Jun 15, 2023
On June 7, The Capitol Forum interviewed Alvaro Bedoya, a Commissioner of the Federal Trade Commission. The full transcript, which has been modified slightly for accuracy, can be found below.
TEDDY DOWNEY: So thanks so much for doing this today, Commissioner Bedoya.
COMMISSIONER BEDOYA: Thank you for having me.
TEDDY DOWNEY: And first, the FTC has many authorities and a lot of responsibilities. And a big decision for commissioners is picking the issues you really want to focus on. And I’d first like to ask you what your priorities are, where you’re at the FTC.
COMMISSIONER BEDOYA: You know, I came to the FTC as someone who had spent most of my time on Capitol Hill and then at Georgetown, focused on tech and focused on surveillance, first in the private sector and then at Georgetown on the government, police surveillance. And I’ll be honest, a lot of people thought, oh, he’s going to be very focused on tech once he goes to the Commission. And I am. And I think some of the privacy work we’re doing is absolutely critical. But I didn’t get into privacy because of the ones and zeroes. I got into privacy because, in 2009, we got a call from the Minnesota Coalition of Battered Women saying our people are getting stalked through their cell phones and through their smartphones. And they cannot show up at a domestic violence shelter without their abuser saying, why are you at the domestic violence shelter?
And then I didn’t get into face recognition because it was cool or interesting. I got into face recognition because it was systematically misidentifying women, young people, older people and African-Americans in a way that really hurt them. And so when I came to antitrust, I think it’s terrific that there is a bipartisan consensus that we need to crackdown—crackdown is the wrong word perhaps—but have rigorous, aggressive enforcement on major technology platforms. I think we need to have that same bipartisan consensus on people’s most basic needs, their groceries, their prescriptions, their paychecks. And so when I, and Max Miller and Catherine Sanchez and Brett Wendling and Bryce Tuttle and Kate Conlow, turn our time to antitrust, that’s what we’re focused on—your groceries, your prescriptions and your paycheck.
TEDDY DOWNEY: And so the basic driving factor is helping people using all the authorities that you have. I mean, those are everyday people issues, I would say.
COMMISSIONER BEDOYA: A hundred percent agree. But I also think that this is why we have antitrust law. You know, I think one of the most disorienting things about this field of law is you crack open an antitrust treatise and the first thing you read is that antitrust is about efficiency. And you see all these graphs and it’s almost like it’s a math. And you go back to 1890 and read those floor debates, there’s nothing about math in those floor debates. There’s nothing about efficiency. They’re talking about Standard Oil. They’re talking about the sugar trust. They’re talking about cattlemen getting cheated out of a fair price for the cattle by a cartel for meatpackers.
And so, they’re talking about small businessmen getting a fair level playing field to compete. They’re talking about the communities they serve. They’re talking about groceries. Eventually, they’re talking about health care and they’re talking about paychecks. They’re talking about labor and how they want to make sure that antitrust isn’t a cudgel against working people and that it gives them a fair shot at a good job.
And so I think I think that focusing on groceries, prescriptions and paychecks isn’t just smart because I care about working people. I care about people living paycheck‑to‑paycheck. I think that is why we have antitrust. And I think it’s in line with the original intent of these statutes.
TEDDY DOWNEY: And I want to stay on this aspect of you delving into the history. You mentioned just diving in on why we have antitrust overall. You’ve done a lot of work on Robinson‑Patman. I’d love you to tell that story about what you learned delving into the history of that law and why you think it’s important to revive it right now.
COMMISSIONER BEDOYA: I think a couple of things have happened with Robinson‑Patman. First of all, I think that there has been a caricature built up around the history of the law and why that law exists. And I think that caricature has unfortunately erased the heart of the law, and not just why that law was passed, but why people wanted that law in the first place and who that law was intended to help.
So one of the caricatures about Robinson‑Patman is that it was passed as a protectionist measure to help the lobby of small grocers, the super powerful lobby, apparently, in 1936. And I do say that somewhat sarcastically. And when you actually crack open the Congressional Record and you look at the two years of debates—two and change actually—you see that Congress was very focused on, yes, they wanted a level playing field, an equal opportunity for small town grocers. But they were also really focused on the value that those small town grocers provided to their communities. The fact that they offer delivery, whereas the chain stores did not. The fact that they offered credit, whereas the chain stores did not.
