Speaker 1: Hello, and welcome to another episode of the ad Thoughts Podcast.
Speaker 2: I'm Tracy Alloway.
Speaker 3: And I'm Joe Wisenthal.
Speaker 1: Joe, you remember last month we spoke with Jared Bernstein,
Speaker 1: who's the head of the White House Council of Economic Advisors,
Speaker 1: and we were talking about Bidenomics.
Speaker 3: Yeah. Great, chat always appreciates sort of getting a sense
Speaker 3: of how policy makers are thinking about things. And obviously
Speaker 3: we've talked a lot about this sort of like industrial
Speaker 3: policy domestic investment side, but there is still more.
Speaker 1: Yeah, So he outlined these kind of three basic planks
Speaker 1: of Bidenomics, and you already mentioned the big one, which
Speaker 1: is public investment slash industrial policy, whatever you want to
Speaker 1: call it. The second one is sort of empowering workers.
Speaker 1: And then there's this third one about promoting competition, and
Speaker 1: we touched on it with Jared. We spoke a little
Speaker 1: bit about how the Biden administration is approaching anti trust.
Speaker 1: But I think it's one of those topics we really
Speaker 1: need to get into because it keeps coming up in
Speaker 1: various ways.
Speaker 3: Can I just say I don't know anything about this topic.
Speaker 3: That's true for most episodes that we do, but I
Speaker 3: feel very comfortable saying that like when it comes you know,
Speaker 3: the law is not an area in which you know,
Speaker 3: I'm like you just like reading like cell side research
Speaker 3: about like Okay, the fit is going to do this,
Speaker 3: so inflation is going to do this. And when it
Speaker 3: comes to things like sort of like the legal philosophies
Speaker 3: related to mergers, et cetera, like I really genuinely know
Speaker 3: very little. All right, nothing.
Speaker 1: There's a market opportunity out there to become the antitrust
Speaker 1: guy on Twitter, so maybe that should be our goal,
Speaker 1: but you have to admit it does keep coming up. Yes,
Speaker 1: So we recorded an episode with Scott Hildenbrand recently about
Speaker 1: bank consolidation and whether or not we're going to be
Speaker 1: seeing a lot more bank mergers in the wake of
Speaker 1: the deposit drama in March. And then it came up again,
Speaker 1: I think on our episode with Josh Wolfe right where
Speaker 1: he was talking about how big tech companies are investing
Speaker 1: in artificial intelligence, but they're doing it in a very
Speaker 1: specific way to possibly evade regulatory scrutiny.
Speaker 3: Yeah, that was one of the things I hadn't appreciated before,
Speaker 3: and he pointed out that you have all these big
Speaker 3: companies making these huge investments VC looking investments in AI startups,
Speaker 3: and he posited that one reason they may be making
Speaker 3: these investments Microsoft and making investments Google making investments is because, well,
Speaker 3: maybe anti trust authorities aren't going to be very happy
Speaker 3: if they buy some of these companies, but they can
Speaker 3: maybe perhaps like make something that resembles a VC style investment.
Speaker 3: So it's coming up enough in different sectoral conversations that
Speaker 3: we have that I think we need to drill deeper
Speaker 3: into the environment right now.
Speaker 1: Absolutely well, I am very pleased to say that we two,
Speaker 1: in fact have the perfect guest. We're going to be
Speaker 1: speaking with Jonathan Canter, the Assistant Attorney General for the
Speaker 1: Anti Trust Division at the Department of Justice. So, Jonathan,
Speaker 1: thank you so much for coming on all thoughts, thank.
Speaker 2: You for having me. It's a pleasure to be with
Speaker 2: you today.
Speaker 1: Maybe just to begin with, you can give us an
Speaker 1: overview of what does anti trust actually mean in twenty
Speaker 1: twenty three versus you know, maybe in previous administrations or
Speaker 1: previous decades.
Speaker 2: Yeah, so let's take a look back through history and
Speaker 2: think about the importance of a competition and a competitive economy.
Speaker 2: It's been the cornerstone of our society since the Tea Party,
Speaker 2: but you can think back historically to Standard Oil and
Speaker 2: AT and t IBM Microsoft. At major inflection points in
Speaker 2: our economy, we've confronted monopoly choke points, and anti trust
Speaker 2: has been Some have referred to it as the magna
Speaker 2: carta free enterprise. It's the way in which we open
Speaker 2: opportunity so that companies who want to compete can compete
Speaker 2: on the merits. So anti trust can deliver lower prices,
Speaker 2: it can deliver better wages, better working conditions, It could
Speaker 2: deliver opportunities to build and grow a business. These are
Speaker 2: the arteries of commerce, and Congress made a value judgment
Speaker 2: over one hundred years ago that competition matters, and so
Speaker 2: our job is to enforce the law. And sitting here
Speaker 2: in twenty twenty three, you mentioned by the nomics. You
Speaker 2: mentioned the interest in anti trust globally and domestically, and
Speaker 2: that flows from, I think an appreciation on so many
Speaker 2: different dimensions that we can't have a democratic society, we
Speaker 2: can't have a free society, and we can't have a
Speaker 2: market based economy without opportunities for competition. And so our
Speaker 2: job is to enforce the law in order to keep
Speaker 2: competition thriving in our country and to do so in
Speaker 2: a way that's consistent with the will of Congress.
Speaker 3: So my impression is that historically, when it came to
Speaker 3: industry consolidation, which I guess on some level always maybe
Speaker 3: reduces the amount of competition out there, but that when
Speaker 3: it came to D street consolidation, a key factor was
Speaker 3: this idea. It's like, well, if a company has monopoly power,
Speaker 3: or if oligopoly power, then they can raise prices more
Speaker 3: and that's bad for consumers, and so that should be blocked.
Speaker 3: And my understanding is that there's been some evolution of
Speaker 3: thinking where maybe there's more than just raising prices. And
Speaker 3: obviously this comes up in tech because we use a
Speaker 3: lot of tech products that they don't charge us anything
Speaker 3: except for the check mark on Twitter, which I haven't
Speaker 3: paid for, but other than that, Like, so, so I
Speaker 3: get the impression that, like, the sort of thinking about
Speaker 3: what actually constitutes something that would harm competition has changed.
Speaker 2: So I guess I will start by saying, in many respects,
Speaker 2: nothing fundamentally has changed. The law is still exactly the
Speaker 2: same as it was when it was written. And the
Speaker 2: law says, for example, in the context of mergers, that
Speaker 2: we should prevent mergers that's may substantially lessen competition or
Speaker 2: tend to create a monopoly, and that we should bring cases,
Speaker 2: or we should prevent monopolization of markets or restraints of trade.
Speaker 2: The law and competition hasn't changed, and that the benefits
Speaker 2: of competition are many. Competition delivers certainly lower prices, but
Speaker 2: not just lower prices. I think we can see that
Speaker 2: in our everyday lives, and if anything, I would say,
Speaker 2: there's today perhaps then in the recent past, a greater
Speaker 2: appreciation of why we should care about competition. I think
Speaker 2: it resonates with people in so many different corners of
Speaker 2: our country. Whether it's somebody looking to start a business,
Speaker 2: somebody competing with an established business who wants to break
Speaker 2: into a new market, somebody who wants the ability to
Speaker 2: switch jobs or get the benefits of competition for labor,
Speaker 2: an author looking for a book advance, a traveler looking
Speaker 2: for fewer cancelations and better conditions on their flights. All
Speaker 2: of this is competition. It also relates to the marketplace
Speaker 2: of ideas. Competition in the media space, for example, generates
Speaker 2: the flow of information which is foundational to our place,
Speaker 2: discourse and you know in the United States that that
Speaker 2: distinguishes us as a on the world stage, as a democracy,
Speaker 2: and I think we are proud of that, but we
Speaker 2: have to protect it.
