Grading the Biden Administration's Merger Enforcement Regime

Wu, Khan and Kanter declared the past 40 years of merger enforcement a failure overseen by feckless enforcers. It's time for a report card. How did they do? What lessons for the Trump Administration?

Welcome back to Competition on the Merits.

The Biden Administration antitrust experiment is over. Jonathan Kanter has left the DOJ Antitrust Division and Lina Khan has – after a slight delay – left the FTC. While both went out with a flurry of activity in the closing weeks and days of the Biden Administration, it is safe to put your Wu, Khan & Kanter coffee mugs back in the cupboard and break out the red pens. It is grading time.

But before we get to grading – do not forget to subscribe, upgrade to paid, send this to a friend, etc.

With the Biden Administration over – and its appointees no longer at the relevant agencies – it is a good time for a retrospective. And who does not love a good retrospective? Today’s Competition on the Merits will focus on exactly that – a retrospective on the Biden Administration’s merger enforcement policy. Why mergers? There are a lot of good reasons to focus there. One is that merger policy is the most significant part of competition policy when measured by value. Another is that there are more merger enforcement decisions and settlements than conduct cases, making it is easier to compare across administrations. A third is that the incoming Trump Administration has promised to “undo” the anti-business agenda promoted by the outgoing Biden Administration while keeping up the scrutiny of Big Tech in conduct cases. If there is a major difference – which is an open question – it will be in the new Administration’s approach to merger enforcement. A fourth is that Khan and Kanter each openly accused prior antitrust enforcers from both parties of being asleep behind the wheel when it came to merger policy — and laid at their feet a perceived increase in market concentration and decline in competition. Seems only fair to see how their record stacks up.

COTM readers may recall we checked in on these data back in June 2024 in our very first column. There was still plenty of time on the Biden administration’s clock. And a few cases pending. It was too early for judgments but you may recall that the interim scoreboard was interesting:

• The Trump and Biden antitrust agencies (combined) were close when it came to mergers blocked (4.75 to 4.71 per year, measured in June 2024), both of those levels outpaced the Obama or Bush Administrations.

• When it came to measuring not just merger blocks but also deals abandoned in response to agency investigation or settlements the story was a bit different: the Trump and Obama Administrations came out on top (25.88 deals “influenced” per year for Obama, 24.50 for Trump, and only 12.94 per year for Biden).

• The Biden Administration also lost more in court in actual litigation than any of the prior administrations with 6 litigation losses in its first 3 years.

But that was June 2024. And life comes at you fast. The FTC and DOJ did have a flurry of activity to close out the Biden Administration, and it is time for the final report card.

Before we get into it, a few quick notes on my grading criteria.

First, today we are focusing only on merger enforcement, and therefore not on conduct cases, rulemaking, or policy efforts. Mergers are perhaps the most important part of an antitrust enforcement regime. Certainly when measured by dollar value. On top of that, the Biden Administration declared a failure of prior enforcers to enforce the Clayton Act, a root cause of a perceived rise in consolidation in the economy. Former FTC Chair Khan described the last several decades of merger enforcement as “feckless” and a “failure,” while Assistant Attorney General Jonathan Kanter also criticized previous administrations and declared at the start of his term that “the era of lax enforcement is over, and the new era of vigorous and effective antitrust law enforcement has begun.”

Second, merger enforcement data offer us some observable metrics: win-loss rates, settlements, abandonments, and litigation losses. Those are really informative. We can compare across administrations to glean some useful information. But of course, each administration faces a different “mix” of transactions. And the mix itself is endogenous to the enforcement regime, i.e. the set of mergers proposed also turns on the parties’ expected response from the agencies. All of this is to say that these activity and outcome data are useful, but imperfect.

Third, merger enforcement outcome data do not always tell us the full story. For example, they do not tell us whether the enforcement decision was a good one – a “win” can be a false positive and harm consumers; just as an anticompetitive transaction that goes unchallenged is a loss for Americans but does not show up in these data. Or a merger settlement might show up as a “positive” in outcome data but, underneath the surface, look like the FTC settlements in Pioneer and Chevron that flouted the rule of law to scapegoat oil executives.

Finally, merger enforcement data do not tell us the entire story for a different reason: merger process. Many of the loudest complaints about the Khan FTC, for example, were not about litigated mergers. The complaints were that mundane transactions that raised no antitrust issues were bound down into bureaucratic process and procedures, early termination of investigation that raised no competition issues was off the table, and investigations burdened companies with providing information entirely irrelevant to the Clayton Act. Of course, this will only get worse under the new HSR Rules, aka the Khan Merger Tax.

