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Amazon filed a motion Wednesday with the Federal Trade Commission to request that Chairwoman Lina Khan recuse herself from any antitrust investigation into the America’s largest online retailer, a move that was met with derision by many market observers, lawyers and journalists. Experts on the FTC and antitrust law, however, tell MarketWatch that there’s a reasonable chance Amazon will ultimately succeed.
“This is a serious motion,” former FTC general counsel Stephen Calkins said in an interview. “Amazon
AMZN,
has retained a real expert to submit an affidavit … and they have set out a lengthy, extensive analysis setting out their side of the argument.”
Khan was confirmed by the Senate to serve as a commissioner just over two weeks ago before being tapped by President Joe Biden to be chairwoman of the commission. She rose to fame in 2017 when she penned a Yale Law Journal article called “Amazon’s Antitrust Paradox” about how existing antitrust law is ill-equipped to rein in the market power of Big Tech. Starting in 2019, Khan worked for the House antitrust subcommittee on a report released last October that said there is a “clear and compelling need to strengthen antitrust enforcement” with a special focus on “the challenges presented by the dominance of Apple
AAPL,
Amazon, Google
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and Facebook
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and their business practices.”
Amazon argued in its petition that Khan’s public statements and past association with groups that advocate for aggressive antitrust enforcement makes it clear that she has already “pre-judged” Amazon to be a monopoly engaged in anti-competitive practices, in violation of its constitutional right to due process.
Khan “has on numerous occasions argued that Amazon is guilty of antitrust violations and should be broken up,” the company wrote in its petition. “These statements convey to any reasonable observer the clear impression that she has already made up her mind about many material facts relevant to Amazon’s antitrust culpability.”
The FTC declined to comment for this article.
Calkins, a law professor at Wayne State University in Michigan, said that while Amazon has made a plausible argument that Khan should recuse herself, whether she will is another matter. “There have been very few successful efforts like this, so I don’t want to overstate the probability of success.”
The political calculus
One reason that FTC commissioners rarely recuse themselves from investigations is that it’s the FTC itself that decides whether recusal is necessary, Calkins said. If Khan declines to recuse, it would be the responsibility of the other four commissioners to vote on the question. Even if the two Republican commissioners — who are skeptical of the recent bipartisan bush for stricter antitrust enforcement against Big Tech — vote for her recusal, it would likely end up in a 2-2 tie that would lead to her remaining involved in the Amazon investigation.
William Kovacic, who also served as an FTC general counsel before his appointment as an FTC commissioner, told MarketWatch that ideology isn’t the only driving factor in how commissioners might vote, noting that it’s a “delicate situation” when you’re asked to consider sidelining a colleague. Meanwhile, the pending nomination of Commissioner Rohit Chopra to serve as the head of the Consumer Financial Protection Board could result in Democrats temporarily losing a majority on the FTC, further complicating any analysis of whether Khan will be forced to recuse.
Khan said during her confirmation hearing that she didn’t expect to need to recuse herself from investigations into Big Tech companies, given that she has no financial ties or previous association with them. But contrary to her statement, those are not the only considerations that federal courts take into account if Amazon challenges an FTC decision, absent recusal.
Ultimately the decision may be made by the federal judiciary. Kovacic pointed to two appellate court decisions in which the court voided FTC orders made during the chairmanship of Paul Rand Dixon, who had served as counsel to a U.S. Senate subcommittee on antitrust and monopoly. Dixon was appointed to head the FTC by former President John F. Kennedy.
“He’d been involved in structuring the hearings, he asked a lot of questions, he made substantive comments at the hearings and the allegation the companies made was that this previous experience had created both the fact and appearance of bias, and the court agreed,” Kovacic said, adding that Khan’s involvement with the House’s report is somewhat similar.
Handicapping the outcome
The lack of recent case law on FTC recusals makes it difficult to predict the outcome on this issue, but some antitrust lawyers argue that basic common sense would dictate that Khan recusing herself makes little sense.
“Recusals are almost always in the context of prior legal work on behalf of one or the other parties,” said Spencer Waller, who specializes in antitrust issues at Loyola University Chicago’s School of Law. “The law is easy, but the facts are hard, and what you would do are based on the facts that are not in the public record,” when she wrote about Amazon before entering government. Her previous experience does not indicate her to have “an irrevocably closed mind,” he added.
Kovacic, a law professor at George Washington University in Washington, D.C., also noted that nominees for roles like the FTC chair are extensively vetted by ethics officials both in the White House and the FTC, particularly if the nominee is going to be dealing with hot-button issues like antitrust. If either thought it likely that Khan would be forced to recuse on any cases involving Big Tech, the president would have likely nominated someone else.
“The [antitrust] issue and its significance was also known 6 months ago, it was known in March when the president said ‘I intend to nominate her,’” he said. “I infer from all of that they made a basic judgment that, though the issue might be raised, it would not be a barrier.”