And anyone who’s ever lived on a budget – actually, I haven’t talked about this much. But when I was growing up, my dad would occasionally get groceries on credit from the grocery store. And why? It’s because he ran out of money. And being able to go downstairs, and go to the bodega in this case, and get our groceries was how we ate for most of the month when that happened.
And the same thing was true in 1936. You have a congressman talking about how no chain store had ever carried the Widow Jones and her two kids for 60 days or however long it takes for her to get back on her feet. Whereas, the independent grocers did.
And so I think that there is a caricature that’s been built up that Congress passed this as a protectionist measure. When Congress passed this as a measure, yes, to provide a level playing field for small town grocers and retailers. But it also passed it to make sure that the communities they served had the full benefit of competition, not just on price terms, but also on service terms. And then the other idea is this outlier, that Robinson‑Patman is this outlier When anyone who looks at the Congressional Record in 1890, 1914, 1936, 1950—and at this stage, thanks to my team, I’ve been able to do just that—Robinson-Patman is an exemplar of the rule, not an exception to the rule, in that Congress was keenly focused on what was happening to small business and offering them a level playing field.
So there’s that caricature about how that law came into being. But I think, Teddy, the most harmful thing is that we’ve forgotten what this law means for rural and urban America. And for me, my eyes were opened to this when Max and I visited Pine Ridge, South Dakota. We met a fourth generation grocer, RF Buche. His family had been serving Indian Country in South Dakota for generations since the early 1900s. And we met him in Minneapolis and he said, come on out. I want to tell you about what we’re experiencing. I want you to meet the people we serve.
And so Max and I took a trip out to Pine Ridge, and we expected to spend most of our time in that little manager’s office overlooking the grocery store in Pine Ridge. We spent most of it in the dairy aisle talking to tribal leaders from the Oglala Lakota Tribal Council. We’re talking about a 13 year old showing up the emergency room with ulcers because by the end of the month, the only food they could afford was the food at the convenience store. There was a state representative, Peri Pourier, who talked about not knowing a single 20 year old man in her family who didn’t have diabetes. And it’s not just 20 year old men. Fifty percent of residents over 40 are suffering from diabetes.
And what they said was we want healthy food too. We want access to fresh produce. We want access to all those things. Ironically, we are surrounded by farmland. We are surrounded by this beautiful, fertile land. And we can’t afford that food. And then we went upstairs and talked to Mr. Buche. And actually, let me just say that what they described was, someone listening to this might say, well, why can’t they get in a car and go to the big box store and get their groceries there? Well, the nearest big box store is, I think, 100 mile round trip away. And eight or nine Pine Ridge residents out of ten do not have a car. And so do they end up bundling up in a car and saving their money to make the trip? They do. But they’re not benefiting from that in the way you might expect.
And so then we went upstairs and talked to Mr. Buche. And Mr. Buche said, hey, look, 20 years ago, 30 years ago, we could compete on price with the big box stores. You know, if you shop their coupons, we could compete. And that is not true today. You know, I cannot even access the same prices that the big boxes have, even when I’m ordering by the truckload. And that was not true 20 or 30 years ago.
And so Robinson‑Patman has been caricatured as this protectionist measure, as something utterly alien to what it is and what it’s about. It’s about making sure rural America and urban America get a fair shake when it comes to groceries and have access to good prices, good service, just like the rest of us in suburban America. And so, one of the things I’m trying to do is make sure that this law Congress gave us, this law that Republicans and Democrats are saying to us now, please enforce this law, that we actually do that job.
TEDDY DOWNEY: It’s interesting. I get a couple of reactions here, just having done what I did for ten years. I had the fortune to be able to interview people at the FTC over the years and even work with my own staff and talk to them about supermarket deals. And one thing I would always ask is basically like they would make these charts of overlap. And it was just kind of acceptable that if a supermarket was within X number of miles, that it was okay. It was okay to consolidate as long as there was still a supermarket within 15 miles or whatever the miles was, 30 miles or something.