You get it. Data are informative and valuable, but do not always tell the whole story. Still, they are really useful to understanding the big picture of what actually happened with merger enforcement during the Biden Administration and how it compares to prior administrations. There are some highlights and lowlights. And definitely some surprises. Let’s get into it and start with evaluating the Biden Administration merger policy as a whole – both DOJ and FTC – and then we will zoom in on the FTC.

Grading Biden Administration Merger Enforcement Policy – A Retrospective

Enough talking. You want to see the data. Here is the first table I want to show you. This one focuses on merger activity and litigation win rate. There is a bit of misinformation that runs around when it comes to measuring win rates so we will take some time and talk about it here. But first — check out the data. Here we just have counts of complaints challenging mergers filed in federal court – note that the Biden Administration (DOJ) has two pending. From these data we can calculate a Litigation Win Rate that consists of deals blocked in court or where the parties abandon after a complaint is filed as a fraction of mergers challenged (and not pending).

A few things stand out to me. Some observations:

The first is that the Biden Administration was fairly active – but not an outlier. 29 challenges filed in four years are in the same ballpark as the 27 in Trump I; both Administrations challenged mergers at a greater clip than the Bush and Obama Administrations. In the next table, you will see deal blocks per year where Biden comes in around 4.25 per year, with Trump I leading the way at 4.75 per year. Again, not bad at all. The Biden Administration was less successful than the Trump I Administration on these activity and winning metrics – but ahead of Obama and Bush. The first comparison usually surprises people who have just seen the headlines and read Bloomberg. The second is less surprising to most.

Second, the Biden Administration loses in court more often than its peers. Seven federal court losses – including the most recent loss in FTC v. Tempur-Sealy/ Mattress Firm – is a lot. It is the most losses in federal court of any modern antitrust regime. Let’s hold off on the discussion of potential explanations for a moment and get through the data.

Third, the Litigation Win Rate, while not bad, is nothing special. Trump I leads the way at 70% win rate followed by Biden (63%), Obama (62%), and Bush (61%). We will decompose this between DOJ and FTC below.

In sum, looking at the litigated cases and outcomes for the Biden Administration leaves its performance looking sort of mediocre. A little bit more active than average, but more losses than its peers and a lower average win rate. For full transparency, so far I’m thinking B? B+? Now, astute antitrust observers are by this point noticing something very important missing from the first table: merger consents. Merger settlements have been a frequent outcome of merger enforcement investigations in the last several decades. We’ve focused so far only on outcomes in litigated cases.

Perhaps looking at settlements will help uncover the successes that will justify the many Khan, Kanter, Wu, and Biden claims that the Administrations of the past were asleep behind the wheel, failures, feckless, and so forth, while theirs is a profile in courage and a great success. Perhaps. Let’s look at the settlement data.

The Biden Administration had a grand total of 27 consents. Well, 27 consents in 4 years compared to an average of 76.2 per prior modern administration is a problem for those hoping the Biden antitrust revolution was hiding in the settlement numbers, since it was obviously not present in the litigated cases. Isn’t it?

We can take a deeper dive here. The next table shows other performance data, including settlements. The number of settlements is a standard outcome metric for competition regimes. But it is also one that the Biden Administration had an interesting and ever-changing relationship with. Khan and Kanter and their deputies publicly criticized prior Administrations for entering into settlements rather than outright blocking deals. But as we’ve seen, the Biden Administration did not block more deals than their peers. Later in the Biden Administration, the FTC, through its press office, would sometimes tout settlements as victories. Fair enough – let’s look at the table and see how the Biden Administration stacks up when they are included.

Not great. You can see in the raw numbers that the Biden Administration is an outlier when it comes to merger consents. in a negative way. So when we look at the total impact of an Administration’s merger enforcement program – litigated blocks, abandonments, and settlements – we can come up with an aggregated performance metric. I’ll call these “Deals Influenced.” To control for the extra years the Bush and Obama enforcers had we can report this on a per year basis in the last column on the right.

