Policy Upheaval and the Future of the

US Antitrust Enforcement System

William E. Kovacic
George Washington University Law School
National Press Foundation
May 28, 2021
wkovacic@law.gwu.edu
 Extraordinary Ferment in the U.S.
Antitrust System
• Why Now? Formative Conditions with Major
Historical Antecedents in US Antitrust History
(1906-1920, 1935 to 1950, 1969 to 1980)
– Period of Perceived Permissiveness in Federal
Antitrust Enforcement
– Emergence of powerful enterprises
– New literature that criticizes markets and status
quo of public policy
– Economic shocks that inspire reassessment
The Remarkable Upheaval: Cases Filed
Since January 2020
• US et al. v. Google
• Colorado et al. v. Google
• Texas et al. v. Google
• Federal Trade Commission v Google
• New York et al. v. Google
• District of Columbia v. Amazon
• Epic v. Apple
District of
Columbia v.
Amazon (D.C.
Superior Court,
May 25, 2021)

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Michael Hausfeld
 Remedies Sought
• Structural Remedies
– Divestitures: e.g., FTC v. Facebook (spin-off
Instagram and WhatsApp)
• Injunctive Relief
– Conduct controls: e.g., Colorado v. Google
and Texas v. Google (ban exclusive dealing)
• Damages
– E.g., DC v. Amazon, Texas v. Google
 The Remarkable Upheaval II: The
Legislative Agenda
• Higher Tempo of Congressional Hearings
• Proposed Federal Legislation
– More resources for federal antitrust agencies
– Strict controls on mergers by dominant firms
– Strict controls on dominant firm conduct
– FTC authority to adopt rules for major platforms
• State Legislation
– New Virginia privacy controls
– New York proposal to amend NY antitrust statute
Chairman David Cicilline
June 2020 Hearing of Cook
the House Judiciary Pinchai
Antitrust Zuckerberg
Subcommittee Bezos
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Cicilline’s Opening Question: “Why are
you stealing”?
Mark Zuckerberg (FB CEO) to David
Ebersman (FB CFO): Feb. 27, 2012
 And the Rest of the World
• Over 130 Countries Have Competition Law
Systems (Compared to 30 in 1990)
– Modern Capital of Antitrust Enforcement: Brussels
(EU Directorate for Competition)
• Numerous Lawsuits/Inquiries on Big Tech
• Major Proposals for New Regulatory Regime
– European Union: Digital Markets Act
– United Kingdom: Digital Markets Unit
 Most Recent Comparable Upheaval:
1969-1980
• DOJ Lawsuits to Break Up AT&T and IBM
• FTC Lawsuits to Break Up Xerox, the Four Leading
US Breakfast Cereal Producers, and the Eight
Leading US Petroleum Refiners
• Legislation: Congress
– Enacted the Trans-Alaska Pipeline Authorization Act
(1973) [amended FTC Act]; Tunney Act (1974); Hart-
Scott-Rodino Act (1976)
– Considered the Petroleum Industry Competition Act of
1976 (endorsed by Senate Judiciary Committee)
 Today’s Agenda
• Contending Schools in the Policy Debate
• Demands for Transformation: Causes
• The Transformationalist Agenda
• Progress to Date
• Prospects for Durable Adjustments
• Caveat: Personal Views Only
• Further Caveat: FTC General Counsel, 2001-04,
Commissioner 2006-11, Chair, 2008-09
Major Focus: Main Catalysts for the
Remarkable Upheaval
Three Contending Schools of Thought

• Traditionalists: Essentially Leave It Alone

• Expansionists (Progressives)
• Transformationalists (New Brandeisians)
 Traditionalists
• Maintain the Central Focus on Consumer
Interests (“Consumer Welfare”)
• Reject Expansion of Goals Framework
• Notable Exponent: Joshua Wright
– Professor, George Mason Scalia Law School
– Former FTC Commissioner
– See Wright et al., Requiem for a Paradox: The
Dubious Rise and Inevitable Fall of Hipster
Antitrust, 51 ARIZONA STATE LAW REVIEW 293 (2019)
 Expansionists (Mainly Composed of
Clinton/Obama Era Antitrust Alumni)
• Retain Focus on Consumer Interests (Prices,
Quality, Innovation, Monopsony)
• Emphasize Modern Microeconomic Analysis
• Expand Scrutiny of Mergers and Dominant
Firm Conduct with Existing Enforcement Tools
• Adopt New Legislation (with Rulemaking)
• See Center for Equitable Growth, Restoring
Competition in the United States (Nov. 2020)
Transformationalists: Two Architects
Barry Lynn, Director, Lina Khan, Nominee,
Open Markets Institute Federal Trade Comm’n
 Goals: From Consumer Welfare to
Citizen Welfare (Workers, Small
Business, Democratic Institutions)