Speaker 4: And we have to invest in it through a competitive economy.
Speaker 1: Are we allowed to say hipster antitrust in this conversation?
Speaker 1: I mean, that's really that's kind of what you are
Speaker 1: alluding to, right, Joe, Well, yeah.
Speaker 3: I mean like there is some change, right, Like there
Speaker 3: is some shift.
Speaker 4: Yeah.
Speaker 2: So let me start by saying it's a good thing
Speaker 2: that we're audio only, or maybe it's a bad thing,
Speaker 2: because if you saw me in person, you would recognize
Speaker 2: that I am definitely not a hipster.
Speaker 4: My hairlines, I am.
Speaker 3: I'm wearing a Western.
Speaker 4: Yeah, there you go.
Speaker 2: So I think we can dispense with that right away.
Speaker 2: I think we're talking about anti trust, and I think
Speaker 2: we're talking about restoring anti trust that really reflects the
Speaker 2: will of Congress. So the anti trust laws were written
Speaker 2: at a time when members of Congress and presidents who
Speaker 2: signed bills didn't want to concentrated economy, they didn't want
Speaker 2: clogs on competition. And I think what going back to
Speaker 2: a few moments ago, it's not that something has changed
Speaker 2: in terms of the law, but it's really that something
Speaker 2: has changed in terms of awareness. And I think what
Speaker 2: I've found, at least throughout my evolution, I'm someone who
Speaker 2: spent my entire career in the anti trust space, going
Speaker 2: back to my summers in law school working at the
Speaker 2: FTC to my first job at the Federal Trade Commission
Speaker 2: in nineteen ninety eight. I've been practicing anti trust ever since.
Speaker 2: And when I started, it was in many respects in
Speaker 2: niche area that was really interesting, perhaps a bit wonky,
Speaker 2: did not generate a lot of attention, certainly was not
Speaker 2: the subject of a presidential executive order or the third
Speaker 2: pillar in a presidential economic platform. But I think what
Speaker 2: we've found out, what I find today is that the
Speaker 2: awareness outside of the insular anti trust bubble is greater
Speaker 2: than ever, or perhaps that is greater than in at
Speaker 2: least you know, or about one hundred years. And so
Speaker 2: why well, I think so many different people have experiences
Speaker 2: with monopoly choke points in their lives, and they're all
Speaker 2: very different. It could again be a worker looking to
Speaker 2: be mobile. It could be the small business, It could
Speaker 2: be the traveler, it could be the concert co or
Speaker 2: it could be the person who cares about their privacy.
Speaker 2: People want control over their lives. They believe that freedom
Speaker 2: and choice and competition go hand in hand. And so
Speaker 2: what we've seen is a greater awareness, and I think
Speaker 2: there's an important opportunity to meet that moment, but we
Speaker 2: have to do it in a way. And I would
Speaker 2: remind at least folks listening now that my job at
Speaker 2: the Anti Trust Division at the Department of Justice is
Speaker 2: a law enforcer. So I don't write the law. I
Speaker 2: don't right the law. In many respects, the policy judgments
Speaker 2: have already been made. They've been made by Congress interpreted
Speaker 2: by courts over a century, and our job is to
Speaker 2: enforce the law the way Congress wrote it. Now, I
Speaker 2: personally believe there's a lot of wisdom in the anti
Speaker 2: trust laws and it is a really important part of
Speaker 2: our free and democratic society and open markets and economic freedom.
Speaker 2: But those judgments were made, you know, initially in eighteen ninety,
Speaker 2: and then again in nineteen fourteen, and then numerous times
Speaker 2: thereafter as the antitrust laws were revised, updated and expanded.
Speaker 1: So just on the awareness point, I think everyone can
Speaker 1: appreciate the sense that maybe a big monopoly is bad
Speaker 1: for either our personal lives in one way or another,
Speaker 1: or for economic society as a whole. You kind of
Speaker 1: get this nagging sense that, well, maybe Amazon prices are
Speaker 1: really low, but it's not great that they're crowding out
Speaker 1: other players in the market. And I know in Biden
Speaker 1: has talked about using antitrust to also improve you know, workers'
Speaker 1: lives and labor power and things like that. But how
Speaker 1: do you actually measure these things? First of all, you know,
Speaker 1: it's one thing to go out and look at prices
Speaker 1: and say, well, there's a bad monopoly out there and
Speaker 1: they're raising prices and that's bad. I imagine it must
Speaker 1: be kind of different to go out and say, like, well,
Speaker 1: you know, there are these other things happening that might
Speaker 1: be detrimental to the economy as a whole.
Speaker 4: Right, So.
Speaker 2: That's why each investigation is highly fact intensive. And so
Speaker 2: we start and we just talked about this in some
Speaker 2: new merger guidelines that we'll probably talk about in a
Speaker 2: little bit, but we talk about one of the first
Speaker 2: questions we ask in an anti trust investigation is how
Speaker 2: does competition in this market present itself and does the
Speaker 2: merger or the conducting question threatn that competition, and then
Speaker 2: we work backwards from that, because competition is not this
Speaker 2: monolithic being, it's dynamic. It presents differently in markets throughout
Speaker 2: the economy, and so we start by saying, how do
Speaker 2: we have a sophisticated understanding of how markets function? And
Speaker 2: so in a technology market, it might be a multi
Speaker 2: sided platform with significant feedback effects, and where data itself
Speaker 2: is a platform and this is something we're seeing increasingly
Speaker 2: in AI, and the competitive dynamics in a market like
Speaker 2: that might be very different than traditional vertical supply chain
Speaker 2: where you have a manufacturer, wholesaler and retailer. And if
Speaker 2: we don't adapt our thinking to make sure that we
Speaker 2: understand the economics of how markets function in a modern economy,
Speaker 2: then we're going to miss the competitive dynamics and then
Speaker 2: we're not going to be able to enforce the law effectively.
Speaker 2: And so our job is to make sure that we
Speaker 2: have the expertise to do that. And so that's one
Speaker 2: of the things that we've been doing over the last
Speaker 2: year at the Anti Trust Division is we've been we've
Speaker 2: been building our expertise to meet the needs of a
Speaker 2: modern economy, and that includes hiding sorry hiring AI experts
Speaker 2: and technologists in addition to labor economists and of course
Speaker 2: our ioeconomists and competition experts. And that's a field of
Speaker 2: expertise and a scope of expertise that I think we
Speaker 2: have to expand in order to be relevant.
Speaker 3: You know, since you mentioned multi sided marketplaces, I know
Speaker 3: that this is something specific in the new merger guidelines
Speaker 3: which you released in early July and which you just
Speaker 3: sort of teased ahead. But why don't you just sort
Speaker 3: of give us the little the summary as you see it,
Speaker 3: of what's new in these new merger guidelines. And so
Speaker 3: the companies think about doing deals like generally understand the
Speaker 3: rules of the road.
Speaker 2: Here, right, So just for a little bit of background,
Speaker 2: in nineteen fourteen, Congress wrote the Clayton Act, and Section
Speaker 2: seven of the Clayton Act prohibits mergers that may substantialize
Speaker 2: in competition or tend to create a monopoly. That law
Speaker 2: has been updated numerous times, including a significant amendment in
Speaker 2: the fifties to make sure that the law captured a
Speaker 2: broader range of acquisitions, including asset acquisitions, but also to
Speaker 2: clarify and this was an important update that antitrust in
Speaker 2: the Clayton at can apply to vertical acquisitions, or as
Speaker 2: they termed it at the time, conglomerate acquisitions, something that
Speaker 2: we would probably use a different term to describe today.
