Transcript of Conference Call with Bill Baer on Antitrust Enforcement—Past, Present and Future

Apr 03, 2024

On August 3, The Capitol Forum hosted one of the world’s best known and most respected antitrust/competition enforcers, Bill Baer, for a discussion on “Antitrust Enforcement—Past, Present and Future.” The full transcript, which has been modified slightly for accuracy, can be found below.

TEDDY DOWNEY:  Good morning and welcome to our Conference Call with Bill Baer on “Antitrust Enforcement—Past, Present and Future.”  I’m Teddy Downey, Executive Editor here at The Capitol Forum. And Bill Baer, he really needs no introduction, but I will give one anyway. He is one of the world’s best known and most respected antitrust enforcers, or previous antitrust enforcers. He’s currently a Visiting Fellow in Governance Studies at Brookings. He’s the only person to have led antitrust enforcement at both U.S. antitrust agencies. Is that right, Bill? Am I getting that right?

BILL BAER:  That’s right. You’re getting it right, Teddy.

TEDDY DOWNEY:  And he’s served as Assistant Attorney General in Charge of the Antitrust Division, DOJ. Of course, the light goes off. Sorry, a lot of technical difficulties this morning. And as Director of the Bureau of Competition at the FTC from 1995 to 1999. He’s also an incredible scholar of antitrust. And I’m excited to talk about his track record and what he sees from the anti-monopoly movement going forward. Bill, thank you so much for doing this.

BILL BAER:  Well, it’s good to be with you again, Teddy. Even if I’m here not as present or future antitrust enforcer, but represent the past.

TEDDY DOWNEY:  And we’re going to get to this because I see how you participate in the conversation around antitrust as very much important to the present and the future, but we can get to that shortly.

I just want to get one thing out of the way. If you have questions, please put them in the control panel question pane or email us at We’ve got a lot of questions already in the hopper. But if you put them in, we’ll try to get to them as well.

Bill, just with this framing of the past, present and future, I would love it if you could tell us a little bit about how you view the work that you did at the antitrust agencies and how you see the difference between what was going on then and what is going on now. And then after that, maybe we can talk a little bit more about how the anti‑monopoly movement more generally is going.

BILL BAER:  Well, let me first begin by saying I’m a fan of what the current team is doing, Chair Khan, AAG Kanter, their teams, the support of the Biden White House. They have taken what I sort of think of as a zero‑based antitrust budgeting approach. Let’s not start with the case law. Let’s start with what areas of our economy are not performing well. And what we can do to make them more competitive, to give consumers, workers, whatever, the benefits of a truly competitive economy. And we could talk more about the specifics, but I think that needs to be both acknowledged and praised at the very outset.

I know a lot of the people who, like me, were involved in antitrust enforcement over the last 30 years or so perhaps felt a little bit attacked for not doing enough and I understand how that reaction developed. But  look back at the success antitrust enforcement had over the last 25, 30 years fighting the Chicago School, a very conservative current, and the upstream efforts that had to go into making a difference and convincing the courts that there are markets that just weren’t working and needed to be improved.

You look at Bob Pitofsky’s term at the FTC in the late 90s that I was privileged to be part of, there were a bunch of horizontal merger cases that were successfully brought by that Commission—Staples/‑Office Depot, drug wholesalers—at a time when the government wasn’t bringing those cases, and to the extent they were bringing them, they weren’t securing the preliminary injunctions.

And with the help of some really talented career and political appointees, we turned that trend around. We initiated the Toys”R”Us case, which established or re‑established the principle that hub and spoke conspiracies are actionable, which has a lot of present-day currency when it comes to looking at hub and spoke behavior around firms offering pricing algorithms to many different firms in a market. We brought the first standard setting abuse case involving Dell. If you go over to DOJ, where Anne Bingaman and Joe Klein were working, they produced two successful challenges to behavior by Microsoft, the second of which resulted in that 2002, if I remember correctly, the unanimous Court of Appeals decision that provided the anti-monopoly framework that is being employed by the current folks in a number of cases involving the dominant tech platforms.

