Biden’s Antitrust Agenda: Mission Creep or Mission Achieved?

Jack Derwin:  Hello, and welcome to this Federalist Society’s virtual event. My name is Jack Derwin, and I’m Associate Director of Practice Groups at The Federalist Society. Today, we’re very excited to host a panel discussion titled, “Biden’s Antitrust Agenda: Mission Creep or Mission Achieved? Joining us today is a stellar panel of antitrust experts. In the interest of time, I’ll keep these intros very brief. You can view their full bios at fedsoc.org.

 

Elyse Dorsey is a Partner in the Washington DC office of Kirkland & Ellis, LLP. Previously, Elyse served as counselor to the Assistant Attorney General in the US Department of Justice’s Antitrust Division and as Attorney Advisor to FTC Commissioner Noah Phillips. Amanda Lewis is a Partner at Cuneo Gilbert & Deluca, LLP and has held a number of roles in the FTC’s Bureau of Competition, including Council Detailee to the Antitrust Subcommittee of the House Judiciary Committee. David J. Shaw is a Partner in Morrison & Foerster’s global antitrust law practice group. Before joining his firm, David was the Deputy Chief of Staff and counsel to the Assistant Attorney General in the Antitrust Division of the Department of Justice. And our moderator today, Jonathan Wolfson, is the Chief Legal Officer and Policy Director at the Cicero Institute. Before joining Cicero, Jonathan led the Policy Office at the US Department of Labor, among other roles.

 

After discussion between our panelists, we’ll go to audience Q&A. So please enter any questions into the Q&A function at the bottom of your Zoom window. And finally, I’ll note that, as always, all expressions of opinion on today’s program are those of the speakers joining us. With that, Jonathan, the floor is yours.

 

Jonathan Wolfson:  Thanks, Jack. And thank you all for us today. I’m really excited to get to moderate this panel with three really knowledgeable experts on these topics, and we’re going to have an interesting discussion. I’m not going to take very much time, other than to give you a quick run of the show that we’re going to have each of the speakers talk for a few minutes about an overview of what they see as some of the key issues in the Biden administration’s decision so far in the antitrust space. We will then follow that with some specific questions to each of the panelists, and at the end, we’ll have some time for Q&A. And Jack said, please put those in the Q&A tab in Zoom, and we will try to get to as many of those as we can at the end. So, with that, I will turn it over to David Shaw to make some introductory remarks.

 

David J. Shaw:  Well, thanks, Jonathan and Jack, and good afternoon. Happy to be on this panel. I’ve known Jonathan for almost 25 years. I had the privilege of working with Elyse at DOJ. I’ve enjoyed getting to know Amanda out of the course of preparing for this. And, so, for my introductory remarks, I’m going to give an overview of the DOJ Antitrust Division in the Biden administration.

 

And I’ll address the rhetoric, the policy, and the civil and criminal enforcement we’ve seen so far. But let me start with just giving a bottom-line assessment, which is we’re still pretty early into the Biden administration’s impact on the Antitrust Division. But the signals certainly suggest that we’re on the cusp of some significant change. So we’re early days. Biden may have taken office 18 months ago, but he only appointed and had his head of the Antitrust Division, Jonathan Kanter, confirmed as the Assistant Attorney General for Antitrust in November of 2021. And moreover, Kanter was the first political appointee to show up in the Antitrust Division. Before that, it was run by career officials.

 

In contrast, while it took some time for the Trump administration to get a confirmed head of the Antitrust Division to show up, his Principal Deputy was in place by spring of 2017. And it’s also taken some time for the full leadership team to get into place at the Antitrust Division. In fact, only this week did the final member of that team, Susan Athey, the economist and the -- come join as the Deputy Assistant Attorney General for economists. So I think the result is we haven’t seen the full impact of Biden administration political appointees and AGG Kanter’s leadership specifically. Antitrust cases tend to move slowly. And, so, we really haven’t seen the full life cycle of a significant case under his leadership.

 

Now, on the rhetorical front, Kanter has come out swinging. He’s criticized the Consumer Welfare Standard. He has criticized the practice of settling merger cases, not simply behavioral remedying, which are almost universally derided, but even structural remedies. And he’s impeded -- repeatedly employed muscular rhetoric about not being afraid to bring difficult cases and the importance of litigating as opposed to settling cases. In terms of policy, we have seen some movement on the policy front. The most significant is likely going to be the rewriting of the Merger Guidelines in conjunction with the FTC.

 

We haven’t seen the new Guidelines yet, but, if the call for comments is indicative, I would expect a pretty dramatic change, and I hope we’ll have a chance to talk a little bit about Merger Guidelines later in this panel. In terms of civil non-merger enforcement, there are public reports that Kanter’s recused from the DOJ’s most significant conduct case, which was brought by the last administration and is scheduled to go to trial in September of 2023. And we haven’t seen any additional Section 2 cases brought yet. But this clearly, based on his speeches, seems to be a priority for Kanter, and I would be surprised if we didn’t see at least one — and maybe several — before the end of his tenure. In terms of civil merger enforcement, DOJ has been very active in bringing merger challenges. Some of these decisions were made by career officials before Kanter was confirmed.

