It’s been an excellent week on the anti-monopoly front, with a major win in court, a big pharma case filed, and a key judicial nominee blocked. Today’s monopoly round-up is about our many wins, colored by the immensely irritating negotiations over the debt ceiling, which could have a significant impact on governance going forward.
Also, I’ll be in the Bay Area this week speaking at the SynBioBeta conference on Thursday, along with the legendary Esther Dyson.
So here’s the round-up.
The Antitrust Division just brought down airline fares in the Northeast, winning an antitrust case against American Airlines and JetBlue on Friday. Here’s the backstory. In 2020, the two airlines had come together in what was called the Northeast Alliance, which was a joint venture in New York and Boston where the two airlines would fully integrate operations. It was essentially a quasi-merger, since 75% of JetBlue’s flights came to or from the two hubs, and one approved by Trump DOT Secretary Elaine Chao on her way out the door.
The Biden Antitrust Division had to challenge it to undo what looked like a pretty corrupt deal. They did. On Friday, in a spectacular opinion, Judge Leo Sorokin ruled against the airlines. Sorokin said the arrangement consolidated the market for airline travel, and in doing so, substantially reduced competition. The airlines had argued they needed to be bigger to take on Delta, which the judge dismissed as both untrue and irrelevant to the standards of the Sherman Act.
The ruling is not the end of this story. The parties could appeal. More importantly, JetBlue is also trying to buy Spirit Airlines, which will go to trial later this year. According to David Gringer, an antitrust attorney at WilmerHale, the judge’s ruling creates a “very substantial tailwind for DOJ.” I’ll have a bit more early next week in a quick read.
That’s not all from the Antitrust Division. DOJ enforcers are considering a suit to block Korean Air’s planned takeover of Asiana. They also filed a consent decree in its case against George’s, a fourth poultry processor, in its effort to address wage suppression in labor markets.
Lots of stuff from the Federal Trade Commission, aside from the merger challenge to Amgen-Horizon I wrote about on Friday. The FTC released a policy statement saying deceptive or incomplete disclosures around biometric surveillance could be unlawful. Yet another AI-relevant policy. It also barred ovulation tracking app PreMom from sharing health data with advertisers after it violated FTC Health Breach Notification Rule. And it is looking into a mattress merger. Finally, the FTC deepened its investigations of PBMs, ordering two additional firms (Zinc and Ascent) to turn over info about business practices.
In a busy legislative session, the new fully Democratic Party controlled Minnesota-government voided non-compete agreements. It also became the fourth state to make prison phone calls free. Excellent! A very cruel practice by private equity to extract cash from the families of prisoners. On the flip side, it seems like the Mayo Clinic, after threatening the state government, is going to get its exemption from required nurse staffing levels. As Marshall Tanick noted, bullying works.
The Consumer Financial Protection Bureau issued a new circular telling banks it’s illegal to reopen Americans’ closed bank accounts to harvest more fees.
The IRS may start doing your tax filings for you, if the House Republicans don’t stop them
Republican Texas AG Ken Paxton sued hotels over junk fees. Yay!
Joe Biden and DOT Secretary Pete Buttigieg are going to force airlines to cover costs for canceled flights when the airline could have avoided the cancelation. I’m warming up to this Buttigieg guy.
The Maryland Supreme Court ruled it is constitutional to tax big tech giant ad revenue.
Creepy stuff at TikTok. Montana banned the app, which will be challenged in court.
Merger enforcement is ramping up to record levels.
The Senate Commerce Committee passed the Railway Safety Act in a bipartisan vote, 16-11. The fight was within the GOP; Senator J.D. Vance and Ted Cruz battled in mark-up.
The Supreme Court ruled against big pork processors, arguing that California’s state law on humane treatment of pigs is Constitutional even though it affects a substantial amount of commerce outside the state. Reducing the power of what’s called the ‘dormant commerce clause’ of the Constitution is helpful for state-level anti-monopoly laws. Biden’s Solicitor General, Elizabeth Prelogar, took the side of big pork processors.
