Israel Pares Back Judicial Reforms

Happy Tuesday! Sure, ABC’s new Bachelor franchise featuring senior citizens seems like a shameless cash grab, but all the writers are on strike and—oh wow, have you met Gerry?

Quick Hits: Today’s Top Stories

• Russia on Monday withdrew from a deal brokered by Turkey and the United Nations last year that had allowed for the safe export of more than 30 million tons of Ukrainian grain across the Black Sea. A Kremlin spokesman claimed Monday that the other side of the agreement—which allowed payments, insurance, and shipping for Russian agricultural exports—was not being upheld due to western sanctions, and that Russia would return to the deal “as soon as the relevant agreements are fulfilled.” Russia had briefly left the deal last fall before re-entering it under pressure from Turkish President Recep Tayyip Erdoğan.
• On Sunday, the Kremlin seized the local assets of Danish beer company Carlsberg and French food and drinks company Danone, placing them under federal state property management agency Rosimushchestvo. Moscow in April released a decree giving itself authority to seize assets owned by people or entities from “unfriendly” states, making it harder for Western companies to leave Russia. Yale School of Management’s Chief Executive Leadership Institute estimates more than 1,000 companies have left Russia or reduced operations there since the war’s start.
• The Kremlin accused Ukrainian forces on Monday of striking a bridge linking Russia to the annexed Crimean Peninsula, killing two people and wrecking the road. An anonymous Ukrainian official later told CNN the country’s Security Service and naval forces were behind the drone attack, but Russian-installed officials in Crimea said the bridge’s railway, which is critical for Russian forces’ resupply, hadn’t been damaged. 
• The U.S. is deploying additional forces to the Middle East—including F-35 fighter jets and a Navy destroyer—in response to Iranian efforts to seize two oil tankers in the Strait of Hormuz earlier this month. A U.S. navy destroyer intervened in both instances, prompting the Iranian vessels to abandon their attacks. A Pentagon spokeswoman declined to say how long the additional forces will be deployed, but the fighter jets will also aim to deter Russian military interference with American aircraft operating over Syria following provocative Russian intercepts of U.S. drones.
• Drugmaker Eli Lilly released phase 3 clinical trial data Monday appearing to demonstrate the effectiveness of its Alzheimer’s drug, donanemab. The trial found that when taken early, the antibody treatment slowed the progression of the disease by 35 percent by targeting amyloid, a damaging protein that builds up in the brains of Alzheimer’s patients. The drug was associated with a higher incidence of edema, but researchers heralded the results—which slightly outperformed another, already approved antibody treatment called Lecanemab—as “very encouraging.” Eli Lilly submitted donanemab for FDA approval yesterday.
• Air-quality alerts covered much of the northern half of the United States Monday as smoke from hundreds of Canadian wildfires continues to drift south. Air quality is expected to remain at unhealthy levels throughout this week, and meteorologists don’t foresee a more permanent reprieve from the bad air until September, when rainfall should help put out the fires.
• District Court Judge Joseph Seidlin put a temporary hold on Iowa’s new abortion law on Monday, preventing enforcement of the legislation—which prohibits most abortions after a fetal heartbeat is detected, generally around six weeks gestation—while a challenge to the law proceeds. He argued in the ruling that the petitioners’ challenge to the law is likely to succeed, so a temporary injunction is warranted. 
• Ohio Secretary of State Frank LaRose launched a Senate bid on Monday, becoming the third prominent Republican to enter the race to unseat Sen. Sherrod Brown, the Democratic incumbent. Republican state Sen. Matt Dolan and Cleveland businessman Bernie Moreno have already announced their candidacies, setting up a contentious Republican primary battle. Both Dolan and Moreno ran in the 2022 Senate primary that J.D. Vance won—Dolan finished a strong third with 23 percent of the vote while Moreno dropped out before the election.

Bibi Slices the Salami 

What if we told you sliced salami is the going metaphor to encapsulate the current situation unfolding in Israel over the country’s judiciary? No, really. 

Prime Minister Benjamin Netanyahu hit pause on a sweeping judicial reform package in March, but the game is back on—this time with only one of the several original proposals on the table. Opponents of the reforms—some of whom have been seen brandishing plastic salamis at recent protests—say Netanyahu is passing one “slice” at a time to try to make the reforms more palatable. On the other hand, “the ‘salami tactic’ is how the Supreme Court got its current power,” Eugene Kontorovich, professor at George Mason University Scalia Law School and scholar at the right-leaning, Israel-based Kohelet Policy Forum, tells TMD. “They didn’t do it in one day.” 

The slice of the reform currently on the table—limiting the court’s use of the “reasonableness” test—is a significantly pared-back version of the original package, and Bibi is hoping to enact it before parliament’s summer session concludes at the end of the month. The concessions, however, weren’t enough to stave off more protests and strikes—including by military reservists—which have ramped up again in response to the renewed push. 