This is where, I think, the rubber hits the road. The Biden Administration was average to slightly below average in the courtroom. Slightly above average when it came to activity level. But far below par when it came to resolving competition concerns for Americans with consents. The Deals Influenced Per Year metric tells a clear story and helps to paint a more complete picture of what happened in each of these regimes:

• The Bush and Obama enforcement regimes look far less active when one focuses exclusively upon litigations, with the Obama regime in particular as particularly active with a leading 24.25 Deals Influenced Per Year. So much for sleeping behind the wheel for either the Bush or Obama enforcers.

• Obama and Trump I lead the way in terms of Deals Influenced Per Year with 24.25 and 23.75 per year, respectively.

• The big surprise: the Biden Administration did not influence half as many deals as the Obama or Trump Administrations and far fewer than the Bush Administration. I suspect that statistic will be the most shocking part of these data – especially for folks who only hear about how active the enforcers are from the antitrust trade press or the New York Times.

How would you grade the Biden Administration’s merger enforcement policy as a whole? Again, this excludes some important considerations that might cut in either direction depending upon your perspective. For example, I think the new Merger Guidelines are a step backwards. A big step backwards. But your mileage may vary there. You might give credit to the Khan FTC for trying, but losing, to litigate a labor theory of harm in a merger case. And so on. But if we focus on the marginal product of the Biden Administration merger enforcement regime, things do not look great by comparison. And things certainly do not look favorable for the Biden Administration in light of its harsh criticism of prior Administrations for not doing enough, for not winning enough, and for not trying hard enough.

The highlight, to be fair, is a relatively strong showing in terms of litigation activity level. But that is outweighed by a record number of losses and a record low number of merger consents. I won’t spend time here sifting through the wins and losses to flesh out meaningful precedents and other things that could influence the final grade. But my intuition on those issues is operating somewhere in the background here. Final grade based on that intuition but mostly these metrics is a B-. I thought about a straight B. And I can see someone more enthusiastic about the Khan-Kanter non-enforcement accomplishments giving a bump here. But it is a stretch. The overclaiming of likely success combined with the denigration of prior Admins who have outperformed them on many metrics as failures, corrupt, or worse does not leave much room for positive spin. Combined with the record losses and virtual no-show on merger consents dampens if it does not drown any claim for a bump.

Let’s zoom in on the FTC.

Grading FTC Merger Enforcement under President Biden and Chair Khan

Let’s walk through the same statistics focusing now only on the FTC. We will begin as we did when we looked at the FTC and DOJ together by focusing on the raw numbers in the table below.

What stands out? The story remains largely the same as the administration as a whole: relatively high activity level, more losses in federal court, and a mediocre Litigated Win Rate. Trump I and the Biden Administration were clearly more active than Obama and Bush in filing complaints in merger cases. The Biden Administration accumulated a 68% Litigated Win Rate – recall again that this accounts for litigation wins and post-complaint abandonments. Using that measure, the Biden Administration is on par with both Bush and Obama (69%) who achieved the same activity level and sustained it for a longer period of time. But really there is nothing unique here. The Trump I Administration stands out for an equally high activity level while achieving a remarkable 85% Litigated Win Rate.

As before, we next include settlements. If we focus on FTC merger consents across administrations the picture looks largely the same. While the Biden FTC settled twice as many mergers (18) as the Biden DOJ (9), the numbers still pale in comparison to any 4 year administration during this century. Indeed, the Khan FTC did not muster even half of the merger consents, finishing in next-to-last place with Bush I’s first term taking first place with 40 settlements). Again, it is hard to add up the middle of the pack litigation results with dismal settlement output and conclude anything but that the Biden Administration merger enforcement performance was certainly less than promised. And more certainly less than reported by media outlets.

Let’s finish looking at the FTC by combining our litigation and settlement outcome figures. We can use these measures to make some “per year” comparisons across administrations. Another way to do this would be to control for the number of merger filings or Second Requests each year. We will do that in the future, though my hunch is that they don’t change things much. Check out the table below.

What do these data tell us?

First, If we look at blocking mergers outright – Trump I’s FTC wins again with 4.25 blocks per year. The Biden Administration does come in second with 3.25 per year. Again, the Bush and Obama regimes look less active focusing solely on court outcomes.

