Transcripts For CSPAN2 Justice 20240703

Good morning, everybody. And welcome to brookings. Welcome to those in person and those online. On cspan. Before i introduce our distinguishedho guests running e program today. We are going to do 60 minutes of discussion among the three of us then we will open up for 30 minutes of questions from the floor as well as questions online. We do ask identify yourself and identify any appropriate affiliation. Lets get on with the program the Brookings Institution and the governor of the studies program off which i am part, i m a visiting v fellow here at brookings and government studies program. We are honored to welcome back to brookings the assistant attorney general jonathanto kanr from the Justice Department. Let me quickly introduce both. They need no introduction, but i will give them a short one here. Leah. On the faculty at columbia law school. Before that she was counsel of the house antitrust subcommittee before that she was an attorney advisor to then the commissioner who was now chair of the Consumer Finance protection board. She is nnc a prolific contributo the antitrust debate including a piece while she was a student at yale. She was nominated by President Biden tode be a commissioner on the ftc. She was confirmed by the senate in june of 2021. I think that she set a record in terms of time as a commissioner before coming chair. The president announced that he would designate her as ftc chair jonathan kanter. A partner in two Different National law firms. Most recently set up and antitrust boutique here in d. C. Like chair con, he has been an advocate. A vocal advocate for vigorous antitrusten enforcement. Also likely he is tough and determined spirit as demonstrated early in his legal career by surviving two years. Lets get to the questions, although i should note that the assistant attorney general kanter was c confirmed by the senate in november of 2021. He is coming up at two years. Almost two and a half years in position. First of all, welcome. Both of you before, assuming your rolls in government, critical of antitrust laws. I think the bottom line is asked antitrust enforcement over the last 3040 years has left a lot of consumer injury. Unaddressed or under addressed. And that means harm to consumers two workers that antitrust enforcement should be reaching and have not been doing. I think it is fair to say and you would embrace the notion that the president appointed you because you saw the need to be a game changer. First question is that an accurate characterization of the role. Specifically as yousp would approach the job on senate confirmation. What goals did you have in mind. What is the progress thus far. Thank you for hosting. Such an honor to be appear on stage with dale. It was noted in 2021 and assessment of antitrust where the needs were reinvigorated competition policy. I think that there is an understanding over recent decades weco have seen waves of consolidation across markets for many markets across the u. S. Now dominated by a small number of companies and that that lack of competition is harming the American People resulting in higher prices. Resulting in h lower wages. Rtit has made it more difficult for entrepreneurs andld startups to really get a foothold in the market. This, overall, means that our economy is worst off and as the president noted it means our democracy is worst off. I think that there is been a government wide effort to reinvigorate the policy. Its been an honor to be part of that. At the ftc we have a whole set of Law Enforcement tools. We also haveal policy tools. We have been seeking desire on all cylinders to make sure we are enforcing the laws that Congress Passed to reinforce the sherman act and the clayton act but also critically the ftc act. One of the things that we have been doing is really going back to the statutes including section five and understanding what was Congress Goal when congress wrote this. How of course it was interpreted and how we can make sure that across our are being entirely faithful to the statutes into the legal precedent on the books. That is what we have been engaged in. It could be in Close Partnership with our colleagues at the antitrust division. We always want to be moving with even greater urgency and greater speed but we are really thrilled with the progress we have already made in the last month alone. Filing monopolization lawsuits. That is where i am going. Go ahead. Both on the Consumer Protection side as well as a competition side including what we proposed earlier this year which would eliminate noncompete laws and contracts. Literally thrilled with the progress we have already made. It is quite small all things considered. Only half of which are really devoted to antitrust. We are smaller today than in the 1970s. We are small but mighty. Really looking to fire on all cylinders to meet the moment. Thank you. Jonathan. Allow me to echo the sentiments that were shared. When ita started out the ftc, se bright eyed summer intern. Summer of 96. Eventually, i looked up and saw two giants. I saw the chair of the competition. I thought to myself, if i am fortunate, i, will grow up. More hair than bill. Not much. [laughter] being here and, in this moment with you in the chair is unbelievably humbling for me and very meaningful and moving. So, i do think that we cap stated a lot of what we are trying to deal. Trying to go back to the first principle. What are the goals of the anti trust laws. I think the competition matters. Why . Because a Democratic Society depends on opportunity. The ability to start a business. Being mobile as a worker and entrepreneur. Benefiting from innovations, lower prices. All of these are core fundamental values to our society. The antitrust laws are the cornerstone of protecting those values. We haves a very serious responsibility which is to do that. We take that very seriously. We have to look all around us. This overly technocratic exercise. Instead think about antitrust as Law Enforcement. It is to enforce that law. First and foremost, when i the Great Fortune andfo privilege oa lifetime to take the reins of the antitrust division, i started with the principle of this is an exercise of Law Enforcement. The facts and we followed the lawn we see where it leads. I have also started with the appreciation, but i have come to really appreciate that key to success is not what i deal. The key to success is harvesting the antitrust commission. The assistant attorney general, the talent is overflowing. The wisdom, the institutional knowledge, the fortitude, the commitment is unending. Part of my job as i see it and perhaps the most Team Ingredient to success is making sure we reach that. I look back and i think about President Bidens executive order. This court we have received from attorney general garland and his dedication to reinvigorating the antitrust enforcement had we have a lot to do, but i am really proud of where we have come. I am proud to see for example we have challenge the firstever and succeeded in menominee. In the firstever successful challenge to an airline transaction trial, for the first time in over 45 years, not only brought monopolization cases as criminalal, but we brought two f them including one conviction and one that is pending trial. The firstever systematic enforcement which involves interlockinghi directorates fors to resign from boards with many more investigations ongoing. We have made it very clear that we will follow the puck where it is going and enforce the law, in light of how markets actually work. As a result, we have seen a decline in problematic