WEBVTT - A Top Antitrust Lawyer on How Increased Competition Could Fight Inflation 0:00:10.640 --> 0:00:14.240 Hello, and welcome to another episode of The Odd Lots Podcast. 0:00:14.360 --> 0:00:18.799 I'm Tracy Alloway and I'm Joe Wasn't Joe? Have I 0:00:18.840 --> 0:00:24.880 ever told you my favorite conspiracy theory? Uh? No, but 0:00:25.120 --> 0:00:28.440 I'm not surprised you have a favorite conspiracy theory. I 0:00:28.480 --> 0:00:30.600 don't know what it is. However, I'll try not to 0:00:30.640 --> 0:00:34.040 take that personally. Um, but my favorite conspiracy theory is 0:00:34.080 --> 0:00:36.120 a favorite and has something to do with a silver 0:00:36.240 --> 0:00:40.880 price suppression. Well, now, wait a second, that conspiracy theory 0:00:40.920 --> 0:00:44.879 actually turned out to be true. But anyway, Okay, we're 0:00:44.920 --> 0:00:46.680 going to go on a really long tangent if we 0:00:46.760 --> 0:00:50.000 keep heading in that direction. No, my favorite conspiracy theory 0:00:50.360 --> 0:00:54.120 is well, it has to do with inflation, um, and 0:00:54.240 --> 0:00:58.520 eggs and cholesterol. And yeah, this is a good one. 0:00:58.600 --> 0:01:01.360 Not many people know this, but in the nineteen sixties 0:01:01.480 --> 0:01:05.240 when there was high inflation and uh, the president was 0:01:05.480 --> 0:01:08.720 very worried about it. This is Lyndon B. Johnson. Back then, 0:01:09.200 --> 0:01:11.120 he was trying to come up with all these different 0:01:11.120 --> 0:01:15.319 ways to maybe get prices to start coming down, and 0:01:15.400 --> 0:01:19.360 one of the things he did was target eggs and 0:01:19.400 --> 0:01:23.760 he basically told the Surgeon General to issue alerts um 0:01:23.800 --> 0:01:27.280 all about the risk of cholesterol in eggs to try 0:01:27.280 --> 0:01:31.880 to get people to buy fewer of them. And you know, 0:01:32.000 --> 0:01:35.440 even to this day, people still think there's lots of 0:01:35.520 --> 0:01:39.360 cholesterol in eggs and that they're unhealthy. And a lot 0:01:39.400 --> 0:01:42.720 of that traces back to Lyndon Johnson trying to fight 0:01:42.760 --> 0:01:47.319 inflation fifty years ago or sixty years ago. I should say, So, 0:01:48.040 --> 0:01:50.360 you said this is a conspiracy theory, But is it true, 0:01:50.640 --> 0:01:52.920 Like did this actually happen or is it just people 0:01:53.000 --> 0:01:55.640 think this was the sequence of events? No? No, no, 0:01:55.680 --> 0:02:00.360 this actually happened. But basically there was a conspiracy to 0:02:01.160 --> 0:02:04.400 tell the public that eggs were terribly unhealthy when in 0:02:04.480 --> 0:02:08.800 fact they aren't. That's crazy. So the reason I'm bringing 0:02:08.840 --> 0:02:13.119 it up is because there are clearly concerns about inflation 0:02:13.520 --> 0:02:16.480 right now. I think um CPI is at something like 0:02:16.520 --> 0:02:21.000 six point eight percent, and when people think about inflation, 0:02:21.280 --> 0:02:24.400 I think the first thing their minds turned to is 0:02:24.880 --> 0:02:28.440 interest rates and monetary policy. Inflation is high, so maybe 0:02:28.440 --> 0:02:32.280 the Fed should start raising rates, But of course there 0:02:32.280 --> 0:02:38.280 are these different ways to actually try to bring prices down. Right. 0:02:38.520 --> 0:02:42.040 This is really the key thing, which is that you know, obviously, 0:02:42.639 --> 0:02:44.880 you know, people think of inflation is the purview of 0:02:44.880 --> 0:02:49.040 the FED and monetary policy and monetary aggregate Milton Friedman, 0:02:49.160 --> 0:02:53.800 Inflation is always an everywhere monetary phenomenon. But like we 0:02:53.919 --> 0:02:55.840 see it this year, if we had if we had 0:02:55.919 --> 0:02:59.320 had to say, like more used cars or more semiconductors 0:02:59.360 --> 0:03:02.680 to make cars or etcetera, we know that headline inflation 0:03:02.960 --> 0:03:05.360 would be lower, and that's just a fact. And so 0:03:05.440 --> 0:03:10.200 like we clearly see the existence, especially right now, what 0:03:10.240 --> 0:03:13.240 I would say is non monetary inflation. And maybe some 0:03:13.280 --> 0:03:15.799 economists would get annoyed by that