Speaker 2: And so the statute was written broadly to protect competition,
Speaker 2: and then it was updated again to provide a notification requirement.
Speaker 2: Starting in nineteen sixty eight, the Department of Justice started
Speaker 2: issuing guidelines to help provide a framework that the Department
Speaker 2: could use with transparency to the public, to have a
Speaker 2: little bit of discipline and transparency into how we go
Speaker 2: about analyzing mergers. There have been updates since then, including
Speaker 2: a significant update by the Reagan administration in nineteen eighty two,
Speaker 2: updates in nineteen eighty four, nineteen ninety two, nineteen ninety seven,
Speaker 2: twenty ten, and then a partial update in twenty twenty.
Speaker 2: And so there's a rich history of updating these guidelines
Speaker 2: to generally meet the needs of a modern economy, but
Speaker 2: also to reflect changes in the law, both statutory and
Speaker 2: interpretation by courts like the Supreme Court. There was an
Speaker 2: executive order early on in this administration by President Biden
Speaker 2: that encouraged or mandated that government cross agencies start taking
Speaker 2: competition more seriously, and we pursue a whole of government
Speaker 2: approach to how we think about competition policy. As part
Speaker 2: of that, it asked the Department of Justice and the
Speaker 2: Federal Trade Commission to revisit whether updates to the merger
Speaker 2: guidelines were appropriate. We undertook that exercise. We solicited public comments,
Speaker 2: of which we received very historic number relative to past endeavors,
Speaker 2: and what we uncovered was that the merger guidelines had
Speaker 2: largely been and there have been many really helpful updates
Speaker 2: over the years, but it's largely been an update to
Speaker 2: the same frame work, and that framework often started with
Speaker 2: the question is this merger of vertical or is this
Speaker 2: merger horizontal?
Speaker 4: Right?
Speaker 2: Because those were legally significant or economically significant questions.
Speaker 4: But one of the things that we've.
Speaker 2: Learned is that markets don't always present in that two
Speaker 2: dimensional way. And often like to say that thinking about
Speaker 2: markets is vertical and horizontal is like looking at four
Speaker 2: K video through a black and white TV. You might
Speaker 2: make out some of the images, but you're going to
Speaker 2: miss all the nuance. And the fact of the matter
Speaker 2: is today's economy is you know, the geometry is more
Speaker 2: like a gemstone for fans of the show a righteous gemstone,
Speaker 2: but it's more like a gemstone than it is a
Speaker 2: you know, two dimensional drawing. And so if you think
Speaker 2: about the realities of today's economy, certainly compared to fifty
Speaker 2: years ago, it's different. Phones don't have rotors, documents are
Speaker 2: stored in the cloud and not in you know, file cabinets,
Speaker 2: and even ten years ago, most people are still stopping
Speaker 2: at the gas station and asking for directions.
Speaker 4: Our worlds have changed.
Speaker 2: Data isn't something that is a byproduct of business, but
Speaker 2: it's the product of business now that is itself is
Speaker 2: becoming a platform, and markets are increasingly multi sided, multi dimensional,
Speaker 2: and more sophisticated. And it's really important, at least to
Speaker 2: me and I think to the public, that we adapt
Speaker 2: our analytical frameworks to recognize those foundational shifts in our
Speaker 2: economy and to use state of the art economics and
Speaker 2: analysis to ensure that we are conducting investigations in a
Speaker 2: way that accurately reflects the realities of today's market, and
Speaker 2: that we are building the expertise necessary to understand those
Speaker 2: nuances and ask the right questions so that we can
Speaker 2: generate the right answers to determine whether the facts and
Speaker 2: the law support enforcement.
Speaker 1: I definitely want to ask you how you're applying those
Speaker 1: analytical frameworks to specific industries. But maybe one more process
Speaker 1: question from me, and you sort of touched on it
Speaker 1: in that answer there. But one of the things that
Speaker 1: has happened recently is, you know, the White House has
Speaker 1: directed a bunch of different agencies to think more about competition,
Speaker 1: think more about antitrust. How are you coordinating with some
Speaker 1: other entities, like, for instance, the Federal Trade Commission. How
Speaker 1: are you all collectively working together on this issue.
Speaker 2: It's a great question. So we have a very good
Speaker 2: relationship with the Federal Trade Commission in the Department of Justice,
Speaker 2: and I Trust Division and the Federal Trade Commission have
Speaker 2: worked closely together for decades across administrations. I think what
Speaker 2: the Executive Order really unlocked was a broader hole of
Speaker 2: government approach and an opportunity to really think about competition
Speaker 2: in so many different dimensions. And so we've seen reports
Speaker 2: come from you know, treasure relating to the spirits and
Speaker 2: alcohol and beer business. We've seen reports relating to agriculture.
Speaker 2: I've seen greater cooperation with our partners at the Department
Speaker 2: of Transportation. What we're seeing, and I was actually thinking
Speaker 2: about this a little bit earlier today. It's almost the
Speaker 2: way in which in the eighties, cost benefit analysis was
Speaker 2: infused into regulatory and policymaking across the government.
Speaker 4: I think the.
Speaker 2: Executive Order really elevated competition in a very similar way
Speaker 2: and said it's a core value that we need to
Speaker 2: carry forward in every dimension. So if we want a
Speaker 2: competitive economy, we need to make sure that we're thinking
Speaker 2: about competition in all aspects of our government. I think
Speaker 2: that's a separate question from enforcement. Enforcement is more specific,
Speaker 2: it's not covered by the Executive Order, but it's something
Speaker 2: that we do on a case by case basis. But nonetheless,
Speaker 2: we've still been pursuing a more whole of government approach.
Speaker 2: And one example is we brought we believe for the
Speaker 2: first time ever at the Anti Trust Division, a packers
Speaker 2: and stockyards claim based on a referral from the Department
Speaker 2: of Agriculture in order to address issues in connection with
Speaker 2: the tournament system that was affecting farmers and growers and
Speaker 2: processing poultry processing plant workers who were, in our view,
Speaker 2: being deprived of better wages due to information sharing. And
Speaker 2: so unlocking those tools is a very important part of
Speaker 2: the agenda, both from a policy perspective, so that we
Speaker 2: can weigh in and encourage our fellow agencies to think
Speaker 2: about competition and competition policy and share our expertise, but
Speaker 2: also in how we deploy our own enforcement tools.
Speaker 3: Let's get into some of these. Actually, I was going
Speaker 3: to ask you a question about banks, and I want
Speaker 3: to start getting into the sectoral questions and how you
Speaker 3: think about how this applies to different industries. But since
Speaker 3: you mentioned the tournament system of poultry, which I had
Speaker 3: never seen. You never heard this term, and I feel
Speaker 3: I would be remissed to because now it's like, oh,
Speaker 3: we're definitely going to do a tournament poultry episode. What
Speaker 3: is the tournament system in poultry? And I do remember
Speaker 3: like there was a lot of talk about stockyard consolidation,
Speaker 3: particularly in twenty twenty when there is a scarcity of
Speaker 3: meat due to supply chain issues and things like that.
Speaker 3: What is the tournament system of poultry? And what are
Speaker 3: some of the things that you identify within the sort
Speaker 3: of meat or poultry or farm ecosystem that flashes on
Speaker 3: your radar.