mergers coming to us in the first place and that is a winwin. It meansve that we do not have o use unnecessary taxpayer resources to Block Transactions because those transactions, to quote one of my predecessors who may be on stage here, some should never leave the board room. We have seen many abandonments over 10, not over a dozen, since we started. These are transactions and the threat of a challenge have abandoned. When i look back, you know, the first two years have been a long decade. We are excited. We have an amazing team. We have a bunch of them out here today. An Extraordinary Team both in the front office at the department more broadly. Mosty, importantly, the antitrut edivision employees who were wh no offense to my friends at the ftc, second to none. They can be tied. They can be tied. Let me just follow up on a point. I think that the public perception, certainly the antitrust Business Community perception is that the two agencies have dramatically increased the number of matters they are investigating and the numbers they are challenging. Jonathan just suggested that is maybe not right. The percentage of problematic transactions is probably about the same or a little less than it had been previously. Is that your experience as well . I think overall it is true. But, you know, as a law enforcer , the key goal is to turn. More and more we are hearing from senior dealmakers. The head from a prominent investment bank. Saying that previously, considerations around antitrust need to come in the middle of a dealer even at the end of a deal now he is seeing antitrust considerations and that it is happening at the very start. There are deals that are not being proposed because it is determined from an antitrust perspective. Serious legal concerns. Those deals are not getting out of the board room. From a Law Enforcement perspective, thatme deterrence s cca remark of our success. We are a looking at continue building on that. The more we can achieve this, the more we can ensure that our resources are being deployed more effectively and not having to go after the flagrant wall that we are seeing and shifting attention to areas where we think there needs to be more efforts including on the conduct side. Overall, we think it is a really important advancement. I like the way both of you frame up what you are doing as Law Enforcement. Many peoplean miss use the term antitrust regulation. There is not a lot of regulation let me continue on the merger thing. Those that are not antitrust nerds like me, you may be aware that there are draft revised murder f merger guidelines ia Public Comment. Closing a few weeks ago. Merger guidelines have been around in various forms since the late 60s. They have been updated and revised. The most recent is 2010. It sort of attempts to provide the Business Community. Agency staff i think was a sense of the framework of analysis. Somewhat the people surprise the courts over the years. Embracing these as a helpful and informative statement of what the analytic framework to be for looking at proposed transactions earlier this summer q issued new revised. A proposed guideline. I want to ask you some specific questions about what is in there you change the format in a very significant way the from the way that they had been since 1982. My old law professor issued the first revision. Can you talk about what went into this thinking and why the framework is changed . And what significance we should draw from that . Sure. I was nine years old with a full head of hair. A lotol has changed. For those of you that can remember back that far. Think about what your lives were like in 1980 deal. What cars look like. What phones look like. Documents were stored in file cabinets, not in cloud. The world was very different. The idea that we are bringing in a new format, new framework to how we think about mergers, in 2023 versus 1982 should see selfevidenten. The world has changed. That world has changed in many ways. The world has changed in terms of how competition presents itselfat. That isho how we started this project. If the goal is to protect the competition, the first question should not be overly technocratic like is this horizontal or vertical he had lots of antitrust lawyers. In my 25 years of practice, i dont think i ever saw an executive referred to it as horizontal or vertical. We have data, we have privacy issues. People pay with their privacy and data just as much as they pay with their wallets now. How people pay. How people communicate has changed. Stateoftheart and how we understand markets have changed. A theoretical aspect to how they apply research. We have data science. We have cognitive science. And behaviorall economics. The world has changed. And then does this threaten to harm the competition by lessening it or intending to create a monopoly . We have laid out a number of ways we see competition presenting itself. All of which are obvious to the Business Community. Is it a straight, you know, horizontal merger . You look at it one way. Will it likely affect a traditional supply chain with the manufacturer or distributor or retailer . You look at it one way. There are lots of different ways in which competition presents itself. By organizing the guidelines around the market, it makes it certain, we hope that we dont miss those market realities as we enforce the law. Thank you. In this proposed generation, we cite case law. What is the rationale behind deciding to defer to antitrust jurisprudence. A core pillar of what we are looking to do is fidelity to the law. A key part of this at the front and was to say lets go back and look at what the law says. The text of the clayton act and the legal precedent that is still on the books. It is still routinely cited by the courts. As we went through that exercise went through instances in which, you know, thered been a bit of a gap of wow they laid it out and what the book said. As well as justin tires framework that has not really been front and center. Part of this exercise we wanted to make sure that we were closing back out. Making sure the guidelines were fully faithful on the books. We were also ensuring that the document was comprehensive. They were w accounting for different ways that they may threaten competition even if these had not been top of mind in recent years. Part of that exercise, we wanted to makein sure that we were orshowing our work. If the guidelines will look different, the burden is on us to explain how they are grounded in the law inciting legal precedent seemed like a part of that exercise. It is actually been really striking to me to see the sharp reaction to that fact and i think reflecting more generally it seems like an antitrust over the last few decades. There has been greater reliance on tools including economic tools that are really important. Ultimately, this is a Law Enforcement exercise. The law is the core anger. We wanted to make sure that we were giving due respect and appreciation to the law on the books. Generally, one thing that i think they also do really nicely is itan does a lot of analytical work on the front end. You look at the document and there are at least 12 different ways you can analyze mergers on the front and. I will just say, internally, as we think about our staff with the very limited resources they have on a very expedited timeline assess mergers, it is already providing a lot of analytical efficiency onn the frontage. You can look at the deal and say this is raising concerns two, seven and a. That just angers the analysis and provides a lot more efficiency and effectiveness in knowing what