Nov 04, 2025
On October 17, The Capitol Forum held a conference call with Michael Kades, Antitrust Partner at Nachawati Law Group and former Deputy Assistant Attorney General for the Antitrust Division at the U.S. Department of Justice, and Adam Gitlin, Chief of the Antitrust and Nonprofit Enforcement Section at the Office of the Attorney General for the District of Columbia on the future of antitrust enforcement in the U.S.
The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: Good afternoon, everyone and welcome to our Conference Call on “The Future of Antitrust Enforcement.” This is a very exciting, big topic for us. I’m Teddy Downey, Executive Editor here at The Capitol Forum.
Today’s guests are Michael Kades, Antitrust Partner at Nachawati Law Group and former Deputy Assistant Attorney General for the Antitrust Division at the U.S. Department of Justice, and Adam Gitlin, Chief of the Antitrust and Nonprofit Enforcement Section at the Office of the Attorney General for the District of Columbia. We’re going to be talking about state-level enforcers, how they’re shaping the next phase of antitrust policy and what their growing influence means for markets, consumers and competition nationwide. Michael, Adam, thank you so much for doing this today.
MICHAEL KADES: Thank you for having me.
ADAM GITLIN: Pleasure.
TEDDY DOWNEY: Before we get started, I just want to really quickly go over some stuff. To submit questions, type them in the questions pane in the control panel. We’ll collect questions. We’ll address them at the end.
And with that, why don’t we start? Michael and Adam, clearly, we’re going through an interesting time of federal antitrust enforcement. I would love to get your take on what’s going on right now at the DOJ, the FTC and how you see states sort of fitting in there in terms of sort of filling in the gaps or what have you.
ADAM GOTLIN: Sure, I can start. Let me just say thanks again, Teddy, to The Capitol Forum for having us on. Usual disclaimers apply. I speak only for myself, not for the D.C. Attorney General Office or the Attorney General and especially not today because I’m looking forward to some freewheeling conversation where I’ll do my best subject to those limitations to give my views.
I think there’s a lot going on in federal antitrust enforcement and some of it is going to be stuff that the states are going to be joining in on. Some places where you might see a little less action by the states and some places where you might see more.
One of the things that I think we are all recognizing is that there’s been a fair amount of pent up capital for mergers and acquisitions that is now finally starting to get deployed. And every time there’s an M&A wave, federal and state enforcers have to figure out how to deal with it. And that may mean that they don’t get the same ‑‑ you may see a dramatic increase in M&A activity, but you don’t really quite see the same dramatic increase in the staffing for the merger enforcers. And so, they’ve got to figure out how do we prioritize? Where do we focus our efforts? And where does it make sense for states to do more focusing and the federal folks to take the lead in others?
MICHAEL KADES: Yeah, Adam has totally hit the nail on the head. Look, interest rates have come down. So, that’s going to spur on merger activity. The new administration has made it clear they have a different view on settlement than the prior administration ‑‑ that I was part of ‑‑ had. That’s going to spur merger activity.
But at the same time, both agencies continue to have very existing active dockets. The Department of Justice, even getting through the Google remedy phase, they still have Apple. They still have Visa. They have the Agri Stats case. They have a number of cases as does the FTC. Then you have, who knows, how appropriations are going to work?
And then finally, both agencies have seen a significant reduction, people have left. So, they have a lot of things they’re trying to balance. And I think the issue is that there is a lot of room for state enforcement in this environment.
ADAM GITLIN: And I would say, let me add on the state enforcement point that a lot of the states have increased their staffing over the last few years. They’re increasing their staffing, both in terms of the number of people working in state antitrust enforcement. Yes, there are still states that have one or two antitrust enforcement lawyers for a variety of reasons, but there are a number that have way more than that.
And not only that, but a lot of the time now, to Michael’s point, they’re pulling from the ranks of federal enforcers in some instances. They’re bringing on folks who, like me, kind of got a lot of their training in the DOJ Antitrust Division or at the FTC. And that improves not only their capacity, but also improves cooperation with federal agencies because there’s a bit of familiarity there.
TEDDY DOWNEY: And one thing that I think we’ve seen really recently is the states also holding the DOJ and the FTC accountable in some respects. You’ve got the states asking for discovery in this HPE situation around the Tunney Act stuff. Historically, states have made it more difficult for the federal agencies to settle if there’s a merger or an investigation or a conduct investigation or a lawsuit that they’re party to.
How do you see that accountability going forward? Is that the right way to think about what another thing that the states are going to be doing?
