Khan and Kanter Defend ‘Disorienting’ Antitrust Approach

It’s a “good thing” business leaders are thinking harder about antitrust risk when pursuing potential deals, even if the Biden administration’s policies have been “disorienting,” FTC Chair Lina Khan said Tuesday. Khan and DOJ Antitrust Division Chief Jonathan Kanter defended their antitrust approach during CNBC's CEO Council Summit.

Khan addressed questions about the decline of merger and acquisition activity since she and Kanter took office in 2021. U.S. M&A activity was recorded at $2.79 trillion in 2021 and $1.48 trillion in 2023, a 47% decrease.

Khan said the U.S. has gone from “decades of lax enforcement” to a more “rigorous” approach under the Biden administration, which can be “disorienting for the business community.” Enforcers want corporations aware of policy changes through documents like the merger guidelines (see 2312180069), she said. Previous antitrust regimes saw proposed deals that were “facially unlawful,” she said. However, now antitrust risk is part of the conversation from “day one,” she said. “That’s a really good thing. We want that legal consideration to be part of the analysis because illegal deals should not be pursued.”

The FTC and DOJ examine dozens of transactions involving the tech and telecom sectors yearly. They analyzed 3,029 transactions in fiscal 2022, according to the FTC’s latest Hart-Scott-Rodino report. Internet service providers, web search portals and data processing services were buyers in 49 of those potential deals. Computer and electronic product manufacturing accounted for 36 deals, and the telecom sector was involved in 22. Broadcasters were part of seven.

Kanter said the Biden administration has powered this antitrust movement in response to consumer and business demands. Whether it's tech entrepreneurs, rural farmers or newspaper owners, businesses are trying to compete, he said: “The current movement about corporate power and antitrust, it’s not coming from us. We are being responsive to the demands of the people. ... People want choice, and they want opportunity. And they feel like that has been taken away from them.”

Khan said agencies are thinking hard about how they gauge market power and decide where monopolization exists. One of the most “probative ways” to analyze market share is considering a company’s ability to “make things worse” for customers or workers and “get away with it,” she said: If there’s a functioning, competitive market, customers can abandon “abusive” companies.

Khan and Kanter were asked about companies like Amazon and Apple, and their ability to deliver products consumers want. It’s “important to distinguish” between “old-fashioned” competition -- providing better services and products -- and companies engaging in illegal behavior to protect dominance, Kanter said. Major tech companies with dominant positions require a distinct enforcement approach, Kanter said: “When you have a very large market share and a big moat around the business, it changes the dynamics, and that’s why the law treats those companies differently.”