What Growth Companies Should Know About The Newly-Broken FTC Deadlock

Client Alert

The latest appointment to the Federal Trade Commission (FTC or Commission) could lead to greater antitrust enforcement in industries that President Biden previously identified in his 2021 executive order regarding competition. Alvaro Bedoya was sworn in as the newest FTC commissioner on May 16, 2022, creating a 3-2 Democratic majority on the Commission.1 Commissioner Bedoya joins the FTC after founding the Center on Privacy and Technology at the Georgetown University Law Center.2

The FTC typically receives information regarding potential mergers through Hart-Scott-Rodino filings and makes determinations regarding the legality of mergers.3 The FTC seeks to prevent perceived abuses of monopoly power, which are argued to result in higher prices or lower-quality goods for consumers.4 To  preclude mergers that are alleged to have these effects, the FTC may take action in the courts.5

The new Democratic majority on the Commission creates the potential for more activity in key industries, which President Biden previously stated were technology, Internet service, healthcare, banking, beer/wine/spirits, transportation/shipping, agriculture, defense, and labor generally. In January, the Democratic chair, Lina Khan, stated her position that the FTC and DOJ must work together to update merger guidelines to stop deals that are allegedly anticompetitive.6

Chair Khan has also said that “concentration across markets and a variety of consequent harms have prompted [the] broad reassessment of our antitrust enforcement tools and frameworks.”7 It is likely that a view toward limiting “consequent harms will be within reach with the new Democratic majority on the FTC.” In addition to the focus on merger enforcement, the Commission is expected to take expanded interests in online privacy,8 fair lending and tech platform enforcement.9

With this new Democratic FTC majority, companies would be well-advised to consider how their products and services are benefiting consumers, such as by innovating or expanding services. The FTC will likely target competitive actions that allegedly contribute to the economic challenges that Biden and his antitrust enforcers believe need to be addressed. Any transaction or other strategic plan that arguably limits choice will likely be scrutinized by this Commission.


1 Press Release, Fed. Trade Comm’n, Alvaro Bedoya Sworn in as FTC Commissioner (May 16, 2022).

2 Id.

3 Merger Review, Fed. Trade Comm’n.

4 Id.

5 Id.

6 Press Release, Fed. Trade Comm’n, Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers.

7 Press Release, Department of Justice, Justice Department and Federal Trade Commission to Hold Joint Spring Enforcers Summit (Mar. 10, 2022).

8 Lina M. Khan, Chair, Fed. Trade Comm’n, Statement Regarding Policy Statement on Education Technology and the Children’s Online Privacy Protection Act (May 19, 2022).

9 Memorandum from Lina M. Khan, Chair of the Fed. Trade Comm’n, to Commission Staff and Commissioners (Sept. 22, 2021).

manatt-black

ATTORNEY ADVERTISING

pursuant to New York DR 2-101(f)

© 2022 Manatt, Phelps & Phillips, LLP.

All rights reserved