Whither “Neo-Brandeisian” Antitrust Enforcement: A Candid Conversation with Jonathan Kanter

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Jack Derwin:  On December 8, 2022, The Federalist Society's Practice Groups hosted Assistant General Jonathan Kanter for a fireside chat with Rick Rule. The following is the audio from their conversation.

 

Steven Schaefer:  Welcome to today's luncheon discussion, "Whither 'Neo-Brandeisian' Antitrust Enforcement: A Candid Conversation with Jonathan Kanter." My name is Steven Schaefer, and I'm the Director of The Federalist Society's Regulatory Transparency Project. My friend and colleague, Nate Kaczmarek, who is Vice-President and Director of Practice Groups, is out with the flu today and he sends his best.

 

      Today's event is brought to you by The Federalist Society's Corporations, Securities, and Antitrust Practice Group, which Rick Rule was the first chair of. As a note, we anticipate a robust discussion between Rick and our guest, Assistant Attorney General Jonathan Kanter, and we will only have Q&A if there is time available. So please do not line up at the microphones. Note: The Federalist Society takes no position on particular legal or public policy issues. All expressions of opinion by a contributor are those of the contributor. 

 

      I would like to introduce today's moderator, Charles "Rick" Rule, who is a partner at Rule Garza Howley LLP. Rick began his career as the Assistant Attorney General in charge of the Antitrust Division of the U.S. Department of Justice, a position he held from 1986 to 1989. Over the last 30 years in private practice, Rick has led the antitrust practices of several leading D.C. and New York law firms, and has represented clients before the Antitrust Division, the Federal Trade Commission, state attorneys general, and major foreign antitrust regulators. 

 

      At this time I'd like to invite Rick Rule and Assistant Attorney General Jonathan Kanter.

 

Hon. Charles "Rick" Rule:  Welcome everybody. I assume this is on. And thank you Steven, and Nate, who couldn't be here, unfortunately. But it's an honor to be up here and have the opportunity to talk to the Honorable Jonathan Kanter. It's the first time I've ever called him "Honorable." It may be the last.

 

Hon. Jonathan S. Kanter:  I can confirm that.

 

Hon. Charles "Rick" Rule:  I've known Jonathan for a long time. In some ways, people may view us as being on the opposite ends of the spectrum of antitrust ideas and enforcement. I think we may find that there's not that far a distance between the two of us, over time. But I've known Jonathan for quite a long time. Jonathan, after he graduated from Washington Law School, went to the FTC. I first saw him there when he worked on the staff investigating the Exxon Mobile deal and some other oil deals. Jonathan also was heavily involved in the AOL-Time Warner deal. Those were very big deals back in the '90s, for those of you who were in kindergarten or not born in those days.

 

      But Jonathan stood out on the staff at that point. And later, when I, in the early 2000s, went to Fried Frank, along with Deb Garza, one of the first associates who had recently been hired that we encountered was Jonathan. And Jonathan became an important part of the team, and impressed us a lot. I had clients who basically said, "Look, we want your best associate on stuff," and — at least until Andy came along — we'd always put Jonathan on those things.

 

      Along the way, Jonathan displayed his passion for antitrust enforcement. And I think, as some people know, he had an opportunity to marry his passion with professional opportunities when he was challenged to think of the problems created by platform companies. And he came up with some of the original theories that still resonate today. And a lot of his practice after that was devoted to, if you will, the enforcement side of things.

 

      Jonathan ultimately went out and started his own firm, the Kanter Law Group, a few years ago. And when President Biden got elected, the administration decided to, essentially, turn to the leading progressive antitrust authorities. They placed Lina Khan as the chair of the FTC, and, ultimately, Jonathan Kanter at the Department of Justice, in the Antitrust Division. Jonathan's now been there for a year in the job, and he's gotten a lot of attention. I'll put it that way.

 

And we want to explore how Jonathan's enforcement agenda is different from that of his predecessors, and where he sees antitrust going. And I want to start the discussion at a fairly high level and see if, Jonathan, you can tell us from your perspective, what is the difference between "neo-Brandeisian" antitrust — or I'll just refer to it, because it's easier to say, "hipster antitrust, " which you probably like even less — and the consumer welfare standard that has evolved over time and that those of us in the 1980s at the Antitrust Division helped usher in.

But maybe you can start where you see the principal differences.

 

Hon. Jonathan S. Kanter:  Well, Rick, thank you for that very glowing introduction. And it's true we've been friends and colleagues for a very long time. And it is truly a privilege and an honor to be with you today, and to be with all of you. And I really look forward to a vibrant discussion. I do think we may surprise some people along the way that we're not as far off on some idea as perhaps people might perceive.

