Navigating Antitrust Laws

𝐌𝐞𝐫𝐠𝐞𝐫𝐬: 𝐞𝐚𝐬𝐲 𝐭𝐨 𝐝𝐨, 𝐡𝐚𝐫𝐝 𝐭𝐨 𝐮𝐧𝐝𝐨 That's the uncomfortable truth at the heart of our new paper just published in the 𝘈𝘯𝘵𝘪𝘵𝘳𝘶𝘴𝘵 𝘓𝘢𝘸 𝘑𝘰𝘶𝘳𝘯𝘢𝘭, where John Kwoka and I ask: what happens when a merger turns out to be anticompetitive after it's done? Answer: not much good. We built the first comprehensive dataset of all US enforcement actions against consummated mergers from 2001 to 2023. Fifty-odd cases. More than we expected, tbh. But quantity is not quality. Here's what we found: 🔹 Barely 2 out of 48 cases used a pure structural remedy (i.e. an actual breakup). Most used a messy hybrid of divestitures + behavioural promises. 🔹 In almost 𝘩𝘢𝘭𝘧 the cases, the divested assets didn't even survive in the market for 2–4 years. Gone. 🔹 Behavioural remedies get used more when agencies wait longer, which is also when they work least. We also build a simple model of optimal merger policy timing. The punchline: if ex post enforcement is weak (and it is), ex ante enforcement must do the heavy lifting. Stronger presumptions. More scepticism toward remedies. Fewer mergers waved through on the promise that "we'll fix it later." Because we can't and we don’t. The Live Nation/Ticketmaster saga is perhaps the most vivid illustration. But it's far from alone. Link to the pre-print in the comments below. Ciao

The case to dismantle large not-for-profit healthcare systems. Over the past two decades, nonprofit health systems have consolidated hospital markets across the United States to the point where competition no longer exists. Roughly 77% of metro hospital markets are now highly concentrated, and nearly 30% are extremely concentrated. A conservative estimate shows that about three-quarters of these concentrated markets, and roughly 85% of the most extreme cases, are dominated by large not-for-profit systems. This level of consolidation is not accidental. It is the predictable outcome of permissive merger policy and weak antitrust enforcement. Once a nonprofit system controls a market, costs rise rapidly. When hospitals or physician practices are acquired, prices are almost immediately reset upward to systemwide rates, even though the care, staff, and facilities remain unchanged. Facility fees are added to routine visits, insurers are forced into all-or-nothing contracts, independent physicians are squeezed out, and patients are steered into higher-cost hospital settings with fewer real choices. Despite their nonprofit status, most large systems provide very little true charity care relative to their size. Charity care often represents a small fraction of revenue and frequently overlaps with bad debt that would exist regardless. In exchange, these systems receive enormous public subsidies, including exemption from corporate income taxes, exemption from property taxes on valuable real estate, subsidized bond financing, and large federal transfers through programs like 340B and DSH. In many markets, the value of these subsidies far exceeds the actual charitable care delivered. When an organization dominates a market, raises prices after acquisitions, blocks competition through vertical integration, and absorbs massive public subsidies without delivering proportional public benefit, it is not functioning as a charity. It is functioning as a monopoly. Nonprofit status has become a shield for market power, and hyper-consolidated nonprofit health systems should face aggressive antitrust enforcement, divestitures, and breakups. HHI explained: The Herfindahl-Hirschman Index (HHI) is a standard antitrust measure of market concentration. An HHI above 2,500 is considered highly concentrated. Above 4,000 indicates extreme concentration, often a monopoly or duopoly. Map caption: The map shown highlights highly consolidated hospital markets across the United States. Roughly two-thirds of metro areas are already highly or extremely concentrated, demonstrating that market dominance by large health systems is widespread, not isolated.

