The bravery quotient

13 February 2018

The bravery quotient

Federal Trade Commission building

After years of critics clamouring for changes to the way the US antitrust agencies enforce the law, lawmakers in 2017 proposed legislation that they believe would boost competition enforcement. But longtime antitrust observers on the right and the left say those amendments aren’t necessary. What’s needed, they say, is the bravery to bring difficult cases. Ron Knox explores whether Trump administration officials are up to the challenge

In the eyes of critics of the Obama Administration’s record in policing the economy against monopolies, there is no greater and more obvious example of its failure than the Federal Trade Commission’s investigation of Google.

For months, FTC chairman Jon Leibowitz told everyone within earshot that he was going to take down the online search titan. The agency’s investigation, launched in 2011, coalesced around the theory that the company had used its unchecked power in online search to unfairly boost its power in other, adjacent products – shopping, stocks, maps and so on – at the expense of its smaller rivals. And Leibowitz thought he had the facts. He hinted at the case publicly on multiple occasions, and in quieter settings he assured listeners of the agency’s inevitable lawsuit against the company. While the full report from the FTC’s bureau of competition staff remains confidential – a status some are trying to change – the half of the report obtained by The Wall Street Journal suggests that the agency’s staff believed they had a case: Google had broken the antitrust laws and deserved to be sued for doing so. While staff was torn about different aspects of the case, they sent a list of potential charges to Leibowitz and his fellow commissioners for a vote.

Then . . . nothing happened. Despite his best efforts – and a Democratic majority among the five commissioners – Leibowitz could not secure the three votes needed to sue Google. Instead, Google and the FTC signed an inconsequential settlement in early January 2013, and less than a month later, Leibowitz resigned from the agency and went to work for New York law firm Davis Polk & Wardwell. Google, of course, continues to be the unrivaled leader in online search and advertising.

How different things could have been. A lawsuit, of course, would have altered life drastically for Google. At the least, the company would have had to defend itself before the agency’s in-house tribunal and in federal appeals court, where its opaque search algorithm and business model would have sizzled under the public spotlight. It also would have been by far the most important antitrust lawsuit of the Obama administration, a parallel to the Clinton administration’s Microsoft case almost 20 years earlier. But most of all, a lawsuit against Google perhaps would have changed the current discourse surrounding antitrust.

Now, in the first months of 2018, antitrust enforcement is more central to US political discourse than it has been in a generation or more. Americans suffer from the most pronounced economic inequality in their country’s history, coupled with levels of industry concentration not seen since before the Great Depression. A rising number of economists, scholars and pundits say successive decades of lackadaisical antitrust enforcement contributed to America’s dangerous macroeconomic problems. While the Obama administration blocked dozens of mergers in traditional industries, it skirted opportunities to stop two of the country’s most powerful technology companies, Google and Facebook, from growing through mergers, and declined to bring any major monopolisation cases – all while inequality advanced. Some good old-fashioned trust-busting, critics say, is the once and future cure for what ails the economy.

Had the FTC brought its case against Google as Leibowitz boasted, would the current narrative remain? Would people still believe that US antitrust laws are broken and require legislative repair and regulatory buttressing to police our modern economy? Would US critics still look to Europe for guidance and inspiration?

It seems a fool’s lament. The government never sued Google. It never properly investigated the market power of Amazon despite the company’s dominance cropping up in multiple adjacent probes. It allowed Facebook to buy Instagram and WhatsApp and Google to buy DoubleClick, Waze and ITA. Industries across the economy have consolidated relatively unchecked, and economists now point to that concentration as one of the drivers of America’s historic levels of inequality.

