There Is Much More U.S. Ruin Care of Lina Khan and Jonathan Kanter

By Robert Bork Jr.

September 27, 2024

In the late Middle Ages, artisans melted down florins, the Florentine coin of pure gold, to apply it as gold leaf for floating halos over the heads of the saints. Today, if you are Lina Khan, you just go to Leslie Stahl.

In a rapturous 60 Minutes segment, Lina Khan was followed by CBS cameras as she was mobbed by law students and other admirers seeking selfies. In an interview, Stahl told Khan that the Chair of the Federal Trade Commission had reversed “decades of a hands-off strategy toward mergers and acquisitions” under Republican and Democratic presidents.

60 Minutes then reprised a snippet of a speech from President Biden in 2021: “We are now 40 years into the experiment of letting giant corporations accumulate more and more power, and where – what have we gotten from it? Less growth, weakened investment, fewer smaller businesses.”

None of these assertions are true. For forty years, antitrust regulators relied on the consumer welfare standard, judging every merger and acquisition by its impact on consumers in terms of price, choice, and innovation. There were many vigorous antitrust challenges under that standard – Microsoft under President Clinton, AT&T-Time-Warner and Facebook under President Trump. President Biden was also wrong about the fruits of a disciplined focus on consumer welfare. From 1980 to 2020, the U.S. economy almost tripled in size, Americans’ per capita income doubled, stocks yielded an inflation adjusted average return of almost 10 percent, and small businesses increased by 54 percent – not “fewer small businesses.”

Under Chair Khan, the FTC is replacing the consumer welfare standard with an everything standard that represents the supposed interests of workers, less efficient competitors, precrime approaches to imagined harms, even, somehow, racial disparities. The problem with such a vague and often hard to define assortment of standards is that they allow the government to bring an expensive and years-long action against any company, at any time, for anything.

Stahl put her finger on the dangers of such expanded power when she asked Khan, “Do you ever worry about the power that the FTC and the chairman have that could result in a destabilizing of basically the whole economy?”

The damage is already visible. Justin Wise of Bloomberg Lawreports that in the first half of 2024 alone, six significant merger inquiries ended with the FTC or the Justice Department’s Antitrust Division reporting abandoned transactions. These called-off mergers exceeded yearly totals from the prior decade. Justice’s Antitrust Chief, Jonathan Kanter, sees this as an accomplishment. He brags in speeches that in all 20 potential deals were abandoned after receiving inquiries from Kanter’s division.

This pressure can have real costs for American jobs and competitiveness. Consider the pressure exerted by FTC staff, which promised to recommend a lawsuit, in dissuading Amazon from going through with a proposed $1.4 billion acquisition of iRobot, which makes the Roomba floor cleaner. iRobot stock, once more than $100 a share, now can be bought for less than $8 a share. An Amazon deal could have recapitalized it and given it global market reach. No American benefited from FTC’s action. But it was a boon for Chinese companies like Ecovacs, which will not have to worry about pesky antitrust concerns as long as everyone in management spends two hours a day keeping up with their journaling on Xi Jinping thought. 

At the root of progressive antitrust is the Marxist conviction that capitalism is fatally flawed and must constantly be saved from itself – an idea articulated by Tim Wu, the leading light of the movement, who said every business needs a “policeman at the elbow.” As FTC and the Justice Department remain poised to challenge almost every merger or acquisition, we risk fossilizing innovation. Who suffers the most? The smaller players who cannot afford to pay $1,200-an-hour billables for antitrust representation that can last for years. “This is one of the big ironies of the current enforcement approach,” Jesse Solomon, a Davis Polk & Wardwell antitrust partner told Bloomberg’s Wise. “The chilling effect is largely on the non-blockbuster deals that are getting in-depth reviews but cannot sustain the costs of those reviews.”

Khan’s term as FTC officially expires this week, though she can serve until the next president selects her successor and the Senate confirms that replacement. Or, perhaps, as Stahl asked, might Khan want to keep her job for another term if the next president were to ask her to stay on?

After some hemming and hawing about consulting with her family, Khan replied, “there’s so much work to be done, and it’s such an honor to be in this role. And it would be an honor to have that opportunity to keep going.”

As Adam Smith said: “There is great deal of ruin in a nation.” There is so much left for Khan and Kanter to do.

Robert H. Bork, Jr., is the president of the Antitrust Education Project. 

Originally published at Real Clear Markets.