Deep Dive Episode 255 – A Roundtable on Recent Developments at the FTC

Recent months have seen a flurry of notable developments at the Federal Trade Commission, including oral arguments in the high-profile Axon v. FTC and SEC v. Cochran Supreme Court cases, administrative complaints challenging deals between Altria and JUUL and Illumina and GRAIL, and FTC Commissioner Christine Wilson’s announced resignation.

This episode is a live recording of a panel of antitrust law experts examining these developments and debating what might come next at the FTC.


Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.



Nate Kaczmarek:  Good afternoon. Welcome. I think that today’s audience here proves that, post-pandemic, some people actually do work on Mondays in Washington D.C. Glad all of you could join us in person. And welcome to all of the people tuning in remotely by the livestream. My name is Nate Kaczmarek. I am Vice-President and Director of the Practice groups and the Article I Initiative for The Federalist Society.  


Today’s event is “A Roundtable on Recent Developments at the FTC.” It is co-sponsored by the Corporations, Securities and Antitrust Practice Group, as well as the Regulatory Transparency Project. To learn more about the practice groups, please visit our website, And for more info about RTP, the website is We are pleased to have with us an all-star panel. And we are looking forward to a very insightful discussion. 


Our moderator today is Bilal Sayyed, who is a senior adjunct fellow for TechFreedom. He previously served as director of the Office of Policy Planning at the FTC. Before his service, Bilal was an attorney in private practice, representing clients in merger and non-merger matters before the FTC in the Department of Justice, and in consumer protection matters before the FTC. He has taught antitrust law at the Antonin Scalia Law School. And, before that, he was an attorney-advisor for FTC chairman Tim Muris. He brings a great deal of expertise to the conversation. And we’re happy to have his help today. With that, please join me in welcoming our panel.


Bilal Sayyed:  All right.  Thank you, Nate. I’m going to be brief. I don’t even have to introduce our topic, as Nate has done that. But I’ll introduce our panelists, in no particular order — well, alphabetical order. Debbie Feinstein, here, is a partner in Arnold & Porter, and is head of their global antitrust group. She’s previously served at the FTC as well, most recently and most importantly, as director of the Bureau of Competition, basically in the second term of the Obama administration. I, one other time, introduced Debbie, and introduced her as the hardest-working person in antitrust. And I believe that is still true. 


We also have Bill Kovacic. Bill is a global competition professor of law and policy at GW Law School. Bill was, at various times, at the Commission. He was an attorney-advisor when he was a younger lawyer. He was general counsel during the George W. Bush administration. He was a commissioner and also acting chair of the Commission. He also is with the UKCMA, or Competition in Markets Authority, as a non-executive director, and other roles.


Richard, or Dick Pierce is also a professor at GW, mostly, largely, focused on administrative law. He has one of the largest treatises on administrative law, and one that I consulted often when I was at the FTC, to keep us out of trouble. And, finally, but not last or least — whatever the word is — Josh Wright, who is a professor at the Antonin Scalia Law School at George Mason, the executive director of the Global Antitrust Institute, and also formerly a commissioner at the FTC. 


Much longer bios are available, but let’s try to get to the program. We’re going to leave time for questions at the end. And I will raise the prospect of — but I won’t promise to do it — if people have questions during the back-and-forth between the panelists, I may try to work those in. Don’t be insulted if I ignore you. But if you actually have a question that you think is sort of topical during the discussion, sort of raise your hand and maybe it’ll work. We’ll see. I hate leaving it to the end because sometimes you’re going back to things that were talked about earlier. So I’ll try to make it a little interactive.


We’re not going to have opening statements. We’re going to jump right into questions. I think the one point I want to make is this is called “A Roundtable on Recent Developments.” A number of the items — a case is mentioned on the blurb on the program — really relate back to the Trump administration. And maybe that will be discussed during our talk. But let’s start. So I want to focus, initially, or start discussion on merger enforcement at the Biden FTC.  


There’s been a lot of criticism by the Biden folks and the leadership of the antitrust agencies, the FTC antitrust division, about the record of antitrust merger enforcement over the last 30, 40 years. Basically, according to these critics, both the FTC and the antitrust division failed to challenge mergers sufficiently over the last 30, 40 years. So, let me ask Debbie, to begin, what’s your evaluation of the FTC’s merger enforcement record these past few years? What’s your, and what’s your colleagues’ experience? Should we expect anything, going forward, that we haven’t seen in the last couple of years? Or are they on sort of autopilot?


Debbie Feinstein:  Thanks. Well, I appreciate being invited to be here. I feel like I’m on a little bit of a speaking tour defending the democratic record on mergers, which strikes me as an odd position to be in. But I think that’s where we are these days. I would say a couple of things. First, I take issue with the notion that we weren’t trying, or that it was business as usual and there was no moving of the envelope. I look back at what we accomplished during the time I was there, and we won every hospital merger we did. Maybe not at the district court, but we did get there at the appellate level. And so, we got favorable decisions on the Sixth, Seventh, Third, and Ninth Circuits. 


And that was really a continuation of policies that had begun many years ago. There was a long history of hospital merger enforcement. In fact, when I was there the first time, back in the late ’80s, there was a string of hospital merger losses. And Chairman Muris came in and said, “We need to figure out why this is happening,” spent a lot of time on retrospectives, on economic work, and basically kind of helped reframe the telling of the story. I felt like we took the baton on that and really brought things to a place where I think we deterred a lot of hospital mergers because there was such a winning streak.


Another thing I’d like to point to, that I think wasn’t just business as usual, was really making use of the 2010 guidelines’ notion of targeted customers. And we used that, I think, to good effect, in both the Sysco and Staples/Office Depot cases. In Sysco, the targeted customers were national customers. And so, even though there was a lot of competition for other types of customers, for national customers there was something different. And we got the court on board with that. In Staples/Office Depot, it was a harder lift, because the customers that we were focusing on there — the Fortune 100, large B-to-B customers — were a very small portion. And anybody who sat through that trial remembers having to stare at the pyramid day after day after day of “Here’s the affected customers, and here’s everybody else who’s unaffected.” So I point to those as a couple of the things that were done. 


And then, finally, potential competition. I keep hearing how potential competition was dormant for years. In fact, I was at a conference recently, and a speaker said, “Oh, they haven’t brought potential competition cases in forever.” And I think, “Well, did anybody not remember the Steris trial?” Now, we lost that on the facts. But it was a case that was brought. And I might add that, unlike Sysco — which was a three-two vote, two commissioners did not vote for the case — all commissioners voted for the Steris case. That was not a particularly controversial one within the halls of the FTC. 


And the other time that we brought what you could consider a nascent competition, potential competition case was the Mallinckrodt-Questcor case, where Questcor acquired Synacthen, a product that wasn’t being developed by the company who sold it but were there were two other bidders who would have taken it and potentially developed that. And we said in a blog post, “We’re not even sure that it was likely. We brought it under Section II because we weren’t sure that we could show a likelihood.” Not only did we convince the company to divest the assets, we got $100 million in disgorgement there. 


So, the notion that we weren’t thinking about these issues, and were soft — now, does that mean we got every decision right? Look, it’s hard. I can remember one case in particular where we had a very well-known economist who was going to be our testifying economist. And I said, “Okay, what’s the case for bringing this?” And he said, “Well, I can make this really compelling argument, blah, blah, blah, blah, blah.” And then he said, “But I can make the counterargument just as compellingly. And I can’t tell you which one is right.” And we paused on that. And we did not bring that case. Perfect one for retrospective. I have mentioned it to people now at the agency. That’s one where I think there is a retrospective.


There’s another one where there was a divestiture, where I think there was a lot of debate about whether or not we should have taken it, and where one of the commissioners dissented. I urge, any time there is a case that we didn’t bring, that a commissioner dissented on, go back and look at them and see. I invite that. I’m not saying that we got every decision right. But I think it’s just too broad-painting a brush to say that nothing was done, or not enough was done, without pointing to some specifics. Because the only way you can learn from the mistakes is to figure out what they were and to, basically, build upon them. 


So, retrospectives, looking back, I applaud all that. But I think you have to do it with the knowledge of what was moved forward and what did go well, and then really figure out, okay, what is it that went wrong? Are there specific cases? Or, rather, were there other factors at play, in terms of why markets got more concentrated?


Bilal Sayyed:  So, let me ask Josh a quick question, and then open it up for everybody. So, we’ve heard this criticism from the Biden folks. What have they done? And, of what they’ve done, how much of it is sensible and how much is not? And where are they going?


Hon. Joshua D. Wright:  That’s a quick question. All right, I gather some of the sensible and not we’ll sort of sprinkle throughout the day, so I won’t try to get to all of that now. What is interesting, in part, in the current numbers — and the punchline is going to be, I think, the performance record is sort of underwhelming, whether you’re looking at it qualitatively or quantitatively. But I think the reason that that’s drawn so much attention is because the administration came in and they looked at all the administrations prior, and said, “All of you were horrible at your jobs.” Some of them said that out loud, on the record. 