 

      I will start by perhaps rejecting labels. I've been a law enforcement authority at the Department of Justice, and my job is to enforce the antitrust laws and to promote competition and the competitive process. And that's the label that I prefer, one of rule of law and law enforcement. In terms of consumer welfare standard, I guess I always start by saying that the idea of a standard is that there's agreement as to what it means. And if you ask five antitrust lawyers what the consumer welfare standard means, you often get six different answers. And I don't think there's really a basis to call something a standard, if there's not broad-based agreement as to what it means. And so, I think, with that said, ultimately, the purpose of antitrust law is to promote competition. 

 

Senator Sherman called monopolies a "kingly prerogative." And Congress had the value judgment that competition and competitive free market is essential to a thriving democracy and a free society, and enacted antitrust laws over the many decades and centuries to ensure that we have opportunity and freedom of access over the necessities of life. And that's what antitrust is about. And that's why I think it's a worthwhile endeavor to enforce the antitrust laws.

 

Hon. Charles "Rick" Rule:  Well let me rephrase the question in this way: given what you understand the consumer welfare standard to be, what are its deficiencies? Or are you saying that, out of those five definitions of consumer welfare, there's one that you particularly like? And if there is, what is that?

 

Hon. Jonathan S. Kanter:  Well, that's the thing, is I think you get into the semantic or lexical debate. And I don't think that's wise. I look at the statute that talks about competition. Congress wrote a statute.  It's up to Congress to make value judgments. Congress said, "We value competition and the competitive process."  And so, for example, if a merger may be the substantial lessening of competition, or tend to create a monopoly, the law should be enforced. If Congress wants to impose a standard that's perhaps more detailed, more nuanced, or articulate certain parameters, then that should come from Congress.

 

Hon. Charles "Rick" Rule:  Well, of course, Bob Bork — rest his soul — wrote The Antitrust Paradox, and the whole Chicago School focus on consumer welfare was intended to give objective meaning to the term "competition." The reason being that you could say that a merger which eliminates some competition between two parties is a deviation from the competitive system. But the competitive system generates mergers, or generates joint ventures or other collaborative activities that actually benefit consumers and benefit competition. So you have to draw the line somewhere.

 

Hon. Jonathan S. Kanter:  Sure.

 

Hon. Charles "Rick" Rule:  Right? And so what are the kind of objective criteria that you think should determine what's pro-competitive, versus anti-competitive behavior?

 

Hon. Jonathan S. Kanter:  Sure, well first of all, antitrust is about rule of law, and so we start with the language of the statute.  That's where we should start when enforcing the laws: looking at the words that Congress used to describe what the law says. And then we should look to court precedent, and we should look to the plain language and plain meaning of the statute. Now, when you talk about welfare effects, one of the challenges is that if you start making value judgments about how to net out different welfare effects, and you start turning antitrust enforcement solely into a mathematical exercise of netting out welfare effects, it can become dangerously close to central planning, and it can become un-administrable. And that clarity, or that certainty that you talked about no longer exists. 

 

And those are some of the concerns I have about, perhaps, an overly rigid approach, versus the one that Congress laid out. Which is to say, let's focus on competition. So it's not that any merger that lessens competition violates Section 7 of the Clayton Act. It has to be substantial. And, yes, there's a question about determining what that means. And that's why you have courts. And that's why you have rule of law, and law enforcement. But, ultimately, I think you have to go back to first principles. And the first principles of antitrust shouldn't be a book written by a professor. The first principles of antitrust should be the statute written by Congress.

 

Hon. Charles "Rick" Rule:  Well, in defense of Judge Bork, I will say that he felt that he was reading the words as they were written, and I know you disagree with that.

 

Hon. Jonathan S. Kanter:  Well, he talked about the legislative history. So he went very deep into the legislative history, which is a mechanism of jurisprudence that I was sort of surprised to see, as opposed to looking at the language of the statute.

 

Hon. Charles "Rick" Rule:  Well it certainly --

 

Hon. Jonathan S. Kanter:  Am I wrong, or am I right?

 

Hon. Charles "Rick" Rule:  It's certainly not consistent with his judicial philosophy, but --

 

Hon. Jonathan S. Kanter:  Thank you.

 

Hon. Charles "Rick" Rule:  But let me just say --

 

Hon. Jonathan S. Kanter:  But am I right?  Didn't he go back into his -- the root of consumer welfare, from Judge Bork, came from his review of the legislative history. Now, I don't know that he got it right, even then. But it's not a plain reading of the statute. Ultimately, it should be a value -- Congress should write the law.

 

Hon. Charles "Rick" Rule:  Well, okay. I think, again — not to spend a lot of time defending Bork and what we thought of consumer welfare in the 1980s — but, just to state it, the idea was, you look at the expected impact on output of collaboration, different forms of collaboration. And you developed rules that were tuned to what you thought the expected impact on output was.