will be the key dimensions we will be looking out. Both from a fidelity to law perspective, but also kind of eases use for our team spirit for the Business Community. I think that it would be a big step forward. Adding a comment. I havee seen some of the commens that have been filed. Over 4000 or something. I have suggested that you are citing Old Supreme Court cases. Challenges, there are not that many. Youth Supreme Court cases involving mergers. I think one of your colleagues did a Little Research and found that in the last 10 years, 50 different merger decisionsci hae cited to those Old Supreme Court cases. It isno not as though the agencs are kind of resurrected them the graybeard they are alive andve functioning. In a Law Enforcement exercise , you have to look at law. Has anyone out here heard of the case brown versus board of education . No, seriously. Raise your hand if you have heard it. Do you think we should still cite it as valid case law . Raise your hands. Let the record reflect most people raise their hands. I want to talk to those that have not. That was decided in, what, 1954 . My recollection from law school is that Supreme Court cases do not expire. The question is, how do you take those questions of law and apply them to tracks on the ground today. As you point out, these are the cases not only that we are citing, these are the cases that the courts are citing to. The case of stanford key legal principles, like mergers should not increase concentration to a certain level, mergers should not take a firm that already has monopoly power. A merger should not cut off supply of key inputs to rivals. These are core principles. Questions of law as they are often referred to in law school. That sets us from questions of fact. How you analyze in a particular merger depends on the fact of any particular merger. The key principles are still sound. The other thing that i point out is a lot of the cases were decided and this was actually an historically. T right after the seller firm and the antimerger act, the act that covers mergers was actually updated in t the 50s. To strengthen it, to close some loopholes. And, so, the following as you may expect, there were a bunch of cases that were decided to determine what that meant. Cases and numerous others were decided in the following decade and they were to determine what congress meant when revising the statute. They went back and they looked at what Congress Said when they were enacting the statute. It was i not surprising to me tt a lot of the key cases were decided right after it was updated. There is not been a lot of Supreme Court cases in the last 20 or 30 years. I think the last one did not even involve the merger of the early 90s. Dont go to the Supreme Court that often because a lot of the key questions around the scope of the statute have already been decided or at least the court determined that. That is the reality that we have we try to take those principles into the merger guidelines and then figure out what analytical tools using the stateoftheart thinking today, stateoftheart economics, data science, investigation tools to figure out how best to apply law by congress. Certainly the tools we use today are different than the tools int for the feedback. The newest guidance or when you will go to court. They will look at examining the opportunities to go to court. It is not helpful. The mainstream and others for this years interest. These guidelines are suggesting that increases in concentration. It is and of itself sufficient to initiate an investigation to go to court. That showing thread of substantial economic harm, showing the risk that market power will be obtained or enhanced as a part of what the government needs to do when it challenges an acquisition. Is that a fair reading the way the draft is intended to work . The structural presumption has been longstanding. The first 13 principles that we lay out are really what the government is doing. There is a separate section of the guidelines devoted to rebuttals. Laying out what opportunity firms have to say i understand government. This is your initial case. So i think that there is also been a misunderstanding about what we are saying related to the opportunity to provide rebuttal evidence. The first 13 really laying out templates as we make our initial assessment. That iss the core part of it. I think another key feature as we recognize that no single threat of analytical tools will necessarily be the right one. It is very depending on the market. The guidelines honor that fact. Here is a full set of tools. You will be relying on more the metric tools we have been using. We will use the right tools depending on the context. I think that that is a really important step forward. We have b seen all too often ani thinked the courts say we need o be mindful about what to say or the right tools for a particular context. That is what the documents are also trying to reflect. Can you givean your sense of when we can expect a final version . That is a great answer i want we are working as quickly as we can to adjust the comments. I have heard a lot of them. I think one of the things is absolutely bread absolutely remarkable. I know you listen through earlierrl revisions. A lot of the comments are from people. Emergency room nurses. Farmers o. Small business owners. They are writing in their own names in their own words and they are making sense. They are talking about their concernson. They are talking about how concentration and mergers have affected their lives. There are opportunities that they believe that should be available to them to compete and to work and to benefit from competitive economies. Not only in certain parts of the country, but throughout the country. To me, this encapsulates the moment. The moment that the country is watching. The country cares about competition in a competitive economy. It affects so many democracy. This is deliberate choice on our part. To write the guidelines in a way that iss accessible to the broader public. I think that one of the concerns i i had, and i talked about thi, the language that we use has become antiexclusionary. It has become overly technocratic. By using words that people can relatete to, terms that resonate with people that actually have important experiences to share increases participation. I think we are seeing that in the Public Comment process. I think that is a really important part of what we are doing it i will say, i have not seen all of them but i have read more than half of the comments, every single one, and i will read them all before we finalize this. The majority are not critical of the merger guidelines. The majority supports the direction we are going. That means a lot. The idea about concentration is a little bit head scratching to me. Unless the agencies have gone back to the 60s citing Philadelphia Bank as lena mentioned which stands for the proposition that increases in compensation can be a proxy for showing competitive harm. The idea that we are continuing those cases and the binding Supreme Court precedents should not come as a surprise for anybody. The statute says, transaction can be competitive if may be the competition tending to create a competition. Rather than being overly ductile and rigid, particularly to folks that are not antitrust lawyers, but the previous horizontal merger guidelines were focused on this framework around coordinated effects and unilateral effects. As arm way in which are presentd itself. These are terms that have been effectively made up by the antitrust institutions. They are probably important, but not fully