Antitrust demolishes global competition – indicts the FTC.

Arguably the most damaging byproduct of Khan’s anti-merger overreach is that it is hurting American global competitiveness and innovation, even in fields such as life-saving medicines. For example, when the FTC filed suit against pharmaceutical giant Amgen for its acquisition of Horizon Therapeutics despite the companies having no overlapping products (the first time this has ever happened for any pharmaceutical company) and the FTC was closely scrutinizing Pfizer’s purchase of Seagen to advance no-overlap cancer drugs, even Amgen and Pfizer’s competitors rallied against the FTC.

Pharma industry groups came together to publish a detailed report showing how $18 billion in private venture capital investment and $152 billion in large pharmaceutical company investments into new vaccines and treatments would be practically outlawed overnight, bringing the flow of new drugs to market to a virtual halt and bankrupting thousands of biotech startups overnight. A respected pharmaceutical industry analyst, Jay Olson of Oppenheimer, wrote, “Stop the insanity,” describing the FTC actions as “ludicrous,” echoing the sentiments of many of his peers.

Only after severe blowback did the FTC pause, then rapidly settle, the suit. Nevertheless, the damage from Khan’s suit has been lasting, with biotech venture capital investments down 25% this quarter, partially spurred by investor concerns over FTC interference, resulting in fewer new drugs being brought to market. Meanwhile, Khan has refused to acknowledge any mistake. In fact, Khan took a victory lap over “significant” settlement concessions in its settlement with Amgen—even though Amgen factually noted that all the settlement entailed was a promise not to commit illegal actions (which the company has never done and had no intention to do regardless of the settlement) with zero real impact on Amgen’s business.

Importantly, antitrust overreach is hurting American business competitiveness in global markets, with the FTC calculating industry concentration on a purely domestic—and sometimes even local—basis instead of examining market share on a global scale. For example, this week’s reports emerged that the FTC is now probing the Exxon-Pioneer merger, which means the FTC will likely also probe the Chevron-Hess merger. Antitrust advocates rightly note that the Exxon-Pioneer merger means the combined entity will control over 50% of the Permian oil field, but oil is, by definition, a global marketplace, and the Permian oil field is equivalent to just 5% of global production.

Do we really want to have to buy more oil from Vladimir Putin and other foreign autocrats by hurting our own companies? Hamstringing American entities by miscalculating industry concentration as if U.S. companies do not compete with foreign competitors, many of which are subsidized by their national governments, in strategic industries such as energy, steelmaking, mining, and others only hurts American competitiveness.

Another example of how market share is defined too narrowly and locally is Roark Capital’s purchase of Subway. Antitrust advocates point out that Subway has a 20% market share in sandwiches and delis within the U.S.—but its international presence has been much more challenged with single-digit (if even that) market share across each of its international markets. In almost every international market, Subway trails behind local brands as well as U.S.-based competitors such as McDonald’s and Yum Brands, which have a combined market share of up to 70% in some overseas localities.