or they would disagree 0:03:15.919 --> 0:03:19.200 or whatever, but like we could point to maybe overall 0:03:19.280 --> 0:03:21.639 it's not just about bottlenecks or whatever, but we could 0:03:21.680 --> 0:03:25.320 certainly point to at times the existence of forces that 0:03:25.360 --> 0:03:28.480 are not clearly related to the faith that push up 0:03:28.600 --> 0:03:32.519 the aggregates of price and disease without question. And you know, 0:03:32.560 --> 0:03:35.119 in other areas like medical care, like and I don't 0:03:35.120 --> 0:03:37.640 think like the high cost of medical care is something 0:03:37.680 --> 0:03:42.920 that like obviously is attributable to monetary policy, no um. 0:03:42.960 --> 0:03:46.760 And we are starting to see politicians pay more attention 0:03:46.920 --> 0:03:50.280 to these specific issues. So we've been talking a lot 0:03:50.320 --> 0:03:55.720 about attempts to ease supply chain congestion, and I have 0:03:55.760 --> 0:03:59.400 to say one of the more interesting efforts that is 0:03:59.480 --> 0:04:04.880 currently going on has to do with antitrust legislation, which 0:04:05.000 --> 0:04:07.400 is not necessarily something that you would think of when 0:04:07.400 --> 0:04:10.640 you think of supply chain problems. Yeah, no, I think 0:04:10.680 --> 0:04:13.680 that's like really interesting. And you know, obviously these are 0:04:13.720 --> 0:04:17.920 sort of like slow moving things and they're probably a 0:04:17.960 --> 0:04:20.240 limit to what you could do in the next few months. 0:04:20.279 --> 0:04:23.880 But the idea that a few companies have incredible amount 0:04:23.920 --> 0:04:27.880 of buying power because of concentration, because of lack of competition, 0:04:28.440 --> 0:04:31.240 it seems like a very interesting avenue and one that 0:04:31.320 --> 0:04:33.839 even at least in the medium to longer term, if 0:04:33.839 --> 0:04:36.840 not right away in the next few months, could increase 0:04:36.920 --> 0:04:39.720 the sort of like productive capacity overall if we have 0:04:39.839 --> 0:04:44.440 more competitive markets exactly. So we are going to be 0:04:44.600 --> 0:04:47.480 digging into that question of whether or not you can 0:04:47.600 --> 0:04:52.520 use antitrust enforcement to try to bring down inflation and 0:04:52.600 --> 0:04:56.320 ease some of these supply constraints bring down things like 0:04:56.360 --> 0:04:59.320 food prices. And we do have the perfect guest to 0:04:59.440 --> 0:05:02.240 talk about. We're going to be speaking with Craig Sebald. 0:05:02.279 --> 0:05:06.120 He's a partner at Vincent and Alkins and an expert 0:05:06.200 --> 0:05:09.480 in anti trust. So, Craig, welcome to the show. Well, 0:05:09.520 --> 0:05:11.840 Tracy and Joe, it's my pleasure to be with you, 0:05:11.920 --> 0:05:14.039 and I'm excited to talk to you about some of 0:05:14.040 --> 0:05:18.080 my favorite subjects, anti trust, politics, and a little history. Great, 0:05:18.360 --> 0:05:20.120 I had a question for you too. I really I 0:05:20.160 --> 0:05:22.600 worked on this because it's hard to combine a joke 0:05:22.680 --> 0:05:25.920 that includes anti trust and supply chain. But here it goes, 0:05:26.320 --> 0:05:28.919 how many anti trust lawyers does it take to change 0:05:28.920 --> 0:05:32.960 a light bulb? How many? None? The light bulbs are 0:05:33.040 --> 0:05:38.280 late and not shipping. So that was pretty good. I 0:05:38.320 --> 0:05:40.680 like it. I like it. It's solid, it's tough materially 0:05:40.680 --> 0:05:45.680 anti trust. That's the best I can do. Well, I mean, 0:05:45.760 --> 0:05:48.240 on that note, maybe you could just to begin with 0:05:48.320 --> 0:05:52.440 you could start by defining what antitrust actually is and 0:05:52.520 --> 0:05:56.880 how it could relate to supply chain problems. Yeah, let 0:05:56.880 --> 0:06:00.000 me just give you a quick overview. In the United 0:06:00.080 --> 0:06:05.360 the States, we have three basic antitrust laws, and well, 0:06:05.480 --> 0:06:08.880 in the United States, high prices in ament themselves are 0:06:08.920 --> 0:06:12.760 not in any trust violation. We do worry and the 0:06:12.800 --> 0:06:17.240 greatest sin for the any trust area is actions