 

Some of the cases have been pretty aggressive. None strike me — although I’d be curious to hear Elyse and Amanda’s view on this — as unique to the Biden administration. The previous administration brought some pretty aggressive merger enforcement cases as well. And while I certainly wouldn’t say that the same cases would have necessarily been brought by the administration, nothing strikes me as an outlier that a previous administration wouldn’t have -- could not have brought, at least for the DOJ. On criminal enforcement, we have seen some very aggressive actions, particularly in the labor space with prosecutions for alleged no-poach agreements and wage fixing. Again, though, this is a continuation of indictments that were brought in the previous administration.

 

I think the criminal enforcement does give us an example that Jonathan Kanter is true to his word when he says he’s not afraid to bring difficult cases and practice. The most significant is the chicken’s prosecution where there was two mistrials, and Kanter proceeded with a third trial, which was highly unusual, if not unprecedented. That actually just came out with an acquittal yesterday, so we’re still -- we’ll still see whether we’re going to get some traction on that. I say the one thing on the criminal side that would represent an enormous departure — and we’ve seen rhetoric about it, but we haven’t yet seen any indictments — is a Section 2 criminal case. DOJ has repeatedly said, under Kanter, that it would consider bringing this case.

 

It hasn’t given a lot of guidance as to what the exact facts would be around that, and there hasn’t been a Section 2 criminal prosecution in the modern era of antitrust enforcement. So, if such a prosecution were brought, then that would be a very significant departure. It’d be a very interesting case to watch unless, I suppose, you were the subject of it. And we’ll see. So I think significant change is on the horizon but still yet to fully come to fruition.

 

Jonathan Wolfson:  Thanks, David. Amanda, tell us a little bit about what you’re seeing in the world as it has been in the Biden administration.

 

Amanda Lewis:  Sure. So the perspective that I bring here is -- certainly is that I was at the FTC for about a decade under both Republican and Democratic administrations. But most recently, the last three years that I was at the FTC, I was on detail to Congress. So I’m going to give the backdrop of what has been going on in Congress during the Biden administration, understanding that separation of powers. We are -- there’s certainly been a lot of coordination, and the Biden administration has weighed in mostly in favor of things that the Democratically controlled Congress has done on antitrust, some of which was also on a bipartisan basis or most of which. So, with that, I will -- I’ll explain what’s been going on in Congress where antitrust has had a much more prominent role than it has in the past. In -- typically, the Antitrust Subcommittee — certainly on, I think, on both sides — has been a pretty sleepy committee but not so while I was there.

 

And, so, I would say, first, there are four categories or four issue areas that Congress has been focused on when it comes to antitrust. And that are -- those are digital markets, supply chain, healthcare, and agriculture. There’s also, I would say, labor competition issues as well, so we’ll make that five. I think the most prominent area has been in digital markets. But all of these areas were highlighted as priorities in President Biden’s July 2021 Executive Order. So, in that Executive Order, the President -- it had a pretty extensive order and all geared towards promoting competition and the American economy. But all of these areas were featured prominently.

 

So the digital markets investigation was initiated during the Trump administration, and that was a 16-month, bipartisan investigation focused on Facebook, Google, Amazon, and Apple. And based on the findings of the investigation, after Biden took office, a group of Judiciary Committee members introduced several bipartisan bills, all of which were aimed at reining in the monopoly power of the largest online platforms and also revitalizing competition in digital markets. So the Senate Judiciary Committee has advanced the companions of two of those bills, the American -- sorry, this is always hard to say -- the American Innovation and Online Choice Act — which I did not name, but I did work on — and the Open App Markets Act. And the bill sponsors are hoping for a vote this summer on both of those bills, and it is certainly possible that that could happen, and those bills could become law. So, tying back to the Biden administration, the White House has endorsed the Big Tech legislation and does -- that came from the DOJ in the form of a letter, but it’s not just approved through the Antitrust Division but also goes through other parts of the administration.

 

And then, also, at the Department of Commerce, Secretary Raimondo also endorsed the legislation, so I think there’s been a pretty strong show of support there. This, as I think as I mentioned, the legislation is bipartisan and has a lot of support on the Republican side as well. Just briefly on healthcare, there have been hearings on -- I think that, both in pharma and provider consolidation have been priorities on both the Senate and the House side. There has been legislation that has been advanced out of committee but not inactive yet. And as a -- another topic that, not surprisingly, has received a lot of attention is the relationship between competition issues and some of the supply chain problems and fragility that we’ve seen and also some of the high prices — right? — high prices in particular for consumer goods. And I know on the House side, they had a hearing looking at that, and I think that’s the sense.

 

Certainly, from the White House, I think that there’s messaging that certainly competitive issues and consolidation issues and problems and lax enforcement over the years has -- underenforcement and lax enforcement has contributed to many of the problems that we’re seeing today in our supply chain and very high and rising prices. So for the other areas, agriculture and labor, I think we’re going to talk a little bit more about labor competition issues later, but I would just also note that both of those have been explicitly identified as high priority for this administration, both, again, in that Executive Order and then by the leaders of the -- Chair Khan at the FTC and Assistant Attorney General Kanter at DOJ that both -- with rhetoric and action. I think we’ve seen attention to all of the industries and issues that I mentioned.