The Strictly Control Mergers and

Transformation Dominant Firm Conduct Using
Agenda: Broad Existing Enforcement Tools
Application of
Adopt New Laws to Strengthen
Antimonopoly Antitrust Controls and Create New
Policy Regulatory Framework

Deconcentrate Monopolies and

Oligopolies
 Foundational Philosophy of
Transformation
• House Judiciary Antitrust Subcommittee (Oct.
2020 majority staff report later endorsed by
Judiciary Committee): Congress should restate
– “the original intent and broad goals of the
antitrust laws by clarifying that they are
designed to protect not just consumers but
also workers, entrepreneurs, independent
businesses, open markets, a fair economy,
and democratic ideals”
 The Arch
Transformationalist
Villain: Robert Bork
Almost as
Bad: Barack
Obama

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 Litany of Obama Antitrust Failings
• Generally: Promised Much, Delivered Little
– American Economic Liberties Project, The Courage
to Learn – a Retrospective on Antitrust and
Competition Policy during the Obama
Administration and Framework for a New,
Structuralist Approach (Jan. 2021) [182 pages]
• Big Tech Revolving Door
• Antitrust Agency Failures
– No significant DOJ case against dominant firms
– FTC walks away from case against Google (2012)
and allows Facebook to buy Instagram/WhatsApp
 The Transformation Agenda:
Suggested Means
• Appoint Untainted, Courageous Enforcers
– No Obama alumni, no private practitioners with
Big Tech or corporate defense backgrounds
• Expand the Focus of Enforcement Dramatically
– Accept greater risk of losing cases
• Amend the Antitrust Laws
– Restate Its original egalitarian aims
– Expunge disfavored judicial precedents
– Create bright line prohibitions
 Policy Debate in the United
States and Abroad
Impact to
Date: Legislative Agenda: Cicilline,
Buck, Klobuchar, Hawley
Fascinating
Case Study Agency Cases Against
of Policy Amazon, Facebook, Google

Advocacy Debate Over Whom Biden

Should Appoint to Lead DOJ
Antitrust Division and FTC
 DOJ and FTC Appointments Examined
in More Detail
• The Summer Approaches and Key DOJ and FTC
Leadership Positions Are Unresolved
• DOJ: Jonathan Sallet? Jonathan Kantor? Others?
• FTC Membership
– Rebecca Kelly Slaughter: Acting Chairwoman
– Rohit Chopra: (Incumbent; term expired)
– Lina Khan: Awaiting Vote by Full Senate
– Noah Phillips: Incumbent
– Christine Wilson: Incumbent
Acting FTC Chairwoman Rebecca Kelly
Slaughter
 Tim Wu

• National Economic Council,

Special Assistant to the
President for Technology
and Competition Policy

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 Reasons for Transformationalist
Influence So Far
• Surprised Complacent Status Quo
• Seized Opportunity Created by GFC/COVID
• Produced Avalanche of Research/Ideas
• Bypassed Existing Institutions and Formed New
Community
– Foster/use new publication venues (American
Prospect, The Intercept, Substack)
– Social media: immediate support for allies and swift,
sharp attacks on adversaries
– New academic and professional networks
 Transformationalist Style
• General: Keep Opponents on the Back Foot
– Application of a public policy OODA Loop
• Ferociously Hard Working and Productive
– Major report or book per month since mid-2019
• Keen Strategic Vision and Tactical Awareness
– Example: House Judiciary Committee
• Take No Prisoners
– Highly personalized critiques that name names:
special contempt for Obama antitrust agency alums
– Adversaries depicted as inept and “corrupt”: bad
policy from bad people
Going Ahead: Prospects for Durable Policy Change?
Core Transformationalist Assumptions
• 1980-2020 Wasteland: Nothing to Learn Here
• Causes of Antitrust Collapse from late 1970s
onward: Chicago (e.g., Bork), Consumer
Fanatics (e.g., Nader), Wealthy Elites/Market
Enthusiasts (coalesced during Carter
Presidency)
• Needed Inputs for Transformation
– Courageous, untainted enforcers
– Agencies with more powers and resources
The Blind Side: Policy Implementation