Into that void, Democratic lawmakers and strategists have propelled a vision for the reinvigoration of antitrust enforcement in America. The Democratic party has injected renewed monopoly enforcement into the current party platform – called “A Better Deal” – while a group of Democratic Senators, led by Amy Klobuchar, introduced new legislation in September that would bulk up merger enforcement by requiring lookbacks at closed deals, revamped filing fees and other changes. “Economic concentration is driving up costs for consumers and driving down innovation in business,” Klobuchar said at the time. “We need more competition, and we need antitrust enforcement that meets the demands of the 21st century economy.” It’s a bold plan that would usher in sweeping changes to the country’s antitrust enforcement regime.

It’s also unnecessary, antitrust observers from various points on the political spectrum say. The antitrust agencies can, right now, alter the country’s approach to policing monopolies and harmful mergers. All it will take is guts. Willpower. Bravery.

“Our existing antitrust laws and existing enforcement infrastructure is perfectly capable of dealing with market power issues that we see today,” says Diana Moss, the head of the pro-enforcement American Antitrust Institute. “The tools are there. We need progressive, creative, vigorous enforcement.”

Observers say internal, mainly philosophical changes at the antitrust agencies would be enough to bring the kind of changes needed to help rebalance the American economy. What’s more, those changes would likely not require the agency to plumb novel theories of harm and experimental economics. While anti-monopoly case law is scarce, it exists, and it often includes thoughtful opinions broad enough to capture harmful behaviour throughout the economy. It just needs to be harnessed, observers say, by government officials willing to take chances and risk courtroom losses in order to rebuild a more robust enforcement.

At the dawn of the Trump administration, the possibility that its incoming antitrust appointees would kickstart a new era of powerful enforcement appeared remote. Law firms comforted clients with promises that despite some populist chatter on the campaign trail, President Donald Trump’s antitrust cops would police the beat with the same restraint and hands-off approach as recent Republican administrations. Now, those forecasts appear shaky. At the Department of Justice, new antitrust head Makan Delrahim has sued to outright block a vertical merger for the first time in decades. And at the FTC, those who know Trump’s nominee to lead the agency believe Joseph J Simons will enter with a more ambitious agenda than some prognosticators have predicted – and that he has the will and intimate understanding of the agency needed to wield the enforcer’s broad powers.

Of course, questions about the agencies’ antitrust agenda and capabilities abound; after all, it took more than a year after Trump’s inauguration for the president to officially nominate replacement commissioners to the FTC. But observers say the current crop of enforcers have all of the tools and economic backing they need to bring the kinds of cases the US government hasn’t brought in a generation.

All they need is the bravery to do it.

***

“I agree that America’s anti-monopoly laws are largely up to the task, as they were originally framed by Congress." - Barry Lynn

Changing America’s approach to enforcing the antitrust laws has become, for some, the preferred cure for a range of economic and political ills: inequality, stagnant new business growth, even the erosion of democratic standards. The gap between the wealthy and the middle class in the US is widening at the same time industries throughout the economy have grown increasingly concentrated. The agencies tasked with policing that concentration haven’t done it, so perhaps altering the law or the standard by which they enforce will rejuvenate their trust-busting work, break up companies’ consolidated power and help reverse the headwinds of inequality.

In mid-December 2017, Barry Lynn, founder of the Open Markets Institute and perhaps the most prominent champion of shifting the country’s antitrust enforcement standards, sat before the Senate antitrust subcommittee and delivered a damning condemnation of antitrust’s current guiding principle: consumer welfare. The standard was championed by Robert Bork and has been embraced as policy ever since the Reagan administration. But it has blinded antitrust enforcers to the harms mergers and conduct could inflict on wages, entrepreneurship and democracy, Lynn told the senators. The standard’s narrow focus on price and output convinced enforcers to allow mergers and buyouts that have hollowed out the economy, he said, and the focus must change for those structural issues to improve.

Lynn’s argument is tangential to, or perhaps separate from, the argument that the US antitrust laws are inadequate to police the modern economy. While Lynn and Open Markets are pushing for changes to antitrust policy, Democratic lawmakers have proposed amendments to the federal statutes themselves – some minor and some major.