that 0:06:17.240 --> 0:06:20.719 were that cause higher prices. So we have three laws 0:06:20.720 --> 0:06:22.800 as always saying. One is the Sherman Act, and the 0:06:22.800 --> 0:06:26.240 German Act goes back to have Sherman Act Section one, 0:06:26.360 --> 0:06:30.760 which regulates agreements and restraint and trade, and we're looking 0:06:30.800 --> 0:06:34.480 at price fixing, bid rigging, those type of agreements between 0:06:34.520 --> 0:06:38.440 competitors that raise prices. Those are illegal. The second major 0:06:38.560 --> 0:06:42.200 antitrust law we have is Section two of the Sherman Act, 0:06:42.360 --> 0:06:45.640 which regulates monopolies. This is getting a lot of press 0:06:45.720 --> 0:06:50.240 these days because the government's challenges to Google, to facebooks, 0:06:50.440 --> 0:06:55.040 those are all under Section two. What's interesting under our law, 0:06:55.320 --> 0:06:58.560 it's not illegal in the United States to be a monopolist, 0:06:58.920 --> 0:07:02.280 but it's illegal to engage in monopolization. And what do 0:07:02.320 --> 0:07:04.920 I mean by that. It means it's okay to be 0:07:04.960 --> 0:07:07.880 big in the United States, but it's not okay to 0:07:08.000 --> 0:07:10.800 be big and do bad things. And one of the 0:07:10.840 --> 0:07:14.680 bad things could be taking actions to raise prices. And 0:07:14.720 --> 0:07:17.000 so one of the things that we worry about with 0:07:17.080 --> 0:07:19.960 the big tech companies is what actions they're doing to 0:07:20.080 --> 0:07:23.640 make markets less competitive. And then finally, we have our 0:07:23.680 --> 0:07:26.080 merger control laws, which go back to the Clayton Next 0:07:26.160 --> 0:07:30.600 section seven, which regulate anti competitive mergers. And when we 0:07:30.640 --> 0:07:32.800 review mergers, and we have a whole regime here in 0:07:32.840 --> 0:07:35.160 the United States. Um and actually we have a unique 0:07:35.200 --> 0:07:38.400 system in the United States because we have to antitrust agencies. 0:07:38.680 --> 0:07:41.080 One wasn't apparently not good enough for the United States. 0:07:41.120 --> 0:07:44.680 We have the Justice Department Antitrust Division and the Federal 0:07:44.720 --> 0:07:49.120 Trade Commission, both with authority to investigate matters under the 0:07:49.120 --> 0:07:52.600 intrust draws challenged mergers. And the greatest sin with mergers 0:07:52.720 --> 0:07:56.600 is a merger that increases concentration and raises prices. So 0:07:57.240 --> 0:08:00.520 increased prices through bad actions are something that the antitrust 0:08:00.600 --> 0:08:03.720 laws are good at going after. So let me ask 0:08:03.760 --> 0:08:07.480 you a question about anti trust as applied. Because there 0:08:07.640 --> 0:08:11.680 is our antitrust regulation, there is an impression and that 0:08:11.840 --> 0:08:15.760 in recent years that by and large anti trust on 0:08:15.800 --> 0:08:18.400 any of the avenues that you identified has not been 0:08:19.040 --> 0:08:22.960 pursued particularly vigorously. That in the past our anti trust 0:08:23.000 --> 0:08:25.560 laws were taken more seriously, that regulator has had a 0:08:25.560 --> 0:08:29.680 greater appetite to enforce them, whatever they are, and that 0:08:29.880 --> 0:08:32.120 by and large these days there's not a lot of 0:08:32.280 --> 0:08:35.319 regulatory activity, or there hasn't been up until recently. Is 0:08:35.360 --> 0:08:38.080 that a fair characterization or is that just sort of 0:08:38.120 --> 0:08:40.440 like a medium meth, you know, I would say it's 0:08:40.480 --> 0:08:45.000 a mixed record. Over the last few years, we are clearly, 0:08:45.040 --> 0:08:49.200 I think, poise for much more antitrust enforcement. The Biden 0:08:49.200 --> 0:08:53.720 administration any trust regulators are very aggressive and has signaled 0:08:53.760 --> 0:08:56.200 that they're going to be aggressive in the market. There's 0:08:56.240 --> 0:08:59.679 almost an attitude of what's happened before didn't work, We're 0:08:59.679 --> 0:09:02.760 gonna change things and do more. When I say it's 0:09:02.760 --> 0:09:05.839 a mixed record, when we look at enforcement, we've been 0:09:05.880 --> 0:09:08.760 fairly strong in terms of our criminal enforcement, and that's 0:09:08.760 --> 0:09:11.320 an important point. The anti trust laws in the United 0:09:11.320 --> 0:09:14.920 States are prosecuted both criminally, so people go to jail 0:09:14.960 --> 0:09:18.600 for anti trust crimes and civilly, and so the criminal 0:09:18.679 --> 0:09:21.840 enforcement program has been very active. In the last twenty years. 