reflective of how competition reflected wealth. The idea we would continue to rely just on those paradigms without thinking in the way competition presents itself, i think, would be a major disservice to the public. It is about the Public Participation tier. We made a very concerted effort to do listening sessions, healthcare workers, People Living through consolidation. I had the chance to go out to las vegas to do some listening sessions around the merger that is being considered. It is just been so humbling to hear directly from people that have seen firsthand how consolidation and mergers all too often have met that prices are higher. They are having to drive further for basics like hospital care and groceries. There is also been a deep dissolution with government inga sense that government is in out there fighting for them and protecting them from monopoly power and corporate power. The burden for us is getting it right from a competition perspective. Also showing people we have cops on the beat fighting to protect people from these forms of private coercion and a piece of monopoly power. That is really what i worry about. Maintaining the antitrust. Making sure we have the right feedback loops in place to be understanding. How is the work that our agencies are doing affecting people out there in the real world. The merger guidelines willl bere really important from an enforcement perspective. I think part of the broader exercise to make sure we are fully serving the public and caring that burden as well. N. Ill, maybe i will ask you a question. Bill uh oh. Jonathan this is unrehearsed. You seen the guidelines iterated over numerous versions including 1997, the first time guidelines added efficiencies. A lot of folks often portray it as embedded by the framers in the constitution. I dont think that is true. Yeah, and so i guess i would be curious about your observations because you have seen the evolution and the guidelines going back and and what you think of those criticisms . Well, lets talkic about efficiencies because that i was working with bob when he and his fellow commissioners concluded that there needed to be a discussion of efficiencies in the merger guidelines, the courts were beginning to talk about it even though there wasnt a lot of precedent saying it was it was a legitimate defense to anticompetitive merger and we put together principles. You can look at them, they will not be outcome in a merger, the serious risk of any compive harm, they ned to be unique to the s merger and that sort of stuff. While we were talking about what to say and how to say it, law professor bill baxtor. Who is billbi baxtor . Leading antitrust professor and 1981 Ronald Reagans choice to be head of the antitrust division where john then and i have been both privileged to serve. He was a friend and spent 3 lunch, because they are bull shit, people will assert them. You are not going to be able to verify them and very often mergers dont produce. His words were prophetic. The defense on that case that efficacies dwarfed and any concern. By the time we got to it was a 5day trial. The defendants and staples and office depo had up their efficiency claims by 5x to what they represented to respective boards at the time the transaction was authorized and judge wrote wellrip b opinion and said its bs. They also claimed that the efficiencies inevitable will be passed through consumers in terms of lower prices and said we are goingme the pass through 80 of these efficiencies. Consumers will benefit. Two of the three Office Supply super stores in the country bo one. G i just cant trust any of this. There is reason to be to scrutinize careful and be skeptical about what what the parties they are asserting a particular benefits are. Since 1976 were not merger effects. Its been a premerger reporting requirement for transactions ofr a certain size, 90 million now if youre transaction is that big, youve got to follow a premerger notification form. It was not capturing the data that was most important to understanding what the deal rash ale was and what the potential was. Also about the concerns that that of what, 3,000 or so 3500 transactions looked at a year and youre only investigating 3 to 4 and how do you weigh the burden on that 96, 97 of transactions which youre not going to look at because you dont see a problem although it maybe goes up on the new form. How do you balance burden on those deals versus legitimate asking the tough questions of the deals that may have problems. The fact on the front end we are not getting remotely a fraction of the information that we need to really do a sound competition and its important to remember that when a merger team comes in, our team has 30 days to assess if the deal is problematic. When we went throughe the mergr wave of 2021, filings were 70 , our teams were just drowning and you were having to look at filings and make quick assessments of what we are going take a look at and this form is not functioning as remotely effective screen. The economy has changed dramatically in the last few decades. Deals have become more complex. We are seeing all sorts of unique investment vehicles and they are just basic information that other jurisdictions request includingg relating to deal rash rationale. The proposed revision is really designed to mitigate blind spots on the front end, a loft the information that we request is we expect information that the parties already have. Theres not going to be a tremendous amount of burden. We assumemo actually providing that in part because other jurisdictions already have the information and in other instances we are looking for a list of prior acquisitions o addl acquisitions we have seen. We recently brought a case a few weeks ago, the ftc brought a case alleging this company, u. S. Ap and private equity owners had engineered a roll up scheme buying out the largest anesthesiology practices across texas, jacking up the price and ultimately texas patients and businesses were paying millions of dollars more for anesthesia. This was engineered through serial acquisitions, no single one of which would raise a problem but in the aggregate you can have a roll up of the market. The form will allow us to screen for those types of dynamics on the front end. The form also asks questions about labor markets. This is an area of merger analysis we are doubling down on because we heard a lot about, all too often mergers among firms, workers are laid off. We are building up the muscle for the right data but we think the data we capture and the renewed form will help expedite some of that analysis. We think this is an important and overdue step forward for the hsr analysis. Weve gotten comments. Our teams are reading through those, digesting us. Ultimately, we think this will make our analysis more efficient in ways that will benefit businesses. Sometimes, through additional information, we can determine there are no problems. Actually, previously we may have issued a second request but now we have that on the front end so we are not going to tie up the deal any longer. Those efficiency benefits could payoff internally and externally. Jonathan i completely agree. For the antitrust nerds, a little humor, but the form, and the issues line up nicely with the new draft guidelines. That is an efficiency. Thank you to the people who laughed. I would encourage people to look at the old forms. When i started in the midtolate 1990s, the form wasnt relevant then either. Perhaps, the untold truth or the truth that wasnt discussed broadly and has been this way for a long time is most of the form, if not