Speaker 2: Yeah, So, without going into specifics of specific investigations, generally speaking,
Speaker 2: the concern that's been expressed by farmers and growers throughout
Speaker 2: the country is that the risk is being shifted from
Speaker 2: the packers to the farmers. And so it's almost like
Speaker 2: growing into a gig economy style model where the farmers
Speaker 2: take all the risks where they're asked to be exclusive
Speaker 2: or have elements of exclusivity and their commitments, but then
Speaker 2: are under the thumb of larger companies who are at
Speaker 2: their whims in terms of how much supply is being purchased,
Speaker 2: how much of the risk of failure is on them,
Speaker 2: and then on risk of loss. And so it's again,
Speaker 2: without getting into too many specifics and talking about any
Speaker 2: specific keys, there are elements of it that I think
Speaker 2: are emblematic of other areas of our economy where workers
Speaker 2: or entrepreneurs are being held at the thumb of really significant,
Speaker 2: powerful companies who are imposing terms that not only exploit
Speaker 2: but limit their ability to work with competitors.
Speaker 3: Tracy. Two things. A I think I'll tell you have
Speaker 3: an episode. I think I have a good chicken guest. Actually,
Speaker 3: on more of this topic.
Speaker 1: You know how I feel about chicken.
Speaker 3: I know, and I've been meaning to tell you. And
Speaker 3: two he Jonathan Just' point reminds me of our conversation
Speaker 3: with Gordon McGill about the distribution of risk being distributed
Speaker 3: outward onto the drivers rather than trucking companies. So this
Speaker 3: broader theme in society comes up again.
Speaker 1: I mean, this does seem to be something that companies
Speaker 1: are becoming more sophisticated about the distribution of risk. And
Speaker 1: also I guess pricing to some degree, and.
Speaker 4: A lot of this is contractual too, right.
Speaker 2: I think what we're when we start getting concerned is
Speaker 2: when a lot of these are terms and conditions that
Speaker 2: are being posed as to and are being imposed by
Speaker 2: companies with power.
Speaker 1: Jonathan, can I ask one more process question before we
Speaker 1: move on to banks? And I promise we will get
Speaker 1: to them. But how do these things land? This might
Speaker 1: be a weird question or simplistic question. How do these
Speaker 1: things actually end up on your radar?
Speaker 5: You know?
Speaker 1: Is it you're working at the DOJ and you wake
Speaker 1: up one day and you think, hmm, I think I
Speaker 1: see some problematic things happening in the poultry industry or
Speaker 1: in tech or wherever, or do you kind of have
Speaker 1: like a vision of how all this should work together? Like,
Speaker 1: how does this actually land on a desk at the
Speaker 1: DOJ so.
Speaker 4: Many different ways.
Speaker 2: I'll give you a little anecdote because I remember it
Speaker 2: was the summer of nineteen ninety six, and I'm dating
Speaker 2: myself here and revealing my unhipster like age. And it
Speaker 2: was my first summer of law school and I was
Speaker 2: working at the FTC and I walked in in the
Speaker 2: morning and I was bright eyed and you know, excited
Speaker 2: to roll up my slaves and dig in. And I
Speaker 2: walked in in the morning and I saw attorneys and
Speaker 2: this was common at the time. We can explain the technology,
Speaker 2: but reading newspapers and people were flipping through newspapers and
Speaker 2: I was like, oh, why are people reading the newspaper?
Speaker 2: And what I was told at the time was looking
Speaker 2: for potential leads, and it was very you know, intuitive point,
Speaker 2: which is that you know, that was one source of
Speaker 2: case generation. You know, I've come to learn that there
Speaker 2: are many sources of case generation. Some of it is
Speaker 2: we develop expertise in industries and we monitor those industries.
Speaker 2: And that might be as simple as opening up a
Speaker 2: newspaper or or logging online to local journalist, but it
Speaker 2: also might be hearing from industry participants affected customers, consumers, farmers, entrepreneurs.
Speaker 2: One of the biggest sources of case generation for US
Speaker 2: tends to be from business. So I'm often asked the question, well,
Speaker 2: is anti trust good for business? And if you ask
Speaker 2: the folks who are coming to us asking for enforcement
Speaker 2: of the anti trust laws, I think the answer is yes.
Speaker 2: A lot of our cases are generated by businesses who
Speaker 2: want the opportunity to compete or in a B to
Speaker 2: B market or consumer market, don't want to be held
Speaker 2: under the thumb of a dominant firm or dominant firms.
Speaker 4: We have a number of other ways.
Speaker 2: I think it's important for us as we as the
Speaker 2: economy becomes more sophisticated, to use data analysis to identify
Speaker 2: trends that might indicate problems and concerns. We have a
Speaker 2: whole range of tools and methods that we are using
Speaker 2: and modernizing to make sure that we are being proactive
Speaker 2: in our case detection.
Speaker 4: Now that's a little.
Speaker 2: Bit different from there are a couple of distinctions in
Speaker 2: some other areas of our enforcement. One is mergers, and
Speaker 2: so I mentioned the update to the Clayton Act in
Speaker 2: the seventies that required mergers of a certain size to
Speaker 2: pre notify and wait to close until we've had the
Speaker 2: chance to investigate. And that's called the Hart Scott Rodino Act.
Speaker 2: So mergers at least above a certain size come to
Speaker 2: us through merger filings. And then in the criminal context,
Speaker 2: where we have criminally unitrust enforcement, we will get tips,
Speaker 2: we will get proactive sources and methods that we use
Speaker 2: to uncover violations. But we also have a vibrant leniency
Speaker 2: program where we can have potential wrongdoers come to us
Speaker 2: under certain conditions and self disclose.
Speaker 3: So it's not reading the newspaper. But you know, there
Speaker 3: was an episode of a podcast called odd Latch that
Speaker 3: was released July seventeenth, twenty twenty three, in which our
Speaker 3: guests said that large tech companies are making big investments
Speaker 3: in AI startups because they can't they're worried about anti
Speaker 3: trust enforcement and the not going to buy them out right.
Speaker 3: But what they're doing is maybe a large company with
Speaker 3: a big cloud division makes an investment in some company
Speaker 3: that makes an AI model, and then that company spends
Speaker 3: all of their money on the investor's cloud, and that
Speaker 3: all of their future customers are implicitly customers of that cloud,
Speaker 3: et cetera, and so I'm curious, you know, And he
Speaker 3: said that, He's like, well, this is just because of
Speaker 3: you know, a way to get around concerned about anti trust.
Speaker 3: Are there non merger things that are anti competitive in
Speaker 3: your view, such as business relationships that large tech companies
Speaker 3: could make with say strategic investments that can you know,
Speaker 3: raise red flags even if they're not formally or formally
Speaker 3: a merger.
Speaker 4: So that's a fun question.
Speaker 2: I think you have a future in running law school
Speaker 2: exams because that's like a perfect hypothetical scenario.
Speaker 3: Again, I want to be careful, it's all hypothetic. I
Speaker 3: didn't name any companies, but yeah, I didn't say Google,
Speaker 3: open Ai, Microsoft, and topic. I just said large cloud companies,
Speaker 3: companies with a model.
Speaker 4: Well, thank you for that.
Speaker 2: Let me let me take a little bit of a
Speaker 2: step back and a different level of abstraction and try
Speaker 2: to answer the question in a productive way here for you.
Speaker 2: So in one of the things I often will say
Speaker 2: across all industries is that substance overform. And so what
Speaker 2: we're looking at is it's not just mergers. First of all,
Speaker 2: one of that amendment that I mentioned in the fifties
Speaker 2: made sure to cover other kinds of partial and asset acquisitions.
