By Dave Michaels
WASHINGTON -- Voters won't be considering Lina Khan when they go to the polls in November. But who they elect to the White House will decide whether her progressive experiment in antitrust policing survives.
Khan, the 35-year-old chair of the Federal Trade Commission, has been one of President Biden's most prominent agency leaders. As a young academic, she built a surprisingly robust following around a tract that argued antitrust enforcers had shrunk from their duty to restrain corporate power, while companies such as Amazon.com exploited the opportunity to build unchallenged monopolies.
Khan's FTC tenure got off to a slow start, as employee morale nosedived over concern that she condemned much of their prior work. She quickly withdrew policies that had made it easier for some mergers to clear the FTC's review and started to bring headline-grabbing enforcement actions against Amazon, Microsoft and others. Along the way, she has made new enemies in Silicon Valley and across corporate America. Several of her biggest cases remain pending in the courts.
Khan remains a hero among progressive Democrats and labor unions, a rarity for a leader of a federal agency that most voters know little about. In recent months Khan was cheered at local events in Texas and New York, where she appeared with Sen. Bernie Sanders, the Vermont liberal who caucuses with Democrats, and Alexandria Ocasio-Ortiz (D., N.Y.).
"There is a reason why many people in the corporate world have been very unkind, to say the least, to Lina," Sanders said at an event held at the Texas AFL-CIO's offices in Austin. "Because she is finally doing what should have been done decades ago."
Khan has built surprising alliances in pockets of the Republican Party, with lawmakers and libertarians who harbor deep suspicions of Big Tech. Still, it is a near certainty that her authority will end if Donald Trump wins the presidency because many in the GOP favor more latitude for mergers and see Khan as too tough on business.
"Despite whatever traction there will be for populist antitrust within a Trump administration, I see very little chance for her staying on" if he wins, said Eric Grannon, an antitrust partner at White & Case and a former Justice Department official.
During his term in office, Trump appointed veteran conservative antitrust lawyers to the top jobs at the FTC and Justice Department, which share antitrust authority. They took a few big shots at mergers and alleged monopolies, but largely steered the agencies to find ways to settle with companies to address concerns about competition.
By contrast, Khan and the Justice Department's current antitrust chief, Jonathan Kanter, have taken a hard line against accepting such deals, raising high hurdles for a number of mergers.
"We used to get deals done with settlements quite often," said Mike Cowie, a partner at the Dechert law firm. "You're seeing more of these abandonments because the agencies will not agree to settlements."
If Vice President Kamala Harris wins the White House, progressives will have a much longer runway to try to finish what they started. The book is still open on Khan and Kanter, in large part because cases take years to adjudicate and many of their signature efforts are yet to be resolved. Their aggressive stances have spurred companies and trade groups to fight back in court just as vigorously.
Courts have already blocked some of Khan's shots, such as a regulation that would have outlawed employers from imposing noncompete agreements on workers. The FTC has also suffered losses in merger cases that conservative enforcers likely wouldn't have brought, such as a pair of lawsuits in which the commission tried to block Microsoft and Meta Platforms, the owner of Facebook and Instagram, from expanding. The FTC's Republican commissioners voted against both challenges.
The Justice Department and FTC have succeeded in blocking some mergers that could have consolidated a range of industries, including air travel, publishing and healthcare, while Nvidia and Sanofi dropped plans to acquire rivals rather than face litigation.
Khan led the FTC in suing Amazon last year, saying it illegally wields monopoly power in e-commerce. A federal court last month denied Amazon's request for early dismissal. A trial is set for October 2026.
The commission also continues to try to break up Meta. The lawsuit was filed during the Trump administration, underscoring how anxiety about big technology companies affects both parties.
Kanter is Google's nemesis. His antitrust division sued Google challenging what he called its monopoly in digital advertising. He is also litigating another case against Google that began during the Trump era. If courts grant the remedies Kanter is seeking, Google could be broken up.
For now, the threats these cases pose to the tech companies remain far off. That could change during the next administration, when antitrust enforcers will face choices on how far to push.
A progressive enforcement mindset would almost certainly continue under Harris, a former California attorney general who could put her own stamp on enforcement by emphasizing cases that connect to everyday concerns. The Democratic nominee, for example, has blamed food companies and grocery stores for price gouging.
Whether Khan sticks around is more of an open question. Khan would be open to remaining atop the FTC if Harris wins, according to a person familiar with her thinking. Harris has ties to the country's biggest corporate law firms, whose merger departments feed on the flow of deals brokered by investment banks. Some investors, such as Reid Hoffman, have also said Khan's antimerger bent hurts innovation. Hoffman, the founder of LinkedIn and a major Democratic donor, said this summer that Khan should be replaced if Harris wins the White House.
Travis LeBlanc, an attorney who worked in a senior role under Harris when she was California attorney general, said she would appoint leaders who are bold but careful about picking the right cases.
"She is attuned to recognizing that bad cases make bad law and every enforcer who comes after you has to live with that," said LeBlanc, now a partner at the Cooley law firm.
If Trump wins, enforcement might be more relaxed, but also idiosyncratic, influenced by the Republican's distinctly personal brand of politics.
"There is a risk we will see both dramatically reduced enforcement and if there is enforcement, it's selective and more based on relationships than merit," said Bill Baer, who ran the Justice Department's antitrust division during the Obama administration.
The Justice Department during Trump's term sued to block the tie-up of AT&T and Time Warner, a deal that Trump opposed during his 2016 campaign after clashing with Warner-owned CNN. AT&T defeated the government's case at trial and on appeal. The department insisted its decision to sue wasn't political.
Pressure on some industries could ease if Trump wins in November. Oil and gas mergers have faced hurdles at Khan's FTC, including over the agency's claims that some executives communicated improperly about prices with the Organization of the Petroleum Exporting Countries. Trump suggested at a May fundraiser that he would take it easier on their deals, according to people familiar with the meeting.
A second Trump administration wouldn't give free rein to mergers but would be less likely to take some of the legal long shots that Biden enforcers did, said Barry Nigro, a partner at Fried Frank who served as a top Justice antitrust official during the Trump administration.
"There will be a difference between Harris and Trump," Nigro said. "But if people think all the lights are going to turn green under Trump, I don't think that's going to happen."
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
October 13, 2024 05:00 ET (09:00 GMT)
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