The Federal Trade Commission and the Department of Justice have found themselves under the microscope as calls for antitrust investigations into "Big Tech" companies escalate. The agencies, which share civil antitrust enforcement authority, are reportedly engaged in a turf war over investigations of companies operating in the social media, online retail, search engine and app store space. In September, FTC Chairman Joseph Simons reportedly sent a letter to Assistant Attorney General Makan Delrahim expressing concern about the agencies' interactions. Meanwhile, they both appear to be investigating the same Big Tech companies, contrary to a clearance agreement penned by the agencies in 2002 and, reportedly, a more recent agreement concerning Big Tech. What is causing this largely uncharacteristic dispute and what effect will it have on enforcement?

The Agency Clearance Process

As we discussed in June 2018, because the FTC and DOJ have concurrent civil antitrust jurisdiction, they rely on a clearance agreement to coordinate their authority. The current agreement's Appendix A seeks to prevent disputes by assigning particular industries to each agency. The quasi-independent, consumer-protection-focused FTC generally monitors industries that, as Simons recently put it, "most directly affect consumers and their wallets." By contrast, the DOJ, an executive branch law enforcement agency, generally oversees less consumer-facing industries and sectors impacting national defense.

Because Appendix A is perfunctory, however, disputes frequently arise where a company targeted for investigation falls between Appendix A's cracks or, more commonly, straddles more than one industry. The clearance agreement lists criteria for resolving these disputes. Emphasizing specialization and conservation of resources, it grants priority to the agency "with expertise in the product or similar product … gained through a substantial antitrust investigation … within the last seven years." The agreement also enumerates a list of tie-breaking factors; for example, an agency gets more "expertise" credit if a case was litigated to verdict than if it was filed and later settled. While the vast majority of disputes are settled with Appendix A and the tie-breaking criteria, disagreements may also be settled through a neutral evaluator and, ultimately, upon elevation to the FTC chairperson and the assistant attorney general for the Antitrust Division of the DOJ.

Conflicts Over Investigations Into Big Tech

The agencies' turf war over Big Tech suggests they may be struggling to apply the aging clearance agreement to companies and business models that were somewhat embryonic when it was drafted in 2002. For example, social media is not explicitly addressed in the agreement, and there appears to be no obvious analogue to it in Appendix A. Although there are reports that the FTC and DOJ struck a new clearance deal concerning Big Tech, there are bound to be hiccups. U.S. Sen. Mike Lee, chairman of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, said last month: "What's evident from this latest institutional tug of war is that the Antitrust Division of the DOJ and the FTC are now actively battling each other to take the lead in pursuing Big Tech."

However, the emergence of Big Tech does not fully explain the discord. This summer, the DOJ and FTC publicly clashed in the FTC's monopolization case against cellular chipmaker Qualcomm—a quarter-century old enterprise whose product seems to fit neatly within Appendix A's framework. The case was filed by a divided FTC commission in the waning days of the Obama administration, alleging the company licensed standard essential patents in an anticompetitive fashion. The district court ruled in the FTC's favor, but, on Qualcomm's appeal, the DOJ filed an amicus brief siding with Qualcomm's request for a stay of the lower court's ruling. It argued: "Immediate implementation of the remedy could put our nation's security at risk, which is vital to military readiness and other critical national interests."