Kanter and FTC Chair Khan also underscored the need for additional enforcement resources

WATCH KLOBUCHAR’S FULL OPENING STATEMENT HERE

WASHINGTON - At a Senate Judiciary Antitrust Subcommittee hearing titled, “Oversight of Federal Enforcement of the Antitrust Laws,” Assistant Attorney General of the U.S. Department of Justice’s Antitrust Division Jonathan Kanter reiterated the Department of Justice’s support for the American Innovation and Choice Online Act (AICOA), U.S. Senator Amy Klobuchar’s (D-MN) bipartisan, bicameral legislation with Senator Chuck Grassley (R-IA) to restore competition online. Kanter and Federal Trade Commission (FTC) Chair Lina Khan also underscored the need for additional resources to enable their agencies to vigorously enforce the antitrust laws. 

“I'm concerned that Congress has held dozens of hearings on this issue related to your agencies but hasn't followed up with legislative reforms to address the gaps in antitrust law and new market challenges posed by dominant digital companies,” said Klobuchar, Chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights. 

FTC Chair Khan concurred that antitrust agencies need a broader range of tools and resources to counter anticompetitive behavior and mergers. “In terms of the challenges…antitrust enforcement resources has not kept up with the size of the economy,” said Chair Khan. “It causes enormously difficult decisions for us about what types of unlawful deals we are challenging and are not challenging.”

“The Department of Justice provided a full-throated letter in support of your AICOA legislation along with Senator Grassley, and we remain enthusiastic about the prospect of Congress exercising its authority to give us additional tools,” said Assistant Attorney General Kanter.

In October, Klobuchar and Grassley introduced the American Innovation and Choice Online Act to set commonsense rules of the road for major digital platforms to ensure they cannot unfairly preference their own products and services. In January, the legislation passed the Senate Judiciary Committee by a bipartisan vote of 16-6, making it the first major bill on technology competition to advance to the Senate floor since the dawn of the internet. 

The American Innovation and Choice Online Act has been endorsed by the National Federation of Independent Business, Center for American Progress, Consumer Reports, the Consumer Federation of America, Public Knowledge, leading national security experts, leading antitrust legal scholars, small business organizations, and over 60 small and medium-sized companies and trade associations, including Spotify, Wyze, FuboTV and Quora. 

A transcript of Klobuchar’s full exchange with the witnesses is given below. Video is available for TV download HERE and for online viewing HERE.

Sen. Amy Klobuchar: Thank you very much. We have a number of senators here. So I'll get started. As leaders of our antitrust agencies, I want to know your views on how market consolidation and market power are affecting competition. What do you see the biggest challenges right now in taking this on? I'll start with you, Mr. Kanter. 

Jonathan Kanter: Thank you, Senator. So, without a doubt as the economy becomes more concentrated, there's less competition. Less competition results in risks to the American public. Those risks include higher prices, lower wages, and less innovation. And it certainly can affect the marketplace of ideas and the free flow of information which is vital to the democratic process in the public discourse. In terms of the greatest challenge, there are a number of them, I think the most important is that we lack the resources, you mentioned, scotch tape and band aids. We certainly need more bandaids and more scotch tape, but I think we'd like a little krazy glue, if you can supply it. We need more resources. We have 352 fewer people today than we had in 1979. I think with those additional resources, we can bring more cases to conclusions, and bringing more cases to conclusions could help start creating precedent that will allow the law to evolve and keep pace with a modern economy. 

Sen. Amy Klobuchar: And as you said you bring money in, is that correct? To the Justice Department? 

Jonathan Kanter: We are a net contributor in so many different respects, Senator, including from our HSR fees but also in terms of penalties and other mechanisms. 

Sen. Amy Klobuchar: Chair Khan, what's your view of the status of things in general with competition?