Some of the legislative changes would, observers say, support the mission of the agencies without making wholesale changes to their enforcement powers. Senator Klobuchar’s proposed Merger Enforcement Improvement Act hikes filing fees on deals and requires companies to submit post-merger data to the agencies to ensure the merged company isn’t stinging consumers or competition. While both provisions additionally burden dealmakers, they preserve the basic legal structure that governs antitrust enforcement.

The other pending legislation, the Consolidation Prevention and Competition Promotion Act, would change the law considerably by lowering the bar for what the agencies would need to prove to stop a merger. With minor changes on the language of the Clayton Act – turning “substantially” into “materially” and adding “monopsony” to “monopoly” – the agencies would need to prove only that a deal does some damage to competition for a federal court to nix the merger. And it would emphasise that that powerful buyers can cause just as much harm to the economy as powerful sellers.

The latter bill is the most significant attempt so far to implement something close to Open Market’s vision for antitrust; the preamble to the bill specifically mentions low wages, suppressed entrepreneurship and economic inequality as antitrust harms equal to higher prices or reduced output. But Open Markets doesn’t see legal changes as necessary to vigorous antitrust enforcement. The group doesn’t necessarily oppose the changes – Matt Stoller, a fellow at the institute, says the bill’s proposal to shift the burden of proof off the government and onto powerful companies would be a welcome change – but believes the existing laws are more than capable.

“I agree that America’s anti-monopoly laws are largely up to the task, as they were originally framed by Congress,” Lynn said in his prepared testimony to the Senate. “I also agree that antitrust enforcers should not have to make political decisions, or judge between different political outcomes. That’s because Congress already made those political decisions when it originally framed and enacted those statutes.”

Many of the arguments coming from those pushing for more vigorous antitrust enforcement skip asking for legal changes, instead advocating for a philosophical shift in enforcement. This hoped-for change in thinking and action in antitrust enforcement often collides with established case law that, to the outside observer, appears daunting to overcome.

For example, in her widely-read Yale Law Journal note about Amazon’s market power, Open Markets legal director Lina Khan pegs the company’s primary wrongdoing as predatory pricing – below-cost pricing to siphon customers from rivals and ultimately put competitors out of business. Khan’s paper meticulously details the legislative history and intent of the antitrust laws to address harmful pricing behaviour, from the groundbreaking Standard Oil monopolisation case, to Section 2 of the Clayton Act, the Robinson-Patman Act and other fair trade laws that attacked pricing practices. This history and legislative intent exists, Khan argues – but modern antitrust doctrine erects significant obstacles to predatory pricing claims. Under post-Chicago School antitrust jurisprudence, captured in the Supreme Court’s decision in Brooke Group and elsewhere, plaintiffs bringing a predatory pricing claim must prove that a company’s prices were not only below its costs, but also that the company took steps to recoup those lost profits through higher prices after driving rivals from the market.

Khan describes Amazon’s ebooks business, as examined in the DOJ’s case against Apple and five book publishers, as predatory. The company prices bestsellers and new releases at cost, then recoups its profits elsewhere in its business. Apple had argued that its agreements with publishers – which the DOJ successfully challenged as price fixing – were intended to break Amazon’s ebooks monopoly, but Judge Denise Cote, who ruled on the case in Manhattan federal trial court, rejected Apple’s view, insteading finding Amazon to be an occasional loss-leader in ebook pricing and not in violation of the antitrust laws. Khan says that’s a mistake – that being a loss leader with an online platform, where product markets are much more precise, can inflict more harm on competition than it does in a physical store. Plus, it is far more difficult to prove recoupment online, where prices fluctuate and lines of business from which to recoup profits are myriad. The US needs a new standard to test whether below-cost pricing is harming rivals, she and her colleagues at Open Markets say.