Speaker 2: Our new merger guidelines has a whole new section that
Speaker 2: specifically addresses partial ownership and acquisitions. And there are other
Speaker 2: parts of the antitrust law. There's monopolization. There's an area
Speaker 2: of anti trust enforcement that we have deployed perhaps more
Speaker 2: extensively than any enforcement authority ever since it was an
Speaker 2: act in nineteen fourteen, and that's called Section eight of
Speaker 2: the Clayton Act, which prohibits interlocking directorates, meaning you can't
Speaker 2: sit on the boards or have representatives on boards of
Speaker 2: competing companies. And we've caused i think over fifteen nearly
Speaker 2: twenty members of boards to step off boards and violation
Speaker 2: of Section eight. We have a whole range of investigations
Speaker 2: that are open. So the short answer to your question
Speaker 2: is we have many tools that we can use, and
Speaker 2: its substance over form and so attempts at evasion are
Speaker 2: usually not successful. And so if the goal of a
Speaker 2: transaction or investment is to monopolize a market, manipulate a market,
Speaker 2: to exclude competition, then we have the tools necessary to
Speaker 2: address that.
Speaker 4: If we need to.
Speaker 1: Let me ask the question in a slightly different way,
Speaker 1: do you see any evidence currently of perhaps anti competitive
Speaker 1: practices in some of the let's call it the AI
Speaker 1: boom recently. And then secondly, I just be curious how
Speaker 1: you're sort of looking at AI and its interactions with
Speaker 1: tech and I know you mentioned beefing up staff and
Speaker 1: technical expertise on that matter.
Speaker 2: Yeah, So the first part of the question I will
Speaker 2: artfully dodge because I can't. We have to specific industries.
Speaker 2: I appreciate the efforts, it's noble and noted, But the
Speaker 2: second part I can embrace. So our job is to
Speaker 2: make sure that we are following the puck where it's going,
Speaker 2: so much so that we have something at the Anitrust
Speaker 2: division we call Project Retzki based on the famous quote
Speaker 2: from Wayne Gretzky, which is he skates to where the puck.
Speaker 4: Is going, not to where it is. And so AI
Speaker 4: is a.
Speaker 2: Significant inflection point and development in business, and it's going
Speaker 2: it's changing the way a lot of things operate, and
Speaker 2: it's changing economic realities, and so we have to understand
Speaker 2: those significant changes. And it's really more that AI is
Speaker 2: an umbrella term that's used to talk about a lot
Speaker 2: of different things, but machine learning data as a platform
Speaker 2: are all really important developments and they're also it's also
Speaker 2: going to create many really great opportunities, right, So you know,
Speaker 2: we're agnostic in many respects to the technology itself, at
Speaker 2: least at the end of trust division. What we're trying
Speaker 2: to do is make sure that, particularly at these inflection points,
Speaker 2: that competition has the ability to thrive. It's also not
Speaker 2: lost on us, and we've talked about this that AI
Speaker 2: is you know, particularly for example, like a large language
Speaker 2: model is based on data and mountains of it.
Speaker 4: And so when you think.
Speaker 2: About AI being deployed, you know, not just in the
Speaker 2: consumer tech space, but in enterprise tech and healthcare and
Speaker 2: energy and agriculture and everything in between. You know, we're
Speaker 2: looking at a world where companies that have access to
Speaker 2: the most data are going to be able to pay
Speaker 2: the cost of entry. And so if you want to
Speaker 2: build those foundational platforms, you're going to need a corpus,
Speaker 2: You're going to need data at scale, and so competition
Speaker 2: or lack there of in a predecessor technology could very
Speaker 2: much limit the ability for there to be vibrant competition
Speaker 2: for technologies in AI that depend on data. So we
Speaker 2: have to think about making sure that we're opening up
Speaker 2: all avenues.
Speaker 4: To competition in this space.
Speaker 2: But we can't do that effectively in my view, unless
Speaker 2: we understand it, unless we have the right experts in
Speaker 2: house in order to appreciate those nuances and see clearly
Speaker 2: what is actually happening in the marketplace, and then skates
Speaker 2: where the puck is going.
Speaker 3: I want to ask a question about how anti trust
Speaker 3: thinking dovetails with other priorities. And this is also sort
Speaker 3: of a segue into consolidation in banks. So obviously Silicon
Speaker 3: Valley Bank blew up in March, and perhaps one reason
Speaker 3: that it blew up is because there are lower sort
Speaker 3: of regulatory requirements for smaller banks. And I wonder if
Speaker 3: there is a tension where you want there to be
Speaker 3: competition with the gigantic money center banks that are based
Speaker 3: in New York. But on the other hand, there are
Speaker 3: many who argue that say, a Canadian style banking system
Speaker 3: of essentially like six banks, all of which are very
Speaker 3: big and regulated to the max, is the most stable system.
Speaker 3: And so I wonder how you think about tension where
Speaker 3: it's like, Okay, we want there to be a competitor
Speaker 3: to the big ones. One way to make sure that
Speaker 3: there's competition is to lower maybe the capital requirement standards,
Speaker 3: et cetera. But if you want have this competition, then
Speaker 3: does that run into priorities potentially a financial stability.
Speaker 2: Sure, it's a great question. So the word dovetail or words.
Speaker 2: I guess it's a word, right, I'll look it up
Speaker 2: all your yes, is the perfect way to describe it. So,
Speaker 2: because you know, we have some authority here, but that
Speaker 2: authority dovetails with the bank regulators, and the two sides
Speaker 2: of the coin worked very well together and are important compliments.
Speaker 2: And so there's something called the Bank Merger Act which
Speaker 2: gives us the Anti Trust Division the ability to provide
Speaker 2: a report to the bank regulators.
Speaker 4: To assess competition.
Speaker 2: And we do that on the regular when there are
Speaker 2: certain bank mergers that were obligated to address. And then
Speaker 2: if we decide we want to challenge an acquisition, we
Speaker 2: still have independent authority to do that even after the
Speaker 2: bank regulators weigh in. What I gave a speech at
Speaker 2: Brookings a few weeks ago where I talked about many respects,
Speaker 2: a lot of the things that we've already discussed today,
Speaker 2: which is how our economy has changed in the context
Speaker 2: of banks. I talked about how competition and banking might
Speaker 2: have been reflected in giving away free toasters when you
Speaker 2: sign up for an account, but those days are over
Speaker 2: and banking is very different today than it was thirty
Speaker 2: years ago. And the last bank merger guidelines were written
Speaker 2: in the nineties when people still got toasters, and that's outdated.
Speaker 2: And I think we realize now that bank fees and
Speaker 2: overdraft fees, I think something one of your guests a
Speaker 2: few weeks ago, Jared Bernstein, talked about that those are
Speaker 2: in different technologies and customer service are all nuances of
Speaker 2: a modern banking economy, and we want to make sure
Speaker 2: we understand that well so that we can provide appropriate
Speaker 2: analysis to the bank regulators. The other distinction that I
Speaker 2: called out in that speech is that a lot of
Speaker 2: bank merger analysis, at least on the competition concentration side,
Speaker 2: had been done using a very stylized model of what
Speaker 2: we called HHI index Herfriendal Herschman index, which is just
Speaker 2: a fancy way to talk about measuring market shares and
Speaker 2: concentration levels. It's actually relatively simple mathematical exercise quantitative exercise,
Speaker 2: but it's based on deposits in local branch overlaps and
Speaker 2: one of the things you know, I tried to stress
Speaker 2: is that you know, while in some instances that may
Speaker 2: be helpful, that it's probably not the most sophisticated or
Speaker 2: relevant way to assess competition in today's markets. So we
Speaker 2: want to make sure that we're also updating our bank
Speaker 2: merger guidelines, which is something that we're working on also
Speaker 2: under the executive order from President Biden. And in that discussion,
Speaker 2: we're going to think about all these different dimensions of competition.