Some commissioners at the FTC, for example, sort of looked at the prior administrations and said, “None of you are bringing the right cases or enough cases. And when you bring them, you’re losing them. You’re all bad at your jobs. We’re going to do better.” And that was sort of the framing coming in. And I think if you look at the numbers, there are a couple of interesting things. Maybe the most interesting thing is if I asked you to hold your breath until somebody named a big FTC-litigated victory, it would be a dangerous move for all of us. 


And so, not winning in court, but everybody in the room in and around the practice of antitrust law knows there’s a lot of ways to win other than litigated cases: you get consents, people abandon transactions. But if you look at the numbers collectively, there’s sort of no way to slice it other than less litigated victories, fewer litigated victories. There are some consents, no more or less by measurable degree than any of the past three administrations, some abandoned transactions. There was a big spike in HSR filings two years ago, so there was a big jump in activity.  


But I think it’s been underwhelming, both in terms of outcomes, settlements, abandoned transactions, litigated victories, if you sum those up as positive outcomes for the agency. And sometimes they are and sometimes they’re not. You settle a deal you shouldn’t have, or something like that. Or you bring a bad case, but you win it. But I don’t think there’s any way to look at the overall performance record and view it as one where you could sensibly conclude that the Biden FTC has done more. 


I think a second thing that we ought to put in that discussion is that the process has changed, so I think the number of second requests is way up. So they’ll drag people into subpoenas and hold them there. They issued a statement that said — or they now do these routine closing letters that say, “We’re closing the investigation but that doesn’t mean we’re actually closing the investigation. We might sue you tomorrow. We’re not going to tell you.” So that’s sort of become a routine thing. They have issued policy statements suggesting that they will — when they reach settlements with merging parties — seek prior approval conditions with the settling parties, meaning, if I would like this merger to settle and be done, I will sign something saying, “Next time, I forgo my right to judicial review. My merger is only okay if three sitting commissioners say so. I lose the opportunity to go seek judicial review, should the agency want to challenge a merger I don’t believe violates the Clayton Act.” 


So, all of these things together — suspension of early termination, right? So, mergers with no issue are being held longer. There’s less certainty in the merger review process, but not more litigation. Parties who bring mergers in front of the agency in the review process, if you go back in any of the prior three administrations, you deal with staff on a transaction, and you identify some problems in some of the deals, and you talk with staff, and you’re talking to them for a reason. It’s not because they vote on the case. You come up with a settlement that you think resolves all the competitive issues, and they’re going to send a recommendation up to the commissioners. And if the thing is sensible, the commissioners are going to agree. And you’re going to be done.


That’s not really what happens inside the building more often than not these days. Staff works on a case. They send a recommendation up. And who knows what happens? The Commission follows. The Commission doesn’t follow. And so, you’re seeing parties, I think, respond sort of rationally to that and say, “Goodness, staff, you would like 30 more days to review this because merger analysis is hard? Sure, we’ll give you 30 days. And we’ll give you some documents. And we’ll cooperate in the investigation because we think if we can resolve this with you, it means we’re done, and we can have some sort of business certainty around the deal.” And parties aren’t doing that. 


Parties are saying, “Well, goodness, if I do business with you, staff, and you send a recommendation up to the Commission, that means nothing. So, no. You have 30 days or sue me.” And I think they’re getting a change in the environment around merger review because the relationship between staff and the Commission has sort of changed that dynamic. Whether that’s a sort of equilibrium, I don’t know. But I think it certainly is casting uncertainty over the merger review process. And I think it has something also to do with the way the numbers look at the end, whether you’re getting settlements or litigation or abandonment. 


Prof. Richard J. Pierce:  I wanted to add something to that that is really in the same vein. I agree completely with what Josh said. But I would commend to everyone’s attention a study that was just completed by Dan Sokol at USC and three of his colleagues. They interviewed a large number of lawyers and economists who engage in regular counseling of firms that are contemplating the possibility of transactions that have to go through the Hart-Scott-Rodino process. And these lawyers and economists had been involved in a lot of the deals that had been before the FTC in the last couple of years. 


And the findings of that study are fascinating. There are a lot of them. But I can just give you a summary of, first, it’s quite clear to everyone that they are not acting in accordance with any of the prior published guidelines. The published guidelines have just about nothing to do with whatever they are doing. But no one has any idea what they are doing, that there’s a tremendous range of uncertainty out there about what they’re doing. Now, of course, as Bill Kovacic was pointing out to me on the way in, every one of those law firms and consulting firms will tell their class, “We know the answers, and pay us enough money and we’ll do — ” The truth is, when they respond anonymously to this survey instrument, what they say is, “We’re clueless. We have no idea what they’re doing.” This will be published in the next issue of Business Lawyer.


Bilal Sayyed:  Well, it does sound like uncertainty has become sort of the crux of their merger policy — uncertainty and delay. And I think the potential disciplining factor on the agency is litigation. And that allows me to turn to Meta-Within. One of the high-profile cases the agency brought was a challenge to Facebook’s intended acquisition, now consummated acquisition, or Meta’s acquisition of Within. Now, it appeared to me, in looking at that complaint and the activity around it, that the commission believed its own — or the majority commissioners believed their own talking points, that if somebody brought a case, they could strengthen, improve, or clarify the case law, with respect to potential competition. 


And, in doing so, they disregarded what appeared to be very, very weak facts of future or potential entry by Meta into the alleged relevant market. Now, Bill, you’re one of the few people to be both general counsel and chairman of the FTC. And, as general counsel, you and your team would evaluate the strength of litigation sort of separately from the bureau’s analysis and recommendation of how to proceed. So I have two questions, really. 


While the commission leadership is claiming that the Meta-Within loss was still valuable, because they alleged they clarified the case law, and maybe standards for bringing a future case, future potential competition case. I wonder if that’s true. And I also wonder how common it is for the Commission, as a general matter, to disregard or act opposite to a recommendation from staff. And are we seeing a lot of that? And is that a positive, a negative, or what should we make of it?


Hon. William Kovacic:  I think, in a lot of ways — but I want to thank you for assembling the panel, and the honor of participating in it with these folks — I think, for starters, it’s way too early to tell. There aren’t many data points on litigation. For this chair and this leadership team, there’s one litigation event and a merger in the federal court so far that proceeded to a conclusion. That’s Meta-Within. That’s not a very big data set. There are other matters that will fill that out a bit. But when there’s a discussion that I see sometimes in the newspapers about losing streaks, I guess one’s a streak. But it’s a somewhat lonely streak. Don’t you want more observations before you draw conclusions about what’s taking place?


There are instances in which the agency has proceeded in the face of staff objections. I suppose one of the most important is the baby food case, that’s Heinz, where the staff recommended for the Commission to stand down. It believed the party’s sufficiency story. The chair basically said, “Go back to work,” and essentially took the responsibility for formulating the complaint and the theory of liability away from the staff, and gave it to the senior leadership it appointed to the Bureau of Competition. And they prepared it, along with his advisors. A 3-2 vote to proceed, a loss in the district court, but the court of appeals decision turns out to be a very important limitation on the idea that concentration  data just doesn’t matter as much as it used to. Where the D.C. Circuit said when you get up into the very high ether of concentration, namely 3-2, you don’t have much margin for error. You can admit deficiency arguments, but they’re going to have to be overpowering. I wouldn’t say that it’s a routine deviation from the standard practice of abiding by staff recommendations. But that’s a powerful example of where merger jurisprudence would be much different if the Commission had simply accepted what staff wanted to do.


So how important is Meta-Within? I think the Commission is right in doing its best to portray good things coming out of it. I certainly did it. We lost cases, but there was always an effort, in the first paragraph of the press release, to talk about glorious results from failure. Not that we had many, of course. But that, I think, is a natural element of the administrative agency behavior, back to the beginning of time, or maybe a little bit before that.


The idea that you can achieve some clarification of doctrine — I would say that when you array all of the potential competition decisions from earlier cases, the district court kept a formula and approach that’s more plaintiff-friendly than it had to be. It could have been more skeptical. I’d say the element of a mirage in potential competition is that courts repeatedly have said, “The theory is conceptually strong without it. You need the right facts to back it up.” And the concern that I have, in reading earlier decisions, is that that set of facts that works is like a mirage in the desert. And you see what you think is an oasis. And you march toward it, only to find out that when you’ve gotten your best facts and put them on the table, it’s just another sand dune. 


That is that antitrust has a number of these mirages where courts have said, in concept, there’s a plausible, supportable theory of liability, if you have the right facts. But, in so many instances, the right facts never seem to come about. And I think that’s a problem. How do you develop that right set of facts? How, internally, do you specify what facts are going to be persuasive to the courts? And the agency didn’t cross that last element of the case. The judge, on several occasions, said the FTC’s evidence is “speculative.” I suppose that’s a label I could apply to lots of potential competition fact scenarios.


