Fireside Chat with Bilal Sayyed, former FTC Director, Office of Policy Planning

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Nick Marr:  Welcome, everyone, to this Federalist Society virtual event. I'm Nick Marr, Assistant Director of Practice Groups at The Federalist Society. As always, please note that expressions of opinion are those of our experts on today's call.

 

Today, February 22, 2020, we're joined by a moderator for our discussion today, Ms. Svetlana Gans. She's Vice President and Associate General Counsel at NCTA. She's also a member of a few different practice groups at The Federalist Society. The Corporation, Securities, and Antitrust Practice Group and the Regulatory Transparency Project are both co-hosting this discussion today.

 

With that, Svetlana, I'll hand the floor off to you.

 

Svetlana Gans:  Great. Thank you so much, Nick, and thank you for The Federalist Society for hosting my fireside chat with Bilal Sayyed. We're very thrilled, Bilal, that you joined us this afternoon.

 

      Just a brief introduction on Bilal. Bilal previously served as the Director of Policy Planning at the Federal Trade Commission where he led the agency's work on the 21st century hearings, the examination of non-compete clauses in employment contracts, and the Big Tech 6(b) study pertaining to past acquisitions.

 

      Bilal recently left the agency and is currently a Senior Adjunct Fellow at TechFreedom. Previously, Bilal was an attorney in private practice and served as an attorney advisor to FTC Chairman Tim Muris from 2001 to 2004.

 

      Bilal, thank you so much for being with us here today.

 

Bilal Sayyed:  All right. I'm excited. Great.

 

Svetlana Gans:  All right. So, let's jump right in. Just for the audience, we will be taking questions from the audience in two ways. First, you could utilize the Zoom chat feature; I will be monitoring it. Second, you could also raise your hand in the Q&A feature, and I will try to get to your questions that way.

 

      With that, let's kick it off with the first question that I had, Bilal, regarding the FTC 21st century hearings. The FTC held the hearings through the fall and spring of 2018 and 2019. The goal was to determine whether the broad-based changes in the economy, evolving business practices, new technologies, or international developments might require adjustments to the way that the FTC competition, consumer protection law, policies, and priority might change.

 

      Can you give our audience a brief synopsis on the goals for the hearings?

 

Bilal Sayyed:  I think there were a few goals for the hearing. I think most important was the chairman's interests in both identifying and shaping, and maybe potentially revising, a consensus about the proper scope of antitrust within the economy and as a matter of government policy.

 

      Coming into the Commission, there was a lot of ferment about what the agencies should be doing, whether they had done enough in the past, both on antitrust and also with respect to privacy and some other what are considered consumer protection topics.

 

      There was also some question, also, about beyond the agencies and whether the law, as enforced in the courts through private litigation was sufficiently robust and attentive to at least perceived competitive problems in the economy.

 

      I think Joe wanted to get a full spectrum of views, both through the physical hearings, let's say, and the written comments, on where people thought antitrust was properly enforced or properly moving forward and properly developing and where it wasn't.

 

      I think that was the main goal. I think there were a few things that we thought were important to get done. They'd either been not done in many years—and an example of that is the vertical merger guidelines—or try to provide guidance on topics that were topical, like acquisitions of potential or nascent competitors and evaluating the conduct of so-called or allegedly dominate platform companies. And a few other areas, like common ownership; there had been some empirical research.

 

So, I think there was a hope and a desire to try to address some open issues—open requests for guidance, and those were both older things, like vertical mergers—and newer issues that were coming up. I think those were the two primary goals.

 

Svetlana Gans:  Thanks for that background. Can you discuss some of the accomplishments from the hearings?

 

Bilal Sayyed:  I think the biggest accomplishment, and maybe the only public accomplishment, was the vertical merger guidelines that DOJ and the FTC did together, and the vertical merger commentary that complements the guidelines. That was done by the FTC.

 

      It had been, as you know and as probably many of the folks listening know -- the 1982/1984 merger guidelines were the last U.S. government publication of an analytical framework for vertical mergers. So, by the time the hearings got started and ran their course, it had been roughly 35 years before the agencies had given or provided a framework for analyzing vertical mergers that reflected the reality of vertical merger analysis.

