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'Planet Money': The FTC finds that breaking up big business is hard to do

MICHEL MARTIN, HOST:

The chair of the Federal Trade Commission is facing increased scrutiny over some high-profile losses in antitrust cases. Our colleague Darian Woods at The Indicator from Planet Money takes a look.

DARIAN WOODS, BYLINE: The Federal Trade Commission has two main functions, and one is to penalize companies that behave badly, like by lying to consumers, and the other is to stop companies from buying up other companies in a way that hurts competition. And that's been going way up under Lina Khan. The year she took on her role as chair in 2021, letters of investigation for mergers and acquisitions nearly doubled. We spoke to Tara Reinhart. Tara worked for the FTC as the chief trial counsel for its Bureau of Competition.

TARA REINHART: For all of us antitrust nerds, it's definitely an intellectual wonderland and full of supportive people and big thinkers.

WOODS: Tara is now a partner at the law firm Skadden. And Skadden is on the other side of the ring to the FTC. It represents the companies that want to merge. But Tara says the FTC is still near and dear to her heart. And she says at the core of that intellectual wonderland has been what's known as the consumer welfare standard.

REINHART: Business should be permitted to go out and grow through acquisitions as they see fit unless the deal is likely to hurt consumers.

WOODS: The FTC and also the Justice Department are now rejecting that view, even though it's been the dominant principle for about 40 years.

REINHART: They want to reestablish the view that if a merger pretty much causes harm in any sector, including just to your competitors, then the businesses should not be able to merge.

WOODS: So is it true that the FTC is on a losing streak? Because when you're driving towards a complete overhaul of how we think about monopolies over the last four decades, Tara says maybe we should expect some bold punts.

REINHART: The FTC has been bringing cases based on novel theories, cases where the courts have not had much experience with the theories of harm that are being thrown out there.

WOODS: One of the novel theories the FTC is pursuing is the idea of potential competition. That's what they argued when Meta was acquiring the digital fitness company Within. But to win that, the FTC needed a lot of evidence. Now, Meta is not a fitness video provider, but the FTC argued that if Meta does stake a claim in some kind of virtual reality world like it's trying to do with the so-called metaverse, then owning Within could stifle competition in digital fitness services in the future.

REINHART: There simply was not evidence that Meta had made plans, was considering plans.

WOODS: The FTC ended up losing in court. And Lina Khan was asked about this at the Economic Club of New York. And she framed that loss as actually a win because the judge left open the door to that argument of potential competition. It's impossible to have one objective scorecard for the FTC. It is clear the FTC has managed to instill a degree of fear in the business community about new mergers. You just have to look at the opinion columns for that. But with tech giant Amazon next in the scope of the FTC, the agency's got its homework cut out for it.

Darian Woods, NPR News.

(SOUNDBITE OF MISHEGAS' "SENTIR") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Darian Woods is a reporter and producer for The Indicator from Planet Money. He blends economics, journalism, and an ear for audio to tell stories that explain the global economy. He's reported on the time the world got together and solved a climate crisis, vaccine intellectual property explained through cake baking, and how Kit Kat bars reveal hidden economic forces.

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