In those same years, criminal cartel enforcement was dramatically improved, cartel through the use of the enhanced leniency program and securing tougher penalties for violations. That ability to make progress, again, despite a fairly conservative judiciary, continued in the Obama years. The agencies updated the merger guidelines in ways that reach more conduct in M&A activity than they had in the past. And the courts have largely embraced that. The FTC revitalized hospital merger enforcement. They had a couple of big wins in the Supreme Court on state action issues and on pharma pay-for-delay.

Over at DOJ, I think we were successful in a high number of merger challenges. And also began that mantra of advising companies and their outside antitrust advisors that antitrust risk needs to play a more prominent and early role in evaluating deals and that some of the deals that in the past might have been proposed should never make it out of the corporate boardroom because they’re inevitably going to get challenged. And they’re not going to be resolved through cheap settlements.

So, from that, the Apple E-books case successfully challenged a high tech, hub and spoke conspiracy. Great success in criminal, cartel enforcement. During my three plus years heading the Antitrust Division, we secured over $6 billion in antitrust fines. We held five of the leading investment banks – Citi, JP Morgan, Barclays, UBS and RBS ‑‑accountable for the first time at the corporate level for involvement in cartel behavior and secured guilty pleas.

So, there was a lot that was accomplished. That said, I think, as I began, the fact that the Biden folks came in saying, ‘fine, you did a really good job, but let’s look at what more needs to be done’ is the right way for a new administration to come in and resort to what I call a zero-based‑ approach to where is the consumer and worker injury out there that hasn’t been adequately addressed? And how do we get at it?

TEDDY DOWNEY:  And I want to follow up with a question about the executive order on competition. Because in many ways, that just called for a clear rejection from the President of sort of that Chicago School philosophy. And I’m wondering how important a statement that is, all the sort of required studies and rules, and all of government approach. How different was that? I think people don’t really remember how radically different that kind of a statement was from what the Clinton and Obama administrations’ competition policymakers were dealing with. And so, it would be really great to get your perspective on the importance of the EO on competition and the role that that played in sort of a broader anti-monopoly movement that we’re seeing now.

BILL BAER:  Great question. I cannot from my perspective overstate the significance of that. It’s not just the fact that somebody wrote some words down on paper and an executive order was issued. It is the follow-up that occurred out of the White House ensuring that agencies followed through. The fact that the President commits, I think it’s twice a year, maybe three times a year, to have the committee that enforces that Executive Order come to the White House and sit down with him and talk about what they’re doing. That’s an unprecedented level of White House involvement, presidential involvement, in promoting a pro-‑competition agenda.

We sometimes forget—I do – that so much of our economy is subject to regulation and either antitrust enforcement has a limited role or no role whatsoever. So, to get the Department of Transportation, Surface Transportation Board, to get the Department of Agriculture, Defense Department, Labor, Treasury, really thinking about the competitive impact of their regulations, to get the bank agencies rethinking how they are approaching M&A activity in the financial sector, is hugely important. And that’s an area I think that antitrust enforcement has limited ability to affect. But having the White House say this is a priority makes a huge difference.

TEDDY DOWNEY:  And I also want to talk about—I think you mentioned this previously, but I want to talk about it here: ‑how these issues are sort of resonating‑ beyond just the federal antitrust enforcers. So, you’re getting action from state AGs, state legislatures, on a wide variety of issues. Can you talk a little bit about how you’re seeing this sort of movement, the anti‑monopoly movement, sort of playing out at the state level as well, and what that means for antitrust enforcement?

BILL BAER:  Again, that’s a terrific question. I think it’s under-recognized just how much the problems being identified and pursued at the federal level translates into activity at the state and local level. Some of it is state AGs combining with FTC or DOJ or both to do a policy statement or join in an enforcement action or bring an independent enforcement action.

But since the concerns of the last 10 or 12 years with no-‑poach agreements, a number of states’ legislatures have outlawed them, have moved forward. The non-compete rulemaking that is pending at the FTC surely will be challenged on the basis of the uncertainty about how much competition rulemaking authority is contained in the FTC Act. But in the meantime, by putting out the numbers, by explaining why non-competes hurt the average worker, the FTC has provided ammunition to state legislatures all across the country. And so, there is this cascading effect. And so, even if some of the legal challenges being pursued at the federal level don’t succeed, talking in plain English about those areas of the economy that aren’t working translates into a cascading or compounding effect that is making a real difference, I think, to the average worker or the average consumer.