 

      I think that was the biggest accomplishments. Although we went into that believing that it was worth doing, I think we wanted to make sure that there was actually a desire for such guidelines or guidance. It wasn't pre-ordained that we would do it, but the feedback we got made it possible to do, develop some support for it. Of course, it was an area where there was relative uniformity of views between DOJ and the FTC, which also made it possible to do. And, of course, within the FTC, the staff, the bureaus, BC and BE, of course, had a lot of experience with vertical mergers, and so there was not a lot of internal concern about doing them.

 

      So that, I think, was the biggest accomplishment. In fact, I think it is, in fact, an impressive accomplishment given that there had been calls to update the framework from the '82 and '84 guidelines since the mid-'90s, and that's a long time. When I was there with Muris in 2001, there was some thought about trying to do it, but we didn't.

 

The AMC, the Antitrust Modernization Commission, called for guidance in 2007 and 2008 on vertical mergers, and the ABA has, in its past reports to the transition teams, has called for guidance. We got it done and Joe and Makan deserve a lot of credit for getting something done that had been under consideration in some way for 20 to 25 years.

 

      The U.S. was about the only competition agency of note whose merger guidelines did not reflect an analytical framework for vertical mergers, or at least a current one, and so I think it was a major accomplishment and a necessary one. I wouldn't call it low-hanging fruit, but of all the things we wanted to do, that was the one where I think there was a view that there was enough out there that we could do it.

 

Svetlana Gans:  Great. One thing you mentioned earlier on is that you looked at platform-based businesses and digital markets as part of your hearings. In particular, the October 2018 hearings focused, in part, on the identification and analysis of potentially collusive, exclusionary, and predatory conduct by digital and technology-based platform businesses.

 

      Following these hearings, the FTC was contemplating issuing a report on how the antitrust laws apply to digital markets with some case studies. However, no such report was issued. Can you describe, generally, what the FTC was seeking to achieve and the challenges presented with issuing a report?

 

Bilal Sayyed:  Well, let me clarify that slightly. As we went through the process and thought about what the output would be from the hearings, we thought about doing a report—either narrow reports on specific topics or a big report across many or all the topics.

 

      Given the dynamics of the Commission, it did not seem like we would get a good report out that had unanimous approval. So, we decided rather than write a report that either was a little bit on the one hand and on the other hand, or ended up with a 3-2 split vote, that we would focus on projects that tried to identify for the public how the agency, or maybe agencies, were evaluating either conduct or mergers. That is what we did with the vertical merger guidelines and commentary, and it's what we tried to do with the application of the antitrust laws to the so-called tech platforms.

 

      What OPP wanted to do, and which I think we had approval to do, was to craft a guidelines document that looked not like the horizontal merger guidelines, but looked like the competitive collaboration guidelines but with respect to Section 2, mostly with respect to the application of Section 2 to single-firm conduct, taking account of the potential uniqueness of platform companies—two-sided markets, strong network effects, things like that.

 

      What our goal was there was, like the CCGs from 2000, was to try to develop a framework that was sort of forward looking on how we thought the law should apply both outside the Commission and by the agencies. So, there's a lot of Section 2 law, and not all of it is good law, and there's some inconsistencies in it. And there's also some things from Section 1 law that might be useful to apply to the analysis of single-firm conduct.

 

      What we tried to do, specifically, was adopt and put forward a framework for, again, mostly the application of Section 2, that adopted but also modified and tried to advance the balancing approach in U.S. v. Microsoft.

 

      Now, that would be sort of an application of the rule of reason, but a full application of the rule of reason. Most of my time doing antitrust has been with Tim Muris. Tim had always been a very strong proponent of the use of a structured rule of reason approach to Section 1 conduct.

 

      Our effort was to try to take the best of Section 2 law and some of Section 1 law and create a framework that the FTC could use to evaluate so-called dominate-firm conduct here, here limit it to platforms. Had we had DOJ on the effort, it might've been slightly different, but what I thought we could do -- well, I think we were going to do two things.

