Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Judges may be more effective than FTC administrators in enforcing antitrust law: Wright, (Feb 25, 2015)

By Dan Selcke, J.D.

Despite the presence of specialized economists on staff, generalist judges may have a better record of enforcing antitrust law than do FTC administrators, Federal Trade Commissioner Joshua D. Wright said during a February 21 speech at the Inaugural Global Antitrust Institute Moot Court Competition in Washington, D.C.

In his remarks, entitled “Judging Antitrust,” Wright considered whether generalist judges or FTC administrative courts produced better results when it came to managing antitrust cases. He concluded that the FTC actually had a weak substantive record of managing such cases internally, and suggested that the proposed Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act could help resolve some unfair advantages currently enjoyed by the agency.

Generalist judges, expert agencies, or both? Wright began by noting that modern antitrust jurisprudence involves the application of complex economic analysis. Approaching antitrust in this way has promoted consumer welfare, predictability, and stability in antitrust enforcement, but the very sophisticated mathematical and technical methods often needed for it can be burdensome for judges and lawyers not specially trained to apply them.

In this context, Wright asks, are antitrust cases best decided by generalist judges or economic specialists at agencies like the FTC? Evidence shows that, at least in terms of simple antitrust cases, judges with basic economic training were appealed and reversed less than their more economically educated colleagues, although this advantage disappeared when it came to more complex cases.

Meanwhile, expert agencies are staffed with specialists in the field, which may lead to the conclusion that they are better suited than generalist judges to tackle antitrust cases. Research shows, however, that Commission decisions are actually appealed and reversed significantly more often that the opinions of generalist judges in antitrust cases, suggesting that the conventional wisdom may be flawed.

In fact, scholars have been criticizing the FTC’s record of enforcing antitrust law through administrative adjudication since the 1960s. Professor Richard Posner, for example, expressed concern over the potential for abuse inherent in a system in which a single agency both initiates and adjudicates its own cases. This concern is borne out by a lopsided decision rate, with the Commission almost always finding liability for the respondents.

Wright also noted that the FTC had never employed its Section 5 unfair methods of competition authority in a way that contributed significantly to antitrust law, despite Congress having granted that authority to the FTC in the hopes that the agency would use its expertise to create new competition policy. Wright cautioned, however, that this should not suggest that the FTC has had no effect on competition policy, just that the use of its Part 3 administrative adjudication process has not had much effect. The Commission has been far more influential as a research-and-reporting institution, as FTC studies, amicus briefs, and reports have been cited by federal courts and law journals far more often that the FTC’s internally adjudicated decisions. By the same token, FTC cases brought in federal court are cited far more than cases brought under the agency’s Part 3 authority.

Mergers, preliminary injunction standards, and The SMARTER Act. When trying to obtain a preliminary injunction against an unconsummated merger in federal court, the FTC currently faces a more lenient standard as compared to the one faced by the Department of Justice’s Antitrust Division. Moreover, the FTC is authorized to seek permanent injunctions in either federal court or through administrative proceedings, where it stands a better chance of having its request granted. For the FTC, this means that a denial of a preliminary injunction in federal court does not mean its case is over, as the agency can continue to pursue the challenge internally.

These advantages can result in uncertainty among businesses sued by the FTC, since they cannot be sure that a denial of a preliminary injunction against them represents a win. Wright suggested that the SMARTER Act could help alleviate this imbalance.

First, the Act would harmonize the preliminary injunction standard for the FTC and DOJ by authorizing the FTC to challenge unconsummated mergers through Section 7 of the Clayton Act, the same authority vested in the DOJ for this purpose. The SMARTER Act would also divest the FTC of its authority to initiate and pursue administrative challenges to such mergers, thus requiring it to head to federal court to challenge those deals.

Wright suggests the SMARTER Act would get rid of the due process concerns raised by the FTC’s ability to get two bites at the apple and the incomplete separation of the Commission’s prosecutorial role from its adjudicative role. Concerns over whether normalizing the standards between the FTC and DOJ would implicate whether the FTC should exist at all were valid, but were not a reason to refrain from tweaking the FTC’s authority in light of its poor performance when it came to handling unconsummated merger cases through its administrative processes.

News: Antitrust FederalTradeCommissionNews