Antitrust Settlements, Transparency, and the Tunney Act: A Conversation with Darren Bush

One of the most common refrains we've heard for decades from both antitrust enforcers and members of the bar is that antitrust is a form of law enforcement, not regulation.

So one could be forgiven for thinking that antitrust cases must be commonly resolved in legal proceedings before federal courts or administrative law judges.

But the reality is that the federal antitrust agencies only rarely rely on adversarial proceedings to establish violations and determine appropriate relief.

The vast majority of antitrust enforcement matters are resolved through negotiated settlements.

Criminal charges are typically resolved through plea bargains, while civil charges are commonly resolved by DOJ consent decrees or FTC consent orders, which are negotiated private settlements between the agencies and the alleged wrongdoers that are enforceable by courts, but only if the parties breach any of their terms.

The agency's heavy use of negotiated settlements in place of litigation is not an accident.

It's very much intentional and widely considered to be a feature of the antitrust system rather than a bug.

Congress gave both the FTC and the DOJ a variety of tools that are specifically designed to encourage settlements, and in particular early settlements before the machinery of the judicial process is ever set in motion.

The DOJ, through the Antitrust Civil Process Act, and the FTC through Section 20 of the FTC Act, have the power to issue what are called Civil Investigative Demands, or CIDs, which give the agencies authority to compel depositions under oath and document data productions that allow them to gather evidence and find facts during a pre-complaint investigation.

Because of their CID power, the agencies usually have a strong hand when they show up to the negotiating table because they've seen all the cards and have a clear picture of the strengths and weaknesses of both their case and the defendant's case.

As a result of this dynamic, when a government investigation reveals an antitrust violation, the agencies are often able to obtain through settlement all of the relief they would otherwise seek in a lengthy and expensive trial.

Congress gave the agencies extensive investigatory powers precisely because they wanted to encourage that result.

By restoring competition and compensating victims without trial, settlements can be highly efficient.

They not only reduce the duration and cost to society of a violation's anti-competitive effects, but they help victims obtain relief without unnecessary procedural delay and conserve the scarce and taxpayer-funded resources of both the judiciary and the antitrust agencies themselves.

But a byproduct of an antitrust system that relies so heavily on settlements is often a lack of public transparency.

Because settlement negotiations take place behind closed doors, and the victims of the antitrust violation are not in the room, the public often has no way to know whether a negotiated settlement is a fair one, and in particular, whether the government settled for less than it needed to or less than it should have.

In today's episode of Rule by Reason, we'll talk about rules that Congress has put in place to address those transparency and fairness concerns, and whether those rules are working the way they were meant to in an era where settlement dynamics may be changing, and becoming more controversial.