 

Hon. Jonathan S. Kanter:  And so what do you include in that? Do you include in-market? Do you include out-of-market? Do you include -- in a multi-sided market, how do you net all those out? Now, it becomes -- the process was supposed to be simple, right? And the rules were supposed to be bright and clear. But, as you know, antitrust practice has become anything but. It's become extraordinarily complex and technocratic, which is not how Congress certainly wrote the statute.

 

Hon. Charles "Rick" Rule:  Now, and again, there is a larger debate going on, I guess, in the people who would purport to defend the consumer welfare standard as to what it is. And you're right about that.

 

Hon. Jonathan S. Kanter:  Right. And so your definition of consumer welfare --

 

Hon. Charles "Rick" Rule:  Absolutely.

 

Hon. Jonathan S. Kanter:  -- is not necessarily the definition of work consumer welfare that is used in other forums. And so, again, when people talk about the standard, they're often talking about different things.

 

Hon. Charles "Rick" Rule:  Right.

 

Hon. Jonathan S. Kanter:  And so, it's not standard. It's a phrase.

 

Hon. Charles "Rick" Rule:  Yeah. Although you could say that — and I might — that the standard got hijacked along the way. And the focus on output got converted into a focus on price, with the idea that economists could predict price effects. And that's where -- that was the road to hell there.

 

Hon. Jonathan S. Kanter:  Isn't this why we should focus on what Congress says, rather than turning the keys over to unelected officials who will make those determinations about what a standard should be? This is why the rule of law should originate with what Congress puts in statute. If Congress wants to make a value judgment about a standard, or the goals, then Congress should articulate that in its text.

 

Hon. Charles "Rick" Rule:  Okay, but here's the question to you, because you're the person who has to read those statutes and has to apply them. When you're applying them, what are the objective criteria that you use to judge whether or not a practice, a merger, an agreement, in fact, harms competition or not?

 

Hon. Jonathan S. Kanter:  I look at -- yeah.

 

Hon. Charles "Rick" Rule:  What is it? Is it just what Jonathan Kanter happens to know it when he sees it?  Or --

 

Hon. Jonathan S. Kanter:  Not at all. It's what Congress said, plus over a hundred years of court precedent.

 

Hon. Charles "Rick" Rule:  Okay, well tell me what that is. Can you give me a general idea about what the standard -- how do I judge, as I'm counseling clients, as many in this room are? How are we supposed to tell our clients what competition means in the eyes of the [inaudible 00:16:31] --

 

Hon. Jonathan S. Kanter: Are you billing by the hour, now, Rick? Because I know you're pretty expensive.

 

Hon. Charles "Rick" Rule:  I hope to after we get done. But not right now.

 

Hon. Jonathan S. Kanter:  Listen, I think it's a broader conversation. I understand why you're asking the question. Ultimately, the antitrust laws are about protecting competition. And it's important to look at a fact pattern and understand how competition presents itself. And then determine if the conduct at issue — whether it's a merger or some other form of conduct — has the effect of harming competition in a way that's covered by the statute.

 

But I think it has to start with market realities, and it has to start with understanding what are the modes and mechanisms of competition that define the market at issue, and then looking back realistically. I think that's a much more -- that's a standard that's tethered to market realities. And markets shift. Markets change. The markets that we confront today are vastly different than the markets that we encountered just 20 or 30 years ago. And assumptions that might be embedded in the law — economic assumptions — no longer hold true.

 

And this is one of the dangers. If courts start trying to become economists and embedding economic principles into the law, then those principles become enshrined. But markets change, and markets shift, and market assumptions shift. So it's much better for Congress to essentially articulate what it thinks is appropriate. In the case of Congress and the antitrust laws, it's that we value competition. And why do we value competition? Because it yields a whole range of benefits across lots of different aspects of our society.

 

And those benefits might be to consumers, paying lower prices. Those benefits might be to an entrepreneur having access to compete in a new market with a new technology. That might be somebody who wants to have upward mobility in their life by getting one employer to compete to hire them from another employer. That's competition. And that should be the first principle for where we start, unless Congress steps in and articulates something different, in which case, we need to enforce the law the way Congress writes it.

 

Hon. Charles "Rick" Rule:  Right. And not -- because I want to turn to a different topic, but, again, for those of us trying to understand and predict where you will go in a particular enforcement matter, the question is how you draw the line. Because, even taking everything that you said as true, there has to be a distinction between that sort of conduct and, let's say, the thing that we get up every day — and you, for the first 20-plus years of your professional life did — which is go to work with other ostensible competitors in a partnership, and work together to give better service to a client. I mean, that happens all over the economy.

 

Hon. Jonathan S. Kanter:  Sure.

 

Hon. Charles "Rick" Rule:  And that is an attenuation of competition.

 

Hon. Jonathan S. Kanter:  It is.

 

Hon. Charles "Rick" Rule:  But most people and most courts have always said, "That's not illegal."

 

Hon. Jonathan S. Kanter:  Yeah.