So, if you’re the agency, what do you have to do to persuade the district judge? Or if you want to use your administrative process to say that our interpretation of the facts should give you confidence to find liability in this instance? That is, “We’re bringing you the facts on the table. But we’re also bringing you the reputation, the brand that comes with our agency. And when we do this kind of analysis, we are trustworthy on this point. Even if you, Your Honor, might be uncertain about what the precisely correct outcome ought to be.”


So, in many ways, a real question for us is what’s the larger record going to look like? How many litigation events are you going to have? And, out of those litigation events, are you going to focus on a subset of cases where you really want to make a point? Debbie mentioned before, hospital mergers. When Tim Muris came to the Commission and arrived in June of 2001, that was a conscious objective. That is, “We are going to move the needle on this,” recognizing that it would take a long time to do it. There was research developed. 


There were collaborations with Health and Human Services and its Medicaid insurance team — that’s called “whole of government competition policy,” by the way — to assemble data and to bring it together, then the formulation of the Evanston case, which, itself had real risks, then, finding liability within the agency — but not a happy remedial outcome, unfortunately — then a PI action to stop a transaction involving Innova and a hospital in Prince William that was abandoned after the PI was filed, then, the further progression of cases that Debbie referred to before, the real risk, taking the baton and running for a really good leg after that. That took a long time to develop. 


So, in formulating your program, are you building in mind, consciously, this effort of incrementally establishing foundations that are going to establish a basis for moving the perimeter of enforcement in a durable way, over time, even in the face of regime changes? Or are you going to try to do something that you can develop very quickly? I don’t think the quick approaches are feasible. They don’t have enough time to do that. How many elections are you going to win, after all? How many elections can you win? How far can you carry things? And recall that they got off to a slow start. I think those who have come into an administration with a new chair realize that the best practice is you all arrive at the same time. You get your team in place right away. 


I believe the current chair did not learn until — I don’t know what the amount of time was, but relatively soon before the elevation to be chair, that that was going to happen, did not bring her own people, did not bring her own team, inherited, basically, everyone she was going to work with for the first six months from people who were already there. I can’t imagine what a disadvantage it is. I think that costs you four, five, six months in moving your program ahead. So, it’s very early, there’s a single observation. But if you’re going to ultimately change the perimeter of doctrine and policy, it only happens in Fed Second, Fed Third, Fed Second — is it the third now?


Hon. Joshua D. Wright:  Fourth.


Bilal Sayyed:  Fourth.


Hon. William Kovacic:  Four in the Supreme Court reports. That’s where you have to ultimately go and win cases that, step-by-step, build out your program. So, there’s one district court defeat in one court in our many courts. Unremarkable by itself, but you’ve got to have others where you succeed. And you need a conscious strategy saying, “These are the ones that really matter. This is the area of doctrine, the sector on which we’re going to make a difference,” and mass your forces there.


Debbie Feinstein:  So, I’ll just disagree slightly on a couple of things. So, look, Meta-Within — I think they got some things that were there already, but having another court say it is helpful. They got “likelihood” instead of “clear proof” as the standard. But that’s the same standard that was used in Steris and a number of other cases. They got a soundbite that maybe objective evidence of entry would be sufficient, that you didn’t always need subjective evidence dicta because it wasn’t important to the outcome of the case. 


So, they certainly got some language that is helpful. Was it enough? No. And did that case really go to the core of what the FTC’s problem is in these potential competition cases, which is that when businesspeople and customers sometimes get up on the stand and say, “This isn’t how we see things,” how does a judge overcome that? Is the question really that we need a standard different than “likelihood” for potential competition cases? Is there an appreciable risk where it’s clearly not likely? 


I don’t know whether there’s a strategy inside the agency for figuring out, “Okay, we’re losing these potential competition cases. How do we turn that around?” I will say, though, that there are cases where you can move things along that are in the consent area. I think everyone understands that the FTC is going to look at potential competition in these big pharma cases and is going to require divestitures if there’s a clear problem between an existing product and a pipeline product, or two pipeline products. And there are reasons those big cases don’t get litigated. But people walk in knowing. 


So, I think that they moved the evolution of how people think about that in certain industries, simply by repeatedly taking consents and making clear that this was a concern, and that they would threaten to litigate if they had to, and never had to. So, I think you can incrementally move how people think about things, just as — and I think we’ll talk about that — if you’re out there saying, “You know what? The standard used to be 3-2 or 4-3.” There was an economist at the FTC who used to do these wonderful analyses where he’d go through every merger decision, and he would basically see the number of competitors and the presence of hot documents and the presence of hostile customers and all that. 


And you could see, over time, it was really helpful. Two-to-ones almost invariably get challenged. I say, “almost invariably,” because I did once work on an arguable merger to monopoly that we convinced the Commission should not be challenged, for a variety of reasons. 3-2’s almost always get challenged. And you see they’re the exceptions, with staff recommending against Heinz, originally. Most of the 4-3’s generally get challenged, the majority of those, and then, where you saw the line move was 5-4.


If the Commission starts saying, “Uh-uh. That’s not the line anymore. The line is 7-6, that’s where you’re going to face things,” people are going to move their behavior as a result of this. So, I don’t want to suggest that there hasn’t been deterrence from some of the things that they’ve said, that the uncertainty hasn’t deterred, and that there might have been deals that they had to grapple with, challenge, and the like. So, they may be winning through just the statements and deterring people. The line is always going to move, based on what they say. But if you’re going to threaten to litigate and to say affirmatively, “We want to bring more cases, because we think settlements are a bad idea,” then you have to start winning in court.


Hon. William Kovacic:  I think the common law of consents can be very important. The FTC built a privacy program, chiefly — almost exclusively, for the period of over a decade — on consents, longer than that. At some point, if you want it to stick, if you want the changes to be durable, you have to win cases. Those have to reinforce and set in place the boundaries that you’re trying to achieve. I can’t tell you how many you have to win, what those reinforcing events have to look like. Sometimes, maybe it’s one case that really places a stamp on a theory, like Staples. Maybe that’s enough. But you have to go out and win. And, so far, they haven’t been litigating potential competition cases. They’ve litigated a potential competition case to a conclusion. You just need more observations to know where it’s going to go.


Bilal Sayyed:  Let me ask Josh if he’s got any comments on that. I also have a comment, but I’ll — 


Hon. Joshua D. Wright:  Only one, in the context of — well, two, now that I’ve thought about it. So, one, in terms of the import of disagreeing with staff. So, I think it was highly — how common is it, and what does it mean? Are you going to go and win litigated cases where you’re disagreeing with staff? And how common is it? We keep on using the word “staff” to mean lawyers. And I guess, as the economist on the stage, — so there is a Bureau of Economics —


Hon. William Kovacic:  I meant both. I meant both.


Hon. Joshua D. Wright:   — and they write memos. And they get disagreed with all the time –more often. Not all the time, much more often. And I think that’s meaningful too. And I think it’s meaningful, both in regular merger cases and in potential competition cases, because you want to have a bunch of your ducks in a row if you’re going to get in front of an Article III judge. You want documents. You want economic proof. You’re going to want customer complaints. The economic proof is going to matter. 


And you’ve got an agency who — and I don’t know whether this was a good case or not. So, B.C. staff apparently thought not. But you also have an agency that didn’t bother to fill leadership positions in the Bureau of Economics for 18 months, just didn’t care, could have elevated some. That’s easy to do. You had economists leaving the building left and right to take other jobs. Economists who go to the FTC love to work at the FTC. I think Bill fairly points out one loss is one loss. And what you really need to do if you’re going to be bringing close cases in front of an Article III judge, it’s really nice if you’ve built up some institutional credibility and capability so they say, “You know, these guys know what they’re doing. They’re making a prediction about the future. And the defense is making a different prediction about the future. And, you know what? I believe the guys at the FTC side of the table on this close call.” 


And I think it is hard to do that when some of these other things are happening. It was a “Throw out the 2010 merger guidelines.” You don’t have a replacement document. Now, I mean, you will at some point, but you don’t now. When you’ve got statements about what you intend to do in merger control, you have officials from the Federal Trade Commission that have said out loud, “All mergers are bad.” I don’t even know what that means. 


But that’s not a serious thing to say, for a law enforcement person enforcing the Clayton Act. And I certainly think, you know, my view of it is less important than some Article III judge trying to grapple with the Clayton Act for the first time. I think you need to sort of build some sort of reputational capital to win those close cases. And I have very significant concerns that, instead of building it, we are mostly incinerating it. 


Hon. William Kovacic:  I think, as a practical matter, too, Josh, there’s a real benefit if companies underestimate you, if you come in being underestimated and they take a run at you with deals that are really edgy, and you win a couple early. That was a real benefit for us. The business press in 2000, 2001, basically said, “Olly olly in free. Here comes the team. The Clinton Team’s out. The Bush team’s in. And you can do any damn thing you want.” And a number of companies believed it. 


So, they walked in with 3-2s, and would look at you and say, “Well, it’s a new group. I read, in a column in the New York Times, you were going to approve all of these.” We said, “Well, maybe not.” So, we had a handful of, I’d say, small cases. Goodness, one of them involved the pickle industry. Not exactly high-tech. But we had a couple of cases early on that — none of these cases are easy. There’s no litigated victory in a merger case that’s easy. 