More broadly, critics say the world’s largest platform technology companies – Google, Amazon, Facebook and Apple, or GAFA as they’re sometimes called – engage in harmful behaviours that provoked punishment in other jurisdictions but escaped the gallows in the US. While those in the rising anti-monopoly movement see inaction or legal shortcomings by the FTC and US Department of Justice, private lawyers, economists and scholars say the theories of competition harm that exist in Europe and elsewhere simply don’t fit with current US antitrust law or jurisprudence.

Among academics and former enforcers steeped in antitrust orthodoxy, even those who are most sympathetic to the call for broadened antitrust enforcement say the right set of facts must exist for the agencies or private lawyers to bring a case and win. There must be antitrust harms under the law as it stands, which requires damage to consumers or rivals through some unscrupulous means.

It’s a rub on the arguments of Khan and others: while they identify legitimate concerns about the power of Amazon and other platform monopolists, there’s no clear description of an action that traditional antitrust thinkers say violates the US antitrust laws as they stand today – including, apparently, Khan’s predatory pricing description of Amazon losing tens of millions of dollars selling below-cost diapers, only to hike prices once the FTC had reviewed and cleared its purchase of rival nappy retailer Diapers.com. Recent former enforcers in particular find the new anti-monopolists’ criticisms frustrating; if there had been a set of facts that would have opened a clear path to an antitrust lawsuit and likely victory in court, they say they would have taken it.

“I’m not really sure what it is that the so-called platforms have allegedly done that violates the US antitrust laws,” says Renata Hesse, the former acting head of the DOJ’s Antitrust Division and now a partner at Sullivan & Cromwell, where she advised Amazon on its purchase of Whole Foods. “What is it that GAFA is doing that harms consumers” in an antitrust context, she asked.

Hesse, perhaps more than any other recent enforcement official, embodies this middle way between supporting more aggressive enforcement but remaining loyal to current antitrust orthodoxy. She is no fan of the Chicago School-inspired policies that came to dominate thinking at the agencies during the past 30 years. But she supports economics as the backbone of antitrust actions. Moreover, she questions whether antitrust is the right tool to address the myriad problems that plague the American economy.

During her time in government, Hesse became perhaps the most vocal proponent of using antitrust as a means to help battle inequality and other economic issues since Thurman Arnold, the iconic New Deal-era trustbuster and head of the Antitrust Division. At a speech at Georgetown University last September, Hesse said that “fighting against the unfairness of concentrated economic power profiting at the expense of consumers, suppliers, or competitors who could challenge the defendant’s dominance” was the moral underpinning of the antitrust laws, and that “economic fairness” was its ultimate goal.

While economic fairness might indeed be a worthwhile goal of antitrust enforcement, former enforcers say that isn’t enough to sway courts that hew closely to existing jurisprudence. The Antitrust Paradox and other writings of Robert Bork and his fellow Chicago-school adherents seeped into in court opinions. It built a body of case law that made enforcement efforts, particularly against single-firm conduct, far more difficult.

The chances of another grand shift happening now appear slim. While Khan’s paper has been widely read and influences the national conversation around antitrust and the power of the GAFA platforms, she’s not Bork – who as Solicitor General during the Nixon and Ford administrations was able to directly influence government policy and legal filings. Replicating that influence will require either actual changes to the law, or antitrust enforcers who are willing to take Khan’s arguments and other novel approaches to anti-monopoly enforcement to court – and to risk losses once they get there.

Few believe that will happen under the business-friendly Trump administration. But they’re called surprises for a reason, some in the antitrust bar say. Trump’s picks to lead the antitrust agencies might very well try to move them toward the kind of enforcement Khan and others have called for. It may have already started.

***

The AT&T/Time Warner challenge represents an antitrust Rorschach test for those interested in the government’s motivations.

