By Aaron Wudrick, February 15, 2024
Philip MacKeller recently penned a piece arguing that the U.S. Federal Trade Commission (FTC) – led by Chair Lina Khan – has undertaken an “aggressive approach to enforcing antitrust law”. And while there’s no doubt that Khan and her hipster antitrust supporters welcome that narrative, the facts suggest it may be more than a little embellished.
Consider first that much of this flattering narrative is built on just two data points: most recently, the Department of Justice’ Antitrust Decision to block JetBlue’s acquisition of Spirit Airlines; and the FTC’s successful federal court case against biotech company Illumina, which will force it to divest itself of Grail – a company it spun off in 2017 only to reacquire in 2020.
Zoom out and the picture is less flattering. Data reveals a steady and significant drop in annual merger investigations in 2021, 2022, and 2023 compared to the Trump administration’s final year – there is hardly evidence of aggressive enforcement.
The FTC also hasn’t fared so well in challenging big tech mergers, where they lost attempts in court to block several deals, such as Meta’s acquisition of Within and Microsoft’s purchase of Activision. The “crusading antitrusters” narrative attaches considerable weight to other deals they never actually sued to stop – such as Adobe/Figma and Amazon/iRobot – which were abandoned in the face of opposition from the European Commission (EC). In contrast to the FTC, the EC wields considerable power in merger reviews, effectively serving as judge, jury, and executioner, with appeals against its decisions being both rare and quixotic.
Perhaps the FTC should be thankful it isn’t responsible for these European ‘wins’ — many deals blocked on the premise of preventing consolidation turn out disastrously. In the case of the Amazon/iRobot deal, the latter announced it would be laying off 31% of its staff and abandoning certain product lines.) In addition to immediate American job losses and regulatory uncertainty for American companies, Chinese rivals stand poised to capitalize on these missed opportunities, with broad implications for innovation and competitiveness in the medium and long term.
But even as Lina Khan’s losing streak in the US is being shored up by the EC, she might soon find another foreign regulatory body in her corner: Canada’s Competition Tribunal. That’s because Bill C-59, which is currently before Parliament, contains amendments to Canada’s Competition Act that would empower the Competition Tribunal to block deals based solely on evidence of market concentration, bypassing the need to demonstrate actual harm to competition. Since many major American businesses have substantial Canadian operations, and do business in the Canadian market, this approach offers a potential workaround for the FTC’s mandate to adhere to the consumer welfare standard.
This should be cause for alarm for Canadian policymakers for at least two reasons. First, Canada’s drift away from the consumer welfare standard is likely to have negative unintended consequences for the Canadian economy, leading to smaller, less efficient firms that innovate and invest less. This should be of particular concern to a country that is struggling with a well-established productivity crisis.
Second, the politics of a foreign regulatory body being perceived as a de facto second kick at the can for an FTC that can’t win arguments under U.S. law are fraught, to say the least. The Trudeau government has already been happy to irritate its most important ally and largest trading partner with its proposed digital services tax and futile spat with Meta and Google.
Make no mistake: Canada could certainly use more competition, in sectors ranging from grocery retail to telecoms, and airlines to banks (to say nothing of its shameful system of supply management for dairy and poultry). But for most of these sectors, recent and imminent reforms to the Competition Act completely miss the mark and will have no impact because they remain shielded by restrictive foreign ownership requirements. Exposing Canadian business to the unforgiving discipline of global competition is politically fraught, so instead we get showboating reforms like Bill C-59 that will only damage less-shielded but vital sectors of our economy.
Contrary to the superficial narrative advanced by Lina Khan’s FTC and her allies, hipster antitrust has run aground on its home turf – a fact about which both Americans and those around the world should be thankful. Canadian policymakers should not be looking to Khan for inspiration – and they certainly shouldn’t be willing to serve as a surrogate to thwart American business where she has failed.
Aaron Wudrick is a lawyer and the domestic policy director at the Macdonald-Laurier Institute.
