Last week was the occasion of the “spring meeting”; that is, the big annual antitrust convention in Washington, D.C. hosted by the American Bar Association (ABA) Antitrust Section. To engage in a bit of self-plagiarism (efficient for me, at least), I had this to say about it last year:
For those outside the antitrust world, the spring meeting is the annual antitrust version of Woodstock. For those inside the antitrust world: Antitrust Woodstock is not really a thing. At the planetary-orbit level, the two events are similar in that they comprise times that are alternately engaging, interesting, fun, odd, and stultifying. There were more than 3,500 competition lawyers and economists in one place, if not in one room. Imagine it, then pour yourself a good stiff drink.
This year? Same same, but different. I gather it was a little bigger, with the ABA reporting almost 4,000 advance registrations. So, not Woodstock, by a couple of orders of magnitude, but a whole lotta lawyers and economists going on. It seemed pretty big to me.
Question for Tim Wu and/or Lina Khan: Is that bad? Too big? Should it be broken up or are there efficiency advantages to getting everybody (or that large subset of everybody) together from time to time? I dunno. I liked it, as a consumer, but then again, some folks are trying to throw the consumer-welfare standard out the window . . .
Question for the group: Is it just me, or has the spring meeting become more enforcement/intervention-friendly in recent years? To be sure, the bar (and many others) want to know what’s on enforcers’ minds, and it would be irresponsible of the ABA to stage a meeting that didn’t acknowledge that interest. And it’s not as if the views represented were uniform throughout—hardly. Still, the skew has seemed a bit different, so I wonder.
Also, artificial intelligence (AI) seems to be on everyone’s mind. Maybe it’s on the “mind” of various AI systems, as well. In any event, there were at least seven sessions with AI in the title, including a well-attended Chair’s Showcase. Decidedly uneven–perhaps spectacularly so–but some panelists were really very good, and there were other panelists too, and I’ll leave it at that for now. Just for now.
Anticipation
No, not the song by Carly Simon, nor the clip of it in a (still?) famous 1979 ad for Heinz Ketchup.
I mean the anticipation—hopeful, excited, nervous, dreadful, panicked, there’s some mood for everyone—attending the Federal Trade Commission’s (FTC) recent announcement of an April 23 open meeting, at which “[t]he Commission will vote on whether to issue a proposed final rule that would prevent most employers from enforcing noncompetes against workers. The proposed final rule being considered would generally prevent most employers from using noncompete clauses.”
The January 2023 notice of proposed rulemaking (NPRM) is here. My International Center for Law & Economics (ICLE) colleagues and I—joined by 25 independent scholars of law & economics, including, among others, two former directors of the FTC’s Bureau of Economics, two former chief economists at the U.S. Justice Department (DOJ) Antitrust Division, and a former FTC general counsel—submitted extensive comments here.
Here’s the agenda:
At the start of the meeting, the Commission will vote on whether to authorize public disclosure of the proposed final rule that is under consideration. Then, Chair Khan will offer brief remarks. Next, if the Commission votes to authorize public disclosure of the final rule under consideration, the Office of Policy Planning will give a staff presentation on the final noncompete rule under consideration. Finally, the Commission will vote on whether to issue the final rule.
I wonder how they’ll vote.
No, really. I’m sorry if that scans as me being snarky, yet again.
To be clear, I’m wondering about some of it, not all of it. I strongly suspect that the commission will vote to authorize public disclosure (if they adopt a rule, they have to publish it in any case), and I suspect that the current Office of Policy Planning (OPP) has that staff presentation in hand, knowing full well what the vote will be. I feel nearly certain (read “dead certain”) that the OPP statement will bear little resemblance to one I would have written if I were still at the OPP (and still charged with working on competition issues to do with noncompetes). And I fully expect that they’ll adopt a rule that looks a whole lot like the one proposed in January 2023, the many subsequent (and preceding) critical comments that were submitted to the agency notwithstanding. I also recommend comments submitted to the record by the Global Antitrust Institute (here).
On this issue, I never saw staff input or outside input move the needle one iota. But who knows? The particulars might well surprise me. Hope springs eternal.
For those who’ve forgotten the issue, I touched on the rulemaking in a post just a few weeks ago, and for more Truth on the Market, see, for example, here, here, here, here, here, here, here, here, and here. I’ll also tout a peer-reviewed article of mine on the narrower topic of physician noncompetes here.
There are, indeed, policy reasons—including competition-policy reasons—to be concerned about the effects of noncompete agreements. That is, there are reasons to be concerned about at least some of them, in some contexts. But there are also contexts in which there are legitimate business justifications for noncompete agreements.
The FTC’s enforcement experience in this area is new and extremely limited; and the economic literature is more mixed, and far less settled or comprehensive than the FTC’s very slanted discussion in its NPRM would have one believe. Relevant data and methods are works in progress. In brief, the FTC has been overly hasty in proposing a spectacularly overbroad rule.