 

Hon. Charles "Rick" Rule:  So where do you draw that line?

 

Hon. Jonathan S. Kanter:  Well I think the -- so you draw the line looking at court precedent, right? Certain types of collaborations are lawful. Certain types of restrictions are evaluated under the rule of reason, versus per se. Certain types of mergers, even if they might reduce competition, may not substantially lessen competition. Those are factual judgements, right? And that's fine. It's okay to make those factual judgements. It's okay to have courts confront factual patterns and create rules that are dynamic and that relate to the realities of a market.

 

I think that's all fine and good. But that's different than saying there should be a certain mathematical calculation that unelected people impose to determine whether something's a problem or not. That's my concern. I think that would be the role of Congress, not the role of unelected.

 

Hon. Charles "Rick" Rule:   Okay, let me ask you -- let me turn to a slightly different question, and that is the role of economists and economics. You've used the term "economics and economists" a couple of times in your description. What role, if any, do they have in this process?

 

Hon. Jonathan S. Kanter:  So, economists -- let me take a step back, which is, antitrust, in order to be effective, needs to understand how markets function. And so there are questions of fact that expertise can help us resolve. And economists of a wide range, might have knowledge and expertise to help us understand what we're seeing. Other kinds of experts — maybe behavioral scientists, or data scientists, or agriculture scientists, or healthcare experts — might help us understand what we're seeing.

 

My view is, they should be used to help address and resolve questions of fact so that we can — like they're used across the legal industry broadly — so that we can make sophisticated, informed decisions. Where I think there may be some disagreement with me and others is whether these should be embedded, as to address questions of law. And I think that's when it starts to become subjective, and it starts to become activist.

 

Hon. Charles "Rick" Rule:  So if, when you're confronted in your day-to-day decision-making with econometric merger simulation models, or GUPPI analyses, how important is that?

 

Hon. Jonathan S. Kanter:  Are you talking about analyzing fish, Rick?

 

Hon. Charles "Rick" Rule:  Yes. I'll let you explain GUPPI analysis.

 

Hon. Jonathan S. Kanter:  No, no, you should.

 

Hon. Charles "Rick" Rule:   But it's a standard under the merger guidelines --

 

Hon. Jonathan S. Kanter:   Please feel free.  Is it in the Clayton Act?

 

Hon. Charles "Rick" Rule:  -- of another Democrat administration, but --

 

Hon. Jonathan S. Kanter:  I just want to know, is it in the Clayton Act?

 

Hon. Charles "Rick" Rule:  But just to -- again, it was, as I recall, the Obama administration, I believe. But maybe it goes back to the Clinton administration.

 

Hon. Jonathan S. Kanter:  Where in the Clayton Act is the GUPPI analysis?

 

Hon. Charles "Rick" Rule:  I don't know. Go ask President Obama or Clinton. But, anyway, the bigger question is, how important is it to your decision-making? Before you, and, arguably, before Makan certainly, merger simulation models, and those sorts of econometric analyses, played a pretty central role. And there are some lawyers out there, probably, who still advise that's the key to analyzing any merger. And I guess it would be interesting to know how important that is to you, as you look at a particular merger.

 

Hon. Jonathan S. Kanter:  So, I think I really want to stress this carefully, which is, it really depends on the facts and circumstances of a particular deal. I think, in a merger analysis, is inherently, as Congress prescribed, forward-looking in nature, in its incipiency statute. It's not designed to be predictive. It's designed to preserve a certain level of competition. And so a standard that requires definitive proof of effects is not something that's achievable, because the beauty of market economy is that you don't know what you're going to get.

 

The beauty of a market economy is that competition can send and deliver beautiful things that you never could anticipate. And what we're trying to preserve in a competitive market, is that uncertainty of competition, and what marketplace, in a capitalist free market, could provide. And so this idea that you can calculate a definitive answer through a simulation -- people are welcome to provide it. We will always listen. We will always analyze. We will always review the information we have.

 

It would be irresponsible for me to say something as inherently unpersuasive out of context. But, in a sophisticated, dynamic economy, the idea that you can have a simulation that definitively, or decisively predicts what is going to happen in an inherently uncertain market economy, is a tall order.

 

Hon. Charles "Rick" Rule:  So I think it's fair to say you wouldn't view one of those studies as dispositive?

 

Hon. Jonathan S. Kanter:  I'll let you interpret it any way you like, Rick.

 

Hon. Charles "Rick" Rule:  Okay. So it could be dispositive?

 

Hon. Jonathan S. Kanter:  Do you view it as dispositive?

 

Hon. Charles "Rick" Rule:  I think you know I don't. I never have, but -- so I think that's probably one area where we agree.

 

Hon. Jonathan S. Kanter:  Listen, I think you can take my comments for what they are.

