As expected, on June 15, 2021, the US Senate confirmed Lina Khan’s appointment to the Federal Trade Commission (FTC). Unexpectedly, hours after her confirmation, President Joe Biden appointed her president of the FTC. Ms Khan graduated from law school four years ago, but in that short time she gained notoriety thanks to her calls for a new approach to antitrust and her harsh criticism of Big Tech. His appointment as FTC chairman likely indicates that the Biden administration will not only be more aggressive in enforcing antitrust laws than the previous two administrations, but may also push for more significant antitrust reform.
Lina Khan’s experience
In 2017, while a law student at Yale University, Ms. Khan rose to prominence following the publication of a memo she wrote in the Yale Law Journal criticizing antitrust law enforcement as not equipped to tackle market power in the digital economy and calling for a new framework. In her article, Ms Khan questioned the long-standing consumer welfare standard and its emphasis on price effects. She advocated for the use of antitrust to address a range of political concerns – including, for example, protecting the interests of workers by blocking mergers that result in a reduction in the workforce or a stagnation of workers’ wages.
After graduating from law school, in 2018, Ms. Khan worked as legal director of the Open Markets Institute, an organization which, according to its online mission statement, “uses research and journalism to expose the dangers of monopolization.” and advocates for changes in policy and law to address these dangers. In 2019, she served as a Legal Officer in the Office of FTC Commissioner Rohit Chopra and Advisor to the Antitrust, Commercial and Administrative Law Subcommittee of the House Judiciary Committee. She helped prepare the October 2020 report of the U.S. House Antitrust Judicial Subcommittee that recommended legislation to, among other things, dismantle large tech companies and place the onus on dominant firms to prove that a merger is necessary to serve the public interest. In July 2020, Ms. Khan joined Columbia Law School as an Associate Professor.
What does Ms. Khan’s appointment as President mean for US antitrust law enforcement?
Ms. Khan’s selection to lead the FTC came as a surprise to many. The two current Democratic commissioners who served under the Trump administration – Rebecca Slaughter and Rohit Chopra – have proven to be aggressive executors and even more progressive in their positions than their predecessors in the Obama administration. For example, the two called for more scrutiny of vertical mergers, dissenting in two committee votes not to challenge vertical mergers, and criticizing vertical merger guidelines updated in June 2020 to continue to include the view that vertical mergers are almost always pro-competitive. Commissioner Chopra was awaiting a potential appointment to the Bureau of Consumer Financial Protection, and many expected President Biden to use the vacancy to take the FTC chair with a less progressive voice. Instead, Ms Khan will now lead FTC policy and will undoubtedly use her leadership position as a platform to advocate for antitrust reform, including passing some of the bipartisan bills proposed to strengthen the ‘application. Additionally, the combination of President Biden’s appointment of Ms Khan as FTC chairman and her previous appointment of Tim Wu – another progressive antitrust voice and bigtech critic – to the National Economic Council, sheds more light. on the administration’s antitrust priorities. Nonetheless, there will be limits to how aggressive the administration is to bring about a radical change to antitrust laws in the United States.
First, a long history of legal precedents provides a consistent legal framework for assessing potentially anti-competitive behavior and mergers. Although Ms Khan and other progressives criticize the consumer welfare standard and argue for a new, broader framework, courts have applied the same standards under current antitrust laws for decades. This precedent will be difficult for the FTC to overcome in the short term. She may also be counting on Congress to amend the laws, but it’s far from clear whether some of the more sweeping antitrust bills will pass.
Second, like all antitrust law enforcement officials, Ms. Khan and the FTC will face resource constraints. Introducing antitrust litigation is a costly and laborious process, often requiring millions of dollars in expert fees and a large army of FTC staff attorneys, and taking months, if not years, to accomplish. Typically, the FTC can only deal with a handful of antitrust matters at a time. It seems likely that Congress will provide more funding to the FTC in the current environment, but even with these additional resources, the FTC will still need to choose its cases carefully and cannot challenge every agreement or every case of alleged illegal behavior.
Third, the FTC shares its federal jurisdiction over antitrust enforcement with the Antitrust Division of the Department of Justice (DOJ). When it comes to examining mergers and potentially illegal civil behavior, agencies divide jurisdiction based on previous experience in an industry and an agreement to let an agency take the lead. As we’ve seen in the Trump administration with surveys of big tech companies, agencies can fight over which one will take on a particular case. The FTC and DOJ generally coordinate on antitrust policy matters as well, including merger guidelines, proposed legislation, and other key positions. As a result, who the Biden administration appoints to the vacant post of Deputy Antitrust Attorney General at the Justice Department will impact Ms Khan’s agenda to some extent. If President Biden appoints a more moderate enforcer in the DOJ, it could put the brakes on changes in antitrust policy. A more progressive DOJ leader, similar to Ms Khan at the FTC, could of course lead to more changes. We expect President Biden to make the DOJ nomination soon.
Following Ms. Khan’s appointment as FTC President, we expect continued aggressive enforcement at the FTC and some attempts at change. However, Ms. Khan’s ability to effect fundamental reforms of the nature she previously advocated depends on a multitude of factors, including whether Congress significantly changes U.S. antitrust laws, what additional resources the FTC is granted for prosecute and who President Biden appoints to lead antitrust enforcement at the DOJ.
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable national laws.