Why FTC Republican Noah Phillips voted against Facebook antitrust suit

Noah Phillips, commissioner, Federal Trade Commission, testifies during the Senate Commerce, Science and Transportation Committee hearing tilted The Invalidation of the EU-US Privacy Shield and the Future of Transatlantic Data Flows, in Russell Building on Wednesday, December 9, 2020.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

Noah Phillips, a Republican commissioner on the Federal Trade Commission, explained why he voted against bringing the agency’s antitrust lawsuit against Facebook during a hearing before the House Judiciary subcommittee on antitrust on Thursday.

Phillips said he believes the length of time that has lapsed since Facebook’s acquisitions of Instagram in 2012 and WhatsApp in 2014 presents an obstacle for enforcers. The FTC reviewed both merger proposals at the time and decided not to block them, allowing Facebook to move forward with the deals and make the apps integral parts of its own business.

“A big part of this goes to the integrity of the process,” Phillips said, adding that he agrees that the law allows the agency to reevaluate mergers after they are consummated. “But as a general matter in terms of mergers, the longer you wait, the more investments the company make[s]. And I think that presents a real issue.”

The FTC voted 3-2 to bring the case in December, with then-Republican Chairman Joe Simons voting with the two Democratic commissioners.

Merger law allows for enforcement agencies to reevaluate deals. A decision not to block a deal has no bearing on future enforcement. But, Phillips testified, the fact that Facebook has subsequently invested in Instagram and WhatsApp, around which the lawsuit focuses, presents a practical problem.

Phillips was not a commissioner at the time that the FTC evaluated the mergers.

Phillips said he also had some concerns on the merits, including with the market definition and effects under Section 2 of the Sherman Antitrust Act, though he did not go into detail.

Still, Phillips said he thinks enforcers today are more willing to bring a skeptical lens to merger cases than before, especially when they involve nascent competitors.

“We’re a little bit less concerned with the risks of over-enforcement and a little more concerned about the risks of under-enforcement,” Phillips said regarding merger cases with nascent competitors “We are hearing the message and we are concerned about this dynamic.”

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