TEDDY DOWNEY:  I still want to stay on non‑competes for a second. Because I think it was the bank regulators, maybe led by the FDIC, just put out a ban on noncompetes in the banking sector rulemaking. Do you think that if those succeed, that helps the FTC? Because the authorities are actually pretty similar. And I know everyone is saying that the FTC doesn’t have rulemaking authority. But the places where they don’t have that authority when it comes to banks (I think it’s transportation, maybe some nonprofits. I’m not 100 percent sure. I can’t remember exactly); but to the extent those regulations are put into law successfully, does that help the FTC in their efforts? I agree it’s going to end up in court, but I hadn’t really thought about the other agencies getting involved and the implication that could have. I wanted to get your quick response on that.

BILL BAER:  Yeah, I think it does make a difference. Whether it makes a difference to a court decision about exactly what authority the FTC or any other agency has, not so much. But articulating the factual concerns, the real-world harms, that these non-competes cause, is doing a great service. I just read this morning that a competition minister in Australia has proposed banning noncompetes and went through a series of individual personalized stories of how people were adversely affected by being unable to move to a job, accepting appointment elsewhere. And how employer power can be used to keep people in jobs and give that employer power over wages if there’s no meaningful threat of moving to a competitive alternative. So, I think that’s an area where, while it’s underappreciated, we are seeing significant movement toward opening up labor markets to meaningful competition.

TEDDY DOWNEY:  Yeah, I’m amazed. I was in Brussels, and London and the CMA had just put out a study and is looking at banning noncompetes in the U.K. I do meetings on Wall Street. And there’s a lot of people that don’t like their noncompetes up in New York as well. So, it’s kind of an issue that resonates a lot more broadly than people think. It’s definitely something I’ve noticed as well.

Let’s talk about tech platforms because that’s come up a lot. I would love to get your reaction to the cases that have been brought on Big Tech by this administration. And we can talk about Facebook and Google search as well, which were brought under the previous administration. But we’d love to get your overall take on the Big Tech monopolization cases. I know you mentioned it earlier as Microsoft kind of paving the way. And I’m curious to see how important the monopoly maintenance type of framework is, from your perspective, in all of these cases. Or not necessarily all, but a lot of them.

BILL BAER:  A lot of them. I think that’s right. That whole question of once you’ve been successful, you’ve climbed the ladder by coming up with a better product or a better service, what are the limitations on you greasing the ladder so no one else can climb up? To me, that’s what’s presented in these four or five pending challenges. They aren’t easy cases to prove because you’ve got to show that the behavior had the effect of maintaining a monopoly without any otherwise legitimate justification for the behaviors. You can see it in all the tech platform cases. You see in Google search, which is the one case that at least had the liability phase litigated, although we don’t have oral argument or a decision out of the D.C. court. You can see that these are tough cases.

At the same time, I think all of them have some obvious merit to them. If you read the complaints, the details, the behaviors, most recently Apple was alleged, and with some supporting internal documentation cited in the complaint, to have tried to exclude rivals, degrade the experience. I use an iPhone and it’s great. But the notion that Apple is justified in not allowing me to message other people or receive messages from other people, degrading the quality of something that comes in on an Android competing phone. It’s hard for me to see that Apple is going to be able to justify that. I know they’ve said it’s all about protecting privacy, protecting your security. But a lot of what they say publicly differs from what they say internally. And that’ll be an issue they’ll have to confront in the court, whenever this case up in the Third Circuit, up in New Jersey, goes to trial.

TEDDY DOWNEY:  I want to talk about kind of the public sort of reaction to these Big Tech cases. I’ve been surprised that more like your average person in my conversations – now, I live in D.C. So, it’s not exactly the perfect place to talk to your average person.

BILL BAER:  Yeah, ‑‑everyone’s above average in D.C. Everyone’s above average.

TEDDY DOWNEY:  Yeah, in good ways and bad ways.

BILL BAER:  Right.