 

Jonathan Wolfson:  Thanks, Amanda. And, Elyse, you’ve done some research, and you’ve got some interesting insights into the current system and where we look like we’re going.

 

Elyse Dorsey:  Yeah, yeah. Well, Jonathan, first of all, thank you so much for having me too. I think this is a really fun topic, and I love a good excuse to see David and Amanda. And as I’ve been saying, I think it’s a really interesting time in the antitrust world. I think it’s a really reflective period that we’re in and a time where we’re really reassessing our assumptions about what it is antitrust law can achieve and what it should be aiming to achieve. Right? There are a lot of potential goals out there and a lot of really important sociopolitical factors and considerations. And I think we’re trying to figure out the extent to which antitrust properly has a role here.

 

And I think one of the fundamental questions that’s -- that implicitly raises is what is actually the capacity of antitrust law and policy to be achieving some of these goals. A lot of them are really worth goals in their own rights. For any one given area of law, there’s only so much you can maximize. Right? So we have to figure that out and also to figure out, again, what antitrust enforcement is actually capable of. So, if we start bringing antitrust cases, are they able to really achieve the goals we want them to achieve? So I think we’ll get into a bit more of that a bit later on in the discussion, but I think, again, it makes this a really good opportunity to be critically reviewing what antitrust laws’ capacity is and to be checking our existing assumptions and taking a rigorous look at, okay, what’s the evidence that we have?

 

Again, we’ve been enforcing the antitrust laws for well over a hundred years at this point in the US, so there’s a lot of information and data we can draw from when we’re making these important decisions as to how to keep our markets competitive and how best to serve consumers going forward. And I think, as David alluded to in his discussions, over at the FTC, who I think we’re seeing some similar themes in terms of some of these over notions that they’re considering and how they might be able to effect some change and some good movement in some of these spaces. As David noted as well, I think we’ve started to see some initial shifts in the FTC, expressing a lot of interest in some of these different areas but not so much has yet had a chance to come to fruition. Again, some of this change takes a little time, and they’ve only had -- I think the new chair passed the year mark. So I think they’ve been busy — right? — but not a ton, again, has been fully flushed out and started to come to realization, especially, again, as David mentioned, in terms of what cases have actually gotten to the courts and been able to be litigated.

 

So I think what we’ve seen so far is a lot of expressions in policy statements, sometimes in statements going along with settlements where the FTC is really explaining some of the other things that they are looking at critically now and, I think, trying to navigate the way forward on some of these. I know Chair Khan, early on in her administration, noted that she was really looking to create a more holistic approach to identifying harms, including recognizing that antitrust and consumer protection violations might harm workers and independent businesses as well as consumers. So that’s been a little bit of a shift in their thinking. I think we’re seen a lot of focus on potential labor monopsony. Commissioner Slaughter, I think last summer now, reiterated that she thinks antitrust law can be doing more to affect racial equity and might be able to navigate in that space as well. So we’ve seen a lot of statements like that. And then, the FTC also has been changing or adopting some of their guidance.

 

So they revoked their Section 5 statement. They also withdrew from the Vertical Merger Guidelines last year. And I think this, again, puts us in an interesting space at this point where they’ve taken away some guidance. They haven’t put out anything new yet. I know they’re actively working on it, and I think a lot of people have a lot of expectations about what that might or might not be able to do. And as David said, I think we’ll get into this a little bit later. But I think it’s, again, a really interesting time, and it does feel like we’re on the precipice of some potentially really big shifts and are just waiting to see how all of that takes shape.

 

Jonathan Wolfson:  Thanks, Elyse. Well, the first question we’re going to throw to the whole panel is, “Where would you put the Biden administration efforts in the short and long-term arcs of the history of US antitrust and competition policies?” So we’ll take a couple minutes and talk about that. Elyse, if you want to go first.

 

Elyse Dorsey:  Yeah, absolutely. So, again, I think it’s an interesting time because in a lot of ways it feels like déjà vu all over again. For the last few decades -- right? -- antitrust had been pretty focused on economic considerations. Right? It really became targeted over the last several years, and that’s what the courts really look at is the consumer welfare. And that’s -- it’s the lodestar -- right? -- of antitrust analysis when courts are figuring out, okay, is this -- does this violate the antitrust laws or not? They’re looking, too, okay, what actually happens to consumer welfare? Are prices going up or down?

 

Is innovation -- is this harming innovation? Is quality getting better or worse and really looking to those factors. And what we’re seeing today is a better of a resurgence in a notion that antitrust law maybe can be doing more about some of these sociopolitical goals that are, again, a big part of the broader popular discussion at this point in time and really trying to foster that. And that is something, in the history of antitrust law, for several decades, there were many different goals that the antitrust laws were trying to foster. And I think recognizing some of the history is important here because it informs how we got to where we have been for the last several decades. And, so, one thing in particular that I thought I’d mention in the discussion here is I’ve been working on a paper looking at income equality or the distribution of income because there’s a ton of information there and empirical work as to what’s been going on for about a century now and tracking that against what has been happening in antitrust enforcement because, for a very long time now, there’s been this notion that there’s been an intimate relation between antitrust enforcement and the distribution of income.