MICHAEL KADES: So, from an outsider’s view, it does seem to me, without commenting on what the issue is in HPE Juniper, it is no doubt that there are a lot of people who are questioning the integrity of the federal enforcers and particularly Antitrust Division. So, if I were there, from my perspective in any ongoing settlement or litigation that I was considering, I would really want the state AGs onboard as a way to sort of protect against that kind of suspicion or criticism. Which I think gives the state AGs a lot more authority and a lot more leverage in pursuing their goals, which hasn’t always been true.
I mean, a lot of times when you have federal and state together, there’s a tendency, there could be a tendency, for the feds to basically take the position we’re going to settle. You do what you want, but we’ve committed all the resources. And I think maybe that’s shifted just a bit or maybe more than a bit.
ADAM GITLIN: So, I can’t add, because at this point, D.C. is involved in this Hewlett Packard Juniper matter. So, I’m not going to talk about that. But I’ll say just taking a step back that the states, consistent with what Michael just said, the states will generally, if they see a merger they have concerns about, they’re going to act and the procedural posture might be different, right? If somebody else, maybe the Department of Justice has been litigating the matter and the states have a concern about it, they will join in whatever fashion makes sense given the posture at the time.
This is not in that sense new. An example that people often think about is the Sprint T-Mobile matter back in 2019 where you had the Department of Justice and some states settled and other states were not satisfied with the settlement and proceeded to litigate to try to block the merger. I think that’s consistent with this idea that states are (1) not monolithic. They’re going to make different decisions depending on the situation. And (2), they’re going to act based on whatever the posture is of the case and what they need to do to protect their residents.
TEDDY DOWNEY: I just want to stay on this for one more second because I think it’s really interesting. So, right after the HPE deal closed, a lot of consultants were going to merging parties and saying, hey, look. All you have to do is hire Mike Davis, hire a bunch of MAGA lobbyists, get the White House to weigh in and you’ll get your deal through. But what you’re saying, Michael and Adam, to some extent, but really what Michael’s point is actually because you have states who can weigh in and expose any overt or even subtle corruption that taints these deals, that it’s discouraging.
It actually discouraging that strategy and makes it really risky. Even to the point where now there’s going to be, to some extent, an assumption of some kind of corruption when you’ve got a settlement on one of these matters. I don’t want to put words in your mouth. But I think that is, to me, from a strategic sense, really different from where we were even a few weeks ago when everyone was celebrating this HPE deal getting done.
MICHAEL KADES: Right, I mean, again, at this point, no involvement in the HPE Juniper matters. I don’t want to comment one way or the other what actually happened. But looking at the dynamics, I think if you’re a federal enforcer, you don’t want a repeat of that public issue. So, regardless of what’s happening on a given settlement, you now have to say, wait a minute. We have to make sure that we have the states onboard. Because otherwise, we’re going to be spending all of our time dealing with criticism. So that the states now are in a position to sort of legitimize the process. Because if you have a settlement and the feds and the states are all onboard, then it’s far less likely that people are going to think something untoward has happened. So, that puts the states – one, it gives them a really important role in enforcement in the short term for legitimacy, but also increases their ability to direct the outcome of merger challenges based on their independent judgment.
ADAM GITLIN: Yeah, the only thing I’ll add is there is a bit of paradox here. Because I think oftentimes there’s been a thought in the defense bar that when it comes to antitrust, it’s true that states are increasing their antitrust chops. But with a state AG, there’s always a bit of room to consider non-antitrust factors when you’re doing merger review. That is that if you can, that it may be a little bit more like things sometimes proceed, for example, in front of the FCC or an agency that might have a broader ambit to think about what’s in the public interest. And so, you have these interactions where they’re actually focusing on, well, what can we do for a state AG that might not necessarily quite address the competition problem, but gets us over the hump?
And so, there’s a bit of paradox here because we may be entering an environment where the states are being extra mindful in some instances that we are all, as government antitrust enforcers, responsible for really trying to tie these reviews and these cases to the merits. And if that means folks want to try to find other ways to get deals done, that’s a new reality we’re going to have to live with. But it’s kind of on all of us to make sure that we stay faithful to the statutes we’re actually enforcing.
MICHAEL KADES: So, I just want to say Adam makes an excellent point there. And I guess maybe to take as a friendly amendment, I’m focusing on I think the states have more room to operate in this and it depends on how they choose to use it.
TEDDY DOWNEY: Yeah, super fascinating. We’ll continue to watch the state of moment on things like this going forward. Not everything is easy for states. Obviously, there is a bit of a push and pull with the federal government restricting resources to specific states, mostly blue states.
State budgets aren’t in the greatest shape in the world. Adam, you mentioned there have been hires in the antitrust space as state AGs. But what is the outlook going forward for funding for state AGs when it comes to antitrust enforcement? And what are other challenges that the states face? Obviously, they can’t step in and sue every deal. They’re going to have to manage their resources. But I would love to get your take, and Michael, your thoughts as well, on what the challenges are and how they could deal with them.
