Apr 24, 2026
On April 24, The Capitol Forum held a conference call with Professor John Newman of the University of Memphis Cecil C. Humphreys School of Law to discuss Newman’s recent paper, “Lawless Antitrust,” which explores how modern antitrust doctrine has diverged from statutory text, and what that shift means for enforcement, legal interpretation, and competition policy. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: All right, I think we’re ready to go. Welcome everyone. I’m Teddy Downey, Executive Editor here at The Capitol Forum.
Today I’m very pleased to be joined by Professor John Newman of the University of Memphis Cecil C. Humphreys School of Law. John is the author of the recent paper, “Lawless Antitrust.” Many people must know that John was at the FTC leading a lot of tech policy enforcement. So, a lot of those lawsuits that are still ongoing, John was the brains behind a lot of those. And this paper, “Lawless Antitrust”, examines how modern antitrust doctrine has diverged from the statutory text and what that means for enforcement and competition policy.
And before we get going, everyone in the audience, if you have a question, there is a questions panel in here. You can enter it in. We’ll get to the questions later. Just put it in the Q&A or send us a text or email us at editorial@capitolforum.com. We’ll get to your questions.
John, super interesting paper. I would love to know why now this paper—for people who are looking at the economy, looking at this tech space—why does this resonate right now, what you wrote about here?
JOHN NEWMAN: Yeah, well, first off, as always, good to see you, Teddy. Thanks for having me. Yeah, it is a somewhat curious choice of title and topic these days to write something about lawless antitrust, but have it mostly be about stuff that happened in the 70s and 80s, not the headlines that we’re seeing right now.
So, maybe unpacking it, you’d really have to, I think, back up to 2021 when Lina gets appointed to head the FTC. I moved up from Miami to D.C., joined her there. And one of—among the other things we were looking at—but one of the things we were looking pretty hard at, of course, was the digital tech space.
And people had been pointing to all kinds of problems for a while. It felt like some of these companies—I’m thinking of like Meta in particular—just seemed like they were sleeping on their laurels. They weren’t incredibly well-managed. They were just these kind of monopolists that had gotten comfortable, which is not good, right? In America, we want people to be feeling competitive pressure to innovate, hire workers, build new products and all that good stuff.
So, one of the ways we tried to get at this was to think about, like, what are all the legal tools we have? And then let’s figure out which ones are appropriate for these markets, which have some different features maybe than we’ve seen before.
So, we did that. We kind of looked at all the legal tools that are on the books, statutes that had been around for decades, case law that had been kind of mostly forgotten. And what we found was, like, there’s actually some pretty powerful tools that seem to have some resonance for some of the problems that people are talking about today. I mean, I’m looking at things like exclusive dealing, things like vertical mergers, things like potential competition, price discrimination. All of this has, like, deep resonance for the tech space.
And all these are, like, laws and ideas that have been floating around since the 1930s, if not before. And we started seeing a lot of old wisdom in these old cases. I mean, these are judges in, like, 1950 talking about how competition is a stimulant and monopoly is a narcotic for business. Like, yes, that’s what we’re seeing right now.
So, this felt great. We’re all really excited. But as we started digging deeper and connecting, like, 1960 to now, we realized there’s a big mess right in the middle of it that was going to prevent us, make it hard for us to use these tools. And that was not by accident. That really is kind of the seed of this paper is to describe once we turned over the rocks and kicked over the logs, the bugs and maggots and things that we found underneath that had been left there by our predecessors.
TEDDY DOWNEY: Yeah, I think a lot of people, just sort of in the world, think, oh, judicial activism. They think that has been thrown at Democrats over the years, Democratic judges who are trying to push ahead with more aggressive enforcement of environmental rules or what have you, right? And sort of they’re always being accused of legislating. And that kind of connotes a doing something more, like adding something.
What you point out in your piece is judges that sort of cut off huge swaths of law with these decisions or otherwise constrain the law. I’d love to just walk through some of the highlights in the paper. I know Judge Posner starts off the paper. He appears a couple of times. Walk us through some of the highlights here of examples where judges, judicial decisions, have really curtailed antitrust law.
JOHN NEWMAN: Yeah, and that’s such a good insight, Teddy. I think it’s easier to get away with stuff when you’re doing negative things rather than doing positive things. I think that’s basically what happened here.
One initial point I think is worth keeping in mind is it wasn’t just judges. It was the agencies too. And in particular, the FTC. I actually view that as maybe even more problematic. But let’s come back to that. I do think the Judge Posner example is probably like the banger of the article. It’s pretty wild stuff.
So, Okay, Richard Posner, Chicago School antitrust guy, gets appointed by President Reagan to the Seventh Circuit federal appellate bench. And among other things, he heard a decision involving Clayton Act Section 3, which is one of those statutes that people just kind of forgot about for a while. I don’t know of a single law school class that would teach Clayton Act Section 3, at least before recent events. It was just kind of one of those lost antitrust statutes I was talking about.
Well, how did it get lost? Okay, Posner got himself a Clayton Act Section 3 case called Roland Machinery when he was on the Seventh Circuit. And for folks who don’t know the history of the Sherman and Clayton Acts, basically you’ve got Sherman Act of 1890, pretty broad, pretty general. A few years go by, and the Supreme Court cabins it pretty strictly. And so Congress passes a new law, the Clayton Act, that’s much more clear, much more specific, and it’s much more aggressive. It’s just—the language is different. The thresholds are different. It’s targeting specifically, among other things, exclusive dealing. Okay, and that’s what this case is all about.
