Reasonable conservatives can and do disagree about a number of topics, such as the best approach to tax policy, the right level of foreign aid, and whether the greatest president of the last century was Ronald Reagan or Calvin Coolidge (sorry, Teddy and Ike). In general, however, free-market conservatives believe in the rule of law and markets, rather than regulators, as the best path to satisfy the needs and wants of consumers and to cabin government within its proper, limited scope. Here at home, free-market conservatives also recognize that a vibrant and innovative American economy undergirds our prosperity and national security, particularly as a check on China’s authoritarian and expansionist regime.
On the other hand, a recent column in The Federalist by Aiden Buzzetti titled, “Why Free-Market Conservatives Should Cheer the Amazon Antitrust Suit,” encourages free-market conservatives to support the Biden administration’s antitrust agenda and, specifically, the Federal Trade Commission’s recent lawsuit against Amazon.
I have news for free-market conservatives: The Biden administration is not your friend. In sharp contrast to the arguments laid out in this column, the administration supports discredited leftist ideas that allow government regulators to dictate the structures of markets and to punish large and successful companies because they are large and successful.
In support of this “Neo-Brandeisian” philosophy, the FTC and the Department of Justice’s Antitrust Division are seeking to afford themselves virtually unlimited power to micromanage the economy, to disregard decades of judicial precedent dating back to Robert Bork, and to pick the winners and losers in the marketplace. In industry after industry, from defense to health care to semiconductors to tech, the administration’s lawsuits and regulatory moves have damaged U.S. economic and security interests abroad and harmed consumers at home.
To understand the flaws in Buzzetti’s position, let’s start with the proper role of government. In general, all conservatives support federalism and the principle that agencies should exercise only that authority expressly granted by Congress. Not this administration. For instance, citing a broad statute that prohibits “unfair methods of competition,” the FTC has asserted that it can “condemn essentially any business conduct it finds distasteful” without any showing of harm to consumers, anticompetitive intent, or market power. The FTC is suing Amazon under this theory, among others, and if it prevails, the FTC could gain vast new authority over the economy.
Although Buzzetti correctly notes that “conservatives are right to be wary of efforts on the left to weaponize antitrust,” his column fails to recognize that an expansion of discretionary governmental power would create new opportunities for just such abuse.
Perhaps even more aggressively, the FTC has proposed a rule that would ban noncompete clauses around the nation. An unprecedented power grab, the FTC’s proposal would overturn laws in 47 states and effectively reverse hundreds of years of court cases that have upheld reasonable noncompetes. Noncompetes raise a number of legal and policy choices; even the FTC itself acknowledges studies finding that “non-compete clauses increase employee training and other forms of investment.”
Nevertheless, three FTC commissioners — or, as the dissenting commissioner put it, “three unelected technocrats” — voted to impose a sweeping rule to rebuke principles of federalism and to invalidate tens of millions of contracts across the country.
The antitrust agencies also disrespect the norms of governance. For certain officials, the ends justify the means. Although Buzzetti asserts that the FTC’s leadership has “put the need for strong law enforcement above personal bias,” in just a few years, the FTC’s leadership has: disregarded ethics advice and then dissembled before Congress; destroyed documents related to its noncompete rule-making; used unpaid experts and consultants in ways that the FTC’s own inspector general found problematic; and crushed staff morale, with 28.8 percent of employees questioning the “honesty and integrity” of agency leaders.
The FTC’s chief economist resigned, apparently in protest over a biased health care study, while the last remaining Republican commissioner resigned over leadership’s “disregard for the rule of law and due process.” A federal court recently questioned whether DOJ’s leadership maintained an appearance of impartiality in another tech lawsuit, against Google, and an investigation has been requested into whether the agencies are complying with an Executive Order that encourages agencies to settle disputes. Rep. Jim Jordan and Sen. Ted Cruz, among others, have spotlighted these concerns.
Beyond the governance issues, the antitrust agencies are undermining U.S. economic and security interests. The FTC and DOJ recently proposed a new merging reporting form and new merger guidelines that more than quadruple filing and compliance costs and that effectively reverse the longstanding bipartisan consensus that most mergers promote competition and innovation.
How to Quickly Quell American Innovation
The new form and guidelines also would give the agencies far more discretion to block mergers based on amorphous, politicized criteria — criteria that any politician, even the esteemed Theodore Roosevelt, could use to protect friends and assail opponents (according to contemporary critics, President Roosevelt used antitrust in just such a manner). Already, one political operative, a former staffer for Sen. Elizabeth Warren, has attempted to intimidate an FTC commissioner on enforcement issues. Such a politicized regime would chill much of the dynamism that has separated America’s economy from Europe and much of Asia.
In fact, this administration has brought numerous merger challenges that are hampering innovation across the U.S. economy based on speculative theories with little or no grounding in precedent or economics, including sectors critical to our global competitiveness.
For instance, the FTC continues to challenge Microsoft’s acquisition of Activision — a “vertical merger” between companies that operate in different markets — even though regulators in Europe and the United Kingdom have signed off on the deal. The FTC objected to other vertical mergers that would have strengthened the international competitiveness of U.S. companies in various markets, including chip design, rocket motors, the metaverse, and cancer treatments, again without evidence of harm to consumers.
To date, the FTC and DOJ have lost all but one of their litigated merger challenges in court, but the costs remain. Worst of all, in some instances, the agencies have colluded with foreign governments to block U.S. mergers and quite possibly sought to reduce procedural protections for U.S. companies in the Indo-Pacific.
The agencies’ most recent tech lawsuits also rest on flawed premises. Far from a monopoly, Amazon accounts for about 5 percent of domestic retail sales; one court has already dismissed another lawsuit that raised many of the same theories as the FTC’s current suit. Similarly, DOJ is suing Google for “monopolizing” the search market even though consumers can change browsers with little more than a click. Both lawsuits ignore the benefits of integrated, global American companies, which can offer consumers low prices (often at no out-of-pocket cost) and invest in advanced technologies such as quantum computing and artificial intelligence.
Moreover, neither lawsuit addresses conservative concerns about online speech, and, in fact, conservatives should worry about any proposal or lawsuit that would further empower the Biden administration. Instead of increasing the authority of federal regulators, as these lawsuits would, speech concerns are better addressed through proposals that would limit the ability of regulators to use their authority to influence or promote censorship or to pressure social media companies to censor speech. The FTC and DOJ should prevail only if they prove that Amazon and Google’s business practices are harming consumers — a possibility that, given the agencies’ track record in court, seems unlikely.
In any event, these lawsuits raise fundamental questions about what it means to be a free-market conservative. Do free-market conservatives want to give administrative agencies more discretion, or less? Do they prefer a light regulatory touch, or European-style industrial policy? Should conservatives trust federalism and decades of judicial precedent, or the Biden administration’s progressive regulators?
For free-market conservatives steeped in the tradition of Ronald Reagan, Friedrich Hayek, and Milton Friedman, the answers are obvious.