(Bloomberg) — The head of the U.S. Federal Trade Commission said the antitrust agency is struggling to handle a merger boom that is rapidly consolidating industries across the economy.
Chair Lina Khan told House lawmakers at a hearing Wednesday that antitrust officials are processing the highest number of merger filings in two decades.
“Although the FTC is working to review many of these deals, the sheer volume of transactions is significantly straining commission resources,” Khan said. “I am deeply concerned that the current merger boom will further exacerbate deep asymmetries of power across our economy, further enabling abuses.”
Khan’s remarks to a panel of the House Energy & Commerce Committee marked her first appearance before Congress since becoming chair of the agency in June.
The merger wave is one of three main problems facing the agency, Khan told lawmakers. She also cited a Supreme Court decision that made it harder for the agency to recover money for consumers harmed by scams and deceptive practices by businesses and warned about the increase of fraud during the coronavirus pandemic that has been “supercharged by digital platforms.”
The companies’ business models based on user engagement “have allowed these platforms to become finely tuned instruments for bad actors who often target the most vulnerable,” Khan said.
Companies have announced $2.8 trillion of deals so far in 2021, an unprecedented number that puts this year on track to be the most active ever, according to data compiled by Bloomberg.
The surge in mergers and acquisitions has been fueled by rebounding corporate confidence and free-spending private equity firms. Deals have been happening across a wide range of industries, from technology and media to health care and transportation. Some of the largest deals this year so far include AT&T Inc.’s merger of its Warner Media unit with Discovery Communications Inc., General Electric Co.’s sale of its jet leasing business to AerCap Holdings NV and Canadian National Railway Co.’s agreement to buy Kansas City Southern.
Khan said that through the first three quarters of the current fiscal year, which began in October, antitrust agencies have processed more than 2,400 merger filings, a level that is the highest in two decades.
President Joe Biden’s decision to name Khan chair of the FTC put one of the most prominent advocates for more forceful antitrust actions against companies in charge of the commission and signaled the administration’s intent to toughen how competition watchdogs police mergers and conduct by dominant companies.
Khan rose to prominence with a 2017 research paper on Amazon.com Inc. that she wrote as a law student at Yale University. The paper casts the online retail giant as a harmful monopoly and argues that the company employs practices that should provoke a rethink of antitrust enforcement in the U.S.
Since Khan’s elevation to chair, Biden issued a sweeping executive order requiring federal officials to take steps to bring more competition to industries across the economy and tackle rising consolidation that has led to worries that dominant companies are choking off competition.
Biden nominated another critic of the power of technology giants, Jonathan Kanter, to lead the Justice Department’s antitrust division, which shares competition enforcement with the FTC. Kanter is a long-time foe of Alphabet Inc.’s Google, and if confirmed, he would take over the division as it forges ahead with a monopoly lawsuit filed against the search giant last year.
Khan is taking steps to give the FTC more teeth. In July, she and her two fellow Democrats on the commission voted to rescind an Obama-era competition policy that put limits on how the agency uses its authority to bring antitrust cases. Advocates for more aggressive enforcement have said the FTC can use that authority more broadly that the 2015 policy allowed.
Khan is already encountering blowback from companies and Republican commissioners. Amazon and Facebook Inc. have asked Khan to recuse herself from enforcement decisions affecting the companies given her past academic work and her role as a lawyer for the House Judiciary Committee’s antitrust panel which probed Amazon, Facebook, Google and Apple Inc. and concluded the companies have abused their dominance in digital markets.
Republican Commissioner Noah Phillips said at Wednesday’s hearing that under Khan’s leadership, the FTC has repeatedly changed policy direction without giving the public adequate notice and without “serious consideration.” He also criticized Biden’s executive order for opening the door to harmful regulations based on authority the commission doesn’t have.
“Much of it would replace consumer-driven market forces with government-supervised regulation, the opposite of competition,” Phillips said of the order.
(Updates with comments from hearing starting in fifth paragraph)
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