Transcript of Interview with California Attorney General Rob Bonta

Jul 06, 2023

On June 19, The Capitol Forum’s Jeff Bliss and Teddy Downey interviewed California Attorney General Rob Bonta. The full transcript, which has been modified slightly for accuracy, can be found below. Listen to the conversation here.

JEFF BLISS:  All right, this is Jeff. I can start with the first question. Thank you again California Attorney General Rob Bonta for joining us. You’ve been a leader at the state level in going after abuses of market power as you see them, particularly in health care, oil and gas, agriculture, and big tech. Could you talk broadly why you decided to focus on your antitrust enforcement efforts in these sectors?

ROB BONTA:  Sure. And let me just first say thank you for the opportunity to spend this time with you and talk about our work. I’m really proud of our work, our team, the priorities that we’re setting at a very, very high level. It’s important to me and the values that I have that our businesses and corporations in California thrive and continue to make us the fifth, soon to be fourth, largest economy in the world, to be the tentpole of the American economy of job creation, and that all of our businesses and corporations, as they thrive, follow the law. That means following antitrust law.

And we are very aggressive and focused and have put a high priority on our work because we want to protect the little guy against abuse by the big guy in very simple terms. And more specific in nuanced terms, we want to keep prices for consumers low and affordable. Antitrust does the opposite. It makes prices higher. We want to make sure that there’s opportunities for startups and entrepreneurs and innovators and doers to dream and then to do and to create new things. They can be squashed and that competition can be stifled by those who abuse and manipulate their monopoly power and anti-competitive practices.

And then finally when companies get bigger and create excess profits from antitrust violations. Those profits benefit shareholders, one might argue, but only around half the American public has no exposure to the stock market. And so they can’t enjoy that growth. And it’s some of the wealthy who are getting wealthier. And again, the everyday American is not benefiting.

So, we want competition. We want prices low. We want there to be equity and equality across our economy. And so how is that manifested? It’s manifested in a robust set of antitrust work, all of which we’re proud of. Certainly, we have a strong focus on tech, on health care, on oil and gas, and on agriculture. We also are in some other spaces, including grocery as well as the airlines, which I know we’ll have the opportunity to talk about. But these are all some of the biggest economic drivers in California and across the nation.

Tech, of course, everyone knows Silicon Valley. We are renowned around the nation and the world for our ag prowess and feeding the state and feeding the world. A lot of the biggest healthcare titans are in and operating in California. And then oil and gas, of course, a long tradition of corporate activity in that space too.

And so, these are also places where we’ve seen violations and a need to police the line and the boundaries and enforce and make sure that people in these spaces, in these markets, that they corporate actors know we’re here. We’re watching. We care. We will get involved. We will engage. We will sue you if you violate the law and step over the line. And we have.

And so, whether it be getting involved with Google or Facebook or other tech companies, Apple ‑‑ or sorry, Google and Facebook are two prime examples. Or health care. There’s a number of different cases, including working with the FTC on the Plum/Providence merger and are very proud of our landmark settlement against Sutter Health. As examples, we have something with S.K. and Vitol in the oil and gas space and a new law in California coming online soon, which could lead to other activity in the oil and gas sector. And then in Ag, just seeing such a high reduction in competition and need to continue to be vigilant and active in that space as well. So, all important sectors to America, certainly to California, and also places where we’ve seen overstepping, and in our view, illegal activity. So, we’ve been active.

TEDDY DOWNEY:  And I just want to quickly follow up on that. You mentioned a lot of cases. Is there any type of conduct that you’re seeing that really troubles you in any of those markets? Just if like a story about some of the concerns you’ve heard from other small businesses or citizens in California in any of those markets?

ROB BONTA:  You know, one theme that we’ve seen, including in the tech space, is tech companies who’ve dreamed and created and innovated and become very successful now turning around and saying someone else who wants to do that in their space will be crushed or acquired and not allowed to thrive and will be made part of the large tech company that was able to be successful. And it is in direct conflict to the innovative spirit that allowed the original tech company, say Facebook, to be successful in the first place. And so, innovation and competition means innovation and competition for everyone, not just the one who gets big, fastest, and then can stifle competition from anyone else or acquire or impede their growth or development.