As we’ve noted before, Israel has no written constitution, but rather a series of “basic laws”—and the country’s Supreme Court has accumulated significant authority to strike down legislation, administrative actions, and even government appointments it views as contrary to Israel’s founding principles. The result of a 1990s “Constitutional Revolution” which saw the court expand its powers is a left-leaning body which bedevils conservative lawmakers. 

Netanyahu made judicial reform a campaign promise last year during an election that saw him retake the premiership with the most right-wing coalition in Israeli history. The original package of changes was robust, as Harvest detailed in February amid the first wave of protests which brought at least 100,000 demonstrators against the reforms out in front of the Knesset—the Israeli parliament. Among other proposals, the overhaul included provisions that would allow a Knesset vote to override Supreme Court rulings and functionally eliminate the court’s “reasonableness” test, which purports to allow the court to strike down government actions not in the public good. 

The court used the doctrine as recently as January to strike down one of Bibi’s cabinet appointments. The court called the appointment of Aryeh Deri—who was twice-convicted of criminal offenses, including taking a plea deal for charges of tax fraud—“extremely unreasonable,” noting the plea bargain had suggested Deri would quit politics. 

Both sides of the debate claim they’re trying to defend Israeli democracy. Opponents of the reforms argue they transfer too much power into the hands of the Knesset’s governing majority, removing essential checks and balances and damaging the rule of law. Without a constitution, and in a parliamentary system where the legislative and executive branches are combined, efforts to limit the court’s power is seen by opponents as a step toward autocracy. “This reasonability bill […] is a minor component of the reform that was never the most important part,” Alex Lederman, policy and communications associate at the New York-based Israel Policy Forum, tells TMD. “But legal professionals are still pointing out the ways in which it will leave a black hole that will make it difficult for the courts to prevent corruption and deployment of corrupt officials.” 

The reforms’ defenders, meanwhile, argue the changes are long-overdue, reining in an extreme, out-of-touch, activist court. “Israel is a democracy in name, but is in actuality a juristocracy,” Gadi Taub, senior lecturer in the School of Public Policy and the Department of Communications at the Hebrew University of Jerusalem, tells TMD. “We are ruled by judges and legal counsel.” 

The once-expansive package has been whittled down over the last three months. When boycotting military reservists sparked national security concerns in March, Bibi agreed to negotiate with the opposition for the sake of military cohesion. Those negotiations, brokered by Israeli President Isaac Herzog, collapsed in May without a plan the Knesset’s most left-wing members would’ve supported. In a late-June interview with the Wall Street Journal, however, Netanyahu said he had decided to permanently drop the highly controversial “override clause.” Instead, Bibi and his government moved ahead with the “reasonableness” change, one of the less controversial elements of the original plan. Last Monday, the Knesset passed the law curtailing the reasonableness test in its first of three “readings” before parliament.

The move sparked renewed outrage in the streets and in the military ranks. In the lobby of the Knesset ahead of the vote, protesters tried to glue themselves to the floor before police removed them. A “day of disruption” Tuesday saw thousands of protesters block major highways, cause disruptions at Ben Gurion International Airport, and clash with police. Protests continued over the weekend, with tens of thousands gathering in Tel Aviv and elsewhere. 

Reservists are once again threatening to stop showing up for training. This time—instead of warning his boss the reforms could risk national security—Defense Minister Yoav Gallant is scolding the soldiers. “Calls that are being heard these days encouraging refusal and halting the volunteering of reservists threaten the unity of the ranks, are dangerous, and are a reward for our enemy,” he said Tuesday. Conflict on the northern border with Lebanon recently has underscored the importance of Israel’s military readiness. 

The U.S. has been unusually vocal about the domestic affairs of its closest Middle Eastern ally. 

In response to last week’s protests, the White House National Security Council issued a warning to authorities in Israel to respect the right of peaceful assembly. President Joe Biden, Secretary of State Antony Blinken, and the outgoing U.S. Ambassador to Israel Tom Nides have all urged the ruling coalition to seek consensus before moving forward with its reforms. 

But Herzog arrives in D.C. today to clearer air—figuratively, at least, since wildfire smoke is still blanketing the nation’s capital—after a call between Netanyahu and Biden Monday during which the two agreed to meet, likely before the end of the year. Bibi said the U.S. president had invited him to the U.S., but National Security Council spokesman John Kirby was even more vague, saying the two would meet, but that the “wheres and whens are still being worked out.” Biden has faced some criticism, including an oblique jab from Netanyahu himself, for not having invited the Israeli premier to the White House during Bibi’s current term. 