So, you have these two very, very different statutes, one passed directly to override the Supreme Court’s treatment of the other. Posner, with just kind of a little bit of throat clearing, just kind of comes out and says, yeah, these are different statutes. And the Supreme Court, my ostensible bosses, have said as much. And they have applied different standards. They have said it’s easier to prove a violation under the second one.
But I’m not going to do that. I think the rule of reason should apply, which is the old Supreme Court test that Congress specifically overrode with this new law. His citations are like laughable for that proposition. He cites like a concurring opinion, an out-of-circuit like district court opinion. It’s just kind of unbelievable. I think the way he got away with it was because he was walking back rather than walking forward, as you said.
Okay, that’s one decision. Well, it’s been cited over a thousand times by subsequent decisions. Like, it’s a big one. And lo and behold, the federal agencies still have not brought a standalone Clayton Act Section 3 case ever since then.
TEDDY DOWNEY: And it’s not just the thousand citations. And I can see why if you don’t want to be on the wrong side of this law, you would cite it. But it’s also like that it was so successful, like there was no one standing up, no one saying this was wrong, no one taking him on, just that you can get away with it without with total impunity. And somehow, he’s still a respected judge, right? Like, a lot of people think he’s a smart guy, what have you.
Obviously, there’s been criticism from the anti-monopoly movement about what he’s done. And he showed up at one of those and basically said, well, there is no antitrust law anymore.
JOHN NEWMAN: Yeah, he killed it, right?
TEDDY DOWNEY: Yeah, I killed that, right. Fun fact, my college roommate clerked for him and now works for OpenAI. Shout out, Tom Gorman.
But the other thing you mentioned is Areeda-Hovenkamp teaches this, right? Like, so it’s so ingrained in learning that no one even knows that—it might as well not exist anymore.
JOHN NEWMAN: That’s it. When you’re talking about activist judges, isn’t it a single judge with a stroke of a pen repealing a congressional, like a democratically enacted, statute? I mean, that’s beyond activism to me. That’s the kind of thing that gave me this title. That’s lawless, I think. You’re not using the statutory text. You’re not using the history. You’re not looking at the purpose. You’re not comparing it to other laws. You’re disregarding the Supreme Court. What are you doing?
So, usually one check on that is scholarly criticism. You’re not supposed to get to go on fancy speaking tours and get the adoration of a bunch of prestigious law professors when you do that sort of thing. And yet, as you point out, the leading scholarly treatise just takes this approach and says, yeah, it’s pretty much just the rule of reason for all kinds of vertical restraints. Doesn’t matter what underlying law we’re using.
And that to me is a kind of a failure of the academy. That’s just not what we’re supposed to be doing as law professors. There are econ departments that would look at this differently. There’s business departments that would look at this differently. Of course, we’re supposed to be legal academics, right? And I just think it’s inappropriate.
TEDDY DOWNEY: And so, let’s say he hadn’t been able to do that. What would—if this tool were used, could be used, how would that make bringing cases easier? Like what kind of cases would be seeing more of?
JOHN NEWMAN: Well, a couple of different things. One, there’s an FTC case involving some de facto exclusivity in inputs, pesticides for farmers. It’s still going on, one of the few that’s still going on. And the allegations are that the defendants have like monopoly level market shares. In my view, we should be seeing cases well before we get to that point. So, that’s one thing that a revitalized Clayton Act Section 3 could do.
I mean, I think that’s what it was supposed to do, right? Instead of waiting until you’ve got 70 percent of a market locked up, it’s supposed to be kicking in when you’ve got 25 percent and you’re threatening to get 30, frankly. So, that’s one thing.
Now, that’s still dealing with like physical goods. We started out talking a little bit about me pondering tech problems as the source of all this. Well, there’s some old case law that says, and this statute was also meant to apply to things, even if they are intangible, if they are kind of like a mass produced good.
So, I’m thinking about some of the like Google exclusive dealing contracts. Same thing, maybe—if you could stretch the statute just a bit to cover this intangible new product. We should have been bringing cases well before Google had 90 percent of a market right back when they had 30 percent. I mean, that just yields such a different world than the one we live in.
TEDDY DOWNEY: And so, as a result, basically, because this doesn’t exist, antitrust enforcers are constantly having to package everything into monopolization cases and you have to wait until they already have a monopoly. And so, that ends up, basically, making life not completely impossible, but really, really hard, right?
JOHN NEWMAN: I think that’s a big part of it. One is that you have to wait until the power threshold gets so high. There’s a time element to that. If you wait that long, now it just becomes, oh, the way the world works. I guess Google just is the only search engine we have. It just lets the monopoly normalize itself. I think that’s a problem in a litigation setting.
And then two, this Clayton Act standard—like the one we apply to mergers—it also interjects like a probabilistic analysis. The Sherman Act kind of requires you to be pretty sure that the company’s monopolizing the market. The Clayton Act just says “may.” It’s like it’s illegal if this may cause a problem. That’s at least ostensibly a much easier analysis for your plaintiffs.
I mean, the other nail in the coffin of all this, too, then was, hey, well, this is just the federal judiciary. The paper points out the FTC did the exact same thing in a case that kind of went under the radar. So, this whole world that I’m talking about, it was pretty well buttoned up by the Chicago School.
