Two high-profile defeats in court do not a failed strategy make, or so says FTC boss Lina Khan.
Speaking at the Economic Club of New York yesterday, Khan said that, while it’s true the US regulator failed to halt a couple of major mergers this year (Microsoft’s purchase of Activision Blizzard, and Meta’s acquisition of VR firm Within), those are just two among 13 to 20 challenges her monopoly cops have successfully brought against takeovers in her time at the helm, depending on how you count.
“In the scheme of our merger enforcement program, losing two is okay,” Khan said. “Every time we have that kind of setback, we look very closely at where we could have done better, where we fell short, and use that to inform our approach going forward.”
Part of what has made the FTC’s recent cases harder to fight, Khan said, is that many of them – particularly the Microsoft-Activision takeover – have involved vertical mergers, which involve companies absorbing other firms up and down their supply chain as opposed to direct competitors.
Khan, who was sworn in as FTC chair in 2021, said vertical mergers can be tougher to litigate, in large part because of four decades of antitrust enforcement that considered vertical mergers largely beneficial.
“Around 40 years ago … policymakers bought into a set of assumptions that markets tend to be perfectly competitive … that monopoly power is generally fleeting, and that a hands-off approach to antitrust competition policies would lead to great efficiencies that outweigh any cost,” Khan said in her speech.
Fresh research points to the opposite, the FTC boss noted, adding that reports have “documented rising consolidation, declining competition, and a resulting assortment of economic ills and risks.”
Attitudes within the federal government toward vertical mergers began to change around 2015, Khan said, noting that it wasn’t even the Biden administration, nor her taking over the FTC, that kicked off opposition to those types of acquisitions. The Trump regime did so in 2017 when it challenged AT&T’s absorption of Time Warner, a fight Uncle Sam eventually lost, she argued.
Khan, an arch-critic of Big Tech, said the Trump-era FTC’s challenge of the AT&T/Time Warner vertical merger sparked surprise, whereas her FTC’s vertical merger challenges have not so much.
“You didn’t see that kind of commentary when we filed” to block Lockheed’s acquisition of Aerojet, and Nvidia’s purchase of Arm, Khan said. “I think there’s been a step forward in thinking about what are the red flags and risks created” by a vertical merger, she added.
The FTC succeeded in putting a stop to Lockheed’s gobbling up Aerojet and Nvidia’s buyout of Arm, with the FTC noting in the latter case that its defeat of Nvidia-Arm was “the first abandonment of a litigated vertical merger in many years.”
As for its most recent vertical fight, the FTC has paused its litigation against Microsoft, and the commission wouldn’t tell The Register whether it was still preparing a rebuttal or had abandoned the matter entirely.
Either way, it looks to be full steam ahead at Khan’s FTC, losses or not. ®