• Historical Tendency of Advocates for Major

Expansions of Antitrust Policy: Underestimate
Implementation Difficulties
• Caution Relating to My Point of View
– FTC positions during the Wasteland Era
– Pre-academic experience in corporate law firm
– Transformation advocates would not regard me as
a trustworthy observer
Graham Allison, THE ESSENCE OF DECISION
(1971)
• “If analysts and operators are to increase
their ability to achieve desired policy
outcomes, … we shall have to find ways
of thinking harder about the problem of
‘implementation,’ that is, the path
between the preferred solution and
actual performance of the government.”
 May 25,
1961
• “I believe this nation
should commit itself
to achieving the goal,
before this decade is
out, of landing a man
on the moon and
returning him safely
to earth.”
 Policy • The Physics of Going from the
Implementation Earth to the Moon and Back

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 Policy
Implementation

• The Engineering of
Sending Humans to
the Moon and
Returning Them
Safely to Earth

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 Implementation Obstacles
• Agency Capacity
– Matching commitments to capabilities
• Judicial Resistance
– Goals and doctrine
• Unvirtuous Political Feedback Loop
• Undisciplined Righteousness
• Incomplete, Selective Invocation of History
 Agency Capability
• Human Capital
– Numbers and experience
– Salaries: Compare CFPB
• Powers
– FTC and the Sunshine Act
– FTC jurisdictional carve-outs
 1970s Mismatches
• FTC: Cases to Restructure Major Sectors:
Petroleum, Food (breakfast cereal, bread,
instant coffee, lemon juice), Photocopiers,
Rental Cars
• DOJ: Cases to Restructure Computer,
Telecommunications, Automobile Tire Sectors
• And Much, Much More
 Pivotal Role for the Federal Courts

