Another Antitrust Soldier Down? The Implications of the One Agency Act

11.12.2024

CeCo EE.UU

4 minutos

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Claves:

Con una nueva administración a punto de asumir en Estados Unidos, los funcionarios del gobierno han recalcado su intención de impulsar la «Ley de Agencia Única» (One Agency Act), un proyecto de ley que probablemente extinguiría el mandato de la FTC sobre la política de competencia y consolidaría la aplicación federal de las leyes antimonopolio en la División Antimonopolio del DOJ.
Los defensores del proyecto argumentan que tener dos agencias federales encargadas de la aplicación de las leyes antimonopolio genera ineficiencia en el sistema, dado que a veces ambas agencias gastan sus recursos investigando las mismas industrias o empresas, además de aumentar el riesgo de que las agencias lleguen a conclusiones contradictorias.
Los opositores al proyecto sostienen que la FTC y el DOJ tienen poderes legales diferentes, considerando que la FTC puede recurrir a su procedimiento de adjudicación administrativa y también tiene la autoridad exclusiva para hacer cumplir la Ley de la FTC, lo que permite a la agencia combinar los esfuerzos de protección al consumidor y la política de competencia, y abordar un abanico más amplio de conductas ilegales.

Keys:

With a new administration about to take office in the US, government officials have recently reinforced their intention of pushing the “One Agency Act”, a bill that would likely extinguish the FTC’s mandate over competition policy and consolidate federal antitrust enforcement in the DOJ.
Those in favor argue that having two federal antitrust enforcement agencies brings inefficiency to the system, given that sometimes both agencies spend their resources investigating the same industries or companies, as well as raises the risk the agencies reaching contradicting conclusions.
Those against the bill claim that the FTC and the DOJ have different legal powers, considering that the FTC can rely on its administrative adjudication proceeding, and also has exclusive authority to enforce the FTC Act, which allows the agency to combine consumer protection and competition policy efforts and to tackle a broader range of unlawful conducts.

Following an administrative reform, competition policy in Mexico is about to suffer major changes with the potential extinction of the country’s independent antitrust authority, the Comisión Federal de Competencia Económica (“COFECE”).^[1] Yet, practitioners might receive shortly groundbreaking news regarding the dismantling of another antitrust enforcement agency: the United States (“U.S.”) Federal Trade Commission (“FTC”).

Proposed in 2021 by Senator Mike Lee (Republican, Utah), Bill S.633 (named the “One Agency Act”)^[2] advocates in favor of transferring all of the antitrust enforcement structure, including functions^[3], staff, assets (e.g., electronic or paper records; equipment), and funding dedicated to antitrust work from the FTC to the Antitrust Division of the U.S. Department of Justice (“DOJ”). If enacted, the One Agency Act would put an end to the long-lasting double-agency antitrust system that the United States have relied on since the creation of the FTC by the FTC Act of 1914. The FTC would lose its mandate over competition policy, remaining solely as the guardian of consumer protection issues, and the DOJ would be the exclusive public enforcer of the federal antitrust laws.

Although the debate whether consolidating antitrust enforcement in the hands of a single agency is not new in U.S. history, the discussions surrounding the One Agency Act are gaining momentum, especially now that a new administration is taking office next January. With the Republican Party taking control of the White House, Senate and House of Representatives,^[4] governmental officials have recently declared that “Congress has a high chance of passing” the One Agency Act.^[5]

The reform is a subject of great controversy across the political spectrum and among practitioners. Those in favor of the bill criticize the current double-agency system. First, they argue that it leads to inefficiency, given that both the DOJ and the FTC often spend their valuable time and resources investigating the same company or industry. According to Sen. Mike Lee, this situation can even lead to the agencies adopting conflicting approaches, as it occurred with the claim brought by the FTC against Qualcomm in 2017.^[6] The FTC filed a lawsuit before the U.S. District Court for the Northern District of California accusing the company of adopting anticompetitive practices to maintain its monopoly in the supply of semiconductors.^[7] After Judge Lucy Koh’s ruling in favor of the FTC, the decision was reversed by the U.S. Court of Appeals for the Ninth Circuit. Interestingly, the DOJ filed an amicus brief supporting Qualcomm’s appeal, arguing that the District Court’s finding of liability would harm competition, innovation, and national security.^[8] Second, the advocates of the bill assert that allocating sectors to the oversight of each agency creates the risk of different industries receiving different antitrust treatment. Third, they claim that, if there is room for only one federal antitrust enforcer, then this should be the DOJ, given its current exclusive jurisdiction over criminal enforcement.