ADAM GITLIN: So, I think there are two resource issues that the states are always going to face. One is that antitrust is a labor-intensive practice. There are very few cases that don’t require multiple attorneys working on them in order to litigate them effectively and investigate them effectively as well.
And not only that, but even in the investigative phase, there’s often a need for economic analysis. Now, it’s true that you’ve got more states than ever with in-house economists. I don’t know, Massachusetts, California, Texas, New York, Pennsylvania. There’s probably a few I’m omitting. But, generally speaking, they still have one, or not much more than one, economist. And so, they’ve got to make do with either what they’ve got or hiring outside economists, which is way more expensive.
And so, there are folks who’ve made efforts at even the federal level. I think actually, Michael, it was one last thing the FTC and DOJ did together, perhaps towards the end of the Biden administration, the beginning of the new one, and that got carried forth, was a request for Congress to try and find a way to make antitrust litigation less expensive. Well, if the federal agencies were seeking it, you can imagine that holds doubly true for the states.
So, that is always going to be an issue for us. I think for the states, there are a couple of ways we’ve been trying to address those issues and we’re going to probably see more of that. There are ways where the states can work together. We can pool resources. That allows also some states which might have, for whatever reason, smaller budgets for actually paying experts, but greater budgets in terms of labor to be able to help out and work with other states that might have more money for experts and maybe proportionately less labor.
There’s also ways that states can take on greater roles in particular litigations, even if they’re joined by the feds. There was a couple of recent cases brought by coalitions of states in the wake of the NCAA versus Alston case, one against the transfer rule, the other against the name, image, and likeness rule. And in one of those cases, DOJ joined the states as a co-plaintiff. It still didn’t actually lead the litigation, but joined. And there were resource sharing agreements that I think are even increasing now among the states and the FTC and the DOJ.
The other area, to do a plug for Michael, is in the use of outside counsel. I think there are a number of different ways we are seeing states partner with the private bar. Sometimes it’s being done in a pay-as-you-go way where the states look forward to trying to get attorneys’ fees at the end, as Washington State did in its challenge to the Kroger-Albertsons merger. There are other situations where ‑‑ and D.C. probably does this a bit more than states ‑‑ use outside counsel on a contingency basis where it’s kind of beneficial across the board. We can talk about it more if you’d like, but that enables us to leverage our resources as well.
MICHAEL KADES: Yeah, well, thank you, Adam. I do think the NCAA matter doesn’t get a lot of attention, but it does really reflect the way in which state enforcement is really an equal partner with federal enforcement. That was one of my matters, and the states moved first. We thought it was a great case and we joined it. We didn’t have to lead it because they’d done the work, and it expanded enforcement resources for both the feds and the states. And I think Adam makes a great point that states can be creative in how they leverage their resources.
And so, the way I’ve been thinking about this a little bit is, take a small healthcare merger, small in the sense geographically, in a relatively smaller rural state. The harm relative to that state is substantial. That state may not be in a position where they can hire six, seven, eight, nine, ten antitrust lawyers, as Adam points out, the sort of fixed cost of antitrust litigation is substantial. You don’t see many people trying an antitrust case with two attorneys.
And so, you have this issue that, from a fed perspective, may be hard to justify the resource commitment because it’s a localized harm. And the state is not in a position to sort of carry that much of an antitrust team. Hiring outside counsel ‑‑ and there are a variety of ways, as Adam suggested. You can do contingency, attorney’s fees. There are all sorts of ways you can do this. It might allow this — it allows this — can allow the state to really enforce more aggressively than it could otherwise. So, it’s a really important tool out there. You see it a lot. It’s been used significantly in consumer protection cases. And D.C. has used it in addition to Washington in the antitrust context, as have some other states. And I think it’s a real unexplored option for states to ramp up antitrust enforcement.
TEDDY DOWNEY: No, I think it’s a very interesting trend to watch, especially if the states are trying to be more aggressive. One tool that I wanted to ask about, particularly Adam, are these new merger notification laws. That’s been a trend across the country. How do you see that playing out?
And in particular, maybe we could just, at a high-level, think about what are the types of deals that are of concern to states? And how do they think about priorities when it comes to mergers? And then maybe we could get into conduct after that. But yeah, merger notification laws, and how that fits in with state priorities on mergers.
ADAM GITLIN: Sure. So, on the pre-merger notification laws, there were already some states that had some form of pre-merger notification requirement. I think there are a couple of maybe let’s say three trends or issues that are making things more interesting now.