Second, as we saw above, things change when we include settlements. If we turn to a broader metric for an enforcement agency and include blocks, post-complaint abandonments, as well as settlements, the picture is dramatically different. Deals Influenced Per Year – again, including settlements – is a relatively close race between the Trump I and Obama FTC (an FTC where I served as Commissioner) with the Obama FTC coming in with a leading 16.25 Deals Influenced Per Year followed by Trump I with a very respectable 15.50 per year. The much maligned Bush antitrust enforcers – often accused of snoozing on the job by the Kanter-Khan regime and their allies – come in at 12.38 Deals Influenced Per Year. And in last place – dragging at less than half of the Deals Influenced by either the Trump or Obama FTCs – the Biden-Khan FTC comes in with only 7.75 Deals Influenced Per Year.

That might be a surprising result for some of you. Especially for those of you who rely on the FTC and DOJ press offices, Bloomberg, or the NY Times for your information about agency performance. But I find it a pretty interesting set of comparisons.

Here’s another way to look at the same data across Administrations (and note that given the FTC’s latest loss in Tempur-Sealy/ Mattress Firm, categorized as Pending in the chart below, would turn green as the parties prevailed).

What is the FTC’s final grade for merger enforcement? The same B- is where I come out. The overall activity level includes consents that alleviate competitive concerns with mergers. And those numbers, while slightly better at the FTC than the DOJ, are dismal. The Khan-Kanter regime came in firing at prior administrations for their failure to enforce the Clayton Act for 40 years. Their allies in the Neo-Brandeisian / Hipster movement labeled enforcers from the Obama Administration – active enforcers and dedicated public servants who, as the data show, did a whole lot to protect competition for Americans – everything from corrupt to dishonest. And you can imagine what they had to say about the Bush and Trump I FTCs. It is impossible to look at these data and conclude anything other than:

• Overall litigation activity levels that are slightly above average, but not outstanding with a record. number of losses both overall and at the FTC;

• While there were certainly some wins for both the DOJ and FTC, there were no real signatures victories that moved the law or Clayton Act precedent in a meaningful direction.

• The abandonment of merger consents as a tool to protect competition was largely a failure. It would be one thing if this was coupled with a lot more litigation – but it was not. What Americans got in the deal was middle of the pack litigation effort and results, and next to nothing in merger consents.

Final Grade: B-. With some room for a stretch to a B for those who support the new Merger Guidelines or other non-enforcement policy changes affecting mergers. But not for me. I would probably bump down to a C+ accounting for those qualitative factors.

A really interesting question to close on is why so much fuss about Chair Khan and the FTC merger policy if they were not doing that much? It is a great question – and it is also one that we have answered here at Competition on the Merits previously:

But if the Biden-Harris FTC and DOJ are nothing special when it comes to merger review – why are people so upset about Khan (especially) and Kanter? From Andreesen & Horowitz and the Little Tech Agenda, to Harris supporters like Mark Cuban and Reid Hoffman campaigning against a second term for Chair Khan, to Republicans pointing out the merger enforcement approach has been a general and broad tax against all M&A activity. How does all of the objection to Khan-Kanter merger enforcement make any sense when there is not that much of it in court? The answer: It’s the merger process.

The Khan FTC has been on a mission to make it harder to merge using HSR and other tools. Notice that I did not say the Khan FTC (and Kanter DOJ) have been using HSR and other process tools to target anticompetitive deals. That would be a feature, not a bug. But when one has expressed the worldview that all mergers and acquisitions are a social bad, it is not surprising that we see procedural, sub rosa attempts to kill deals whether or not they raise any competition concerns.

That is exactly right. There are lessons to learn from the Biden-Khan FTC merger enforcement policies for the Trump II FTC led by Chairman Ferguson. Some are in these data, including normalizing merger consents as a tool to alleviate competitive concerns under the Clayton Act.

But there are also lessons that do not appear as readily in these data. The problem with the Khan FTC in merger enforcement was not the cases they brought, or even the cases they won or lost in federal court. The problem – the problem that taxed the economy significantly, chilled innovation, and caused bipartisan concern over her continued control of the FTC – was merger process. Normalizing merger process and procedures, adhering to the rule of law, and transparency in the merger process (between staff and parties, FTC staff and management, and the FTC and the business community) are all incredibly important projects facing Chairman Ferguson and the new Trump II FTC. Fortunately, they are problems both Ferguson and Commissioner Holyoak have been especially attuned to. Yes, the HSR Merger Tax fits into this category as well. But it is part of a much broader project to improve merger process and free commerce and innovation.

I hope you enjoyed the merger retrospective data. It was a fun exercise and I learned some things doing it. I hope you did as well. As always, feel free to send comments, suggestions, or ideas for future columns to me directly. See you soon.