The FTC has a critical enforcement weapon it can use to block acquisitions and pressure merging parties to abandon deals the regulators dislike — administrative adjudication. These are lengthy trials conducted before the agency in its own court, not in federal court. This is unfair since the FTC as an agency blocks an acquisition and then a trial is conducted in its own court, not in Federal Court. Under this setup, most mergers that are blocked by FTC don’t move ahead since it’s a losing proposition to fight FTC in its own court. Opponents of this setup are requesting in a pending Supreme court case that if FTC blocks an acquisition the trial should be conducted in a Federal court so that it’s fair to both parties (FTC that is blocking the acquisition and the Acquirer that is requesting approval of a deal).
For major tech platforms, the fight is also personal. The tech platforms contend that FTC Chair Lina Khan is biased against them and thus should not participate in administrative cases that determine the fate of their proposed deals. In the days and weeks ahead, the FTC will be forced to play defense as the fundamental fairness of the agency’s administrative process is challenged in the Supreme Court and in a federal district court in Northern California. If these cases go against the FTC, the agency may be forced to abandon agency trials in marginal cases and pursue merger challenges against big tech deals in federal court, a far less promising option for the Commission. Without the “home court advantage” of an agency trial, the FTC may have little choice but to allow tech platforms to complete transactions that would otherwise have been challenged in an agency proceeding. Acquisitions are very important for large tech firms since it forms one of the largest levers of their growth prospect. Currently, due to the FTC against all large tech acquisitions, this particular growth avenue is blocked.