TEDDY DOWNEY: And when was the last time—I think you mentioned in this paper that an agency brought a standalone Section 3 case?
JOHN NEWMAN: As far as I know, it’s the In re Beltone case that went before the FTC. It was started under Carter, then resolved under the Reagan administration in a very similar fashion. They just said, eh, we’ll treat it like the Sherman Act, yeah.
TEDDY DOWNEY: So, it’s been like 40 years. Can you walk us through some of the other examples you have in the paper of the antitrust law becoming illegal?
JOHN NEWMAN: Yeah. So, there’s a few other sort of positive or like actual moves that were done. There’s also some non-enforcement moves that were done we could talk about.
But one of my kind of simultaneous favorites inasmuch as it’s so ridiculous and least favorites because it was so annoying when I was at the agency, was this concurring opinion that Commissioner Wilson in 2022, I think it was, wrote in the Illumina/Grail vertical merger case. So, we’re talking about tech, a platform vertical merger, right, involving like a nascent market. Really, really interesting case and like lifesaving technology at stake.
The Commission hears the appeal from the ALJ. Commission issues an opinion that says, hey, we applied the Supreme Court’s test for vertical mergers. It’s been laid down. It’s on the books. It’s been applied by dozens of other courts. We applied that and we also applied this newer ability/incentive framework that the agency’s kind of developed. Either way, we think the merger is illegal.
Christine Wilson weighs in as a concurring opinion, not joining the majority, to say, yeah, there is no Supreme Court test for vertical merger legality. Which is interesting. Like, that’s an interesting claim. And it was kind of striking to me. Because this is a Supreme Court case that she admits has never been overturned.
Okay. So, how is it that there’s no test in modern antitrust, as she was saying? Well, she lays out a few arguments. She says, oh, we, the agency’s issued some guidelines that didn’t include that test. Okay. As far as I know, agency guidelines cannot overturn the Supreme Court. She said, well, there really haven’t been any cases recently that use it. Which wasn’t true. There was one in 2016.
And then she said, and academics don’t like it. Like, man, I’m an academic. I would love to have the power to reverse Supreme Court decisions that I don’t like, but we just don’t. You’re just behaving lawlessly. You’re saying here’s the law and I don’t like it, basically.
TEDDY DOWNEY: Yeah, it’s a challenging thing. I mean, it puts you in a really tough bind if you hold yourself to operating within the law and you can lose either within the way the law works or you can also lose in this other option, which is just completely outside the law. And so, I think that does go to why it’s so hard to win these cases. You’re always going to be at a disadvantage if you can have the real merits or made up doctrine.
I want to take a step back here, because how much do you think this—I can’t remember the exact language you use, but it’s just sort of the aura of a legal antitrust. Just sort of the aura of it being illegal in this specific area of law. Like, where do you think that comes from? Is it because obviously anti-monopoly movement talks a lot about the antitrust paradox and Bork and you’ve got Supreme Court precedent that citing a book, right, as opposed to statute sometimes. Where do you think this idea of, well, I can just be a judge and just wash it away because people don’t like, it comes from?
JOHN NEWMAN: Yeah, I think it’s an ideological move, right? There’s a justification that was put forward for it. But I think it’s an ideological move by some people who were looking at statutes and case law they did not like, but they knew they were not nearly popular enough to actually go before Congress and get the law changed.
And so, instead of engaging in democracy, they engaged in a kind of ideological takeover project. Now, part of that was putting together an intellectual framework, speaking somewhat generously, to justify what they were about to do. The way they did it was to say, okay. We want to roll back the clock to before 1914 and these new laws came on the books. We want judges to be able to do that. We know Congress won’t do it. So, we need judges to have the sort of authority to do it, which is kind of a stretch, right?
So, their argument was, then, oh, the antitrust laws are so vague and empty, that they were just a total “blank check” to judges to do whatever they want, come up with root to branch, right? Like top to stern or stem, whatever the saying is, like from the goals all the way at the top, down to the application in a given case, judges can just make it up. That was their argument.
And then they kind of tried to throw a few more things at the wall to see if anything else would stick, but that was it, basically. That freed them up to say, oh, instead of the law, we can just follow what our favorite economists say, and that is doing law.
My argument in the paper is to say, no, it’s really not. It’s got the kind of cloak of authority, but it is lawless. It kind of, in an insidious way, undercuts the rule of law itself. If you’re just removing the role of law—it’s kind of a clever little line in the paper, I think but if you remove the role of law, you have no rule of law left, right? It’s rule by power, by fiat.
TEDDY DOWNEY: Yeah, and like you said, we do see that a lot now. Obviously, your paper is looking at historically. We see that all the time now. Do we have a king or bribery law? I mean, you just name your Voting Rights Act. I mean, you just name your issue. This has definitely spread. It’s less unique now and its illegal, the illegal nature of what’s going on.
But I want to get back to implications in a second, but any other examples? Yeah, let’s go through a few more examples. Because you have a lot in there. They’re all really interesting, and just like how the event happened.
JOHN NEWMAN: Yeah, here’s another one that’s kind of a favorite/least favorite, because it was so fascinating, interesting, nobody had talked about it as far as I know, but also was like a huge thorn in our side while we were at the agency. And this is the In re B.A.T. merger case that went before the Commission in the 1980s.