It’s not clear whether Netanyahu’s government will move forward with the other slices of the reform salami in the next legislative session. If it does, the next piece would likely be aimed at altering the structure of the committee which chooses judges, making elected members of the Knesset the dominant force in their selection. 

Some of the prime minister’s allies are dissatisfied with the turn the package has taken. Taub is one of them: “On the right, it’s a great disappointment that from the big reform we’re left with these peanuts.” 

Another FTC Court Failure

“Why are you losing so much?” “My problem here today is that you’re a bully.” “You are a brilliant woman.” “Do you have any books that are checked out from the library that are overdue?” Congress just can’t make up its mind about Federal Trade Commissioner Chair Lina Khan, as evidenced by the bipartisan blend of affection and ire directed at her during Thursday’s House Judiciary Committee hearing. Khan’s ambitious—but frequently failed—attempts to remake antitrust enforcement have inspired fierce critics and unlikely allies. That’s unlikely to change after her latest loss in the Microsoft-Activision Blizzard merger case—a nearly $69 billion deal that would mark the largest tech acquisition in history.

Since Khan was tapped by Biden to serve as chair in 2021, progressives and “hipster antitrusters”—who want to expand antitrust enforcement beyond a narrow focus on low prices and consumer choices—have lined up behind her as the standard bearer for taking on corporate monopoly power. Khan’s initial claim to fame was a provocative article in the Yale Law Review on “Amazon’s Antitrust Paradox,” which argued, “the current framework in antitrust—specifically its pegging competition to ‘consumer welfare,’ defined as short-term price effects—is unequipped to capture the architecture of market power in the modern economy.” Khan believes that, particularly for big tech companies, consolidation “across distinct business lines may prove anticompetitive” and that the FTC should scrutinize such mergers.

But Khan’s ambitions to expand antitrust enforcement have also made her a target of criticism on the Hill, where some pro-business conservatives see the chair’s campaign as anathema to antitrust law properly understood. Her leadership hasn’t exactly been popular inside the agency, either. Employee confidence in senior leadership has plummeted under her term, and the FTC has suffered increasing departures recently (including some very public ones). Bloomberg first reported Friday that Khan intends to name law firm partner Henry Liu as the agency’s top competition official to replace retiring competition bureau director Holly Vedova. 

The 34-year-old wunderkind of the left faced a barrage of criticism from conservative Republicans on the Judiciary Committee, including its chair, Rep. Jim Jordan, who prodded Khan for “harassing Twitter” since Elon Musk’s takeover last year. Rep. Darrell Issa—a Republican of California, former tech CEO, and Congress’ wealthiest sitting member—summed up his skepticism toward Khan’s approach: “I believe you’ve taken the idea that companies should have to be less competitive in order to merge, that every merger has to be somehow bad for the company and good for the consumer, a standard that cannot be met.”

Still, some populist-leaning Republicans, such as Rep. Ken Buck of Colorado and Rep. Matt Gaetz of Florida, praised Khan’s work on scrutinizing big tech companies. “You know how much it costs to buy Congress?” Buck asked, chiding his colleagues who take money from Silicon Valley. “Big Tech does. They spent $250 million against the bills that passed out of this committee last Congress. They spent money lobbying. They spent money on advertising in members’ districts. They spent money with third-party think tanks.” Buck has joined with Democrats in cosponsoring proposals to reform and expand antitrust laws to tackle digital markets and concentration. 

“This hearing revealed that there’s actually a pretty strong desire on the right to do something about monopoly power,” Matt Stoller, the director of research at the hipster antitrust competition policy think tank the American Economic Liberties Project, tells TMD. 

On the other side of the aisle, Democrats were largely laudatory toward Khan, commending her willingness to take “on big tech and the monopoly powers that allow them to use our data and snuff out small businesses competitors,” said Democratic Rep. Pramila Jayapal, chair of the Congressional Progressive Caucus.

Several Republican committee members emphasized the FTC’s losing track record of suing to block mergers under Khan’s tenure, asking if Khan was intentionally losing cases to pressure Congress to strengthen antitrust laws. “We only bring lawsuits where we believe there is a law violation given the facts in the law at hand,” Khan testified repeatedly in response to a tough line of questioning from GOP Rep. Kevin Kiley of California.

The commission has lost two high-profile merger challenges this year, most recently fumbling a lawsuit to block Microsoft’s merger with video game company Activision Blizzard. Microsoft makes Xbox video game consoles, and the FTC argued that if the software company bought a video game development studio, it could make its games Xbox-only, excluding the PlayStation consoles of its competitor Sony. Activision Blizzard makes some of the most popular video games including Call of Duty, Candy Crush, and World of Warcraft. 