 

Hon. Charles "Rick" Rule:  Okay, let me turn a little bit to the real-world implications, or, actually, impact of your policies. I suppose I'm going to blame this on other people, because I don't want to come off as too snarky. But some people have observed that --

 

Hon. Jonathan S. Kanter:  I've never known you not to be snarky, Rick, so it's okay.

 

Hon. Charles "Rick" Rule:  Some people have observed that — with the exception of the Penguin Random House case -— the division has suffered a number of fairly high-profile merger defeats. In the Change-Optum case, the Booz Allen Hamilton-EverWatch case, and the -- what's the other one that I'm blanking on?

 

Hon. Jonathan S. Kanter:  I'm not going to help you out.

 

Hon. Charles "Rick" Rule:  All right, you're going to make me look it up now. Okay, and the U.S. Sugar-Imperial.

 

Hon. Jonathan S. Kanter:  It's so front-of-mind that you couldn't even remember it.

 

Hon. Charles "Rick" Rule: Yeah, I didn't know. I'm getting old, Jonathan.

 

Hon. Jonathan S. Kanter:  You've been getting old for a long time, Rick.

 

Hon. Charles "Rick" Rule:  But someone might say that this reflects the fact that the courts don't necessarily agree with your view that the statutes are so clear that, if you bring a case in, obviously, they should recognize that it violates the words of the statute, and you're home free. They've rejected your challenges. So does that reflect the fact that you're in a different place from where the case law is, and the courts are?

 

Hon. Jonathan S. Kanter:  I'll make a few points here. First, I think you have a sample size problem. Go back to economics. But second is, when I look at --

 

Hon. Charles "Rick" Rule:  How large does the sample have to -- how many losses before we have a sufficient --

 

Hon. Jonathan S. Kanter:  Well, first of all -- let me point this out. So, from an enforcement perspective, I'm proud of our record. We've had at least — and these are the only ones that are public — four deals that have been abandoned, either at the doorstep of litigation or after litigation has been filed. And from the perspective of the government, that is the best, most desirable outcome. And those are four substantial mergers, two of which involved ocean shipping, and issues relating to our supply chain that are vital to our economic freedom and liberty.

 

      Second is we had a successful outcome in the, as you noted, the Penguin-Random House. That was a five to four merger among publishers. It was a monopsony case. And it was a well-litigated case on both sides of the equation, including against some formidable opponents. And it was a decisive victory, and one that focused on preserving not just the ability of consumers to buy books at a lower price, but preserving the ability of authors to get the benefits of competition for advances so they can go research and write books for a living, and preserve the marketplace of ideas.

 

      I view that as a very successful record, standing alone. Two of those other mergers that you mentioned are currently under appeal. And part of the process, as you know, is litigating cases and working them through the courts. And so, until those cases are worked through the courts, I don't think it's fair to have a final determination about where they're going to come out. And then, the last case, in Maryland, is still in litigation. It was only a preliminary injunction. But the case on the merits is still outstanding.

 

      And so I think it's all still being written. The deterrent value of our program, we believe, is very effective. And we believe we've demonstrated that we can bring cases for the right reasons. We can bring them in a sophisticated way that is supported under the law. And, as we demonstrated most recently in the Penguin case, we can win them.

 

Hon. Charles "Rick" Rule:  Okay, and that's fair enough, and it's appropriate for you to point out that victory. And I want to come back to that in a minute to talk about what it represents, overall.

 

Hon. Jonathan S. Kanter:  I'll also point out this Rick. I'm sorry to cut you off.

 

Hon. Charles "Rick" Rule:  That's all right.

 

Hon. Jonathan S. Kanter:  But now that I can finally do it after these years --

 

Hon. Charles "Rick" Rule:  People want to hear from you anyway, so [inaudible 00:29:48]

 

Hon. Jonathan S. Kanter:  -- it's enjoyable. So this is how we --

 

Hon. Charles "Rick" Rule:  By the way, I could never shut him up. So that's, you know, there you go.

 

Hon. Jonathan S. Kanter:  Yeah, this is a real-life glimpse into our relationship. Part of what I've lamented is that the agencies started putting themselves into the role of regulator instead of law enforcer. And, as a result, we have not seen the vibrancy and frequency of litigated decisions. And the result of that is the law doesn't have the opportunity to evolve. And so, I think, on average, over the last 20 or 30 years, there's less than one merger case a year that's litigated to a decision, or at least until we started.

 

      And I think, ultimately, I have faith in our judicial system. I have faith in our legal system. And if we bring fact patterns to courts and we give courts the opportunity to confront facts, to confront market realities, and we do our job — which is to articulate theories of harm that are based on economic realities that are based on sound legal and expert theories — we'll see the kind of success that we saw in the Penguin case.

 

      But that's a living, breathing process. And if all we do is take consents are restructure mergers, then we become a regulator, not an enforcer. And I think that's a risky position for antitrust enforcement, and it starts to veer into central planning, as opposed to what Congress envisioned, which is antitrust being an exercise in law enforcement.