• Define and Adjust Legal Rules

– “Upgrades”
– Perceptions of goals
– Less constraining role for stare decisis
• Impose Remedies
–Note: US agencies cannot do anything
that “hurts” without judicial approval
 Judicial Resistance
• Consumer Welfare Focus
• Intervention Skepticism
– Private rights of action
– Doubtful view of Implied administrative powers: AMG
Capital (S.Ct. 2021)
– Competition rules: How sturdy is National Petroleum
Refiners (DC Cir. 1973) today?
• Will Biden Replicate Reagan’s Appointment of
Influential Academics to Move Doctrine?
– Bork, Bowman, Scalia, D. Ginsburg, Winter, Williams,
Posner, Easterbrook
Unvirtuous Political Feedback Loop
• Seemingly Favorable Environment in Congress for
Reforms Now, but for How Long?
• Compare FTC in 1970s: Beloved by Congress from
1970-76, But the Weather Changed Fast
– Walter Mondale in Battle Creek on eve of 1980
presidential election; promises to tank Cereal case
– 15 major consumer protection rules in flight by 1977
(including Kidvid); many berated by Congress
– Shut down twice for lack of funds: 1979-1980
– All of this happens before Ronald Reagan comes to
Washington in January 1981
 Legislative Coalition for Change:
Breadth and Strength?
• Level of Commitment
– “Will support it” vs. “Am open to it”
– “It’s on the table” (and could be removed?)
• Republicans: Antipathy to big tech, or more?
• Democrats: Transformation or Adjustment?
• What Happens When Lobbying Intensifies?
– Historical tendency: Bold reform proposals enter
the US Code in diminished (substantially?) form
 Legislative Reform Sequencing
• More Resources for DOJ and FTC, and then …
– Congressional outlays for the states?
• FTC Act 13(b) restoration? In What Form?
• Enhanced Merger Control?
• Stronger Limits on Dominant Firm Conduct?
• Vacate Process Obstacles (Twombly, Matsushita,
Brunswick, Associated General Contractors)?
• Form Ex Ante Regulatory Regime (Platforms)?
 Righteousness Side Effects
• Motivator or Flaw: Getting the Correct Dosage
• Purity in Presidential Appointments
– Disqualify all candidates with Obama-era links
and private practice defense work?
– Consider: Would Louis Brandeis or Thurman
Arnold have passed the purity test?
• Depicting DOJ/FTC from 1980-2021 as Useless:
Will the Professional Staff (on whom success
depends) Trust/Rally to the New Leaders?
 Fractured History
• Daniel Ernst and the “Usable Past”: Dangers
– Example: Did the Chicago School alone hijack antitrust in
the 1970s? Harvard scholars (Areeda, Breyer)? Impact of
economic stagnation and ascent of Japan/Europe?
• Ignore 1980 to 2021?
– Judicial appointments: the academics strategy
– Cases: prevailing before demanding courts
• Example: DOJ v. Microsoft (D.C. Circuit 2001)
– Rulemaking: Do Not Call
Strategy Derived from Past Success
• What’s the Plan If Congress Does Not Change the
Law Materially (Beyond Adding Money)?
• How to do Better with What You Have
– Form common agency strategy
– Identify how circumvent doctrinal obstacles
• Special role of government litigation
• FTC administrative litigation
• There are paths (though difficult) that lead
to doctrinal extensions through litigation
 Closing Thoughts: Four Major
Unresolved Issues
• What Mix of Public Policies (Antitrust and
Others) Inspire Desired Levels of Technological
Progress and Other Forms of Innovation?
• What Kind of Competition Do American
Citizens Prefer?
• Are Our Public Institutions Fit for Purpose?
• What Is the US Relationship to the Rest of the
World of Competition Policy?
 What Are the Sources of Innovation
that Spurs Economic Growth?
• Illustration: The Emergence of the Digital Age
– Antitrust
– Removing artificial restrictions on entry
– Intellectual property regime
– Public investments
• Research and development (by public
agencies, universities, private firms)
• Human capital
Bell Laboratories:
1947: Bardeen,
Brittain, and
Shockley and the
Invention of the
Transitor

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Telephone: 1950s
Camera (and Film) 1980s
Mainframe Computer: 1960s
Today
Regulation and New Business Models
Malcolm McLean
 Government as Investor: Higher
Education and Human Capital
Land Grant Colleges State University Systems

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BY

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Apollo 11:
July 1969

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 Government as Inventor

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 This Photo by Unknown Author is licensed under CC BY

Government as Buyer:
Modern Revolution in
Space Transportation

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The Enabling Environment
 Do Citizens Like Competition?
• As Consumers: Ordinarily, Yes
– Smart phones
• As Workers? Not So Sure
– Displacement: Existing firms and industries
– Shocks from trade/economic integration
• As Residents? Not So Sure
– Upheaval in communities
 Competition as Displacement
• Joseph Schumpeter, Capitalism, Socialism and
Democracy (1942): Chapter titled “The
Process of Creative Destruction” [6 pages]
– “Perennial gale of creative destruction”
– “New commodity, new technology, new source of
supply, new type of organization”
– “Bombardment” that assaults “foundations” and
“very lives” of incumbent firms
– Political significance
Fisher Body Plant 21 (Detroit: 1950s)
“Body by Fisher”
Fisher Body Plant No 21 Today
 Are the US Competition Law
Institutions Fit for Purpose
• Framework of Federal Enforcement: DOJ, FTC,
Sectoral Regulators
• Role of State Governments
• Private Rights of Action
• Federal Courts
– Note: DOJ/Colorado cases against Google are
scheduled to go to trial in September 2023
– Will Texas case go to trial (jury?) in 2022?
 US Role in the Rest of the World
• Is US Competition Law for Big Tech Relying on
the Right Mix of Policy Technology?
– Litigation of big cases vs. ex ante regulation?
• Will Foreign Regimes Set Global Standards
Because:
– Other major jurisdictions (e.g., EU) moved first?
– US stature has suffered
• Contempt for international institutions/allies 2017-21
• Transformationalist suggestion that US lost its mind
from 1980 to 1921 (Why trust it now?)