almost all, with the exception of two requests has no bearing whatsoever on the substantive antitrust analysis. If we proposed the formats that exist today, for criticism would have been wired you proposing a form and create all this work that has no relevance whatsoever to an antitrust analysis . When people ask about the new form, the best way to understand it is to look at the old form. The fact we are asking questions relevant to analysis is far more faithful to the direction of congress and the intention of the act which mandates merger filings. Its important for people to understand, the purpose of the form is to give up information we need to make an efficient determination about whether there needs to be investigation. If the form has no info relevant, that makes the process less efficient and undermines intent of congress which was to provide notification. Lina congress when passing the act believed around 150 mergers needed to be reported every year. Now, we get 150 every month. The volume of transactions is dramatically off the charts. That requires us to be getting more info. Bill you mentioned looking at labor market effects as part of what guidelines do and what the information, the new form would require. Lets talk about your respective involvement in labor markets not related to m a activity. Toward the end of the Obama Administration, we announced at the antitrust division we would pursue agreements between competitors, as criminal violations of the antitrust laws Going Forward. You have been saddled with that responsibility, which i apologize, and have brought a number of cases. The courts have generally said these are legitimate, it is legitimate to treat these agreements as criminal violations, section one of the sherman act. Juries havent quite gone along with the prosecution you have done. Where have you learned what happened out there in the real world and is that affecting willingness to bring cases or willingness to rethink how you bring cases . Jonathan thank you. Let me start by reiterating, as i did weeks ago, this remains a high priority for the antitrust division. Attacking workers from protecting workers from criminal behavior, to realize upward mobility in their lives by getting access to better jobs, better training and opportunities to provide for their families is fundamental and foundational to the work we do as antitrust enforcers. We continue to take it as seriously as we ever have. We are committed to enforcing the law, both criminal and civil enforcement, depending on the facts. I will say, it is our job to make sure we are learning from every experience. Certainly as you described, courts have potentially agreed with our characterization of the law. We have an obligation to present cases to juries. That is a burden on us. We need to make sure we are looking at our cases and how we bring them with fresh eyes and perspectives. The one thing i can assure you is we constantly do that, win or. We are always learning from our experiences. If we are fighting to protect the rights of workers and the facts and the law support prosecution, we will bring those cases and make sure we are benefiting from all of our experiences. Win or lose. A lot of our experience historically has been consumer, criminal antitrust cases where we talk about pricefixing and other agreements. There are things we can and should learn about how we explain effects on workers. They are different. They present differently than they do to consumers. Those are deep learnings we have been able to adjust, ingest and take into account, and that will factor into both as we try cases Going Forward and make decisions. This is fundamental and foundational to our mission. When the facts and the law support bringing a case we will not hesitate to do so. Bill meanwhile down the street, at the ftc, you and your fellow commissioners have been shining a spotlight on noncompete agreements, which are really quite pervasive throughout the economy, affecting all Different Levels of workers. Tell the audience about the rulemaking you have pending, what the status is and why that ought to be a subject of concern to enforcers. Lina absolutely. Noncompetes have expanded across the economy. They started in the boardroom. Increasingly they have been applied in sectors ranging from fast food workers, Security Guards, engineers, doctors. Before i joined the commission, there were efforts to start studying what is the impact of noncompete . There have been certain states that the fact ohara rendered noncompete nonenforceable for many years such as california and oklahoma. The past couple decades, more states have introduced statelevel policy to further curb the use of noncompete. That has created a natural, National Experiment that allowed us to isolate the empirical effects of noncompete. There has been a set of scholarship finding noncompetes are bad for workers, they result in lower wages and fewer opportunities, interestingly not just for the workers directly bound by noncompete but even for workers who arent, which is striking but makes sense. If there are workers locked into their jobs and not moving as much, that is creating fewer openings for the workers not directly affected by noncompete. Employers continue to use noncompete even in states when they are nonenforceable or there are choice of forum clauses to make sure theyre getting advantages of different states. There is empirical work showing these are bad for workers. Interestingly, there has been empirical evidence suggesting noncompete has a negative effect on competition and Economic Growth as a whole. If you have new startups, entrepreneurs, businesses looking to enter the market, sometimes they find, even if they secure capital, they are not able to secure talent because the pool is locked up with noncompetes. Our team looked at that evidence and determined we should issue rules. In january, we propose a rule that would eliminate noncompete clauses, which follows certain Enforcement Actions we have brought, one of which was in the context of Security Guards. These are people who make close to minimum wage, subject to noncompete clauses. The Michigan State court ruled they were not enforceable. The Security Guard company continued to enforce them, threatening guards with having to pay thousands of dollars. These were people making close to minimum wage, seeking better opportunities, because of the ftc enforcement action, these noncompete were dropped for thousands of workers, and we similarly brought a different case in the context of the glass manufacturing industry. It is fairly concentrated. Dear the harmful effects were not just a workers but actually on competition. Newer firms were looking to enter and inject competition that ultimately couldnt because the talent pool was locked. Weve been moving forward on the enforcement front and the rulemaking. We got over 26,000 comments as part of the noncompete rulemaking and an overwhelming number of which were from healthcare workers who were sharing, some of the justifications you hear about, why you need noncompetes do not apply in health care. They invest in their training, not their employers. Noncompetes can impair patient care. We heard stories about how during the pandemic, Health Care Workers wanted to be mobile and move around. If you wanted to go over and help out, you were not able to do so, because of the noncompete. And you had during the pandemic enormous need for Health Care Workers who were willing and able to jump in, but they werent able to because of the noncompete. That can significance here, and we are really excited about the