0:09:21.880 --> 0:09:25.680 There's been a lot of cases involving international cartels, and 0:09:25.840 --> 0:09:30.160 both Republican and Democratic administrations have gone after them. There's 0:09:30.160 --> 0:09:33.520 been a fairly rigorous merger enforcement, although I think there's 0:09:33.600 --> 0:09:36.120 questions about whether we've let too many mergers go through, 0:09:36.240 --> 0:09:39.120 and we'll talk about that as we talk about shipping. 0:09:39.600 --> 0:09:41.960 The one area there hasn't been many cases, and I 0:09:42.000 --> 0:09:45.439 do signal a change in this is the monopolization cases 0:09:45.600 --> 0:09:47.680 you look at, you know, just a couple of years ago, 0:09:47.720 --> 0:09:52.040 we were bringing zero monopoly cases and uh, that started 0:09:52.080 --> 0:09:54.120 to change at the end of the Trump administration with 0:09:54.240 --> 0:09:57.160 the high tech suits, and so I think they're looking 0:09:57.160 --> 0:10:02.880 to reinvigorate the monopolization cases that they're they're looking at 0:10:02.920 --> 0:10:06.200 these days. So you sort of tease this a few 0:10:06.240 --> 0:10:08.800 minutes ago when you when you mentioned that we're going 0:10:08.840 --> 0:10:11.679 to get into some history. But one of the interesting 0:10:11.960 --> 0:10:16.040 things when it comes to supply chains and antitrust is 0:10:16.080 --> 0:10:21.160 that there's actually a carve out for shipping companies. So 0:10:21.280 --> 0:10:25.600 there's an antitrust exemption. Could you maybe walk us through 0:10:26.240 --> 0:10:29.559 what that is and how that came to be. So 0:10:29.640 --> 0:10:33.920 in the antitrust general, there are exemptions to the antitrust rules. 0:10:34.480 --> 0:10:37.600 The courts have been very consistent in saying anti trust 0:10:37.640 --> 0:10:41.880 exemption should be applied very carefully and they should construed 0:10:42.240 --> 0:10:45.960 very nearly. One of the most famous antitrust exemptions that 0:10:46.040 --> 0:10:49.679 exist is Major League Baseball. There is an exemption from 0:10:49.679 --> 0:10:53.360 Major League Baseball. They are not challenged. What's interesting, They 0:10:53.400 --> 0:10:56.840 get the benefit of that. But other professional sports football, 0:10:57.320 --> 0:11:00.720 the n c a, A, golf, others words don't have 0:11:00.760 --> 0:11:03.160 the benefit of that. So that's a very famous one. 0:11:03.160 --> 0:11:06.280 And actually there was some concern the summer over even 0:11:06.320 --> 0:11:10.000 that exemption, because when Baseball decided not to have its 0:11:10.200 --> 0:11:13.079 um All Star Game in Georgia this summer, there was 0:11:13.120 --> 0:11:15.480 some talk about getting read of that exemption. Putting that 0:11:15.520 --> 0:11:19.560 side talking about the shipping exemption. So it goes back 0:11:19.640 --> 0:11:22.760 to this notion that shipping used to be a highly 0:11:22.840 --> 0:11:28.080 regulated area, and so because of the highly regulatory nature 0:11:28.120 --> 0:11:30.960 of it, that there was felt that the shippers would 0:11:30.960 --> 0:11:34.560 need to be able to work together to organize how 0:11:34.640 --> 0:11:39.960 they ship freight, to maximize storage capacity, to work together 0:11:40.000 --> 0:11:43.880 on rates, and so because of this regulatory structure, there 0:11:43.960 --> 0:11:47.920 was given an antitrust exemption, and the exemption allowed that 0:11:47.920 --> 0:11:52.240 that the shippers could agree on rates tariffs they charge 0:11:52.679 --> 0:11:56.520 so long as those were filed with the Federal Maritime 0:11:56.679 --> 0:12:01.840 Commission and approved by the Federal Maritime Commission. So you 0:12:01.840 --> 0:12:05.200 can have a classic cartel, but so long as under 0:12:05.200 --> 0:12:08.280 this exemption they were filed