Sen. Mike Lee Struggles to See Point of Competition, Checks and Balances

At a Senate oversight hearing last month, antitrust subcommittee Chairman Mike Lee, R-Utah, reacted to reports of disagreements between the Federal Trade Commission (FTC) and the Department of Justice (DOJ) over who would investigate Facebook for antitrust violations.

Lee criticized the two enforcers for the conflict, saying that it “will have the agencies stumbling over each other and will inevitably undermine rather than further the enforcement efforts of both agencies.” DOJ Antitrust Division head Makan Delrahim told Lee, “I cannot deny that there are instances where Chairman Simons and my time is wasted on these types of squabbles.”

Lee used the episode to repeat a favorite criticism of his: that having the FTC and DOJ both enforce the antitrust laws is“inefficient.” Both FTC Chairman Joseph Simons and Delrahim agreed at the hearing that they would not recommend the United States’ system of enforcement, which also includes state attorneys general and antitrust laws by private actors, as a model for other countries.

The whole exchange, however, revealed a deep misunderstanding of American’s antimonopoly tradition and political philosophy generally. Previous generations of lawmakers intentionally fostered competition among many different enforcers over who could best protect people from corporate power. The resulting multiplicity of enforcers is not a bug; it’s a carefully engineered and vital feature.

When Progressive reformers passed the Clayton Act in 1914, for example, they intentionally extended the power to enforce its provisions not only to federal agencies, but also to the states, and even private parties. The same year, they created the FTC “to recover the power to control antitrust policies,” as one legal scholar put it, from reactionary judges who were prone to interpreting the Sherman Act in ways that helped corporate monopolies and hurt farmer co-ops and labor unions. Instead, Congress wanted to make sure that a federal agency, accountable to Congress, would be able to study and police new and potentially abusive business practices.

To be sure, neither the FTC or the DOJ today is striving hard to outpace the other in checking corporate concentration. A body of research, led by Northeastern University economist John Kwoka, has found that the DOJ and FTC have frequently failed to challenge mergers that led to price increases and other harms.

But the FTC and DOJ have differed, with one enforcer or the other taking a more aggressive stance in particular cases. For example, the DOJ has disagreed with the FTC in federal court this past year over how to punish chipmaker Qualcomm for abusing its patent over essential chips. In response, the FTC characterized the DOJ’s argument as basically exempting Qualcomm from antitrust laws. The case is in front of the Ninth Circuit currently, but Delrahim’s highly-criticized deference to patent holders suggests that if it were up to the DOJ, there wouldn’t even be a case.

Another disagreement came in 2008 when the FTC called a DOJ report on enforcing the Sherman Act against dominant corporations “a blueprint for radically weakened enforcement.” A three-member majority declared the FTC “ready to fill any Sherman Act enforcement void that might be created if the Department actually implements the policy decisions expressed in its Report.”

New York University law professor Harry First wrote, about states enforcing antitrust laws, “No single antitrust enforcement agency always gets it right; the benefit of [shared] enforcement is that persuasion must be used rather than command.”

The states increasingly appear to be “getting it right” more than their federal counterparts. States have worked to make up for many recent high-profile failures by federal enforcers. To name a few, the DOJ and FTC have failed to arrest the concentration and abuse of power in T-Mobile’s blockbuster acquisition of Sprint, Facebook’s abuses of users’ data privacy, and Google’s power over online search. In each of those cases, bipartisan coalitions of state attorneys general have stepped into the “enforcement void” left by the two federal enforcers.

Speaking after Lee in the hearing last month, Ranking Member Amy Klobuchar, D-Minn., summed up the value of multiple enforcers neatly: “I’d rather have a split investigation than no investigation.”

Perhaps the most concise and eloquent statement of the basic American attitude about seeking “efficiency” in the exercise of state power came from Supreme Court Justice Louis Brandeis. In a 1926 dissent, Brandeis argued that the Constitution’s Framers wanted a separation of powers “not to promote efficiency but to preclude the exercise of arbitrary power. The purpose was not to avoid friction, but, by means of the inevitable friction incident to the distribution of the governmental powers among three departments, to save people from autocracy.”