So, the one that doesn’t relate to what’s actually happening in the states is the new HSR form allows for waiver by the companies that would allow the feds to share information with the states. Historically, the practice had been that the states would go to the companies and ask essentially for a waiver. But a lot of companies are giving out those waivers less now, which might relate, or not, to some of what we’ve already been discussing. And so, it’s interesting to see some of the other things that are happening.
Another thing is you’ve got some states that are focusing on trying to pass pre-merger notification laws that focus on particular sectors. And really, in healthcare is where this is biggest. A couple of years back, Minnesota enacted a pre-merger notification law that covers transactions like mergers and transfers of ownership.
And I think the threshold is something like $80 million. And if you’ve got average annual revenue or $80 million or more, there’s a 60-day pre-closing notification period. And I think that was driven by a non-reportable transaction, one that, for whatever reason, Minnesota’s AG’s office wanted to be able to review before it actually occurred. There are other states that are doing similar things.
And similarly, you’ve got the U.S. government. And the ULC, the Uniform Law Commission, periodically puts out draft model legislation. And one of the most recent things they did was a model pre-merger notification law that is basically supposed to be set up that if a lot of states adopt it, the states that are most affected are going to receive pre-merger notification. Others may have access to this sort of common database in some way. And Colorado and Washington this year became the first two states to pass it. It’s pending in a number of other state legislatures, including mine. And the thinking is there that also that way, those mergers that are of particular concern to a given state, they’re going to be able to focus on it. They’re going to be able to address it on the front end. And you won’t just have also this sort of patchwork of states tackling a particular transaction. You’re actually going to have it be a little more focused.
And I think there’s an interest in that for the merging parties too. Because the flip side of the benefit of the burden of pre-merger notification is an argument of repose. That is, if a state gets pre-merger notification because it’s getting it through this new system or through some other law, the idea is now’s your time to act. And states will make arguments about mergers that they maybe were notified about and didn’t act on at the time because they may have had good reason not to act at the time. But it’s a very fair argument that merging parties are going to make. Hey, you had your shot under this new regime. You’ve decided not to act. That was your chance. We get to merge.
TEDDY DOWNEY: Michael, any thoughts on when it comes to mergers and state AGs and what they might prioritize? I’ll come up with a couple of specific examples or themes, but anything that jumps out to you?
MICHAEL KADES: The first place we can look is just what Adam was talking about is a number of states have passed merger notification laws, but some are specifically limited and generally it’s specific to healthcare or private equity. So, that’s a really clear signal that any state that does that is specifically concerned.
I think the second place is what’s important to that state. I think to the degree a state that has a significant presence in agriculture, you would expect that to be an issue. And so, that’s how I would look at it. California, you would expect them to be really concerned about mergers in the tech space because they have a lot of tech companies. That’s a big industry for them. They may be very concerned about how a merger affects the labor side in that market.
So, also you need to expect them to be the same issues that concern the feds. It’s clear the states are equally as interested in things like algorithmic pricing. So, to the degree that comes up, information sharing. Those would be the areas of how I would sort of expect where states would go.
ADAM GITLIN: Just one more. Because I realize I didn’t totally answer the question in terms of how these new regimes fit into how states are looking at merger enforcement. I think it’s important to remember that partly because the states have such varying setups, they will often take advantage of their ability to kind of pave their own path and be really nimble about how they address whatever issues they might face in terms of trying to protect residents. It won’t necessarily be in the hot areas we might be thinking of like healthcare or tech, right?
The best recent example I can think of, or at least one of them, is New York AG’s office went after this ski resort merger. This was Intermountain’s acquisition to basically, allegedly, to create a monopoly for seasoned pass holders in the Syracuse, New York area. They used the New York’s Donnelly Act, which, I know from my days being in the plaintiff’s bar, lacks a Section 2 equivalent, right?
So, it doesn’t actually have a monopolization section. But they did have a written agreement, which gave them an ability to go after it under their sort of Sherman Act, Section 1 analog. They won affirmative summary judgment on liability, which allowed them to, you know. And they did it with a per se allocation of markets. So, they didn’t have to do this really expanded, economist paid, heavy work. They used, I think, an in-house data analyst to submit a declaration and then gave them the quantitative information that they wanted. And in that sense, I mean, they won on liability.
I think they recently had an evidentiary hearing on remedies where they used their in-house economist to testify. So, they managed, without any elaborate new pre-merger notification scheme. And alleging essentially a monopolization without having a monopolization statute, they protected their residents from what they considered to be an anti-competitive merger. And you’re going to see that kind of inventiveness, I think, in the coming years from states regardless of whether or not it’s an industry where we have particular concerns.
TEDDY DOWNEY: I want to throw out a specific theme here. There are a couple of active mergers in the media space, a lot of consolidation. At the same time, there is a lot of concern about billionaires controlling communications platforms and media properties.