 

So as far back as 1940, the Temporary National Economic Committee identified this potentially intimate relationship between the two and really set out to explore that given some early data, in terms of income inequality and what they were seeing in antitrust. And what I’ve been trying to do is map the two trends over time to really, for the first time, explore what’s actually going on there and see how well they track against one another because, again, I think what’s happening right now is we’re reassessing what antitrust law can do. And when we do that, we really need to think about what is antitrust law’s capacity here. I think there’s a lot of agreement across the board that individual antitrust cases will have obvious distributional effects. And I think the bigger question is whether antitrust law can or really does play any, sort of, more than marginal role and can really affect change in terms of the distribution of income. And I think what the early data that I’ve been able to pull together so far doesn’t really show that there’s a strong relationship between the two, that antitrust enforcement isn’t necessarily, again, on a macro level, affecting distribution of income, which is maybe not surprising, given how factually based individual cases are and all of those kinds of things.

 

And, again, even the -- in 1940, the report of the Temporary National Economic Committee noted that increasing the effectiveness of competition is not necessarily going to yield equal incomes for all and that considerable degree of income inequality seems consistent with a degree of competition, and it’s probably actually an essential characteristic of a competitive economic. Right? So, again, I think it’s this balancing act, and I think that’s what we’re seeing again is we -- antitrust law went from trying to foster several different goals, including many sociopolitical goals focused very narrowly on the economic goals for the last several decades. And now, there’s this reassessment in terms of moving forward, are there other things antitrust law can or should be doing?

 

Jonathan Wolfson:  Thank you, Elyse. Amanda, do you have any thoughts on where we are in the long-term arc?

 

Amanda Lewis:  Yes. Yeah, I do. So I think I’m going to talk a little more -- I think the question that Elyse raised and the work that she’s doing is really interesting. And I agree 100 percent that it is very helpful to look to the past to try to learn lessons from the past to make informed decisions about the future. So I really -- for that reason, I’m a big fan of merger retrospectives. And, so, I really applaud her work on that. I think it is a tough -- it’s a tough issue in terms of when you’re looking at, through correlation — I’m not saying anything that anybody doesn’t know here — but correlation versus causation and then trying to isolate the amount to which -- how much antitrust enforcement or stronger antitrust enforcement might be somehow alleviating income inequality or other sociopolitical problems. My view is, certainly under current law, we should be using every tool we have available to address sociopolitical problems.

 

We -- I -- we -- so we have antitrust law, and I think the rhetoric and the action that I think we’ve seen to date and probably will see more of is a reflection of Assistant Attorney General Kanter and Chair Khan, saying what I’ve heard them say along, which is we absolutely need to be using every tool in our toolbox at the agencies to address the problems that we can. So, I guess, I say I certainly -- I do not think that antitrust can solve every problem, but I do think that aggressive and strong antitrust enforcement and more competition will help and will help in a significant and tangible way that is worthwhile. I don’t know that that affects -- except for maybe at the margins in some very close cases, which cases are brought versus which cases are not. So I think it will be interesting to see how the rhetoric and the philosophy that Assistant Attorney General Kanter and Chair Khan came into their roles with, how that does come into play in the policy making and, again, the enforcement decisions since they’re in enforcement agencies. So how much will that actually change things?

 

I, again, commend them and think that they are on the right track to say we should be using every tool available to be as enforcement minded as we can to try to address some of these problems. And coming from where I came from, being on the Hill for those past three years, I think real -- for more significant change that we really do need to see legislative change and that we need Congress to step in. But I look forward to seeing the enforcers and the agencies do -- implement some of the policies that they’ve talked about, and there’s certainly a lot that they can do. So I look forward to that. I think one thing that I would like to highlight in terms of a change that — and I’ll try to be brief about this — that I has been really positive and interesting that I did see firsthand when I went back to the agency for a few months after I was on detail is that I think Chair Khan and Assistant Attorney General Kanter — but I’m more intimately familiar with the FTC side — has made a concerted and pretty successful effort to democratize the agency’s enforcement and policy work in a way that has brought in a lot of new and important voices that have somewhat — perhaps there was a resource constraint or other reasons have not been part of the conversation.

 

So I think that has been a real change and, I think, an improvement to have not just the narrow antitrust bar or antitrust lawyers and their clients weighing in on policy but opening that up to -- more to the public and to community groups and small businesses and other types of civil society groups who can provide a very different but important perspective.

 

Jonathan Wolfson:  Thanks, Amanda. David, what are your thoughts?

 

David J. Shaw:  Yeah, and I’ll try to be brief. But I think, at least rhetorically -- right? -- because we talked – we’re still somewhat early. We haven’t seen the full fruits. At least rhetorically, on the short-term arc, I think we’re seeing the Biden administration enforcers, again rhetorically, reject a 40-year bipartisan consensus around antitrust and, specifically, the consumer welfare in the role that economics plays in that. And there’s a high degree of skepticism of economical analysis and the idea of efficiency as an overriding goal of antitrust. I think a lot of skepticism of corporate power and bigness in general.