There was never any guarantee that AT&T’s planned purchase of Time Warner would pass antitrust scrutiny. On 24 October 2016 – the first day of trading after the telecommunications company announced its $66 million acquisition of the content provider – the stock prices of both companies dipped. Reports at the time suggested that investors were spooked by the deal’s prospects before antitrust enforcers. The DOJ had previously stifled AT&T’s attempted 2011 tie-up with rival T-Mobile, which cost the would-be buyer a $4 billion breakup fee. At a time when Democrat Hillary Clinton appeared to be the likely next president, Wall Street grumbled at prospects of the Time Warner deal ever getting done.

In antitrust circles, however, the outlook for the deal was far more upbeat. For a generation, the DOJ and FTC had been reluctant to outright stop vertical deals – mergers of companies that did not compete head-to-head in any specific market. Since the DOJ failed to block a paper industry deal late in the Carter administration, the government has not taken a vertical merger to court. Over the past two decades, even consent decrees have been rare; the agencies challenged 31 vertical deals during the Clinton administration, but during the Bush and Obama presidencies combined challenged only 17.

The AT&T/Time Warner deal appeared poised for clearance, especially after the Republican candidate won the presidency. Trump had publicly vowed on the campaign trail to block the deal – one of his statements to support speculation he could lead antitrust enforcement in a more populist direction. But pundits believed his antitrust agencies would enforce the law along traditional Republican lines, based on a fundamental belief in cognisable merger efficiency claims and hesitancy to challenge deals or conduct unless they found ample evidence of higher prices or other consumer harms. Shortly before the election, Delrahim, who would become the head of the Antitrust Division, said he did not see the AT&T/Time Warner deal, a vertical merger of a content provider with a distribution network, “as a major antitrust problem”.

But views inside the Antitrust Division did not align with that conventional wisdom. Since its 2015 acquisition of satellite television provider DirecTV, AT&T has been the largest subscription television distributor in the US, while Time Warner owns CNN, TNT and other networks that division staff viewed as “must-haves” for any pay-TV package. The merger, division staff came to believe, would allow AT&T to use the power of the Time Warner networks to hurt DirecTV’s rival distributors – either shutting off competitors’ access to those networks, or raising the price AT&T could charge to access them.

In the past, parties to vertical deals that raised similar foreclosure concerns had found ways to appease the antitrust agencies and eventually close with conditions intended to limit their ability to hurt either upstream or downstream rivals. The DOJ’s 2011 clearance of Comcast/ NBCUniversal is the most germane to the AT&T/ Time Warner deal, and gave antitrust observers the most confidence that the companies would find a way to get their deal done. But Delrahim made clear in the weeks leading up to the AT&T/Time Warner complaint that he had no stomach for such behavioural conditions, which required the government to act like a regulator and monitor the companies to ensure they kept their promises. For Delrahim, the choice for companies in such cases was binary: either change the deal structurally to quell antitrust concerns, or face a lawsuit to stop the merger altogether.

By October the division had told the companies that it wanted severe structural changes to the merger, or it would face an antitrust lawsuit. Various news outlets published conflicting reports about the negotiations that indicated the DOJ staff had identified two possible fixes: have AT&T sell off DirecTV, a deal it completed just two years earlier and was deeply reluctant to undo; or have Time Warner spin off its “must-have” Turner Broadcasting suite of networks, including TNT, TBS and, most importantly, CNN. The two sides reached no deal, and on 20 November, the government sued to block the merger.

The lawsuit met a cool reception among some conservative members of the antitrust bar – including those who, a year before, observers believed could be leading enforcement for the Trump administration. In late January, former FTC commissioner Joshua Wright took to the conservative house organ National Review to remind readers – government officials among them – that antitrust enforcement should remain the purview of economics and evidence, rather that populist sentiments. “The Trump administration’s merger policy thus far looks strikingly similar to the Obama administration’s,” Wright wrote. While he declined to predict how enforcement might ultimately manifest under Trump, “there is little evidence that conservative principles are currently guiding merger reviews,” he wrote. A year earlier, Wright had been a member of Trump’s transition team and under consideration for the top job at the Antitrust Division.