TEDDY DOWNEY:  But people who do love their iPhone or do use Amazon all the time, there hasn’t been this…‑I think there’s ‑been more of a popular embrace of taking on Big Tech with these cases. Especially since there are certain things, like you said, like excluding the green bubble with Apple and sort of the system that Amazon has to sort of tax these third-party sellers.

I’ve been getting the sense that there’s more of a popular sense that Big Tech is too powerful sort of from a societal standpoint. I wanted to get your take on that. And along with Khan appearing on The Daily Show with Jon Stewart, he had that anecdote about Apple. And I just feel like the popular sort of reaction to this is, I think, kind of more similar to ‑Microsoft and how that’s changed. I’d like to get your reaction on whether you think it’s changed, and if so, why? And then we can get into the judge’s conversation after that.

BILL BAER:  Yeah, thanks for the open-ended question. Look, I think the American public has become more appreciative about how markets that have tipped in favor of one tech platform actually have the potential to limit options, to lock us in ways that don’t feel right. And so, I think there’s a much deeper, broad based, bipartisan concern with big business, Big Tech. And conservative Republicans used to talk about that a whole lot when I first came to this town. And it’s not just big government, but having dominant private institutions is something that a true conservative worries about as well.

The reaction the other night to Lina Khan’s appearance on Jon Stewart has been fascinating. She and Kanter, and the President and Tim Wu, when he was over at the National Economic Council, have done an outstanding job of getting out of the antitrust bubble where we use all sorts of technical language and talk about SNIP  tests and that sort of stuff and translating that into common English that people understand: that you are adversely affected when Kroger combines with Albertsons and seeks to satisfy the antitrust concerns by spinning off a few stores in a few markets to somebody with no meaningful experience in grocery retail, consumers and workers can understand that that puts you at risk.

I was just in Bozeman, Montana, over the last few weeks. And the concern there about the diminution in competition if the deal goes through, and the potential reduction in choices for service workers who work or would like to work at those competing chains is very real at a gut level. And so that’s why I think you see more support for antitrust action on a bipartisan basis than you see in almost anything else in our politics today. Now, not everybody, particularly on the Republican side of the aisle, believes in antitrust enforcement, but a lot more people do and are willing to say so publicly.

TEDDY DOWNEY:  Yeah, it is interesting. I’m particularly interested in the politics around the Supreme Court looking at Section 230 protection. And then also on the freedom of speech arguments that Big Tech was making. And the Republicans are the ones that said, hey, there’s some tension here. You can’t just have immunity on this side and then also immunity, I mean, you can’t just be completely immune to law enforcement.

And that moment where the conservatives on the court are sort of questioning how the extent to which you could sort of be laissez fair when it comes to big business and Big Tech kind of pushing them to that brink—I want to get to a broader question about judges, but have you followed the Supreme Court kind of thinking around Big Tech at all? And I’m curious to get your reaction, if you had a similar assessment as I did. Or what your kind of thinking is when it comes to the Supreme Court making big decisions around Big Tech, on Section 230 and freedom of speech and things like that.

BILL BAER:  Yeah, I don’t purport to be an expert on the Supreme Court or on Section 230, but I do follow those developments. And there seems to be a number of members of the Court that are trying to rethink how we deal with tech dominance and the lack of options, the ability of platforms to—you know, some conservatives, I’m sure, think that it’s wrong for platforms to be able to censor some kinds of speech. I happen to believe that there’s an important role for a private entity to avoid fostering hate speech, encouraging violence, or publishing demonstrably false information.

So, it’s an issue where we’ve got to sort out the First Amendment concerns. We do want to support a marketplace of ideas. At the same time, given that technology enables us to get instant information that may be totally factually inaccurate and not really subject to any kind of controls or checks presents a societal issue in the United States and around the world that we’ve just got to come to grips with. And I don’t think we’re there yet. But I do think that the Supreme Court, at some point, is going to weigh in on this. I can’t predict when or how. But the questions asked in  oral argument and some of the statements made in opinions, concurrences and dissents, suggest that they are not at all oblivious to the effect of platform speech on our nation, on political discourse and the like.

TEDDY DOWNEY:  And we have a lot of questions from the audience. So, I want to try to make sure we get to as many of these as we can. The first one is how important is the political affiliation of a judge in an antitrust case brought by the government? And I would also add to that, how have you seen judges now making decisions versus when you were enforcing the law? And what the difference is?

