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Department of Justice headquarters in Washington
The past month has generated something close to despair in anyone who cares about effective governance as a force in people’s lives. Haphazard firings, rapid dismantling of vital government agencies, devaluing of basic science, and commandeering of government IT systems are all part of a power grab that threatens to turn our democracy into a cult of personality. It’s hard to imagine anything positive coming out of this.
And yet.
On Tuesday, the new leaders of the Federal Trade Commission and the Justice Department’s Antitrust Division both released statements saying that they would continue to follow the 2023 merger guidelines, and not seek to make any changes to them, at least in the near future. Those guidelines reflect the understanding of antitrust statutes and jurisprudence as envisioned by Lina Khan and Jonathan Kanter, the predecessors at those agencies.
In other words, the Trump antitrust enforcers are adopting the Khan and Kanter viewpoint on the law.
“I think it goes underappreciated sometimes in policy circles, just the degree to which there actually has been bipartisan consensus on some of these core issues,” Khan said on an episode of the Organized Money podcast, which I co-host, that was taped on Wednesday. The episode will air next week. “It was the Trump administration originally that filed the first Facebook case as well as the first Google case. It was under the Biden administration that we kept those going … And so candidly, it’s not all that surprising to me that there’s going to be some continuation here as well.”
There is almost no other area of policy where this is the case. Trump reflexively reverses anything achieved by a Democratic president. And competition policy was one of the pillars of the Biden administration’s economic agenda. So what else is going on here?
The cynical view is that this simply allows Trump to weaponize the legal system once more, to demand tribute from would-be merging parties in exchange for a pass. But it’s not clear why you would need tougher merger guidelines in place to accomplish that. Under any guidelines whatsoever, the government has the power to hold up a merger, take the parties through an expensive court proceeding, and potentially blow up their deals. Is there some world where Donald Trump cares which standard of legal review is in place when he shakes down a company?
In this reinvention of American government under Trump, the small rebellions have come out of the antitrust agencies.
Even without that drastic interpretation, Trump is definitely trying to constrain the capacity of enforcement agencies and put their funding and rulemaking authorities squarely under his boot. And while antitrust authorities are kept relatively intact, the areas of policy antitrust frequently interacts with are being systematically gutted, like consumer protection. It’s hard to crack down on the power of Big Tech in one agency when another agency is enabling Big Tech’s entry into financial services.
Just as the FTC announced continuity with the stronger guidelines, the White House issued an executive order attempting to bring the authority of the Commission and other independent agencies like it under its control. FTC rulemaking and budgets now must be approved through the White House, and even routine policy priorities must survive consultation with White House officials.
So nobody should expect the fight against corporate power in the next four years to look anything like it did in the previous four years. The oligarchy was seated at the inauguration in front of the cabinet for a reason. But the announcement this week is nevertheless important for a lot of reasons.
First off, the 2023 merger guidelines are good. They were developed using the text of the statutes and existing cases, rather than the customs, mostly in the direction of nonenforcement, that had built up over time. They stand as a rebuke to the myopic economic model–driven view of antitrust law, and instead look to the real world. They stress the importance of labor harms in antitrust, the need to police vertical mergers that can deny material inputs to competitors, the role of digital platforms and private equity ownership. They are a modern approach to a modern economy that has been stung by consolidation. The previous guidelines were more of a way agencies could decline to enforce the law. Khan and Kanter restored the law.
Amid all the other good initiatives that are being trashed, the fact that the merger guidelines will stick around means that there’s one less thing to fix if Democrats ever regain power.
Second, the guidelines are effective. At least ten court cases have already used them in decision-making in their first year in operation. Despite the assumption that judges are implacably pro-business on these issues, they actually do use and engage with the guidelines as a yardstick for the government’s opinion of the law. As long as they’re in place, judges, especially those without deep expertise in antitrust, will continue to learn and evolve the law.
Third, there really is a faction of MAGA-world that is questioning the value of large corporations. Gail Slater, the incoming nominee to run the Antitrust Division, repeated to senators at her confirmation hearing the meme put forward by writer Sohrab Ahmari, that tyranny.com is no better than tyranny.gov.
Though in large part, all federal agencies have been swept up in this reinvention of American government under Trump, the small rebellions have come out of the antitrust agencies. The Justice Department sued to block a merger between back-end software companies Hewlett Packard Enterprise and Juniper Networks, one of the only actual enforcement actions (if not the only) in Trump’s first month. And despite a government regulatory freeze, an important rule that expands the information merging parties must give on notification forms was put into effect earlier in February.
But maybe the most important reason to celebrate this continuity on antitrust is that Wall Street is terribly upset. Merger filings were down 30 percent in January compared to last year; the payday that Big Finance expected from a return to consolidation hasn’t materialized. Now, with the same hurdles from the Biden administration staying in place, the fat bonuses and luxury yacht purchases are vanishing in the air.
The fact that the richest people in the world, people who populate the funding rosters of both parties, couldn’t dislodge these merger guidelines suggests the forging of a new consensus on antitrust policy in the United States. There almost certainly will be selective prosecutorial discretion, and scandals around politicization, in the next four years. But the foundation is in place for what the New Brandeis movement sought for more than a decade: a restoration of competition policy as an economic and social imperative. It’s not something, unlike so many other areas, that will have to be built back with a changeover in power.
