Policies and priorities for U.S. competition agencies are coming into sharper focus as leadership settles in under the new administration. Last month’s Fordham Competition Law Institute’s 52nd Annual Conference on International Law and Policy plus Antitrust Economics Workshop offered a chance for leaders at the U.S. Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC) to set out their vision.
DOJ Assistant Attorney General (AAG) Gail Slater, DOJ Deputy AAG Dina Kallay, and FTC Director Daniel Guarnera all expressed a strong preference for case-by-case antitrust enforcement not just to redress past harms but also to ensure competitive development of emerging markets, backing away from rulemaking or broader policy statements promulgated under the Biden Administration. The agencies echoed administration statements on the priority of jumpstarting innovation in key industries—especially artificial intelligence (AI) and healthcare—and on ensuring that incumbents do not leverage technology or data advantages to suppress potential upstarts. Firms operating in these spaces, particularly those well-established in related markets, can expect close scrutiny as the agencies seek to ensure American competitiveness in global races to deploy new, transformative technologies.
Remarks by AAG Slater
AAG Slater Claims the Division Is Using Antitrust Law to Promote AI Innovation: AAG Slater spoke on the use of antitrust enforcement to promote innovation and competition in generative AI. AAG Slater framed her remarks with the Google Search remedies decision by the U.S. District Court for the District of Columbia, calling it a “key battle” in the Antitrust Division’s fight to keep AI markets competitive. AAG Slater discussed the requirement to prospectively share competitively critical data with qualified competitors, which include AI companies in addition to rivals in the general search market that was the basis of the court’s liability decision, contending that it was “already setting the foundation for a more innovative and competitive AI industry.” Discussing antitrust remedies more broadly, AAG Slater compared “the scalpel of antitrust” as ex post law enforcement with the “sledgehammer” of regulation, contending that the former targets specific conduct by specific actors on a case-by-case basis, avoiding broad regulatory interference in the free market.
AAG Slater echoed administration statements that antitrust enforcement should foster a level playing field for newcomers and start-ups as well as for market incumbents. AAG Slater made the familiar comparison of data to oil for the economic engine of AI and other novel software technologies, suggesting that data scale may play an even greater role in AI markets by allowing incumbents to unfairly outcompete newcomers. She predicted that demands for access to high-volume, high-quality data could drive vertical integration and warrant close scrutiny in industries with valuable and sensitive data—such as healthcare (an industry of interest for this administration). AAG Slater concluded by cautioning that “monopolists may [] use privacy concerns as a pretext for gatekeeping data and refusing interoperability.”
Remarks by Director Guarnera
Non-Compete Agreements: In line with AAG Slater’s emphasis on antitrust as law enforcement, Director Guarnera stated that the FTC still intends to bring enforcement actions against unlawful non-compete agreements despite abandoning defense of the now defunct rule broadly barring them. He encouraged firms to conduct their own internal review of any such agreements that could potentially be overly broad.
Reduction of Regulatory Barriers: Director Guarnera noted that the FTC considers that regulatory processes may have been coopted to stifle competition. He referenced FTC Chairman Andrew Ferguson’s recommendations for deleting or revising “anticompetitive regulations” across the federal government and view that regular review of regulations is wise from a public policy perspective. He stated that the FTC would like to reduce anticompetitive regulatory barriers and specifically highlighted that dominant firms, while few in number, are highly motivated to engage in regulatory capture and to utilize regulatory barriers. Director Guarnera stated that the firms most harmed by this are large in number but have little ability to combat these larger firms.
Approach to Mergers: Under the current administration, the FTC plans to more commonly grant early termination of the HSR waiting period, and Director Guarnera stated that nearly 250 early terminations have already been granted. Director Guarnera also noted that the FTC will bring back phased investigations, which would allow the FTC to ask parties discrete questions and issue an early termination of a Second Request if the FTC is satisfied with the answers to those questions. Director Guarnera emphasized the FTC’s willingness to litigate but also its openness to remedies in merger cases, particularly when raised and negotiated early in the process. Director Guarnera flagged a preference for structural remedies, such as divestiture and standing up a new competitor. He discussed two challenges that need to be resolved regarding remedies: 1) the process for negotiating remedies for the parties must be reasonable—the FTC expects that the parties will put forth workable divestitures and provide the necessary information to evaluate the proposal; and 2) the risk that a remedy results in worse outcomes must be mitigated, such as by ensuring a clean structural divestiture where all of the inputs supporting the divested business unit are also completely separated.
Agency Updates: Outside of the FTC’s enforcement practices and priorities, Director Guarnera mentioned two changes happening at the agency. First, Director Guarnera noted that the agency is working on internal processes to ensure that it can carry out its law enforcement mission and that FTC staff is motivated to carry it out. Second, he announced that the FTC is restructuring its offices outside of Washington, D.C., by centralizing all regional offices under a single administrative unit to ensure work is evenly distributed.
AI Competition: Lastly, Director Guarnera emphasized that regulators must have humility when approaching AI to ensure that there are competitive conditions for innovation, ideas, and investments to satisfy market demands. Director Guarnera stated that the FTC is committed to making sure the inputs necessary for AI models (such as semiconductors and energy) remain competitive and that AI companies are held to the same standards as other firms regarding accurate advertisement and policies that protect children.
Remarks by Deputy AAG Kallay
Non-FRAND Assured Industry Standards: Deputy AAG Kallay discussed the Antitrust Division’s concerns regarding the creation of collaborative industry standards that do not have FRAND (fair, reasonable, and non-discriminatory) licensing assurances. She highlighted two scenarios as potentially concerning: 1) missing or negative FRAND assurances and 2) proprietary standards development policies that are not FRAND-based.
The first scenario occurs when a contributor of patents to a standards development organization (SDO) refuses to give a FRAND licensing commitment or even expressly rejects a FRAND commitment. Deputy AAG Kallay stated that implementors of the standard can become “locked in” to the technology, potentially allowing the holdout patent holder to impose unreasonable terms or exclude those implementors—including competitors. She asserted that this can harm innovation as 1) companies may be reluctant to adopt standards with these potential issues and 2) the SDO may need to reopen and redefine standards that have already been adopted to design around the patents at issue, creating further inefficiency and waste.
The second scenario occurs when proprietary standards consortia policies are not FRAND based. According to Deputy AAG Kallay, these consortia and SDOs may lack a governance structure that accounts for all stakeholders’ interests and clear rules. She highlighted private consortia imposing mandatory royalty-free cross-licensing as an example. In this scenario, she stated, dominant implementors could require companies dependent upon the standard to give up key innovations of their own for free, reducing innovation by disincentivizing companies to invest in research and development.
Incorporation of Patented Technology in Proprietary Standards: Deputy AAG Kallay also discussed the recent joint statement of interest by the DOJ Antitrust Division and the U.S. Patent and Trademark Office in Radian v. Samsung. Radian alleged that it was pressured to join a private consortium by Samsung and others, but it refused to join as the consortium required mandatory, royalty-free cross-licensing. Radian alleged that consortium nonetheless incorporated its technology using information obtained through confidential discussions, conferences, and product demonstrations. The joint statement of interest explained that standards development processes that are dominated by large firms with collective market power can raise monopsony concerns, as illustrated by Radian’s allegations.