The current US administration likes to mischaracterise foreign competition enforcement against US tech giants as protectionist trade policy. In 𝘌𝘱𝘪𝘤 𝘷𝘴 𝘎𝘰𝘰𝘨𝘭𝘦, the first US court of appeals now confirmed that conduct previously challenged abroad, including in Europe, also violated US antitrust laws. The court found obligations akin to those under the Digital Markets Act appropriate to (re-)create competition. Ten findings: 𝐎𝐧 𝐝𝐞𝐟𝐢𝐧𝐢𝐧𝐠 𝐦𝐚𝐫𝐤𝐞𝐭𝐬 𝐟𝐨𝐫 𝐩𝐥𝐚𝐭𝐟𝐨𝐫𝐦𝐬 1) Market definitions must align with the specific theory of harm. 2) There are distinct markets for Android app distribution and in-app billing, which may overlap with a broader market for digital mobile gaming transactions. 3) “Just because [Apple and Google] compete in one market does not mean [..] that there cannot be a narrower or overlapping market in which the parties do not compete.” 4) “Advocating for single-brand aftermarkets is another attempt by Google to flatten the entire Android ecosystem into one brand that competes with one other brand – Apple. But the crux of this case is Google’s anticompetitive conduct vis-á-vis many different brands within the Android ecosystem.” 𝐎𝐧 𝐭𝐡𝐞 𝐟𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐬 𝐨𝐟 𝐚𝐧𝐭𝐢𝐭𝐫𝐮𝐬𝐭 𝐫𝐞𝐦𝐞𝐝𝐢𝐞𝐬 5) Remedies must: (i) cease the anticompetitive conduct, (ii) deny the defendant the fruits of its violation, and (iii) prevent future equivalent infringements. 6) They must account for “the particular characteristics of digital markets, which can allow monopolists that achieved or maintained dominance through exclusionary conduct to perpetuate entry barriers and maintain monopoly power long after that conduct has stopped.” 7) “[A]ntitrust remedies can and often must proscribe otherwise lawful conduct to unwind and further prevent violators’ anticompetitive activity.” 8) Remedies may include “forward-looking” restraints to prevent recurrence. 𝐎𝐧 𝐜𝐨𝐮𝐧𝐭𝐞𝐫𝐢𝐧𝐠 𝐢𝐥𝐥𝐞𝐠𝐢𝐭𝐢𝐦𝐚𝐭𝐞𝐥𝐲 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐧𝐞𝐭𝐰𝐨𝐫𝐤 𝐞𝐟𝐟𝐞𝐜𝐭𝐬 9) “Once the court established [..] that network effects were among the consequences of Google’s anticompetitive conduct, the court was permitted to shape relief targeted to those effects”- i.e., by granting rivals access. 10) Where network effects, currently enjoyed, are “fruits" of an antitrust violation, reducing the infringer’s network benefits (e.g., via sharing obligations) is a suitable remedy. One of my favourite lines: “Just because Google didn’t get something that it proposed is no basis to upend the injunction.” I doubt we would have seen this judgment without Europe’s pioneering work in addressing competition issues in digital markets. I hope this (and future US rulings, including the upcoming 𝘎𝘰𝘰𝘨𝘭𝘦 𝘚𝘦𝘢𝘳𝘤𝘩 remedy decision) will help restore the EU Commission’s confidence in its own expertise and encourage it to enforce the competition law principles it has rightly developed. #CompetitionMatters #GoogleNonCompliance 

Jeff Immelt once told me that he thought, from his experience as CEO of GE, that one of the huge problems with health care in the U.S. was the consolidation. This article does two things that ought to be of interest to people interested in why health care in the U.S. is so expensive: 1) it reports on the concentration of health benefits administrators (which is, as Immelt thought, high), and 2) it raises the issue of problems with vertical integration. Health insurers were, by law, required to pay out 85% (or 80%, depending on various factors) of premiums collected in either medical benefits or documented efforts to improve performance. BUT, it turns out the easiest, and most profitable, way to meet the medical loss ratio payout numbers is simply to, if an entity owns providers, have the providers increase their prices. Which is precisely what is happening. This is yet another example of how the failure to pursue a vigorous antitrust policy, which should be of interest to conservatives who believe in markets and liberals who believe in lower prices, has left our health system unduly concentrated, overly expensive, and ripe for self-dealing. #healthinsurance #healthcare #concentration #prices #selfdealing https://lnkd.in/eBwefgiE