Would that be a space where you could theoretically see a state diverge from where the FCC and the Trump administration are potentially in terms of intervening in a merger or otherwise being more skeptical of merging parties’ arguments around why they should be able to consolidate media properties? Adam might be limited in this. So, maybe Michael, if you can start off and give your thoughts, that would be great.
MICHAEL KADES: So, let me be the two-handed lawyer, on the one hand, on the other hand. On the one hand, media is the most obvious example where states have an example of disagreeing with the federal government and Sprint T-Mobile, right? They did not agree with either the FCC’s approach to that case or the DOJ’s, and they sued to block the merger.
So, it’s obviously something that can happen. And I think it’s an issue that really is not just the federal issue. It’s going to be incredibly important to states, particularly when we think about the impact on local news. That’s, I think, a clearly important issue.
The other hand is, it is very difficult for ‑‑ I think what T-Mobile Sprint shows — is it’s very difficult for states to come in and say, judge, two federal agencies got this wrong. But we also only have ‑‑ so I guess I’m a three‑handed attorney now ‑‑ because we only have one example of that. And so, I would be careful to say, because of the result in Sprint T-Mobile, states are going to stay away from that. But obviously, where there’s a state‑federal split, it does make it more challenging. So, hopefully I’ve really muddied the waters there in that answer.
TEDDY DOWNEY: Adam, any thoughts? I’ll have a follow-up for Michael. But if you’re playing high-level.
ADAM GITLIN: I will weigh in, but less on sort of where the question started and more where the answer ended. So, I think there is a general sense sometimes among state enforcers that there are instances where our state courts are going to give us not deference but maybe a bit more credit than we might enjoy in federal court in certain kinds of actions.
And one thing I think you might see more of in the coming years, you know, that New York case I mentioned that was brought in New York state court, if we’re talking about mergers in Washington state, Judge King issued a much longer opinion in the Kroger-Albertson’s challenge. It doesn’t mean it was better, but the point is it was thorough and it was based more on consumer protection law than Judge Nelson’s was in federal court. And I think state law can be really powerful. There are remedies that exist that are not necessarily available to federal enforcers and that maybe have even sort of more force in state court proceedings. So, that is that is one way you might actually see more enforcement on both the merger and the conduct type.
TEDDY DOWNEY: I guess another way to think about this is you had a couple of different, you had a couple of distinct, things that happened during T-Mobile Sprint. There wasn’t as much of a question of the federal government ‑‑ I think there was a willingness to still be deferential to the federal government’s ‑‑ trying to think of a way to phrase this ‑‑ respect for the rule of law. And this administration, I think that’s maybe a little bit more up in the air in terms of how states think about whether or not the FCC and certain agency actions are being done in good faith.
And also, to Adam’s point, that was in D.C., right? So, is the lesson there, hey, maybe we just shouldn’t sue in D.C. (a) Look at states, look at other jurisdictions. And then (b) do you think that just change in attitude and by the states, their view of what’s going on in the government currently is materially different from what we had even in the first Trump administration? To cause people to be a little bit more aggressive and be a little bit more willing to step in and challenge the administration.
MICHAEL KADES: So, I think T-Mobile Sprint, and Adam’s point, it was in federal court. It was actually technically in SDN, Southern District of New York. But the point still stands, and Adam’s exactly right. There’s this unexplored option of a state going into state court. Most states have their own antitrust laws and there’s nothing wrong– in fact, the legislature, if it passed the law, it is fully expected that the AG, Attorney General, will do that.
And this isn’t empirically based, but it makes sense that a state court judge may have very much less interest in giving deference to the judgment of federal agencies and also, probably respects the state attorney general in ways that federal courts may or may not. So, I think that’s absolutely true.
And I do think, Teddy, you’re absolutely right that in the ether today, concerns about rule of law, non‑politicization of enforcement permeate far more than they did in the previously in any administration. But I do also think it’s interesting that you bring up that point. Because part of the reason the states, I think, went forward in T-Mobile was, not to the same degree, but there was a concern that there were improper communications between the parties and senior justice officials. So, it’s a sign that if that’s true, you would expect it to be even more true as a cause for generating state enforcement.
TEDDY DOWNEY: I’m not sure you can answer that, Adam. Should we just move on?
ADAM GITLIN: It’s probably easier. I mean, I’ll go back to this point about sort of states trying to have always like a variety of arrows in their quiver, and that’s part of what animates some of these proceedings happening also in state court. Look, D.C. has two pretty significant antitrust cases right now proceeding in D.C. Superior Court, one about algorithmic pricing in multifamily rental housing, one against Amazon for provisions relating to most favored nations clauses and similar provisions. And those are making antitrust law in D.C. There’s D.C. doctrine on antitrust law now, really for the first time certainly in recent memory. And that can be helpful and can provide alternative paths for doing different kinds of enforcement. And there are a lot of states that are trying to do these sort of homegrown, different kinds of enforcement matters to try and protect their interests. And that’s going to happen sort of no matter what big ticket thing may be happening also at the federal level.