 

Hon. Charles "Rick" Rule:  Well, the other side of the coin, and one of the reasons that, at least it is said, that some of your predecessors really hated to lose, and if you look at the Oracle-PeopleSoft loss back in the aughts, you could argue that it had a pretty significant impact on the willingness of subsequent AAGs, at least for a while, to challenge deals because they were worried about losing, and think the concern was that if you lose, not only might it adversely impact your ability to persuade a court in a future case, but that it emboldens folks to go to court. It maybe reduces their willingness to cooperate, if they think they're going to have to go to court and they're -- you're going to lose. I mean, does that trouble you? And have you seen any --

 

Hon. Jonathan S. Kanter:  So you're in favor of central planning, Rick? Can I get that on the record?

 

Hon. Charles "Rick" Rule:  We can talk about -- and we have talked about this, which is I'm not in favor of central planning by anybody, including the Antitrust Division. And that's particular of the reason that I think it's important to have objective rules and that we, back in the 80s, strived to do that, so that people could understand what the rules were, comport  --

 

Hon. Jonathan S. Kanter:  But how clear are those rules now? In terms of -- if they're so clear, why is it so difficult to apply -- how long is it -- how much date do you have to provide in a merger analysis? How much money do you have to spend on experts? Is that clarity that you sought — and nobly so — to bring, has that become a reality?

 

Hon. Charles "Rick" Rule:  Well, if the wheels stopped turning in 1989, it would have. But it didn't.

 

Hon. Jonathan S. Kanter:  Where are we today, Rick?

 

Hon. Charles "Rick" Rule:  And the standard changed. And I think one of the problems, I'll just say as an observation, and timing letters — they're these letters that now sort of replace the second-request period — are sort of a testament to the fact that you can start out with an idea that's pretty narrow, and the bureaucracy tends to grow it to gargantuan and, arguably, monstrous proportions.

 

Hon. Jonathan S. Kanter:  Right.

 

Hon. Charles "Rick" Rule:  Which is a tendency of the bureaucracy.

 

Hon. Jonathan S. Kanter:  But we're trying to do the opposite. We're trying to create more clarity. We're trying to say that the process has become too technocratic. It's become too inaccessible to the broader public. It's deviated too far from the will of Congress. And so we're trying to bring that back. We're trying to view antitrust enforcement as a rule of law issue, as a mechanism for law enforcement.

 

And I think that's, frankly, probably more faithful to what you just described than perhaps what came before. But I think, ultimately, that's the goal.

 

Hon. Charles "Rick" Rule:  Okay.

 

Hon. Jonathan S. Kanter:  And I think we can agree or disagree about specific cases or specific practices. But antitrust enforcement should be about law enforcement, not regulation.

 

Hon. Charles "Rick" Rule: All right. But what I guess I'm asking is more your observation of what the impact of those decisions has been on what you're seeing, in terms of practitioners coming into the division. Have they -- because there is some sense that maybe they will be less cooperative. Maybe they'll be -- some have said that there will be more mergers presented, because folks think that you'll get overwhelmed. Have you seen any of that?

 

Hon. Jonathan S. Kanter:  No, no we have not.

 

Hon. Charles "Rick" Rule:  Okay.  So Danny Sokol's study and the comments he's gotten from the defense bar, you reject?

 

Hon. Jonathan S. Kanter:  I have not read those comments from the defense bar, but, again, I perhaps will challenge an economist to say that people act on their incentives.

 

Hon. Charles "Rick" Rule:  Okay. Let me ask you a little bit about one of those cases. We could go through the different mergers, one that went against you. I want to then ask about the Penguin-Random House case. But in Change-Optum, that was really the second major vertical case that the Antitrust Division brought and lost, because it also lost ATT-Time Warner -- can't lay that at your doorstep, because that was brought by your predecessor.

 

But don't those cases suggest that you have a very tough row to hoe when you go after non-horizontal mergers where you don't have the benefit of Philadelphia National Bank and some other things? And aren't you going to have a hard time convincing judges of their intuition that vertical deals involving non-competitors are more likely than not to generate benefits, which, I think, makes it tougher for you to block those kinds of deals?

 

Hon. Jonathan S. Kanter:  So there's still a rich history of Supreme Court precedent that deal in non-horizontal mergers. And we also have — you pointed out — really two cases, over the course of, what, 20 or 30 years right now?  And I just think the obligation is ours to start capturing market realities. And when you look at the economy, vertical and horizontal, especially vertical, is a vestige, perhaps, of a post-World War II, mid-century, 20^th century economy. Markets are way different now. And it's up to us to explain that to courts – that this idea of looking at things only through a vertical/horizontal lens can be the equivalent of looking at video shot in 4-K through a black and white TV.  You might make out some images, but you're going to miss the nuance.