Real estate trade groups told the Supreme Court that the mortgage market would face chaos if it declares the CFPB’s funding to be unconstitutional and doesn’t preserve the agency’s existing rulemakings on mortgage rates.
Judicial nominee Michael Delaney, who had a questionable record on market power, withdrew from consideration from the first circuit slot. Circuit court judges are immensely powerful, so this is very good.
Judge Amit Mehta, who is presiding over the Google case, is speaking at a random American Bar Association conference put on in Copenhagen on June 11-12. That’s weird.
KKR’s Envision, which controls emergency room physician practices and was the firm behind surprise billing, filed for bankruptcy.
Disney’s Pixar films are not doing well anymore. And Netflix is slowly offshoring production.
Democratic Maryland Senate candidate and liquor monopolist David Trone “threatened to “execute” and “fucking end” a delivery worker at his Total Wine in Arizona, according to a police report.” That was in 2021, when he was a member of Congress. Um.
YouTube’s algorithm seems to train school shooters.
Google has 15 products with more than 500 million users, and 6 products with more than 2 billion users.
The New York Times signed a $100 million deal with Google. News has value!
60 Minutes is doing an episode tonight on how defense contractors are ripping off the government.
Mergers usually don’t work out, even when they don’t foster market power. Meta lost $1 billion on its failed acquisition of Kustomer.
Boeing is suing a sole source supplier who makes parts for fighter jets because the supplier is closing at the end of the year.
Search rival Neeva shut down, unable to get customers because of Google’s default agreements with phone makers. Google front groups had pointed to Neeva as evidence the market wasn’t monopolized.
Debt limit negotiations are going badly. It’s very hard not to blame Biden and Yellen for this one. Biden spent months saying they wouldn’t negotiate, and then started negotiating. Don’t make threats you don’t mean!
Treasury Secretary Janet Yellen is pushing for more bank mergers. Yellen is racing for the title of ‘worst member of the Biden cabinet.’ Shahid Naeem has more on the problem.
Football legend Jim Brown died this week, he was a lead plaintiff in an important antitrust suit on players’ rights.
Softbank’s Vision fund lost $37 billion this year, and $27 billion last year. When predatory pricing goes wrong…
The EU Competition Authority approved the Microsoft-Activision deal, which doesn’t really matter unless Microsoft can somehow get the UK and US to approve it. That’s a tough road. On the other hand, Microsoft is very influential. They got the UK Chancellor Jeremy Hunt to chide the Competition and Markets Authority for blocking the Microsoft-Activision merger, saying the CMA should think of its "wider responsibilities."
Unions filed a complaint with the Antitrust Division against the University of Pittsburgh Medical Center, accusing UPMC of preventing workers “from exiting or improving working conditions through a draconian system of mobility restrictions and widespread labor law violations that lock in sub-competitive pay and working conditions.”
There was a great hearing in the House of Representatives last week titled “Why Health Care is Unaffordable: Anticompetitive and Consolidated Markets.” Both the Rs and the Ds were mad at monopolies, from pharma to hospitals to insurers. Unfortunately, Rep. Lloyd Doggett, who is normally very smart, showed an ignorance of how health care markets work when he said, "PBMs are the only part of the supply chain that is pushing back on monopoly drug prices." That is not true and there is plenty of research on that point, including from the Capitol Forum’s excellent special report last week, and from the nonprofit 46 Brooklyn. Even the Dem House Oversight Committee’s work last year highlighted how insulin producers elevate prices in cahoots with PBMs.
Is antitrust law actually a form of law? That’s what antitrust icons Tim Wu and Herb Hovenkamp are debating on ProMarket. Hovenkamp is defending the status quo of weak enforcement, and argues that courts should only focus on pricing and output in merger analysis by overruling a keystone case of merger analysis, a case called Brown Shoe, should be jettisoned. Tim Wu responds by pointing out that doing so would overrule the text that Congress passed, based on the preferences of economists. As Wu notes, you can’t do that. Whether you can sub the judgment of economists for law is the essence of the fight in antitrust.