Speaker 2: There's different roles of banks, but also making sure that
Speaker 2: we understand that different banks have different kinds of customers,
Speaker 2: and so making sure that local communities have access to
Speaker 2: banking and competition and viable, resilient banks is a really
Speaker 2: important part of making sure that it's competitive, because, after all,
Speaker 2: the needs of a local business might be different than
Speaker 2: a multinational and you know, local banks and regional banks
Speaker 2: you are quite good at investing in their local communities
Speaker 2: because they want to build that vibrant, local, competitive economy.
Speaker 2: And so this is all agnostic to specific deals. It's
Speaker 2: simply just saying that it's important for us to make
Speaker 2: sure that our analysis understands those considerations. But that's against
Speaker 2: the backdrop if a multi factor analysis that the bank
Speaker 2: regulators have to undertake, and we have a part of that,
Speaker 2: but it's just a part including convenience and needs and
Speaker 2: and other factors that are related to but not perfectly
Speaker 2: overlapping with competition.
Speaker 1: You know, it feels like there's sort of a high
Speaker 1: level philosophical tension or disagreement here where on the one hand,
Speaker 1: it might be nice to have thousands of local banks
Speaker 1: with significant expertise and they know their customers and are
Speaker 1: able to sort of decide who gets alone and who doesn't,
Speaker 1: versus the financial stability sort of efficiency concerns where maybe
Speaker 1: it would make more sense to have a Canada style
Speaker 1: model where we have six dominant banks or something like that.
Speaker 1: And I think we've seen various expressions of those disagreements recently.
Speaker 1: I think Elizabeth Warren has sort of, you know, clapped
Speaker 1: back at some of Janet Yellen's thinking on this topic.
Speaker 1: But when you're at the DOJ, do you think about
Speaker 1: this from a sort of holistic, top level perspective. Do
Speaker 1: you think this is maybe what the banking system should
Speaker 1: look like, or this is where we would like to
Speaker 1: see the banking system go. Does it kind of reach
Speaker 1: that level. So I'll leave it to the banking experts
Speaker 1: and regulators and policy makers and legislators to determine, you know,
Speaker 1: or discuss that big picture. We have the luxury, I
Speaker 1: guess of focusing on this one narrow question is how
Speaker 1: do we make sure that these portions of.
Speaker 4: Our economy are competitive?
Speaker 2: And how do we make sure that we are enforcing
Speaker 2: the law and providing expert reports to the regulators on
Speaker 2: the impacts of competition. And as I talked about in
Speaker 2: my Brooking speech, you know, our belief is that the
Speaker 2: law promotes and encourages there to be a competitive economy,
Speaker 2: including in banking, and we try to enforce that faithfully.
Speaker 3: I'm curious about just firm size, and this comes up.
Speaker 3: I see a lot of Twitter fights about this, which
Speaker 3: is that there is this sort of school of progressive
Speaker 3: thought which says small businesses aren't really that great, that
Speaker 3: we like to extol them, that we like the idea
Speaker 3: of like, you know, competition and all these like small businesses,
Speaker 3: but that by and large, you know, labor protections at
Speaker 3: small businesses are worse, that wages are worse, that environmental
Speaker 3: concerns are worse, that large companies are more likely to
Speaker 3: be unionized, that large companies are more likely to invent
Speaker 3: in things related to decarbonization and so forth, and that
Speaker 3: you know, there's the economy is run by too much
Speaker 3: of the economy is run by small business owners that
Speaker 3: have incredible leverage over their own employees and their own area.
Speaker 3: I'm curious, like how you think about like size, is
Speaker 3: size good or bad? Per se? Are there concerns about
Speaker 3: too much deconsolidation? I mean, I get most of the
Speaker 3: conversations about consolidation, but are there concerns about like too
Speaker 3: much distribution and some of the costs that sort of
Speaker 3: come with the management labor relationship. And I'm curious how
Speaker 3: that fits into your thinking.
Speaker 2: Yeah, so again I think, you know, I try to
Speaker 2: start from the premise of, well, what does the law say, yeah,
Speaker 2: and how do we go from there? And so when
Speaker 2: you're talking about you I trust historically or talking you know,
Speaker 2: we mentioned earlier the standard oils and AT and ts
Speaker 2: and such of the world. We're often talking about some
Speaker 2: of the biggest companies exclusively. But those are a lot
Speaker 2: of the big as Tike points occur, and that's sort
Speaker 2: of at the origin of anti monopoly and anti trust
Speaker 2: law statutes provide different requirements, and so we talked about
Speaker 2: the Clayton Act and mergers, and it takes the view
Speaker 2: that not only a merger is problematic for substantial lessons competition,
Speaker 2: but also if it tends to create a monopoly. So
Speaker 2: that's a value judgment that if something tends to create
Speaker 2: a monopoly, it could be illegal. There is a monopolization
Speaker 2: prong of the Scharmanac Section two of the Sherman Act,
Speaker 2: So you know, certain kinds of conduct that is used
Speaker 2: to create a monopoly can be illegal. And that was
Speaker 2: a judgment that Congress made and we have the obligation
Speaker 2: to enforce. And I would also say in terms of
Speaker 2: small there's a lot of and I'll refer you to
Speaker 2: some of the legislative history and discussions around the creation
Speaker 2: and amendments to the anti trust laws about the importance
Speaker 2: of small business opportunity. But I guess I approach this
Speaker 2: discipline from the perspective of that we're preserving economic opportunity.
Speaker 2: And so to me, opportunity and freedom go hand in hand.
Speaker 2: And you know, one of the things that makes our
Speaker 2: country so amazing and so such a wonderful place to
Speaker 2: be is that we provide opportunities to everybody when things
Speaker 2: are going well and things are going right, and the
Speaker 2: small business on the corner, you know, can lead to
Speaker 2: upward mobility for the next generation, for industrious and ambitious people.
Speaker 2: And we want to make sure that we're providing those opportunities.
Speaker 2: And if those opportunities in those avenues to upward mobility
Speaker 2: are clogged, not only are we depriving citizens of the
Speaker 2: of the freedoms, the fundamental economic freedoms that they crave
Speaker 2: and that we are we promise to our citizens, but
Speaker 2: we're also losing out on all of those benefit and
Speaker 2: so competition is a is a value. It's a value
Speaker 2: that we have invested in as a country because we
Speaker 2: believe that providing opportunity and freedom of opportunity can generate
Speaker 2: so many benefits in so many different ways. And you know,
Speaker 2: I often say it's not a switch that you can
Speaker 2: flip on and on when you need it. You have
Speaker 2: to invest it, and I invest in it. And I
Speaker 2: think that's why Congress, you know, was wise when it
Speaker 2: wrote the NI Trust laws, because it preserved those avenues
Speaker 2: for opportunity and competition. And you know, the courts and
Speaker 2: Congress have been clear that those avenues and opportunities should
Speaker 2: not be limited to select few. They should be open
Speaker 2: to everyone, including small businesses, farmers who are themselves small
Speaker 2: business owners, entrepreneurs. They should be geographically dispersing those opportunities,
Speaker 2: and they should be merit based. They should be based
Speaker 2: on the merits of your innovations, your customer service, your
Speaker 2: commitment in your imagination. And so to me, we don't
Speaker 2: have any of that as a society unless we have
Speaker 2: competitive marketplaces.
