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In Wake of Antitrust Review, Lawyers Say Current Laws are Adequate

Antitrust lawyers are concerned about a chilling effect over-regulation could bring.



Screen shot of ITIF webinar featuring Aurelien Portuese (top left), Kristen Limarzi (top right), and Koren Wong-Ervin (bottom)

WASHINGTON, April 7, 2022 – In the wake of a public request for information by the Federal Trade Commission and Justice Department for information related to the modernization of antitrust laws, some observers are arguing the system does not need to be changed.

Earlier this year, the FTC and the DoJ announced the launch of a review of merger guidelines, holding a press conference on the matter on the same day Microsoft announced its proposed $70-billion acquisition of video games publisher Activision-Blizzard.

During an Information Technology and Innovation Foundation event hosted on Friday, Gibson Dunn law firm partner Kristen Limarzi voiced criticism over the phrase “killer acquisition.”

Companies accused of engaging in killer acquisitions – or acquisitions designed to stifle potential competition in its infancy – were placed squarely in the federal government’s crosshairs when President Joe Biden signed the executive order on Promoting Competition in the American Economy.

“It is also the policy of my Administration to enforce the antitrust laws to meet the challenges posed by new industries and technologies, including the rise of the dominant Internet platforms, especially as they stem from serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects,” the order reads.

Bills with similar intent – to target killer acquisitions – have been supported by myriad legislators. Despite this effort, Limarzi pushed back against the rhetoric. “The term ‘killer acquisition’ is sufficiently evocative that a lot of people have adopted it to apply to any merger that they think ought to be blocked, which is not a not a very useful definition.”

Current antitrust framework doesn’t need changes

To address the question whether an acquisition should be considered anticompetitive or “killer,” Limarzi argued that regulators should ask, “what does the world look like with and without the merger and are [the outcomes] substantially different from a competition perspective?”

In Limarzi’s view, the FTC’s current framework to determine whether to pursue an acquisition is sufficient and not in need of change.

“Where the facts establish that there is actual nascent potential competition that is being eliminated [the FTC] succeeds and where the facts are not there, they do not – but that is not a deficiency in the legal framework,” she said.

Koren Wong-Ervin, an antitrust partner with Axinn, Veltrop and Harkrider, stated that as it stands now, there is no systemic failure in merger enforcement.

“I do not think we have any evidence [of systemic failure],” Wong-Ervin said. “I think a lot of this debate comes down to different beliefs – faith in market versus faith in governments to intervene.”

Wong-Ervin said it is better to under-regulate rather than over-regulate mergers. “Markets can self-correct over time, if you don’t intervene when you should, whereas if you do intervene when you should not, it has a chilling effect,” she explained. “The debate is really about whether you believe that markets can self-correct.”

“If there was rampant under-enforcement and a concentration and monopoly problem and our markets were suffering – you would expect to see this more systematically – [it] would show up in our merger retrospective studies, and were a just now [seeing that],” she said.

Commentators on an Institute for Policy Innovation panel last year made similar pleadings for Washington to avoid hardline antitrust regulation that they said will put a damper on start-up businesses.

The Biden administration has generally taken a harder line against mergers when compared to the Trump administration, as evidenced by big tech critic Lina Khan’s appointment to the FTC, Google critic Jonathan Kanter’s nomination to the DoJ’s antitrust division, and net neutrality advocate Tim Wu’s appointment to the National Economic Council.

Reporter Ben Kahn is a graduate of University of Baltimore and the National Journalism Center. His work has appeared in Broadband Breakfast, Washington Jewish Week, and The Center Square, among other publications. He primarily covers Big Tech and spectrum policy.


FTC Commissioner Concerned About Antitrust Impact on Already Rising Consumer Prices

Noah Phillips said Tuesday he wants the commission to think about the impact of antitrust rules on rising prices.



Screenshot of Federal Trade Commissioner Noah Phillips

WASHINGTON, May 17, 2022 – Rising inflation should be a primary concern for the Federal Trade Commission when considering antitrust regulations on Big Tech, said Commissioner Noah Phillips Tuesday.

When considering laws, “the important thing is what impact it has on the consumer,” said Phillips. “We need to continue to guard like a hawk against conduct and against laws that have the effect of raising prices for consumers.”

Current record highs in the inflation rate, which means money is becoming less valuable as products become more expensive, has meant Washington must become sensitive to further price increases that could come out of such antitrust legislation, the commissioner said.

Phillips did not comment on how such movies would mean higher prices, but that signals, such as theHouse Judiciary Committee’s antitrust report two years ago, that reign in Big Tech companies and bring back enforcement of laws could mean higher prices. He raised concerns that recent policies are prohibiting competition rather than facilitating it.