In the healthcare space, we’re seeing an already very expensive industry for consumers get more expensive and we’re seeing less competition and more merging and less lesser options, service that is taking longer and requiring traveling further distance and higher prices.

And then, in oil and gas, we’re seeing manipulations where one particular incident is used as essentially a pretext or an excuse to just spike prices, just to manipulate and hurt people at the at the tanks. So, we’re seeing a lot of different examples of you know the through line being the consumer or the aspiring start up being really stifled and hurt.

TEDDY DOWNEY:  And I also know, I think, you see California as a leader in enforcement and among states and you brought two prominent cases against Amazon and the insulin makers. Can you talk more about California being a leader and those two cases in particular?

ROB BONTA:  Absolutely. In California, we are, in the eyes of some, a nation state, almost the fourth largest economy in the world, massive in size and scope and scale. And the California Department of Justice, as the DOJ for this incredible state, wields important authority with important tools. And we have the tools available to us that others don’t. And it’s important for us to use them appropriately when needed.

And so, of course, we have accessible to us the federal tools of the Sherman and Clayton Act. But we also have California’s unique tools of the Cartwright Act, as well as the Unfair Competition Law, which we can use based on the facts and circumstances of the case. And so, because we have unique tools, because we are uniquely located in market size and as a leader among states, it’s important for us to lead in our antitrust work. And also, because we are home to some of these corporations that have that have grown and have now unfortunately been engaged in practices that violate our antitrust laws, it’s important for us to hold accountable our homegrown businesses when they violate the law, including those coming out of tech or Ag or health care.

So, we have unique tools, and we believe that they’re there to be used responsibly, but also actively and not to leave those tools on the sidelines, but to use them when appropriate, when the facts in the law dictate and require it. And I think our record shows that we have.

TEDDY DOWNEY:  Yeah, absolutely. And just to follow up, can you talk a little bit about the Amazon case and the insulin case? I know I threw two questions at you, but I wanted to follow up on that.

ROB BONTA:  We’re excited about both of these cases. And they’re cases where they show sort of the California spirit to enforce the antitrust laws, including the ones that are uniquely available to us and to do it on our own, without the necessity of a partnership or coalition with other states or partnership or coalition with the U.S. government. Although, we certainly invite and welcome those partnerships often and are engaged in them.

We also feel we can move alone using our laws. And so, with respect to the Amazon case, we announced our lawsuit back in September of last year, 2022. We’re in San Francisco Superior Court. We’re using California’s unique laws, the California Cartwright Act, as well as the Unfair Competition Law, which I mentioned earlier. And it’s, again, a testament to our ability to file cases without other states or federal agencies.

And the Amazon case concerns Amazon’s policies and practices around their ‑‑ much touted by them ‑‑ claim that they provide the lowest price. We believe from our data, from our evidence, our testimony we took and the documents that we looked at, that the way they try to maintain the ability to make that claim is by keeping lower prices on other platforms from being provided by the businesses that are selling. And they threaten those businesses that need to operate with Amazon since it has so much market power and provides such an opportunity to sell their products on Amazon’s platform.

And so, we think that their claim is factually wrong. And because of anti-competitive practices, they’ve actually made the price higher than it would be for consumers. And they are the exact opposite of what they’re claiming. So, one of the things we’ve seen is that Amazon requires merchants to enter in agreements that actually penalize those merchants if their products are offered for a lower price off Amazon.

So, we’ve gotten some good early developments in that case. A positive court ruling in March of this year, which blocked an attempt by Amazon to dismiss the case and evade responsibility. And then we had some evidence that was redacted, meaning hidden from public view, early on in the case, that was unredacted or revealed to the public in April, with the court issuing an order saying that this evidence is relevant to our case and our claims of anti-competition. So that’s the Amazon case.

And on insulin, we announced the lawsuit in January of this year against the nation’s largest insulin makers and largest pharmacy benefit managers, which together were driving up the costs ‑‑ are driving up the costs ‑‑ of the lifesaving drug, insulin, through what we are arguing are unlawful, unfair, and deceptive business practices in violation of California’s Unfair Competition Law.