 

      If you'll recall, the Section 2 report that DOJ issued in 2008 was quite dismissive of the ability of courts and the agencies to do sort of a balancing effects-based test for Section 2. They were concerned that would lead, potentially, to over-enforcement through Type 1 error, and, as you recall, that report proposed a disproportionality test for application of Section 2.

 

      Well, we thought that their concern about the balancing test, while valid, should actually be engaged on. I think the folks in OPP who worked on this and myself thought that we had a real opportunity to try to develop Section 2 law under the guise of applying Section 5 at the Commission in a way that would, over time, potentially move towards more vigorous and rigorous use of the balancing effects-based approach of Microsoft.

 

      Any reader of Microsoft knows that while they set out a framework for balancing, there was not a lot of balancing done because, at least as the opinion wrote, there was only, I think, one instance where Microsoft came forward with some efficiency or justification for the conduct that the Court recognized. So, there was very little balancing done. In the instance where Microsoft did come forward with the justification, the Court found for Microsoft on that issue.

 

      We wanted to add some real structure and framework to the structured balancing approach, and since it turned out DOJ was not going to participate with us, create something that the FTC could identify through its administrative system that would develop it through the application of Section 5. That would have some protection from the existing case law in Section 2—although, we weren't necessarily going to depart substantially from some of the existing case law except for a requirement of true balancing—but avoid some of the hindrance of developing case law in private litigation.

 

      We thought that it was a very sensible approach, taking advantage of the FTC's unique role with its administrative law system, but we couldn't get it done for a few reasons. I think the key reason was, of course, at the same time we were thinking about drafting and providing a framework on basically application of Section 2 to platform companies. Both DOJ and the FTC had significant investigations on potential and then, of course, actual enforcement actions against platform companies, so there was a concern that anything we wrote in a guidelines format would affect the litigation. So, there was some concern about that.

 

      I think there was disagreement on the substance of some of the way our -- in a sense where OPP came out. We'd like to go this way with the law. Other people may want to go a different way. Those, I think, could've been resolved because our goal was not to set up an OPP version of the world with respect to Section 2, but to identify both what the FTC had been doing and thought it should be doing going forward. If that way is something different than what I would've drafted, so what. It was intended to be very transparent of what we were doing and also help set some direction for what we did.

 

      It was, I think, too fraught with potential conflict or harm in the enforcement actions. Look, I think we could've gotten over that, too, but I understand that concern. Again, I think there it's a bit of a shame because a number of other jurisdictions have put out guidance on application of their laws to conduct by dominant, or allegedly dominant, platform companies.

 

      I think what we did was better, and I think what we did, with the improvements that would've happened naturally engaging with the staff and maybe DOJ, would've been better. We hired a number of academics to review the document. We got very good feedback from them, both in terms of changes that might be needed or that they might suggest or issues we might want to be sure we address. But in general, I think the feedback was positive that it would've been a significant step forward in a framework for using Section 2.

 

      I want to say one more thing just so I don't forget it. This was initially a project initiated by OPP. Of course, we sought comment from the bureaus, but it also built on a lot of good work that the FTC team that was part of the Section 2 hearings back in early to mid-2000s did. Bill Collin, Tom Klotz, Bill Atkinson were still at the FTC. Did a lot of good work, great work, that didn't make it into the Section 2 report. We used quite a bit of that as a foundation for some of what we were doing.

 

      Of course, I mentioned the three people on that who are still at the Commission. There were a number of other people who worked on that whose work we drew on. It was an effort to build on work the agency had done but also to be reflective of changes over the last 10, 15 years. So, I think it's a real shame it didn't get out. I don't see it getting out now with the litigation actually in process, but it's, to me, a significant gap that the FTC and DOJ do not have guidance on application of U.S. antitrust laws to single-firm conduct the way they do for mergers and Section 1 [inaudible 00:24:00].

 

      I'll stop there. That's a lot.

 

Svetlana Gans:  Great. Thank you for that. One other area that you mentioned the FTC was interested in was the topic of nascent competition issues broadly. You did focus a little bit on that on the hearings. And then, subsequent to the hearings, in February 2020, the FTC issued a 6(b) market study to Alphabet—Amazon, Apple, Facebook, Google, and Microsoft—seeking ten years of transaction data to "deepen its understanding of large technology firms' acquisition activity, including whether large tech platforms have been making potentially anticompetitive acquisitions of nascent or potential competitors that fall below the HSR reporting thresholds."