 

And to be fair and to be clear, this is not, say, – it’s a partisan rejection of it because you certainly see this from a -- there seems to be a realignment happening across both parties. I see a lot of skepticism of the value of mergers and acquisitions. Now, in the broad arc, in the long-term arc, in many ways, this is a return to older approaches to antitrust. But one concern I have is what replaces that consensus because I think there’s some significant merit to the critiques that were laid against the antitrust of the ‘50s, the ‘60s, of the ‘70s that it was vague and unprincipled. And, so, I think what we haven’t quite seen yet is, assuming that the actions look to the rhetoric and assuming that there’s success, is what comes next. We have hints.

 

We talk about competitive process and market structure as opposed to consumer welfare, talk about dispersion of power or access to markets or anti-concentration or even resiliency in response to efficiency. We hear a lot of talk about the importance of bright-line rules and structural presumptions and structural separations as opposed to a rule of reason analysis that specifically looks at individual practices and mergers. But I think there’s still a lot of details that need to be filled in before understanding exactly what the new world will look like.

 

Jonathan Wolfson:  Thanks, David. And kind of related to that, as you mentioned, there’s been a lot of discussion about the Consumer Welfare Standard and whether or not it is the correct policy goal or whether there should be other policy goals. What are your reactions — we’ll start with you, Amanda — to expanding antitrust purpose to things beyond the pure Consumer Welfare Standard that has been the touchstone for the last three or four decades?

 

Amanda Lewis:  Setting a touchstone is a little bit before and -- but I think this is a good question, and this is an area that I welcome the opportunity to what -- I think it’s an area that merits some clarification. In my experience, people are often talking past each other when they debate whether antitrust laws should be limited to the Consumer Welfare Standard or broader. So I think it’s really important to start with a shared sense of defined terms and -- or, at least for this specific conversation, because it’s just -- consumer welfare, I have -- generally, I’ve seen it be used in two different ways, often without the speaker maybe explaining that but just assuming that everyone knows -- is using the same definition. So, first, I think there’s a broader view, which is prevalent among most of the antitrust bar. And it’s actually fairly conventional. It was always my understanding of what I was supposed to be applying as a staff attorney, looking at merger investigations.

 

And that definition definitely encompasses non-price harms to consumers, like decreased quality. It encompasses harm to workers and sellers of goods or services, for example, in monopsony cases. So that is one definition that I think is, at least among the antitrust bar and practitioners and the agencies, actually not very controversial. The other view that I think I’ve heard maybe on the Hill or maybe in academic circles is more narrow, suggesting that the Consumer Welfare Standard is only concerned with price effects on consumers. And unfortunately, some -- I -- some court decisions have also articulated it that way and not been friendly or, let’s say, have been even hostile to the broader view, which, again, I think among the antitrust bar is fairly conventional. So I think the -- and going back to the point about what should the -- what is the proper role of antitrust law, I do think that consolidation and anti-competitive conduct has exacerbated and does exacerbate many social ills on a broad scale.

 

So, for example, hospital merger consolidation has -- I don’t have the empirical work in front of me, but I think that there is -- I mean, I know that there is empirical work, that there has been harms to patients and quality, based on consolidation. So -- and access to healthcare and things like that. So I guess I’ll just wrap it up that, in my view, stronger antitrust enforcement and policies that result in more competition can absolutely help alleviate some of these sociopolitical harms. And I, again, I’ll say I don’t think antitrust can solve every problem, but I do think it is an important tool in the toolbox, and it shouldn’t -- you should take it out and use it.

 

Jonathan Wolfson:  Thanks, Amanda. David, what are your thoughts on this?

 

David J. Shaw:  So I’ll say, first of all, I agree with Amanda that, I think,  with the loose [sic] of the antitrust bar, consumer welfare has been understood to -- fairly broad and goes well beyond price harms. The econometricization of antitrust enforcement — and price is a very easy thing to measure — I think often channels litigation and disputes in the price and price effects. That’s obviously an important part of competition, but I agree that anyone who’s saying that it’s just about price and price effects or just prices on end consumers as opposed to other people in that vertical chain are misstating it.

 

I’ll be brief because I know we’re running short on time, but I think vagueness, historically, has been a problem with antitrust laws. In 1937, Robert Jackson, who went on to be Justice Jackson, but he was actually the Head of the Antitrust Division at that point in time. He said, “For 40 years, administrations have alternated between policy being aggressively vague and passively vague when it came to antitrust enforcement.”

 

And Justice Stewart said in 1966, about 30 years later, in his dissent in Von’s Grocery, that -- he said, “The sole consistency that I can find in litigation under Section 7 is that the Government always wins.” And the Consumer Welfare Standard and sort of the primacy that that has taken in antitrust analysis, which coincides about 10 years after Von’s Grocery, was really a way of supplying a coherent, principled method to answer tough questions. And I’ll just give you one example that Einer Elhauge had in a relatively recent, sort of popular piece, where he said, “If you have a merger or if there’s a ten-firm market and two of those firms merge so it takes it from ten to nine but the merged firm is more efficient and better competitor with the remaining eight firms in the market, is that a decrease in competition because it’s one fewer competitors, or is that an increase in competition because it supplies more vigorous competition?”

