On February 21, 2015, Commissioner Joshua Wright of the Federal Trade Commission (FTC) delivered remarks on antitrust adjudication and upcoming SMARTER Act initiatives at the Global Antitrust Institute Invitational Moot Court Competition. Commissioner Wright examined how increased economic sophistication has affected modern antitrust adjudication and how SMARTER Act initiatives may work to ameliorate current adjudication shortcomings.

Commissioner Wright explained that antitrust cases are currently heard by two types of judges:

Commissioner Wright noted that, though antitrust economists believe that generalist judges usually come to understand the economic issues in a complex antitrust case, the FTC is staffed with antitrust experts for the specific purpose of handling those cases.

However, Commissioner Wright explained that despite the FTC's presumed antitrust analytical superiority, FTC decisions are appealed and reversed significantly more often than generalist judge opinions in Article III antitrust cases. Critics of the FTC's performance, including Judge Richard Posner of the US Court of Appeals for the Seventh Circuit, worry that it is too much to expect the FTC to impartially judge cases they themselves instituted. In that regard, Commissioner Wright noted that the FTC has almost always ruled in favor of FTC staff.

Commissioner Wright also noted that the FTC's expanded authority under Section 5 of the FTC Act has failed to significantly contribute to antitrust law, specifically noting that the FTC has not won an appeal in a pure Section 5 case in over 40 years. However, Commissioner Wright explained that the FTC is successful is influencing antitrust law through research and reporting, particularly through its studies undertaken using its authority under Section 6(b) of the FTC Act.

To analyze the difference between the two adjudication types in an issue currently before Congress, Commissioner Wright next turned to the SMARTER Act.

The Standard Merger and Acquisition Reviews Through Equal Rules (SMARTER) Act is intended to reconcile the differing methods by which the FTC and Department of Justice (DOJ) seek a preliminary injunction to block a proposed merger in federal court. The FTC uses its own preliminary injunction standard that weighs the equities and the FTC's likelihood of success, which is generally considered a more lenient standard. In contrast, the DOJ lacks a statutory preliminary injunction standard and is instead subject to the traditional standard that measures the equities, likelihood of success, the public interest and the likelihood of irreparable harm absent injunctive relief.

Additionally, though the FTC must seek preliminary injunctions in federal court, it is authorized to seek permanent injunctions in either federal court or through administrative proceedings. The FTC often leverages its more lenient preliminary injunction standard to obtain a preliminary injunction in federal court, after which parties often abandon the transaction due to high litigation costs, time commitment and uncertainty. Conversely, the DOJ prefers to consolidate preliminary and permanent injunctions, allowing a full federal court hearing on the merits.

To resolve the FTC's and DOJ's differing approaches to injunctive relief and potential unfairness, the Antitrust Modernization Commission in 2007 issued three recommendations that the SMARTER Act adopted, including:

Commissioner Wright clarified that he believes the FTC plays an important role in forming antitrust law and policy, but should be subject to continuous assessments as to its efficacy. Commissioner Wright explained that to that end, the SMARTER Act will work to solve due process concerns caused by the incomplete separation of the FTC's prosecutorial role and its adjudicative role.

For more information on FTC and DOJ preliminary injunctions, see Practice Note, Preliminary Injunctions in FTC and DOJ Merger Challenges.