"Democrats Gain Control of FTC With Terrell McSweeny Confirmation"

by Skadden, Arps, Slate, Meagher & Flom LLP
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On April 9, 2014, the U.S. Senate confirmed the nomination of Terrell McSweeny to the Federal Trade Commission. Commissioner McSweeny’s appointment creates a Democratic majority on the five-member commission, sparking anticipation of more aggressive enforcement by the FTC going forward.

Commissioner McSweeny’s Policy Background

Terrell McSweeny comes to the FTC from her position as chief counsel for competition policy and intergovernmental relations in the Antitrust Division of the Department of Justice. Commissioner McSweeny was appointed to her DOJ post during Sharis Pozen’s tenure as head of the Antitrust Division. While in the Antitrust Division’s “front office,” Commissioner McSweeny participated in many of the division’s high-profile enforcement actions, including United States v. Apple, Inc.,1 United States v. Bazaarvoice, Inc.,2 United States v. Anheuser-Busch InBev SA/NV3 and United States v. US Airways Group, Inc.4 Before that, Commissioner McSweeny served as domestic policy adviser to Vice President Joe Biden.

Commissioner McSweeny’s statements during her confirmation hearing underscore her policy background; she expressed her view that the FTC’s mission — to protect consumers — is a bipartisan one and emphasized her desire to maintain the commission’s collegial and bipartisan tradition.

The End of Deadlock

The FTC has been operating with only four commissioners for the 14 months since Chairman Jon Leibowitz’s departure in February 2013. Because the decision to take enforcement action requires a majority vote, during this period any enforcement decision (absent a recusal) required at least one Republican vote in favor of a complaint. Some antitrust observers expected that the four-person commission, made up of two Democrats and two Republicans, would err on the side of non-enforcement due to deadlock along party lines. For example, in the commission’s opinion in In the Matter of McWane, Inc.,5 the FTC dismissed in part an administrative complaint alleging restraint of trade, due to the commission’s failure to reach a majority position in favor of enforcement. Democratic Commissioners Edith Ramirez and Julie Brill found that McWane had engaged in a price-fixing conspiracy, while Republican Commissioners Maureen K. Ohlhausen and Joshua Wright found the evidence insufficient to establish liability. Only as to one of the complaint’s seven counts did the commission hold by a 3-1 majority that McWane’s exclusive dealing program was unlawful.

Commissioner McSweeny’s confirmation not only numerically eliminates the possibility of non-enforcement due to a tie vote absent a recusal, her appointment also shifts the commission’s party-line voting blocks in favor of her Democratic counterparts, all three of whom are Obama appointees. Because President Obama has expressed an intent to step up antitrust enforcement, this particular majority has fueled speculation that we may now see more aggressive enforcement by the commission.6 Indeed, having participated in a number of high-profile antitrust matters, Commissioner McSweeny is unlikely to shy away from enforcement where warranted.

In reality, however, it is not clear whether the voting blocks materially lessened the commission’s overall enforcement zeal. The commission pursued a number of cases, including In the Matter of Ardagh Group, S.A.,7 In the Matter of Pinnacle Entertainment, Inc.,8 In the Matter of Solera Holdings, Inc.9 and In the Matter of Motorola Mobility LLC.10 Even in McWane, Republican Commissioner Ohlhausen joined Democratic Commissioners Ramirez and Brill to hold that McWane’s exclusive dealing program unlawfully monopolized the domestic fittings market. Commissioner Wright dissented, arguing in favor of the pro-consumer efficiencies created by vertical restraints. Commissioner Wright found the evidence supported only that the program harmed McWane’s rival, not the competitive process.

As with the actual record of the four-member commission, the path of the now five-member commission may very well be more nuanced than a simple split along party lines. Between her policy experience and her stated commitment to bipartisanship, Commissioner McSweeny is likely to bring a pragmatic, policy-based perspective that favors consideration of a broader, intergovernmental context when contemplating an enforcement action. All five commissioners share a commitment to reasoned and principled antitrust enforcement. Should her appointment ultimately lead to stepped up enforcement, it does seem likely that more dissents from Commissioner Wright, who has historically been the commissioner most critical of government intervention, will be forthcoming.

1 Complaint, United States v. Apple, Inc., No. 1:12-cv-02826-UA (S.D.N.Y. Apr. 11, 2012).

2 Complaint, United States v. Bazaarvoice, Inc., No. 13-cv-00133-WHO (N.D. Cal. Jan. 10, 2013).

3 Complaint, United States v. Anheuser-Busch InBEV SA/NV, No. 1:13-cv-00127 (D.D.C. Jan. 31, 2013).

4 Amended Complaint, United States v. US Airways Group, Inc., No. 1:13-cv-01236-CKK (D.D.C. Sep. 5, 2013).

5 Opinion of the Commission, In the Matter of McWane, Inc., No. 9531 (F.T.C. Jan. 30, 2014).

6 See Barack Obama, Sen., Statement of Senator Barack Obama for the American Antitrust Institute (Sept. 27, 2007), available here.

7 Decision and Order, In the Matter of Ardagh Group, S.A., No. 9356 (F.T.C. Apr. 10, 2014).

8 Decision and Order, In the Matter of Pinnacle Entertainment, Inc., No. 9355 (F.T.C. Dec. 4, 2013).

9 Decision and Order, In the Matter of Solera Holdings, Inc., No. C-4415 (F.T.C. Oct. 22, 2013).

10 Decision and Order, In the Matter of Motorola Mobility LLC, No. C-4410 (F.T.C. Jul. 23, 2013).

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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