effort. We are still processing the comments, but we will move forward as appropriate. Bill thank you. Let me turn to a narrative out there that has appeared a lot in the press, particularly the wall street journal oped. The two agencies are losing cases left and right. And that suggests a degree of overreach in civil enforcement. I suspect you dont agree with the narrative. Jonathan, why dont you tell me why not . Jonathan because it is wrong. Bill that is a good start. Jonathan we blocked and won in Court Challenging a merger involving some of the largest Book Publishers in the country. We went to court and challenged a merger transaction involving effectively, a merger transaction involving airlines. We won in court decisively in both cases. As far as i know, they are not appealable. Those are pretty big victories, i would think. And it is the First Time Ever we have challenged successfully in court the transaction, and it is the first time we have successfully challenged a merger based on authors, as opposed to just higher book prices. Those are pretty extraordinary victories and im really proud of our team. Monopolization case we have another case in a month. There have been instances where we have not succeeded, that they are not overwhelming in terms of the numbers. I also note that we have had a number of transactions, one that settled in court, and numerous transactions that were abandoned after we filed. When i look at our record, i see frankly quite a bit of success, and im quite proud of it, and i think it reflects on the amazing work of the antitrust division. So i think that narrative is inaccurate. Lina i would echo that. Within the first year that i joined the ftc, challenged two major vertical rules lockheeds attempted acquisition of aerojet, two major vertical deals. It is no secret we did not challenge and many vertical deals in recent decades. In both instances, the parties walked away. We were excited to litigate those cases and believe we would have won, but the parties walked away and we did not need to do so. Interesting to see the aftermath of that. We have been enormous least successful. We have blocked these deals in court. We have not always one, but we always look at those. The court offered some really important propositions related to how merger law applied in the digital market. Notice for example that even if you have high levels of entry and exit in a market, if you have high concentration, that can signal a presumption of market power, spite the ongoing degrees of entry and exit, which is really important in Digital Markets. Also ratifying potential competition as alive and well in Digital Markets. We have another case that is pending on appeal in the ninth circuit, as well as in administrative adjudication, so i wont go into that. Last summer, the ftc sued two pesticide giants for engaging in pay to block schemes that kept generic manufacturers off market , resulting in farmers across the country paying billions of dollars more for pesticide essential inputs than they would otherwise. That is still pending. There are cases we brought against amazon. The facebook case was filed against the agency and we are excited about that in terms of explain to the judge how competition in Digital Markets works, and why acquisitions the company made were unlawful. Have a very, very active program underway. We think we have already had significant success. In areas where we have not, we look at that closely and see where we can learn from it. But i think the current tally speaks for itself. Bill let me ask one more question and then we will turn it over to the audience. We have seen play out in the google litigation in District Court this conflict between companies, both defendants in government lawsuits, and third parties, and data through the discovery process, claiming broad confidentiality protection over that information. It has resulted in the google case, a number of days in which testimony closes doors, and exhibits are not available to the press and the public. I appreciate the government is in a vine in a bind in these cases. First principle is to see that justice is done. Get the court to block it. And often judges dont want to be in the middle of a right over what is confidential and what is not. They say to litigators, just work it out. Well, if the judge wants to work it out, and not personally be involved in deciding what is confidential and what is not, that tends toward keeping it confidential. Because who wants to anger judges about this size of case . At the same time, there is a huge value here in the publics right to know. And i know as Public Officials who respect that, but how do you advance the publics right to know in cases where you have extraordinarily broad claims of privilege, and a judge just does not want to get involved in it . Do you have an obligation to force that . Jonathan we certainly believe in the publics right to know and we want to fight to protect it when appropriate. We adhere to and we respect very much the role that courts play in administering confidentiality requirements. Im not going to mention a specific case from anything that is pending, but most courts are eagerly interested in protecting the right of the public to know. I think that is something a value we share with the court system, and it is important to the democratic process that our cases be tried in daylight. At the same time, there are instances where part of what we are trying to do is to keep information competitively sensitive. There might be instances where it is appropriate for reductions or omissions, but we do what we think is appropriate under the circumstances, but very much share and support the importance of public access. Lina similarly, maintaining access to the public has been a key value for us. We started doing regular open Commission Meetings were anybody in the public can come up and speak to us and share the issues they are seeing in the marketplace. Also over the last years, we have opened up a set of dockets inviting public information, and making sure we regularly hear from the public. We are thrilled by the progress we have been able to make. Bill we are going to go to questions. We have some that have come in online. The first question i will pose is something that was submitted ahead of time. But i think we will do then is go to one side of the room. We had an opportunity for a question from the other side of the room, and you can fight over. The first question is from raymond morris, a retired attorney at the federal trade commission. A good guy. He asks, dont we need new antitrust laws, given the hostility of the courts to aggressive enforcement. Lina as enforcers, our job is to enforce the laws on the books. It has been enormously exciting to see congress reassert itself in antitrust. The historic investigation that congress did in the house a couple of years ago, looking at Digital Markets and really laying out in that report instances where congress thought there might be a gap between how competition needed to work and what antitrust markets were delivering, relating to antitrust enforcement we at the fcc always stand ready to be good partners to congress. If they are looking at proposed legislation, we provide Technical Assistance and share with them where we think essential updates need to be made. In the fcc, we are working with the tools we already have. Jonathan i think as always, ms. Khan nailed the answer. Bill the question here in front. If you can identify yourself in the organization you belong to, that would be helpful. I am dave, with the wall street journal. You