We uncovered it when we were trying to block Meta from buying Within, this VR app. And our theory was potential competition, that Meta would build its own app if it couldn’t just buy every app out there. Not the first time somebody thought of that theory. There were cases back in the day, including Supreme Court cases.
The Commission had started a case in the 70s using this theory, and then the Reagan-era people came in. Now they had a choice. They didn’t like the theory at all. They could just dismiss the case. That would be one tack. Instead, to their credit, they’re pretty savvy. They said, no, we’re going to hear the case, and that gives us a chance to make the law, basically, as commissioners. And that’s exactly what they did.
The Supreme Court had said, there’s no unique test here. Here’s the standard. You treat this basically like other merger theories. Yeah, you have to prove your case. We’re not going to apply some weird one-off standard to this type of theory. The Commission, citing basically no authority other than an academic article again, said, no, actually, you need clear proof that the buyer—this would have been Meta—would have definitely entered the market if it couldn’t acquire the target.
Okay. That’s an evidentiary standard that appears nowhere else in antitrust law. They just made it up based on this academic article. And saying, you have to prove that Meta, in our case, would have entered, you’ve remade a statute that should be probabilistic. The language says “may.” And you’ve turned it, you’ve taken your little pen, and you’ve crossed that out and overwritten what Congress said, to say “shall” or “will.” They basically changed the law.
What makes that, I think, especially pernicious is nobody’s going to appeal it. The defendants are super happy when they get a Commission opinion for them, so they’re not going to appeal. The Commission can’t appeal itself. So, you have no check whatsoever on these agency heads writing law, right, changing the law.
And that’s a problem. We ultimately overcome it in the Meta/Within briefing, if you look back. The judge did not adopt that. But you’re spending capital, right? Every time you try to get a judge to go along with something, you have to spend some capital. So, it was a real problem. That, I think, is a pretty bad one.
There’s non-enforcement. The agencies just stopped enforcing laws against price discrimination or interlocking corporate directorates. Congress never said to stop. They just said we don’t like it anymore.
And then maybe one last one. Even worse, it wasn’t they just stopped enforcing laws against price discrimination, which maybe you’re just trying to save agency resources, right? You’re just allocating. Sure. Except they were actually spending agency resources to try to overturn the law or weigh in for defendants as amicus in briefing. So, it wasn’t they just were saving resources. They were spending resources just trying to change the law, which, again, I just view as not an appropriate exercise of agency discretion.
TEDDY DOWNEY: One thing that comes up a couple of times is changing the level of proof. You mentioned going to clear proof when it was some kind of probabilistic thing. You mentioned in the paper a merger where the judge changed “may be” to “would be likely to.”
My experience talking to people at the FTC is that they tend to use likely. They don’t even really think of it as may—which just kind of like gets to your point about how entrenched this kind of stuff gets in the educational process.
That seems like a pretty hard thing—that seems like a pretty dramatic change when, if you’re supposed to be only needing to prove with a 30, 40 percent or even potentially lower may. I mean, what percentage are we really talking about? And you’re having to, all of a sudden, prove that it’s likely or certain. Obviously, that seems very effective. Are those actually—but I’ve seen the FTC and DOJ bring cases where they’re actually going back to the statute and saying, hey, this statute is actually may.
So, is that the type of thing that is as easy to just wish away? Or how effective have all these changes been in sort of making it harder? I mean, obviously, you can point to the case law, but the statute is still there.
JOHN NEWMAN: Yeah, yeah, it’s a good question, a tough question. I mean, if you look at the briefing that went out under the agencies from, say, 2021 to 2024, it is pretty clear that we were trying to hammer on this stuff back. Let’s go back to the text of the statute, that we’ve gotten way off course.
I would say with mixed success at best. I mean, there’s a few opinions, I think, do a pretty nice job here on this kind of thing. But by and large, it just seems to be maybe so entrenched in the law that these judges are looking at the case decisions. And there’s always an incentive as the enforcers—the actual litigators—to overplead a little bit. It’s tough to tell your people to go out and say. “Here. Just set the bar here. And if you don’t persuade the judge, you lose.” They want to say, well, maybe you’re right, the bar is here, but we want to prove to the judge that we’re here. So, they’re always incentivized to say, “No, I mean, this thing will harm competition. We’re way past the statute.” Kind of inadvertently maybe allowing that slippage to occur.
One other problem that goes on with the FTC specifically is when they march into federal court to get a preliminary injunction, it’s supposed to be a probability of proving a probability in their own in-house court. I just don’t think the human brain is set up very well to do that kind of thing. And there’s some pretty good psychological research on that.
But properly speaking, if the actual statute only requires, like, let’s just say a 30 percent chance, then in federal court, if the FTC could prove a 50 percent chance of a 30 percent chance, they should be getting the injunction. And that is not what it felt like to me. It felt like we were doing a trial, like beyond a reasonable doubt, every time.
But it should have been like, man, if there’s a 15 percent chance, this thing should be blocked. That’s pretty potent laws. You can see why they were a real target.
TEDDY DOWNEY: And so, you’ve done this historical analysis. Where does that leave us now? And obviously, you did this historical analysis and then you’ve had this recent activity from the second Trump administration.