That’s a fiction. They’re all hard. But we had the benefit of starting out with deals that were easier to challenge successfully than harder, instead of starting out with a litigated case like Meta-Within, which is a hard case. And, if you win a couple early, you do have some reputation capital in the bank. And for building morale, nothing quite helps like winning cases. 


Bilal Sayyed:  I don’t want to beat this too much, but Bill, I was struck by your recollection of the baby foods case. But, of course, the Commission, having lost at the district court, appealed it. 


Hon. William Kovacic:  And got an emergency stay, which was crucial.


Bilal Sayyed:  And, in some of the cases, the potential competition cases from the 80’s — notwithstanding what the district court did, in rejecting a P.I. — the Commission pursued those cases in administrative litigation, and, arguably, won one or two of them. Here, the agency folded quickly. And that suggests to me they were not thinking through what would happen when they decided to disregard staff’s advice or recommendation. And I’m with Debbie. I don’t think they got a whole lot out of this case that wasn’t there in Steris


I think, in fact, it’s a significant loss that you have another district court saying, not so much that the standard is reasonable probability or possibility, but that the reasonable probability is greater than 50 percent. That’s significant. And I think they hurt themselves here. But I wonder what everyone or anyone thinks about their failure to pursue it. Was that sensible or not, given what they’re trying to achieve?


Hon. William Kovacic:  I guess one factor that would come to mind for me is what I already have in the inventory, in the Part 3 process. And there is a lot there. As things stand now, there’s Microsoft/Activision, in principle, is cued up as a Part 3 matter. There are several other Part 3 matters that are still ongoing there that are pretty demanding, significant. I think that one issue you face is one of capacity. There’s a single FTC ALJ. When I was a young person at the FTC in the late ’70s for the first time, I believe there were 10 ALJs. There’s one now. 


That’s a reflection on how the administrative adjudication docket has changed. And so much more additional work has gone into federal district court, which is a headache for Humphrey’s Executor later on when it’s revisited. But, that said, it was a dramatic change. And, in thinking if you’re going to go ahead, I guess the reason to continue it in Part 3 is that, can we develop facts? Can we write an opinion? Can we say something that’s going to be useful, given the amount of time we’re going to have to devote to it, compared to other things we’re doing? 


I can imagine someone concluding it’s not going to be worth it to do it. But, at the same time, everything, in concept, if I put aside the rest of the docket, this could be an area where I’d say, “Yes, I’m going to do it, even, perhaps, if those elusive facts don’t come fully into vision. I want to write an opinion that perhaps dismisses a complaint that moves the conceptual framework forward.”


Debbie Feinstein:  They sort of did that in PolyPore, though, right? PolyPore is the Commission talking about potential competition and basically getting out, I think, most of the things that it wanted to.


Hon. William Kovacic:  Yes.


Debbie Feinstein:  So, you have to ask yourself, “Okay, I bring this case. I get to write an opinion on potential competition. They have other cases they’re going to write on potential competition, Altria/JLI being one of them that was brought during the Simons administration. But, of course, it was before this commission now. So, the Commission has a case where it can talk about what it thinks the standards for potential competition is. And, because that wasn’t litigated in federal court, they have to keep going with it, right?  It makes sense for them to, in their minds, to keep going forward. There have been developments, factually, in that case, that make it kind of all moot. 


So then the question you have to ask is, “Look, if I do the Meta-Within case, am I ultimately going to get a favorable circuit court opinion? Either am I going to get better law than I’m going to get with opinions that I’ve written already, or am I going to turn things around and get a circuit court to basically disagree with the district court on the facts, and agree with whatever I write on the facts? 


And you can make your conclusion and decide, at the end of the day, my odds are not super high. And am I really going to advance the ball on anything by writing another Commission decision on potential competition? And I am not in the room. That would be, I think, the calculus that we would have gone through if we were in this situation.


Bilal Sayyed:  Okay. Any reaction? So, let me turn, then, towards, more directly, merger policy. The agencies, both agencies, announced 14 months ago they were going to probably or possibly rewrite both the horizontal and vertical merger guidelines. First, I’d ask, are we hearing anything about what they’re going to look like? What kind of possibilities does this open up, from a positive sense? 


What might we be concerned about? And then I’ll specifically ask Dick to comment on, is there anything that the business community, interested persons can do, if the guidelines divert from either case law or long-standing policy? So, Josh, let’s start with you. Do you have any sense of what these guidelines may look like?


Hon. Joshua D. Wright:  Not really. So, if you read, the sense you can get is from the RFI calling for comment. They sort of trigger specific things that they are interested in. And you can, of course, look at statements made by commissioners or AG Cantor about the state of the law and enforcement policy in mergers, generally, to see what their priorities are. But I think there’s got to be a lot of tea leaf reading to figure out what they sort of want to do and don’t want to do. 


I suspect that the document that we get, sort of from my own tea leaf reading, will be more structural in nature, more — count the number of firms with your fingers and invoke presumptions. Whether it does so in a way consistent with the law or not, I don’t know. I think, on the FTC end, you have a majority of commissioners who have said that there is no efficiencies defense under Section 7 of the Clayton Act. And so, I suspect Section 10 of the current guidelines is dead. 


No, there are other things that will be there. Do they target potential competition, or other stuff, or particular industries? I don’t know. But I think I would bet a beer or a whiskey or a coffee with anybody in the room that they’re more structural and the efficiency stuff is gone, or significantly less than it is now. I think that’s what the document will look like. I think the $64,000 question is, “Will any Article III judges care what the document looks like, if it deviates — and that’s a big if — if it deviates too far from the framework set out, both with the 2010 guidelines and what’s sort of largely been adopted by courts. 


The guidelines have been successful as persuasive authority, because they’ve been pretty darn good. They’ve evolved over time with economic input, and they’ve been adopted because they are good. I think they have been persuasive because they have been a pretty high-quality set of guidelines that’s evolved over time. And I think rewriting new guidelines doesn’t mean you win cases. It could make things better. Sure, it could make things better. It could also make things worse. I think it depends on what’s in them.


Bilal Sayyed:  Bill, Debbie?  Any reaction? 


Hon. William Kovacic:  I couldn’t contribute on this from an administrative law standpoint because this is an area in which the applicable administrative law doctrines have changed dramatically since 2010, certainly, when the FTC and DOJ put out the joint horizontal merger guidelines. So, from an administrative law standpoint, there is no such thing as a guideline. It has no legal significance. So, the guidelines are some combination of interpretative rules and policy statements. And the law, in 2010, governing judicial review of interpretative rules and policy statements was very simple. 


Since they’re not legally binding, they are not reviewable in any pre-application context. That law has changed dramatically since then. The Supreme Court issued two unanimous opinions, in cases called Sackett and Hawkes in 2012, and then, again, in 2016. And what the Supreme Court did in both of those cases is send a very clear message to the lower courts that they were very concerned about a situation that had evolved in which many people who thought that they were the victims of something unlawful that the federal government was doing had to go through, to quote the Supreme Court, “An arduous, expensive and long process, in order to get to court.” 


And so the Court sent a message to all the lower courts, “We want you to change your approach here. We want you to address any issue that is susceptible to being discussed, addressed, in some meaningful manner, by a court in a pre-application context. We want you to do that at the earliest possible time, where the alternative is for the person to be able to get access to the courts only after going through an arduous, expensive, and long process.” And, of course, this is a context that easily qualifies, in that respect. 


Well, since the second of those, in 2016, every circuit has gone en banc and changed its law applicable to pre-application judicial review of interpretative rules and policy statements. The most recent, last of those, was a federal circuit in a case called National Organization of Veterans Advocacy v. Secretary of Veterans’ Affairs, where it went en banc and overruled its precedents and said, “We’re doing what the D.C. Circuit had done a couple years earlier. We’re saying that any interpretative rule or policy statement is subject to pre-application review if it passes a two-part test. And it’s exactly the same as the two-part test that the Supreme Court announced in 1967 in its famous Abbott Laboratories test. It’s just that it now applies to interpretative rules and policy statements, as well as to substantive rules. 


And part one is, does it raise an issue that is susceptible to consideration by a court in the pre-application context? And then, part two is, in order to raise this, to get this to the attention of the federal court, would you otherwise have to go through an arduous, expensive, and long process? And any guidelines that are issued today would easily pass the second of those tests. There’s no question that the pre-Hart-Scott-Rodino analytical process, combined with the Hart-Scott-Rodino decision-making process, is an arduous, expensive, and long decision-making process. And then, whether it passes the first half depends, of course, critically, on the content. 


So, if it’s nothing but incremental changes in the analytical tools that have been used, historically, to figure out whether a proposed merger acquisition is presumptively legal or presumptively illegal or false, in that nether land in between the two, I don’t have any doubt that it would flunk the test for pre-application review. And, even if it was reviewed, I don’t have any doubt it would be upheld. 