And the three big manufacturers are Eli Lilly and Novo Nordisk, Sanofi, the three big PBMs, CVS Caremark, Express Scripts and Optum Rx. And they essentially have prices that are getting higher and higher and higher, rebates that are getting bigger and bigger and bigger, provided between the two of them and at a great cost to the average consumer and making insulin much higher, much less affordable, and higher in price than it should be.

And so, a number of folks throughout the country, policymakers and law enforcers, have seen this phenomenon, and there have been different attempts to address it. Ours is a unique attempt with our own lawsuit brought by us alone using our unique law.

JEFF BLISS:  I just wanted to ask about some comments you made earlier about the oil and gas sector. One, you said that sometimes they use incidents as an excuse to raise prices. I would love to know a little bit more about that. And also, I think you mentioned a law recently passed by the California Legislature that will allow you to be more active in that sector in terms of making sure competition is still there. Could you talk a little bit about both those?

ROB BONTA:  Sure. So, I’ll take the first one first. An example of when a big company in the oil and gas industry has used an incident that’s occurred to jack up prices is reflected in our case, California v. SK and Vitol, which is currently pending in San Francisco’s Superior Court. Our office announced it in May of 2020. And we allege that following an incident, a February 2015 explosion at a gasoline refinery in Torrance, California, that Vitol and SK Energy Americas engaged in a scheme to drive up gas prices for their own profit and manipulated California’s gas prices, costing consumers more at the pump.

So, the pretext was the explosion. What followed were prices that went up. The suggestion was the prices are going up because of the explosion of the refinery and the disruptions to the market, including a reduction in supply. But we believe it was manipulated and that was cover and that SK and Vitol saw an opportunity to manipulate prices in violation of the law and that they did so. So that’s one example.

We saw prices at the pump spike as well around the fall of last year and they were spiking even higher in California than other places around the world. One event that was pointed at as a possible cause, natural cause, of the spiking was the global conflict within Ukraine. But it didn’t seem to fit. And there was a lot of activity in the Legislature and among California leaders. And that led to a bill that was passed, that I supported, and an effort that was led by Governor Newsom called SBX1-2.

It was signed into law on March 28th of this year, and it’s aimed at policing the California gas market for the first time, providing a line of sight and information and transparency into how gas prices are fixed and created and what goes behind them as the rationale and the justification for those prices. And it provides a dedicated day in and day out, independent watchdog to root out price gouging by oil companies. And it authorizes the California Energy Commission to create a penalty to hold the industry accountable. So, if prices are excessive and there’s no justification for them, then a penalty can be imposed. And then that watchdog can also refer violations of law to the attorney general for prosecution.

So, it’s a law that provides for collaboration, additional information, more insight, and line of sight into what had for a long time seemed to be a black box where you didn’t know what was happening to determine how prices were created. All you saw was the ultimate output. And even if it was a high price, you didn’t know if it was justified or not. This will allow us to know. And if the market is being manipulated and it’s unfair, then either a penalty can be imposed, or we can take action as the attorney general.

TEDDY DOWNEY:  Awesome. I mean, I’m very interested in that. I know I always have questions about how these gas prices are working when they’re fluctuating. And I had the same reaction when everyone kept saying Ukraine. It doesn’t seem to explain everything. You mentioned a couple times the Unfair Competition Law in the Cartwright Act. I was wondering if you could explain to our audience why you see those as special and what makes them different from your typical antitrust laws?

ROB BONTA:  Sure. We like our state laws that have been created as state specific tools to protect consumers and guard against anti-competitive practices. The Cartwright Act and the Unfair Competition Law have deep roots and origins in our state. The Cartwright Act was first passed in 1907 and the Unfair Competition Law in 1887. And the Cartwright Act was passed to address the growing power of monopolies and cartels, and the Unfair Competition Law to enforce the basic rules of common honesty and accepted business ethics. And they have been tools that have stood the test of time and provided durability and longevity and sustainability as tools to address anti-competitive practices. And they have a have a certain type of synergy.

The Cartwright Act generally outlaws any combinations or agreements which restrain trade or competition or which fix or control prices. And it is not patterned after federal antitrust laws. So, it’s actually patterned after other state laws from Texas and Michigan from 1889. So, it kind of comes at it from a different angle. And so, it can sweep in and capture different practices than the Sherman Act and the Clayton Act.

