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We’ve written time and again about the ongoing problem with former antitrust officials revolving to the private sector and BigLaw firms, where they trade in their government connections to provide corporations with invaluable institutional knowledge and defend them against their former regulatory colleagues. Last month, I wrote about the tendency of media organizations to dub any former official from the FTC or the DOJ Antitrust Division as an “expert” in the field while conveniently obfuscating the fact that said ex-officials either have been, or currently are, on the payroll of giant corporations that stand to benefit from weak antitrust enforcement.
Implicit in the worldview of these revolvers is the idea that corporations should be free to operate and acquire competitors with near impunity, therefore antitrust enforcement should be as narrowly tailored as possible. This is obviously problematic — we need regulators that believe in the government’s ability to take on corporations with outsized market influence — but Cravath, Swaine & Moore’s Christine Varney recently took things many steps further in her representation of the biotech company Illumina in its case against the FTC. Varney doesn’t just attack specific enforcement actions as unwarranted, but calls into question the constitutionality of the FTC’s authority to issue enforcement actions in the first place.
From Top Enforcer…
Prior to becoming a legal hack for corporate America, Varney held two of the highest regulatory positions in the government. During the Clinton administration, Varney was appointed commissioner of the FTC, serving from 1994 – 1997. Yes, the very same FTC that Varney believes is unconstitutional. Oddly enough, I’ve scoured press releases and news articles from her three years as Commissioner and have not found a single instance of Varney renouncing her appointment or refusing to be a leader of an unconstitutional agency.
Varney then revolved out of the FTC in 1997 to join BigLaw firm Hogan Lovells (f.k.a. Hogan & Hartson) where she represented and advised tech titans of the time including eBay and AOL. Following her time collecting Big Tech dollars, Varney returned to the public sector to head the DOJ’s Antitrust Division as Assistant Attorney General from 2009 – 2011.
At the time, Varney’s Antitrust Division appointment set off alarm bells throughout corporate America. Outlets like Forbes and CNN Money warned that she would reinvigorate strong enforcement after the Bush administration’s eight years of rubber stamping mergers. They pointed to her time as FTC Commissioner, as well as her role representing Netscape while at Hogan when she argued that its competitor Microsoft was engaging in unfair competitive practices.
… To A Glorified Ventriloquist Figure
Unfortunately, the business community’s concerns were misplaced. Seven years after its initial warnings, CNN Money conceded that Varney “came in with guns blazing […] but the administration never quite lived up to those expectations.” The effects of that lackluster era are still with us today – Varney notoriously approved the merger of Ticketmaster and Live Nation that was recently lambasted by everyone from Amy Klobuchar to Taylor Swift.
In hindsight, it really should’ve come as no surprise that Varney would fail to fundamentally alter the course of antitrust enforcement. After all, she had already revolved once to represent corporate clients. And, while Varney gained credibility as an anti-monopoly crusader by representing Netscape, this experience merely points to her true calling: a ventriloquist dummy for whichever corporate client is currently paying her bills. Does Varney truly believe, in her heart of hearts, that Netscape was harmed by Microsoft’s anticompetitive practice? Maybe so. But undoubtedly, if Hogan’s client had been Microsoft rather than Netscape, Varney would have been in the exact same courtroom spewing the exact opposite opinion.
Now, at the behest of Illumina shareholders, Varney is challenging the legitimacy of an agency that she previously led, including specific enforcement actions that she utilized as an FTC commissioner. The Illumina brief argues that FTC divestiture power goes beyond its constitutionality as affirmed in the 1935 Humphrey’s Executor v. United States case:
“Whatever powers FTC possessed in 1935, the divestiture power invoked by FTC in this case—forcing Petitioners to unwind a multi-billion dollar transaction designed to promote the widescale access to a revolutionary cancer test—was not among ‘the set of powers [Humphrey’s Executor] considered.'”
Yet, in perhaps the most notable cases during her time as FTC, Varney voted in favor of a consent agreement that forced a divestiture. The FTC filed a complaint against a $7.5 billion acquisition of Turner Broadcasting Systems by Time Warner, alleging that the merger would raise consumer prices and reduce competition. The parties reached a much-too-lenient settlement, but it did require cable provider Tele-Communications, Inc (TCI), to divest its 7.5% ownership of Time Warner, as it would have posed “significant competitive concerns” according to the separate statement of the majority that Varney joined. During her time at the helm of the Antitrust Division, Varney again utilized divestiture powers to force Ticketmaster to sell its ticketing subsidiary Paciolan as she waived through the merger. Clearly, Varney has no problem with divestiture power –- it was a favorite tool that allowed corporations to merge while maintaining a veneer of regulatory scrutiny. Varney, though, is willing to pretend otherwise in service of her corporate client hoping to squeeze extra profits from cancer patients.
The Illumina case is the latest example, but Varney has long been cemented as a corporate mouthpiece, with a moral compass that judges right and wrong based on who pays more. Remember how Varney was an antitrust hero for taking on Microsoft? Well, Varney has no problem working with Microsoft — she represented Barnes & Noble in its forming of a “strategic partnership” with Microsoft in 2012. Her worries that Time Warner would engage in anticompetitive behavior? Completely assuaged in 2016 when Time Warner hired her to push through its megamerger with AT&T.
Varney’s opinions on any and all antitrust matters are about as credible as a Cameo appearance from a celebrity – she’s only saying it because a corporation paid her to do so. (Cameo provides a range of Jersey Shore options and BigLaw provides a wide swathe of revolver options – BigLaw is basically Cameo with an advanced degree requirement)
Birds Of A Feather
The Illumina case may be the most egregious instance, but Varney is hardly alone in leveraging her past government experiences to become a vacuous lawyer awaiting their next corporate talking point. By that I mean Varney is literally not alone — not at Cravath, not in the Illumina case. Former FTC Commissioner Noah Phillips revolved to Cravath in 2022 following his departure from the Commission. Latham & Watkins joined the Illumina brief in defense of their client Grail. The firm’s lead counsel for the case is former United States Socitor’s General Gregory G. Garre. Of the 38 partners in Latham’s Antitrust & Competition team in the US, we found that over 25% of them have prior government experience, namely former FTC Director of Bureau of Competition Ian Conner and Former Assistant Attorney General of the Antitrust Division Makan Delrahim.
Phillips, Conner and Delrahim aren’t counsel for the Illumina case, but BigLaw firms like Cravath and Latham depend on the reputations and credentials of revolvers to legitimize these types of cases. One has to wonder whether fellow FTC alumni Phillips and Conner agree with their colleagues’ assessment that their former government employment violates the Constitution. We reached out to both offices to check, but neither responded.
Shameless sellouts of this ilk have led two of the country’s most important regulatory agencies for far too long. When former FTC commissioners call the FTC unconstitutional, it primarily makes clear their absolute lack of integrity, but it also undermines the executive branch’s ability to enact regulatory controls over corporate consolidation and malfeasance. It’s this type of cravenness — where 75% of your top officials have worked or go on to work for the very companies they regulate — that made the FTC an unserious regulator for the past 20+ years.
Antitrust revolvers have become so commonplace that news of Varney’s brief has not made headlines in any major media outlets, but individuals like Christine Varney should not be allowed to sink in the shadows when they work as corporate hitmen who target the constitutionality of government agencies.