with the Federal Maritime Commission, 0:12:08.600 --> 0:12:11.240 it was allowed. That's kind of evolved over the years 0:12:11.280 --> 0:12:15.200 as we've had deregulation in the shipping industry, so that 0:12:16.200 --> 0:12:21.800 there is still then exemption, but it's fairly limited. You 0:12:21.800 --> 0:12:25.840 can still technically file tariffs, but people don't do that. 0:12:25.920 --> 0:12:29.720 All the shipping contracts are private contracts these days, so 0:12:29.800 --> 0:12:33.320 those are those are not any trust exempt. Where the 0:12:33.360 --> 0:12:36.439 exemption really lies is that you can have what they 0:12:36.440 --> 0:12:39.200 call conferences, and I think that's just a light way 0:12:39.480 --> 0:12:42.320 to talk about competitor meetings where you can have competitor 0:12:42.400 --> 0:12:46.199 meetings where they can talk about rates, but they can't 0:12:46.240 --> 0:12:49.240 agree upon the rates. Now they have to if they 0:12:49.280 --> 0:12:53.000 have if they talk about them. Again, it's this filing notion. Uh, 0:12:53.040 --> 0:12:55.120 they still have to file what they're talking about with 0:12:55.280 --> 0:12:58.319 the Federal Maritime Commission, but they can't agree on it. 0:12:58.600 --> 0:13:01.160 So it's a little odd, I have to admit, because 0:13:01.280 --> 0:13:04.320 it's a pretty fine line to be able to say, oh, 0:13:04.400 --> 0:13:08.080 we're gonna talk about rates and have a general agreement 0:13:08.160 --> 0:13:11.000 that we may or may not agree to. So it's 0:13:11.000 --> 0:13:14.880 a pretty fine line and it causes I think a 0:13:14.880 --> 0:13:18.160 lot of issues in the shipping industry. And as you say, 0:13:18.200 --> 0:13:19.839 it's not just one of the shipping industry. We see 0:13:19.880 --> 0:13:41.360 this in some other industries as well. So, first of all, 0:13:41.400 --> 0:13:43.240 when it comes to shipping, and you know, this is 0:13:43.480 --> 0:13:45.600 this is an area we've talked about a fair amount. 0:13:45.800 --> 0:13:49.320 Most of these companies are US based, and I'm just 0:13:49.480 --> 0:13:51.920 curious or the big ones anyway that we talked about. 0:13:52.200 --> 0:13:56.200 I'm just curious about the extent to which US regulators 0:13:56.480 --> 0:14:00.680 have reached into this space versus you know, how much 0:14:00.679 --> 0:14:04.080 does that further challenge the ability of US regulators, even 0:14:04.120 --> 0:14:09.360 in any legal regime, to do anything on shipping competitiveness 0:14:09.480 --> 0:14:11.880 the US Any trust laws, I would say, are not 0:14:12.200 --> 0:14:17.000 unlimited in their jurisdiction, but very fulsome in their jurisdictions. 0:14:17.000 --> 0:14:22.200 So any action caused by a foreign company that has 0:14:22.240 --> 0:14:27.120 a direct enforeseeable effect on US commerce is subject to 0:14:27.200 --> 0:14:30.960 challenge by the Justice Department. So you could have a conspiracy. 0:14:31.080 --> 0:14:32.840 We see this all the time in the cases I 0:14:32.840 --> 0:14:36.200 work on, where two companies to business people of real 0:14:36.360 --> 0:14:39.320 prices in some foreign country. They're even in the United States, 0:14:39.560 --> 0:14:42.240 but yeah, the US government can go challenge them and 0:14:42.360 --> 0:14:45.680 challenge the conduct in US sports. So a couple of 0:14:45.800 --> 0:14:48.680 years ago, there's this coalition of the shipping companies. They 0:14:48.680 --> 0:14:51.000 get together and talk about race, talking about something that 0:14:51.080 --> 0:14:54.600 we're just talking about under the exemption, and they came 0:14:54.920 --> 0:14:58.240 to San Francisco for their meeting. You knew who visited 0:14:58.280 --> 0:15:03.320 their meeting. Anti trust lawyers and the FBI. They came 0:15:03.360 --> 0:15:06.440 in and rated this meeting and they handed out subpoenas 0:15:06.760 --> 0:15:08.440 to everybody in the room. So I can you imagine 0:15:08.440 --> 0:15:11.240 you're in this hotel room with all these your it's, it's, it's, 0:15:11.280 --> 0:15:15.360 it's it's a group of shipping executives, and it's all 0:15:15.400 --> 0:15:17.200 the CEOs, all the top guys. So they all come 0:15:17.240 --> 0:15:19.520 to