The work of the Federal Trade Commission is not supposed to affect international affairs, but it is doing so, empowering China in the race for technological supremacy and harming businesses in the United States.
It is time for the Biden administration, Congress and other policymakers to audit and abort the FTC’s mission creep. Further, since the FTC is eager to engage in international affairs, it should start by understanding and taking on its counterpart in China, the State Administration for Market Regulation, which recently nixed a proposed merger of Intel and an Israeli company, harming American interests.
The FTC is an independent agency of the federal government charged with “protecting the public from deceptive or unfair business practices and from unfair methods of competition through law enforcement, advocacy, research and education.” Its 2023 budget is $430 million.
Driven principally by the audacity of its chair, Lina Khan, the FTC, over the last two years, has aggressively fought business combinations, sought to end non-compete agreements, and proposed radical changes on the types of future mergers that would be allowed in the United States.
It has also worked closely with regulators in the European Union and elsewhere to inhibit mergers and disrupt companies’ operations. And the FTC has done so despite the EU’s long track record of imposing restrictions on U.S. tech companies that benefit European ones.
Whether the FTC should have any significant role in international affairs is highly questionable.
According to the International Antitrust Enforcement Assistance Act, the U.S. Department of Justice, a Cabinet-level department, assists foreign antitrust authorities. The act says, “A request by a foreign antitrust authority for investigative assistance under this section shall be made to the Attorney General.”
Yet, the FTC has been engaged in an international outreach campaign under Khan’s leadership. In November 2022, Khan became vice chair of the International Competition Network (ICN), an informal group of competition authorities from more than 100 countries.
Her involvement with ICN includes:
—Giving the keynote address at the group’s annual conference in Berlin on May 6, 2022.
—Hosting an Enforcers’ Summit on March 27 in Washington, which included sharing ideas with regulators worldwide.
—Likely having a prominent role at ICN’s next international symposium in Barcelona in October.
Khan should be clear about whether she will attend this event and the agenda items. And she should specify how, if at all, it will help American businesses and consumers.
Congress is already investigating the FTC’s bold and egregious actions with EU regulators to keep two U.S. healthcare companies from working together to deploy pioneering life-saving technology.
The FTC has also been ramping up its discussions with European and other regulators as it seeks ways to block business transactions involving Meta, Amazon, Microsoft and other companies. These matters should be thoroughly investigated.
The FTC has not engaged with China on antitrust and other business matters. For starters, China is not even a member of the ICN.
Meanwhile, as China changes its approach to mergers and antitrust, the FTC seems oblivious to what its peer agency is doing.
On February 27, the law firm Davis Polk reported: “In 2022, China amended its Anti-Monopoly Law for the first time in fourteen years. … In a continued divergence from U.S. and EU trends, Chinese enforcers approved negotiated behavioral remedies and blocked no mergers.”
While U.S. and European regulators are restricting the size and strength of technology and other companies, often for arbitrary reasons, China approves such combinations. This is not surprising given the Chinese government’s stated aim of becoming dominant in global high-tech manufacturing by 2025, the “Made in China” program.
It is also not surprising that against this backdrop, the deliberate inaction of China’s FTC peer, the State Administration for Market Regulation, led Intel and Tower Semiconductor, an Israeli chip manufacturer, to call off a $5.4 billion merger after 18 months.
Surprisingly, the FTC is not evaluating U.S. business combinations in the context of America’s competitive standing with China or even talking about it. And there are no indications the FTC has engaged with the SAMR. In fact, the last Memorandum of Understanding between China’s predecessor agency to the SAMR and FTC, from 2011, is now woefully obsolete.
Before the FTC even thinks about sending its chair and other officials to Barcelona or elsewhere for EU hobnobbing and commiserating, it must get back to basics. This begins by determining and understanding what the SAMR is up to and reviewing U.S. business combinations in our competition with China.