 

And the Consumer Welfare Standard is a way to answer that question, say, well, that’s actually -- that’s not a decrease. That’s not a lessening of competition. That’s not something that we should prohibit under the antitrust laws. That’s procompetitive. That makes the market better and more efficient. And I really worry if we wholesale reject consumer welfare that we lose that coherence, and we lose that principled approach. And I have many more things that I can say on this, but, in the interest of time, I’ll stop there.

 

Jonathan Wolfson:  David, I’m going to turn to you quickly and just ask — I know you were just at DOJ in the Antitrust Division and some of the senior leadership — just talk for a minute about some of the challenges that the Biden DOJ is going to face in achieving their policy agenda.

 

David J. Shaw:  Sure, yeah. I think there’s several. And I think the first is just institutional inertia. Running a federal agency is challenging under any circumstance, and trying to make changes, even changes of the margins, is difficult. It’s like steering a battleship. And that’s just human nature. And if you, again, if you take the rhetoric from Chair Khan and from AAG Kanter seriously, and I think you should, then keeping with the nautical imagery, what they’re trying to do is not to have to adjust course ten degrees port but to really fundamentally change the direction of the ship, and that’s just a very challenging thing to do.

 

There’s also, then, resource constraints. I mentioned how this was a very muscular rhetoric about not settling cases but litigating them. Well, it takes a lot of effort to staff cases just for investigation. It takes even more to litigate them. And, so, you start running into the problems. You can only -- there’s only so many cases that the FTC and the Antitrust Division can litigate at any one point in time.

 

And, so, you really do have to make tough choices on the margins. And every case you choose to litigate rather than accept a settlement. Even if the settlement isn’t ideal, that’s taking away resources from another case that might be more challenging. And then, I think the final challenge is going to be the federal judiciary because you have 40 years of case law that embodies a certain view of antitrust. And the Biden administration enforcers are very critical of that view, but, at least for agency-driven change — and we’ll set Congressional changes aside — for agency-driven change, you can’t fundamentally make those changes without persuading a federal judge and federal courts and doing that while you, as the agency, bear the burden of proof. And, so, I -- we’ll see. And it’s a lot of intelligent, talented people over there. And, so, I certainly wouldn’t rule that out, but it’s going to be tough.

 

Jonathan Wolfson:  Thanks, David. Elyse, talk a little bit about the challenge the FTC’s going to be facing.

 

Elyse Dorsey:  Yeah, yeah. I think a lot of the same ones that David mentioned, again, institutional inertia is a very real thing. Right? It’s a big agency. It’s been doing what it’s been doing for a long time, and that’s always going to be difficult when you’ve got a lot of different motivating factors and different folks with different perspectives at the agencies. One thing in particular I wanted to add on, picking up on the point about the federal judiciary, is, when the FTC and DOJ are thinking about how they’re going to crash Merger Guidelines and what those are going to look like, I think there’s a lot of pressure on the Chair and on AAG Kanter -- right? -- to really be reshaping merger enforcement. But, at the same time, what has made the Merger Guidelines so effective and so persuasive in court is that they’ve stayed relatively the same, and the FTC and DOJ have been very clear that these guidelines have been reflecting their long-term practices. Right?

 

They’ve largely been retrospective as opposed to looking forward. So they’ve been telling the courts, “This is what we’ve been doing for a long time. This is what we’re seeing,” and have very thought-out reasons as to, “Okay, for the last several years, we’ve been seeing. And this is how we’ve been updating, for example, consent decrees, what we look for in divestitures.” And, so, then, over time, incorporating those changes to, again, really reflect current agency practice. And I think there’s going to be a bit of attention for that moving forward, in terms of if they want to start reshaping mergers and how they’re reviewing them, how they walk that line with also maintaining Merger Guidelines that courts are going to be comfortable relying on and giving deference to.

 

Amanda Lewis:  Can I just add just real quick -- Jonathan, is that okay?

 

Jonathan Wolfson:  Yeah.

 

Amanda Lewis:  Yeah. Okay.

 

Jonathan Wolfson:  Yeah, absolutely.

 

Amanda Lewis:  Yeah, I think that is a really interesting point, and I will be interested to see how courts do, what kind of deference they do give to any new guidelines that are issued by the agency or other guidance documents. I do think that there is a big benefit to the agency being transparent about the fact that, “Look, we are new leadership here. We’re going to be doing things differently,” so it -- well, I know there’s been some criticism about rescinding the guidelines, and there’s -- there is a risk that new guidelines won’t have the force of law that the long-standing guidelines that have been in place have generally enjoyed by the courts. There is -- there’s a transparency there that is providing, I think, valuable information to industry and marketplace participants who are considering mergers that, “Look. This is -- that’s the old approach. We are not taking that approach anymore.” And I give the agency credit for that. I think it’s important that people -- that the guidelines match the approach that the agency is going to take.

 

Jonathan Wolfson:  Thanks, Amanda. So one interesting question that I’ve had in thinking about this topic is assume that we have had the standards wrong and that the new -- assume that we have had some sort of change in paradigm, which good, bad, or indifferent. If we realize that there are mergers that we’ve approved and there are organizations and companies that exist now that maybe we don’t think are benefiting consumers or how -- whoever ought to be benefited. What is the way that you deal with unwinding those things? Or how do you Control Z the situation and not basically just reward all the incumbent companies that have managed to get by in the old system and now you’re punishing the future mergers that are coming forward? So, Elyse, do you want to take that question first?