It’s been a great year, for example, for like the Connecticut AG’s office in terms of tackling bid rigging issues. They’ve got two cases in the last year that basically tackled situations where they had ‑‑ I think these were both married couples where they basically created two companies to essentially put together competing bids, but where they were essentially really the same operation. And then the winner would subcontract that to the loser. And this happened with an asphalt company, I think. in December of 2024, and then more recently moving companies.
But they and others are really trying to focus on not just the sort of nationwide high news getting activities where some of the kinds of concerns Michael’s pointing out definitely have a role, but also where it’s either them or no one is potentially going to act on some of these issues. And that’s not going to slow down.
TEDDY DOWNEY: I want to circle back. We’ve mentioned algorithmic price fixing. I wanted to ask more broadly, and then maybe we could dig into that specifically. But are there sectors that states are really concerned about or focus on? We mentioned healthcare. We’ve mentioned tech. I think agriculture has come up a lot, particularly recently. Where should we expect states to really focus their attention when it comes to both merger enforcement and conduct?
ADAM GITLIN: So, I don’t know offhand whether or not that it’s fair to say that there are particular sectors in which the use of AI or algorithms is going to be especially the focus of states. I think actually in that sense, government enforcers across the board are sort of figuring this out and are most likely ‑‑ there are two things that are happening, right?
One, we’re learning about how these different kinds of software work, right? But we’re also learning about how they’re being used. And so, at least in the antitrust bar, like the well-known analogy that former FTC Commissioner Olhausen used about just replace the algorithm with a guy named Bob. And if that wouldn’t be okay, then it’s probably not okay for an algorithm to do it.
Understandably, enforcers are focusing a lot of their ammunition on industries where either the algorithm is likely to have a great effect or where the conduct just seems really hard to justify. That is to say how the algorithm is being used, whether or not it has a great effect, seems so obviously problematic that if we replaced algorithm with a messenger model, the way companies in some industries have at times used a third-party to aggregate information – if it was problematic, the enforcers went after it.
And here we’re going to see a lot of the same. And I don’t have bases kind of like a priori to think that it’s going to be in some industries over others. We’re seeing it. I think we saw, yes, a lot of it in particular industries at first, but it’s only expanding.
MICHAEL KADES: I would only add that I think the states, even more than the feds, are really focused on things that have specific harm to their citizens, whether they be consumers, workers, business owners. And so, that drives a lot of state enforcement in ways ‑‑ if we’re trying to think about how it’s different, it’s not that the feds don’t think about that. We absolutely did. I’m sure they still are. And it’s not that states don’t care about sort of doctrinal issues or practices. It’s just, the balance of those issues is a little different based on where you sit as an enforcer.
TEDDY DOWNEY: Maybe another way to think about this is we’ve seen at the Trump administration, even as they are looking to wind back or take the foot off the gas of antitrust enforcement, particularly around mergers and allowing more settlements, they are still pretty seemingly gung ho about a lot of these ongoing Section 2 investigations. You saw the FTC sue Ticketmaster recently, and I think a really underappreciated, pretty explosive lawsuit tying Ticketmaster to untoward conduct in the secondary ticketing market. You’ve seen DOJ continue with its UnitedHealth investigation, continue with its Ticketmaster enforcement, these issues that are very consumer facing, and that might actually result in citizen blowback.
Do the states think about pocketbook issues or sort of things that are top of mind to their citizens? And should we be looking there? I mean, there’s been a lot of focus on housing, for instance, and algorithmic pricing on housing, rentals. We’ve done reporting on algorithms in food and groceries. And there’s a long laundry list of these algorithms popping up every day. Eggs, protein, you name it, you can probably find someone coming up with an algorithm.
There’s even an algorithm in healthcare where in response to the health insurers having an algorithm pushed back on pricing by providers, the providers now have an algorithm to push back against the health insurer algorithm. So, the war of the algorithms, the algorithms popping up every day, this seems to create a big potential opportunity for states to intervene, either state AGs, legislatures., And are these pocketbook issues relevant?
And then secondly, let’s say you’re dealing with these cockroach type problem. Is that one area maybe, Michael, where the states can really look to outside counsel to help complement or supplement their own enforcement resources? And maybe Adam, if we could start with you and then go to Michael, that’d be great.
ADAM GITLIN: Sure. So, definitely, the phrase pocketbook issue gets used in the halls of my office, and I’m sure in the halls of many other state AGs’ offices. It’s always going to be a concern, both in terms of what we think our residents want and also how we have the greatest, some of the most palpable, impact in some of our enforcement matters.