At a hearing on Capitol Hill the week before Wright’s op-ed published, Berin Szóka, president of the libertarian TechFreedom think tank, told lawmakers that the harm the DOJ believed the deal would create were fictional, and that AT&T’s DirecTV was a wobbling competitor in the pay TV market, rather than the content distribution behemoth the government described. The division’s attempt to block the deal was “extraordinary”, he said – and he believed the government would turn its sights on companies such as Google and Facebook next.

Indeed, the AT&T/Time Warner challenge represents an antitrust Rorschach test for those interested in the government’s motivations. Vertical merger enforcement is already an opaque practice, with outdated guidelines leaving case-by-case enforcement decisions solely in the hands of political appointees.

Then there was the Trump factor. Trump had repeatedly bashed CNN, on the campaign trail and from the White House, for its allegedly biased coverage of his campaign and presidency. Knee-jerk reactions to the lawsuit speculated that Trump was simply instructing his DOJ to punish CNN for its perceived wrongs. Either way, pundits opined that the lawsuit was a one-off action and not a shift in policy. “I think it’s just a unique transaction,” Scott Solberg, a partner at Eimer Stahl, told GCR in November. “And I don’t know what role the politics and the politicisation of [the merger] is playing into it.”

But others say that view appears naive. One former DOJ official, who spoke on the condition of anonymity to talk freely about the new administration, says Delrahim’s very public aversion to solving potential harmful mergers through behavioural remedies has “boxed him in,” setting the division up to be either very aggressive or very permissive when policing vertical deals. “He’s either going to sue a bunch of deals that would have a remedy, or he’s going to let a bunch of potentially harmful deals go through,” the source says. “If you leave yourself no middle ground, then you’re at the extremes.”

The source says the hardest cases are those in which the harms and benefits of a merger are difficult to weigh and parse out. If Delrahim refuses to put behavioural conditions on such deals, the DOJ will either accept the harm to competition in exchange for the alleged benefits, or shun those efficiencies in order to protect consumers. If AT&T/Time Warner is the model, he seems willing to prevent the harm vertical deals might pose at the expense of the possible benefits – a stance that would mean more vigorous merger enforcement than the US has seen in decades.

Down Pennsylvania Avenue, the enforcement forecast is far less certain. The FTC remains led by Republican acting chair Maureen Ohlhausen, who at the moment is part of a two-member commission alongside Democrat Terrell McSweeny. Trump in January 2018 nominated Joseph Simons, a former director of the agency’s bureau of competition, to lead the commission.

In Simons’s response to the Senate commerce committee, which will oversee his nomination to the FTC, he mirrors Muris’s praise for the FTC’s efforts against anticompetitive conduct during their time at the agency. He told the committee that the FTC then “brought more non-merger enforcement actions than in any comparable period two decades before or since,” all while continuing to police mergers.

Notably, Simons also said in the questionnaire that he would respond to criticisms that the antitrust agencies have been too permissive when reviewing mergers, as concerns over the harm that mergers can inflict on both consumers and workers are central to the agency’s antitrust mission. “The FTC needs to devote substantial resources to determine whether its merger enforcement has been too lax, and if that’s the case, the agency needs to determine the reason for such failure and fix it,” Simons wrote. He suggested such retrospective reviews could extend to non-merger matters as well.

If and when Simons takes over the FTC, some longtime observers predict he’ll continue along Ohlhausen’s current course: one of deeply conservative enforcement and a stringent focus on economics. “The combination of him and [acting bureau of competition director] Bruce Hoffman – there’s going to be a huge focus on economics,” says one former enforcer. “I think there will be less enforcement.”

But multiple veterans of the antitrust agencies under Republican administrations look at Simons and see other possibilities. While Simons was indeed part of the FTC during the George W Bush administration, he came into the agency as a protégé of the agency’s then-chair Timothy Muris, and he was hired with a reputation as an early critic of Microsoft’s market power and as a lawyer with a particular perspective on monopolisation issues.

