Biden’s Antitrust Chiefs Seek Funds for Strong Enforcement

Anna Edgerton and Leah Nylen
·5 min read
2

(Bloomberg) -- The Biden administration’s top antitrust enforcers asked Congress for more money to continue their ambitious enforcement strategy, telling a Senate panel that they’re “outgunned” by the legal power wielded by giant corporations.

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During a Senate Judiciary Antitrust Subcommittee oversight hearing on Tuesday, Jonathan Kanter, the assistant attorney general for antitrust, said the Justice Department would litigate more mergers this year than any fiscal year on record and remains “committed to bringing difficult cases.”

Kanter’s testimony came the day after a federal judge rejected the department’s bid to block UnitedHealth Group Inc.’s $7.8 billion acquisition of Change Healthcare Inc., dealing a blow to the division’s aggressive agenda.

“While I am proud of the work we are doing, we lack the resources to fully address these challenges,” Kanter said, pointing out that the antitrust division has 350 fewer people today than it did in 1979.

Federal Trade Commission Chair Lina Khan said in its monopolization case against Meta Platforms Inc., the commission is “outgunned one to 10.”

Read More: UnitedHealth Wins Court Approval for Change Healthcare Deal

Khan said vigorous antitrust enforcement is critical to economic growth, adding that that when industries become more consolidated, “prices rise, wages fall, and our markets become more fragile and less resilient.”

She said that the agency has had “significant success with at least six mergers being abandoned due to an FTC lawsuit.”

The abandoned deals include Lockheed Martin Corp.’s proposed acquisition of Aerojet Rocketdyne Holdings Inc. and Nvidia Corp.’s deal to buy Softbank Group Corp.’s ARM. Three hospital groups also quit plans to merge as did Great Outdoors Group, the closely-held owner of Bass Pro Shops and Cabela’s, which sought to buy Sportsman’s Warehouse Holdings Inc.

Khan and Kanter, together with White House adviser Tim Wu, were hailed as the Holy Trinity of a new antitrust movement that advocates for a stronger government hand in addressing market concentration. Their calls to return trust-busting to its more aggressive roots breaking up the steel barons and oil tycoons of the last century have found enthusiastic support from progressives, as well as more populist Republicans who also decry the abuses of corporate power.

This attitude has found an especially rich target in technology giants -- both in legislation that seeks to restrict anticompetitive practices in the internet economy and in federal antitrust enforcement. Kanter’s Justice Department division is suing Alphabet Inc.’s Google and investigating Apple Inc., while Khan’s FTC is suing Meta and investigating Amazon.com Inc.

Such cases, however, are challenging after decades of what progressives view as lax enforcement and conservative rulings that built up case law favoring the view that consolidation can benefit consumers with lower prices. Khan and Kanter have indicated that they are prepared to bring aggressive cases -- even if they are hard to win -- to force companies to reconsider mergers and acquisitions that they’ll have to defend in court.

This year alone, the Justice Department has gone to trial seeking to block four deals, an unusually high number of cases for antitrust prosecutors to be pursuing at the same time. Decisions in three of the cases remain outstanding, and the antitrust division heads to court next week in a fifth suit against American Airlines Group Inc. and JetBlue Airways Corp. over a joint venture between the airlines.

The UnitedHealth merger challenge wasn’t the Justice Department’s only trial loss this year. In June, five chicken industry executives, including the former Pilgrim’s Pride Corp. chief executive officer, were found not guilty of price-fixing after an unprecedented two mistrials. Following the June trial loss, prosecutors dismissed charges against most other executives, Koch Foods Inc. and Claxton Poultry Farms Inc.

Kanter defended his division’s strategy, saying “too much is at stake” in the US economy.

“Part of the job that we have before us is to litigate cases and to take risks when it’s appropriate and necessary to defend the American people,” Kanter said. “We are not going to back down from bringing meritorious cases and seeing them to conclusions.”

The FTC and Justice Department are now rewriting federal guidelines on mergers with an eye toward persuading courts to block more deals.

Republican senators criticized Khan for what they described as the politicization of the FTC. Mike Lee of Utah, the top Republican on the subcommittee, needled her for being willing to “sacrifice actual enforcement for flashy headlines.”

“Getting good press isn’t enough,” Lee said. “What little we have seen from the FTC is legally questionable and ill considered.”

Republican FTC commissioners Noah Phillips and Christine Wilson submitted a statement disagreeing with parts of the testimony approved by the three Democratic commissioners. Phillips and Wilson said the majority misrepresented the agency’s work under Khan and complained about an “unfortunate departure from the agency’s tradition of working towards bipartisan consensus.”

Amy Klobuchar, the chair of the Senate’s antitrust subcommittee, praised Khan and Kanter. She also reinforced the need for new legislation, such as her American Innovation and Choice Online Act, to give the FTC and DOJ new rules and authority to prevent the largest US technology companies from abusing their market dominance.

“We have many opportunities to create some common sense rules of the road to make sure entrepreneurs and small businesses can compete on a level playing field, and also to give those that appear before us today more tools to do their job in a modern economy” Klobuchar, a Minnesota Democrat, said at the hearing.

However, momentum is slowing for Klobuchar’s bill, which has advanced further than any US legislative effort to address the market power of some of the world’s richest companies. The Senate only has a handful of weeks and several competing priorities before leaving Washington for November’s elections.

(Updates with Kanter quotes beginning in the 14th paragraph)

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