So, yes, we were very involved in the case we brought with the FTC to block the Kroger‑Albertsons merger because both companies have significant number of supermarkets in the District and we were worried about prices for groceries, among other things. So, I think we’re working with the Department of Justice and the FTC on a number of matters, some in litigation, some not yet, but generally focusing on the bread-and-butter issues that ordinary people face.
I think there’s also a bit of a synergy when we sue for damages to residents. That is our parens battery authority is most often invoked to say, hey, you’ve overcharged consumers who are our residents. And what do consumers buy and what is the connection there? It’s the things they use their pocketbook to buy. That is things that are sold directly to consumers.
And whether that’s groceries or concert tickets, it’s not as if we start necessarily by saying, hey, we want to go after this particular industry. We’re looking at what kind of conduct is affecting our consumers? And if there’s a violation, we act. I think to this point about, yes, the heightened use of algorithms is just creating more, not new, questions of whether or not we focus on a particular industry.
It’s more, hey, is this thing that’s happening with this particular new kind of tool or this tool that’s accelerating in its use, is it being done in a unilateral way? Or is it being done in a coordinated way? That’s essentially the key question I think that’s driving a lot of these matters.
MICHAEL KADES: So, Adam’s completely, I think, correct on the role of the states here. And Teddy, you were talking about at least initially. I think housing is an area where those basic pocketbook issues are important.
In terms of outside counsel, as I think about at least my practice and what we’re trying to do, we really do view ourselves as trying to put ourselves at the service of states. So, it’s really how can we help state AGs accomplish what they want to accomplish? And one area where a state might see that advantage is particularly where there’s a high risk on the legal theory. The states can take advantage of say a contingency arrangement where the law firm is shifting that risk, which is a way to actually expand your capacity.
So, particularly in any groundbreaking area like algorithmic pricing, a state might be able to pursue that using outside counsel where they may not have the resources or the risk tolerance based on their budget to do it without shifting some of the risk.
And Adam was talking about the parens authority. I think this is really important, and maybe underappreciated, is the courts have really made class certification difficult. And companies require arbitration everywhere or significantly. All of that means is that it is it really difficult for individual consumers or businesses or workers to recover damages that Congress has thought they should have.
The states have the authority to push all that aside and come in under the parens patriae authority saying, there’s an antitrust harm here and we can recover, and may be able to do it more efficiently in some cases than private enforcers could because of both court decisions on class certification and the use of arbitration clauses.
ADAM GITLIN: Yeah, let me just add one coda to everything Mike just said, which I agree with, which is that because of exactly the features that Michael’s describing, it shouldn’t really surprise anyone that both blue and red states are — depending on what their particular statutory schemes allow — increasing their at least consideration if not use of outside counsel.
And I think there’s an easy critique of that that says, well, wait a second. You’re just enriching a bunch of plaintiff’s lawyers. Why are you doing that? And there’s actually, I think, a pretty compelling response, which is that oftentimes when we are doing it is precisely because they are some of the types of cases where class certification may be harder, where arbitration clauses may block consumers and where essentially it may be the states that do something or there’s nothing.
So, what would you rather? Would you rather have the state bring litigation that it otherwise, might lack the personnel, not to mention the budget for experts, and perhaps have to give a percentage of what is recovered to the outside counsel? Which I will flag is generally lower than the percentages that they ask courts for if they’re filing class cases? Or would you rather consumers recover nothing after being overcharged pursuant to anti‑competitive conduct? And would you rather forego any chance to get meaningful injunctive relief? Which the states will also always push hard for whether it’s outside counsel litigating it or whether we’re the ones litigating it.
TEDDY DOWNEY: Yeah, I mean, it’s analogous to the False Claims Act. It’s like you’re recovering money for the government, for the people. And it’s just another way of making sure that enforcement gets done. I don’t find that really controversial. I could see people who don’t like lawyers, or what have you, having an issue with that.
There’s a related question here from the audience. We’ve got two questions from the audience. If you guys don’t mind, maybe we’ll just race through these. One is we’ve talked a lot about the different potential values from some states and what’s going on with the federal government, enforcement priorities, things like that. How has that affected coordination between government agencies and the federal government and the states when it comes to working on a merger or a Section 2 case together? Has there been any lack of coordination or any skepticism or what have you that you can talk about? I don’t know what Adam can say, but Michael, any thoughts there?
MICHAEL KADES: Well, I don’t know what I can say given that I’m not there. When I was at the Justice Department under Jonathan Kanter, it was really important for us to work with the states, not as a sort of virtue signaling. We really felt that both the states and private enforcers were all different ways to achieve the same results.