 

Elyse Dorsey:  Sure. I’ll take a stab at it. And I’m sure Amanda and David will have many things to add and many corrections to make. But I think it’s a great question, and I think that’s really where the rub is today -- right? -- is, okay, but how do we navigate a viable path forward. And I think some of that, again, starts with taking stock of what we’ve seen, not just in the short term but the longer-term trajectory of antitrust law, and really looking at the cases and what the agencies have been bringing and how we’ve been doing things. And, again, making sure that we’re assessing what antitrust’s capacity is. Again, we want to make sure we’re using all the tools in our toolkit, but we also want to make sure we’re properly identifying them and using them the way that we’re supposed to so that, again, we’re actually getting what we want to out of the tools, and we’re not creating chaos where we’re trying to create competition.

 

And I think, to your point about how do we not just -- how do we viable on the way forward continue to help out smaller businesses and things. I think some of this is difficult because a lot of times with increasing regulatory costs and regulatory hurdles, what you see is powerful incumbents are a little bit better — maybe a lot better — situated to be navigating that because they have all these sorts of resources. So, again, I think it’s really important to be cognizant of both the effects we want to achieve and any potentially unintended effects of the different regulations so that we’re not pricing smaller competitors out of the market because we’re raising the cost of all mergers, even ones that would be good for smaller competitors. And, so, that leaves us with only larger mergers with incumbents who are powerful and have money to throw at lawyers to be moving things forward. I’ll let -- I know -- again, we’re kind of -- this hour’s flying by, and we’re kind of getting close to the end, so I want to make sure David and Amanda have a chance to weigh in here as well.

 

Jonathan Wolfson:  Yeah. Go ahead, David.

 

David J. Shaw:  One tool they have — and it’s a hard tool to use — but, if you want to unwind deals, you can bring Section 2 or even Section 7 cases after the fact. There’s nothing that stops — maybe if there was a consent decree, that’d be a different story — but, if the deal just went through, and that’s exactly what the FTC’s doing with their large Section 2 case that came in December of 2020, is trying to unwind long, since-closed deals. The longer it goes, the more challenging it is because it’s an equitable remedy. And at some point, I think federal courts say, “Well, you know, this happened ten years ago. I’m not going to just give you that remedy now.” I think, on a going-forward basis, you could imagine — and it’d probably have to be legislative — but you could imagine tweaks where you -- if a company met certain criteria, maybe a size in a given market, maybe flip the presumption or the burden of proof.

 

And, so, that might solve, you know, by not creating shackles on smaller companies that kind of need to get up to scale to compete, but letting larger companies that might already have, say, 50 percent market share, making it a lot harder for them to acquire companies that go above that 50 percent market share, but still giving them an out if there actually is a compelling, procompetitive reason for the deal but putting the burden on them to do that. This is a thought experiment in my mind. I’m not endorsing that, so that we’re clear. But those are options.

 

Jonathan Wolfson:  Well, and Amanda’s on the plaintiff side now in her private practice, so she might want to endorse that position. Amanda, what are your thoughts?

 

Amanda Lewis:  Yeah, I think not just among the plaintiff’s bar [inaudible 00:50:07] -- in terms of merger cases, there are actually very few private antitrust enforcement challenges to mergers, even though that is contemplated within the statute. I think that burdenship thing is something that there’s a lot of -- well, at least -- on the Judiciary Committee, I saw there is some bipartisan support for that. And our digital markets investigation, that was one of the recommendations that we included in the report. And that was also in the Third Way Report, which was authored by -- or put out by Ranking Member Buck and joined by a few other Republican Judiciary members. So I think that is something that could be a good path forward in terms of legislation. With respect to increasing costs for some firms, if you raise the cost of doing mergers, CALERA, which was the antitrust reform bill — excuse me — introduced by Senator Klobuchar, that actually has different standards for larger mergers.

 

And, so, that -- that’s one way to address it, if you have tailored standards based on the size of the merger. One thing that I’ve found — and then, I guess, just real quick — on the House side -- and there’s a Senate companion for a merger bill that would be focused specifically on the covered platforms, like the Big Tech companies, which is where there’s been a lot of criticism about where the agencies have gotten it wrong. I think -- just something that’s interesting is the -- when -- on the one hand, there’s often, they say, there’s this messaging that we should have -- we shouldn’t have some sort of broad, vague merger bill that adds a lot of cost to doing mergers. But then, I often see, when we put forward a tailored, more specific, narrowly targeted merger bill, the other side -- or there’s a lot of critiques that come out and say, “Oh, that’s not right. We can’t have one rule for one group of merging parties and then another for others.”

 

And often I think that criticism is just hard to take because it -- somehow, it’s not -- it almost seems like these people are just saying, “We don’t want any changes. We don’t want any merger reform,” whether -- and if it’s specific, the critique is it’s not general. “We needed economy-wide rules.” And then, if it’s economy-wide, it’s, “Oh, it’s economy-wide, and there’s something wrong with that.” So that’s just -- just to share some experience in what I saw.

