FTC Chairman Khan Highlights Key Policy Priorities For The Future, But Aggressive Agenda Faces A Spike | Skadden, Arps, Slate, Meagher & Flom LLP

In a September 22, 2021 memorandum to staff, Federal Trade Commission (FTC) Chairman Lina Khan formally outlined her “vision and priorities for the FTC,” reaffirming her calls for broad anti-trust law enforcement organized around three key policy priorities: the application of mergers, dominant intermediaries and restrictive contractual clauses. The note further describes its vision for the agency’s strategic approach and operational objectives to support these priorities. Like his previous calls for antitrust reform and aggressive enforcement,1 the political priorities outlined by President Khan are somewhat abstract and do not specify the concrete actions the agency will take to achieve them. However, a close examination of these high-level priorities, approach and goals reveals some practical obstacles to implementation, including limitations imposed by resource constraints and the existing body of antitrust law.

Policy priorities: application of mergers, dominant intermediaries and restrictive contractual conditions

President Khan listed three political priorities for the agency going forward. First, she identified a need to strengthen the agency’s merger enforcement work to combat what she described as rampant consolidation and the market dominance that she believes consolidation has enabled. . In particular, she expressed concern that the markets “will only become more consolidated” without the vigilance of the FTC and firm action. She noted that the review of the merger guidelines will be important in achieving merger reform, calling previous iterations of the guidelines “a somewhat narrow and outdated framework for assessing mergers.” She also stressed the need to find ways to deter illegal transactions, including “illegal face deals”.

Second, Ms. Khan indicated her desire to focus the application on “dominant intermediaries and extractive business models”. Having suggested that market power is an increasingly systemic problem in the economy and that the FTC should devote resources to regulating the most important players – the “next generation technologies, innovations and infant industries” requiring particular vigilance, it focused specifically on the market position of “guardian” companies and “dominant intermediaries”. Such entities, according to President Khan, have been able to “increase fees, dictate terms, protect and expand their market power.” She also argued that the involvement of private capital and other investment vehicles can deprive these companies of their production capacity and harm consumers. In discussing the agency’s strategic approach to addressing these issues, President Khan indicated her intention to “focus on[] on structural incentives that allow illegal behavior ”and“ watch[] upstream among companies that allow and benefit from this conduct.

Third, Ms. Khan discussed certain contractual clauses, including non-compete clauses, remedial restrictions and exclusion clauses, which she said could constitute unfair competition methods or unfair or deceptive business practices. She also argued for a “holistic” approach to identifying damage to account for effects on workers and independent businesses. Describing this holistic approach in general terms, she said the agency would focus on “the power asymmetries and illegal practices that these imbalances allow”, and the effects such conduct has, for example, on marginalized communities. . Sharing her hopes to “further democratize the agency,” President Khan also said the work of the FTC should help “shape[] the distribution of power and opportunity in our economy.

More generally, the note identifies areas of investment for the agency in order to contribute to the achievement of these priorities. This includes integrating a greater range of analytical tools and skills into the agency’s work and expanding the agency’s regional footprint to grow its ranks, including by hiring technologists, data analysts, financial analysts and experts from additional outside disciplines. President Khan also announced that she would appoint Holly Vedova and Samuel Levine, both career FTC staff (as opposed to political appointments), director of the Competition Bureau and director of the Consumer Protection Bureau, respectively. .

Practical limits to the implementation of President Khan’s political priorities

President Khan describes the antitrust program described in her memorandum as “robust,” and the memo communicates her intention to attempt to reshape antitrust policy and its enforcement. However, a revolutionary change in the application of antitrust laws by the FTC will face significant practical challenges.

