By Kirk Victor and Claude Marx. Originally published on FTC:Watch March 3, 2017
Over the course of an hour-long interview that covered a slew of issues that have crossed her desk since she became director of the Federal Trade Commission's Bureau of Competition, Deborah Feinstein seemed relaxed, reflective and even expansive in her comments.
It's a side of Feinstein that reporters haven't seen much since she took this post in 2013, as she often seemed standoffish in her dealings with the media.
When asked what she is proudest of, Feinstein sounded like the tough litigator that she has been throughout a career that includes heading up the antitrust practice at Arnold & Porter.
"I am most pleased about the fact that people don't think, 'We can just steamroll the FTC because they aren't ready or prepared to litigate,'" she said. "The point is when we think we need to litigate, we will. And that's true even if there are divestitures on the table."
At the same time, Feinstein acknowledged that when people talk about the fears of litigating a case, "I always say I am terrified to litigate, there's always a risk that you lose, but you do it anyway."
In taking the director's job, Feinstein returned to an agency at which she had served early in her career as an assistant to the director of the bureau. Her husband also has worked at the agency twice. "This is family for us, work family," Feinstein said, noting that after she left the agency to return to private practice at Arnold & Porter, she often represented firms before the commission.
As she prepares to leave the agency on March 3, Feinstein says she hasn't decided her next career move, though she is sure she'll ultimately return to private practice. First, she'll take a "mini-sabbatical."
"This is just a fantastic job, a fantastic institution and the people are unbelievable," she said. "All good things must come to an end."
Edited excerpts of the interview follow.
FTC:WATCH: How much can this agency change from one administration to another?
Feinstein: I don't know how much change there can be because there haven't been dramatic changes. Really, the last time I saw dramatic change, and I was awfully junior, was from [President Ronald] Reagan to [President George H. W.] Bush. The perspective in the 1980s was that the commission didn't do anything, that the antitrust agencies were largely dormant. When I came here [in 1989] everything we did was new. It was so much fun. I remember [former FTC Chairman Tim] Muris [a Republican] giving a speech basically applauding [former FTC Chairman Bob] Pitofsky [a Democrat]. Acting Chairman [Maureen] Ohlhausen talks about this as a relay race where the baton gets passed. People talk about wanting to make some changes, but it's not like some areas where people seem to want to talk about blowing up what has been done before and doing a 180-degree reversal.
FTC:WATCH: How tough is it to work with a two-person commission?
Feinstein: We were set up to be a five-person commission, but I don't think it's been a problem not to be. In the time I've been here we've had a two-person commission, a three-person commission, a four-person commission and a five-person commission. I have lived through each of those permutations and feel like we have gotten our job done. I joke that the biggest difference when you have two, rather than five, is you have a lot fewer meetings. Whether you've had two or five, you have not seen in the past few years a lot of split decisions. There has been, on the antitrust side, unbelievable unanimity. It's a handful of cases you can point to [for split decisions].
FTC:WATCH: How tough is it going into court when the judge knows that two commissioners voted against it, as occurred in Sysco-US Foods? Obviously, you won it.
Feinstein: Is it ideal? I'd like to go in with [a unanimous vote]. But we went in with unanimous in Steris and still lost. I don't think it matters. Maybe part of my perspective comes from having to go to court when I was in private practice and we were being sued by private plaintiffs in a merger and the Department of Justice had cleared it without even a second request. We told the judge that. And he said: 'Do I have to follow what the Department of Justice said?' And we replied 'No, your honor.' So he said, 'Good, tell me what this case is about and I will make up my own mind.'
FTC:WATCH: There's been lots of chatter that the antitrust watchdogs should be more aggressive.
Feinstein: We look at each case based on the facts before us and make our best judgment. We're not perfect. We bring cases that we lose. We accept remedies that do not turn out perfectly. We acknowledge that. I don't think you are ever going to get 100 percent success in this job. The question that I always ask is what merger happened during our watch that should have been challenged and what is the basis for thinking that it should have been challenged. I haven't heard what that case is.
On the whole we brought the cases that we thought were the right ones to bring. We are not afraid to look back and do this study and say, 'Hey, did we get our remedies right?' We are pretty good at being self-reflective.
FTC:WATCH: Sysco and other cases suggest that market definition is the ball game. Is it?
