WASHINGTON—Members of the Federal Trade Commission rejected a complaint from
Meta Platforms Inc.
META 23.28%
asking them to disqualify the agency’s chair from judging the company’s proposed acquisition of virtual-reality company Within Unlimited Inc.
The FTC voted 2-1, along partisan lines, to allow
Lina Khan
to participate in the legal case against the Meta-Within deal, according to an order made public Thursday. The agency’s Democratic commissioners said federal ethics rules don’t require Ms. Khan’s disqualification, even if her prior work and statements were critical of Meta, the Facebook owner that rebranded itself as a company focused on developing immersive virtual worlds, or metaverses.
The FTC’s decision relates to a lawsuit filed by its enforcement staff in its administrative court last year seeking to block the Meta-Within deal on antitrust grounds. The FTC, like several other independent federal agencies, can bring its cases to an in-house court whose judge decides whether mergers are illegal or not.
A federal judge this week declined the FTC’s request for an injunction halting Meta from closing the Within purchase while the FTC’s in-house proceeding plays out. In many past cases, the FTC has abandoned administrative litigation after a district court judge rejected its request for an injunction.
It couldn’t be determined whether the FTC would continue with the administrative case against Meta. A trial in the in-house court is scheduled to begin on Feb. 13.
That judge’s decision can be appealed to the four-member commission, which Ms. Khan has led during the Biden administration. In such a case, the commission sits as a sort of appellate court, deciding whether to side with the FTC staff or the company whose deal is under review. Meta had argued that Ms. Khan, before joining the FTC, consistently made public statements accusing Facebook of conduct that violates antitrust laws.
Before becoming FTC chair in 2021, Ms. Khan was a staffer on a House antitrust panel that conducted a 16-month investigation of large online platforms and recommended in a report that lawmakers take steps to rein them in. She also taught at Columbia Law School and wrote a widely read law-review article arguing that antitrust law had failed to restrain
Amazon.com Inc.
As a legal scholar and since joining the FTC, Ms. Khan has been a leader of a movement arguing the federal courts’ decadeslong approach to antitrust law failed to restrain corporate dominance and stop mergers that eroded competition. She has argued in favor of blocking more deals, aggressively attacking monopolistic practices and potentially breaking up some of America’s largest companies.
The FTC’s two Democratic commissioners,
Rebecca Kelly Slaughter
and Alvaro Bedoya, said in their order dismissing Meta’s petition that commissioners aren’t disqualified from addressing cases simply because of past statements they made about a company. None of Ms. Khan’s past statements were explicitly about Meta’s commercial activities related to the metaverse, they wrote, showing that she hadn’t prejudged its plan to purchase a VR company.
Christine Wilson,
the FTC’s lone Republican member, wrote in a dissenting statement issued Thursday that Ms. Khan’s past work on the House committee represented one reason she should be disqualified from the Meta case. The House committee’s staff report involved the “same parties, facts and issues” as the FTC’s case against Meta, which is the relevant standard for recusal under federal case law, Ms. Wilson wrote.
Ms. Khan had earlier declined Meta’s request for her removal, according to the commissioners’ orders. Under agency rules, that step necessitated a decision by the rest of the commission.
Write to Dave Michaels at [email protected]
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