“He isn’t afraid to lose cases and will take on a novel theory if the economics are there. He won’t ‘protect’ any industry,” says J Robert Robertson, a partner at Hogan Lovells and the former head of litigation at the FTC. “He has a strong economics background and will do what’s right, period.”

Muris describes Simons another way: “It was clear that Joe wasn’t afraid to bring monopolisation cases,” he says now about his former bureau director. During Simons’s tenure at the FTC, he led four single-firm conduct cases in three years – “a ton” of such cases compared to what’s typical, Muris says. Those complaints raised state action issues, alleged Noerr-Pennington violations and accused companies of raising rivals’ costs. Some settled, including the Bristol Myers and Unocal cases, but Simons proved unafraid to challenge conduct he saw as unlawful. The agency under Simons also investigated multiple closed mergers and, in the Evanston Northwestern case, tried to unwind a long-consummated deal when he found the combined hospital had hiked prices. At times and in certain areas of the law, the Bush FTC had a more ambitious and successful enforcement agenda than its successors in the Obama administration.

Muris himself led the agency with such an agenda. He, along with Simons and Hoffman – whom Simons hired – set out to revitalise the agency’s hospital merger enforcement portfolio and did so in a way that observers say Simons could emulate with regard to other sectors. The agencies had suffered a long hospital merger losing streak when Muris returned to the FTC as chair in 2001.

Turning that record around required the agency to study exactly what had gone wrong in those cases and gather evidence that hospital consolidation led to higher costs for patients. By 2002, Muris and Simons created the Merger Litigation Task Force within the agency and ordered it to study closed hospital deals and report back on what happened to the cost of care in those areas. The agency found that costs had indeed risen, and of the long-consummated mergers it became concerned about, it sued to unwind one: Evanston Northwest’s purchase of Chicagoland rival Highland Park. To win that fight, the agency changed its approach to market definition and to non-profit hospitals and, for perhaps the first time, relied on competitive effects as a proxy for market definition. That tactic would find its way into the 2010 horizontal merger guidelines and merger challenges during the Obama administration.

So the template for altering enforcement at the agencies exists, even under typically conservative leadership. But observers who know Simons question whether the template will be necessary. The FTC has never entirely gotten out of the anti-monopoly business, unlike the DOJ’s having more or less “vacated the field”, a source says. During the Obama administration, the FTC sued Intel, sued McWane and very nearly sued Google, all for monopoly conduct.

“I don’t think Joe would shy away” from a major case if it presented itself, Muris says – and without changing the statutes. “I will be very surprised if Joe thinks we need to amend the Sherman Act or the Clayton Act,” Muris says. Indeed, several spectators believe a case against one of the major online platforms could be in the cards if Simons and Hoffman have the will to bring it.

And even if the will is there, observers say, courts and caselaw could stand it its way. But the path to more aggressive enforcement is not as fraught as it may seem.

***

“There’s a path there. It is hardly a futile environment in which to pursue cases." - William Kovacic

If US antitrust enforcement will test its modern boundaries, the federal agencies, rather than private plaintiffs, will likely lead the way. Case law created by the government tends to stick, and when the agencies walk into the courtroom, there is a presumption that they wouldn’t be there if they didn’t have a solid factual case behind them. Such judicial deference has buoyed the government for the past decade; the agencies won their antitrust trials far more often than they lost, particularly when challenging harmful conduct by companies.

Observers suggest that if the DOJ or FTC brought a case against a monopolist, it would at least get a fair shake in federal court simply because it is the government, regardless of the case law on predatory pricing or other monopolist conduct. And at the FTC, moving the law on monopolies is considerably easier – at least in the first instance. The agency can bring cases under the monopolisation statute in the Sherman Act, or under Section 5 of its own, ostensibly a less restrictive statute that addresses unfair conduct more generally. Plus, it has its own internal administrative tribunal to try cases, which are then appealed to the commissioners. Yes, those decisions can then be further appealed to the circuit courts, but at that point the defendant would be asking federal courts to reverse a decision by the expert FTC, to which they have traditionally shown deference.

