Competition Corner by Alden Abbott- Let's not go the way of Rome!
1,613 years ago this month, the city of Rome fell to a Visigoth barbarian army that proceeded to sack what was once the capital of one of the world’s greatest and most successful empires. Although the United States with its superior military is hardly in danger of such a fate as things stand, it’s still a reminder that success and prosperity can never be taken for granted and the fight to preserve the conditions that enable them is one that never truly ends. When it comes to federal policy in Washington D.C., the dangers come from within it rather than outside it. And unfortunately, they often tend to come from those with good intentions.
Determined to take a stand on what it regards as potentially harmful corporate power, the Federal Trade Commission (FTC) has filed a preliminary injunction against pharmaceutical company Amgen to stop its acquisition of Horizon Therapeutics. Given that the FTC’s complaint lacks a colorable theory of competitive harm, smacks of discredited portfolio-leveraging theories of harm that are unfeasible, and flies in the face of established precedents, the lawsuit is likely to top off the Lina Khan-led agency’s 0-4 losing record in court over merger challenges.
It will also give the court a chance to consider the FTC and Department of Justice (DOJ)’s newly issued revised merger guidelines. Last month, I wrote briefly about the guidelines’ flaws, including their eschewal of the consumer welfare standard and acknowledgment of pro-competitive efficiencies, their misinterpretation of legal precedents, and attempts to cite outdated case law that does not reflect modern antitrust jurisprudence. Given these circumstances, if they are adopted in their current form, they are unlikely to influence courts – except to the extent that they undermine the reputation of the federal antitrust agencies in the eyes of judges.
Despite the FTC’s poor litigation prospects, its actions continue to cause immense damage to the competitive ecosystem by discouraging and increasing the cost of deals. In particular, the FTC’s pronouncements could potentially benefit consumers while creating commercial uncertainty that is antithetical to encouraging investment in the development and deployment of cutting-edge technologies like cancer detection tests and cloud-based gaming.
Mercatus will continue to fight for sound economic principles that allow for human flourishing and encourage vigorous competition to improve our lives and promote consumer welfare. My colleague Satya Marar is currently working on a Mercatus primer for policymakers on the antitrust implications of artificial intelligence. Satya has also authored a soon-to-be-published op-ed on DOJ’s approach to mergers in the banking sector and its implications for consumers. Stay tuned!
Senators Elizabeth Warren (D-Mass.) and Lindsay Graham (R-SC) recently proposed a bill to create a new federal commission for regulating big tech companies, while citing the Federal Communications Commission (FCC) and Interstate Commerce Commission (ICC) as model success stories that inspired the idea. In my recent op-ed for The Hill, I canvass the history of these agencies and explain how they managed to hamstring innovation and harm consumers, rather than rein in abuses of market power.
Writing for Law 360, Professor Reeve Bull, Deputy Director of the Office of Regulatory Management for the Commonwealth of Virginia, argues that courts can play an important role in overturning state government regulations that are deficient and unconstitutional.