If, however, it is a set of guidelines that reflects the well-known, well-publicized views of Chair Khan, that are completely inconsistent with all of the prior guidelines, I don’t have any doubt that that would be immediately reviewable. I also have no doubt that it would be immediately the subject of a preliminary injunction. Because that’s another area in which there’s been a sea change in administrative law. 


In 2019, when I published the sixth edition of my treatise, I characterized as “rare” the circumstances in which you could get a preliminary injunction to stop an agency from applying some rule or policy. In the seventh edition that will come out in a couple of months, “rare” will be replaced by “commonplace.” So, I don’t have any doubt that if they come out with new guidelines, and those guidelines reflect the views that Chair Kahn has expressed in so many fora, that they’ll be immediately reviewable and immediately enjoined.  


In the meantime, my advice to any firm that’s contemplating a transaction that’s subject to Hart-Scott-Rodino review is don’t grant any extensions beyond the 30 days to which FTC is statutorily entitled. Prepare to litigate and you’ll have an excellent chance. If you have applied the guidelines and concluded that your transaction is a presumptively legal transaction under the guidelines, I don’t have any doubt that you’re going to prevail in court. You just are going to have to litigate it. And that’s what I suggest you do.


Bilal Sayyed:  So that’s pretty interesting, that if the guidelines are as different as some people suggest they might be, that a party may challenge them and seek to enjoin them. That would be very interesting. But let me ask Bill and Debbie and, later, Josh if they’ve got comments on that.


Hon. William Kovacic:  I suppose a very hard issue, for both the Commission and the Department of Justice — of course, the antitrust division is the co-author of the document — relates directly to Dick’s point, and one that Josh raised also, which is, how dramatic a departure from the status quo will the document be? The consultation draft seemed to foreshadow significant change. Contained in the footnotes is the litany of 1960s, early 1970s Supreme Court jurisprudence in mergers, which was highly intervention-minded. 


On the efficiencies point, the strong suggestion in Brown Shoe, matched up with Procter & Gamble, that efficiency arguments simply don’t count, that they can’t rescue a merger thought to be inappropriate on the basis of structural criteria, the consultation draft did not say, “We’re going to embrace that.” But a major theme of the effort by the transformation advocates in competition policy, to change policy, was that resetting merger policy where it was before with the technical doctrinal strictures, but also the broader egalitarian vision that is so clearly expressed in Brown Shoe, ought to be brought back into life, and not in an apologetic way, but in an energetic and muscular way. 


Will the new guidelines documents do that? I suspect a major hesitation. And maybe Josh has a better idea of the perspective of the economic teams at both the Department and the Commission. Maybe the resolution is to establish stronger presumptions, anchored in concentration data, and concentration effects, and to clarify that defenses are available, but only available through extraordinary means. But I also wonder. 


I think of the fairly exceptional leadership appointed to the heads of the economic groups in the two agencies: Susan Athey, who may be on a path, at some point, for getting that prize for economic science; Aviv Nevo, who is an astonishingly capable person, a fascinating appointment, because that’s the kind of appointment that to advocates of basic change should not happen. He was a chief economist at the Department of Justice previously, during the Obama administration. 


I can’t quite imagine, Josh, either of them wanting to be in front of a microphone at a podium, being asked by their peers, “How did you acquiesce in guidelines that simply threw the efficiency arguments over the side? How could you acquiesce in a process that repudiated recourse to analytical techniques that had been developed and tested in good faith over the last 20 years? 


I don’t know how many times I’ve heard Aviv say, at different meetings, “To make basic changes, you do not have to forget useful lessons that you’ve learned in the past. You do not have to just walk away from the accumulated learning.” Now, maybe it’s become too complex. Maybe some simplifications are appropriate. But to have just abandoned this body of knowledge would seem to be perverse. And, my hunch is, I can’t imagine the agencies issuing guidelines that are not faithful to those kinds of cautions.


Hon. Joshua D. Wright:  Bill, I’m hearing a bet for a whiskey. And I’ll take it. 


Hon. William Kovacic:   Okay.


Hon. Joshua D. Wright:  And if you are suggesting a campaign —


Hon. William Kovacic:   Maybe some soda water on the side too please. Thank you.


Hon. Joshua D. Wright:  If you are suggesting a campaign for Susan Athey for AAG, and Aviv for chair, I will line up with you and I will make the signs myself. I think — and I’m very sympathetic with the points that you raise. And I think the world of both Susan and Aviv. I’ve also thought very highly of many former chief economists at the DOJ and many former chief economists at the FTC who leave the place saying, “I didn’t have as much influence on policy discussions or enforcement decisions as I would have like to,” chief economists at the DOJ who don’t get to sit at the big table during the big meetings, chief economists at the FTC who leave saying the same thing., “I wish it were different.” 


And I don’t know that that is happening now. And I could very much imagine Susan and Aviv saying, “I will not come unless I get to sit at the big table for these big discussions.” But I don’t know that that is happening. And I think, if it is a battle of priorities for what Aviv and Susan will say when asked, since they don’t have a vote, and what Lena and Jonathan want, since they do, I know where I will bet my money or my whiskey. And I guess I’m on record as now having done that.


Debbie Feinstein:  I guess I have a couple of perspectives. One is just from what I’ve heard Jonathan Canter say about efficiencies. I litigated the Publisher’s case. And one of the big issues there was the standard of proof, and whether you had to have an independent expert come in and vet your efficiencies work. And he said, “I think you’ll see some of this in the guidelines,” which suggests to me that efficiencies are going to be in the guidelines, but with a standard that’s going to be very high. 


The second thing is, on the question of whether or not the courts are going to okay the guidelines, if the guidelines basically say, “Brown Shoe is brilliant law. Vons is brilliant law,” it’s still the Supreme Court law. That’s going to be a little tougher for a federal court judge to basically say, “No, there’s no good Supreme Court case law on mergers.” And, certainly, Brown Shoe and Philadelphia National Bank, still good law, courts cite it all the time. The government cites it all the time. 


The Philadelphia National Bank presumption numbers are not the same as the guidelines numbers in simply saying, “Look, this was a statement of enforcement policy that they were going to let some mergers go that would have been passed under the Philadelphia National Bank presumption. We think there were mistakes made, and we’re going back to saying the Philadelphia National Bank presumption numbers are the right ones. I don’t think that’s going to make federal court judges’ heads explode. I just don’t. They like those laws. 


And when we talk about the guidelines being accepted — yes and no, right? We’ve gotten most judges comfortable with the hypothetical monopolist test. But have you ever seen a case that relies simply on the HMT? No, they always go back to the Brown Show factors. So, I think it’s more nuanced. I think there are ways to write the guidelines that may be seemingly dramatic from the most recent case law, but that do so in a way that basically says, “We’re trying to be consistent with what we thought.” 


Now, I think people are going to win and lose cases still. And I think they’re going to have to have — courts are used to having economists now on these cases. They’re going to have to have people who tell these stories and where the facts all line up. And I think that concentration statistics aren’t going to be enough, alone, in cases, to win anymore, in the face of all the storytelling that parties do. 


So, I think there’s a lot to be seen and to play out, in terms of how things go. I think the biggest thing the guidelines could do is deter people from doing the kinds of mergers they might have. Because, even if you think you’re going to win at the end of the day, going through a two-year process is something that a lot of companies will decide they don’t want to — they can spend their money and their time elsewhere. And so, it could have that effect.


Hon. William Kovacic:  Would we agree among us that the current policy at the FTC has had, in a rough way, the effect of deterring at least some deals?


Hon. Joshua D. Wright:  Yes.


Hon. William Kovacic:  That is, is the calculus — would we agree that the use of soft and harder policy tools, in fact, has had some deterrent effect, and that they’ve succeeded in that end?


Prof. Richard J. Pierce:  I don’t have any doubt that’s true. But I go back to your point that you’ve got to have one or two victories. You’ve got a couple guidelines with something that gives you credibility that you’re likely to prevail in court. And you can afford to lose some cases, but you can’t afford to lose all the cases. You’ve got to win some. And those principles, then, you’ve got to reflect into the guidelines. And then you’re in business of really, powerfully deterring the kinds of mergers that you want to deter. 


Hon. Joshua D. Wright:  I think the answer is yes on deterrence. But I don’t know if it’s a good or bad thing.


Hon. William Kovacic:  Yeah.


Hon. Joshua D. Wright:  I mean, there are lots of margins to deter on, including good deals.


Debbie Feinstein:  And there’s always going to be deterrence, right? I used to joke with somebody when I worked at the FTC. I’d say, “It’s great that I’m here at the FTC. I’m doing wonderful things. But heck, in private practice, I could kill more deals in a month than you do all year.” The running joke, right? Because all I had to do is, if I said, “That is a really bad idea. Don’t do it,” that conversation would end. Now, it might come back every six months or so, “You sure I can’t do this deal?” To which my friend at the FTC would respond, “But you only know how to do that if I tell you where the lines are.” Also true, right? 