And frankly, one of the things that made that easy was antitrust wasn’t a partisan issue. It was you had red states that were concerned about enforcement and about the lack of Section 2 enforcement. You had blue states. And that makes it a lot easier to work together.
The question is, in this environment, has that consensus begun to break down? And I’m not there. So, I’m not going to comment on that. But I can say that I felt from my perspective, it was really easy to work with the states and it was really beneficial to enforcement. We talked about the NCAA case, the airline cases, the Agri Stats case. There are just a number of cases where we were able to, I think, improve our enforcement. But it started with the fact that it was not ideological or it was not partisan. We kind of all had a view of what the problem was.
ADAM GITLIN: I’ll just say I’m going to keep my remarks to a level here.
TEDDY DOWNEY: You don’t have to answer.
ADAM GITLIN: Let me give you three points because I think this is actually relevant. One is I think it’s important to remember that most of antitrust enforcement happens at the line staff level, okay? Functionally, the coordination, the cooperation, the working together, the figuring out who’s staffing which depositions, which parts are we going to investigate further? This stuff is happening between career lawyers at the federal government and in the state government. And that continues no matter who is ultimately pulling the strings at the very top.
The second thing is it’s still early days. The new administration didn’t really have people fully installed until the last few months. And I would say currently, just stating an objective fact, I’ve noticed a material change in federal enforcers.
I don’t know what your questioner is thinking here, Teddy. But if the notion is that they’re somehow being less forthcoming or less solicitous of wanting state participation in matters that they think are going to affect the states, no, I haven’t seen a change in that at DOJ or FTC.
TEDDY DOWNEY: No, I think that’s really interesting, just given the turmoil at the top and the HPA thing. Let’s keep going.
Last question here. Coordination between state AG offices and private plaintiffs. It’s not really a question. It just says those words. I imagine coordination or intervening and AGs working, with big private cases, what’s that like right now? How do you think about that?
ADAM GITLIN: I think it’s complicated. Because I think we all generally share a common interest, both in the sort of layman’s sense and generally speaking in the legal sense too, in the sense that we should be able to cooperate and have asserted that. But also, sometimes class plaintiffs are ostensibly, depending on how you view the case law, going after essentially the same pot of money, to be kind of crude about it, as state AGs that might be proceeding in a parens [patriae] capacity.
I think there are always going to be situations that have to be evaluated sort of case-by-case which one is stronger. There’s a serious policy consideration that state AGs are going to have to take into account in deciding whether to proceed in a parens capacity which is: Has the class case got a better shot at obtaining relief for residents than a government parens case? Because if we feel strongly enough that people will get the right injunctive and monetary relief without our participation, we don’t need to. We don’t have a profit motive. We don’t need to do that kind of work if we are confident that others are going to get our residents the kind of recovery and the kind of injunctive relief that they ought to.
And if people disagree, then we do our best to figure things out. Traditionally, a lot of the time, states have tried to essentially get carved out of class cases where states brought parens actions. It’s a delicate art. But people are doing it in multiple cases. And we generally have the same underlying goals in mind.
TEDDY DOWNEY: Michael, any thoughts?
MICHAEL KADES: I would just add it’s the nature of the beast. You have federal enforcers, state enforcers, private enforcers. They all have overlapping, but distinct, interests. And the first step is recognizing that. And so, realizing when people represent slightly different interests, you have to work through those. And at least I think the best way to start is people aren’t acting in bad faith, until you have evidence otherwise, in a lot of it.
ADAM GITLIN: Not only that, but you also have to remember that a lot of these folks are going to be repeat players. Someone who is class counsel in one case might be representing a state in an outside counsel capacity in the next. So, be careful what kind of arguments you make, because you might be shooting yourself in the foot later down the line.
TEDDY DOWNEY: Well, Adam, Michael, this has been amazing. Fascinating time, fascinating conversation. You tackled a very, very tough topic, the future of antitrust enforcement extremely well. I can’t thank you enough for taking the time today.
MICHAEL KADES: Teddy, it’s always a pleasure. Thank you so much for having me.
ADAM GITLIN: Really appreciate you having us on, Teddy. Thanks a lot. Thank you, Michael.
TEDDY DOWNEY: Thanks, Adam. Thanks, Michael. And to everyone else on the call, this concludes the call. If you found the conversation helpful or thought-provoking, be sure to follow The Capitol Forum on LinkedIn, X or Blue Sky for breaking news, policy updates, and information on upcoming events.
We’d love to hear from you. Drop us a line at events@tcfpress.com. If you have ideas for future topics, speakers, or just want to connect, happy to hear from you. Have a great day everyone.
And thanks again, Adam and Michael. Bye-bye.
MICHAEL KADES: Bye.
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