The UCL, the Unfair Competition Law, has three major prongs. It prohibits unlawful business acts or practices. Number two, it prohibits unfair business acts or practices. And three, it prohibits fraudulent business acts or practices. So unlawful, unfair, or fraudulent. And I mentioned that there’s a synergy. The Unfair Competition Law complements the Cartwright Act by being broader and more flexible, and it can cover actions that violate the policy or spirit of the antitrust laws, but that may not rise to the level of an antitrust violation. So, it sort of has a penumbra beyond the Cartwright Act that it can still capture practices that are harmful to consumers. And together, they’re strong medicine and they really help our consumers. And they help us as a state address anti‑competitive practices.

JEFF BLISS:  Is it possible that in some cases, I mean, obviously, you’ve brought some suits against huge companies using these state laws. So, you obviously think in these cases they might be more powerful, more flexible, however you want to say, than the Sherman Act or the Clayton Act. Could you talk a little bit about that and why they might have fit those like the Amazon case or the insulin case better than those federal acts?

ROB BONTA:  Yeah, I’ll say that generally the Cartwright Act and the UCL, while they occupy the same broad space of antitrust and anti-competition law, they do not mirror federal law. They are broader than federal law. And the California Legislature enacted those laws for us to enforce. They’re only available to us. No other Department of Justice can enforce them. Nor can the United States Department of Justice.

So, they’re unique laws. Not everything fits within them, and they don’t address every issue. Sometimes the Clayton Act is a better fit. Sometimes the Sherman Act is a better fit. The Clayton Act generally covers mergers. The Sherman Act covers restraints against trade. And for every fact pattern or scenario, we can overlay four potential laws to address the facts that we see. The federal government can only overlay two. So, it’s about fit, but there’s more of an opportunity for California given the menu of options that we have available to us, the laws, the tools that we have available to us to be active in more cases. And yeah, we do think they can carry the water as state laws only in major cases against major corporations, including some of the biggest ones in the world, like Amazon and insulin manufacturers and PBMs.

TEDDY DOWNEY:  And you also wrote a letter, with other AGs, on Albertsons’ plan, $4 billion investor payout. And I would love to hear your interest in private equity, that merger specifically. And then I’d also like to loop in, just because I think it’s related, you know, it’s supermarket, it’s food, it’s Ag, you’re interested in Packers and Stockyards as well and whether or not that’s all connected to your interest in supermarket and food and Ag.

ROB BONTA:  Sure. Last fall, in October, we sent a letter, along with five other attorneys general, and we demanded that Albertsons delay a $4 billion payout to stockholders until state attorneys general and the FTC could complete their review of its proposed merger with Kroger. We thought they were moving too fast, and it was sort of a fait accompli that they were making a payout based in reliance on the merger, which had not yet been approved or evaluated. And so, we sent the letter and Albertsons did not delay the payout. So, we filed suit in November, and we were trying to stop Albertsons’ dividend payout. And unfortunately, we lost. And we live with courts’ decisions and that was the decision that we got. But we are continuing to investigate the proposed merger of Kroger and Albertsons. It could have massive impacts on a lot of places and spaces, including consumer prices, competition, access to food. It could create more food deserts. It certainly could potentially impact workers. So, we’re very interested in the impacts of the proposed merger and are continuing to actively investigate.

JEFF BLISS:  Okay. You mentioned before about the airline industry, and you’ve also been talking about how the consolidation of that industry is not helpful to California and other consumers. You want to talk a little more about that?

ROB BONTA:  Yeah, happy to. Did you want me to talk about Packers and Stockyards?

TEDDY DOWNEY:  Oh, yeah. If you could, that’d be amazing. Just because I think those two are kind of connected a little bit. And then we can get into airlines.

JEFF BLISS:  I jumped the gun, sorry.

ROB BONTA:  No, that’s okay. You know, it’s sort of part of this food supply chain and access to food and pricing. And we joined several letters supporting revisions to the Packers and Stockyards Act. We think it needs to be modernized to promote more competition in the agriculture industry and to strengthen enforcement. The meatpacking industry, beef, pork, and poultry is dominated now by just a few processors, and the concentration of power really negatively impacts California consumer and producers, especially some of the smaller players, the smaller rural farmers.