 

      Can you elaborate, briefly, on the FTC's goals with respect to the nascent competition area of inquiry?

 

Bilal Sayyed:  Sure. Again, I'll take that in two parts. First, there's this view out there in the broader antitrust community that the agencies don't have either the framework for evaluating the acquisition or accommodation involving potential competitors or future competitors, nascent competitors, or what I'd call emerging competitors. There's a misperception that the horizontal merger guidelines don't talk about potential competition or emergent competition. That's in part because the '82-'84 guidelines have a section on potential competition and the horizontal merger guidelines don't.

 

      Now, of course, anyone who's read the horizontal merger guidelines knows that they talk about potential competition. Anyone who understands them knows they talk about evaluation of emerging competitors, including but not limited to the evaluation of the innovation effects of mergers. Same with the vertical merger guidelines. They have a reference to evaluating conduct that may exclude or eliminate competition from future or potential competitors.

 

      Part of what we wanted to do was articulate that framework and also show that the agency, again, one or both agencies, were bringing cases. Again, in the work we did at OPP and with the bureaus, we identified, over the last 25 or so years, a hundred or so cases that fell into potential competition or emerging competition area. One goal was to just make that clear to the public and people who were interested in this topic, including people on the Hill, including people in the policy groups.

 

      That was largely backward looking, although I think we wanted to explain how the Commission thought about the application of Section 2 to acquisitions of nascent or potential competitors. Now, you can imagine at least some of that would run up against the enforcement efforts that were underway at the time. So that created some difficulty in getting that document completed and out. Again, I think with the filing of the case against Facebook in particular, it's going to be hard for the agency to publish the framework for evaluating such transactions.

 

      Now, the second part of your question is in addition to thinking about what had the agency done and what was its framework over the last 25 or so years, we wanted, some might call it, empirical data or evaluation of acquisitions by large companies—in this case, again, the five of the largest platform companies, but five of the largest market cap companies—of smaller companies.

 

      We were not alleging or we're not saying this was a study of the acquisition of nascent competitors. This was a study of the acquisition of smaller firms to see if they had effects, either singularly or in the aggregate, that could be perceived as the acquisition of nascent competitors and the acquisitions that led to the loss of future competition. But it was also intended to take a look at the efficiencies that came out of those acquisitions, and again, to see if, in a sense, apply sort of, again, a balancing approach to evaluating such conduct.

 

      Now, I think there is a lot of reporting on the acquisitions by those five companies but not a lot of in-depth analysis of either what was acquired and how those assets fit into the acquirers' business model or products, both their current products and potential future products.

 

      That was the intent—it's still the intent—of the study. I think the team that's working on that, led by Katie Ambrosian and Liad Wagman, have done a tremendous amount of work in identifying what types of acquisitions these were, what they were intended to do. Not so much what their effects were, because that's a much different analysis, but whether these products or assets were integrated into the company's products or not.

 

I think it's probably the most important 6(b) study the agency's done in a long time. There's a lot of chatter about acquisitions by the large tech companies and whether they should be stopped or subject to a different standard, but there's very little reflection on the potential benefits associated with those acquisitions. There's also very little information on that. What the team is doing is trying to work through that and have something to say.

 

We also wanted to identify limitations in the HSR rules with respect to notification of small transactions. The study was formulated to only require documents and information with respect to transactions that were not notified to the FTC and DOJ, and I think the information we got has confirmed the few ideas that we've been kicking around in OPP about limitations in the HSR A.

 

For example, I'll give you one. I think it's almost something [inaudible 00:32:37] where it's probably no one would recognized, but there is different treatment in the jurisdictional test between manufacturing and non-manufacturing companies. That may have made sense in the mid-'70s when we were concerned about that, with respect to mergers, we were sort of focused on manufacturing industries. Now, at least with respect to these tech companies and lots of the industries, we're focused a lot on the effects in service markets or other non-manufacturing markets, and sometimes retail markets.