BILL BAER:  So, I think the political affiliation, it certainly is not outcome determinative in my experience. I do think, though, that judges who came on the court in the Reagan era and the decades after that, many of them without antitrust experience—presented a challenge. A lot of judges  never were practitioners who dealt with antitrust issues, maybe never took the course in law school. And suddenly, they’re confronted with these complicated cases, battle of industrial organization economists. And it’s tough, I think, to see a clear path through to an outcome.

And to the extent there’s been judicial education offered, it’s largely been by Chicago School adherents, most recently at George Mason’s Scalia School of Law. I do think it would be very helpful were there an opportunity for judges to get more of a perspective on how competition policy was intended to work and how some of the adherents of a consumer welfare standard really are calling for a shareholder welfare standard that assumes the market is competitive and profit maximization by a company will inevitably benefit both shareholders and consumers. When, in fact, if the market is broken, if it’s concentrated, if it’s imperfect, if it’s tipped, it seems to me that there is much more of a divergence between shareholder welfare and consumer interests than a lot of Chicago School adherents would admit to.

TEDDY DOWNEY:  I actually am curious to get your reaction to this. The way I’ve been looking at it is actually the D.C. circuit has been—the D.C. judges—are kind of the most sort of Chicago School, I mean, they’re the most antitrust brain judges. And when you get out of D.C., you get people who are not sort of as familiar with sort of Chicago School or just I would call it more just common sense. They’re just using their experience in looking at the cases. You get outside of the D.C. bubble and you get better judges. I mean, I think you’re starting to see that just from where the FTC and DOJ are bringing their cases. Does that resonate with you at all in terms of being a factor in how judges make their decisions? And sort of like taking a more common-sense approach as being like probably better for FTC and DOJ? Because the more complicated the parties make it, the better their chances of winning are, I think, generally. But I’d be curious to get your reaction. Because that’s some of the things that I’ve been seeing, but it’s kind of a hypothesis. I would love to get your thoughts on that.

BILL BAER:  I don’t know if I can draw a clear contrast between the judges in D.C., many of whom I know and have a great regard for, versus judges elsewhere. But the point you make that I do agree with is because many judges don’t have a lot of antitrust experience, they may not have the self-confidence to go with their instincts the way they do in other matters. I mean, look at the law, apply the law and do justice. What does tend to substantially lessen competition mean? It’s a little bit of an unusual standard in our law because it’s talking about a prediction of the future and a risk assessment that a bad future outcome may occur. It’s a different role. And then you complicate it with the detailed economic expert presentations. It’s a little bit hard to figure out.

I remember Chief Judge Hogan, who decided the Staples/‑Office Depot case we brought in 1996, sometime later had a conversation he had with my mentor, Bob Pitofsky, suggested that a lot of the economic expert testimony tended to cancel each other out. And you really needed to look at market structure, at pricing behaviors, at internal documents, ordinary course of business documents, in deciding whether or not there was likely to be a problem. And in the opinion he wrote—‑I think it was in 97—he clearly relied on that. And you see it today in the rejection of the American/Jet Blue Northeast Alliance and the rejection of the JetBlue acquisition of Spirit. I also think it will be interesting to see whether the decisions at both antitrust enforcement agencies to file in local jurisdictions where there’s a more demonstrable local impact affects the way these cases are decided. So, that part of your observation I totally agree with.

TEDDY DOWNEY:  We’ve got some more questions here. A couple based on the presidential election. So, I’ll lump them together. What happens to the Biden revival of antitrust enforcement in a Trump administration? And then the other question that’s related: How sticky will the Brandeisian theories be if/when administrations change? Or is this a secular shift? So, I guess if you could talk about Biden’s second term or Trump election, how either of those might affect antitrust enforcement, that would be great.

BILL BAER:  The Biden reelection is easier to make a guess or make a judgment. I think it’ll be more of the same with the notion that a market system without competition is exploitation, I think is the term the President used. Capitalism without competition is exploitation.

