How a long-contested Democratic victory could spell trouble for Amazon and Elon Musk

It’s all part of an aggressive anti-monopoly and consumer protection agenda that has thrilled progressive activists and angered many Republican lawmakers since Khan took over the agency in June.

But don’t assume Bedoya will be an automatic yes to anything Khan says.

“It’s too early to say he’ll be a bulldog on antitrust issues, for example,” warned Mary Lehner, a partner at law firm Freshfields.

Yet Bedoya’s arrival at the FTC means the agency’s two Republicans no longer have the power to thwart Khan’s priorities. Here are some areas where he could provide the key vote:

Confront Elon Musk

The FTC is reviewing Musk’s $44 billion bid to buy Twitter, according to Bloomberg, by conducting a review of its potential consumer protection implications, as required by law. The agency has a month to decide if it wants to look further into selling Musk.

Experts say the deal is unlikely to raise any red flags for antitrust regulators, but it’s still up to the FTC to make sure the deal went through a legally sound process and won’t harm competition. . The FTC is also investigating Musk’s failure to disclose his initial 9% stake on Twitter in a timely manner, The Information reported last month.

Anti-monopoly groups like the Open Markets Institute have urged the FTC to closely investigate and potentially even block Musk’s acquisition. This process would require buy-in from all of the agency’s Democratic commissioners, now including Bedoya.

Pursue Amazon

Khan was a law student at Yale when she made a name for herself by writing an article in a legal journal calling for a rethink of how antitrust laws should apply to Amazon. She now has the leeway to move forward with a potential antitrust lawsuit against the e-commerce giant, which the agency has been investigating since 2019.

That investigation has been largely on the back burner since the FTC’s Trump-era executives chose to make their antitrust case against Facebook a priority. But since becoming president last summer, Khan has dug into Amazon, revamping some of the survey’s focus.

That could spell trouble for Amazon’s recently struck deal to buy MGM Studios, which will see Amazon combine its own film, TV and streaming operations with the company that owns the James Bond and Rocky franchises.

Khan never called a vote to challenge the purchase, anticipating that the two GOP commissioners would block him from moving forward. But with Bedoya in place, Khan may have the votes to file an antitrust lawsuit that could cite the MGM acquisition as part of Amazon’s effort to maintain its monopoly.

A letter to the FTC from major unions after the deal was struck outlined several arguments the agency could make in court — for example, accusing Amazon of using MGM content as leverage to force other streaming platforms to use products such as Amazon’s cloud services.

The FTC laid the groundwork for such a lawsuit soon after Amazon announced its acquisition of MGM in May 2021. The commission persuaded the Justice Department’s antitrust division to let it review the merger, arguing that the deal could enroll in the commission’s monopolization investigation, three people familiar with the talks said.

The agency also looked at Amazon’s use of “dark patterns” – confusing design interfaces intended to trick consumers into signing up for something online – to get more subscriptions to its Prime service. Since taking office as President, Khan aims to break down silos within the FTC that separate competition and consumer protection investigations.

An Amazon lawsuit with both antitrust and consumer protection elements could be a tempting target for Khan to test this new approach.

Cancel the non-competition

In an executive order last summer, President Joe Biden urged the FTC to ban or prevent companies from requiring workers to sign agreements that restrict their future employment. These non-competition agreements, once reserved for CEOs and other high-paying executives, have become pervasive throughout the economy, even among low-wage workers. About 1 in 5 Americans today are bound by non-competition, especially in technology and healthcare, where clauses are common.

Non-competition and other factors limiting competition for labor (such as non-disclosure agreements or compulsory arbitration) reduce worker wages by 15-25%, a Treasury Department study published in March found.

The widespread use of non-competition has sparked Biden’s interest in improving antitrust and competition, he said during a speech in January.

“It amazed me,” Biden said, “when I realized how many people with no particular idea of ​​access to patents or anything else had to sign a non-competition clause – people who earned an hourly wage.”

The Trump FTC had already begun laying the groundwork for rulemaking on the matter, organize a workshop in January 2020. But the action has stalled since the two Republican FTC commissioners said they were generally opposed.

Some in the Biden administration have expressed frustration that Khan did not move forward with non-competition regulations last summer, when she still had a majority before then-commissioner Rohit left. Chopra. Presidential interest and that added pressure make the start of non-competition regulations a high priority for the new Democratic majority.

Tackling pharmaceutical industry intermediaries

The FTC has long been interested in so-called drug benefit makers, middlemen who negotiate discounts from drug companies and develop lists of drugs that health insurers will cover.

The highly concentrated PBM industry is a frequent target for lawmakers, patient groups and independent pharmacies who accuse the industry of contributing to high drug prices. The top three PBMs – CVS Caremark, Express Scripts and OptumRX – account for almost 80% of the market and are owned or owned by insurance companies. The trio also represents three of the four largest U.S. pharmacies by prescription drug revenue.

But despite strong support, the FTC deadlocked in February over approval of industry study due to concerns raised by the two Republicans in the agency. Instead of modifying the study – as Khan agreed in November in the face of a similar hurdle looking for supply chain disruptions – the FTC chairman opened a public comment period on the PBM issue, a decision that did not require a vote by the agency’s other commissioners.

In a recent appearance, Khan said she would revisit a study on the PBM industry once Bedoya is in place.

“We’ve heard a lot about the role of PBMs and particular concerns about both the impact of their business practices on independent pharmacies but also on drug costs, including the price of insulin,” Khan said. , adding that the launch of the study was “of great interest”. for the agency.

The FTC’s search authority allows it to subpoena companies for documents — information that can then be used in a lawsuit challenging the conduct of PBMs.

Protection of private life

With Congress stalled on consumer privacy legislation, the FTC laid the groundwork to advance rules for businesses on data privacy and security.

It’s an issue that then-commissioner Chopra tried to push before he left the agency in October, using an unorthodox maneuver that GOP commissioners derisively called “zombie votes.”

Chopra left behind dozens of motions for actions he hoped the agency would take, including a proposal to begin privacy regulations, according to two people familiar with his votes. Under the commission’s rules, his votes could remain in effect for up to two months after he cast them – but since Chopra was gone, his proposal could not be changed.

Concerned about the wording of Chopra’s secrecy motion and the legality of the “zombie votes” themselves, Khan allowed the motion to expire, leaving the matter to later — and input from Bedoya, a third person with knowledge. the situation, said.

Earlier this year, the agency told the White House Office of Management and Budget — which has some oversight over rulemaking — that it intended to begin rulemaking this spring. “to curb lax security practices, limit privacy breaches, and ensure that algorithmic decision-making does not result in unlawful discrimination.

Privacy rulemaking is an area where the FTC’s Republican minority may be able to wield some influence, though the arrival of Bedoya may lessen their effect.

For over a year, Republican Commissioner Christine Wilson said she was open to the idea of ​​establishing confidentiality rules given the inaction of Congress. But Wilson, a self-proclaimed “privacy hawk,” has also publicly declared an “aversion to rulemaking,” likely making his vote conditional on a narrowly tailored rule.

As a privacy expert and former congressional aide, Bedoya is expected to play a leading role in shaping the FTC’s privacy rules. And with a Democratic majority, Khan might be able to move forward with broader rules than would be possible with GOP support.

While these four issues are likely among Khan’s biggest immediate priorities, the FTC told the OMB it also wants to move forward with a few other rules, including an update on online privacy. children, making it easier for consumers to cancel recurring subscriptions like gym memberships, and forcing franchise companies like 7-Eleven, McDonald’s, and Subway to disclose more information to people who operate individual sites, like when they buy a lot of goods from preferred suppliers.


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