Why Lina Khan’s Recent Setbacks are Not Defeats for the FTC
Introduction
Mergers and acquisitions play a crucial role in the financial world, particularly on Wall Street. However, when these deals face challenges, it often generates anger and frustration among negotiators. Lina Khan, the top US antitrust official, has become a target of criticism in recent times. This article explores the reasons behind this and delves deeper into the significance of her recent setbacks. Furthermore, it sheds light on the complexities of the Amgen deal and the potential implications for the Federal Trade Commission (FTC). Finally, it addresses the criticisms against Khan and provides insights into her approach to competition law.
Antitrust Challenges in the United States
Mergers and acquisitions have always been highly competitive battlegrounds, leading to intense negotiations and occasional resistance. Lina Khan, the prominent US antitrust official, has faced backlash due to her attempts to block deals that could lead to monopolistic practices or higher prices for consumers. One such instance is the recent Amgen-Horizon Therapeutics acquisition, where the FTC aimed to prevent greater market power and protect patients from soaring prices.
However, critics argue that the outcome of the Amgen deal was not a defeat for Khan or the FTC. Instead, it was a settlement that achieved some of the regulatory restrictions the FTC sought. To understand the significance of Khan’s setbacks and the potential implications for future cases, it is important to analyze the complexities and nuances surrounding these deals.
Analyzing the Amgen Deal
The Amgen-Horizon Therapeutics deal marked the FTC’s first challenge to a pharmaceutical merger in over a decade. The FTC argued that Amgen could potentially leverage its best drugs to influence buyers’ preferences and strengthen Horizon’s position in the market. As a result of the negotiations, Amgen agreed not to bundle two of Horizon’s drugs.
While some may view this as a partial victory for the FTC, it is important to note that antitrust cases often face challenges in court due to the conservative nature of US antitrust law. Eleanor Fox, a competition policy expert and professor at New York University School of Law, explains that the FTC’s ability to achieve regulatory restrictions in a settlement is a testament to their efforts to combat pro-big business guidance and preserve competition.
Understanding Lina Khan’s Approach
Lina Khan’s appointment as the head of the FTC in 2021 came with a mandate to revive the agency’s focus on antitrust regulations. Her egalitarian view of competition law aims to improve the well-being of citizens beyond their roles as consumers. This perspective has garnered both praise and criticism, with financiers accusing Khan of being anti-American and anti-business.
However, it is crucial to recognize that Khan’s long-term goals go beyond individual cases. She uses litigation as a platform to return antitrust law to its original purpose of preventing industry consolidation and post-merger abuse. This broader approach seeks to address systemic issues and promote fair competition in the market.
Deconstructing the Wall Street Opposition
Khan’s stance has faced significant opposition from Wall Street, with financiers expressing their hatred and striving to influence Biden administration policies. This opposition reflects the profound impact that Khan’s approach has had, despite the setbacks faced in recent cases. The upcoming FTC lawsuit against Amazon is expected to be a critical test of her vision and influence.
James Keyte, the director of the Fordham Institute of Competition Law, points out that transaction volume has decreased since Khan assumed her role as FTC chair. However, the total number of transactions remains higher than the average of the past decade. This suggests that while large companies are avoiding mega-deals, smaller acquisitions are still occurring, albeit with potentially less threatening consequences.
The Implications of Khan’s Setbacks
While some view Khan’s setbacks as defeats, others argue that they are strategic moves driven by realism. William Kovacic, a former FTC chair, suggests that the FTC’s reluctance to settle easily stems from concerns that antitrust restrictions often fail to preserve competition effectively. However, this cautious approach may weaken the agency’s position in future battles and encourage merged parties to challenge settlements in court.
Nevertheless, Khan’s tenure at the FTC has already made a lasting impact on the perception and practice of antitrust regulations in the United States. The Amazon case, which is set to be filed in the near future, will provide further insights into the effectiveness of her approach and its potential implications for the future of competition law.
Summary
Lina Khan’s recent setbacks in the Amgen-Horizon Therapeutics deal and other cases should not be viewed as defeats for the FTC. Instead, they highlight the complexities of antitrust disputes and the cautious approach required to preserve competition effectively. Khan’s broader vision and commitment to returning antitrust law to its original purpose have garnered both praise and criticism. While opposition from Wall Street is evident, it reflects the significant impact of Khan’s approach on the financial industry. The upcoming FTC lawsuit against Amazon will be a crucial test of her influence and the future direction of competition law in the United States.