So, I think it will continue. It’s very hard to predict what a Trump administration would do. There’s some indications from Trump’s four years, since both the FTC and the DOJ—‑FTC was Facebook; DOJ was Google search—‑brought some cases. At the same time, there are allegations by a whistleblower that Attorney General Barr sought to use the antitrust laws to serve illegitimate ends. The claims by Mr. Trump as a candidate that he’s about retribution appears to be a much more transactional approach to governing than I think is ideal in a democracy. I just don’t know to expect from 4 more years of Trump.

An interesting thing was the week or ten days before DOJ brought the Apple suit, former Attorney General Barr wrote an op-ed in the Wall Street Journal basically saying I started this investigation. And they’re finally getting around to doing what I thought should be done to challenge the power of the tech platforms. I think it’s a little bit of a stretch to say four years later, you deserve credit for the case that got investigated, put together and brought by the Biden Administration. But it does suggest that some of the former Trump officials as well, as we were talking earlier about Republicans on the Hill, that there may well be support for continuing some of the more progressive policies that we’re seeing out of Kanter and Khan.

TEDDY DOWNEY:  And we’ve got another question here. How do you think resource constraints at the FTC and DOJ will affect their inclination to bring cases with novel arguments in 2024?

BILL BAER:  Yeah, that’s a great question. I do think—‑‑and this has been my experience during 14 or so years I’ve been in government on three different occasions—I think the politics, for the most part, don’t play into decision making. Do resource constraints? Yeah, you’ve got to come up with priorities. It’s another variation on what I started out with in terms of zero-based antitrust budgeting. At the same time budgets were increased early on in the Biden term; ‑I know there’s been some recent controversy over cutbacks and things. And I’m sure the hundreds of millions of tech platform dollars that go into lobbying Congress, that some of that is directed at trying to squeeze the agencies so they can do less. At the same time, I am impressed and – amazed may be the wrong term – impressed at how well the agencies have embraced technology, tried to get ahead of the curve on AI. And I think those are important legacies that will carry on into the next administration, whoever heads it up.

TEDDY DOWNEY:  You already talked a little bit about Kroger/Albertsons. But we’ve got a question here, specifically getting your thoughts about that case and how strong it may be. Any thoughts on the Kroger/Albertson case?

BILL BAER:  Well, it’s a classic example of something I’ve been fighting my entire antitrust career—‑at least while in government—‑‑about people wanting to do something that is going to have an anti-competitive impact. You know, a three to two merger or whatever. And they say –, this happens with hospitals as well—here is a bit of a fix that makes it all better. In my tenures, I’ve been very skeptical of those purported fixes.

Best example, early on in my time at DOJ, ABI comes in and says “we own 52 percent of Modelo, the Mexican brewer. We only have a 48 percent voting stake. We just want to get three or four percentage points more so we can control. But we’re going to make sure there’s no anti-competitive, anti-consumer impact on the U.S. We’re going to sign a supply agreement. We’re going to let whoever distributes in the U.S. use the Modelo brands for ten years. And this is such a good deal, this settlement, we’ll take care of any problems in the U.S. and allow us to expand our footprint globally. “

I looked at that the first month I was in office and I thought it was pure bullshit as a settlement. I mean, it was ridiculous. They were going to be able to control Modelo’s US output. Supply agreements, in my experience, never work. Sometimes you need them for six months for a transition, but they never work long term. And I met with the lawyers. I met with the CEO of ABI. And they were all convinced that this “settlement” was the answer to antitrust. I told them it was an answer for them and a nonstarter for the Department of Justice.

And what happened we rejected it? They said, well, let us come up with a revised supply agreement to meet your conditions. We said, no, no, there’s no way we are going to refrain from going to court if you have any interest whatsoever in Modelo’s brewing capacity, that’s devoted to the U.S.; in its supply, or its control over brands or distribution.

And so, they said, well, what do we do? I said, well, I know what I’m going to do. I’m going to sue you. And we sued. And within about four weeks, they came in and said, okay. What do we really need to do? And we sat down with some experts. We forced ABI to divest their most efficient and new plant on the northern border of Mexico that supplied the U.S. We forced them to divest all rights to Constellation, which at that point distributed some beer from Modelo, but was basically a hard liquor and wine distributor in the U.S.