 

The fact of the matter is, when you look at what animates today's markets, you see data, you see platforms, you see multi-sided markets. These are realities. And these are realities that it's up to us, if we think there's a problem, to present to courts. But unless we adapt to make sure that we're communicating those realities in a tangible and coherent way, we're going to continue making the same arguments. And everything will be viewed through the narrow lens of foreclosure or raising rivals' costs.

 

And I think those theories still apply in some instances. But it's only the tip of the iceberg of the kind of competitive issues that exist in a modern economy, which is dynamic, which is multidimensional. And it's really important that we start to incorporate those market realities when explaining the facts. And I have confidence that courts, if presented with persuasive arguments and market realities and opportunities to weigh in, will get it.

 

Hon. Charles "Rick" Rule:  Okay. The other aspect of that decision that I'd like to ask you about is the court's willingness to entertain the litigation of the fix by the parties. And the standard --- I suppose it's a little ambiguous, because the judge did say --

 

Hon. Jonathan S. Kanter:  It's ambiguous.

 

Hon. Charles "Rick" Rule:  -- they met both standards. But there seems to be this notion that, I think, in the judge's view, that it's the government's burden to prove that the deal, plus the fix, substantially lessen competition, as opposed to viewing a fix as -- after having established liability, there's an affirmative burden on the parties to prove that the fix eliminates all competitive issues.

 

Hon. Jonathan S. Kanter:  Yeah. These are issues in live litigation, so I'm going to not go there. But there's a lot of precedent in the D.C. Circuit and outside the D.C. Circuit. And in the Supreme Court they talk about these issues. And for your hourly rate, I'm sure you could provide that to clients.

 

Hon. Charles "Rick" Rule:  Just to give me a little help and some free advice to the clients, can you describe, a little bit, your view and approach to remedies? Because there's been a lot written and I think you've said a lot about it.

 

Hon. Jonathan S. Kanter:  Sure.

 

Hon. Charles "Rick" Rule: But how you view remedies --

 

Hon. Jonathan S. Kanter: What I've said is that a remedy is something that satisfies a problem. And so if there's a finding of liability or there's a problem, a violation of the law, you have to remedy that violation. And so we're always open to listening to proposals regarding remedies. But what I've said, and I believe, is that they're likely to be more of a rare exception than the norm. Because if there's a violation of law, as a law enforcer, our job is to enforce the law. And again, I think we have to be careful about veering into central planning, which can come from restructuring. But, beyond that, we're always listening. And we'll always evaluate. And everything is viewed on a case-by-case basis.

 

Hon. Charles "Rick" Rule:  Okay, and obviously, over time, the way the practice has developed, if you have two companies that act in a variety of markets -- and I recognize that you just said that maybe things aren't as simple as they used to be, or as we thought they were in the past, in terms of what's a market and what's not a market, and what are cross-market effects -- but let's assume that -- 

 

Hon. Jonathan S. Kanter:  But that's the problem. Those assumptions, Rick, are --

 

Hon. Charles "Rick" Rule:  No, but let me -- I'm going to give you a hypothetical.

 

Hon. Jonathan S. Kanter:  Okay.

 

Hon. Charles "Rick" Rule:  So, I can, in a hypothetical, assume away these problems.

 

Hon. Jonathan S. Kanter:  Sure you can. Okay.

 

Hon. Charles "Rick" Rule:  So let's assume that there are two companies, each are in ten different areas. And there's one area, only one area do they overlap, and that's a problem. Is there some reason to be skeptical of a divestiture of one of the company's overlaps to remedy the problem?

 

Hon. Jonathan S. Kanter:  We can assume for this conversation that I won't engage in hypotheticals.

 

Hon. Charles "Rick" Rule:  So you're not going to answer the question. Is that what you're telling me, John?

 

Hon. Jonathan S. Kanter:  It's a hypothetical question. I'm in law enforcement. I don't want to deal with hypotheticals.

 

Hon. Charles "Rick" Rule:  Okay.  All right. So the sort of standard notion that if the parties can come up with a solution to an overlap -- I can talk about pharmaceutical mergers, but I know you'll avoid talking about that, since the FTC, and not you, do those. But — as you know from your experience and practice — the way, traditionally, those deals were handled, you'd look at the transaction, you'd look at where there might be overlaps, either of actual products, or products late-stage of the pipeline. And, if there were those overlaps, generally, the FTC would require you to divest one or the other, and allow the matter to go forward.

 

      The FTC seems to be rejecting that today. And, so, again, is there some notion that — and this is what I guess I'm trying to get you to tell us — is there some notion that you're inherently suspect of divestitures because they may be ill-defined, and the business that's spun off essentially doesn't resolve the problem, because the parties have hoodwinked you and decided to spin off some crappy assets, and --

 

Hon. Jonathan S. Kanter:  See, you are moving into the direction of a question that maybe I would answer, and then you had to get all snarky.