And I would always ask, well, what if they don’t have a car? Are they doing the work to see how many of the people have a car? Oh, yeah Well, ten percent of people that shop at these stores don’t have a car, nine percent. And I was just like, well, then you’re just completely hurting those people, right? Like, it was just like an acceptable amount of carnage in a merger.
And what you’re saying is actually let’s flip that. Let’s actually focus on these people that have been kind of ignored over the years in some respects. I mean, that’s one of the reactions I have where you’re actually thinking about the people walking. Which I remember I was kind of laughed at when I when a similar comment, probably about eight or nine years ago. But that’s one of the things I think is kind of refreshing about what you’re saying.
And the other the other reaction I have is in your speech about Robinson‑Patman, you talk about, look, the history of this law, it was made because the big chain stores were entering into secret rebates, secret kickbacks, secret advertising budgets. I’ll be honest, like that sounds exactly like how all these markets work right now. And not even just food, by the way. We could have a whole conversation about pharmaceuticals and things like that, which we’ll get to.
So when it comes to Robinson‑Patman, do you see—I mean, I hear in your speech, it sounds like how business is right now. And so do you see a big role for Robinson‑Patman? I mean, it would seem like you need a lot of people. You need to really ramp up staff and enforcement, just given what you’re saying about the importance of the law and just how these markets work right now.
COMMISSIONER BEDOYA: So a couple of thoughts in reaction to this. And look, I’ll tell you that the folks I talked to at the Commission now are very, very interested in low income communities and people living paycheck‑to‑paycheck. And I’ve been really, really glad that every time—because I ask that question. I always ask, okay, well, what about the folks living paycheck‑to‑paycheck?
And the other thing is that some people don’t have a paycheck, right? Or some people don’t make steady money, right? Some people are struggling to get a job, to hold onto a job. And I’ve been very happy that when I’ve asked that, that there’s always been answers. And that’s where their heads are at too. And so that’s one thing that that I’ve been very, very glad about.
So what role should Robinson-Patman have? I’ll say a couple of things. One thing that we’ve been trying to do is make sure people understand the full breadth of Robinson-Patman. Look, was the law written beautifully? It wasn’t, it’s not some platonic ideal of textual clarity. At the same time, what Congress was trying to do is enact specific restrictions, given a political environment in which it was very unlikely that a 1914-esquebroad Section 5 or that style mandate was unlikely, but also to respond to the specific ways in which the A&P at the time was cheating people.
So one thing the A&P was doing was saying, oh, look, you know, we’ll take the same deals as everyone else. You can give us the same price. But if you want to sell us, you’ve got to use this broker. And actually, this broker isn’t our broker. It’s actually your broker. And so you’ve got to pay your broker, right? When really that was the A&P, right? It was a subsidiary of the A&P. And so you had this middleman who was getting kickbacks, ostensibly to serve the suppliers, but really was an agent of the buyer.
And one thing I’ve been trying to do is remind people of Section 2(c) of Robinson‑Patman. It’s really interesting. Because everyone says price discrimination, 2(a), 2(e), 2(f)—amen. Absolutely. We should revive those aspects of the law. But 2(c) is a far simpler rule. It’s about kickbacks. And one interesting thing that Max and Bryce and I found, when we read the legislative history, is that people talk about it as commercial bribery. Those words don’t really appear in the legislative history. And so let’s call it what it is. It’s a kickback. So this is about kickbacks. It’s almost like a duty of loyalty. It initially was not a per se rule, but it grew into a per se rule.
And the other thing I’ll add is that in our policy statement on rebates, you had five FTC commissioners, a bipartisan group of commissioners, pointing to 2(c) and saying this is good law. Now, some of us had different reasonings for that. But I want to make sure that when people think of Robinson-Patman, it isn’t just 2(a), but it’s also 2(c). And do I think that we need to look beyond grocery? Absolutely. I think we have that policy statement that talks about it, I believe, in the context of a pharmaceuticals.
