Winston & Strawn Partner Susannah Torpey on Antitrust Enforcement under Biden

President Biden historically has had a moderate stance on antitrust issues and has not demonstrated the same activist positions on competition law as some of his fellow Democratic politicians, such as Senator Elizabeth Warren.

Susannah Torpey
Winston & Strawn

But while Biden is moderate on antitrust, “the ground has shifted underneath his feet in terms of what moderate means.”

That’s according to Susannah Torpey, a partner at Winston & Strawn in New York.

Word on the street is that Biden will nominate an activist to fill one of two seats at the Federal Trade Commission (FTC) and a corporate defense lawyer to be the antitrust chief at the Justice Department.

“There might be a split between the FTC and the Department of Justice,” Torpey told Corporate Crime Reporter in an interview last week. “There is a big difference between the author of the Amazon Antitrust Paradox (Columbia Law Professor Lina Khan) and former officials in the Department of Justice who have worked for Google and Apple and defended mergers.” 

“But realistically when it comes down to it, Biden has a real focus on institutional competence and trying to restore what he sees as diminished institutional competence in the Department of Justice. And he’s likely to lean toward people who have experience in those roles.” 

“Some of the proposed candidates may be challenging, specifically if they would need to recuse themselves from the Department of Justice’s Google case. That case could be the Microsoft of our generation. Nevertheless, we may see more of an institutional pick at the Department. But you have to question what institutional means at this time because Lina Khan has great experience on House investigations.”

Biden is being pushed by the progressive wing of the Democratic Party to take a more aggressive stance on antitrust.

“Senator Warren has called for substantial break ups of big companies,” Torpey said. “Other Democrats have called for a more expansive consumer welfare standard and using the antitrust laws as not so much a measure to right economic harms, but to address social problems as well.”

“We see a bit of a compromise in some of Biden’s latest positions. He has made reference to merger review in a broader context, for example in dealing with things like racial inequalities, which certainly has never been part of merger analysis in the past. But you have to look at the development of antitrust enforcement in general. What we will have going forward will not be a replay of the Obama administration. We are just at a different place now.”

“During the Obama administration, the agencies had much more of a wait and see approach. When it came to tech, there was an emphasis on waiting to see real market effects before taking aggressive action.” 

“Even by the end of the Obama administration, you started to see agency statements acknowledging that the conversation in antitrust was shifting, acknowledging that maybe they had waited and seen enough at that point, that there had been a significant concentration of market power in large corporations and that it was now time to start taking more aggressive enforcement actions.” 

“For example, in October 2016, still under the Obama administration, we saw a significant shift in taking a more aggressive position against wage fixing and no poach agreements and warning everyone that they were going to start criminally prosecuting companies in these areas. These types of agreements were very prevalent at the time. But they were already starting to acknowledge that there were growing calls for antitrust intervention.” 

“You have to put the Obama administration enforcement into the context of the prior financial crisis. A lot of what the Obama administration was focused on was shoring up the institutional foundations.”

“People may criticize the Obama administration for taking a pass on the Google investigation, for example, or letting very large mergers go through. But everyone needs to recognize that there was a different financial context.”

“Even at that time, the EU had already been very aggressive for years in the tech space.

There was a lot of debate in the antitrust community as to whether there would ultimately be a convergence between US and EU antitrust enforcement. Despite all of the political discourse in our country, we have now reached a point where one of the few areas where Republicans and Democrats seem to enthusiastically agree is the need for reform in the antitrust area.”

“The federal government here has taken a more restrained position than the EU, you saw things come full circle in the opening of the tech investigations of the GAFA (Google, Apple, Facebook and Amazon.). And you are seeing the state enforcement agencies playing a significant role and making statements about how they needed to investigate Google because the EU did not go far enough.” 

“We are in this fascinating point in time where we are seeing not only more of a convergence between EU and US antitrust tech enforcement, but we are also seeing different governmental actors play significant roles and potentially more aggressive roles than the Biden administration is likely to take on.”

“At the FTC, President Biden will be able to add two more Democratic commissioners. President Biden has already signaled a shift in merger review cases. That indicates he has a more progressive view of consumer welfare than in past administrations. President Biden’s Unity Task Force called for a review of all mergers and acquisitions since Trump took office and to assess those that have resulted in highly concentrated markets, reduced competition and raised prices. Those are traditional consumer welfare metrics. But there is a call to also look at those that demonstrably caused harm to workers and even those that have exacerbated racial inequality.”

“Even that does not go far enough for the most progressive antitrust advocates because it does not consider environmental impact in mergers, which some countries have begun taking into consideration.”

“The FTC is likely to move closer to the EU’s large tech fines if they are able to. That is a question mark. The Biden FTC will face some new hurdles in this administration which they have not in the past. Acting FTC chair Rebecca Kelly Slaughter and former FTC commissioner Rohit Chopra entered some very strong dissents, for example, criticizing settlements with Facebook and Google with respect to privacy issues. Chopra for example argued that the $5 billion fine against Facebook was too small with respect to Facebook’s gain.”

“We would expect to see a shift toward even more dramatic financial penalties and likely more aggressive injunctive relief to strike more at the heart of the business models at these tech firms.”

“But the FTC is facing some unprecedented challenges to its power right now. The ability of the FTC to order disgorgement and monetary penalties is before the Supreme Court right now in the AMG Capital case. The Supreme Court is considering whether the FTC Act gives the FTC the power even to order disgorgement. A split has emerged in the circuit courts as to whether or not the FTC can even continue ordering disgorgement at all.”

“With the current composition of the Supreme Court, the continued viability of FTC monetary penalties is at risk for the first time in this history of the FTC.”

[For the complete q/a format Interview with Susannah Torpey, see 35 Corporate Crime Reporter 10(13), Monday March 8, 2021, print edition only.]

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