Today, during the Oversight of the Federal Trade Commission hearing, multiple US congressmen questioned FTC Chairwoman Lina Khan about the ongoing litigation against Microsoft and Activision.
Congressman Kevin Kiley, who is also an attorney brought up the ongoing litigation mentioning that Biden appointee Judge Jacqueline Scott Corley denied the FTC's demand for a preliminary injunction against the acquisition as the court found that the regulator is not likely to succeed on the merits.
Kiley added that the FTC is "seemingly losing quite a bit" and now has scored 0 wins and 4 losses in merger trials, which is well below the 75% win rate for the agency in the modern antitrust era.
Khan responded by mentioning that the FTC has "some of the best litigators around" and she's "enormously proud" of them adding that Judge Corley praised them for being able to go toe-to-toe in terms of legal talent and skill with Microsoft and Activision's counsel despite being totally outsourced.
Kiley interrupted her by mentioning that he's "not sure that the taxpayers are going to take much delight in the legal talent and skill" of enforcement action in view of their cost in taxpayer dollars and the fact that they end in defeat. He then accused Khan of starting litigations destined to lose to influence Congress to update antitrust laws in its favor.
Khan answered by mentioning that the FTC only bring cases when the facts before it lead them to believe that there is a law violation under the existing laws. She also "absolutely" denied the idea that the FTC raises cases it expects to lose.
We fight hard when we believe that there is a law violation and unfortunately things don't always go our way.
Kiley accused the FTC of "essentially making up case law" specifically in regard to the Microsoft & Activision case.
Irrespective of the legal standards, you probably wouldn't have won under any legal standard, because the Court said this: that the FTC has not raised serious questions regarding whether the proposed merger is likely to substantially lessen competition.
The court also not only rejected your assertions of a likely anti-competitive effect but found just the opposite, that record evidence points to more consumer access.
He concluded by asking why Americans should trust the FTC's judgment when a Biden-appointed Judge says it's so far off the mark.
Khan remarked that there are limits on what she can say on the merits of the case because the matter is still pending before the FTC's administrative adjudication, to which the congressman accused the agency of spending even more tax money on an appeal they're likely to lose.
And now, having lost, you're spending even more taxpayer money on an appeal that you're even less likely to win because the appeals court is going to defer to the federal court's findings of fact in this very facts intensive matter, so why are you spending even more taxpayer's resources pursuing this appeal.
Khan's responded that as a general matter, the FTC's staff always looks closely at an opinion and looks at whether there are certain errors in law that they believe are worth appealing on.
Congressman Darrell Issa accused the FTC of being "a bully" and that Khan is enamored of the idea that companies need to be less competitive in order to mergers and that mergers need to be somehow bad for the company and good for the consumer, which Issa argued is a standard that cannot be met. He then went on to talk about Microsoft's case.
You then took on Microsoft. Microsoft is a big company. Everybody up here seems to want to beat on anyone who has over a trillion dollar market cap, and when you served on the committee you were big on "if you're over a trillion dollars we need to break you up or stop you."
however that merger that you lost the other day is one in which a protected market that Sony enjoys in Japan, a company that is already larger, needs competition.
The reality is, we're a global market and you're thinking only of who you want to go after for some reason, and I cannot find your logic and I believe when you blamed your staff, and you said [it was] a staff decision, shame on you.
The fact is you're on this organization, and this left turn came when you took over, not with the staff many of whom may have already been there."
Then it was Congressman Scott Fitzgerald's turn to question the FTC's behavior in the case against Microsoft.
It was announced yesterday that you have decided to break 30 years of precedents by challenging a court's ruling in the merger of Microsoft and Activision. Can you explain why, despite 39 countries and the European Union already clearing this merger, that you intend to move forward with on administrative procedings.
Khan once more refused to provide details on the merits as the matter is pending but provided a general answer.
When we get an adverse ruling, our teams look closely at the text of the opinion, determine whether there are errors of law that they believe warrant an appeal. Those are the types of considerations that they take into account.
It's worth mentioning that all three Congressmen who brought up criticism of the FTC's behavior in the Microsoft and Activision case are from the Republican side. The Democrat side did not comment or bring up questions on this case at all.
If you're interested in reading more about the hearings that led to Judge Corley's ruling against the FTC, which the agency is now appealing, you can read our summaries of the first day, second day, third day, and fourth day (including Bobby Kotick and Satya Nadella's testimonies).