More importantly, the path to overhauling antitrust law enforcement will be limited by the large body of existing antitrust laws and the need to convince a federal judge that the conduct in question is illegal. President Khan’s memo generally advocates a new, broader, holistic approach to identifying antitrust damage beyond the traditional focus on consumer welfare and price effects. However, the courts have relied – and are likely to continue to rely on existing standards developed in case law for many decades. These standards focus on the welfare of consumers and mainly on the effects on prices. In the absence of legislative change, a practical gap will therefore persist between President Khan’s vision of a refocused and more assertive antitrust enforcement, on the one hand, and the law that would apply to any enforcement action by the FTC, d ‘somewhere else.2

In addition, President Khan’s plan to revise the merger guidelines and her desire to target “illegal facial operations” will also face constraints based on the current law. First, antitrust guidelines generally incorporate existing legal standards, making it difficult to achieve radical change. The 1982 guidelines, which had a huge impact on the application of mergers with the implementation of the hypothetical monopolist test, are the latest dramatic revision. Whether the courts will accept major revisions at this point will be an open question. Second, the review of agency mergers is shaped by the existing review process enacted by the Hart-Scott-Rodino Act, whether or not the FTC considers a deal to be prima facie illegal. Unlike regulators in other jurisdictions, the FTC must take legal action and prevail in court if the agency wishes to block a pending transaction.

At the same time, Ms. Khan’s ability to implement her ambitious agenda will depend on whether changing these legal frameworks will depend on either Congress action, which is far from certain, or litigation victories, which require committing significant resources at a time when the FTC is already claiming to be stretching its capacity. Despite her recognition of the demands already placed on FTC staff and her plan to “intentionally” allocate resources, President Khan envisions the FTC undertaking increased vigilance and a more assertive agenda. If existing resource constraints increase in response to President Khan’s heightened law enforcement ambitions, the FTC may find it difficult to balance its investigative agenda with the ability to litigate such cases, especially given the the complex nature of antitrust matters, which often take years to resolve and require millions of dollars for experts and other related costs as well as a large team of lawyers and staff to manage. Furthermore, although President Khan referred to her hope for increased coordination between offices in business, it is not clear that such coordination would be effective or create the capacity needed to fulfill the new agenda, particularly where lawyers from other government divisions have already been recruited to help reduce burdens on antitrust law enforcement matters.

Finally, President Khan’s desire to expand the agency’s regional footprint and complement staff with various lay roles may further strain the budgetary resources needed to keep up with the new agenda and present their own management challenges. It is not yet clear whether congressional funding is imminent, whether it will be used to recruit lawyers or other potential staff desired by Ms Khan, and how quickly recruiting could reach the scale necessary to support the priorities. recently announced by the FTC.


Given the challenges of implementing the broad-based political goals set by President Khan, we do not expect an immediate drastic change in the application of antitrust laws. The practical hurdles described above mean that President Khan’s FTC will not be able to challenge every case of what the agency might perceive as illegal behavior or unfair competition. We anticipate that the FTC will need to continue to be selective in the cases it brings, which may mean that in the short term it will concentrate available resources on sectors of the economy perceived to involve “the most important players”. , such as as the big tech companies that President Khan has frequently referred to, especially as they engage in transactions that involve the new considerations as part of the proposed ‘holistic’ approach to identifying antitrust damage.3 We still expect some cases to be fully investigated and prosecuted, and the results of those cases will likely signal in part the success of the new program.

Associates Evan H. Levicoff and Andrew J. Shanahan contributed to this article.


1 See our Client Alert of June 18, 2021 “Lina Khan’s Appointment as FTC Chairperson Reflects the Biden Administration’s Aggressive Position on Antitrust Enforcement”.

2 For a discussion of the current state of merger law, see “Why ‘Ramping Up’ Merger Enforcement Isn’t So Easy,” The CLS Blue Sky Blog (July 7, 2021), by Steve Sunshine and Julia York. Moreover, as recent history shows, enforcement actions based on changed political priorities can fail in court. Check out our Customer Alert of July 18, 2021, “Facebook decisions are a setback for antitrust regulators but may encourage amendments.”

3 For a discussion of President Khan’s pro-enforcement approach to antitrust regulation and the potential focus on tech companies, see our April 30, 2021 Client Alert, “Antitrust Enforcement Expected To Intensify. “

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