Not incidentally, it’s not at all clear that the commission has the statutory authority to adopt such a rule, and it is clear that the commision lacks the resources to enforce it, in any case. On competition rulemaking generally, see former FTC General Counsel Alden Abbott (here); former DOJ Antitrust Division Chief Counsel for Economics Greg Werden (here); Richard Pierce of George Washington University Law School (here); and Thomas Merrill of Columbia University Law School (here).
Part of me is keen to see what they do, and part of me is keen to see how the courts react. But in the end, I fear that this will be a wasteful exercise in overreach, and one that does serious damage to an important enforcement agency. Serious further damage, that is.
Even More Anticipation
There were rumors of more rulemaking floating about the spring meeting. In particular, it was suggested that new regulations regarding the Hart-Scott-Rodino reporting form, and reporting rules for proposed mergers, would be forthcoming in weeks, but not months (never mind fractional accommodations of the two scales).
This is one area where the FTC has express statutory authority (subject to consent from the DOJ) to promulgate competition rules—procedural and reporting rules, but competition rules nonetheless. Rumors also suggested at least a little pullback from some of the extremes of the FTC’s June 2023 proposal to revise the HSR filing requirements.
For discussion of the specifics, see the comments I filed with my ICLE colleagues Brian Albrecht, Dirk Auer, Gus Hurwitz, and Geoff Manne here, and additional comments by Gus Hurwitz and Geoff Manne here. I also recommend comments filed by former FTC OPP Director Bilal Sayyed, submitted on behalf of TechFreedom (here); comments from the Global Antitrust Institute (here); comments from the Information Technology and Innovation Foundation (here); comments submitted by Asheesh Agarwall on behalf of various FTC alumni (including yours truly) here; and, just for giggles, comments submitted by Sen. Elizabeth Warren (D-Mass.), Rep. Joe Neguse (D-Calif.), and a dozen other members of Congress (here). For even more, I’m at Truth on the Market (here), and my ICLE colleague Gus Hurwitz has a very good piece in the Regulatory Review (here).
We’ll see.
And Still More, Briefly
The FTC’s administrative complaint against the Kroger/Albertson’s merger refers heavily to the structural presumptions of the new merger guidelines. For an extremely abridged list of readings, see ICLE’s Brian Albrecth, Dirk Auer, and Eric Fruits on the merger (here) and a bunch of us on the merger guidelines (here).
The FTC will be filing (or has filed) a motion for a preliminary injunction to block the merger, pending adjudication in its internal “Part 3” administrative process, but we haven’t yet seen the substance of their pitch to the U.S. District Court in Oregon. The guidelines have not yet been tested in court. It will be interesting to see if the FTC makes the same pitch to the court that it made to . . . well, itself in Part 3; if it does, it will be doubly interesting to see what the court makes of it.
Spreading the Wealth
Those who know me know that my ability to kvetch is hardly confined to present agency leadership at the FTC and the Antitrust Division. And don’t get me started on the European Commission, but I don’t stop there anyway.
So . . . did anybody else read Dana Mattioli’s recent Wall Street Journal column “Inside Amazon’s Push to Crack Trader Joe’s–and Dominate Everything”? If so, did you, too, find it fundamentally puzzling, if not inane?
At the tail end of the dog is something to do with FTC Chair Lina Khan and antitrust concerns, but I’ll be darned if I can parse it. Early on, the gravamen of Mattioli’s complaint seems to be that Amazon was playing dirty pool in seeking “to replicate the top 200 items sold at Trader Joe’s.” Or that some of its managers were. Perhaps. The same column reports that the Amazon employees who saw the proprietary information were fired, and it’s not clear what, if any, impact it had.
Trader Joe’s is not one of the top U.S. grocery chains—which, collectively, do not sell all the groceries in the United States. Not by market share, it’s not–it’s reportedly number 30, with about 1.6% of the market nationally (with retail grocery being primarily focused on local markets).
It is popular with certain consumers in certain local markets, at least for some things. Good for them, and good for the consumers who love them. But taking some of their market share on some of their skus seems like the sort of thing that wouldn’t be the first step in a plan for world domination.
Is it supposed to be a quest like Monty Python’s quest for the Holy Grail was a quest?
And intellectual-property issues aside, from a competition perspective, don’t we want someone to compete with Trader Joe’s, supposing that’s an intelligible niche market (or part of one)? Provide something similar—a close substitute, at least as far as certain consumers are concerned—but less expensive? Or something similar, but slightly preferable? Or both simultaneously?
One supposes that all of this fracas about Trader Joe’s might have been avoided by an enforceable noncompete agreement, but Trader Joe’s is headquartered in California (where noncompetes are largely unenforceable and trade-secret litigation is rampant); and recall from most of this post that the FTC has suggested (and might claim outright by regulation next week) that all such agreements are anticompetitive.
So . . . if a former employee walks to a competitor and facilitates product-market competition between her former employer and her present one, because she’s not bound by a noncompete agreement, is that also anticompetitive?