San Francisco for this meeting to talk about these 0:15:19.520 --> 0:15:21.880 things that they're allowed to talk about under the exemption, 0:15:22.360 --> 0:15:25.120 and who bust in is the FBI and the entrut 0:15:25.160 --> 0:15:28.680 Division handing out subpoenas like their candy. Clearly they did 0:15:28.680 --> 0:15:30.880 this investigation was interesting. They did an investigation of the 0:15:30.880 --> 0:15:34.080 shipping industry. I think they were worried about the alliances 0:15:34.200 --> 0:15:37.160 and some of the other things. Ultimately there were no 0:15:37.400 --> 0:15:41.000 action brought, so uh, you know, I think the exemptions 0:15:41.040 --> 0:15:44.000 did take a bit of a part of that and 0:15:44.440 --> 0:15:46.640 why the Justice Department didn't move forward on that. But 0:15:46.720 --> 0:15:50.080 it just shows you that the view that here you 0:15:50.160 --> 0:15:53.080 had thirteen fourteen four and executives all getting subpoenas, so 0:15:53.160 --> 0:15:57.200 that the jurisdiction is very broad from the Justice Department's perspective, 0:15:58.360 --> 0:16:02.960 Why don't we get into um like specific actions that 0:16:03.520 --> 0:16:07.760 the US government the antitrust authorities could take in order 0:16:07.800 --> 0:16:12.280 to remedy supply chain issues, because we already mentioned shipping, 0:16:12.640 --> 0:16:15.920 that's one aspect of it. But of course another thing 0:16:15.960 --> 0:16:19.720 they could do is try to go after large monopoly 0:16:20.000 --> 0:16:24.080 players in consumer goods and try to bring down prices 0:16:24.160 --> 0:16:27.280 that way. So could you maybe get into some specifics 0:16:27.320 --> 0:16:31.520 of what could happen here, what sort of enforcement actions 0:16:31.600 --> 0:16:35.800 are realistic. So there are several actually that are ongoing 0:16:36.000 --> 0:16:39.480 at the moment. The Federal Train Commission just announced that 0:16:39.520 --> 0:16:44.120 they're doing an investigation of the supply chain issues. They 0:16:44.200 --> 0:16:48.200 sent out inquiries to a number of US companies. These 0:16:48.240 --> 0:16:52.920 are the big companies like Amazon, Broger, Procter, and Gambill Tysons, 0:16:52.960 --> 0:16:55.000 those that are trying to bring products in the United 0:16:55.000 --> 0:16:57.280 States to try to understand what the problems are. So 0:16:57.680 --> 0:17:00.320 that's the first step. They're doing an investigation. Now, this 0:17:00.440 --> 0:17:03.280 is under a rule at the FTC that allows the 0:17:03.400 --> 0:17:08.760 FTC to investigate industry wide practices that may have any 0:17:08.760 --> 0:17:11.040 trust problems. So this is really a first step This 0:17:11.119 --> 0:17:14.320 is to say, is there an any trust competitive problem? 0:17:14.440 --> 0:17:16.760 What that could lead to if they say, gee, they're 0:17:16.800 --> 0:17:19.879 do soon to be any trust problems are investigations. The 0:17:19.960 --> 0:17:23.240 Justice Department or the FTC could open up civil The 0:17:23.280 --> 0:17:26.159 Justice Department could open a civil or criminal investigation of 0:17:26.359 --> 0:17:29.480 thinks that there are any trust problems. One of the 0:17:29.520 --> 0:17:34.480 problems about any trust though, is it is very very slow. 0:17:35.000 --> 0:17:39.399 So while we have these problems now, you know, investigation 0:17:39.640 --> 0:17:44.200 can take a year, two years. All any trust cases 0:17:44.640 --> 0:17:48.080 are driven by documents and evidence. It takes a long time, 0:17:48.240 --> 0:17:51.720 especially if you're getting them from foreign companies. It's it's 0:17:51.800 --> 0:17:54.560 can be troubling. There's issues about getting them from foreign companies. 