There’s always going to be a line. The ones that are litigated are typically the ones closest to it. Every now and then I have to say, with all due respect, I hear some of the current enforcers say, “Oh, you know a bad deal as soon as you see it,” or, “You know a bad deal from far away.” I never felt like that. I felt like, most deals, you have to really go through and look at it, and look hard. There were very few that we knew on day one, “Let’s get ready to litigate.” But you’re always just moving that margin. 


So, yes, of course, some deals are always going to get deterred. And it’s the question of which ones, and where is the line, and where is the right line? Because I’m sure that statements I made deterred some deals, that statements that anybody made in enforcement about what their priorities were, were going to deter some deals. I don’t think that’s new.


Hon. William Kovacic:   What interests me is, are we going to look at 2021 through 2024 as being the foundation for durable policy change? Or will this be transient, where the more you rely on soft tools to make adjustments, the more you rely on non-litigated outcomes that generate decisions, the more reversible your approaches are. And I guess that’s what — to go back to one of Bilal’s earlier questions, is that’s where I think the progress being made by the FTC in that direction has been very slow.


Bilal Sayyed:  So, let me ask one question that everyone can answer in their own way. And we’ll allow, if people want to discuss it, touch on the relatively new statement on fair methods of competition, this potential effort, through rulemaking, to eliminate or prohibit non-competes. There are a number of threats to the agency right now. Some people in Congress think the agency should be shut down for various reasons. The agency is duplicative. It’s not subject to effective oversight. Maybe it’s even unconstitutional. And, even if it is constitutional, it often, or too often, strays from a sensible understanding of its mission.


So, with the UMC rule and the NPRM on non-competes in the back of your mind, let me ask, is there any way to constrain what the current OPP director, Elizabeth Wilkins, recently called, “The enormous mandate given to it by Congress”? So what threats are on the horizon for the agency? And, really, what can the agency do about it? So let me start with Josh. Maybe you want to talk about UMC, maybe something else. But let me give you a chance.


Hon. Joshua D. Wright:  I’ll talk about the UMC statement. So, for those in the room who don’t follow FTC UMC policy as closely as I do, the background is the agency’s got this unfair methods of competition authority that has penumbras and spirits that extend beyond the traditional antitrust laws, at least beyond the Sherman Act. And there’s been a great debate sort of raged for over a century on exactly the contours of those penumbras. And the agency has grappled with, in its history, it’s got policy statements on — we’ve talked about several already — horizontal mergers, vertical mergers, all sorts of stuff on the consumer protection side. But, for the signature authority, it never sort of said, “Hey, this is what it means. This is the conduct that is unlawful under unfair methods of competition authority. And this is conduct that is not. 


And, in 2015 —and I was there at the time — the FTC signed a policy statement that said, “You know what? Here’s what we’re going to do on unfair methods to sort of try to give some certainty. Number one, we’re going to say that the unfair methods of competition authority is a type of competition law, is a type of antitrust law. The currency that it speaks in is the same currency as the Sherman Act. You have to prove harm to economic welfare to win, and do it on a case-by-case basis. And, hey, if the federal courts have already touched this subject, we probably won’t bring the case administratively.” 


That’s what it did, relatively simple and short. And it passed 4-1, had bi-partisan support, and lasted a while. It was on Lina Kahn’s very first meeting as chair. They threw it out. As a signatory to this thing, I was very sad that day. Still, I’m very sad that day, but I’m going to remember the good times with you guys. And so, the reason they did that has a lot to do with the rulemaking. So, the Section 5 UMC policy statement said, “You do unfair methods of competition on a case-by-case basis.” Imagine, then, passing a rule that says, “Hey, no more case-by-case basis,” and everybody objecting waving the statement for your own agency in your face, saying, “This is not how any of this works.”


The reason for the statement was, at least, in my view, there had been a history inside the agency of — especially in the context of conduct investigations, sort of outside of the merger context — if we had cases where we did not develop the quality of proof that you would want to bring into federal court, you would conduct an investigation for years. And if you didn’t think you had a winning case, you would whisper to the parties, “Hey, we’ve got Section 5. Do you want to settle?” 


And your implicit threat was, “We will sue you administratively, under a Section 5 theory, drag you through a two-year process. And, by the way, at the end of that process, if you look at the last 30 years of cases where the FTC has brought Section 5 claims administratively, the answer is the FTC always wins. They may win or lose in front of our one ALJ, but, at the end of the day, it is way, way, way more likely than not that the FTC sort of wins when the commission decides its own cases.


Most parties said, “Sure, we’ll settle. That seems like a really bad idea to continue to litigate through that process.” And so the rationale was both to sort of solve some of what the agency had been doing in Part 3 in administrative litigation, ruling for itself in a really impressive — like, 100 percent’s pretty impressive — clip. And, also, to try to tether the UMC authority to the antitrust laws. It did both of those things. It exists no longer. I think it exists no longer. 


They’ve now done a replacement statement. And the replacement statement says something like — it says, “You know it when you see it,” but it says. “If the conduct is oppressive, unfair.” And it defines those terms as saying someone has been harmed. Most competition harms someone. I make a better product than you; I get some of your business. You’ve been harmed as sort of a harm-to-rival. Maybe at its most clear, it’s a harm-to-rival standard, which puts huge amounts of prosecutorial discretion with the FTC in sort of promulgating that statement. 


I think this runs parallel to the rest of our conversation. That statement means nothing unless they get a judge to say, “Yes, that’s what Section 5 means,” and I suspect, at some point, while their main function in redoing the statement was to get rid of the old one as an obstacle to rulemaking. But maybe they’ll bring some cases under this thing. I don’t think they’ve done anything of note. I think they’ve got one invitation to collude case, prior to the new statement under Section 5. 


But I think where the rubber hits the road here is almost very parallel to the merger guidelines discussion. You can put what you want in the document. You’re going to have to put that document in front of an Article III judge and say, “Hey, does this make sense to you?” We are saying that an unfair method is something that harms a rival, in the context of the rest of the antitrust laws. And there’s some law here. There are court of appeals decisions around, as well.


They’ve not done that yet. But, as Bill has emphasized, I think for any of these things to be lasting change, you’ve got to take those documents and either promulgate a rule under them — and others will speak to that — or you’ve got to bring some cases under that set of guidelines. That set of guidelines, the new UMC guidelines, I think go extremely beyond anything that I would be comfortable litigating, if I was in the FTC in front of an Article III judge. They say, “competitive actions that harm rivals” —which is anything pro-competitive you can think of — are unfair methods of competition. 


I would not be comfortable arguing that in front of an Article III judge, for fear that they would define my authority for me. So I suspect that won’t happen for a while, because the FTC lawyers are going to figure that out, too. And I’ll leave others to talk about the rulemaking.


Bilal Sayyed:  Well, let me turn to Dick on the rulemaking. We’re talking about competition rulemaking. What do you think? You’ve written about this. I’ll turn it over to you to comment.


Prof. Richard J. Pierce:  I think it’s highly unlikely that the Supreme Court would uphold the interpretation of the statute that the DC Circuit came up with in the National Petroleum Refiners. I wouldn’t make it a 100 percent certainty. There aren’t very many of those in life or in law. But I’d certainly put it in the 25 percent or less probability of that surviving in the Supreme Court. Skelly rights approach — I’ve been teaching that case for, gosh, since it was decided, basically. And not in antitrust, but in administrative law. And every time, I tell them, “This is a very important case, but you should understand, this is not the way courts usually approach issues of this type.” 


Skelly rights basically reasons, gosh, to be really effective, an agency needs to have the power to issue substantive rules, therefore this agency has the power to issue substantive rules. I found the term “rule” buried in this long, long section of the statute about investigations. I know that for 48 years, the agency said that it didn’t give them this power, but I hereby conclude that they have this power. 


You compare that opinion and the approach that Wright took in that opinion, with Aubrey Robinson’s opinion for the district court that the DC Circuit reversed in that case. And you see Robinson going through a meticulous step-by-step process of statutory interpretation. And at every stage in the process, concluding “No, no, no, you don’t have that power.” I think it is highly unlikely that the Skelly right approach — which hasn’t been seen in any judicial opinion for decades now — would pass muster with the current Supreme Court.


Bilal Sayyed:  Let me ask Bill, Debbie if they have a reaction to that or anything, with respect to these institutional issues?


Hon. William Kovacic:  No, Dick’s laid out all the cautions and the hazards. I’m just going to echo Dick. Dick, you’ve pointed out to me that there’s no necessity, even that a party challenging a rule would have to go to the courts of the District of Columbia, either the U.S. District Court or to the D.C. Circuit. Ultimately, they’ll probably pursue the challenge, perhaps in a court known to be even more skeptical of government intervention. So, it’s not even clear that the court reviewing this will pay much heed to what National Petroleum Refiners had to say.


I’m also chastened by the brush-off that the FTC got in the AMG case. This is the case that interpreted the FTC’s ability to collect monetary equitable relief in all of its cases. The context in which it’s come up before the court involved a consumer protection case, but it was writing more generally about the process of interpretation. And the Commission was trying to support a widely held view in the courts of appeals that had prevailed since the late 1970s that the Commission indeed had that authority. There was one contrary decision. That was the principal basis for the appeal to the Supreme Court. 