And what’s happened? I don’t know if you all saw the stories this past summer. But Constellation, freed from being under the footprint of ABI, went gangbusters. And now most of its revenue comes from beer sales in the United States. And Modelo Superior has surpassed Bud Light as the most popular beer in the U.S. By coming up with a meaningful restructuring of a deal, we actually eliminated the duopoly, a functional duopoly, in beer sales in the United States. Those sorts of settlements make sense.

The settlement, to get back to Kroger/‑Albertsons that’s on the table, makes no sense to me. And hopefully, the courts will see it that way too.

TEDDY DOWNEY:  We’ve got one other question here. What do you think the impact will be of recent DOJ and FTC losses in court?

BILL BAER:  You know, they had some early losses, Teddy. And Meta Within was one. Although, if you’re doing the zero-based approach—rethinking where there’s harm and how you deal with it—the Meta Within case, the judge found factually it didn’t have enough for him to warrant enjoining the transaction. However, he thought the legal theory was quite sound. That’s progress.

And while you cannot expect the courts to do a gestalt switch—you know, suddenly say, oh, frame of reference used to be Chicago School, and now we’re doing something else, whether they call it neo‑Brandeisian‑ or not, doesn’t happen overnight; it needs to be evolutionary. It needs to involve picking cases where you think you’ve got a sound legal theory. Maybe you take a little factual risk. But if you look at outcomes from this administration, they’ve had some recent significant successes: Illumina/‑Grail over at the FTC, the airline alliance and merger challenges the book publishers’ case at DOJ. They’re making progress. And I was talking to a reporter the other day. You can have a revolutionary mindset in terms of going at the problems that have not been adequately addressed. But in dealing with courts, it’s got to be an evolutionary approach. And you’re not going to win them all. At the same time, you’re not going to win the case if you don’t bring it. That’s a given.

TEDDY DOWNEY:  And I think there’s a good way. We’ve got the last audience question here. What are your observations on the new merger guidelines and the effort to replace the consumer welfare standard? I would love to get your thoughts on the new merger guidelines.

BILL BAER:  Okay. Well, first of all, I have stopped using the consumer welfare standard because it has become a Rorschach ink blot test. It means such different things to different people. For two-dimensional Chicago School folks, it means what I said earlier: let’s just assume consumer welfare, consumer benefits, are satisfied by letting companies pursue shareholder welfare. And that’s not how most thoughtful academicians—‑Herb Hovenkamp comes to mind—think about it. But because it gets mis‑used so much, I think having that term in the guidelines, the revised guidelines, probably doesn’t help.

So, say in plain English what you mean and what you’re going to do. I am a supporter of the revised guidelines. I worried as I saw the criticism of that initial draft, which came out last summer, that it might be going too far. And I know a lot of people I respect, who are pro‑enforcement, commented about ways in which it was introducing new terminology which could be confusing. Some thought the draft seemed to be giving a back seat to economic analysis, which was part of the framework that I think the courts welcomed as iterations of the guidelines developed over the years, especially the 2010 version. And I was very impressed with how thoughtfully the FTC and DOJ lawyers and economists, took those comments and addressed those legitimate concerns.

And I think what you’ve got in the document that came out in late December, is something that is not a radical departure from 2010. It covers areas that the 2010 version did not reach. It tries to integrate the analytical framework in terms of looking at horizontal, vertical, diagonal mergers and addressing market-wide vertical integration. I see them as an evolutionary series of moves designed to address, in the M&A context, behaviors that hadn’t been discussed adequately in earlier versions of the guidelines. Examples include private equity rollups and the impact of vertical integration that basically gets you down to just two or three supply chains. Those sorts of things are more explicitly stated. I think it’s entirely fair to incorporate case law into the guidelines. But it was also important that the economic framework be articulated in the main body of those revised guidelines as well.

So, in short, I think they did a nice job. And I am optimistic the courts will see it that way too.

TEDDY DOWNEY:  I want to ask you about the incipiency standard, the sort of focus on trends toward consolidation, in the guidelines. That is pretty, you know, that is kind of, I would say, a departure in terms of if they’re going to actually use that as the crux of a case. There’s this Exxon/‑Pioneer deal. And subsequent to that deal being announced, there’s been a lot, a heavy amount, of acquisitions in not just the Permian Basin, but just in oil and gas in the U.S. I know that you did some oil and gas mergers at DOJ. How big of an issue for you would it be if, under the new merger guidelines, you saw a lot of rollups following a big merger from an oil and gas company?