How are you feeling about where the law is going. Because in some ways, actually, the anti-monopoly movement has had some recent success. Obviously, Ticketmaster Live Nation jury trial unanimously decides against Live Nation. The judge in Nexstar Tegna sides with the states, blocks that deal.
So, in some ways, the groundwork that you all laid is actually creating some room for success. Obviously, you can look at other examples of things not going so well. But how are you thinking about the current moment in light of writing this paper? What do you see going forward?
JOHN NEWMAN: Well, maybe a couple of thoughts on that one. And this harkens back to something you said earlier, Teddy, that I am kind of advocating for us to fight with one hand tied behind our back. The other side is willing to totally opportunistically pick the law if they want to or just disregard it if they don’t. They do have a bigger option set than a side that’s willing to actually follow the law. It takes some options off the table.
And I’m pretty keenly aware of that. It is the sort of thing that keeps an academic up at night. Who knows if anybody ever reads these papers? At least you do, Teddy. So, thank you for that. But to the extent they do, you want to get it right. You want to have the right strategic calls. And I think it is the right strategic call. I think if you just run rampant, right, if you just do lawless antitrust, as I’ve described it, eventually you lose any kind of credibility.
And that’s what we need, right? We need popular underpinnings like the stuff that’s driving Live Nation forward, like the stuff that’s driving Nexstar forward, if this is going to have any kind of lasting impact. I think it’s got to have a kind of legitimate “we are doing the law as the people put it on the books,” cloak or mantle around it, if it’s going to work.
So, I do think it’s the right methodological move to make at this moment. But I also think there’s just a lot of institution building that still needs to happen, frankly, among the anti-monopoly, if it’s even a movement, right? I mean, it’s kind of a project at this point.
And I see people, sometimes, out in the streets. There was a protest around the Paramount potential acquisition the other day. But that’s where we, I think, need to get to. And that tells me there’s still some institution building that needs to happen to better coordinate with for example labor unions.
You’ve been so good at this, Teddy, by just convening, like bringing people together, getting them in the same room. I still remember, I think, your conference was the first one where Lina and Jonathan spoke at the same conference back in like 2016. I think we need more of that, frankly, so there’s a much thicker, like more robust network and maybe an actual movement underlying it.
TEDDY DOWNEY: I’ve got a question here. I’ve thought often about arguments like Professor Newman’s in the context of the failing firm and weakened competitor defenses. The failing firm defense was considered and ultimately not included in the CK amendments. Yet, the Supreme Court continued to recognize it.
Eventually, we got the WC defense. And now, practically every merger, it seems like, includes a quasi-WC defense. See Novant. But I do struggle with what courts in a PI posture are supposed to do, i.e., should the equitable posture of most agency challenges to mergers give courts more leeway to consider defenses like these? See also efficiencies. Isn’t there an argument that a court considering a PI is more a chancery court than a law court?
JOHN NEWMAN: It’s a really good question. And yeah, as we’ve seen, failing firm kind of started to morph into weakened competitor. At some point, that just starts to become we want to do this deal because we think it’ll make us more powerful together, right? Like that’s kind of the core of that argument once you start to get to like weakened competitor, I think.
Yeah, I mean, to some extent it is correct that you are asking for equitable relief in one of these injunctive hearings. That being said, I do think there is a pretty clear—there’s a very clear difference between the FTC and a normal plaintiff in one of these injunctive hearings. And that is that the FTC Act, Congress specifically passed to make it, they said, I mean, paraphrasing just a bit, very, very easy for the FTC to get an injunction, right? To stop one of these mergers. I think the actual quote was to make it so that this was “liberally available” to the agency.
So, yes, I think it is to some extent like “what’s good for the public?” analysis. That’s one of the factors. But I’d say with a pretty heavy thumb on the scales, if you just actually look at the law itself, in favor of granting the injunction. And the underlying idea, once we’re into talking about just what’s in the public interest, I think is that in Congress’s view, historically, at least, firms were just really not supposed to be defaulting to mergers and acquisitions whenever something went wrong or whenever they wanted to build out a new business unit.
And we’ve kind of gotten into that world for some of these companies. But Congress had a vision where you’re supposed to be trying your damnedest to roll up your sleeves and grow internally, like build a better mousetrap, right? That’s the default.
So, I’ll say it’s a great question. I think the premise is right. But I think the law actually does favor it pretty heavily.
TEDDY DOWNEY: One thing, I’ve got a couple of other questions here. We’re going to get to them. You mentioned Congress. What’s their role? Because I can’t think of a way to hold judges accountable other than for Congress to say, you’re not enforcing the law that we wrote. If they’re not willing to get up and say, hey, you have to follow the law.
From my perspective, I’ve flirted for years and years and years, how do I assess a judge’s opinions and decisions? And I think what you’re describing makes it impossible. Because it’s really hard to figure out when they’re following the law or when they’re making it up. I mean, obviously, you did a great job in your paper. But it’s really hard to keep track of them and what’s going on and what their ideology is because they may not know.
Some judge may be just looking at Hovenkamp texts and just doing what’s in there. They’re not necessarily ideologically aligned. They’re just kind of like, I’m looking at some of this precedent they don’t really know is made up. There was no stink made when it happened. It’s got a thousand other citations. The only thing they were going to find is your paper to know that it was completely fabricated.
So, is Congress the answer? What’s the answer in terms of holding judges more accountable? Do you have any sense of how they think about themselves or what have you?