 

I think we saw a fair number of transactions that were above the Hart-Scott size of transaction threshold that were not filed because of this slightly different treatment with respect to the manufacturing and non-manufacturing companies.

 

There a number of things that will hopefully come out in the study that may lead to either legislative fixes or internal FTC rule fixes. But most importantly, I think, a better understanding of why these acquisitions are undertaken, what their possible effects are, and I think, potentially, a greater recognition of the potential benefits. It's a big study. They take time. But I hope it gets out in the next year or so.

 

I'll tell you the other thing that's amazing that the team did. We have data from proprietary but public sources on somewhere in the range of 35 to 37,000 acquisitions in what you might call the tech space. Liad, who is an economist, and a small team is trying to get some learning from that information. That's, let's say, 35, 37,000 transactions occurring over the 2010 to 2019 period. Obviously, it's not limited to the five companies. It's not limited to [inaudible 00:35:24] transactions. It's probably not limited to only U.S. acquisitions of U.S. companies. But it is a significant effort that I think will advance the understanding of these acquisitions.

 

I only wish we had started it earlier because I think it's critically important as people consider legislative changes that may really undercut the dynamism of the tech space and focus solely on perceived harm that -- the disruption. What's occurring is significant disruption of a number of industries, and it's not infrequent that a competitor who's been disrupted out of a nice business complains about the disruption and the firms causing the disruption.

 

By census, that's a significant strength of the dynamism of the U.S. economy. Congress and the agencies and the courts ought to be very careful about adopting positions or laws that hinder that dynamism. I'm not saying change is not appropriate, and the doctrines I've talked about were an attempt to get in front of the curve, but there's a lot of policy proposals out there that actually don't reflect the reality of the effects of the conduct of the acquisitions by those companies, and I think this 6(b) study will be a real help to providing some real analysis of that.

 

Svetlana Gans:  Great, thanks. Sticking with the HSR topic, last fall, the FTC, with DOJ concurrence, proposed amending existing rules implementing HSR to create a new de minimis exemption from the notification filing requirement for acquirers. The proposal would also change the definition of acquiring party to include its associates under common management.

 

      Can you elaborate more on what the FTC tried to do here, and what do you believe will happen in the new administration?

 

Bilal Sayyed:  You mentioned two of the proposals. In conjunction with the proposed rules, the agency went out with an advance notice, which raised questions about seven additional topics that in some ways overlapped with the NPRM, in some ways went off in slightly broader directions. So, what was the agency trying to accomplish? I think they're trying to accomplish two things.

 

      It's been 25 years since there was a major revision to the HSR rules, and that revision was in the mid-'90s and it set forward a number of, at the time, new exemptions that would eliminate filings for a set of transactions that were not perceived as likely to be anticompetitive.

 

      Also, many of the rules and interpretations of the rules that the NPRM and the ANPRM focus on are basically as old as the rules themselves, so over 40 years old. There's been a significant change in the economy in those 40 years. I think the agency, some of the commissioners, chairs, the bureaus, OPP, thought it was time to try to bring some of those rules up to date.

 

      Most of the rule proposal changes, not all of them, most of them relate in some ways to governance aspects of investors. Not solely minority investors but also the governance aspects associated with private equity firms who manage multiple funds but, under the HSR rules, they're treated as separate entities.

 

      In large part, it was an attempt to really rethink the rules in a systematic way and identify areas where, over time, there'd been sufficient change in not only the economy but in the governance of companies that a refresh was needed.

 

For a long time, I'd been a proponent of a de minimis exemption from reporting because I felt that it was a waste of resources for everybody to make a filing that didn't raise substantive concerns or to investigate firms for failing to comply with the HSR Act when the transaction didn't raise competitive concerns and the failure to comply was, arguably, because of an unfamiliarity with some of the unique or specific characteristics of the rules. Of course, lessening the burden on filings or filers or specific filers is not a sufficient thing for the agency to do. It ought to be rethinking how it can better size the HSR rules.

 

One of the drivers of the proposal was to think about the common ownership issue. We had done a hearing on the common ownership concern. The ANPRM includes a series of questions to better understand what institutional investors do with respect to their holdings or the review of the empirical literature that OPP contracted for was an attempt to understand the effects of common ownership, what the empirical literature showed.