BILL BAER:  Entirely fair question. I think the incipiency standard basically suggests, in modern parlance, that we’re just looking at trends. You’re not going to take a snapshot of today or yesterday and evaluate a deal just on its merits today. You’re going to look at future implications. It doesn’t mean we’re going to go back to Von’s Grocery and seek to enjoin a merger that has, I don’t know, what LA market number, five percent buying two percent. But the incipiency standard—at least, again, in modern parlance—says we need to be forward looking. Where is this market trending?

You know, 15 years ago, should we have been more worried about PBMs integrating into retail pharmacies? And a series of transactions—‑maybe each of which on its own would not have been problematic—‑‑leaves us today with PBMs controlling the national drug stores, and forcing us, in some cases, to go to the company-owned stores in order to get a prescription refilled. That was an outcome that was not fully anticipated.

In the oil and gas sector, trying to think through where it’s all going and what’s happened previously, is an entirely legitimate query. Does it mean that any oil and gas M&A activity ought to be stopped? Or there’s a factual basis to stop it? No, but it is the sort of thing that ought to be looked at.

TEDDY DOWNEY:  And there are a couple of other aspects of that deal that I’d be curious to get your thoughts on. One is there could be labor effects in terms of the freelance oil and gas workers, not the employees, but the sort of freelance workers on the ground—or not freelance, but contract workers ‑would have less choice. And so, there’s like kind of higher market share issues in very local regions in that deal. So, I’m curious to get your thoughts on the Kroger/Albertsons labor component in that deal. How big labor needs to be when‑ they’re looking at these deals as well?

BILL BAER:  It’s a great question. I have not focused on independent contractor, freelance worker anti‑competitive risks in the Permian Basin. It’s clear to me that it’s a legitimate basis for inquiry;  monopsony power is real and deserves to be attacked. When you have the downstream, just assuming that you’ve got a downstream market where there’s very little adverse effect, but there is an upstream labor issue, I don’t think antitrust has spent a lot of time figuring out how to balance those things out. But I would fully expect that Jonathan Kanter and team will look very closely at those issues as part of this “let’s look at the whole transaction and let’s not make it static” approach. “Let’s see what dominoes might likely fall if we allow this thing to go through.”

TEDDY DOWNEY:  And the last question, since I find this such a fascinating area on oil and gas, there is kind of a history of sort of coordinating out loud. Basically, saying like we need to be more disciplined on pricing, just like very aggressive commentary publicly by the oil and gas space in the U.S. How much of a factor does that type of – you know, it’s not like exact coordination, but it’s sort of an invitation to coordinate pricing. Does that magnify concerns about consolidation? Or how would you think about that?

BILL BAER:  You know, in just about all the iterations of the guidelines, where there’s a history of behaviors which—‑although not necessarily involving an agreement and therefore not actionable— for example tacit collusion or public statements that are an effort to restrict output, is a hugely important thing.

And just a tangent, I’ve been very concerned about the increased use of third-party pricing algorithms in markets in the United States. It is very much hub-and-spoke conspiracy behavior. And it’s actionable. There are a bunch of private actions going on involving rental markets. DOJ and FTC have both filed a statement of interest in one of the class actions, I believe, down in Tennessee. This is and should be an important priority. As is the risk that the use of algorithms, without any human communication or public signaling, could result in algorithms learning that if you cut price, the other pricing algorithm used by your  competitors will just do the same thing. Machine learning could result in not cutting price in the first place and keeping prices up. I think there’s a risk that the misuse of AI could allow for pricing stabilization, less price competition, and result in less quality and innovation competition than we’re entitled to in this economy.

TEDDY DOWNEY:  I think that’s a great way to wrap things up. Certainly, an issue we follow very closely here at The Capitol Forum. Thank you so much, Bill, for doing this. A pleasure as always. Thank you, thank you, thank you.

BILL BAER:  Thank you. It’s a pleasure.

TEDDY DOWNEY:  And thanks to everyone for joining the call today. This concludes the call. Bye-bye, everyone.