FOR DECADES America and Britain have told the world that for a competition-law regime to be effective and legitimate, it must be insulated from political interference, not least when it comes to how agencies use their powers. Recent events in both countries have undermined this fundamental precept.
In January the British government fired Marcus Bokkerink, the chair of the Competition and Markets Authority (CMA), the country’s principal antitrust regulator, by having an official tell him that a statement would be issued the next day saying he had resigned. In February America’s Department of Justice announced that it would not defend longstanding Supreme Court precedent that protects members of federal regulatory agencies from removal except for good cause. This edict applies to, among others, the Federal Trade Commission (FTC), whose chair, Andrew Ferguson, applauded the Justice Department’s move while condemning the American Bar Association for advancing “radical left-wing causes”.
These actions weaken an important pillar of institutional design. Competition law is the main way of ensuring that markets work well for consumers and for the economy as a whole. This is the logic of the United States Supreme Court’s observation that competition laws are “the Magna Carta of free enterprise”. To perform its vital protective role, competition law gives formidable powers to agencies entrusted with its enforcement, subject to the federal courts in America and the Competition Appeal Tribunal in Britain.
Independence from political interference helps ensure that elected officials do not skew the application of the law to protect or reward those who have their ear (or worse). If it appears that the door to successful political influence opens freely, companies will pour through it.
Far from hindering investment and growth, regulatory independence helps create an environment that nurtures them. Independence, subject to the courts, is a safeguard against swings in the political mood. And the greater the political risk, the warier investors will generally be. This was well understood by Gordon Brown, the principal architect of competition-authority independence in Britain—an achievement to rank alongside his establishment of monetary-policy independence.
The new British government, by contrast, has followed the sacking of Mr Bokkerink by giving the CMA a draft “strategic steer” to “enhance the attractiveness of the UK as a destination for international investment”. We are at a loss to know how the agency can properly do that. Britain’s attractiveness to investors depends on an array of government policies: on planning, taxation, energy, employment and much more. Soft-pedalling competition policy won’t help.
We say this not as unqualified admirers of all CMA and FTC decisions, or their procedural efficiency, in recent years. In our view each agency went too far in some cases, but with the courts as a corrective. Judicial review works best when agencies have acted on the basis of sound analysis, free from political influence. When an agency’s actions appear to be based on its best professional judgment, courts are inclined to take its analysis seriously.
By contrast, courts do not defer to actions guided by political expediency or duress. In the Justice Department’s failed challenge in 2017 to AT&T’s acquisition of Time Warner, it hardly helped that Donald Trump had, during his successful campaign for the White House the year before, called for the merger’s prohibition. A cloud hovered over the judicial proceedings: did Mr Trump’s political appointees seek to block the transaction because they were led to that view by dispassionate analysis, or because the president demanded it?
In any event, the CMA can hardly be accused of excessive zeal lately. Last month saw its first infringement decisions under the Competition Act since mid-2023—an unusually long fallow period. And in December the CMA took the uncommon step of clearing an anti-competitive merger—that of Vodafone and Three—subject to long-term investment commitments from the two telecoms firms.
As for the FTC, the courts have actively reviewed challenges to mergers. Early in the Biden administration, the agency suffered defeats in seeking to bar Meta from buying Within and to block Microsoft’s purchase of Activision Blizzard. (In the latter case an appeal is pending.) Both cases tried to extend the frontiers of merger control. In both, the district courts rejected the FTC’s complaints, mainly because it failed to support plausible theories of harm with adequate proof. In the last two years of Joe Biden’s presidency, the FTC’s success in merger challenges improved dramatically as the agency relied heavily on more traditional theories of harm and marshalled strong evidence to support them.
The politicisation of competition-law enforcement matters more generally. We saw first-hand how independence from political interference strengthened the influence of Britain and America in international forums, including the OECD and the EU, in discussions about both substance and procedure in competition policy. The dramatic expansion in the number of national antitrust regimes, from roughly 30 in the late 1980s to more than 145 today, has lessened the power of long-established regimes to shape global policy norms. Nonetheless, more experienced jurisdictions such as Britain and America still play an outsized role in influencing perceptions about what competition agencies should do and how they should do it.
Whether or not the British government realised how much damage to the CMA its peremptory intervention would cause, it now needs to engage in patient repair. And in America, the future constitution of the FTC, like much else, may well depend on the Supreme Court standing firm against erosion of a central pillar of regulatory legitimacy. ■
William Kovacic is director of the Competition Law Centre at George Washington University. He was a member of the Federal Trade Commission from 2006 to 2011 and its chairman from 2008 to 2009. Sir John Vickers is warden of All Souls College, Oxford. He was director-general/chairman of Britain’s Office of Fair Trading from 2000 to 2005.