And I think that that if we’re focusing on—this is a broader conversation—but if we’re focusing on people and low income people, working class people, blue collar America, some of the stories you hear about pharma are horrific and some of the allegations you hear are horrific, and frankly, keep me up at night. And so that’s also something we’ve been really focused on.
TEDDY DOWNEY: Let’s stay on pharma for one second, because that is a big priority of yours. You have this big Amgen case. In that case, there is an allegation specific to Amgen’s ability to use its portfolio, and its relationship with insurers or vertically integrated giants that are both insurers and PBMs and medical benefit managers, to exclude generic competition. That’s kind of the crux of the case I would. That’s not just a merger case. That sounds like a pretty good theory for a Section 2 case or a conduct case against that type of conduct, which, again, I would argue among these big companies is fairly routine at this point. So again, it seems like you have a path here to bring a lot of cases if that’s illegal. That’s going on all the time. And so I ask this question almost like can we expect a big uptick in enforcement? And do you have the resources to be able to bring a lot of these cases? The writing seems to be on the wall, but we haven’t seen a conduct case. I’m wondering if this is an indicator of such or what you can discuss about that?
COMMISSIONER BEDOYA: So let’s not talk about Amgen, because I can’t and shouldn’t because it’s a live case. But let’s zoom out to this broader question. And by the way, I should have said at the start of our conversation, Teddy, obviously, everything I’m saying is me. I’m speaking for me myself. I’m not speaking for my colleagues, the Chair or Commissioner Slaughter or the Commission as a whole or its staff. It’s just me talking.
So zooming out to this broader question of health care conduct, I absolutely think that this is absolutely a priority for me. And it’s not just rebate walls. But let’s kick the tires for a second on allegations around rebate walls. You know, I think there’s been a lot of assumptions about the economic benefits of rebates and the ostensible and alleged good they do. But I’ll offer two thoughts here.
I think that what should end up on a formulary for an insurer should be the drugs that are most likely to help people in terms of their health. And not as a legal matter, just as a policy matter, I would like to think that what ends up on that formulary is what makes people healthy and that I’d like to think that that is a primary consideration in what ends up there.
Secondly, there’s this idea that rebates are discounts. Discounts are good. And certainly, in some circumstances, I can see a world where rebates are good. And so I don’t think the rebates as a whole are a bad idea. That said, if you’re focused on the people struggling in this country, if you’re focused on people living paycheck‑to‑paycheck, people who are uninsured, people who don’t have government payors, people who aren’t on Medicare, Medicaid, people who fall in that donut hole. What ends up happening with rebates is they get stuck with what’s called the usual and customary price at the pharmacy counter. And that’s a fancy term for full freight. That’s a fancy term for an exorbitantly expensive drug that they need to survive.
And then separately, you’ve got people who get denied coverage. And so, sure, the rebate might be a good idea in certain circumstances. But what if you’re paying full freight for a drug because you got denied coverage or because you don’t have insurance? And so I think we need to question this rationale around rebates and kick the tires on that.
But broadly, one thing that that my team has really been focused on is I think there’s a lot of assumptions around the benefits of a vertical integration from ten or twenty years ago that we really have to question, that we really need to reexamine. And so, we talked about rebate walls. You know, there’s spread pricing, DIR fees, clawbacks, et cetera. The thing that for me has really hit me in the gut is some of the allegations around steering.
So, I had the pleasure of sitting down with some pharmacists from Louisiana a couple of weeks ago. My wife’s from Louisiana. And particularly before the pandemic when we weren’t in suburban Maryland or D.C., we were in rural Louisiana with my sister‑in‑law and my mom and–actually my mother‑in‑law’s in Kenner. But she’s not rural. But we spent a lot of time in rural Louisiana. And what these pharmacies said was, hey, look. When Ida came through, there were two parishes south of New Orleans that were normally served by 50 or 60 pharmacies that suddenly were only served by five or six. There was like a Wal-Mart Supercenter, and there were two independents that had five pharmacies open.
