Calling all former students! If you will be in DC for the ABA antitrust meeting and want to come to a reunion, let us know at TAP@yale.edu

To stop controversy over abortion pills, Walgreens could divide itself into two corporations or brands, a red chain of stores and a blue one. I had a great original idea: name the red brand “Rite Aid”! Maybe that would increase competition!

American Express….A decision that is widely viewed to have some of the worst economics in recent memory. The decision protects American Express's tactics that shield itself from competing on its merchant fees. Through the channel of the antitrust laws, the court significantly increased economic inequality in America

https://www.nytimes.com/2023/03/04/opinion/credit-card-rewards-points-poor-interchange-fees.html?smid=nytcore-ios-share&referringSource=articleShare Great piece in the Times Opinion section today for antitrust enthusiasts. It carefully describes the harm to ordinary consumers - the giant transfer from the middle class to the rich - that the Supreme Court celebrated and protected in their American Express decision. 1/2

The news on the bird site says that Caremark used the arrival of the first Humira biosimilar to extract large discounts from the brand and therefore prefer the brand and not the generic. Entry is doing what we expected: creating competition and driving down prices. But without sales, entrants cannot cover the cost of entry and will learn not to enter (because they are providing a public good - benefits to consumers rather than themselves). What is the right policy solution here?

N: The FTC’s arguments in support of the proposed rule are striking in their reliance on serious economic theory and empirical work published by mainstream academic economists (which I think is an excellent approach). The FTC today, far from deprivileging economics as called for by many NBs, is relying on it in very important settings such as reinvigorating its rule-making authority. END

N-1: The FTC’s recent proposed ban on noncompete clauses contains a thorough and sophisticated exposition of the results in the economic literature of the ways in which noncompetes harm workers. These numerous and strong results demonstrate that such restrictions on future employment cause workers significant harm in the form of lost wages and mobility.

n/5. … They further argued that major changes are not yet called for even in areas where popular concern has been voiced such as claims of increasing markups, competitive effects from increased cross ownership, monopsony power in labor markets, and coordinated effects.” These positions are much more centrist than both those of the FTC Chair and many other progressive economists. Of course, it remains to be seen if Professor Nevo will be influential in FTC policy.

n/5. The new chief economist’s policy positions are also less progressive than NB positions. For example, the description of his public comments on the Merger Guidelines written by colleagues from Cornerstone Research (consulting firm) says “In their 2022 RFI comments, Professor Nevo and colleagues cautioned that the mainstream economic literature does not call for major changes to the Guidelines. Rather the 2010 Horizontal Merger Guidelines in particular have “largely stood the test of time” …

4/5 Many NB journalists and thinktank members have argued that the reason antitrust enforcement was insufficient to protect competition during the last Democratic administration was the fault of Obama-era enforcers. In December, the FTC announced the appointment of a new chief economist, Professor Aviv Nevo, a well-known and eminent research economist who served as chief economist at DOJ in the Obama administration. The choice of appointment is therefore a marked change.

3/5 ….competition and not limited its goals to considering only the narrow implications for competition in a particular market. The op-ed contradicts this by stating “The world faces challenges that demand policy solutions beyond what merger enforcement can provide. Finding those solutions is often a job for legislators and other policy makers.” This is a traditional progressive position taken by past Democratic antitrust enforcers.

In December of 2022, the Chair of the FTC, Lina Khan, published a WSJ op-ed with the tagline “Our job is to prevent illegal mergers, not to make the world a better place.” It explains why green activities, inclusive culture, and good governance do not help predict the competitive impact of a merger and therefore would be irrelevant to FTC analysis. A central tenet of NB philosophy is the idea that antitrust enforcement in the past should have had a broader conception of the benefits of

1/5 I have recently noticed a shift by the FTC to a more traditional progressive approach to enforcement and away from the original NeoBrandesian (NB) positions of the Biden administration. Given the media attention paid to the left-leaning progressive stance of Biden administration antitrust enforcement, these changes are noteworthy. Several recent events indicate this centrist shift.

Testing

Aviv Nevo is the new chief economist at the FTC! This is a serious economist joining an agency that wants to deprivilege economic analysis. How will it work out? Will Aviv teach the Commissioners economics or will the Commissioners convert Aviv to getting along without it?

@1br0wn Does anyone remember the Comcast monopoly and the “Expanded Basic” package? It was awful. I like Netflix+ net neutrality + my fiber overbuilder! Netlfix’s content is both better and cheaper.

@ethanz It is the strategy you would expect from an incumbent trying to harm/stop a threatening entrant. Degrade interoperability.

Austin Goolsbee will be the next president of the Federal Reserve Bank of Chicago! Wow. Many congratulations.

It describes how competition between platforms is fostered by multihoming and interoperability and therefore large platform conduct that degrades those capabilities is worth enforcement scrutiny.

New paper on Platform Annexation joint with Susan Athey is out in the Antitrust Law Journal: https://www.americanbar.org/groups/antitrust_law/resources/journal/84-3/platform-annexation/