A federal judge in San Francisco on Tuesday dismissed the Federal Trade Commission (FTC) that asked it to stay Microsoft’s acquisition of video game publisher Activision, which it announced in January 2022.
“The FTC has not demonstrated that it can show that this transaction would be likely to reduce competition in this industry,” Jacqueline Scott Corley wrote in her preliminary ruling.
The agency has appealed – dismissed on Friday – and can await investigation of the case, but its lawsuit is now very poorly initiated.
In the two years since attorney Lina Kahn was named president by President Biden, the FTC has failed in court to block a number of mergers or acquisitions, including Meta’s acquisition of virtual reality specialist Within.
“The record isn’t good,” said John Lopatka, a law professor at Penn State University.
The FTC “takes an aggressive approach to transactions that would not have gone unchallenged with a traditional antitrust approach,” he says. “And those measures had largely failed.”
Led by Lina Kahn, the regulator is trying to change the doctrine that has prevailed for half a century regarding mergers in the United States.
The current rule tends to prevent the merger of two companies only if it can be shown that it would cause obvious harm to consumers, a definition much narrower than that used in practice before the 1970s.
battle lost?
But the change desired by the Biden administration, aimed both at preserving competition and at directly protecting consumers, can only be implemented in concrete terms through the courts and not by law, since Congress has almost approved the rare initiatives on the subject systematically overwhelmed.
“The (government) authorities cannot change anything unless they convince the courts to follow them,” summarizes John Lopatka.
“It’s an uphill battle that she’s likely to lose,” adds Keith Hylton, a law professor at Boston University, of Lina Kahn, “because it would take her years, much longer than the length of his presidency.”
And the Republican opposition in Congress has made no secret of their hostility towards the 30-year-old, who would likely have landed in the event of a political change.
“She’s trying to brutally break the norm that has made America successful,” Republican-elect Jim Jordan said Thursday during Ms. Kahn’s hearing, whose record he called a “disaster.”
At the same hearing, her colleague Kevin Kiley, also a Republican, accused her of wasting taxpayers’ money through risky lawsuits.
“Our mission is to promote competition,” the prospect replied impassively. “For us, it’s all about companies complying with the law.”
The few major successes of the Biden administration were due to procedures by the Justice Department and not the FTC, which led in particular to the fact that the publisher Penguin Random House refrained from acquiring its rival Simon & Schuster.
The Justice Department also urged insurance brokers Aon and Willis Towers Watson to resign from a union before the matter was even decided by a judge.
Likewise, “it’s possible that the FTC’s position has a deterrent effect that isn’t visible in the numbers,” says Keith Hylton.
In his opinion, “if you make a merger more expensive, you’ll have less,” in part because of the significant legal costs of overcoming regulator objections.