And so people were suddenly showing up at the independents with prescriptions for insulin. And the pharmacist was being told by the PBM that they could not fill their insulin prescription because they had to go across the street and fill it in the pharmacy that the PBM owned. What the system didn’t appreciate was that that pharmacy was either flooded or closed or both as a result of Ida. And so there’s people who can’t get their insulin because—again, this is an allegation. You know, I haven’t had a chance to look into it. But people apparently weren’t getting their insulin because the PBM wanted to ensure that was filled by a pharmacy that they owned and that the vertically integrated entity that they were a part of would profit from once they got it.
There’s another horrific story about a West Virginia family that I read on the West Virginia Insurance Commissioner’s website of a kid with cancer. A family goes into a pharmacy. A pharmacist has the cancer medicine behind the counter. And the PBM, over the phone, says, sorry. You’ve got to go home and get it from a mail order pharmacy that we own.
And so I think that steering and the allegations around steering are some of the most serious I’ve heard as a Commissioner with the Federal Trade Commission. And that really made me question about what this vertical integration, which was which was supposed to have all these benefits for consumers and all these benefits for the public, what it really means for working people, particularly people in rural and urban America, that are served by independents in particular.
TEDDY DOWNEY: Yeah, we’ve done a lot of reporting on vertical integration among the integrated health care giants. And I agree the harm that results from how the companies favor themselves can be really jarring. Particularly, I remember a story that we did with ProPublica on UnitedHealth denying coverage to a college kid and just the persistence of denying it. And then, I’ve got to ask the question, well, what happens when the doctor is owned by the insurer right? That kid actually ended up getting his medicine because his doctor said, he needs this. He will die if he does not get this. But if the insurer owns that doctor, what happens? And I think that you get all of these really scary stories and scary situations when you’re thinking about how these companies can favor themselves. And to your point, exploitation of the patient and the small businesses in that ecosystem potentially like an independent pharmacy.
We’re basically out of time. But I do want to touch on, if you can discuss quickly, you know, labor is a big deal for you. I just don’t want to leave that off here. You talk a lot about fairness and antitrust law and you looked into the history about the labor exemption. I wonder if you could really quickly discuss why labor is so important to you and why that’s such a big issue in this particular economy that we have right now?
COMMISSIONER BEDOYA: Yeah. You know, why is it important? I think that one of the many things, you know, there’s just one small thing that I appreciate about having Chair Kahn as a colleague is one thing she says is it’s about the public, right? You know, you don’t hear her talk a lot about, you know, consumers. Her focus is on the public. And I think that’s refreshing. Because I think sometimes in the past, we’ve overused this term consumer. And I don’t know anyone who identifies as a consumer, right? I don’t know anyone who wakes up in the morning and is like, you know what I am? I’m a consumer, right?
I think people wake up in the morning and they’re like, I’m a mom, I’m a dad. I work at this grocery store. Or I’m a dietitian. I’m a nurse. People identify with who they are in their family. And people identify with their work.. This is a basic part of who we are. This how we put food on the table. This is how we survive this. This is a big part of how we have a sense of worth about what we do during the day. So this isn’t just about having enough for yourself and your families, but it’s about who you are. And so I think work is one of the most basic things we have.
Secondly, we have our antitrust laws because a coalition of farmers and working people demanded that the state houses and Congress pass those laws. And so the history, the reality, I think that’s why we should care about these things. And secondly, we used to have a thriving middle class in this country. And instead, what has happened over the course of the last 20, 30, 40 years, is that the rich have gotten richer and the middle class have either stayed the same or lost money. And some of that has changed in the course of the last one or two years of the pandemic. It has not—that violence has not completely been undone.
And so, that’s why I’m focused on this. And one of the most surprising things I’ve seen in antitrust is how the purpose of antitrust law was turned on its head in a way that, unfortunately, has hurt working people. Antitrust laws have been repeatedly used across most of the 20th century to shut down worker organizing in a way that, frankly, I think the Senate of 1890 would roll over in its grave about.