So FYI, Neeva (Google alternative) folded: "But throughout this journey, we’ve discovered that it is one thing to build a search engine, and an entirely different thing to convince regular users of the need to switch to a better choice. From the unnecessary friction required to change default search settings, to the challenges in helping people understand the difference between a search engine and a browser, acquiring users has been really hard. Contrary to popular belief, convincing someone to pay for a better experience was actually a less difficult problem compared to getting them to try a new search engine in the first place."
Hey Matt, excellent roundup, with the debt ceiling talks going badly. Wouldn’t be easier to just reform the debt ceiling? Could president Biden do that without congress?
One thing that I hope you might look into is LinkedIn and how they are a monopoly that nobody talks about - and they abuse their monopoly power all the time.
I am a Career Coach and Resume Writer and one of the the things I've seen LinkedIn do is restrict users' accounts when all they are doing is having an assistant or colleague log in.
I'm no fan of Facebook, but at least they have a modern account access/rights system that allows you to assign access to other users or companies - like Social Media marketing companies.
K-drama has been very big almost everywhere outside of the US, before US audiences discovered "Squid Game". I'd be concerned that any Netflix affiliation might cause problems for Korean studios.
Matt, a question on the Chinese collecting on their loans to countries. Are the countries fighting back and do they have the ability to inflate their currencies to reduce the impact? I would be suspicious of any contract with the Chinese.
I clicked on the link regarding David Trone, who I recently learned was a classmate in college, although our paths never crossed. Curiously three other people quoted in the police report say he was angry but never threatened physical violence.
https://twitter.com/matthewstoller/status/1660116481873530883?s=20
Matt, this isn't listed, but your late flurry of ACA related tweets are completely spot on and should be included as part of this round up.
So FYI, Neeva (Google alternative) folded: "But throughout this journey, we’ve discovered that it is one thing to build a search engine, and an entirely different thing to convince regular users of the need to switch to a better choice. From the unnecessary friction required to change default search settings, to the challenges in helping people understand the difference between a search engine and a browser, acquiring users has been really hard. Contrary to popular belief, convincing someone to pay for a better experience was actually a less difficult problem compared to getting them to try a new search engine in the first place."
Holy shit almost 100k. Hope it's 1M soon!
Hey Matt, excellent roundup, with the debt ceiling talks going badly. Wouldn’t be easier to just reform the debt ceiling? Could president Biden do that without congress?
Matt - This is great stuff!
One thing that I hope you might look into is LinkedIn and how they are a monopoly that nobody talks about - and they abuse their monopoly power all the time.
I am a Career Coach and Resume Writer and one of the the things I've seen LinkedIn do is restrict users' accounts when all they are doing is having an assistant or colleague log in.
I'm no fan of Facebook, but at least they have a modern account access/rights system that allows you to assign access to other users or companies - like Social Media marketing companies.
And in franchise news, CFPB Director Chopra and Senator Cortez Masto (NV) continue to take steps to protect franchisees.
https://www.restaurantbusinessonline.com/financing/regulators-say-loans-franchisees-even-franchisors-are-subject-federal-credit-rules
Good riddance to Envision
The Substack app doesn’t allow the roundups to be read aloud. Is this a setting on the author’s end?
K-drama has been very big almost everywhere outside of the US, before US audiences discovered "Squid Game". I'd be concerned that any Netflix affiliation might cause problems for Korean studios.
Matt, loved your podcast with grant Williams! Everyone should listen.
Matt, a question on the Chinese collecting on their loans to countries. Are the countries fighting back and do they have the ability to inflate their currencies to reduce the impact? I would be suspicious of any contract with the Chinese.
I clicked on the link regarding David Trone, who I recently learned was a classmate in college, although our paths never crossed. Curiously three other people quoted in the police report say he was angry but never threatened physical violence.