President Trump has the opportunity to correct a major misdirection of American antitrust law, by replacing FTC Chair Lina Khan, who has been attacking large firms for innovations that their smaller rivals cannot match.
During a potential second term, former President Donald Trump will have the opportunity to correct a major misdirection of American antitrust law, through his power to replace Lina Khan, the chair of the FTC.
Over the last three and a half years, federal antitrust law enforcement at the FTC has followed a direction departing sharply from the last five decades of both Democratic and Republican administrations.
The FTC has been attacking large firms for innovations that their smaller rivals cannot match, even if the products or services of the larger firms are preferred by consumers. Traditionally, antitrust law has recognized the welfare of consumers as its ultimate goal; that has not been the case under Khan.
A good example is the FTC’s criticism of Amazon’s requirement that companies selling in the “Amazon Prime” space must make use of Amazon’s delivery and return policies. Consumers overwhelmingly applaud the timeliness and reliability of Amazon’s fulfillment services, yet the FTC criticized this requirement because it denied other delivery companies this share of the market.
For traditional antitrust enforcers and scholars, this kind of business practice demonstrates “superior skill, foresight, and industry,” which even a firm with large market share should be encouraged, not punished, for displaying. That phrase is from one of the seminal cases in American antitrust, written by Judge Learned Hand, widely considered the most distinguished federal appellate judge in history.
Traditional antitrust is more than adequate to protect consumers without punishing innovation. To drive a competitor out of business by selling at prices below cost, for instance, is a textbook example of settled antitrust law. The law punishes such predatory conduct, while allowing competition on the merits to reward firms that make true cost-saving innovations. It ought to be a foregone conclusion that a second-term Trump choice to replace Khan would steer the agency back to that sensible, balanced approach. However, former President Trump’s selection of Sen. JD Vance (R-Ohio) as his running mate introduces an element of doubt.
As a senator, Vance has praised Khan and her attacks on high tech. Khan is a protégé of Sen. Elizabeth Warren (D-Mass.), who is the polar opposite of Vance in most policy areas. But there is a populist strain that they hold in common. Before becoming a senator, Vance spent a short amount of time in Silicon Valley, investing in start-ups. He developed an antipathy toward the actions of the larger tech firms competing against the companies that Vance’s investors had funded.
For an antitrust enforcement agency like the FTC, a “big is bad” presumption discourages large firms from adopting innovations that would have the effect of increasing its market share. This is bad economics but popular politics.
If Trump, in a second administration, reappoints Khan, or someone of similar views, however, he would be undermining a goal much larger than antitrust policy: the constraint of regulatory overreach by federal agencies.
Khan has been the single greatest proponent within the Biden administration of extending the power of federal agencies. Trump, in his first term, achieved major victories in the battle to rein in the size and intrusive nature of federal agency actions; and those victories were enshrined in U.S. Supreme Court opinions.
With the participation of the justices whom President Trump appointed, the court has insisted on presidential authority to hire and fire heads of administrative agencies (even when a statute says they can only be removed for cause); denied agencies the power to resolve “major questions” that Congress should be deciding instead; and reversed years of practice by agencies which impose fines without a jury trial.
Khan is a disciple of President Obama’s “I have a pen and a phone” school of presidential assertion of power to act when Congress won’t do what the president wants. The Congress has authority to regulate commerce under our country’s separation of powers’ doctrine. Khan has arrogated that authority to the FTC.
This is the broader issue that will literally trump the fact that some neo-populist Republicans may like the way the FTC has used its illegitimately assumed power.
Tom Campbell was the director of the Bureau of Competition, the antitrust arm of the FTC, during the Reagan administration. He served five terms as a congressman from Silicon Valley (1995-2001). Campbell is an antitrust advisor to Netchoice, a trade association focused on promoting free expression and free enterprise. His views are not necessarily those of any other organization.