Feinstein: I don't think it is. I think competitive effects is the ball game. We have to talk about market definition because that is the way the case law has evolved, but I think when courts are thinking about market definition, they are not doing it in isolation. We don't have a trial on market definition and all go home, wait for the opinion and then do the next phase. The courts are hearing all the evidence simultaneously. It was no accident that in Staples we used the big data in our closing statement in at least three different places because it told the story. Whatever else you want to think about how we should define the market [and Amazon's role in the market], the bottom line was these two competitors — same was true in Sysco — were No. 1 and No. 2, and they were butting heads against each other to the benefit of consumers and customers. That basic fundamental point kind of informs everything.
While the courts still talk in terms of the step-by-step approach, I think they, like us, look at things a little bit holistically and are really trying to get down to the heart of, is there competition here and is it going to be lost and is it going to matter.
FTC:WATCH: You touched on Amazon, the 900-pound gorilla in the retail market. President Trump has talked about it, too. Thoughts on Amazon as a monopoly?
Feinstein: You have to look at the facts of the situation to determine whether there is any issue. I always laugh because when I started my career the answer to every merger was, 'The Japanese are coming.' Then in the 1990s, it was 'The Chinese are coming.' Then, in the late 1990s, in the retail industry, it was 'Walmart is coming.' And now it's 'Amazon is coming.' And the truth of the matter is you have to look at the facts, and it depends.
FTC:WATCH: In private practice you were up against DOJ and FTC. What's the biggest difference between them in their approach to cases?
Feinstein: The analytical approach is very, very consistent. We work from the same playbook — the merger guidelines. I never felt like, 'Boy, gee, if I had just made this argument at the other agency, I would get a lot of traction.'
FTC:WATCH: But some critics say it's a crap shoot. They are pushing the Smarter Act (or in its longer form the Standard Merger and Acquisition Reviews Through Equal Rules Act) to make the two agencies follow similar standards.
Feinstein: The argument I always make is that if it is so hard to litigate against the FTC and so easy to litigate against Justice because we have this standard that means we always win and they have this standard that is fair — then look at the actual data. People abandon their fights with the Justice Department all the time. I used to call over to friends at DOJ when they would get an abandoned case and say, 'What the heck? What's your trick? I'm doing three trials at once — you got another company to abandon.'
Why are people taking us to court if they believe they have no shot and yet not taking the Justice Department to trial? It just doesn't square up. So, I have never felt like it made a difference.
What I have said about the Smarter Act is, if it isn't broken, why fix it? I worry about a bill that is drafted with unintended consequences.
FTC:WATCH: Bill Baer [DOJ's former antitrust division chief] said some deals get out of the boardroom that never should. Do you agree?
Feinstein: I am surprised that people come in with deals that clearly combine No. 1 and No. 2 and then act surprised that they are in my office talking about them.
FTC:WATCH: Does that surprise you?
Feinstein: No, because I understand that companies have a perspective, and their lens is not the same as our lens. Companies often think about their potential market — about all the customers they could sell to. They think in terms of these broad universes. We think in terms of the customers they are serving and who are buying from them and who they are competing for day to day — not the customers they don't have. That disconnect sometimes explains why we think in terms of these antitrust markets, and they are thinking about what a small share they have in the addressable market.
There is a disconnect in how we think about remedy negotiations and how they think about remedy negotiations. Business people are used to — 'I want it for a dollar, you want it for $100 — if we talk long enough, we'll probably end up somewhere in the middle.'
That is not how we view remedy negotiations. I would describe it as a discussion — not a negotiation, not a meet in the middle. Business people are often surprised by that. Sometimes the quickest way to get to a good remedy solution is for the principals to come in and actually hear what our issues are, to hear from the lawyers. And sometimes, they need to hear from me. I can say, 'I understand — I've been on the other side, but here's how we think about it; here is our problem that you need to address.'
Once you put it to them as not a negotiation to a compromise, but as a problem they need to address, often the executives get it really quickly. Then they come up with a package and a buyer that does just that. It fixes the problem.
FTC:WATCH: Advice to your successor?
Feinstein: Listen to the staff. We have an amazing staff. Many of them have been here for decades, economists and lawyers. There is an unbelievable wealth of knowledge. When I first got here, I was asking for briefings on some general issues, not on specific cases. I would look around the room and I'd go, 'I have three Ph.D. economists; I have eight lawyers who have been doing antitrust, 100 percent, for an average of a decade. If I were in a private law firm, this meeting would have cost $20,000, and I get to just send an e-mail and get them all in a room together. This is the best job ever.