JOHN NEWMAN: Yeah, it is a tough question, in part because I think at the root of a lot of this really is just a kind of a—for lack of a better word—a kind of a neoliberal worldview that I think a lot of the kind of people who have been appointed as judges in the past 30, 40 years have. And they don’t even necessarily seem to know sometimes. They just don’t seem to be conscious of it.
And I think of that when I read the US v. Google Search remedies opinion. I’m just not even sure, reading that, Judge Mehta is aware that he’s taking a gamble based on his assumption that the market will fix all the problems, right? He like gets close to saying that, but I’m just not sure he realizes the stakes of what he’s doing. He thinks he’s doing the safe thing and avoiding the gamble of a big remedy. No, brother, you’re gambling either way. You don’t know the future. So, you can either follow what the Supreme Court said—which he did not—or you can kind of default to doing nothing—which he basically did.
Okay. So, that, I think, is at the root of a lot of this. How do you fix that? Whoa, that’s a big, big, big problem. I think it starts, though, with training. All these judges go to law school. We’re starting to see some professors in some pretty fancy schools who are probably teaching antitrust different than it used to be taught, which I think is a good thing. I think Lina is putting together a center up at Columbia to train law students who are going to go out and become litigators, become judges. I think that’s phenomenal. I think that’s great. Judicial training might be part of it.
And then I do think Congress, especially holding just kind of like spotlight hearings, can be helpful. I think academics, not just accepting that the world is the way it is and we should just argue over little things here and there and stepping back the way this paper tries to do. I think it’s part of it. But it is a big problem. So, it’s going to take a big solution.
TEDDY DOWNEY: We’ve got another question here. In addition to rogue judges, we’re also dealing with federal enforcers who are ambivalent about enforcing the law or even accepting bribes to let mergers do. You said it, not me. Any thoughts on making private enforcement more robust, especially in the merger space?
JOHN NEWMAN: Yeah. Merger space is tough, as we know. Historically, private enforcement hasn’t been super strong there on the ex-ante side of things, right? Because blocking a merger doesn’t yield much of a payout. And it’s tough to justify spending a bunch of time and money if you’re not going to get a damages award at the end of it.
And couple thoughts. One, this is just kind of naturally happening. There are a bunch of really, really super sharp, super motivated law students who are very interested in antitrust in a way that was not true ten years ago.
I’ve said this anecdote before. The first time I taught antitrust, I had three students enroll. The last time I taught antitrust—this was down at University of Miami. It’s a big school, but I had 140 students in that class.
TEDDY DOWNEY: Wow
JOHN NEWMAN: That is a sea change, right? And I’ve talked to other people who are that way. Lina’s class at Columbia, huge. Herb said his class at UPenn has gotten huge. So, there’s a bunch of really, really sharp, super motivated, people who are about to become attorneys. A lot of them would have gone to the federal agencies in the past. They are, by and large, not going there. They’re savvy enough to know that’s just not the place to be if you want to do good, interesting work. They are flooding into cool, nimble, new—some older, but some new—plaintiff’s firms.
So, there just is an army of people looking at this problem that didn’t used to be there, but I think it’s great. And then we can start thinking creatively about nonprofit models, litigation funding models. There are some things percolating up. I’d say watch this space.
TEDDY DOWNEY: One thing you mentioned in the paper that’s an area of law that’s been curtailed is the Robinson-Patman Act. We actually have seen, not just that big FTC case that’s still ongoing, the liquor market case, but we’ve also seen a lot of firms and groups really leaning into that Robinson-Patman. You’ve seen so much activity on price discrimination. The documents coming out of that Pepsi relationship with Walmart. Just explosive insight into how this type of arrangement can actually increase prices, which is at odds with the sort of longstanding view that you’re stopping Walmart from lowering prices kind of mantra.
How big of a deal—that seems like one area that’s kind of overcome this setback that you mentioned in the paper. Why do you think that is? How do you think that that law has had a comeback, despite kind of being at the centerpiece of judges and FTC trying to make it just disappear?
JOHN NEWMAN: Part of it is the private bar who kind of kept it on life support, I would say, during the lean years. There weren’t a ton of cases. But the cases there were, were brought by private plaintiffs. And they continue to have some success. My sense is—and this is based in part on talking to a few of those private lawyers who’ve brought and won these cases—it’s like when you get the kind of case that you could satisfy the statute with, the facts are actually pretty strong and pretty compelling even to a layperson.
That Southern Glazers case you mentioned, I think, is a pretty good one. I thought the Pepsi case was a pretty good one as well. When you start explaining, hey, a seller probably wouldn’t just grant a discount out of the goodness of its heart. Why would it? It probably means if it’s treating one buyer differently, it’s not based on a cost difference. It probably means that buyer’s throwing its weight around. The seller’s going along. And they’re—in economic terms, kind of creating this two layer barrier to entry that chokes out rivals downstream. We favored partners get to split the resulting above market profits or above competitive profits. It’s a nice little cozy arrangement. So, I think that’s part of it is private plaintiffs kept it on life support.
The Supreme Court hasn’t destroyed it the way they’ve destroyed a few other areas. Their last decision wasn’t too bad on it, and I think that’s just kind of happenstance, honestly.
