Last week’s roundup was postponed because I was kibbitzing at the spring meeting of the American Bar Association (ABA) Antitrust Section. For those outside the antitrust world, the spring meeting is the annual antitrust version of Woodstock. For those inside the antitrust world: Antitrust Woodstock is not really a thing. At the planetary-orbit level, the two events are similar in that they comprise times that are alternately engaging, interesting, fun, odd, and stultifying. There were more than 3,500 competition lawyers and economists in one place, if not one room. Imagine it, then pour yourself a good stiff drink.
With apologies—this says nothing flattering about me—my spring meeting highlight was a bit of a Freudian slip by Bill Baer, the former head of the U.S. Justice Department’s (DOJ) Antitrust Division. Voicing support for the Biden administration’s antitrust policies and personnel, Baer expressed admiration for the Tim Wu book “The Curse of Business.” A most excellent and fitting title, if not precisely the one on the book’s cover. Your (occasionally) humble antediluvian scribe learnt about antitrust law and economics so long ago that I still imagine that consumer welfare matters (many consumers are actually people, it turns out) and that antitrust is supposed to protect commerce, not curse it.
As a former enforcer with friends still inside the building, not a few sessions seemed to me very, very enforcement-friendly, as if someone had confused a perspective with the perspective. The enforcers were very much on-message. It’s full speed ahead on enforcement and regulation, some conspicuous setbacks in the courts notwithstanding.
Curiously, they seem to regard some of the losses as wins. In February, I briefly described U.S. District Court Judge Edward J. Davila’s order denying the Federal Trade Commission’s (FTC) request for a preliminary injunction to block Meta’s proposed acquisition of virtual-reality fitness-app maker Within. The denial was not so preliminary, as it rested on a finding that “the FTC has not demonstrated a likelihood of ultimate success on the merits.” Reading the writing on the wall, and in the order, the FTC then dropped the matter.
At the spring meeting, however, we heard detailed and satisfied reports about the court endorsing the FTC’s theory of the case as a potentially viable theory, but only clipped, sotto voce recognition of the fact that they lost. That is, a federal district court, setting no precedent, recognized that there were such things as viable potential competition cases. Right. And the FTC’s case was not one of them. Is there such a thing as a Pyrrhic loss?
More FTC Departures Made Public
Everybody rightly notices the appointees—Commissioner Christine S. Wilson’s last day coincided with the last day of the Spring Meeting – but let’s not forget about the staff. Michael Vita, deputy director of the Bureau of Economics, retired, and that’s a loss for the FTC. Some of Mike’s work is still posted here. Note that Mike helped to kick off the FTC’s famous hospital-merger retrospective study program before it was a program. He did rather a lot. Cheers to Mike.
I also learned about the departure of Holly Vedova, Chair Lina Khan’s first director of the Bureau of Competition, and author of the fabled “Vedova letters.” And Elizabeth Kraus, who did a great deal for the FTC’s international program, is also out the door, as was Randy Tritell earlier in the administration.
A Not Completely Unreasonable Click-to-Cancel Rule
Some version of this could be right, if not this one.
- The proposed rule is overly broad; but
- There is at least a real problem in the area, and one that might be properly amenable to FTC consumer-protection rulemaking.
That is, firms sometimes make it so hard to cancel various types of contracts—such as automatic renewals—that there’s one or another species of fraud at work. The initial offer was deceptive, or they’re imposing an undue (and unforeseen) tax on consumers, or they’re foisting a supposed contract-in-perpetuity on unsuspecting consumers, and collecting funds without real authorization. Or all of the above. All actionable, and perhaps there’s a viable and well-tailored rule in there somewhere.
That doesn’t mean that the FTC has proposed the right or correctly focused regulation, but there is, at least, a there there. I recommend Commissioner Wilson’s final dissent, alas, for more.
FTC Scores a Win, Against Itself
Spoiler Alert: Having lost its case against the Illumina-Grail merger before the commission’s own administrative law judge (ALJ), the FTC appealed to itself, found itself convincing, and ordered Illumina to divest Grail. In doing so, the commission mirrored last September’s decision from the European Commission.
I wrote about the case here. I won’t pretend to have evaluated all the facts and circumstances of what’s been, after all, a rule-of-reason case. Still, I’ll note again that this was a vertical acquisition with some obvious efficiencies and a not-so-obvious foreclosure argument. The commission’s press release says that bringing the early-cancer-detection test to market is extremely important, and potentially life-saving. We’re also told that:
Illumina has an enormous financial incentive to ensure that Grail wins the innovation race in the U.S. MCED market. Illumina stands to earn substantially more profit on the sale of GRAIL tests than it does by supporting rival test developers.
So . . . that seems like a pretty good argument on behalf of the merger. Rather than recapitulate the whole thing, I’ll point readers to Alden Abbott’s ToTM discussion earlier this week, another by Thom Lambert. an amicus brief by my International Center for Law & Economics colleagues Geoff Manne and Gus Hurwitz (plus a number of other law & economics scholars), and a thorough critique of the FTC’s case by Bruce Kobayashi (former director of the FTC’s Bureau of Economics) and Tim Muris (former FTC chairman).
But Elsewhere, the Commission Won’t Just Take the Win
One more quick note—this one on the now-abandoned Altria-Juul deal—but first a confession of priors: I hate tobacco and I miss my dad, a long-time heavy smoker who did, indeed, fall victim to lung cancer. Too much information, perhaps.
With that said (or typed), this case wasn’t about cigarettes. Tobacco products are lawful, there’s no shortage of information about tobacco risks, and the FTC is not a health and safety regulator.
There’s a lot about the case that’s complicated, but one issue that remains curious is the FTC’s persistence, given that, notwithstanding the loss before its own ALJ, the commission seems to have gotten more or less everything it sought in its notice of contemplated relief(part of the initial complaint):
- The transaction has been abandoned;
- Altria has divested itself of its stake in Juul;
- The parties have agreed to terminate the various challenged agreements associated with the now-abandoned transaction (including a challenged agreement not to compete, in anticipation of the now-abandoned acquisition);
- The parties have proposed an enforceable (by the FTC) agreement not to enter into any new transaction in the relevant market without prior approval;
- The parties have proposed to provide prior notice of any other transactions in the relevant market; and
- The parties have proposed to provide for outside monitoring, at their own expense, for a period of time.
So why aren’t they taking the win? Khan and Assistant Attorney General Jonathan Kanter seem fond of saying that they’re not scared of losing, but they shouldn’t be scared of winning either, should they?
The FTC’s raft of proposed rulemakings seems to suppose that they can enforce rules and orders, with substantial fines at their disposal, and in this matter, they would have been aided in monitoring by interested third parties in the industry. So, as the young’uns were asking last evening: why is this night different from all other nights?