And the Commission said, “We’ve got this large body of interpretation that interpreted the term “injunction” to include other equitable relief. We’ve got, in effect, a huge reliance interest. We have built our consumer protection enforcement program around our ability to get this kind of relief, otherwise, the defendant is, basically, only told, ‘Don’t do it again. Stop what you’re doing now. Don’t do it again.” Not a powerful deterrent. And the commission got precisely no votes. 


And the best friend that the FTC had on the court at that time — and that’s Justice Breyer — just knocked aside every argument that the agency had. And, looking at the transcript of the oral argument, across the entire panel — I did say it was 9-0; it was the entire panel — when pointed to more generous analytical methods, it would interpret the Commission’s authority in the way that the Commission preferred here, said, “That’s just not how we read statutes anymore. And we don’t do that. Congress knows how to use apt words to describe what it meant to do.” 


I think that means that, in relying on the provision that Dick was referring to before, to support competition rulemaking is going to be such a difficult journey for the agency. And on Section 5, I guess what I find intriguing about the new policy statement is that it does get exactly right Congress’s aim of giving the agency broad authority, no doubt. But it doesn’t indicate any of the side effects of that grant of authority. One of those has been that the courts are very skeptical of it. Not nihilist, but skeptical. And it means that, again, this can be one of the great mirages in antitrust law, where the courts have said, at a conceptual level, “Of course you can go out there. In theory, there is a mirage in the desert. And you, the FTC, are entitled to bring cases to go and find it.” 


But what happens again and again, is, in the course of the journey, it’s just another pile of sand. And you start to wonder whether it becomes an illusion that is identified in concept. But in practice, wow, the facts never quite got you there. That’s the judicial skepticism. And the other side effect that has to be in the document, and it’s not, is that there is a powerful political feedback loop that comes to bear on the Commission whenever it tries to do things that arguably are somewhat bold. And what happens is that defendants go to court and say, “This is unprecedented what the agency is doing.” 


And you want to say, “That’s right. That’s what the statute intended.” But they still are able to say, “No precedent for this. It goes beyond existing doctrine. Don’t let them do it.” And the pleas made to the Congress, which so often has said, throughout the Commission’s history, “We meant for you to do bold things, but not exactly that one. But keep trying. Go do another one,” a doubting interpretation of that is that this is a wonderful perpetual motion machine by which Congress urges the agency to be active, take bold steps. When it does, there’s inevitably the complaints made by affected companies to the Congress. 


And the Congress steps in and says, “Don’t do that one again. But do something else and keep doing it.” And this is anticipated in the whole scheme. There’s a powerful passage of the legislative debates in 1914, in which Albert Cummins, who was the FTC’s principal sponsor in the Senate, is asked in the Florida debates about Section 5. And he’s asked, “Isn’t that an awfully broad grant of authority? Unfair methods of competition? Where’s that going?” And he answers, “Don’t worry about it. Of course, it is. But the commission will always operate under the careful eye of Congress. And if the commission goes too far, we will intervene.” And then his punch line, “We created the Commission, and we can destroy it,” his words, “We’ll destroy it if it does the wrong thing.” 


So, this mechanism has always anticipated a deep degree of political involvement and oversight whenever the agency uses this extraordinary, in concept, expansionist authority. It just means that, in trying to apply it effectively means that you not only have to navigate through the courts, which have been very doubting, but when you’ve gotten through the courts, it’s often been the Congress that said, “Not here. Back off.”


Debbie Feinstein:  Oh, no. I’m not following that.


Bilal Sayyed:  All right.  Well, I’ll make one supportive comment. The last three major Section 5 UMC cases, OAG, Du Pont, and Boise Cascade, were late ’70s, early to mid ’80s. That was not Robert Bork and Easterbrook and conservative judges. Those were fairly middle of the road to leftist courts pushing back. And I think now it’s going to be even tougher for the agency.


Hon. William Kovacic:  I think all of them, seen in detail, show the difficulties of proceeding. The first of those decisions was a case called Boise Cascade, which was a pure Section 5 case, in the way that Josh described. No reliance on the Sherman Act jurisprudence. And the court, as an important basis for dismissing the Commission’s complaint, said that in the early 1950s, after bringing a successful Section 5 challenge that went through the Supreme Court, Congress brought you before them. 


And the Senate said, “I want your assurance that you’re never going to lie in the future on the idea that the parallel adoption of certain facilitating practices, by itself, is a violation of Section 5. I expect that you will always prove agreement, won’t you?” And the FTC said, “You have our assurance. We will not rely on this expansive notion that would allow us to attack behavior that’s not Sherman Act behavior.” 


The Boise Cascade case challenged the non-collusive parallel adoption of a facilitating practice. The parties said, “Your honor, remember this testimony back here? What do you think that meant?” And the court of appeals, the Ninth Circuit cites it and says, “Oh, by the way, the FTC said it wouldn’t be doing this again.” That is the unvirtuous cycle of political involvement intended by Congress in 1914, that makes the application of this authority so problematic. I’d have felt better about the FTC’s new policy statement if that warning label had been in at least the footnotes. 


Hon. Joshua D. Wright:  One small point on that. I mean, one difference between litigating UMC stand-alone cases now, versus then — there are several. But it is one thing to litigate those cases in a world in which there is not a policy statement at all. I don’t think you will find Article III courts comfortable with a UMC authority with no limiting principal. The main thing the 2015 statement did was contribute one. 


It is another thing for the FTC to make a new policy statement that says, in large bold font, “We have no limiting principle here,” and then go litigate a case. And that’s what they’ve done. I think, in that sense, Bill, that this FTC has said, “Please Congress, oversight here. Can we get that perpetual motion machine moving faster? We want it.” And that’s new and different, and a little bit special. But they’ve also done that.


The other thing that’s happened in the last 30 years is we’ve developed this record where if you bring things administratively, win or lose in front of the ALJ, the Commission rules for itself, and then brings UMC cases administratively. Were I an Article III judge, looking at the Commission’s behavior using Section 5 and Part 3, you don’t have to look far for sustenance to feed your skepticism about the agency’s use of those authorities.


Hon. William Kovacic:  All three of the defeats in the trilogy that Bilal mentioned had gone through the Part 3 process, through the Commission, and were rejected by the court of appeals. You do have that additional step, which is quite foreboding. And, building these cases, these are like building aircraft carriers. The cycle for building a good case, bringing it, litigating it, takes years. If the Commission, this afternoon were to say, “We’re on it. We’ve got three new ones,” there’s a good chance that the chair and maybe several members of the board will not be there when they come to a conclusion. 


It takes that long. The medium term of an FTC chair since 1950 has been about 40 months. Bob Pitofski, unusually long, six years — but 40 months. You just don’t have much time. Somebody else after you, in the sense that Debbie’s wonderful metaphor before, of the relay race — somebody has to take the baton at full speed, in the zone, and not throw the baton down on the track or just walk off the track. They’ve got to run that leg if it’s going to work.


Bilal Sayyed:  Well, we have very few minutes left, but I will ask if there are questions that we can respond to. Ted?


Ted:  Could I ask somebody on the panel, anybody on the panel, just to direct a few remarks, thinking of the international context? The United States has, for many, many years, been a very forceful advocate in bilateral relations with other agencies in the international organizations like the OECD competition committee. And the ICN has been a very staunch advocate for reliance on evidence-based meticulous economic analysis of every case. And what does this iconoclastic change in the U.S. stance mean for the development of antitrust in other agencies around the world? 


Bilal Sayyed:  Who wants to take it?


Debbie Feinstein:  Well, it moves it closer to how the EC has been, in some respects. I think, in some ways there are folks, always, in U.S. policy who have wished they had the EC magic wand, not going to a federal court judge, but simply decreeing. So, I’m not sure that the rest of the world will see this as some dramatic shift, as opposed to catching up to what others have been doing for a while. I think Bill, you have a better perspective, though.


Hon. William Kovacic:  I think you’re right, Debbie. I think the view, at least from a number of observers abroad, with the European Commission being one of them, is that it’s about time you came around to the mainstream and joined it. So, there’s satisfaction there. That’s one point. Another is that, to the extent that the U.S. was a voice of caution in the deliberations of these institutions, that caution, that moderating influence, is gone now. That won’t happen. And, I guess, last is, there are a number of jurisdictions that took on the U.S. perspective, and, in a sincere way, thought it to be good for their nations. 


They are perplexed at the development, and, I think, anxious that, in their context, that the egalitarian perspective opens the door to a broad range of policy considerations that can be brought to bear on the process, in an environment where the possibility of extreme political intervention is an omnipresent concern. But it means that there’s a concern. And I’ll just mention one other thing. An unfortunate part of our political economy is that the path to attaining power is to scorch the work of predecessor institutions — often, not always the case. 