are both known as concerned about practices and outcomes even in private equity ownership. Deals that are part of a roll up would not require reporting, but what do you do to look into private equity is concentration and potentially monopolization, in addition to the wells carson case that you brought . You expect to bring more cases like that . Bill lets go to the question, a good question. Jonathan let me start by saying as we were talking about earlier in the conversation, making sure we are using tools that are fit for purpose is important. And the realities of a modern economy are important. The role of private equity is different than it was when i started practicing, and unrecognizable compared to 1982 guidelines. These are commercial realities, and our goal is to make sure we understand the commercial realities and just work the law as we see it, based on the facts presented today. And so, you know, sometimes a private equity transaction is going to raise a concern. But how it might present itself might be different than in previous generations. The kinds of issues at purpose in an antitrust context might be a little different in a private equity transaction and in a standard Public Company transaction. Those are the differences, and our goal is to make sure we understand those differences. Lina amen. Bill appear on the left. [indiscernible] bill all right. We got another one coming, sam. Sam sam thorpe, economic studies here at brookings. So far, it seems to me like one of the really important innovations of the new antitrust regime has been treating labor concentration as an issue that is worth enforcing. Im curious to hear specific things. First, what you feel the labor basis is for treating labor power is on par with market power, and what your agencies are intending to do specifically on related antitrust in the coming years. Lina the act have its mergers that may substantially lessen competition or create a monopoly , for justice with regards to consumers. We interpret that to mean it affects all american consumers, workers, and also businesses. This also is not a new issue, right . We have seen over decades that antitrust enforcement recognizes harm to workers can be problematic. The alton case recognized that as well. We think the legal basis is clear. Last year, the fcc challenged a hospital merger where my colleague emma commissioner slaughter, and i noted we had a basis to allege harm to the nurses. As we are doing merger investigations, we are looking at all sides, including on the worker side. We are hearing more from work organizations, from unions, that are sharing information with us about how it is problematic. That is a muscle we are continuing to build with continued engagement and information. On the conduct site, we have our noncompete enforcement work. We will look at other ways that competition may be harming workers as well. Jonathan i strongly encourage you to come away from this discussion with the impression that this is very top of mind for us. It is foundational to the work we are doing. In the merger context, in a nonmerger context, and monopolies, an important principle were competition can concentration can exacerbate asymmetries of power, and competitive market power over workers, over suppliers, over content creators, industries that are the lifeblood of a functioning democracy. We care deeply about this. It is central to the work we are doing. Lina i know our agency as well as the Justice Department has entered into agreements with the labor market, with the nlrb, to make sure we are seeing issues were tools apply. There are government efforts right now to make sure that workers are protected under the law as well. Bill i want to acknowledge i see in the back of the room the Principal Deputy assistant attorney general from the antitrust division, who has been perhaps the worlds leader on labor and antitrust, going back a decade, and has been a real pioneer in this area. That reminds me that both agencies the amazing work that is being done at the ftc, we have literally the best and the brightest thinking about how we bring these issues to protect opportunities for people, for their families, and benefit the american community. Bill there is brilliant enforcement that antitrust laws apply. In the seventh circuit, we were absolutely thrilled that judge easterbrook acknowledged that those harms, those antitrust terms, are illegal in the context of a no poach agreement. The fact of the matter is, the fact that the case involves a woman who is a fry cook, who had the opportunity to come manage another mcdonalds, but was denied, deprived of the opportunity to go from one up dont one mcdonalds to another with a promotion in hand, because of a no poach agreement the judge in the seventh circuit said unequivocally that is a per se legal restriction, and the harm to the ability of a worker to move from one mcdonalds to another. Bill down here in front. We have the microphone on the way. Alan alan loeb, washington attorney. You came to Public Notice when you publish an article, and if i have it right, what you focused on was the harms that come from having market power that does not necessarily raise prices, but allows companies to exert over the way the market operates. I would like to ask you, and actually both of you, what that implies. If we have not been enforcing that for a long period of time, more broadly, the harms from antitrust, it would probably be cases back in history that were never recognized. Even in the literature, there is a list of such cases that now are coming up and recognizing the broader harms. Lina this question i think one of the key pillars of our efforts in addition to fidelity to the law is making sure we are being honest in the way competition is presenting itself, in addition to Consumer Prices would we are looking at harms to wages, benefits. One of the comments we got as part of our merger guidelines is that a really important dimension of competition and equality for workers is actually having control and predictability, right . Through this process, we have been getting a much more granular understanding of the difference in quality that really matters. We also want to make sure that we are fully grasping the realities of how competition works in Digital Markets. The chapter in the guidelines that lays out the Market Dynamics is incredibly important. And a key source of competition is not necessarily going to be from a direct threat, but from a company that may be depending on the platform. The Microsoft Case i think is emblematic here. So we need to be mindful of the different sources of competition. Need to be mindful of the fact that in Digital Markets in particular, multihoming can be a really important mechanism of injecting more competition, because when you have economies of scale and network externalities, multihoming can be a really important path out of that. Overall, i think we are really in the midst of understanding how competition is showing itself in the context in markets. Our cases already reflect that. I anticipate that in the coming 15 months or so, we will continue to see more of that. Jonathan it has been such a privilege to work with chair con khan and the ftc on these issues. For decades since i started practicing, we have heard people say that competition is more than just price. We talk the talk as an industry, the antitrust enforcement industry. Have not walked the walk, right . The fact of the matter is we have not built the toolkit. We have not built the Analytical Framework to adequately address this. Its take a step back and think about