This follows recent concerns that the American Innovation and Choice Online Act, currently awaiting Senate floor consideration, will inhibit America’s global competitiveness by weakening major American companies, thus impairing the American economy. That legislation would prohibit platform owners from giving preference to their products against third-party products.

This act is one of many currently under consideration at Congress, including Ending Platform Monopolies Act and Platform Competition and Opportunity Act.

Small businesses have worried that by enacting some legislation targeting Big Tech, they would be impacted because they rely on such platforms for success.

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Critics and Supporters Trade Views on American Innovation and Choice Online Act

American Innovation and Choice Online Act is intended to protect fair competition among businesses, but panelists differed on its impact.



Photo of Amy Klobuchar from August 2019 by Gage Skidmore used with permission

WASHINGTON, May 10, 2022 – Experts differed on the effect that antitrust legislation targeting big tech companies allegedly engaging in discriminatory behavior would have on small businesses.

Small businesses “want Congress not to do anything that will screw up or weaken the services that they rely on for their business,” said Michael Petricone, senior vice present of the Consumer Technology Association, at a Protocol Live event on Thursday.

Petricone said that antitrust bill would encourage tech companies to relocate to other countries, harming the American economy. He said small businesses would be affected the most.

Instead, Petricone called for  a “smarter immigration policy” to allow foreign innovators access to American tech market, as well as the defeat of the antitrust legislation.

But other said that small businesses suffer from predatory behavior by big tech companies. “Companies can’t get their foot in the door when there is already self-preferencing,” said Awesta Sarkash, representative for Small Business Majority, an advocacy organization, adding that 80% of small businesses say they want antitrust laws to protect them.

Self-preferencing on online platforms is detrimental to the success of small businesses who rely on social media advertising for business, she said. The new antitrust proposals would ensure an level playing field and promote fair competition, she said.

The American Innovation and Choice Online Act would prohibit certain online platforms from unfairly preferencing products, limiting another business’ ability to operate on a platform, or discriminating against competing products and services.

The bill sponsored by Sen. Amy Klobuchar, D-Minn, was introduced to the Senate on May 2 and is awaiting Senate floor consideration.

The debate follows concerns raised by both democrats and republicans about America’s global competitiveness as the bill would weaken major American companies.

If passed, the bill will follow the European Union’s Digital Services Act which similarly sets accountability standards for online platforms, preventing potentially harmful content and behavior.

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Watchdogs Cannot Allow Another T-Mobile/Sprint Merger Under New Consolidation Guidelines, Event Hears

A Yale economics professor called on the FTC and DoJ to make it easier for them to pursue harmful mergers.



Screenshot of Yale economics professor Fiona Scott Morton

WASHINGTON, May 10, 2022 – A professor of economics said at an Information Technology and Innovation Foundation event late last month that the Justice Department and the Federal Trade Commission, during its recently announced review of mergers, should ‘plug those holes’ that previously allowed T-Mobile to acquire Sprint.

“I would say that one thing that we have accumulated a great deal of evidence on is that we are missing problematic mergers – that we are not [stopping] mergers that turn out to be harmful,” said Fiona Scott Morton, the Theodore Nierenberg Professor of Economics at Yale University School of Management, at the April 28 event, referring to the FTC’s failure to stop the Sprint/T Mobile merger and accused it of not appropriately protecting consumers.

“We are under enforcing as a general matter and we should therefore use this review of the merger guidelines to plug those holes,” she said, adding, “Are we catching nascent competitors that are going to prove to be important competitors in the future? It turns out we are not doing that,” she said.

She also responded to critics asserting that the FTC simply needs more money to effectively enforce their guidelines.

“Here is where I am going to play fiscal conservative,” she said. “How about we change the rules to make it easier for the government to bring these cases and then we do not need to spend $2 billion more, we could spend half a billion dollars more because there would be a significant deterrent effect and the government would have less work to do.”

Merger guidelines will give industry more certainty

In January, the FTC under Chair Lina Khan and the Justice Department’s antitrust division launched a public inquiry into modernizing merger guidelines established under previous leadership, on which Khan said was an attempt to “accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals.” Public comments were due on April 21.

Howard Shelanski, a partner at law firm Davis Polk, said at the ITIF event that FTC guidelines serve several purposes.

“One thing is certainly, just to let parties considering mergers to have an idea of what kind of scrutiny they are in for at the agencies,” he said.

He explained that the guidelines serve to inform stakeholders at which levels of industry concentration presumptions of harm will be triggered and what theories of harm the FTC will pursue.

“I think [guidelines] also let parties know how agencies will consider different kinds of defenses that [will] likely be raised,” Shelanski added. “So, the guidelines certainly serve a public purpose, but they also signal to courts about what lies behind the [FTC’s] thinking when it chooses to investigate and ultimately challenge a merger.”

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