0:17:54.640 --> 0:17:57.960 Quite frankly, foreign companies like China have blocking statutes which 0:17:58.000 --> 0:18:01.080 don't allow foreign companies to reduced documents to the U. 0:18:01.119 --> 0:18:04.000 S Government without the Chinese governments signing off on it. 0:18:04.359 --> 0:18:07.120 And so these investigations can get bogged down. And then 0:18:07.160 --> 0:18:10.400 even if they bring a case, anti trust cases are 0:18:10.880 --> 0:18:14.680 super slow, and so you could have a case filed 0:18:15.080 --> 0:18:18.320 and not even have a court date for four or five, six, 0:18:18.480 --> 0:18:22.160 seven years. So we could be on three different supply 0:18:22.240 --> 0:18:25.200 chain events past where we are today, before we start 0:18:25.240 --> 0:18:28.640 having any trust case about what's happening right now. So 0:18:28.880 --> 0:18:32.280 any trust can be helpful, but it's certainly not an 0:18:32.280 --> 0:18:37.399 immediate solution to the problems we're having today. So this 0:18:37.440 --> 0:18:40.040 actually leads me right into my next question. And you know, 0:18:40.119 --> 0:18:42.040 we sort of said in the intro it's like, oh, right, 0:18:42.040 --> 0:18:44.640 you know, well, we're talking about inflation right now. Anti 0:18:44.680 --> 0:18:47.280 trust isn't going to do anything in the next few months. 0:18:47.600 --> 0:18:49.600 But one of the themes that we come back to 0:18:49.720 --> 0:18:52.479 a lot on this show is that a lot of 0:18:52.480 --> 0:18:55.159 what we've run into now is this sort of like 0:18:55.280 --> 0:19:00.119 compounding price that we pay for diminished markets or at 0:19:00.119 --> 0:19:02.560 your feed markets. And we had this long period after 0:19:02.600 --> 0:19:06.399 the Great Financial Crisis in which many industries, maybe due 0:19:06.440 --> 0:19:09.440 to you know, usually talk about mediocre growth or mediocre 0:19:09.600 --> 0:19:14.040 and demand simply did not invest particularly much in capacity, 0:19:14.119 --> 0:19:16.160 and we pay the price. Now, maybe we don't pay 0:19:16.200 --> 0:19:18.760 the price during periods of low demand, but as soon 0:19:18.800 --> 0:19:22.720 as GDP grows rapidly, we pay the price of atrophied capacity. 0:19:22.800 --> 0:19:25.840 And I'm curious, like, okay, long term, like yeah, or 0:19:25.880 --> 0:19:29.520 we accepted in the short term anti trust can't do much, 0:19:29.880 --> 0:19:32.320 but what about in the medium or longer term, like 0:19:32.440 --> 0:19:35.200 is the idea that if we had more robust anti 0:19:35.240 --> 0:19:39.320 trust and we had more competitive markets as the norm, 0:19:39.359 --> 0:19:44.159 that perhaps productive economic capacity overall in any cycle would 0:19:44.160 --> 0:19:48.159 be greater than it is today. I think that's true. 0:19:48.600 --> 0:19:52.960 I think you'll see it, especially in merger enforcement. When 0:19:52.960 --> 0:19:54.800 I was in law school, I had a professor that 0:19:54.880 --> 0:19:57.960 talked about the fact that we see every forty years 0:19:58.000 --> 0:20:01.280 kind of the antitrust pendulums wing. When I was going 0:20:01.320 --> 0:20:04.880 to law school was right after the Regaan administration. Regulation 0:20:05.080 --> 0:20:08.840 was disfavored, let the markets do their own thing, let 0:20:09.000 --> 0:20:13.000 not have very big government enforcement. And I think you're 0:20:13.040 --> 0:20:18.240 starting to see this movement towards more regulation towards more enforcement. 0:20:18.280 --> 0:20:22.240 I think there is a realization by some of our lawmakers, 0:20:22.320 --> 0:20:25.840 by some of our regulators that maybe they let things 0:20:25.920 --> 0:20:28.960 go too far. So if you look, for instance, I'm 0:20:29.040 --> 0:20:30.960 involved in the case right now against some of the 0:20:31.040 --> 0:20:35.439 railroad companies for some logistics issues for some fees that 0:20:35.520 --> 0:20:38.439 they put in place almost twenty years ago at this point. 0:20:38.640 --> 0:20:40.240 But you're like a railroad industry. We used to have 0:20:40.320 --> 0:20:43.720 a very vibrant railroad industry with lots of competitors. It 0:20:43.720 --> 0:20:46.240 was highly regulated then we had this movement and make 0:20:46.320 --> 0:20:50.440 it not regulated, and now we're down to four major 0:20:50.520 --> 0:20:56.040 railroads which control almost of all the all the railroad 0:20:56.040 --> 0:20:59.040 traffic in the United States. And the same as was shipping, 0:20:59.119 --> 0:21:02.680 you had a American competitors, you have foreign competitors. From 0:21:02.680 --> 0:21:05.639 I understand, now you're down to basically nine shippers of 0:21:05.720 --> 0:21:09.760 control almost all of the export products in the United States. 