video FOX Business Flash top headlines for September 7
Check out what’s clicking on FoxBusiness.com
No Washington bureaucracy better exemplifies the Biden administration’s fierce, far-left attacks on free markets than the Federal Trade Commission. Calling the FTC’s recent actions regulatory overreach would be an understatement.
Heading the agency now is 33-year Lina Khan, a radical academic whose experience with the actual world of commerce is zero. Nonetheless, she and two equally extremist Democratic commissioners are imposing their own ideology that is untethered by reality.
They are doing so by cavalierly tossing aside established procedures. Agency actions are now arbitrary rather than being guided by rational rules.
CVS HEALTH TO ACQUIRE SIGNIFY HEALTH FOR $8B
The FTC, established over 100 years ago during the presidency of Woodrow Wilson, has strayed far from Wilson’s original mission to "warn where things were going wrong and assist instead of check."
The Federal Trade Commission is preparing to take a harder line on drug-company mergers, announcing plans Tuesday to overhaul its process for reviewing deals that could harm competition in the pharmaceutical industry. (PAUL J. RICHARDS/AFP via Getty ((PAUL J. RICHARDS/AFP via Getty Images) / Getty Images)
Take antitrust. For decades, antitrust theories focused on consumer prices. If a major merger or acquisition would lead to efficiencies that lowered costs to consumers, then a combination would not be blocked. Bigness itself was not considered bad. The impact on customers is what counted.
Khan thinks all this puts too much emphasis on consumer prices rather than on her notions of social justice and her ideas of competition. She and her crony commissioners do believe in the big is bad doctrine, operational efficiencies be damned.
They are oblivious to the fact that mergers and acquisitions are a constant in a dynamic market as companies and whole industries adjust to changing circumstances or pursue opportunities.
Shareholders, most especially those of the acquired company, usually benefit. Not all such deals in the real world succeed, but free markets — if allowed to do so — will sort these things out.
video Big retailers like Walmart, Amazon face ‘very concerning’ pressure: Market expert
Potomac Wealth Advisors founder and president Mark Avallone says there’s organic demand for higher wages.
Khan complains that big companies, particularly in high-tech, gobble up potential competitors. This is an old myth. The same complaint was lodged back in the 1990s against Microsoft. The federal government filed a massive antitrust suit against Bill Gates’s company — just at the time this supposedly unstoppable powerhouse was missing the significance of the rise of the internet! Only in recent years has Microsoft once again exhibited the entrepreneurial drive that has made it again a creative, dynamic force in high technology.
GM was once so powerful that calls for breaking it up were deafening. No one could conceive this colossus would one day end up in receivership. The same was true of the seemingly unassailable IBM — before the rise of networked personal computers nearly bankrupted Old Blue.
None of this real world reality deters Khan. The word is out. The FTC is hostile to mergers.
It also wants to bust up companies in industries such as food processing and airlines where Khan thinks there is not enough competition.
Stocks in this Article
The FTC knows it doesn’t even have to formally rule on a proposed acquisition. It just slow walks the process so that the combination of time and expense kills the deal.
Not wishing to get sucked into such a regulatory black hole, NVIDIA and Lockheed have both called off big acquisitions that they believed would have strengthened their respective enterprises.
Companies like Pfizer and Amazon which still wish to pursue large-scale deals know they will endure painful challenges.
Despite their protestations that they want more competition, Khan and her extremist colleagues are making markets less dynamic and more stultified by throwing sand into the gears of a critical and normal process of a free economy.
The FTC has gone after Walmart and the company called the case “factually flawed and legally baseless.” FILE: A Gatik truck outside Walmart’s Neighborhood Market in Bentonville, Arkansas. (Walmart/Gatick)
Khan’s ambitions know no bounds. And her methods make a mockery of due process and the rule of law. The agency here has gone rogue.
For instance, before Khan, the FTC staff would have to get the support of a majority of commissioners to begin an investigation. Not anymore. Khan alone can sign off. Subpoenas can also be issued at her discretion.
Khan also withdrew guidelines concerning vertical mergers — acquiring suppliers or distributors to increase efficiencies. She is also imposing a requirement on certain mergers that the entity get FTC approval on any future acquisition, no matter how small.
Her autocratic behavior is on display with a proposed acquisition by Facebook’s parent company to acquire a virtual-reality fitness game creator, which she is trying to block, even though this is an arena with plenty of competition. The FTC’s rationale: the deal might someday lessen competition. Huh? The FTC is now predicting the future.
video Frontier CEO speaks out after merger deal falls through
Frontier CEO Barry Biffle joined ‘Maria Bartiromo’s Wall Street’ to discuss the nearly $4 billion merger between Spirit Airlines and JetBlue, after talks between Frontier and Spirit fell through.
Khan is also going after private equity funds, which she apparently regards as simply hit-and-run wreckers of companies.
Khan and company are harassing Amazon over its Prime membership program. An exasperated company took the unusual step of filing a petition to the FTC accusing it of making excessive and unreasonable demands.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
In a recent move, Khan and her fellow radicals launched a lawsuit against Walmart alleging it turned a blind eye to fraud taking place by money transfer agents doing business at Walmart. The company, which called the case "factually flawed and legally baseless," said Khan refused to meet with them to discuss the matter and — get this — that the Justice Department declined to bring its own case. Walmart pointed out that the fraud was the result of another company of which the FTC was already aware! Walmart and legal experts argued that the case is an "end run" around a 9-0 Supreme Court decision that limits the FTC’s power.
Walmart has now filed a motion to dismiss which raises serious challenges to the FTC’s legal authority to bring the case under. They should be applauded, and more companies need to push back against this rogue agency.
CLICK HERE TO READ MORE ON FOX BUSINESS
Khan’s aggressive take-no-prisoners approach has battered morale among career employees and prompted the agency’s chief economist to resign. The Office of Personnel Management Federal Employee Viewpoint Survey in 2021 found that "high level respect for the commission’s senior leaders dropped from 83% in 2020 to 49%," according to Law360 and a belief that senior leaders maintain "high standards and integrity" dropped from 86.7% to 53.1%.
Congress must radically rein in this rogue elephant of unbridled regulatory power.
CLICK HERE TO READ MORE BY STEVE FORBES Steve Forbes is chairman and editor-in-chief of Forbes Media
Read Full Article