So, while Packers and Stockyards Act Stockyards Act has served as an important tool to ensure competition and fair practices for a century, over time, as there are technological changes and changes in the marketplace, it’s always important for the tools to be revisited, to stay fresh and modern and up to date. And as part of our advocacy to do just that, one result that we got was that in September of last year, President Biden announced a new $15 million fund challenging state attorneys general to partner with USDA on competition issues in the food and agriculture space. And so that’s good progress. And we’re expecting and hoping for additional progress as well.

And in the airline industry, in short, we’re deeply concerned about consolidation in the airline industry. And we think that it’ll lead to less choices for consumers, higher prices and a consolidation of power and anti‑competition and monopolization. And we filed two ongoing lawsuits in this space. Interestingly, each involving JetBlue. One involving the Northeast Alliance by American Airlines and JetBlue, which we filed in the district court of Massachusetts in September. And then another one also filed in the district court of Massachusetts involving the merger of JetBlue and Spirit Airlines in March.

The first case, the Northeast alliance between American and JetBlue, we argued that that was an unlawful agreement in violation of the federal Sherman Act, and we secured a complete victory in that matter. The other case is ongoing. It alleges that the proposed merger violates the Clayton Act because it may substantially lessen competition. And that case is ongoing with a trial date for this October.

TEDDY DOWNEY:  I know we’re out of time, but I had one kind of question. I was wondering, your parents both worked in the United Farm Workers of America. Your father had a role in the Civil Rights Movement. And you’ve carried on some of that legacy as well. I was wondering if either of those things plays into your interest in antitrust. Do you see connections you know when it comes to you know taking on powerful corporate interests, you know when it comes to labor, when it comes to unions, when it comes to civil rights?

ROB BONTA:  Absolutely. You know, my interest and passion for, and support for, antitrust work, including the great work that our office has done, is rooted in that same spirit of my mother and father as activists who were involved in different social justice movements. But certainly, the United Farm Workers of America where the workers, those who were toiling in the fields, picking, and preparing the food that will land on the table of Californians and Americans across the country were not being treated fairly by the large growers. And the large growers were making money, were making money off of the workers, were profiting. And while they were doing so, they were not treating the workers fairly.

And that is sort of part of the framing narrative of all my work, which is preventing abuse of power by the big guy that hurts the little guy. And the workers deserved more. They deserved better. They deserved shade breaks and bathroom breaks and water breaks and a fair contract and a living wage for their work. And my parents fought for that.

And so do consumers deserve fair prices, not manipulated, artificially spiked and high prices. They deserve competition, which allows for prices to stay low and for different options to be provided. Everyday people who want to innovate and enter the marketplace and want to start something new and take a risk and dream. They deserve an opportunity to enter the marketplace without being treated unfairly by those who have already been successful and are trying to keep others out and stifle competition.

So, it’s all part of the same narrative, spirit and set of values. And it certainly applies in sort of the farm worker, grocery, the food supply chain space, but it applies in all the spaces. The same animating set of values and narrative is true everywhere. You can be successful in our society following the rules. If you can only be successful by not following the rules, then you don’t have a good business model. And we’re going to enforce the law against you and make sure that the rules are followed. They’re there, not as a suggestion or a recommendation. They’re not advisory. They’re the rules. And our job is to make sure that those rules that were designed to protect certain people, that had in mind a vulnerable set of people who could be hurt if the rules weren’t followed, that those rules are followed by the big, powerful, sophisticated corporate interests that they apply to. And we want to keep our successful corporations and businesses on the right side of the line. They can thrive on the right legal side of the line.

TEDDY DOWNEY:  Yeah, that sounds very compelling. And, Attorney General, again, thank you so much for doing this. That sounds like a very good message to end on and we really can’t thank you enough. We really covered a lot of ground, really threw a lot at you in a short period of time. So, I can’t thank you enough.

ROB BONTA:  I had a good time.

TEDDY DOWNEY:  Thank you.

ROB BONTA: Thank you for your interest in our office’s work. I’m really proud of it. And thanks for allowing me to share more of it with you. Appreciate it.