On May 1, 2018, Joseph J. Simons (R) was sworn in as the Chairman of the Federal Trade Commission (FTC), and on May 2, Noah Phillips (R), Rohit Chopra (D), and Rebecca Kelly Slaughter (D) were sworn in as Commissioners. The fifth, Christine Wilson (R), is expected to begin service as soon the former Acting Chairman, Maureen Ohlhausen (R), is confirmed for a judgeship on the Court of Federal Claims.
Simons and Wilson are well-regarded antitrust attorneys with a focus on mergers and acquisitions. Both are veterans of the FTC. Phillips and Slaughter hail from Capitol Hill, while Chopra has a background in consumer protection, including a position at the Consumer Financial Protection Bureau.
Simons and the new Commissioners take office at time when antitrust principles are under general scrutiny, essentially calling into question whether the antitrust goal of protecting consumer welfare is defined too narrowly (asking whether employment and wealth distribution should be added to the mix) and the efficacy of antitrust enforcement generally, particularly with regard to challenging mergers. In his Senate questionnaire responses, Simons:
- Promised to examine the efficacy of the FTC’s merger reviews and consider if the FTC has been “too permissive in dealing with mergers and acquisitions”;
- Talked about the need to examine the FTC’s past merger and non-merger antitrust enforcement through retrospective studies; and
- Committed to scrutinize the FTC’s past merger remedies, citing a recent study showing that divestitures not involving stand-alone businesses had a 30% failure rate.
As Chairman, Simons also may seek to limit the scope of some antitrust immunities, including the Noerr-Pennington and State Action doctrines. Under Simons’ direction, in 2001 the FTC created a Noerr-Pennington task force to “limit the overly broad application” of that exemption, under which private entities are immune from liability for attempts to influence government action. In a similar vein, in 2003 Simons criticized the application of the State Action doctrine, which shields from antitrust liability certain private conduct taken pursuant to state policy, and the FTC successfully brought cases to limit the scope of the doctrine.
If Simons’ record from his time at the FTC in the early 2000s is any guide, we also may see the FTC reviewing and challenging more consummated mergers. In October 2001, Simons warned that “[c]ompanies that ‘scramble the eggs’ may be required to divest not only the assets acquired but also additional assets that may be needed to restore the lost competition.”
We expect the new Commission will continue its practice of challenging mergers in the oil and gas industry at concentration levels below those that are challenged in other industries. The recently proposed merger of two refiners, Marathon and Andeavor, may allow us to discern if there is any shift in energy enforcement practices under the Simons-led FTC.
We also may see a focus on the healthcare and pharmaceutical industries. During his prior tenure, Simons challenged a number of hospital mergers. Today much of the acquisitive activity in these industries involves combinations of firms operating at different levels. This trend towards vertical mergers converges with a renewed focus among enforcers, including the FTC, on scrutinizing vertical mergers and rethinking appropriate remedies to address these acquisitions. The current Acting Director of the FTC’s Bureau of Competition, Bruce Hoffman, recently said that vertical merger enforcement should be a “meaningful and important” part of the FTC’s (and DOJ’s) enforcement efforts.
In privacy, we do not expect radical changes from current practice, but we expect that the FTC will be responsible for reviewing the privacy practices of broadband providers now that the FCC has concluded they are not common carriers.
Additional biographical information about each of the new Commissioners follows.
Simons - Simons comes off a fifteen-year tenure as a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP, where he was co-chair of its antitrust group. Prior to that, Simons was Director of the FTC’s Bureau of Competition from 2001-2003 and was in private practice at a number of firms. Notable highlights in private practice include his appointment as trustee to oversee the $41 billion sale of Cingular Wireless to AT&T in 2004 and representation of Sharp Corporation in antitrust litigation and investigations of cartel activity related to liquid crystal display units.
During his tenure at the FTC, notable merger and non-merger challenges included:
- Conduct challenges against Rambus and Unocal, patentees that were alleged to have abused standard-setting processes in an effort to convert patent grants into a market monopoly.
- Post-consummation challenges to mergers involving software maker MSC (acquisition of Nastran, challenge came nearly 2.5 years after transaction), Chicago Bridge & Iron (merging with divisions of Pitt-Des Moines, challenge came 8 months after transaction), and Airgas (purchase of Puritan Bennet Medical Gas, challenge came 22 months after transaction).
- A price-fixing challenge against Warner and PolyGram related to an agreement in 1997 to not discount and not advertise certain of their catalog products for a limited period of time, in order to boost sales of forthcoming jointly-produced Three Tenors concert CDs and videos.
Wilson - Wilson is Senior Vice President at Delta Air Lines, was Chief of Staff to former FTC Commissioner Tim Muris (under whom Simons also worked), and also has significant mergers experience. In her confirmation materials, Wilson highlighted concerns about the healthcare industry, including costs, misuse of sensitive data, and overly burdensome occupational licensing requirements. She wrote that it is “imperative” that the FTC develop a better understanding of the effects of these concerns on patient choice and quality of care.
Phillips - Phillips, who most recently served as counsel to Sen. John Cornyn (R-TX), has spoken frequently in recent years about the need for patent reform, criticizing excessive patent litigation as a barrier to innovation and R&D spending. He promised in his confirmation materials to “maintain predictability and intellectual rigor in the interpretation and enforcement” of the antitrust and consumer protection laws. Echoing Wilson’s statements about the importance of healthcare costs, Phillips said in his confirmation hearing that this was perhaps the “#1 issue.”
Slaughter - The second Hill alumna among the group to be confirmed, Slaughter comes to the FTC following nearly a decade as a staffer to Sen. Chuck Schumer (D-NY), most recently serving as his Chief Counsel. She “strongly support[s]” Chairman Simons’ proposal to analyze the FTC’s past actions in merger reviews in order to gauge whether divestitures have had their intended effects. In her confirmation materials, she emphasized the need for the Commission to keep up with technological innovations in privacy and data security.
Chopra - Chopra, who has an MBA but not a law degree, is the only new commissioner whose focus has been in the consumer protection area. As Assistant Director and Student Loans Ombudsman at the CFPB, Chopra advocated for student loan reforms and in support of consumers harmed by illegally originated student loans and improper debt collection tactics. Chopra has testified before Congress multiple times on consumer protection issues including enforcement of laws protecting servicemembers and their families from fraud and deceptive financial schemes. During his confirmation hearing, he highlighted the Equifax breach as exemplifying the “serious issues we face with the proliferation of consumer data in our economy and society.”