Lipsky talks continuity at FTC, but wants some changes

By Kirk Victor. Originally published on FTC:Watch on March 17, 2017.

Shortly before he took the post as acting director of the Federal Trade Commission's Bureau of Competition, veteran antitrust lawyer Abbott (Tad) Lipsky was asked at a George Mason University symposium what he sees as the biggest areas of continuity and of change between the Trump administration and the Obama administration.

Lipsky, who assumed his new post on March 6, was uncharacteristically reticent in responding. "It will be a lot of continuity, but I can't promise that there will be complete continuity, and, of course, I am only going to be an acting bureau director. The critical decisions are very much up to the commission," he said.

Referring to acting FTC Chairman Maureen Ohlhausen, Lipsky added, "Follow Maureen's speeches very, very closely and…stay tuned."

That muted answer, while perhaps to be expected of a new appointee, contrasts with the provocative style that people who know Lipsky say he can display and that was evident in a recent article he wrote that outlined steps to boost President Donald Trump's odds of becoming "a successful policy innovator" on a level with President Ronald Reagan.

Lipsky wrote that the FTC, when it was created in 1914, had "received the ill-defined mandate to prevent 'unfair methods of competition,' free from both presidential oversight and focused judicial review."

"This combination of a vague mandate and frail checks and balances has proven troublesome," he continued, in the article in the February edition of The Antitrust Source — written before he had been appointed acting director. "The FTC needs better accountability, more disciplined procedures and a specific structure to harmonize its actions with those of the [Justice Department's] antitrust division."

That sounds like a recipe for more change and less continuity. To that end, Lipsky also blasted merger review under Hart-Scott-Rodino as "justly reputed to be the most costly form of merger review in the world. It has become a poster child for agency 'mission creep' and crushing procedural burdens.'"

"Watch whether new agency leadership and the new administration can design and implement ways to limit the number of filings, narrow the focus of investigations, and regulate the process to standardize key practices and reduce cost, delay and other burdens," he wrote.

Those strong words — and his well-known reputation as a "conservative libertarian" as New York University law professor Eleanor Fox described him in an interview — have provoked lots of chatter in the antitrust bar about what to expect.

"Lipsky is not in favor of HHI presumptions carrying too much weight," one long-time practitioner said, referring to the Herfindahl–Hirschman Index, a commonly accepted measure of market concentration. "The staff will really be put to the test of the need to challenge a merger."

"Tad is bright and engaging with a wicked sense of humor," Stephen Calkins, a law professor at Wayne State University and former general counsel at the FTC, wrote in an e-mail to FTC:WATCH. "He's friends with everybody. And we don't have to guess about his priorities — in his Antitrust Source article, he set out what Trump antitrust team priorities should be: 'prune' enforcement by foreign agencies; cut back FTC enforcement, which he describes as stemming from 'a vague mandate and frail checks and balances"; and reduce the number and burdensomeness of merger reviews."

"I often disagree with what Tad writes," Fox noted, while quickly adding that in no way cuts against her high regard for him. "He is a highly intelligent, highly professional, and a really, really good person who does believe in the facts."

"I don't think that Tad or Maureen or anybody else is looking to make drastic sea change kind of changes here," Steven Cernak, of counsel at Schiff Hardin, in an interview Steven Cernak, of counsel at Schiff Hardin, added in an interview. "But I do think that you can change the direction of the boat by sending it off on a slightly different course, just a couple of different degrees and many miles from now you are going to be in a very different place."

"Around the edges you are going to have fewer mergers blocked and maybe fewer behavioral cases, but there will still be some, and I think you will end up in a different place in 4 years, 8 years, whatever, from now," he added.

That Lipsky's views are so well-known perhaps should be no surprise as he is a prolific writer and a long-time leader in the American Bar Association's antitrust section. His early training came at the antitrust division in the Reagan administration from 1981 to 1983 under the leadership of William Baxter, who sparked big changes in antitrust law by bringing more rigorous economic analysis into enforcement decisions.

At the Justice Department, Lipsky supervised preparation of the seminal 1982 merger guidelines that served as the dominant model used for transactions throughout the world. Lipsky, who had been a partner at Latham & Watkins since 2002 until he retired to take the FTC post, has pushed hard for streamlining international antitrust enforcement and for reducing compliance burdens.

For about a decade — from 1992 to 2002 — Lipsky served as chief antitrust lawyer for Coca-Cola, during which he did much work internationally.

The one area that Lipsky does not seem steeped in is litigation. "He does not have a lot of day-to-day, hands-on litigation experience," Cernak noted. "Since he has been around for 40 years, he understands, certainly, the policy issues that go into litigation. He understands how to manage litigation. I don't think he is going to get up in court and make an argument. I don't think he was hired to do that either."

His long tenure at Coca-Cola "gives him a different perspective than somebody who spent his or her entire career at a major law firm in Washington, DC," Cernak said. "He has that day-to-day counseling experience that I think is extremely helpful."

In his recent article, Lipsky wrote that "worthwhile starting points" toward changes that would bring about greater accountability at the FTC include enactment of the Smarter Act, also known as the Standard Merger and Acquisition Reviews through Equal Rules Act, which would make the FTC meet the same standards as the Justice Department when seeking a preliminary injunction to block a proposed deal.

But Lipsky's predecessor as bureau director, Deborah Feinstein, dismissed the need for the legislation in a recent interview, saying that "If it isn't broken, why fix it? I worry about a bill that is drafted with unintended consequences."

Lipsky ridiculed another article in The Antitrust Source that focused on conflicting pulls that could color antitrust enforcement in the new administration — "reining in corporate power" versus "laissez faire."

Co-authored by Steven Salop, a professor at Georgetown University Law Center and Carl Shapiro, a business professor at the University of California at Berkeley, the article focuses on this tension that grew out of the "angry electorate." The conflicting approaches might also be called "fixing the rigged system" through vigorous enforcement and a hands-off approach that might be called "triumph of the 1 percent."

Lipsky lets loose on that article, saying the two authors "craft an entertaining hodgepodge of wild scenarios: the advent of 'crony capitalism,' 'threats to democracy,' and other ultimate-destruction-of-the-Universe consequences for antitrust in the Trump administration."

He describes Salop and Shapiro's thesis as a "violent lurch between predictions of an antitrust review standard that would consider no behavior to be competitively harmful…to a standard that would balance (in some unspecified way) microeconomic analysis with interests of 'working class consumers.'"

Lipsky mocks the article really as a plea for "more use of the services of antitrust professionals." Salop and Shapiro declined to comment on Lipsky's takedown. Shapiro's bio includes serving as deputy assistant attorney general in the antitrust division from 2009 to 2011 and on the Council of Economic Advisers from 2011 to 2012.

But Lipsky's verbal darts don't stop there. He cites a quote from an interview of Renata Hesse, who had served as the acting head of the antitrust division and who said, "I think the intuition behind antitrust economics is that all mergers cause harm."

That statement, Lipsky concludes, "should remind us that real antitrust analysis is actually hard work."

Taking a last shot at the two paths for antitrust enforcement sketched by Shapiro and Salop as well as Hesse's take, Lipsky concluded that "enforcement efforts of the future should not be based on fears of 'complete capitulation' or 'global thermonuclear war,' nor any of the many other verbal sedatives frequently offered to distract us from the serious business of guiding the structure of the economy by forcing changes in competitive conduct."

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