I’ll just tell you the 1890 story. But the talk that I think you’re mentioning is called “Aiming at Dollars, Not Men”. I’m co‑publishing it with our recently departed for law school paralegal Bryce Tuttle in the Antitrust Law Journal. So folks can see it there.
But let’s just talk about 1890. People forget that one of the reasons John Sherman stood on the floor of the Senate and advocated for the antitrust laws was to ensure that laborers would have a fair shake and that their ability to strike would be unimpeded. You know, one of his key floor speeches, I think it was May, 1890. I could be wrong on that. He expressly says that his indictment of trust centers on the fact that trusts command the price of labor without fear of strikes. So if at the very beginning, John Sherman is saying we need this law to make sure that labor isn’t shut down in the face of these powerful trusts.
And so what happens there is the original language drafted by Sherman has this language about restraints of trade, combinations that might advance cost to the consumer. Then you have this parade of Senators stand up on the floor of the Senate—Senator George, Senator Vest, Senator Teller, Senator Stewart—saying, hey, wait a second. This language could be used to shut down organizing by the very workers who are knocking down our doors, asking for passage of this law. And so, the Sherman Act was amended not once, but twice. People forget that it’s twice. People think it was just amended once. No, it was amended once by Sherman and another time by Senator Aldrich to ensure that wouldn’t happen. Then what happens? It goes to Judiciary and Senator Edmunds goes in and removes that language about advancing cost to the consumer.
And since that, you know, language that threatened to impede organizing falls out, so do the amendments that protected against that language. And so when it goes to the floor of the Senate, there’s like one Senator from New Jersey that votes against it, but then everyone else votes for it, including Senator George, Senator Vest, Senator Teller, Senator Stewart. And so, look, I’ll just say, as someone who sat in the Senate Judiciary Committee every Thursday for five years of my life, that the Senators on the Senate Judiciary Committee and the Senate are not in the habit of mutely accepting things they vociferously opposed one or two or three weeks prior. And so it’s pretty clear that the Senate and the House, the Congress as a whole, did not intend this to be used to shut down strikes. And yet, that’s exactly what happened.
And I’ll leave you with one of the most vicious examples I’ve encountered in in antitrust of how it was used to shut down an attempt organized by the Danbury Hatters. Now, you might say hatters. I think there’s like Disney characters who are hatting. But there’s a reason there’s a Mad Hatter, and that is because of mercury poisoning. And so industrial production of felted fur hats involves mercury. There was a study around the time of when the Danbury Hatters were organizing that found that 43 out of 100 of them had mercury poisoning. There were 20 year old men whose hands shook continuously because they were so poisoned. There were grown men who couldn’t feed themselves because of it. And instead of being treated fairly and being treated right, they’re accused of being drunks. And so it was these men who tried to organize—about 250 of them.
And so what happened, Mr. Loewe, who ran the hattery in Danbury, sued them under the Sherman Act. And the Supreme Court upheld that lawsuit 9 to 0. And so Mr. Loewe seized their homes and they almost lost their homes. Except I think organized labor stepped in—I think it was the AFL ‑‑ stepped in and workers around the country donated an hour of their labor to save their homes. And you have example of this over and over and over again. Coal miners in West Virginia. Longshoremen in New Orleans. Over and over again where these laws, that were categorically intended by Congress not to stop people’s right to organize, were used for precisely that.
And I think that one thing that we as antitrust enforcers need to do, and one thing from reading Chair Khan’s remarks and talking to her, Commissioner Slaughter and other antitrust enforcers, I am thrilled to work alongside enforcers who I think are reading antitrust and labor exemption in line with its original intent. And so that’s something I think we need to do, is remember why we have these laws and why Congress gave us these laws and not just look at the bare language outside of that context in applying them.
TEDDY DOWNEY: Well, thank you so much for doing this. I know we’re out of time and it just was a pleasure to kind of walk through this history with you. I love the history of laws and business, and I can’t get enough of it. I love reading about it. I love hearing about it. So thank you so much for sharing this. And good luck with everything. And I look forward to covering you going forward.
COMMISSIONER BEDOYA: Thank you. I really appreciate that, Teddy. It was great to be here.
(END OF TRANSCRIPT)