0:21:09.800 --> 0:21:12.639 There are no US producers. And on top of it, 0:21:12.720 --> 0:21:15.800 you have these three alliances. And so I think you're 0:21:15.800 --> 0:21:19.360 starting to see people say, did we go too far 0:21:19.560 --> 0:21:22.960 and letting some of these mergers go through? And so 0:21:23.119 --> 0:21:25.600 I think you're seeing this reflected in that we need 0:21:25.640 --> 0:21:27.440 to take a harder look at some of the mergers 0:21:27.480 --> 0:21:31.000 going on now to make sure it doesn't go any further. So, 0:21:31.320 --> 0:21:35.760 just on that note, does it feel like attitudes towards 0:21:35.800 --> 0:21:39.960 antitrust enforcement are starting to change? And I guess another 0:21:39.960 --> 0:21:42.120 way of saying that is, does it feel like there's 0:21:42.119 --> 0:21:48.639 bipartisan support for more antitrust legislation? Inflation being one of 0:21:48.640 --> 0:21:51.439 the few things I think that both parties agree um 0:21:51.920 --> 0:21:55.000 is actually bad and so doing something or anything about 0:21:55.040 --> 0:21:57.960 it might be a good thing. I used to not 0:21:58.080 --> 0:22:02.160 worry about antitrust letters insolation, because I just never thought 0:22:02.240 --> 0:22:05.679 it had much of a chance to pass, because you 0:22:05.760 --> 0:22:09.639 always had the setup where the Democrats were more pro enforcement, 0:22:09.760 --> 0:22:13.240 more willing to think about new legislation, and then the 0:22:13.280 --> 0:22:17.199 Republican Party at least ten twenty thirty years ago, was 0:22:17.280 --> 0:22:22.359 the party of country club, Republicans chamber of commerce and 0:22:22.440 --> 0:22:26.760 didn't want to have it. That has changed dramatically in 0:22:26.840 --> 0:22:29.920 the last year or two, as you see the Republican 0:22:29.960 --> 0:22:34.360 Party move away from big business to become more populist. 0:22:34.880 --> 0:22:37.040 And so now you're seeing this merging of kind of 0:22:37.040 --> 0:22:41.160 the left, which has traditionally wanted anti trust enforcement in 0:22:41.200 --> 0:22:45.399 the right. Now that's more anti business. The summer I 0:22:45.440 --> 0:22:49.359 was struck. I was reading pulling from the Gallop organization 0:22:49.440 --> 0:22:54.320 that talked about confidence in big business, and they asked 0:22:54.560 --> 0:22:58.560 Republicans and Democrats whether they had a great deal or 0:22:58.680 --> 0:23:02.600 quite a lot of confidence in business. And just from 0:23:02.640 --> 0:23:06.440 this year to last year, Republicans confidence in big business 0:23:06.600 --> 0:23:11.560 declined by twelve point. Only only of Republicans have confidence 0:23:12.080 --> 0:23:15.720 in big business. And they track kind of the net 0:23:15.760 --> 0:23:18.480 confidence in each so the percentage, so that compares the 0:23:18.520 --> 0:23:22.880 percentage expressing high confidence in business minus those expressing little 0:23:22.960 --> 0:23:25.160 or no confidence. And so in the past, the Republican 0:23:25.240 --> 0:23:27.960 Party over years, I mean over decades was kind of 0:23:28.000 --> 0:23:31.399 plus ten, twelve, fifteen percent in favor of big business, 0:23:31.760 --> 0:23:36.080 you know where it was last year negative. That's incredible, 0:23:36.400 --> 0:23:39.959 it's incredible. So the Republican Party is no longer and 0:23:40.000 --> 0:23:42.199 it's really in line worth where the Democratic Party is. 0:23:42.680 --> 0:23:44.760 And so bringing it back to shipping, there was this 0:23:45.080 --> 0:23:46.960 kind of out of nowhere there was this new anti 0:23:47.000 --> 0:23:50.919 trust bill called Ocean Shipping Reform Act, and it was 0:23:51.000 --> 0:23:53.840 to kind of consistent when we're talking about give the 0:23:53.880 --> 0:23:58.560 Federal Maritime Commission more regulatory powers, more oversight powers, more 0:23:58.680 --> 0:24:00.840 teeth to worry about some of the things we've been 0:24:00.840 --> 0:24:05.360 talking about. The thing that amazes me this bill new 0:24:05.400 --> 0:24:08.440 any trust legislation passed in the House of Representatives. And 0:24:08.440 --> 0:24:10.560