Sometimes there are handoffs that don’t involve that kind of acrimony, or it’s muted in many ways. But, in 1980, the transition into ’81 was extremely harsh. In ’20 to ’21, harsh, as well: the 40 years of failure theme about the past. Imagine the perspective of a foreign audience that’s being told that, on a regular basis, new leadership ascends to power by saying, “My predecessors were lunatics or cowardly or corrupt. But I’m here to fix it.” 


And then, we go through a period in which they have the instruments under their control, and perhaps you have a regime change in which still another group comes forward and says, “They were lunatics. They’re the usurpers. I’m here to fix it.” How much confidence would you have in a nation that’s subject to those periods of perhaps occasional lucid intervals, but its baseline condition is one of lunacy? That’s not good for the brand.


Bilal Sayyed:  One more. 


Questioner 2:  Professor Wright, I think you touched upon this a little bit with your comment about harm to competitors versus harm to competition. I understand you’re generally a defender of the consumer welfare standard. Could you and the panel talk a little bit about what appears to be the Khan FTC’s movement away from the consumer welfare standard?


Hon. Joshua D. Wright:  Yes. So, two things. I think, agencies can’t run a revolution without winning cases. See prior discussion. And so, to the extent that maybe — we were just talking about global antitrust — maybe the place where the consumer welfare standard is the most entrenched and celebrated is United States Supreme Court antitrust doctrine. And so, I think the commission, to the extent that it would like to move away from the consumer welfare standard, is between a rock and a hard place. It can do what it can do, so long as it evades judicial review. And so, what do you do? You kill mergers by process. You try to get UMC — first you take away a policy statement that says UMC is also consumer welfare, and then you try to pass rules. I think they’ll run into difficulty there, but that is an attempt to evade case-by-case judicial review, under the consumer welfare standard. 


I think they are limited. The DOJ is entirely limited. Their only tool is to go to Article III courts where the consumer welfare standard lives. The FTC has some other tools at their disposal. I don’t think that there’s any doubt that they would like to change the law if they could. And maybe we’ll see amicus efforts or things like that to try to undermine the consumer welfare standard in court. 


But the truth of the matter is, I think, to be successful, both agencies are going to have to win cases in court under that standard. There was a window a year ago, maybe a little bit more, where I think there was more substantial probability that we would get major legislation that would undermine the consumer welfare standard. My sense is, that window was closed. It could be open tomorrow. But I think it’s closed now. 


And so, your modes to evade judicial review where the consumer welfare standard lives are either Congress — it’s D.C., you bet the under on Congress — it’s unfair methods: take away the policy statement, pass a rule. I think they’re ultimately going to lose for the reasons that Dick has already suggested on that front, which means it’s mostly talk, I think. I think it’s mostly talk. Doesn’t mean it’s not dangerous talk, because there’s a lot the agency can do through process and other means. I don’t know how to respond, other than to say I think they would do it if they could, but they can’t. 


Bilal Sayyed:  Anyone else? Dick?


Prof. Richard J. Pierce:  I think, an interesting place to consider is the context of merger policy, where I think the strong view of the FTC leadership and the Department of Justice is, “We are not the radicals here. We’re the conservatives. And the doctrine we’re trying to conserve was set out by the Supreme Court in a series of decisions between 1962 and 1972,” and that the Court’s perspective in a number of other areas of antitrust jurisprudence unmistakably has changed. But these decisions lay out a concern for policy interests that go well beyond the well-being of individuals as buyers of goods and services. 


And the last couple of pages of the Brown Shoe majority decision set this out. Brown Shoe‘s main argument was, by merging a good manufacturing company— five percent of the market with a good retailing company — we’re going to sell more shoes, and higher output means good results for everybody. The Court said, “We’re not saying you’re wrong. Vertical integration can be good. But we can’t fail to give effect to the legislative aim of preserving an economic environment in which small and medium enterprises have the opportunity to thrive. And Congress was willing to sacrifice some additional cost for the sake of achieving that. And we give effect to that here. 


In a sense, what the leadership is saying, “Read that passage again. Read others like it in subsequent decisions. And, yes, point me to the Supreme Court merger jurisprudence that has repudiated that.” I suspect it’s when we have the merger decision that tests whether or not you’re willing to write a brief that says, “These are the cases that we like, that you get a result.” I sense that, as Josh was saying, the Court will say, “No, we haven’t decided a merger case on the merits of merger review standards since 1975.” Nearly 50 years ago, since 1975. That was a while ago. “But we do now, and we do embrace the view we’ve taken in other cases.” 


I guess the best indication of that, in a way, for me, is the Alston/ NCAA case, the case involving a unanimous decision for the plaintiff, involving modest scholarship assistance that universities are providing for graduate study purposes, for their athletes. And the Court finds for the plaintiff. When you look at the authority cited, it is a litany of the saints of the intervention skeptic position in jurisprudence. It is a litany of the literature that is skeptical about pushing too far. 


I can’t read the minds of the Court, but it’s almost as though they were looking out those windows that look over First Street, looking across the street at the big domed building, and saying, “You guys change the law, of course we will follow it. We’ll abide by whatever you tell us to do. But, in case you’re wondering what we think, here’s our vision of antitrust law and policy right now. And the consumer welfare orientation, we’re fond of it.  And in these cases, we showed how fond we were. Here’s commentary that we think gets it right too. But, of course, you do what you like. But, in case you were wondering what we’re thinking on these issues, the debate’s swirling outside. Take a look.”


Bilal Sayyed:  Okay.  I think we have to finish. I apologize. People have to go. 


Debbie Feinstein:  You can keep going after us.


Bilal Sayyed:  Well, we’ll take one question then. What the heck. Go ahead.


Questioner 3:  I had an opportunity to look into the antitrust scheme in Korea. And when I was looking at the United States, they had a, for instance, the mediation program. It’s where they take the alleged victims, bring the case, and then the government just puts them into the mediation room, “Hey, so talk it out.” And, on the other hand, in the United States most of the prosecution relating to the antitrust is led by the government. 


And, even if it results in agreement, it is posted on the DOJ website. It’s sort of a walk of shame kind of notion. And then, Professor Wright mentioned that there has been a history in the agency where, when the agency doesn’t have enough proof, the agency sort of whispers at the alleged offender, “Hey, so we got the Section 5,” and then sort of like semi-forcing them into the settlement. So, when I heard that, I was wondering, do you think that the enforcement of the agency in the United States is somewhat overly aggressive in bringing cases, and in persecuting the alleged antitrust offenders, even for cases that would ultimately result in a behind-door discussion and settlement?


Hon. Joshua D. Wright:  I think they’ve been over-aggressive at times. The Section 5 issue is a little bit unique, in the sense that one of the great things about the role of judicial review in the American antitrust system is when agencies are perceived to be too aggressive by the respondents to the investigation, the parties can always say, “You think my merger will raise prices. I don’t think so. Let’s go see an Article III judge.” We can go and fight in front of a judge any time we want, when we disagree with the agency.


That gives American antitrust law some really unique features. I think the judicial development of our doctrine is unlike anywhere in the world, in some ways, I think, because of that. Section 5 worked a little bit differently. It gave the FTC the ability to say, “We’ve investigated you and whether your conduct would be anti-competitive. We think yes, you think no. But we don’t want to go in front of an Article III judge. We’re going to use our Section 5 authority. And nobody knows what it means. And we’re not telling you. And we’re going to sue you administratively. We can rule for ourselves. That will be done in two years, and you can see a judge then.”


And a lot of parties look at that and make a business decision. They say, “We’re going to lose. One hundred percent likely we’re going to lose in front of the Commission, and then we can appeal. But that’s two years from now. Maybe I take a consent today.” I think it gave the Commission an ability to abuse that authority. The agency also did lots of good things with Section 5. I voted in favor of a bunch of Section 5 cases that prevented invitations to collude. 


So, I think the story with that Section 5 authority is not one that’s all good or all bad. But I think, when combined with the administrative process and abuse of that process, that the agency is being able to drag people, or at least postpone their ability to go see an Article III judge. I think it gave the opportunity for some high jinks, and high jinks the FTC, I think, has indulged a little bit too often, in modern times. 


Hon. William Kovacic:  I just say that one thing to consider is that the feedback loop that happens is that firms that are presented with those types of threats tend to have some success retaining good legislative affairs representatives who go to powerful legislators and get letters that are sent to FTC commissioners saying, “Watch it.” And those letters get read too. You’re not defenseless in that process. 


Bilal Sayyed:  Okay, I think we’re complete.


Nate Kaczmarek:  Excellent panel, an embarrassment of riches, could go on all afternoon. I thank you all for coming.  And please join me in thanking our panel.


Debbie Feinstein


Arnold & Porter

William Kovacic

Global Competition Professor of Law and Policy

George Washington University Law School

Richard Pierce

Lyle T. Alverson Professor of Law

George Washington University Law School

Joshua D. Wright

Executive Director

Global Antitrust Institute, Antonin Scalia Law School, George Mason University

Bilal Sayyed

Senior Adjunct Fellow


Antitrust & Consumer Protection

Federalist Society’s Corporations, Securities, & Antitrust Practice Group

The Federalist Society and Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speaker(s). To join the debate, please email us at [email protected].

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