The last point is the other side was pretty lazy. They never actually did the economic groundwork to really cement a position, maybe because they couldn’t do it because they were wrong. There’s been some empirical work recently that says, yeah, no. Actually, this does have – this can have the effect of stifling competition, and then prices go up. Even if you think in the short run, you’re losing discounts, in the long run, you’re getting a less competitive market. We know what that does.
TEDDY DOWNEY: Got a few other questions here. So, let’s get to them. Are consent orders even legal? You can keep doing anti-competitive stuff, but here is a court/DOJ blessing. Are there any consent orders you have liked that worked, that protected competition? Don’t parties just wait out the order?
JOHN NEWMAN: Yeah, I’m pretty skeptical of consent orders in general. I mean, there’s situations where like, let’s say—I’m just talking strategically here because these agencies are litigators, right? The FTC has a real regulatory authority as well, but it is also a litigating entity sometimes.
There’s times when you issue a complaint—you file a complaint, based on what you thought were the facts. You get into discovery. The facts just don’t pan out the way you thought. The world changes. A new witness pops up, whatever. The world can change such that you’re just not in as strong a position as you thought. Going into a trial may not be the optimal strategy for the American public, right? So, I will grant that there are just situations where a consent order is the best of a bad option set.
That said, I’m pretty skeptical of them in general. A few that have emanated recently I would be very skeptical of. I think when it comes to like partial structural divestitures for mergers, there’s a really bad track record.
But the one that I love is, of course, the 1956 AT&T settlement where the government said, yeah, you’ve been doing some bad stuff. License all your patents royalty free. That’s a—if you’ll pardon my language—that’s a fucking consent order, bro.
And some economists have looked at that and said that had a more positive effect on the U.S. economy than the Marshall Plan. It was an unbelievable wave of innovation and competition that was unleashed by prying these patents out of this monopolist’s hands. That was a consent decree.
TEDDY DOWNEY: I do wonder what your thinking is. Because when I look at these companies, Google, for example, is just so big and so dominant, has so many monopolies. I mean, you’re not just talking about Search. You’re not talking about AdTech. They’re monopolistic—or oligopolistic—in AI at this point. You’ve got to think that just based on all the data they get. You’ve got Waymo. You’ve got Gmail. You’ve got YouTube. Hollywood’s worried about YouTube. Uber and Lyft are afraid of Waymo.
We could probably spend half a day talking about Google. I don’t even know if you could have enough antitrust cases brought at once that would matter to their power. Their spending power is bigger. Their CapEx spending is now bigger than most countries. They design their own chips now.
Amazon is the same way. They want to enter a market, the stocks in that market go down. Some of these companies are just so big. Have we moved past the point where any antitrust enforcement is really going to have an impact? And do you need a lot of change? If you have to wait until they’re a monopoly to do exclusive dealing cases and lump them in a monopolization, it’s too late at that point. They’re going to get around it. They’re going to fight you. They’re going to use their political power.
You look at these cases. Obviously, you must still be watching them and be interested in them. But are you at the point where you’re like, hey, we’re just going to need so much more to actually challenge, to disintermediate this concentrated power? Or do you think what? We just need more cases and we can get there?
JOHN NEWMAN: I would say backing up from—let’s start with remedies. If we’re not going to get stronger remedies than we got in Search, all the cases in the world I don’t think are going to do much to move the needle.
I mean, yeah, on the margin, is the world better if some of these, say, reciprocal dealing cases brought by publishers against Google succeed and we can terminate that conduct? Yeah, but the publishers are still going to be totally dependent on Google for any web traffic and Google is going to have its other hand around their throat using AI overviews to replace them altogether. There’s not going to be much they can do about it.
So, I’m kind of simultaneously optimistic in the sense that when you look back at history, people thought AT&T was undislodgable, right? At one point, it was doing everything from handsets to fill in the blank. And its spending was pretty unbelievable. I mean, on par with governments as well. And eventually, it was broken up. Now, there was a longer history there of kind of trying to keep it in its lane that we have totally failed at with Google, candidly. So, there was something to build on that we don’t have.
But all that’s to say, I’m a little bit optimistic. Because historically, this has worked before. I’m a little bit pessimistic based on some of the early results when it comes to remedies. Because the way that it worked before was big, sweeping remedies by confident, bold judges that were willing to kind of unleash or unlock these markets.
TEDDY DOWNEY: So, how big a deal do you think the AdTech and the Live Nation remedy decisions are in terms of changing that dynamic potentially or underscoring it?
JOHN NEWMAN: High stakes, right? I think, if we’re going to get a structural remedy against Google, it was always going to be AdTech. So, this is the one.
And same for Live Nation. I mean, in some ways, I’m more optimistic about that than I was at the start. Now that DOJ did their weird, rushed 13th hour settlement, to me, that kind of sets a floor. This judge seemed like he might have just done that after this liability finding. But that set a floor, I think.
So, I think the judge is going to have to go further. And my hope would be if he doesn’t, you’ve got a bunch of states that are now like ride or die on this. They could bring their own cases in their own state courts. Some of them have some pretty wild statutes on the books they might unleash.
So, I think to your question, yeah, those are two pretty high stakes cases. And I’m at least cautiously optimistic on both.
TEDDY DOWNEY: We’ve got some more questions. Let’s get to these before we run out of time. Here’s one guest. My experience is that we are stuck between two defense arguments about judicial restraint. On the one hand, judges should not get involved in second-guessing business decisions or micromanage company conduct. But on the other hand, black line rules, like the per se rule, ignore practical business realities.
