Are two federal agencies smarter than one to file antitrust lawsuits?
Antitrust lawsuits seem to come in waves. The Justice Department sued Google last fall. Then Facebook was hit with two different lawsuits, one from the Federal Trade Commission and another from almost four dozen state attorneys general. Another group of state attorneys general sued Google for an alleged monopoly in online advertising. Other technology firms are under additional state and federal investigations by both parties. It is hard to keep track. It cannot be this way.
There is no reason for two separate federal agencies and state officials to all have antitrust authority with no clear division of labor. While antitrust law is fatally flawed, it is not likely going away any time soon. At the very least, it should be simplified. Senator Mike Lee has introduced two bills that are the first steps in that direction. He should reintroduce them so Congress can pass them in the new session.
One bill is the Standard Merger and Acquisition Reviews Through Equal Rules Act, better known as the Smarter Act. It would require the Justice Department and the Federal Trade Commission to follow a single uniform interpretation of the Clayton Act, which governs merger cases. Right now, the agencies can use different interpretations as suits their political needs, confusing both judges and defendants alike.
It would also mandate the Federal Trade Commission to use independent courts. This is important as it can now adjudicate its own cases outside the regular judicial system. With these internal courts, the Federal Trade Commission sets the procedural rules, selects the judges, and pays their salaries. The Smarter Act would prohibit it from stacking the deck with a mandate to use the same system as the rest of us.
This almost happened with the new Facebook case. The Federal Trade Commission was still deciding at the last minute whether to bring the case in its internal court, giving the agency better odds of victory, or in a standard court, where it can combine its case with the states. Fortunately, the agency made the right call and filed in a federal court with a judge not on its payroll. But that may not always be the case.
An independent judiciary is an essential institution in our country. There should be no option to evade it. The bullet was dodged in the Facebook case, however, the next target might not be so lucky. The Smarter Act also seeks to make the merger review process of the Federal Communications Commission faster. Indeed, another agency has jurisdiction over certain antitrust cases. The bill limits the process to 180 days.
Six months is a while, but that is swift by antitrust standards. In fact, an International Business Machines case launched in 1969 lasted more than a decade and never reached a decision. The government dropped the case when the technology at issue became obsolete, while the market share of the company was declining with no end in sight. The Microsoft case lasted four years despite efforts to make the process faster.
The second bill is the One Agency Act. It would remove the Federal Trade Commission from all antitrust cases. The Justice Department is perfectly capable of handling such antitrust cases, so having one agency in charge would add simplicity and expertise. It would also end pointless turf battles between these agencies. Whether the Justice Department or the Federal Trade Commission takes on a given case now might as well be decided by a coin toss. That is wrong, especially for cases with hundreds of billions of dollars along with tens of thousands of workers at stake.
Antitrust law is prone to cronyism, political ambition, populist ideology, and economic ignorance. Its statutes should all be repealed, but they are unlikely to be any time soon, and we are at the start of what will likely be a wave of new cases against technology firms. The least Congress can do is simplify the process and limit agencies in abusing power.
Ryan Young is a senior fellow at the Competitive Enterprise Institute. Alex Reinauer is a research associate with the Competitive Enterprise Institute.