This week, the pharmaceutical industry witnessed an intriguing development. Roche has joined Eli Lilly and Company in opposing Novo Nordisk's planned acquisition of manufacturing plants from Catalent Pharma Solutions, one of the biggest contract manufacturers in biopharma. The deal, which could significantly boost Novo's capacity to produce its in-demand GLP-1 drugs Wegovy and Ozempic, is under antitrust review by the Federal Trade Commission (FTC). Why is this significant? - Meeting Soaring Demand: Novo's GLP-1 drugs are in short supply due to unprecedented demand. Acquiring Catalent's facilities could alleviate these shortages and get treatments to patients faster.    - Competitive Dynamics: Lilly, whose competing drug just came off the official shortage list, has heavily invested in expanding its own manufacturing capacity. Roche, too, has anti-obesity drugs in development. By opposing Novo's deal, they could be aiming to maintain a competitive edge. - Market Implications: Capacity constraints have become a defining characteristic of the anti-obesity drug market, overshadowing even efficacy data. The opposition suggests that competitors are willing to leverage regulatory mechanisms to hinder rivals. - Antitrust Concerns: There's an argument that the acquisition could concentrate too much manufacturing and development capacity with Novo Holdings, potentially impacting the broader industry. What's particularly noteworthy is seeing major pharma companies actively urging antitrust regulators to oppose a merger involving a peer. Traditionally, the industry has viewed FTC interventions as overreaching, especially in cases that might not have attracted significant scrutiny in the past. Questions to Consider: - Are Roche and Lilly justified in their opposition, or is this a strategic move to limit competition?    - Could this set a precedent for future M&A activities in pharma, making antitrust challenges more common among industry players?    - What are the potential implications for patients if capacity constraints continue due to such regulatory hurdles? The stakes in the obesity treatment market are undeniably high. It will be interesting to see how this unfolds and what it means for the future competitive landscape. I'd love to hear your thoughts on this development. Feel free to share your insights and perspectives!

Google was found guilty of violating anti-trust law on Monday in the Epic v. Google trial. Epic argued that Google used its control over the Play Store, as well as its influence, to suppress competition in the smartphone app store market. A jury agreed. Epic didn't seek monetary damages in the lawsuit -- instead, it seeks lower platform fees and more payment and distribution alternatives. The judge in the trial will determine the remedies next year. I question the impact on the app economy that a mandate to offer alternative app payments will have. Both Apple and Google have been forced to offer alternative in-app and off-platform payments in various jurisdictions; in all cases, they continue to extract a platform fee on those payments that renders their use financially impractical. For instance: in South Korea, where alternative app payments are required by law, Google and Apple continue to charge a fee on alternative payments -- discounted by a mere 4%. In the EU, in compliance with the DMA, Google will apply a 4% discount to its fee when the alternative payment is offered alongside Google's default option. When the default isn't offered, Google will apply a 3% discount. If the platforms are allowed to apply fees to alternative payments, those alternatives likely can't compete with the defaults: more checkout friction (adding a credit card), less trust, and, potentially, higher costs, given that the alternative payment methods must pay transaction costs in addition to the platform fees. My sense is that the default Google Play and App Store payment methods remain dominant unless the platforms are prevented from extracting fees on those payments. Engrained consumer habits and checkout friction are likely insurmountable when platforms can apply fees to alternative payments. Link in the first comment to my full analysis on the topic.