JOHN NEWMAN: Yeah, I think that’s tough. And I’ll be the first to say I’m not sure that going back to the per se rules that were more prevalent in the 50s and 60s is my preferred solution to all this. But if you go back and look at those cases, even when they were saying per se, oftentimes judges would sort of find a way around it, tweak a fact here and there, and end up doing what they wanted.
So, to my mind, I guess the bigger project is not so much like the final form of the rule, but trying to destabilize that first assumption that the guest points out correctly.
TEDDY DOWNEY: Which is like what you pointed out about neoliberal judges. Basically, they’re just like let the market forces decide, which is like a funny, mystical way of doing law.
JOHN NEWMAN: Yeah. No, I think that’s right. And you can do it without saying businesspeople are like stupid or evil. Because you’re not just trying to convince the judge that markets don’t necessarily work. You’re trying to convince them that business judgment isn’t a magical, always good, thing.
TEDDY DOWNEY: Yeah, they shouldn’t get deferential treatment. Which, by the way, in the jury trial in Live Nation, they didn’t get, right? Yu can look at that jury trial versus most judicial trials. And if I had been a judge, I would have actually been nervous that Live Nation could have won, right?
I would have thought, well, Live Nation could easily win. They got these charismatic people up there. Oh, no, that was taken out of context when we said they were suckers and we’re going to bleed them dry. That’s just one guy. Yeah, he still works there. He didn’t get fired, but we don’t like him. We say that was so naughty.
I could see a judge. Oh, yeah, this is a successful businessperson. Maybe I saw the country club or whatever, right? Whereas, the jury was just having none of it, right? So, I get what this guest is saying.
But I think the other side of it is black lines, rules like the per se rule, ignore practical business realities. I mean, I think at the end of the day, businesses adjust to the law. If the law is made, it’s made for moral reasons as well as market reasons. There’s no like excusing away a per se law. It’s there for a reason. Someone came up and said, we should do it this way. And businesspeople can figure it out. I think it’s, yeah, they ignore some things, but they make it easier on everyone. They actually make it easier on a lot of businesses. Because it’s like clear what’s legal and what’s not legal so they can adjust. So, I think you can look at both those points in different ways.
A couple more questions here. You touched briefly on the agency resource limitation, just looking at mergers. It’s a huge amount of resources to staff a second request, let alone litigation. Conduct cases are even worse given the length of the investigation and litigation. What can our agencies honestly do to address this? Are state agencies able to help fill in the gap?
JOHN NEWMAN: Yes, I do think at times in the past, the agencies occasionally staffed things a little more aggressively than they may have needed to. But there is a minimum floor and that minimum floor is still pretty high, below which you just cannot go and litigate one of these cases. So, it is a practical reality.
I think (1) we’ve got to attack the law where we can to make the burden easier. I think (2) there can sometimes be a tendency to want to get everything perfect at the agencies. Because it’s kind of a heavy burden to represent the American people. And sometimes injecting some fresh blood from, say, the private plaintiffs bar, from state AGs—which is something we tried to do pretty consciously while we were there. Let’s not only hire people from big law firms that have infinite resources. Let’s hire some people from these places that don’t have infinite resources and have kind of learned to deal with it.
So, I think a little bit of like mixing some fresh blood, injecting some new ideas. But also, we’ve got to change some of these legal standards.
TEDDY DOWNEY: Last question here. When is someone going after Walmart on private label? Government agency, not private litigants.
I’m guessing they must be talking about state AGs because it’s certainly going to be at least three years before anyone would reasonably investigate Walmart. But what do you think state AG appetite is to look at dominant supermarkets and their private label businesses?
JOHN NEWMAN: You know, it’s hard to say. If you’ve got evidence that it’s causing food prices to be higher than they would otherwise, I think the appetite could get real high real quick among state AGs who are, if nothing else. pretty well attuned to what their voters care about. And right now, voters care a lot about food prices.
So, if the facts are there, I mean, I think you’ve got a bunch of state AGs who would jump at the chance and are probably feeling pretty good right now coming off of a couple of big wins you referenced earlier.
TEDDY DOWNEY: Yeah, what kind of case would you bring? I guess that’s the real question. Because the whole Walmart with the brands makes it a good Robinson-Patman case. But then you’ve got the private label and they own it. It’s vertical. It’s like not like as obvious that there’s an exchange there. I mean, I guess someone’s making the private label. So, could it be the same type of case ostensibly?
JOHN NEWMAN: Maybe some kind of—maybe if Walmart’s demanding exclusivity from the few private label manufacturers in a given area. I don’t know. Yeah, it’s a good question. Maybe one to unleash your reporters on.
TEDDY DOWNEY: Yeah, we’ll put someone on that. That’s something to look into. Well, John, as always, a pleasure. I found the paper really, really fascinating. The whole symposium, the Fordham, that whole group of papers, we’re going to try to get as many of those people to come on and talk about those papers. I thought they were super interesting. Good luck with everything. You’ve got an uphill climb, certainly. But I look forward to hopefully seeing you soon at one of the upcoming antitrust events.
JOHN NEWMAN: All right. Sounds good. Good to see you, as always, Teddy.
TEDDY DOWNEY: And thanks to everyone for joining us. This concludes the call. Bye-bye.
