[A2k] Wall Street Journal: Justice Department, FTC Skirmish Over Antitrust Turf

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 5 13:04:15 PDT 2019


https://www.wsj.com/articles/justice-department-ftc-skirmish-over-antitrust-turf-11564997402

POLITICS

Justice Department, FTC Skirmish Over Antitrust Turf

Concerns grow that tussle could disrupt coming probes into big tech
companies

By John D. McKinnon and James V. Grimaldi
Aug. 5, 2019 5:30 am ET

WASHINGTON—The Justice Department and the Federal Trade Commission are
clashing over their shared responsibilities to pursue the Trump
administration’s antitrust agenda in the technology industry.

The Justice Department’s antitrust division has flexed its muscles in ways
that have rankled staff at the FTC, most particularly in an antitrust
lawsuit against Qualcomm Inc. After the FTC prevailed in a 10-day trial in
federal court in San Francisco in May, FTC lawyers were taken aback when
Justice Department lawyers sided with Qualcommin the appeal phase of the
litigation.

The two agencies, which have divvied antitrust enforcement for more than a
century, have been known to skirmish over their shared responsibilities in
the past. But some observers say it has reached new heights just as
scrutiny of companies such as Alphabet Inc. ’s Google unit, Amazon.com
Inc., Facebook Inc. and Apple Inc. has become a priority in Washington.

The tensions are raising alarm, from the antitrust legal community to
Congress, that the continuing feud could disrupt the coming probes into
large technology companies, sometimes called Big Tech, or could place an
unfair burden on the companies under review.

“What’s evident from this latest institutional tug of war is that the
Antitrust Division and FTC are now actively battling each other to take the
lead in pursuing Big Tech,” Sen. Mike Lee (R., Utah), the chairman of the
Senate antitrust subcommittee, said last month.

The jurisdictional skirmishing is raising the possibility that individual
companies could face different and possibly duplicative investigative
approaches and civil subpoenas, depending on which agency winds up probing
a particular company or practice.

The tussling over jurisdiction was on display last month when the Justice
Department said that it was conducting a sweeping review of “whether and
how market-leading online platforms have achieved market power and are
engaging in practices that have reduced competition, stifled innovation or
otherwise harmed consumers.”

The announcement caught by surprise some senior staff at the FTC bureau of
competition, though the commission chairman himself was informed ahead of
time, according to people familiar with the matter. Before opening
investigations, the agencies usually consult with one another and negotiate
agreements to avoid duplicating efforts.

And yet, the announcement muddled aspects of an agreement the two sides had
reached just a few weeks earlier. In that earlier agreement, described by
multiple people familiar with the matter, the Justice Department was to
focus on issues surrounding Google as well as Apple, while the FTC was to
take on certain issues surrounding Facebook and Amazon.

In its statement last week, however, the Justice Department signaled its
review would explore “the widespread concerns that consumers, businesses,
and entrepreneurs have expressed about search, social media, and some
retail services online.”

The reference to social media and retail services was widely interpreted by
the legal community to mean Facebook and Amazon, two companies that under
the earlier agreement stood to have at least some of their conduct reviewed
by the FTC.

“For the outside observer, such internecine warfare can only undermine
confidence in the agencies and lead to public distrust,” said Andrew Gavil,
a Howard University antitrust law professor. “It will also needlessly
complicate any investigations and leave the wider technology community
guessing as to where the line is between lawful and unlawful business
strategies.”

The head of the FTC’s competition bureau, Bruce Hoffman, said that the
agencies have sorted jurisdictional issues through “a process that has
generally worked very well, and been respected by both agencies, for
decades (with, of course, rare hiccups that always get straightened out).”

The Justice Department declined to comment.

Mr. Simons added that the Justice Department-FTC agreement—first reported
by The Wall Street Journal in late May—didn’t foreclose the possibility of
the Justice Department looking into some aspects of a tech giant while the
FTC focused on other aspects of the same business.FTC Chairman Joe Simons
said in a brief interview last month that the FTC, like the Justice
Department, is also looking into areas where individual companies enjoy
market power. He said he wasn’t worried about the possibility of
overlapping with the Justice Department when it comes to investigations
into specific companies.

For instance, the DOJ could look into Amazon’s book publishing, where the
antitrust division has always had expertise, while the FTC could focus on
Amazon’s grocery-store operations, since the commission has traditionally
handled retail investigations.

The FTC announced its own high-tech task force early in the year to conduct
a similar wide-ranging review. But that was before the agreement announced
in late May.

Makan Delrahim, assistant attorney general for the DOJ’s antitrust
division, said in an interview in June that he favors taking a broad view
of whether Big Tech dominance is harming innovation, product quality and
consumer choice. His boss, Attorney General William Barr, also has signaled
interest in potential antitrust issues in the Big Tech area.

Sen. Lee, a critic of the Big Tech investigations, urged better
coordination and said he planned to explore the jurisdiction issue at a
coming Senate hearing. “Their duplicative reviews will inevitably waste
government resources and lead to the agencies taking contradictory
positions on the same issues,” Mr. Lee said.

“It is especially striking that the Division would think it appropriate to
broadly channel this view through unprecedented interference in a sister
agency’s case,” Mr. Cicilline wrote. “The fact that the defendant in the
Commission’s case is a former client of yours also raises a serious ethics
question about the degree of involvement in the decision to file this
statement.”Mr. Lee’s Democratic counterpart on the House antitrust
subcommittee, Rep. David Cicilline (D., R.I.), who is more sympathetic to
the investigations, raised similar concerns in a letter to Mr. Delrahim in
May. Mr. Cicilline was troubled particularly by the Qualcomm intervention.

Mr. Delrahim, who was a registered lobbyist for Qualcomm in 2014-2016,
didn’t sign the two briefs that have caused consternation at the FTC. He
has criticized the FTC’s legal theory in a speech, but didn’t mention
Qualcomm. He recently signed another Justice Department brief siding with
Qualcomm on a related private case before the same federal judge.

A Justice Department spokesman said Mr. Delrahim followed the advice of the
department’s ethics officials. “He was recused from all matters involving
Qualcomm until January 21, 2019, when his recusal period was over,” the
spokesman said. “Moreover, out of an abundance of caution he has recused
himself from the specific matter of FTC v. Qualcomm.”

One Justice Department filing that particularly stung attorneys at the FTC,
according to people familiar with the matter, was a brief that openly
questioned the merits of the FTC case and stating that Qualcomm was likely
to succeed on appeal.

While not directly related to the broader technology investigations, the
Qualcomm dispute could make it difficult for the attorneys to cooperate as
they embark on parallel investigations, said Herb Hovenkamp, an antitrust
law professor at the University of Pennsylvania Law School.

“I think the FTC is rightfully feeling injured and somewhat abused by
this,” Mr. Hovenkamp said. “That could certainly muddy the waters and
create some hard feelings.”

Write to John D. McKinnon at john.mckinnon at wsj.com and James V. Grimaldi at
james.grimaldi at wsj.com

-- 
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org


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