The possibilities for more enforcement exist. The question, then, is why such enforcement hasn’t happened. When Christine Varney took over as head of the DOJ’s antitrust division in April 2009, she saw a country deep in the throes of economic crisis and believed enforcing the monopoly laws could and would help. “Vigorous antitrust enforcement action under Section 2 of the Sherman Act will be part of the division’s critical contribution” to the country’s response to the crisis, Varney said in an early speech as assistant attorney general.

She went on to detail two cases she believed could serve as the backbone for future monopoly enforcement – the Supreme Court’s rulings in Lorain Journal and Aspen Skiing. Those cases led to other successful attempts to crack down on monopolists, including the DOJ’s 1990s lawsuits against Microsoft, and they could once again lead to court victories against harmful monopolist behaviour. “[W]hile preserving the right of firms with market power to continue to compete, we cannot allow them a free pass to undertake predatory or unjustified exclusionary acts,” Varney said then.

The DOJ then proceeded to bring only two monopoly cases during the Obama administration, neither of much consequence. Why? Former officials and observers say the facts of any one investigation never supported a major case against a major company.

But in the eyes of critics, a lack of willpower rather than of facts has been the agencies’ most significant obstacle. Case law becomes less of an impediment when the goal is to push courts to pivot from existing jurisprudence. Revamped statutes could push courts in this direction, or a new standard, detailed in policy or guidelines, for deciding what conduct breaks the law.

Or: perhaps the willpower alone is enough.

“It requires a plan,” says William Kovacic, a former chair of the FTC and now a senior advisor to the UK’s Competition and Markets Authority. Bringing difficult monopoly cases requires thinking hard about conduct, he says, and how to exploit the possibilities of each case. “It takes a little bit of risk-taking. It takes fortitude.”

It takes the willpower to go to court without knowing the result, and the footing to withstand whatever political troubles might come with a high-profile loss.

But for the agencies, taking big risks can mean big returns. It’s crucial for enforcers to create a place in their portfolios for monopoly enforcement, lest those muscles atrophy entirely, Kovacic says. There have been important cases with good precedents in the federal appellate courts – Microsoft is certainly one, as is McWane. Enforcers should want those kinds of cases in the portfolio; they’ll matter when the big cases come along. For that collection of case law to grow at the FTC, Simons must do as Muris did, Kovacic says – have a clear vision, announce a set of priorities and push staff to advance that agenda week after week. If enforcers have a positive agenda, he says, the complaints will come.

“There’s a path there,” Kovacic says. “The doctrine is not as favourable as the doctrine that [the European Commission’s Directorate-General for Competition] thinks about when it decides to proceed. But it is hardly a futile environment in which to pursue cases.”

As the Trump administration’s vision for antitrust enforcement becomes clearer, it’s foolhardy, at least for now, to assume the antitrust agencies won’t pursue those cases.

On a cool, cloudy late October day in Santa Monica, California, Simons delivered a state-of-merger-enforcement speech before a gathering of the state’s bar association. It was 2002, less than two years since he and Muris had taken control at the FTC. Simons gave the gathered lawyers an unexpected report.

“When President Bush was elected, many people predicted that the new administration would be much less aggressive in its antitrust enforcement than the Clinton administration had been,” Simons told the conference. People expected Bush to nominate as chairman someone who would wave any merger through the review process. Even if FTC staff wanted to challenge a case, there would be a chair and a bureau of competition director there to stop them, the predictions went.

“Those were the predictions,” Simons said. The reality, at least at the FTC, was different.

That could be the case again – this time at both federal agencies. All it takes is bravery.