Editors' Pick: Originally published Jan. 27.
Former Federal Trade Commission Chairman Bill Kovacic on Tuesday delivered a surprising assessment of the four top presidential candidates' campaign trail statements on antitrust. His remarks were made during a program by the conservative Heritage Foundation in Washington examining how the next administration will tackle antitrust issues.
According to Kovacic's analysis, Hillary Clinton has mischaracterized the state of consolidation and antitrust in order to argue that she will pursue a tougher policy against concentration in key industries. Ted Cruz wasn't always the enemy of regulation that the Texas senator has painted himself to be. Bernie Sanders has offered up a standard left-of-center critique of current antitrust practice. And Donald Trump is the only candidate in recent memory to have been a plaintiff in an antitrust case.
Kovacic, FTC chairman from 2008 to 2009 and currently a professor at the George Washington University Law School, has played a key role in developing antitrust policy since his time as a student at Columbia Law School in 1978. He has served as a congressional staffer, lawyer in private practice and had several stints in government in between long periods as a law professor specializing in antitrust and government contracts.
Kovacic conceded that the candidates' few remarks on antitrust provide just enough material for him to make "nascent observations" about how they will conduct competition policy.
"I want to look not just at their comments but at their experience to gauge what they might do," he told the Heritage audience.
At first glance, the candidates seem to have plenty of complaints about how antitrust laws are enforced. "When you comb through all their statements today, none of them has come forth with a robust endorsement of the enforcement status quo," he said.
Kovacic, who was named to a Republican seat on the FTC in 2006 and was the last chairman of the George W. Bush administration, said Clinton in her campaign statements has incorrectly depicted antitrust enforcement as weak. Specifically, he criticized her campaign for allowing her to mischaracterize the state of the FTC's efforts to rein in "pay-for-delay" settlements in which makers of brand-name drugs coming off patent pay generic companies to drop patent challenges and delay the launch of a copycat drugs. The Supreme Court has ruled that pay-for-delay deals are not, on their face, anticompetitive and that regulators and the courts must look at the merits of each case individually.
Kovacic said that Democratic contender Clinton promised to "take steps to stop corporate concentration in any industry where it is unfairly limiting competition." He took particular issue with this quote attributed to her during a stump speech: "Right now it's perfectly legal for a pharmaceutical company to pay a competitor to keep a generic drug off the market."
The former commission chairman said, "You wonder who writes this. It's not perfectly legal."
A law student taking a basic antitrust course would not receive a passing grade if he or she made such a statement, Kovacic said.
Her leading rival for the Democratic nomination, Sanders, has offered "a couple of glimpses" of what his competition policy would be like. The Vermont senator has complained that farmers are receiving unfair prices when they sell their livestock and harvests to major food producers and that large firms in industries with high levels of concentration, particularly financial services firms, need to be unwound. "These are fairly explicit statements about a need for a continuous process of de-concentration," Kovacic observed.
The leading GOP contenders have made fewer statements during the campaign specific to antitrust, but both Cruz and Trump have taken actions during their careers that, despite their electioneering rhetoric attacking federal regulation, suggest they find competition law useful.
In his campaign appearances, "Cruz has made a fairly strong emphatic declaration of skepticism about the regulatory state and [expressed] a desire to pare it back," Kovacic said. But Cruz served from 2001 to 2003 as head of the FTC's Office of Policy Planning, which overlapped Kovacic's stint as agency general counsel. That doesn't entirely mesh with a hostility towards all things regulatory.
Cruz more than once has delighted audiences by saying that the only difference between an insect and a regulator is that you're not allowed to kill a regulator with pesticide.
Kovacic contrasted Cruz's campaign personae with the one he knew at the FTC. "Although Ted is often depicted as being an unlikable man, to the staff and his colleagues he was extremely likable," the former FTC chairman said. "He was a very good colleague and was an enormously effective administrator of his office and indeed played a key role in launching a number of advocacy measures that continue to resonanate within the agency today."
Although Cruz pursued conservative policy goals at the FTC, he was not shy about using the federal agency's powers and persuasive authority to push back against local and state rules for teacher certification, hospital accreditation, and local governments' agreements with cable television, all of which he argued discouraged competition.
"One wonders whether Ted would look back at that experience and say that's the core of a competition program I would like to support over time," Kovacic said.
"In some sense he was a young man in a hurry, but if you were to chase out of the city all who shared those traits you would have the streets roughly as empty as they are today" following the weekend's debilitating snowstorm.
"It's difficult in [Cruz's] case to anticipate whether elements of his past, in a sense his own career DNA, would predict some sympathy for the program that he was part of, or whether you'd see a far more skeptical view taken to the operation of the regulatory state," Kovacic said.
A harder candidate to gauge is Trump, Kovacic said. The billionaire also plays up his determination to push back the role of federal government in average Americans' lives. But Kovacic noted Trump's role in the death of the long-defunct USFL, a professional football league launched to take on the NFL.
Kovacic noted that according to press accounts, Trump persuaded fellow owners to move its season from summer to fall in order to compete directly with the established powerhouse and to file an antitrust lawsuit against the NFL over TV rights and players' salaries. Trump hoped for a financial windfall from the suit, but the USFL ultimately won only $3 and died before the fall season could begin.
"Donald Trump is the only presidential candidate in my lifetime to be a plaintiff in an antitrust case," Kovacic said.