Speaker 1: So the polar opposite perhaps of the iconic American small
Speaker 1: business is probably American private equity. And there have been
Speaker 1: tons of negative headlines over the years, and I know
Speaker 1: this is something that's on your radar that you've talked about.
Speaker 1: I think you specifically talked about private equities ability to
Speaker 1: exercise command and control over markets. Can you tell us
Speaker 1: a little bit more about how you're thinking of private
Speaker 1: equities role in competition and what exactly the issues might
Speaker 1: be there.
Speaker 2: Yeah, So let me start by saying that the anitrust
Speaker 2: laws are business agnostic or business model agnostic, and so
Speaker 2: you know, I think they apply equally across all businesses,
Speaker 2: including private equity. As I mentioned before, you know, it's
Speaker 2: important for us as enforcers to be mindful of developments
Speaker 2: on the ground, including economic realities. And I think we
Speaker 2: can all agree that private equity you know today means
Speaker 2: something very different than it did thirty years ago, and
Speaker 2: its prevalence and importance or at least impact on our
Speaker 2: economy and our industry is quite significant and different than
Speaker 2: it was in the past. And again that's just in
Speaker 2: an agnostic way. I'm not suggesting it's good, better otherwise,
Speaker 2: simply a fact. And so if we want to be
Speaker 2: relevant in understanding whether there is an antitrust violation or
Speaker 2: where to focus, we just need to make sure that
Speaker 2: we understand those market realities. And so, you know, issues
Speaker 2: that show up in non private equity markets can show
Speaker 2: up in private equity too, But there also might be
Speaker 2: you know, distinguishing characteristics. So for example, you know, private
Speaker 2: equity might lead to greater number of board interlocks and
Speaker 2: it might result in more need to inform or Section eight.
Speaker 2: We talk about roll ups, and we talk about serial acquisitions,
Speaker 2: which is something we see in private equity and out
Speaker 2: of private equity, but it might be an issue that
Speaker 2: becomes something we have to address with greater frequency. If
Speaker 2: the business model, you know, is in fact to roll
Speaker 2: up industries in order to reduce competition. Again, I think
Speaker 2: we just have to call the balls and strikes as
Speaker 2: we see them. But if there are changes in how
Speaker 2: companies or businesses are run invested in, then I think
Speaker 2: we have to be mindful of that, and we also
Speaker 2: have to be mindful of you know, what are what
Speaker 2: it's what is improving productivity and what's not. Again, these
Speaker 2: are all business model agnostic, but they are important concepts
Speaker 2: that apply to anti trust and if we are being relevant,
Speaker 2: we have to be aware and knowledgeable of those developments.
Speaker 5: You know.
Speaker 3: I know, in the beginning of the conversation, I think
Speaker 3: you sort of perhaps downplayed the degree to which the
Speaker 3: sort of you're thinking about anti tire as like some
Speaker 3: big departure, like you know, some new thinking, and you're like, look,
Speaker 3: there's the law, and over time the rules get rewritten
Speaker 3: and maybe there's some interpretations, but basically you're enforcing the
Speaker 3: law as written by Congress. They being said and it's
Speaker 3: been you know, there's Bloomberger's report on this. The DJ
Speaker 3: and the FTC have suffered a handful of setbacks in
Speaker 3: courts relating to some of these deals and mergers. I
Speaker 3: think there was recently a sugar deal. I know we're
Speaker 3: not going to talk about specific deals, but when you
Speaker 3: think about how you think about anti trust and perhaps
Speaker 3: how maybe the sitting judiciary, which may have judges who
Speaker 3: have been sitting there for twenty thirty years, maybe appointed
Speaker 3: by the Reagan administration, think about antitrust, does that affect
Speaker 3: your strategy in terms of thinking about which cases you
Speaker 3: can bring essentially based on like, you know, you have
Speaker 3: your perspective on what antitrust law says, and maybe the
Speaker 3: sort of stock of judges that are out there have
Speaker 3: a separate perspective.
Speaker 2: Yeah, so let me address that question and also, you know,
Speaker 2: try to at least give you some perspective from the
Speaker 2: Department of Justice. When we bring a case, it's a
Speaker 2: matter of law enforcement.
Speaker 4: We have the burden.
Speaker 2: It's on us to make sure that we are following
Speaker 2: the facts of the law and presenting it to a
Speaker 2: court or jury in a way that convinces the court.
Speaker 2: And so that burden is on us, and it's up
Speaker 2: to us to make sure that we are bringing the
Speaker 2: right tools, the right facts, and the right legal analysis
Speaker 2: to persuade a court and we play to win. And
Speaker 2: if we think we have a case that is sustainable
Speaker 2: in the facts and the law, and then it is
Speaker 2: the right use of our prosecutorial discretion, we move forward,
Speaker 2: and we do so in a very passionate and fact
Speaker 2: and legal based way. You know, I will speak just
Speaker 2: from the Department of Justice perspective, because I've heard people
Speaker 2: sometimes not all the information. It's all out there, but
Speaker 2: it's sometimes harder to collect. I'm very proud of our
Speaker 2: track record in this administration. We've filed nine cases in court.
Speaker 2: We've had two litigated victories, including a significant victory and
Speaker 2: a publisher merger Penguin, Random House, Simon and Schuster. We've
Speaker 2: had the AA Jet Blue Northeast Alliance case in Boston.
Speaker 2: We had an out of court settlement in a merger case.
Speaker 2: Two cases were mergers were abandoned after we filed, and
Speaker 2: we've had by our account, twelve mergers abandoned before right
Speaker 2: before we were going to file or in the face
Speaker 2: of filing litigation.
Speaker 4: And we have one pending.
Speaker 2: And so when you take that against the track record
Speaker 2: of a few negative outcomes in court, which we accept
Speaker 2: and learn from with humility, I think that's a pretty
Speaker 2: strong record when you look at the whole of the significant,
Speaker 2: programmatically significant cases that we've won, and I think, you know,
Speaker 2: fifteen or more abandonments, including some after we filed in court.
Speaker 2: It's a pretty good track record. And I'm proud of that.
Speaker 2: And I'm proud of the hard working and professionals at
Speaker 2: the Anti Trust Division and Department of Justice who have
Speaker 2: fought capably and professionally and with vigor and sophistication on
Speaker 2: behalf of the public and competition, and we're getting really
Speaker 2: good results that I'm extremely proud of.
Speaker 1: Can modern antitrust enforcement work without an update to existing
Speaker 1: antitrust laws? In other words, do we need more work
Speaker 1: on the actual legislative you know, underpinnings of this in
Speaker 1: order to make it more effective.
Speaker 4: Yeah.
Speaker 2: So I have a couple of views on this. First is,
Speaker 2: you know, our job is to enforce the law. It's
Speaker 2: the job of Congress to write it. So on some level,
Speaker 2: you know that is a decision that needs to be
Speaker 2: made by Congress, and so they'll give us the tools
Speaker 2: and we'll use them. I believe that the anti trust
Speaker 2: laws today still matter, and they bill can protect competition
Speaker 2: and the public, and we were going to enforce them
Speaker 2: in a way that's appropriate and consistent with the facts
Speaker 2: on the ground. At the same time, there have been
Speaker 2: proposals in Congress to update the antitrust laws. We have
Speaker 2: weight in as the Department of Justice and select instances,
Speaker 2: both in terms of providing technical assistance and in other
Speaker 2: instances with a full throated endorsement of legislation. And so
Speaker 2: you know, we take that on a case by case basis,
Speaker 2: but ultimately that's a decision that comes from Congress, and
Speaker 2: we're very mindful of the fact that they write the law,
Speaker 2: not us, and it's our job to enforce law as
Speaker 2: they write it.
