart-Scott-Rodino rules (which apply to mergers and acquisitions above a certain size) that the current FTC let go into effect in February. These rules will increase the hours needed to prepare filings from 37 hours to 144 hours per filing, and yield approximately $350 million in additional labor costs — but those agency estimates are thought to be a lowball of actual compliance costs. This will be a windfall for lawyers, accountants, and bureaucrats, but will be a de facto tax increase on those businesses still prepared to proceed with a transaction subject to this review.

Perhaps the most astonishing continuance from the Biden FTC to the Trump FTC is the latter’s enthusiasm for pursuing novel, expansive, and big-government-friendly theories of antitrust to achieve policy goals in areas beyond commerce and consumer protection. Specifically, the agency recently called for public comments from those who have been “banned, shadow banned, demonetized, or otherwise censored” from tech platforms.  

The FTC’s request for information leaves the door open to consumer-protection issues, but its mention of these “censorship” instances resulting from “a lack of competition” or having “been the product of anti-competitive conduct” is particularly aligned with the preceding FTC’s neo-Brandesian approach. Instead of expanding antitrust into areas of labor concerns or equity, this FTC is pushing antitrust into speech and extending the government’s reach even further into private property.

Antitrust statutes were designed for matters of commerce, not speech. The actions the FTC may take going forward will run headlong into the First Amendment, an area where the courts have been, even on these digital issues, very clear.

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