 

The aggregation rule within the NPRM, the redefinition of a person, was intended to reflect, I think, the concern that we were -- well, first we were potentially not getting information on transactions that would've been useful to get, such as other ownership interests. It also is intended to reflect what, again, I think is the reality across the world, which is -- I think it's largely only in the U.S. where you fund by fund as opposed to at the higher level for private equity firms. Again, just reflect the greater reality of the governance of these firms.

 

Now, that aggregation rule, that redefinition of person, can have some significant secondary effects with, in particular, how institutional investors' reported obligations may change. I think the ANPRM is an attempt to better understand the effect of the aggregation rule, the potential effect on those entities, and to think about whether some modification may be appropriate for institutional investors or others where their holdings may be, and likely are, passive, at least passive with respect to issues of interest to their competition, competition agencies.

 

It did strike me as indefensible that the application of the institutional investor exemption would allow a small number of firms to acquire 15 percent or less in competing companies without Hart-Scott review, particularly when it wouldn't potentially be only one firm, but a small number of firms who, in the aggregate, built up significant positions in competing companies.

 

Now, that's not to say they're anticompetitive. What I say is it just struck me as indefensible that we had a rule that, at least in its application, seemed to allow this common ownership issue to arise without any pre-consummation review. Because of the importance of institutional investors to investments by ordinary citizens and groups, like unions and other pension plans, it's important, I think, to get this right. Not to put too much of a burden on them to file, but I think the agencies need to understand better what institutional investors are doing and what the effect of their holdings are even if those holdings are passive.

 

One way to do that is through a post-filing or a post-acquisition system of review and investigations, but that wasn't really done either. We thought the right way to tackle one topics of hearings, common ownership, was to think a little bit about how to better apply the Hart-Scott rules.

 

I've looked at the comments that were filed for both the NPRM and ANPRM. Hopefully, the people who would be significantly affected by the aggregation rule, hopefully they proposed some alternatives that reflect the agency's concerns or address the agency's concerns but also don't create the regulatory overhang that potentially would conflict with other agency jurisdiction or the potential real benefits of, in a sense, the use of institutional investors to invest on behalf of Americans and retirees and pension holders and the like.

 

Svetlana Gans:  Great. Thank you so much for that. We have just about 12 minutes left. I wanted to turn to one other hearing-related topic, and then I do see one question in the chat that I will ask you about.

 

      Just briefly, to close out the hearings, which this was not under the auspices of the 21st century hearings, but the FTC conducted it under your tenure at OPP, and that relates to the issue of non-compete provisions in employment contracts. FTC held a workshop on January 9, 2020 to examine whether there was a sufficient basis and empirical economic support to promulgate a commission rule that would restrict the use of non-compete clauses in employer-employee employment contract.

 

      Can you just elaborate, very briefly, on the goal for the hearing and what some challenges might be in terms of promulgating a rule under the unfair methods of competition prong?

 

Bilal Sayyed:  I think the goal of the hearing, again, was to think, in part, about whether we could justify either a policy response or an enforcement response to the growth and the use of non-compete agreements in the economy. I think the chairman was concerned about the potential effects of these non-competes, particularly where it was hard to see the justification for them. I think a number of other commissioners also wondered about the justification for them and the potential for their effects to fall on certain parts of -- low-wage workers or low-skill workers who appeared to be struggling as a group in the economy.

 

      There was a real interest in seeing whether—notwithstanding the potential role of the Department of Labor or other agencies—a real interest in thinking about whether there was an FTC or an antitrust response to the use of non-compete agreements.

 

      John McAdams, a guru of economics, published on his own a review of the empirical literature that was published in December of 2019 or January of 2020. That suggested to many people, including us, that a broad-based ban on non-competes probably was not justified by the empirical literature.

 

      We were spending some time thinking about whether the empirical literature might support a more narrow rule focused on maybe low-wage workers, low-skill workers; something other than a broad class of the economy. I think the biggest hurdle, besides the workload and the effect of everybody working from home, was it was, again, clearly an area where there was disagreement among the commissioners—not so much on potential concerns about the effects of these non-competes but on whether the Commission really had rulemaking authority or, if it had rulemaking authority, whether it could build a record for a rule that would sustain a challenge to it.

