By John D. McKinnon and James V. Grimaldi
WASHINGTON -- The Justice Department and the Federal Trade
Commission are clashing over their shared responsibilities to
pursue the Trump administration's antitrust agenda in the
technology industry.
The Justice Department's antitrust division has flexed its
muscles in ways that have rankled staff at the FTC, most
particularly in an antitrust lawsuit against Qualcomm Inc. After
the FTC prevailed in a 10-day trial in federal court in San
Francisco in May, FTC lawyers were taken aback when Justice
Department lawyers sided with Qualcomm in the appeal phase of the
litigation.
The two agencies, which have divvied antitrust enforcement for
more than a century, have been known to skirmish over their shared
responsibilities in the past. But some observers say it has reached
new heights just as scrutiny of companies such as Alphabet Inc.'s
Google unit, Amazon.com Inc., Facebook Inc. and Apple Inc. has
become a priority in Washington.
The tensions are raising alarm, from the antitrust legal
community to Congress, that the continuing feud could disrupt the
coming probes into large technology companies, sometimes called Big
Tech, or could place an unfair burden on the companies under
review.
"What's evident from this latest institutional tug of war is
that the Antitrust Division and FTC are now actively battling each
other to take the lead in pursuing Big Tech," Sen. Mike Lee (R.,
Utah), the chairman of the Senate antitrust subcommittee, said last
month.
The jurisdictional skirmishing is raising the possibility that
individual companies could face different and possibly duplicative
investigative approaches and civil subpoenas, depending on which
agency winds up probing a particular company or practice.
The tussling over jurisdiction was on display last month when
the Justice Department said that it was conducting a sweeping
review of "whether and how market-leading online platforms have
achieved market power and are engaging in practices that have
reduced competition, stifled innovation or otherwise harmed
consumers."
The announcement caught by surprise some senior staff at the FTC
bureau of competition, though the commission chairman himself was
informed ahead of time, according to people familiar with the
matter. Before opening investigations, the agencies usually consult
with one another and negotiate agreements to avoid duplicating
efforts.
And yet, the announcement muddled aspects of an agreement the
two sides had reached just a few weeks earlier. In that earlier
agreement, described by multiple people familiar with the matter,
the Justice Department was to focus on issues surrounding Google as
well as Apple, while the FTC was to take on certain issues
surrounding Facebook and Amazon.
In its statement last week, however, the Justice Department
signaled its review would explore "the widespread concerns that
consumers, businesses, and entrepreneurs have expressed about
search, social media, and some retail services online."
The reference to social media and retail services was widely
interpreted by the legal community to mean Facebook and Amazon, two
companies that under the earlier agreement stood to have at least
some of their conduct reviewed by the FTC.
"For the outside observer, such internecine warfare can only
undermine confidence in the agencies and lead to public distrust,"
said Andrew Gavil, a Howard University antitrust law professor. "It
will also needlessly complicate any investigations and leave the
wider technology community guessing as to where the line is between
lawful and unlawful business strategies."
The head of the FTC's competition bureau, Bruce Hoffman, said
that the agencies have sorted jurisdictional issues through "a
process that has generally worked very well, and been respected by
both agencies, for decades (with, of course, rare hiccups that
always get straightened out)."
The Justice Department declined to comment.
FTC Chairman Joe Simons said in a brief interview last month
that the FTC, like the Justice Department, is also looking into
areas where individual companies enjoy market power. He said he
wasn't worried about the possibility of overlapping with the
Justice Department when it comes to investigations into specific
companies.
Mr. Simons added that the Justice Department-FTC agreement --
first reported by The Wall Street Journal in late May -- didn't
foreclose the possibility of the Justice Department looking into
some aspects of a tech giant while the FTC focused on other aspects
of the same business.
For instance, the DOJ could look into Amazon's book publishing,
where the antitrust division has always had expertise, while the
FTC could focus on Amazon's grocery-store operations, since the
commission has traditionally handled retail investigations.
The FTC announced its own high-tech task force early in the year
to conduct a similar wide-ranging review. But that was before the
agreement announced in late May.
Makan Delrahim, assistant attorney general for the DOJ's
antitrust division, said in an interview in June that he favors
taking a broad view of whether Big Tech dominance is harming
innovation, product quality and consumer choice. His boss, Attorney
General William Barr, also has signaled interest in potential
antitrust issues in the Big Tech area.
Sen. Lee, a critic of the Big Tech investigations, urged better
coordination and said he planned to explore the jurisdiction issue
at a coming Senate hearing. "Their duplicative reviews will
inevitably waste government resources and lead to the agencies
taking contradictory positions on the same issues," Mr. Lee
said.
Mr. Lee's Democratic counterpart on the House antitrust
subcommittee, Rep. David Cicilline (D., R.I.), who is more
sympathetic to the investigations, raised similar concerns in a
letter to Mr. Delrahim in May. Mr. Cicilline was troubled
particularly by the Qualcomm intervention.
"It is especially striking that the Division would think it
appropriate to broadly channel this view through unprecedented
interference in a sister agency's case," Mr. Cicilline wrote. "The
fact that the defendant in the Commission's case is a former client
of yours also raises a serious ethics question about the degree of
involvement in the decision to file this statement."
Mr. Delrahim, who was a registered lobbyist for Qualcomm in
2014-2016, didn't sign the two briefs that have caused
consternation at the FTC. He has criticized the FTC's legal theory
in a speech, but didn't mention Qualcomm. He recently signed
another Justice Department brief siding with Qualcomm on a related
private case before the same federal judge.
A Justice Department spokesman said Mr. Delrahim followed the
advice of the department's ethics officials. "He was recused from
all matters involving Qualcomm until January 21, 2019, when his
recusal period was over," the spokesman said. "Moreover, out of an
abundance of caution he has recused himself from the specific
matter of FTC v. Qualcomm."
One Justice Department filing that particularly stung attorneys
at the FTC, according to people familiar with the matter, was a
brief that openly questioned the merits of the FTC case and stating
that Qualcomm was likely to succeed on appeal.
While not directly related to the broader technology
investigations, the Qualcomm dispute could make it difficult for
the attorneys to cooperate as they embark on parallel
investigations, said Herb Hovenkamp, an antitrust law professor at
the University of Pennsylvania Law School.
"I think the FTC is rightfully feeling injured and somewhat
abused by this," Mr. Hovenkamp said. "That could certainly muddy
the waters and create some hard feelings."
Write to John D. McKinnon at john.mckinnon@wsj.com and James V.
Grimaldi at james.grimaldi@wsj.com
(END) Dow Jones Newswires
August 05, 2019 05:44 ET (09:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
QUALCOMM (NASDAQ:QCOM)
Historical Stock Chart
From Aug 2024 to Sep 2024
QUALCOMM (NASDAQ:QCOM)
Historical Stock Chart
From Sep 2023 to Sep 2024