 

Jonathan Wolfson:  Thanks, Amanda. Well, we’ve got time to take one question that we received from the audience, and I’ll just get -- take all of your thoughts on it. We have a question asking, “If we got rid of the Consumer Standard, would the set-asides or goals for disadvantaged businesses from governments and larger corporations be subject to scrutiny as economically discriminatory against small business competitors who are not disadvantaged?” So I will take that. We’ll go start with Elyse. And then, Amanda as the plaintiff’s lawyer representative on the panel, we’ll let you go next and then David.

 

Elyse Dorsey:  Yeah. Sorry. So I’m just trying to pull up that question again here. So I think what I understood was, if we’re abandoning the Consumer Welfare Standard for disadvantaged business -- oh, sorry. I think it’s gone now. So I guess, yeah. Some of that, I think, is part of what David was alluding to in terms of how do we navigate a path forward if we’re abandoning the Consumer Welfare Standard, and what does the world look like, and how do the decision makers, be it the courts or the agencies, define or decide what’s legal and what’s not. I think today one of the axiomatic things within antitrust law -- right? -- is that it’s there to protect consumers, not competitors.

 

And, so, what happens to competitors is certainly something the courts consider. But when you think about competition, a firm can do something and compete successfully on the merits; that means a competitor loses out, so they are losing sales. If you’re just looking at what happens to competitors, that’s not necessarily a good proxy for competition because consumers might be better off with the lower prices. And if a less efficient competitor can’t keep up with that, that’s -- it’s good for consumers. It’s not good for that competitor, and I think that’s -- and a lot of the earlier case load within antitrust we saw was kind of the struggle -- right? -- was -- of course, we’re looking at what happened to competitors and trying to protect small competitors that often put them at odds with what was happening to consumers.

 

And, so, you see, in some older case law, the courts acknowledging that, “Well, we’re going to protect these smaller competitors, and prices might be higher as a result,” but that’s the line they were comfortable taking at that time. That’s not really a line that the courts are comfortable taking today or have been for the last several years, several decades at this point, during which, as David noted again, and we had a bipartisan consensus around the Consumer Welfare Standard. So, again, I think you’d end up seeing a lot of confusion, again, moving forward.

 

Jonathan Wolfson:  Amanda.

 

Amanda Lewis:  So -- yeah. So I don’t think -- I just -- I don’t think there’s this stark choice between we either -- that we’re going to abandon the Consumer Welfare Standard, and the sky is going to fall, and no one’s going to know who can merge and who can’t merger and what’s legal and what’s illegal. First of all, the agencies can’t do that unilaterally. As David mentioned earlier, they have to prove to a court that a merger is illegal or that conduct is illegal under the Sherman Act. What I take it is -- what I see as, I think, Chair Khan and Assistant Attorney General Kanter are saying is not -- I just -- and I think Chair Khan has even used these words. It's about a more holistic view of what are the effects of the merger. And I think there is a lot of consensus that the bar has been too high to prove that a merger is illegal and that the courts have been reluctant to recognize harms that are real. And, so, that is why you do have a lot of consensus in Congress right now that something is very wrong and very broken with the way that we have been doing things and why there is -- Senator Lee, Mike Lee, has an antitrust reform bill, so you’re seeing it from all sides that, certainly on the Hill, that something is wrong here.

 

I know, yes, we’ve been doing it this way for the past 30 to 40 years, but we don’t like where we are. So we’ve been doing something wrong, so we have to -- not we have to, but we want to from a policy perspective. As Congress, we want to change what we’re doing here, and we want to give courts new directions or the course correction. Now, that can be a big course correction, or that can be more smaller and be that more holistic view versus some type of “throw the baby out with the bath water” kind of thing. So I’ll leave it at that.

 

[CROSSTALK]

 

Jonathan Wolfson:  David, I’ll give you the last word.

 

David J. Shaw:  Sure. So I think I echo a lot of what Elyse said, which is I think there’s real danger of what comes next, although I take Amanda’s point that that’s not something that can be unilaterally done by the agencies. And maybe it will be during incremental change, adding some holistic expansion out, although I think the rule of reason approach is pretty holistic. So I’m not really sure how we do that without a change. To get very doctrinal, to the -- this question was asked as whether set-asides for disadvantaged businesses by governments would be subject to scrutiny, and the answer is, no, absolutely not because the interest laws don’t apply to governments. And that’s a very well-established doctrine. On terms of large corporations, yeah, it’s an interesting thought experiment, and we’ll be litigating that in 10 to 15 years from now. So we’ll find out. Thanks, everyone.

 

Jonathan Wolfson:  Thank you all so much. And, panelists, really appreciate your time. Thank you to The Federalist Society for hosting this event. I know that we didn’t get to everyone’s questions, and we didn’t get to all the questions that we as the moderator and panelists had hoped to get to, but this just gives us more things to talk about in the future. Thanks so much. Have a great weekend, everyone.

 

Amanda Lewis:  Thank you.

 

Jack Derwin:  Thank you, Jonathan. And I’ll reiterate your thanks to the rest of the panelists as well. And thank you to our audience for tuning into today’s virtual event. You can check out our website, fedsoc.org, or follow us on other major social media platforms, @FedSoc, to stay up to date. With that, we are adjourned.