 

      Again, OPP, at least up until I left, was working on this area, but it was sort of back burnered because of likely differences among the commissioners and the significant importance of what I'll call equity and labor issues to the incoming administration. It seemed, both to the chairman and to me, that on an area of significant interest to the incoming administration, the Commission should not issue a report or paper or recommendations that might have the effect of undercutting an important policy item for the incoming administration.

 

      It's a tough issue, but in the end, I think however which way we might've come out or the Commission might've come out, I think it was just something we didn't want to do in the last days of the administration when this issue seems of significant importance to the incoming administration.

 

Svetlana Gans:  That makes sense. Bilal, I did want to ask you two questions we received from the audience. You could answer both, one, or none. I'll just restate the question from the audience.

 

      The first question is: you mentioned to one of my questions that the vertical merger guidelines were perhaps the only public accomplishment of the hearings. Were there any non-public accomplishments on which you could elaborate?

 

      The second question from the audience is: during your tenure, did OPP make any competition advocacy filings with state or federal entities that you felt had a significant impact?

 

Bilal Sayyed:  On the first question, I think I've talked about the stuff that's non-public in the sense that we didn't release anything. We spent a lot of time on the platform topics, on the potential competition topic, on the common ownership topic. Whatever output there was or might be, all that work, I think, was helpful internal to the Commission in thinking through those issues.

 

      That's sort of a quasi-non-public -- that's the response to the non-public question. We couldn't get some things out, but the effort, I think, was helpful internally, and that may have some longer-term effects.

 

      On the advocacy filings, I think we suffered from a couple of things there. I'm a big supporter of the competition advocacy mission because I believe there's too much government, whether it's at the state level or the federal level. Too much of what the government does restricts competition. Somebody, and the agency and DOJ are as good as any to do it, and better, should be pushing for opening up markets, removing barriers to entry. Whether it's through rules or legislation, someone ought to be doing it.

 

      I think it is hard to identify an actual effect of this effort, and I think that ought to be a consideration of the program going forward. Is it sufficient to plant the flag and say this is a good idea or a bad idea? Should we be measuring the outcome in a way that shows what effect the agency had?

 

      The reason I say that is OPP has devoted a lot of resources to competition advocacy in different ways—maybe letters, maybe reports—and I do wonder if that's the best use of as many of the resources as are devoted to it.

 

      During my time there, we did cut back on it, in part because we had these other projects. I think in the last year of my time there, roughly the last year -- COVID has affected what state legislatures are doing, and there were, I think, fewer opportunities to comment on things.

 

      Right now, I'd say a good chunk of the advocacy we did in the roughly three years I was director was focused on topics we already commented on to other legislatures, so I'm not sure there was a marginal benefit to most or all of them, with maybe one exception.

 

Within OPP, a few people, Dan Gilman in particular, but others, and then outside of OPP, including a couple people in the healthcare shop, did work with HHS on their health IT agenda, and I think we did have some effect there, both through public advocacy and through agency-to-agency discussions, on whether some of their rules were going to be anticompetitive in that they would basically allow for static or not allow for dynamic competition.

 

      I think the telemedicine, telehealth work that we did was potentially helpful in supporting what HHS and others want to do in response to COVID. Karen Goldman did a nice paper on occupational licensing and portability that I think advanced the literature in that area. Then, the Trump administration had a lot of healthcare ideas, and both through public comments and agency-to-agency communications, I think we had a positive effect on those. We filed comments with HHS on a number of things.

 

      Mostly those areas, but I think it's worth thinking about what's the best use of the advocacy function of OPP and where to put those resources.

 

Svetlana Gans:  Great. Well, I see Nick is back on, so I think that means that we're running out of time. We did have one additional audience question on the privacy hearings that the FTC had. Bilal, I don't know if you want to take that question or whether we want to just conclude, and if you have any other thoughts as closing remarks for this session?

 

      Bilal, I'll turn it to you.

 

Bilal Sayyed:  I think on privacy, that was an area where OPP had a real interest but less experience than in other areas. But I think there was also a difference in views as to what was the right path forward on privacy.