why this matters. This is why chair khan so eloquently talks about come in a moving and meaningful way, the impact of the noncompete rules. We have reduced human impact to graying out triangles. That is not an efficient way for us to enforce the law. The fact of the matter is competition can create the quality of health care, which affects lives. My father just had lifesaving surgery in the community hospital, and the level of care was something i have not seen in decades. The attention, the willingness of the doctors to sit with the patient, the family. Those are real benefits. Not just real in a quantifiable sense, but real in a human sense. We think about the free flow of information. We are talking about journalism and authors and content creators. We are talking about the lifeblood of a functioning democracy. This goes to the heart of what makes our country so wonderful. When we talk about the ability to get a job, we are talking about the american dream. The ability to have upward mobility, to start from nothing and grow the right opportunities to your children that you never have the ability to realize yourself, and leave the next generation better off. Those are real things that affect real people. If we are over dependent on just grade out triangles and price lines, we lose that sense of the human impact. Farmers are looking to build thriving businesses and provide for themselves by selling their cattle or other products. These are real people, and these are exactly why the antitrust laws exist. We want to make sure we are protecting competition, enforcing the antitrust law, to preserve all the benefits of competition. Bill thank you. Steve . Steve i am from the washington post. Sort of following up on what you both just said, giving District Court judges 13 different analytical tools to use in assessing behavior or a merger i think we have all observed that District Court judges are somehow very reluctant to exercise subjective judgment, to bring logic and pure observation to their decisions. They are looking for a hard number. They are looking for something that is purely an objective reason why they might or might not take action. They seem to be reluctant to sort of get into it. And that was when they only had the one tool or two tools. Now you want them to get 13 tools. Im wondering about, realistically, their capacity and willingness to do that kind of complicated, and to some degree subjective, work you are going to ask them to do, by first choosing which tool to use, and then having to master using 13 different tools. Jonathan let me start there, because i think it is important to really read and digest the current guidelines and compared to previous guidelines. There actually come in my view, much easier to use and easier to apply. And the tools the tools are how you look at the facts. We are talking about legal principles that existed and continue to exist. Does the merger entrench monopoly power . Does it raise the cost of the rival in a way . Does it increase competition . Does it harm workers . Those are fundamental legal questions. I think they are written in a way that is accessible and understandable, but also has foundation in the law. I think part of what has happened over the last 20 or 30 years is that antitrust has become more complex, more in the weeds, more about quantifying the criticism that has come from some of our predecessors, articulated quite well. And moved away from understanding whether the Risk Assessment framework that congress laid out, which is does this merger risk threaten competition or attempt to create a monopoly . We are going back to those first principles, and we are seeing that if we are going to be relevant to 2023 and Going Forward, we have to understand the economy as it presents itself today. But are judges willing and able to do it . Lina steve, i think one really exciting thing to me over the last few years has been actually sensing a lot of frustration from judges, encoding District Court judges, when they effectively are saying, here i am, with this merger before me. The defendant has an economist. There are these fancy models. The plaintiff has a very fancy economist with fancy models. The kind of cancel each other out right now. What am i really left with . You see judges going back to those first principles. Im going to think about whose witnesses were more credible. I think to us as enforcers, who end up having to pay millions of dollars to economic experts, all too often, judges are saying this is not providing a set of value add to me analytically. I think that is a major problem, right . We as agencies are spending millions of dollars of taxpayer resources judges are saying increasingly this is not helpful. I think we are hearing that problem loud and clear. I think this document will help mitigate that. Jonathan i dont think clearly or clearly articulate it principles are easier to apply. How we write it is more important than how many we write. Lina i think the objectivity and subjectivity issue is important, but i sometimes worry that the type of economics we have been using can actually look objective but mask a lot of subjective decisions that are actually being made under the services, and when you have clear, bright line rules, clear administrator principles, i think those can more the a basis for judges. This is the work we are doing. We are not ask only actually masking subjectivity. The burden is going to be on our agencies for how you apply these guidelines. But i think we have an and norma cement of confidence in the righteousness of that exercise. Jonathan we are listening to the courts. We are listening to what they are saying and what theyre asking for when they bring cases. What are the legal principles . What is this implicitly . How does that present . That is what we are trying to do with the guidelines, legal opinions, what courts are telling us in trial they are looking for, as opposed to trying to find some theoretical utopia. Bill thank you. I think we are running up against our time limit. I did have one question i was going to ask that does not need to be asked because you have answered already. In a situation where your two agencies have overlapping jurisdiction, and sometimes historically there has been Competition Among the leaders about what to do, and how you are getting along you have answered that question for this audience here today. No question there. Before we thank lena and jonathan, i do want to acknowledge the hard work of the staff here at brookings, the government group. They have really put together a wonderful forum, make sure that we got massive online signups, were able to welcome a bunch of you here. I want to thank them. I do want to ask the audience to think the two of you for taking the time for speaking english, not antitrust jargon, to the audience here and around the world. You do that in a wonderful way which makes the value of antitrust enforcement accessible to those of us who are not the nerds. Jonathan bill, you are a National Treasure and we are delighted to be with you today. Bill thanks so much. [captions Copyright National cable satellite corp. 2023] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] American History tv saturdays on cspan2, exploring people and event that is tell the american story. At 7 00 p. M. Eastern the swearing in ceremony of the archivist of the United States colleen followed by interview by the 11th archivit and discusses National Archives and controversy of white house records involving donald trump and joe biden. At 9 30 p. M. 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