META Meta Platforms Inc

By Brent Kendall and Ryan Tracy 

WASHINGTON -- Lina Khan, a progressive champion nominated by President Biden for a key enforcement post, wants to transform antitrust policy into a bulwark against corporate power by blocking more mergers, attacking monopolistic practices and potentially breaking up some of America's largest companies.

Ms. Khan, 32 years old, is awaiting Senate confirmation for a Democratic seat on the five-member Federal Trade Commission after she was cleared by the Senate Commerce Committee. She has risen to prominence -- and gained bipartisan support -- as Democrats and Republicans alike have said lax antitrust enforcement, especially in the tech sector, has allowed dominant firms to hobble rivals and stifle competition.

Her targets have included not just Big Tech but also Big Chocolate and others. She has argued for hawkish positions that would overhaul legal doctrine and go well beyond the approach of recent antitrust enforcers. While her most ardent supporters believe such changes are long overdue, her views have prompted a debate on whether her approach is realistic and potentially so sweeping that it could prove jarring to the economy.

"Stepped-up antitrust enforcement is one thing," said Howard University law professor Andrew Gavil, who was a top FTC staffer the last time Democrats controlled the commission. "Changing the standards is a different matter," he said.

Mr. Gavil, who favors more enforcement, said Ms. Khan will have to consider how to translate her views into something that can be applied in practice. "That's more challenging than simply being a critic on the outside," he said.

If confirmed, Ms. Khan, a professor at Columbia Law School, would join an agency that enforces antitrust and consumer-protection laws across the economy. She would further cement the rise of a progressive camp that believes the U.S. faces what she has described as "a sweeping market power problem" in which large firms have been allowed to become too dominant.

"Lina has been very clear-eyed in recognizing that the core questions have to do with power, with the ability of private entities to coerce and to bully," said Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a research and advocacy group.

A London-born immigrant who came to the U.S. at age 11, Ms. Khan is soft-spoken and a prolific writer. During her teenage years in the New York City area, she worked on the student newspaper at Mamaroneck High School. She gained prominence through her criticism of Amazon.com Inc., writing a widely read law-review article while a student at Yale Law School that argued that antitrust law has failed to restrain the online retailer.

Ms. Khan has rocketed through the progressive ranks, sounding the alarm on corporate concentration in industries ranging from airlines to agriculture. "Big chocolate is about to get even bigger," she wrote in a 2013 article criticizing consolidation in the world market for cocoa processing.

People close to Ms. Khan said she sees herself as an intellectual leader in an antimonopoly movement, one that views unchecked corporate power as a threat to democracy.

She was a House staffer on a congressional antitrust panel that conducted a 16-month investigation of large online platforms and last year recommended that lawmakers take steps to rein them in. She served as legal director of the Open Markets Institute, a group that favors aggressive trustbusting.

Ms. Khan, who declined to comment, would join an FTC that scrutinizes mergers and business practices to determine whether they illegally suppress competition in the marketplace. She has argued that the current framework for enforcing U.S. antitrust laws is misguided because it favors corporate efficiency and short-term consumer welfare interests -- a preference for Amazon's prices and convenience, for example -- over maintaining a competitive structure in which a healthy number of rival firms keep one another in check.

The current system, she has said, essentially gives a green light to most corporate mergers and all except the most questionable business practices.

Restoring vigorous enforcement "first requires recognizing that the source of the problem is not just a lack of enforcement, but also the current philosophy of antitrust," Ms. Khan wrote for the Yale Law Journal in 2018.

Democrats have embraced Ms. Khan's arguments that enforcement has been inadequate, supporting tougher action by the FTC and the Justice Department, as well as legislation to strengthen antitrust laws. Some, however, have said the FTC can change its approach without embracing Ms. Khan's philosophical shift away from how enforcers have thought about the law for decades.

Republicans are more reserved on potential legislative changes and have been critical of Ms. Khan's central argument that antitrust policy should focus on more than just consumer welfare. Some have worried that her views would lead to burdensome government interference across industries, even as they support her positions against Big Tech.

Sen. Mike Lee (R., Utah), the top Republican on a Senate antitrust panel, voted against Ms. Khan in the Senate Commerce Committee and said liberal changes aren't needed. "Our laws could meet the need if only enforcers brought the appropriate facts and the appropriate evidence," he said during her April confirmation hearing.

He asked if Ms. Khan would have to recuse herself from Big Tech cases because of her work on the House online-platform investigation. The FTC is currently investigating Amazon.

Ms. Khan said she would consult with FTC ethics officials if recusal questions arose.

Concern about tech dominance has allowed Ms. Khan to forge common ground with some Republicans by arguing that concentrated corporate power is a threat to liberty. Sen. Ted Cruz (R., Texas), himself a former FTC staffer, said at the hearing that the FTC "should be doing much more" on Big Tech and that he looked forward to working with her.

The House antitrust report concluded that Amazon, Apple Inc., Alphabet Inc.'s Google and Facebook Inc. wield monopoly power -- and criticized U.S. antitrust enforcement agencies as failing to curb their dominance.

All four companies disputed the committee report's findings and declined to comment on Ms. Khan's nomination.

Carl Szabo, general counsel at NetChoice, an industry group whose members include Amazon, Google and Facebook, said Ms. Khan's views "could throw into question American innovation, economic exceptionalism, and consumer happiness for decades to come."

Ms. Khan has acknowledged that some markets, particularly in the digital space, might naturally be dominated by a handful of online firms because of their size and scale. In those circumstances, she has argued, the government should consider placing structural limits on the lines of business in which a firm can engage, or perhaps regulate online platforms directly as "common carriers" as it does with public utilities.

While Ms. Khan has extensively criticized the status quo, she has been less specific on what, realistically, can be done differently, especially as conservative court rulings have narrowed antitrust laws in a direction favorable to business for decades.

She could find herself with allies at the FTC to test the waters.

Democrat Rebecca Kelly Slaughter, the agency's acting chairwoman, has staked out aggressive enforcement positions during her three years on the commission, urging a tougher stance on mergers and recently creating an internal group that could help implement first-ever regulations that prohibit certain kinds of business practices as unfair methods of competition.

"Lina's work has substantially advanced the public debate on competition, and I am not aware of any places she and I disagree," Ms. Slaughter said.

The FTC's makeup is still taking shape. Mr. Biden has yet to designate a permanent chair, and he will have another opening if Commissioner Rohit Chopra, a progressive, is confirmed to run the Consumer Financial Protection Bureau.

An aggressive FTC could face several legal battles in the near term. A fight could ensue if Democrats assert the power to issue competition regulations, an authority that is in dispute. Early targets could include noncompete clauses in employment contracts and pharmaceutical settlements that potentially delay the entry of generic drugs.

The commission might face tough decisions on whether to bring lawsuits on mergers or monopolization because losses in court can set precedent for future cases. In recent years courts rejected government antitrust claims against the chip maker Qualcomm Inc. and American Express Co.

Ms. Khan's supporters have said it is worth the risk. If the FTC runs into skeptical judges, "the cases can help clarify where Congress needs to step in," said Fordham University law professor Zephyr Teachout. "If you don't bring the cases, you are not going to win them."

Write to Brent Kendall at brent.kendall@wsj.com and Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

May 23, 2021 12:14 ET (16:14 GMT)

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