Lina Khan: I think we've seen from a significant amount of empirical studies as well as our own lived experience that declining competition in sectors has caused major problems for the American people. Higher prices, lower wages, lower rates of new business formation, stagnant rates of innovation, as well as crippling resiliency and more fragile markets. This is something that we take very seriously. We, of course, in addition to our competition mandate, have a mandate to enforce consumer protection laws and we also see how increasing dominance and a lack of competition also enables consumer protection violations. In terms of the challenges, I mean, I would echo the AAG in terms of noting that antitrust enforcement resources has not kept up with the size of the economy. The number of people at the Federal Trade Commission today is around two thirds of what it was in the early 1980s - around 500 people fewer - and that causes significant strain. It causes enormously difficult decisions for us about what types of unlawful deals we are challenging and are not challenging. I think, especially when we had years like last year where deal volume was just phenomenally off the charts, it prompted extremely difficult choices for us and unfortunately made us realize that with the resources we have, we're going to do the best we can and fight to protect people the best we can, but fully delivering on the mandate that Congress has given us is extremely difficult. 

Sen. Amy Klobuchar: I'm well aware from this from just my work on antitrust in this building where the four big companies fighting the bill that Mr. Kanter referred to, on self preferencing and the like, have something like 2700, that's a minimum, lawyers and lobbyists. And we have three lawyers, two lawyers and our counsel. Here they are, they're very good. And so I know, I know that feeling. And I think that this is an outrageous situation, if we want to move forward at all.

Lina Khan: And in our federal court Facebook litigation, we’re outgunned at least one to ten is what we calculated. 

Sen. Amy Klobuchar: Mr. Kanter, you were sworn in at a time when the antitrust division had more pending grand jury investigations, that was in 2021, than at any time in history. The division also indicted 20 criminal cases since last November, more than any time since the 80s. Would you share with us your approach to criminal antitrust enforcement very quickly?

Jonathan Kanter: Yes, I think there are three primary benefits, at least three, to criminal antitrust enforcement. First, practices such as price fixing and market allocation raise prices to consumers and deprive people of their hard working money. Competition to fix wages can deprive Americans the opportunity to earn a better salary. And finally, collusion, particularly with respect to the procurement, deprives taxpayers of dollars, wastes taxpayer dollars, and leads to fraud and abuse. And so, this area of criminal antitrust enforcement is absolutely critical to the work we do. 

Sen. Amy Klobuchar: Thank you. And Miss Khan, in January 2022, that would be this year, Martin Shkreli was found liable for antitrust violations brought by the FTC and a group of seven state enforcers for interfering with the entry of a generic drug. We have good, strong feelings about generics here and the importance of competition. The court banned him for life from participating in the pharmaceutical industry, found him liable for $64.6 million in disgorgement. Do you believe this decision to hold him personally accountable sends a message to other executives about obeying the antitrust laws?

Lina Khan: Absolutely. Senator, I think we've seen time and time again that when you just have fines as a remedy, certain firms can treat that as a cost of just doing business and so making sure that we're holding executives, including top level executives accountable, where appropriate, can be critical. 

Sen. Amy Klobuchar: Okay, very good. My last question, I'm concerned that Congress has held dozens of hearings on this issue related to your agencies, but hasn't followed up with legislative reforms to address the gaps in antitrust law, new market challenges posed by dominant digital companies. I've talked often in recent months about putting the mirror on ourselves instead of just complaining about everyone else. Do you agree that as our economy changes and new threats to competition emerge, is it helpful for you if Congress gave you new tools in order to enforce that competition laws? Funding yes, but also new tools? 

Jonathan Kanter: The answer is absolutely yes. As you're aware, Senator, the Department of Justice provided a full-throated letter in support of your AICOA legislation along with Senator Grassley and we remain enthusiastic about the prospect of Congress exercising its authority to give us additional tools. 

Sen. Amy Klobuchar: Thank you. I'll leave because I'm over my time. I will note, Senator Lee, that we have a famous person in our midst, Representative Buck, the ranking member on our sister committee, or brother committee, over in the House, is with us sitting somewhere in the back, I hear. There he is. We thank him for his courage and his really good work in this area, and we'd love to deliver a bicameral, bipartisan, set of legislation that we pass.

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