Keywords: Lina Khan, FTC, antitrust, Amgen, Wall Street, mergers, acquisitions, competition law, market power, settlement, regulatory restrictions, Amazon.
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Mergers and acquisitions are the blood sport of Wall Street. Reaching an agreement is of utmost importance. So anyone who stands in the way of achieving that goal generates anger.
That’s one of the reasons why the top US antitrust official. Lina Khan has become an antagonist for negotiators and why they rejoiced this month when Amgen reached a agreement with your agencyallowing the pharmaceutical company to proceed with its $28 billion acquisition of Horizon Therapeutics.
In its first challenge to a pharmaceutical deal in more than a decade, Khan’s Federal Trade Commission had tried to block the deal, arguing that greater market power would lead to higher prices for patients.
A prominent corporate lawyer summed up widespread opinion about the deal on Wall Street, saying it would discredit Khan and the FTC. He added that it would be more difficult for the former Columbia professor to win future cases, especially since the Amgen deal comes after failing in court to block Microsoft’s $75 billion acquisition of Activision and Microsoft’s acquisition of Activision. from Meta from virtual reality fitness app maker Within.
There is no doubt that the recent defeats are a setback for Khan, who was appointed by US President Joe Biden in 2021 with a mandate to revive the FTC to its antitrust roots. And they have a big showdown looming: an FTC lawsuit against Amazon. expected which will be released later this month. But the reality of the Amgen deal may be a little more complex than Wall Street’s summary.
“The FTC’s record in court and in settlements is in no way a defeat for President Khan’s tenure,” says Eleanor Fox, a competition policy expert and professor at New York University School of Law. . “Amgen wasn’t a loss at all. It was a settlement and the FTC got the restrictions it wanted. “It stopped short of banning the merger, but that partial victory is the nature of an agreement.”
In the Amgen case, the FTC argued that Big Pharma could get buyers to prefer Horizon’s drugs by combining them with its best drugs. Under the resolution, Amgen promised not to bundle two of Horizon’s drugs.
Fox adds that some judicial defeats for the FTC or the Department of Justice are not a black mark either. “Our antitrust law is very conservative, making it difficult for plaintiffs to win, and the FTC (and the Department of Justice) are fighting to try to roll back very long-standing, pro-big business guidance.”
James Keyte, director of the Fordham Institute of Competition Law, also points out Khan’s long-term goals. “She uses litigation, if necessary, as a platform to try to return, in her view, antitrust law to its original purpose of preventing industry consolidation or post-merger abuse,” she says.
A contrary opinion is that of William Kovacic, an academic who chaired the FTC during the administration of Republican President George W. Bush. He says the outcome of the Amgen dispute was an example of ambition tempered by realism. But he adds that the FTC under Khan had been reluctant to reach a deal because of fears that antitrust restrictions often failed to preserve competition. So the deal could weaken the agency’s position in future battles.
“If an agency takes a very tough stance on settlements, it should be prepared to litigate to the end. If it cannot demonstrate its ability to prevail, more companies will accept it and ask the court to consider the terms of the settlement that the agency rejected,” Kovacic says. “This has proven to be a successful strategy for the merged parties at Meta/Within and Microsoft/Activision.”
And it is the hope of the negotiators. Transaction volume (in dollar terms) has fallen significantly since he took over as FTC chairman, but the total number of transactions is above the average for the last decade. What this shows is that large companies have avoided making mega deals, but smaller acquisitions have been made as they probably posed less of a threat.
Consequently, anyone who has spoken to negotiators over the past year will have noticed that almost no one has been able to hide their hatred of Khan. Privately, financiers accuse her of being anti-American and anti-business. Several Wall Street donors to the Democratic Party are using their position of influence to quietly pressure Biden to drop Khan if he is re-elected, according to people briefed on the matter. That’s how much they want her out of the FTC.
Khan takes an egalitarian view of competition law that seeks to improve the well-being of citizens beyond their roles as consumers. The animosity toward her in American finance and business could indicate that she is having an impact despite the setbacks. The Amazon case will be a great test.
Twitter: @JFK_America
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