However, the bill raises doubt on the continuance of important attributes of the U.S. antitrust policy. Differently from the DOJ, the FTC can make use of its internal administrative adjudication system when finding that a company has violated the law, in addition to seeking judicial relief. Although administrative decisions are subject to review by courts, this internal proceeding can play an important tool to establish new doctrines and analytical methodologies that can be endorsed by courts in the future. Moreover, the DOJ does not have currently jurisdiction over Section 5 of the FTC Act, which deem as illegal “unfair methods of competition in or affecting commerce” (commonly referred as “UMC”) and “unfair or deceptive acts or practices in or affecting commerce” (popularly known as “UDAP”). Courts have already acknowledged that Section 5 of the FTC Act is more comprehensive and encompasses more conducts than those that are subject to the Sherman Act. Section 5 of the FTC allows the FTC to pursue investigations using a bifocal lens that connects both antitrust and consumer protection policies, by tackling both UMC and UDAP. A recent example of this approach is the – administrative – complaint brought by the Commission against Caremark, Express Scripts, Optum Rx – three Pharmacy Benefit Managers (“PBMs”) – for allegedly engaging in exclusionary practices that are increasing drug prices in the U.S.^[9]

Beyond traditional political disputes, the bill touches on the sensitive topic of taking away powers from an agency that finds bipartisan support in many of its activities. FTC’s Republican Commissioners Melissa Holyoak and Andrew Ferguson have sided with their Democrat peers Lina Khan, Alvaro Bedoya, and Rebecca Slaughter on a number of initiatives, including the decisions to a file lawsuit to block (i) Tempur Sealy’s acquisition of Mattress Firm,^[10] (ii) Tapestry’s acquisition of Capri,^[11] and (iii) the decision to expand the volume of information merging parties must submit in the filing form, in connection with the Hart-Scott-Rodino (“HSR”) Act.^[12] Furthermore, senior officials of the new Trump Administration – including the yet to become Vice-President JD Vance^[13] – have already publicly appraised the work undertaken by the FTC during the Biden Administration under the leadership of the agency’s Chair, Lina Khan, especially with respect to tackling the power of big tech companies. One should not forget that the current lawsuit against Google’s search engine exclusivity provisions was brought by the DOJ under the Trump Administration in 2020. Therefore, whether the One Agency Act will actually enter into force is yet to be seen.

Notes:

^[1] On this topic, see: Omar Guerrero and Priscila Barba, “De la Autonomía a la Incertidumbre: Retroceso en la política de competencia en México”, CentroCompetencia (“CeCo”), (October 9, 2024), https://centrocompetencia.com/retroceso-politica-competencia-mexico/; and Alejandra Palacios, “El impacto de la reforma judicial en la institucionalización de la política de competencia en México”, CeCo, (September 25, 2024), https://centrocompetencia.com/reforma-judicial-institucionalizacion-politica-competencia-mexico/.

^[2] United States Congress, “S.633 – One Agency Act”, (March 9, 2021), https://www.congress.gov/bill/117th-congress/senate-bill/633/text.

^[3] The One Agency Act defines antitrust function as “any duty, obligation, power, authority, responsibility, right, privilege, activity, or program” relating to the antitrust laws or unfair methods of competition under Section 5 of the FTC Act.

^[4] At the time of this writing, while the 2024 elections for the House of Representatives were yet to be officially concluded, projections indicated that the Republican Party would have a majority over the House. See, for instance: The Associated Press, “2024 House Election Results”, (November 19, 2024), https://apnews.com/projects/election-results-2024/?office=H.

^[5] Global Competition Review, “House and Senate counsel: One Agency Act likely to succeed”, (November 18, 2024), https://globalcompetitionreview.com/gcr-usa/article/house-and-senate-counsel-one-agency-act-likely-succeed.

^[6] The Wall Street Journal, “One Agency for Antitrust”, (November 17, 2020), https://www.wsj.com/articles/one-agency-for-antitrust-11605653810.

^[7] See complaint at: https://www.ftc.gov/system/files/documents/cases/170117qualcomm_redacted_complaint.pdf.

^[8] Available at: https://www.justice.gov/atr/case-document/file/1199191/dl.

^[9] The administrative complaint is available at: https://www.ftc.gov/system/files/ftc_gov/pdf/d9437_caremark_rx_zinc_health_services_et_al_part_3_complaint_corrected_public.pdf.

^[10] See https://www.ftc.gov/legal-library/browse/cases-proceedings/231-0016-tempur-sealy-international-inc-mattress-firm-group-inc-matter.

^[11] See https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-moves-block-tapestrys-acquisition-capri.

^[12] See https://www.ftc.gov/news-events/news/press-releases/2024/10/ftc-finalizes-changes-premerger-notification-form.

^[13] The Hill, “Vance: Biden FTC chief is ‘doing a pretty good job’”, (February 27, 2024), https://thehill.com/policy/technology/4491363-vance-biden-ftc-chief-is-doing-a-pretty-good-job/.