Judge Rules Google's Default Search Payments Violate Antitrust Law In a landmark decision, a federal judge ruled that Google's payments to make its search engine the default on smartphone web browsers violate US antitrust law. The ruling, handed down by Judge Amit Mehta, is a significant win for the Justice Department and highlights the ongoing scrutiny of tech giants' market practices. The court found that Alphabet Inc.'s $26 billion payments to companies like Apple and Samsung effectively stifled competition, maintaining Google's dominant position in online search. This arrangement not only limited market access for competitors but also bolstered Google's annual revenue, which exceeds $300 billion, largely from search ads. This case is the first of its kind in over two decades, representing a pivotal moment in antitrust enforcement against major US technology firms. With search advertising generating $146.4 billion for Google in 2021, the implications of this ruling could be far-reaching, potentially reshaping the competitive landscape for search engines and digital advertising. As this case unfolds, brands must consider the broader impacts on digital marketing strategies and the evolving regulatory environment. #Antitrust #DigitalAdvertising #TechIndustry

I recently spoke with Fox News Media about the latest regulatory shake-up, and one thing is clear—antitrust is still the real fight. #Trump just wiped out a slate of Biden-era lawsuits on DEI and financial regs. But antitrust enforcement? Left untouched. That’s not just a footnote—it’s a signal. Here’s what this means for dealmakers: ◾ Regulatory relief in some areas – Fewer compliance hurdles in hiring, financial regulations, and social policy cases could streamline operations and reduce legal uncertainty. ◾ #Antitrust scrutiny isn’t going anywhere – The FTC and DOJ are still coming for big deals. With Trump leaving these lawsuits in place, bipartisan pressure on M&A remains high. Expect more blocked deals, longer approval timelines, and greater pressure to prove competition benefits. ◾ Deal strategy needs to evolve – The old playbook won’t cut it. Acquirers need stronger deal theses, clearer pro-competition arguments, and earlier regulatory engagement to stay ahead. So..less red tape in some areas, but when it comes to deals, regulators still have the scissors ready. Is dealmaking really getting easier, or just changing shape? What do you think?

Why your next HR decision could be an antitrust issue 👇   The European Commission last week published a policy brief assessing the harmful effects of #wagefixing and #nopoach agreements 🤝, and signalling their priority on its enforcement agenda. 'No-poach' agreements restrict companies from hiring each other's staff, while in 'wage-fixing' agreements employers agree to set wages at the monopsony level.   The Commission’s stance is that these agreements, typically, qualify as restrictions by #object under Article 101(1) TFEU 🚨 and are unlikely to be justified by a net efficiencies defense. The Commission regards labour market agreements as akin to a buyers’ #cartel, categorizing wage-fixing as purchase price fixing 💰 and no-poach as a form of supply-source sharing 🔗. It contends that even if legitimate objectives exist for such practices, they can be achieved by less #restrictive means such as NDAs or minimum employment commitments. The Commission concludes that these practices not only stifle competition but also #harm employees by suppressing wages and curtailing mobility, ultimately hindering innovation and economic growth 📉. This stance follows the Commission’s November raids on food delivery companies Delivery Hero and Glovo for their involvement in no-poach agreements (although no decision has yet been adopted).🕵️♂️ 🍔   Meanwhile, across the Atlantic, on April 23, the Federal Trade Commission issued a bold rule #banning (!) non-compete clauses ⛔ across all sectors (except for the highest-paid executives), with the enforcement date set for 120 days following the rule's publication. This significant step forward, recognizing the anti-competitive effects of restrictions in labor markets in the US 🇺🇸, however, did not go unchallenged. Within less than 24 hours, it was met with #legal challenges from the US Chamber of Commerce and the Business Roundtable, which may delay the rule's enforcement.   At CompLaw: Advanced EU conference in London organized by Informa Competition Law which I had a pleasure to attend, amongst many expert discussions, the national competition authorities also highlighted their enforcement #priorities. The focus on labour markets was clear. The UK’s competition authority 🇬🇧 pointed out that no-poach agreements is focus priority (2 investigations opened in the television production sector 📺 and one in the fragrance sector, and further actions anticipated). Similarly, the Portuguese authority 🇵🇹 emphasized its ongoing commitment to labor markets, showcasing its past successes in reaching #settlement decisions in this matter.   Regulatory bodies worldwide are prepared to take significant actions to ensure fair competition in labor markets👷♂️🌍 . For companies this means a pressing need to reassess their HR strategies and #employment practices 📝.