Speaker 3: I just have one last small question. Can mergers be good?
Speaker 3: And by that I mean, you know, companies when they
Speaker 3: buy other companies are like efficiency gains one common platform
Speaker 3: ways to like improve productivity, et cetera across firms, like
Speaker 3: are you open? Is that a consideration? Do you believe
Speaker 3: in that possibility or in your views that mostly like
Speaker 3: spend when they say that.
Speaker 2: So I'll start with the most diplomatic answer, which is
Speaker 2: and the accurate one, which is my view doesn't matter, okay,
Speaker 2: which and by that I mean our job is really
Speaker 2: to determine whether the merger substantial lessons competition tends to
Speaker 2: create a monopoly.
Speaker 4: And so.
Speaker 2: That that is what we are trying to do in
Speaker 2: a very fact oriented way. I think that's kind of
Speaker 2: different from like the separate, you know, state of the
Speaker 2: union question on whether mergers are good or bad and
Speaker 2: whether efficiencies are realized or not. In any given transaction,
Speaker 2: companies will often, you know, explain why they think their
Speaker 2: mergers will generate certain benefits that they either offset or
Speaker 2: mitigate competition concerns, and we have a framework for how
Speaker 2: we evaluate those efficiencies. This came up in our book
Speaker 2: publishing case that we won, and I think the court
Speaker 2: in that case laid out some pretty specific requirements for
Speaker 2: verifiability and making sure that those claims are something that
Speaker 2: can be supported in the court of law. And so
Speaker 2: we are appropriately skeptical. It's not or not skeptical. We
Speaker 2: are appropriately scrutinizing, I should say, to make sure that
Speaker 2: if folks come in with claims that they're accurate and
Speaker 2: that there are can be verified. But I also come
Speaker 2: back to the foundation, which is anti trust. Merger law
Speaker 2: is ultimately an exercise in risk assessment, and our job
Speaker 2: is to assess the risk that the merger may harm
Speaker 2: competition or tend to create a monopoly. And that requires
Speaker 2: a whole range of considerations that have been laid out
Speaker 2: in the statute but ultimately refined by courts over the
Speaker 2: last century. And we deploy those considerations in a way
Speaker 2: that's faithful to the legal precedent. But it is necessarily predictives,
Speaker 2: necessarily forward looking, and does not require certainty and prediction.
Speaker 2: It's a risk assessment and that's how we treat it,
Speaker 2: and we use the best evidence we have available, the
Speaker 2: best date of the best analytics, the best economic evidence,
Speaker 2: to try to be as accurate and responsive as we
Speaker 2: can to the facts on the ground. But ultimately it's
Speaker 2: a risk assessment.
Speaker 1: Merger's good, monopoly is bad. I'm going to have that
Speaker 1: made as a bumper sticker. I think, Jonathan Canter, thank
Speaker 1: you so much for coming on all thoughts.
Speaker 2: Really appreciate it.
Speaker 4: Very good.
Speaker 2: It's such a pleasure to be with you, and thanks
Speaker 2: for such a fun conversation. And I'm going to go
Speaker 2: home and tell my kids that I'm officially hipster.
Speaker 4: Maybe not nan, I trust, but we did it.
Speaker 3: We can.
Speaker 5: On an Econ podcast, Yeah, Joe.
Speaker 1: That was really interesting. There are so many things to
Speaker 1: pick out of that conversation. I enjoyed hearing Jonathan's anecdote
Speaker 1: from I think it was nineteen ninety six about how
Speaker 1: people at the was the it wasn't it the FTC
Speaker 1: at that time, how they were sort of generating leads
Speaker 1: for cases.
Speaker 3: I know, I think I've heard about that, and it's
Speaker 3: like you're just like, oh, open the paper, open the
Speaker 3: front page of the Wall Share Journal. It's like, hmm,
Speaker 3: there's an interesting sounding deal. It's like we find they
Speaker 3: find out about them the same way that we do.
Speaker 1: Or a farmer comes complains about poultry tournaments. The other
Speaker 1: thing that was interesting, just in the context of AI
Speaker 1: tech was that new it does seem like more attention
Speaker 1: being paid to perhaps new types of ownership structures. So
Speaker 1: not outright mergers, but if you take a minority stake
Speaker 1: or something like that in a company, it could still
Speaker 1: garner interest.
Speaker 3: That was really interesting, the fact that perhaps some of
Speaker 3: the avenues of where anti competitive behavior could turn up
Speaker 3: in data ownership. That's going to be huge obviously, right,
Speaker 3: I mean, that's already this huge deal. You heard about
Speaker 3: it in finance all the time, like who is access
Speaker 3: to financial data which they charge for it? But now
Speaker 3: if these data sources are the are basically what you
Speaker 3: build a business off of. I thought that was super
Speaker 3: interesting as well.
Speaker 1: Right, and like throughout recent history, data has always been
Speaker 1: a source of competitive edge and like almost a facto
Speaker 1: proprietary right, Like this is how you become a big
Speaker 1: and powerful tech company by having access to powerful and
Speaker 1: exclusive data. It's going to be really interesting to see
Speaker 1: how they sort of deal with with that aspect of it.
Speaker 3: I'm still like really interested in. I don't think there's
Speaker 3: like an answer that can be even given to the question.
Speaker 3: But this idea that we talked about, like how it
Speaker 3: fits into other priorities of like you know, going back
Speaker 3: to like the sort of broader bidonomics question of like
Speaker 3: you know there, I do think that there is like
Speaker 3: some tension between do we want a consolidated banking system yes,
Speaker 3: really stable or a competitive one in which you know,
Speaker 3: some banks aren't too big to fail, et cetera. I
Speaker 3: think some of these questions about you know, how small
Speaker 3: we are, can small businesses be bad? There are some
Speaker 3: really interesting like fitting it into like the sort of
Speaker 3: like broader like bidonomics or maybe like the progressive frameworks
Speaker 3: like very.
Speaker 1: Interesting to me, right, And Jonathan was very diplomatic about,
Speaker 1: you know, saying that it's not his job to sort
Speaker 1: of sort out what the US banking landscape should look like.
Speaker 1: It's his job to enforce the existing law. But you
Speaker 1: do kind of wonder like who is making those decisions
Speaker 1: and whether or not they're being made on a sort
Speaker 1: of holistic, top down level.
Speaker 3: I think Jonathan would be a great law professor. You know,
Speaker 3: this is like no seriously, I like, like I, like
Speaker 3: I said at the beginning, I don't know anything about
Speaker 3: this stuff. This has really never been my like sort
Speaker 3: of like realm of like thinking. And I actually felt
Speaker 3: like I genuinely learned a little bit about how our
Speaker 3: anti trust system works by talking to Jonathan.
Speaker 1: Now you've been like Sherman act pills.
Speaker 3: I'm sure an act filled.
Speaker 2: All right.
Speaker 3: Shall we leave it there, Let's leave it there, all right.
Speaker 1: This has been another episode of the Odd Lots podcast.
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at
Speaker 1: Tracy Alloway.
Speaker 3: And I'm Joe Wisenthal. You can follow me on Twitter
Speaker 3: at the Stalwart. I don't think Jonathan's on but you
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