Antitrust Law Daily Justice Department’s Delrahim recommends creation of Digital Markets Rulemaking Board
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Tuesday, January 19, 2021

Justice Department’s Delrahim recommends creation of Digital Markets Rulemaking Board

By Peter Reap, J.D., LL.M.

The outgoing Justice Department antitrust chief suggested new hybrid public/private board to address market power in digital platform space.

On his final day in office, Makan Delrahim, Assistant Attorney General of the Department of Justice Antitrust Division, proposed the creation of a new hybrid public/private entity, the Digital Markets Rulemaking Board, to address the antitrust concern of market power in the digital markets space. He also outlined six specific recommendations that Congress should consider in the area of antitrust, including clarifying the burdens of proof in civil merger cases and piloting the creation of a specialized federal district court for antitrust cases brought by the government providing judges expert at handling these types of complex cases. Delrahim provided these insights at a virtual event hosted by the Duke Initiative for Science and Technology’s Center on Science and Technology Policy.

Delrahim began his remarks by stating that it has been a great honor for him to serve in his current role since 2017, and he also acknowledged the agency’s celebration of the memory of Dr. Martin Luther King Jr. He said he was proud of the work the Antitrust Division has done during his tenure, stating that in sometimes indirect ways, the Division has tried to provide incentives for innovation. He reflected that his early career began as a patent attorney and that he picoted to antitrust at a time when it was still in early development as a mature area of law.

Delrahim noted that there is sustained bipartisan interest in antitrust issues, citing as evidence the recent House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law’s staff report entitled Investigation of Competition in Digital Markets examining dominant online platforms Facebook, Google, Amazon, and Apple, and recommending several reforms, and the minority report entitled The Third Way: Antitrust Enforcement in Big Tech, released by Republican Representatives. He also mentioned the 116th Congress’ recent enactment of three pieces of antitrust legislation as major achievements during his administration: The Criminal Antitrust Anti-Retaliation Act (S. 2258; Public Law 116-257; 134 Stat. 1147); The Competitive Health Insurance Reform Act (H.R. 1418), and the Antitrust Criminal Penalty Enhancement and Reform Permanent Extension Act. Finally, he applauded the passage of The Consolidated Appropriations Act, 2021 (H.R. 133; Public Law 116-260; 134 Stat. 1182), signed into law on December 27, 2020, which effectively increased funding for antitrust enforcement for the first time in over ten years, he said.

Digital Markets Rulemaking Board. First and foremost, Delrahim observed that the biggest antitrust concern facing his successors concentrated market power in the hands of a very few in the emerging digital marketplace. To address this issue, he advocated the creation of a new entity, "a hybrid public-private rulemaking body with limited government oversight to advance the goal of increasing competition and consumer trust in online platforms," the Digital Markets Rulemaking Board (DMRB). He said that the mixed public and private staffing of this entity would allow it to be market focused and have the needed flexibility to adapt swiftly to a rapidly changing marketplace.

He proposes the board as "an alternative to rigid and direct regulation through traditional regulatory agency models Congress has enacted in the past to address market failures or natural monopolies, such as through the FCC, FERC, or similar market regulators. Operating alongside current federal privacy, antitrust, and consumer protection, the proposed DMRB would supplement these legal regimes, and in appropriate places preempt inconsistent state laws." The board would make recommendation to Congress and also have a substantive rulemaking component as he envisions it, addressing important topics and imposing non-discriminatory rules on things such as platform interoperability and data portability. "These rules would be proposed for limited review and endorsement by a government body, such as the Department of Justice." Delrahim then set out his list of six specific recommendations Congress should consider as future antitrust reforms.

Civil merger cases. Congress should consider introducing legislation that would introduce bright lines rules and alter the burdens of proof in civil merger cases in order to combat excess market concentration. Courts need additional guidance in these types of cases, he said. The legislation should amend the Clayton Act to specifically address the acquisitions of nascent competitors by dominant firms and would apply presumptions that these types of acquisitions are by their nature anti-competitive under certain circumstances.

Ohio v. American Express. Congress should provide clarity on the 2018 U.S. Supreme Court case Ohio v. American Express, according to Delrahim. The majority opinion in this case required antitrust plaintiffs to not only show competitive harm by incorrectly raised the standards for plaintiffs in antitrust cases. This decision has been widely criticized, he noted, for creating a barrier to antitrust enforcement against dominant platforms.

Earlier Supreme Court decisions. Congress should consider overturning two older Supreme Court precedents, Illinois Brick Co. v. Illinois, 431 U.S 720 (1977), and Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968)). Both of these decisions are unfair to consumers and allow them to be victimized by cartels, according to Delrahim.

Antitrust enforcer pay. Congress should consider adopting a modernized pay scale for the antitrust attorneys employed by the agencies. A pay scheme similar to that recently put in place at the Securities and Exchange Commission was recommended, along with a merits assessment system that helped endure the taxpayers were getting the best advocates they possibly could.

Foreign missions. The installation of antitrust experts, or competition attache’s, should be considered at the country’s missions for China and the European Union.

Pilot antitrust court. A pilot federal district court that specialized in antitrust cases brought by the government should be considered. In his experience, having to deal with judges who are not very knowledgeable about antitrust can make the job of bringing antitrust cases much more burdensome. This pilot court would be staffed by a rotating panel of district judges with antitrust law expertise. The court would be modeled after the FISA court, but of course its proceedings would not be secret, as those of the FISA court.

Question and answer. The first question posed from the audience was whether the courts are well equipped to handle Sherman Act Section 2 antitrust cases, for example, the current case being brought by the Justice Department against Google? Yes, they generally are, Delrahim said, praising the competence of the judge assigned to the Google case. However, he noted with dismay that the trial in that case has been set for 2023 and "that is a long time to wait." He wondered what type of harm to the public could occur over such a lengthy court case, and he expressed the hope that the DMRB could address these harms much more quickly than the court system.

Next, Delrahim was asked if the appointment of federal judges should place more emphasis on the development of antitrust law. He stated that this was a difficult issue because of the broad nature of issues a federal judge must consider and hoped that the suggested pilot of an antitrust court could better help to develop antitrust law and address quick market changes.

Another question sought his thoughts on the competitiveness of the app stores of the major platforms and Epic’s recent lawsuit against Apple. Delrahim refused to share any thoughts on a specific case but said that there really were only 2 appstores, Apple’s and Google’s, and that this was an issue that need to be further considered. He commented that possibly the DMRB could tackle this issue.

Next, Delrahim was asked how his proposal for the new DMRB differed from the recent proposals for antitrust reform in the UK and in the EU. He said that his intention with the DMRB was to avoid the creation of an entirely new agency. A new agency would not be the best way to address competitive harms in the digital market. He envisioned the DMRB as being structures similarly to the Municipal Securities Rulemaking Board. He said the creation of an entirely new agency could result in years of Administrative Procedure Act litigation in the courts and he wished to avoid that. The DMRB would be a mix of public and private individuals and could possibly include a technical expert from Google and Matt Perault, the host of his talk today before the Duke Center on Science and Technology Policy.

Finally, Delrahim was asked what role the DMRB would play in data access, specifically the ability by researchers to access and use the large amounts of data collected by platforms. Delrahim admitted he had not focused much on this issue but that it was an important one that Congress much consider. He noted that Apple’s recent update to its privacy terms with its recent operating system update seems to give consumers great power to either opt in or opt out of data collection and said that Congress should look at this as a reasonable place to start.

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