In his successful bid to become Chair of the Federal Trade Commission, Andrew Ferguson promised to end Lina Khan’s war on business. Yet, just weeks into his tenure, he’s keeping one of her most radical policies in place—the 2023 revised merger guidelines.
As Market Institute Senior Fellow Norm Singleton explains in Real Clear Markets, these guidelines abandon the consumer welfare standard in favor of a “big is bad” approach that makes it easier for the government to block mergers and acquisitions, stifling economic growth and innovation. By refusing to rescind these rules, Ferguson has ratified Khan’s Neo-Brandeisian agenda—a troubling shift for conservatives who believe in free markets.
“In his successful effort to convince President Trump to appoint him Chair of the Federal Trade Commission, Andrew Ferguson made contradictory promises. On one hand, he promised to “end [former FTC Chair] Lina Khan’s war on business” while also promising to use his power as FTC Chair to go after “big tech” and “woke corporations.” Saying he would end Lina Khan’s war on business suggested he might restore the consumer welfare standard that dominated antitrust policy from the Reagan years until Joe Biden installed Lina Khan as head of the FTC, and Jonathan Kanter as head of the Justice Department’s Antitrust Division.
As the name suggests, this standard judged mergers, acquisitions, and other actions based on how they affect consumers—which is the test of success and failure in the free-market. Khan and Kanter abandoned the consumer welfare standard for a ““Neo-Brandeisian” approach that restores the old “big is de facto bad” standard. This approach has supporters on the right, who have been labeled labeled “Khanservatives” (the most prominent being Vice President JD Vance ).
Any questions about whether Ferguson would replace Lina Khan’s Neo-Brandeisianism with Khanservatism were answered on February 18 when he sent a memo the FTC staff announcing that the 2023 revised merger guidelines would remain in place. Chair Ferguson’s justification was the need to avoid a “recriminatory cycle of partisan rescissions” and to provide stability to the business community. Ferguson’s argument that the guidelines should remain in place would make sense if the revised guidelines were not a radical departure from nearly half a century of antitrust law. Not only do the new guidelines disregard the consumer welfare standard in favor of the “big is de facto bad” standard, they also lower the Herfindahl–Hirschman index score (which measures the degree of concentration and competition in a market) needed to justify opening an antitrust investigation.
The effect of these changes is to make it easier to bring antitrust cases. Ferguson’s decision to keep the guidelines in place means there will be fewer mergers, acquisitions, and other business actions that will increase a business’s market share. Fear of being hauled into court to justify a merger or acquisition could cause businesses to abandon even the most beneficial transactions because the costs of defending them in court makes the transactions less profitable. This would obviously harm investors and owners of the businesses, but also workers and consumers. It is not surprising that Lina Khan and her Neo-Brandeisian allies fail to understand their policies’ unintended consequences. It is also disappointing to see the Neo-Brandeisianism of the last four years ratified by a Republican who claims to be a conservative. It is further disappointing to see support for increased antitrust prosecutions from an appointment of a Republican President—who was elected in large part because of widespread dissatisfaction with the economy and President Biden’s “government knows best approach.”
Some progressives have said Chair Ferguson’s decision to keep the merger guidelines in place reflects the new bipartisan consensus regarding antitrust. It is true that many on the left and the right support a more aggressive use of antitrust, particularly against big tech. However, there is also dissension from the Neo-Brandeisians’ agenda in both parties. Free-market conservatives and libertarians vigorously opposed Lina Khan’s reshaping of antitrust policy during the Biden years. The free-market right will push back on Ferguson’s Khanservatism in hopes of convincing him to adopt a market-friendly approach as he promised he would before being picked to chair the agency. The pushback may grow if Ferguson aggressively pursues antitrust cases that damage the economy, thus hurting Republican candidates in what is typically a tough election year for the party that controls the White House.”
Ferguson’s move has sparked debate among conservatives. Some on the right, labeled “Khanservatives,” support a more aggressive use of antitrust against big tech and “woke” corporations. But as Singleton notes, true free-market conservatives and libertarians reject this approach and will continue pushing Ferguson to uphold his original promise of restoring sanity to antitrust enforcement.
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