 

      I mentioned earlier Liad Wagman has been working with us at OPP. Liad has done a lot of writing in the area of privacy and application of economics to privacy. He's done both, I'll call it, theoretical work but also empirical work. There are other folks in OPP—Dan Gilman, Ruthie Dakin—who have an interest in privacy. But it was an area where I think OPP was not in sync with BCP and particularly DPIP on the right forward-looking approach.

 

      That was an area where I thought the Commission, because it holds itself out as the privacy expert, could be more aggressive in advising on a proper legislative action with respect to privacy. But within the Commission -- I don't think that was the view across the Commission, and OPP was the in the worst place to push for a more active role because we were largely out of step with where BCP was.

 

      Now, I think there is a majority, even at the time, there was a majority of the Commission that was ready to act with respect to privacy because of the failure of Congress to either adopt or enact legislation that would clarify some of the rights associated with data and expectations of what public companies should be doing. But it looks to me that over the next three to four years, there's going to be a majority on the Commission that is willing to use the FTC's rulemaking authority to enact some kind of privacy rule that's within the scope of what the agency can do.

 

      I think that's probably warranted. Putting aside what that rule looks like, I think a Commission initiative is probably warranted given the two things, both the inability of Congress to enact privacy legislation and Congress' looking for the FTC and maybe some other agencies to step up on their own. The benefit of the agency acting is -- although I think OPP was out trumped on this and out of step, if the agency acts, there will be, internally, a better reflection of the economic costs and benefits of privacy legislation or privacy rule than any other agency will provide.

 

      I think, again, any report that we did or tried to do was not going to go far, but Liad and Dan have done some good work. Hopefully it'll be published somewhere as a paper. But we just weren't in a position to get agreement across the staff on anything.

 

Svetlana Gans:  That makes sense, and thank you to that audience question. I think we're right out of time. Bilal, I don't know if you have any closing remarks or anything else you wanted to say at this point?

 

Bilal Sayyed:  Well, I have lots of things I want to say, but I think the one thing I'd say is I think the agency is an important agency within the federal government. It was regrettable that, unlike the years I had been there previously and most of my practicing career, there were a lot of differences among the commissioners that couldn't be resolved. It leads to a weaker agency, and I think there are a small number of people, maybe large, but at least a small number of people who would sort of like to kill the agency for different reasons.

 

I think the inability of the commissioners to put aside some differences that strike me as relatively small is going to hurt the agency. That's something that ought to be something that the management of the place ought to consider going forward. If the place becomes a 3-2 commission on a regular basis, it just weakens the case for maintaining it. There's another branch of the government that does antitrust enforcement. There's another branch that does some consumer protection stuff. And there's a lot of talk about a new privacy and data security agency.

 

So, in addition to getting more resources for the agency, which I support, there really needs to be a feeling among the staff—maybe I'm just, I'm sure I'm just speaking for myself—that the commissioners are all sort of rowing in the same direction and are protecting the agency from what I'd call the interests of people outside of the agency. Those interests are not usually aligned with the FTC or the FTC's mission to protect consumers. For a long time, it wasn't a place that swung depending on who was the president, and there's a real fear, I think, that it's going to become that way and that it'll just be seen as a superfluous agency.

 

Svetlana Gans:  Got it. Well, with that, thank you, Bilal, for being with us today. Thank you, Nick, and The Federalist Society for hosting us. Nick, I'll turn it back over to you for any closing remarks.

 

Nick Marr:  Thanks, both Svetlana and Bilal, for joining us today and to our audience for calling in, your good questions. Good engagement on this event today.

 

      Just a reminder to the audience. We welcome your feedback by email at [email protected]. Also, be checking our website and your emails for announcements about upcoming teleforum calls and Zooms like this one. We have one coming up this Thursday. It's going to be on "Law and Corporate Social Responsibility." It might be of interest to this group, and we're hosting a few speakers, including FCC Commissioner Elad Roisman, so tune in then.

 

      This event will be posted as a podcast shortly, so check our website for that.

 

      Thank you all, again, for joining us this afternoon. We are adjourned.

 

[Music]

 

 

Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.