These so-called vertical mergers—meaning a tie-up of companies in different places along the same supply chain—are less frequently litigated and harder to successfully challenge than horizontal mergers of direct competitors. Until the Justice Department’s failed challenge to the AT&T and Time Warner merger in 2017, there hadn’t been a litigated vertical merger in four decades.

This challenge met the same fate. “The court finds the FTC has not shown a likelihood it will prevail on its claim this particular vertical merger in this specific industry may substantially lessen competition,” District Court Judge Jacqueline Scott Corley, a Biden appointee,  concluded. Corley rejected the FTC’s request for a preliminary injunction, and the Ninth Circuit Court of Appeals rejected the agency’s subsequent appeal of the decision. 

This isn’t the only high-profile merger the FTC has recently attempted—and failed—to block. In February, a federal judge denied the agency’s request to block Meta’s acquisition of a virtual-reality startup. But some supporters of Khan’s approach argue the recent court losses don’t paint the whole picture. “I don’t think you should judge law enforcers based on whether they win every case,” Stoller tells TMD. “What will often happen is, they’ll challenge a merger, and the parties will just say, ‘Okay, well, we’re not going to fight this one, we’re going to walk away,’ and they’ve had a lot of abandonments.” On a per year basis, the FTC has seen more abandonments to challenged deals under the Biden administration than the Trump administration. “It’s fair to say there’s been a chilling effect,” Brian Albrecht, chief economist at the International Center for Law and Economics, tells TMD. 

Lest you think Khan’s only busy losing court cases, there’s lots of other stuff going on. She noted at the hearing that FTC enforcement actions returned more than $392 million to almost 2 million consumers in 2022. The new regulatory actions and crack downs include:

• Securing $520 million from Epic Games over deceptive charges and privacy violations 
• Overhauling merger filing rules to give the FTC more time and information to review proposed deals 
• Moving to ban non-compete agreements
• Proposing a new “click to cancel” rule for subscriptions
• Exploring requirements that companies provide repair instructions with appliances 
• Proposed a rule to prohibit companies from using fake reviews and testimonials

But all the rulemaking will likely need to be defended in court. “If you want a durable change in policy and doctrine, you have to win cases,” William Kovacic, the former FTC chair during the George W. Bush administration, told the Financial Times. Meanwhile, efforts from Congress to expand antitrust authority—for example, empowering competition enforcers to scrutinize big tech companies’ suspect business practices—have stalled.

And the clock is ticking for Khan. She has a little over a year left in her term as chair, and she is reportedly planning to take on her white whale—Amazon—in the coming months. It remains to be seen whether she can turn the agency’s losing track record around. “I think all of us appreciate how these windows of opportunity, where there’s a big mandate for change, can be quite fleeting and rare,” Khan said at a summit last April. “We really feel a big responsibility to take full advantage of it.”

Worth Your Time

• “From the beginning, Nkechi knew that she and Subomi had ‘no business dating,’” Krithika Varagur writes in a story for Harper’s Magazine about sickle cell disease in Nigeria—and about the moral quandaries of choosing children when we can know the genetic risks awaiting them. “There was a 50 percent chance that any child they had would suffer from sickle cell disease like their father. This was no light prospect. Subomi’s own childhood had been marred by secrecy and shame over his condition. Nkechi, meanwhile, had lost four cousins to the disease. Those deaths might be understood as products of an earlier, benighted time, when the average Nigerian knew far less about genetic testing and disease management. Today, however, there was a growing consensus—particularly in their college- educated, upper- middle- class milieu—when it came to passing on two sickle cell genes: don’t risk it. But how, and when, do you weigh risk against attachment?”

Presented Without Comment

Financial Times: Typo Leaks Millions of US Military Emails to Mali Web Operator

“Despite repeated warnings over a decade, a steady flow of email traffic continues to the .ML domain, the country identifier for Mali, as a result of people mistyping .MIL, the suffix to all US military email addresses.”

Also Presented Without Comment

The Hill: Minnesota AG [Keith Ellison] Compares Clarence Thomas to House Slave in ‘Django Unchained’

Toeing the Company Line

• It’s Tuesday, but Dispatch Live is off tonight—we’ll see you next week!
• In the newsletters: The Dispatch Politics team reports on Sen. Ted Cruz’s upcoming re-election bid and Kevin dives into (🔒) the many problems presented by a wealth tax.
• On the podcasts: David and Sarah are joined on Advisory Opinions by Berkeley law professor Amanda Tyler for a wrap of the Supreme Court term that bounces from Mallory v. Norfolk Southern Railway Co. to Abraham Lincoln and habeas corpus.
• On the site today: Adam White reflects on the recent Supreme Court term and Walter Olson looks at Arlington, Virginia’s decision to scrap ranked-choice voting ahead of this November’s general election.

Let Us Know

Do you think the recent changes to the Israeli judicial reforms improve or weaken the proposal?