 

Hon. Charles "Rick" Rule:  Okay.

 

Hon. Jonathan S. Kanter:  So let me be very clear. I'm not weighing in on any specific industry. I'm not weighing in, certainly, on what the FTC does.

 

Hon. Charles "Rick" Rule:  Right.

 

Hon. Jonathan S. Kanter: Let me posit a question, though, for everyone. Do you think Americans are happy with their drug prices?

 

Hon. Charles "Rick" Rule:  But I don't know that they're unhappiness is due to --

 

Hon. Jonathan S. Kanter:  No, no, Rick. That was not the question I asked.

 

Hon. Charles "Rick" Rule:  Okay.  Well, let me just tell you what are -- what are the -- what --

 

Hon. Jonathan S. Kanter:  Are Americans happy with their drug -- let's ask the audience. What do you think?

 

Audience members:  No.

 

Hon. Charles "Rick" Rule:  But why would they be happy with any price above zero?

 

Hon. Jonathan S. Kanter:  Okay. Asked and answered. Let's move on, counselor.

 

Hon. Charles "Rick" Rule:  Now why would they be happy?  Look, that's the problem with intellectual property, Jonathan. It's not the problem with antitrust, right? I remember one of -- somebody who you didn't know, but you've heard about, Roger Andewelt, who was a deputy in the Antitrust Division --

 

Hon. Jonathan S. Kanter:   I've only heard you speak, and others, incredibly warmly and fondly of him.

 

Hon. Charles "Rick" Rule:  Right. And he was a great man. But one of the points that he made was it's very hard to tell — and, at the time, he used India as an example — Indians that they ought to pay a positive price for a drug that's already created, right?

 

Hon. Jonathan S. Kanter:  Rick --

 

Hon. Charles "Rick" Rule:  But the reason that we get property rights and we allow people to charge more than marginal cost, is because that's the fuel to get people to invest. Right?

 

Hon. Jonathan S. Kanter:  That's your view. I'm just asking, are people happy with their drug prices? Are they too high or are they too low? And the question is, if they think --

 

Hon. Charles "Rick" Rule:  Have you ever met a price that you thought was too low, as a consumer? Is there ever a price that you wouldn't think, "Gee, I'd like to pay less for that Tesla?"

 

Hon. Jonathan S. Kanter:  I think people who are struggling to make ends meet, and need vital access to pharmaceuticals for their lives, and their livelihood, and their families. And you're not doing this, but I don't make light of that. I mean, these are issues that affect people in a profound way. It's life or death. It's grandparents. It's children. It's people at the poverty line who are looking to have access to lifesaving pharmaceuticals. If we believe that competition results in better innovation, competition results in lower prices, competition results in better access and better service, then that's relevant.

 

Hon. Charles "Rick" Rule:  I agree.

 

Hon. Jonathan S. Kanter:  I'm not weighing in on a specific procedure or policy.  All I'm saying is your hypothetical -- I just asked a question in response to it.

 

Hon. Charles "Rick" Rule:  All right.  I get it. And it's a cute rhetorical device. But the point --

 

Hon. Jonathan S. Kanter:  I was well trained.

 

Hon. Charles "Rick" Rule:  The point is I agree with you, certainly, on competition. But you have to disentangle competitive effects from effects of property rights. And I think what the pharmaceutical people -- and I'm not carrying their water, as you know. But I think what they would say --

 

Hon. Jonathan S. Kanter:  Well, I don't know. Is that right? What do you think?

 

Hon. Charles "Rick" Rule:  I think what they would say is that property rights and the ability to capture the value from drugs you create, create the treatments that are made available to grieving families in the future that weren't available today. And that's important.

 

Hon. Jonathan S. Kanter:  That's a different question, Rick, from whether a merger that might substantially lessen competition has the ability to raise prices to lifesaving pharmaceuticals. I'm not answering that question. It's a case-by-case basis. We have to look at all the facts. All I'm saying is it's important to understand that the policies and the decisions we make may have effects on people and I think it's healthy to always evaluate whether the decisions we're making or the assumptions we make about whether certain types of practices — remedies, or otherwise — work, still hold true. And I think when, as someone wise once told me, when the facts and the models don't line up, the problem is not with the facts.

 

Hon. Charles "Rick" Rule:  And I definitely will agree with that.  But let me go back and try it this way. I think the way you have described your approach to remedies suggests a greater skepticism about remedies than at least some of your predecessors, maybe all of your predecessors. When we're talking about structural remedies, generally, the division has always been skeptical of behavioral remedies. But with respect to structural remedies, I think it is fair to say that — at least the way your words are being interpreted — you're more skeptical that they can solve problems. And I'm just asking you what the basis of that skepticism is.

 

Hon. Jonathan S. Kanter:  Sure. So, again, I want to be very clear that each situation needs to be evaluated on its facts, and context matters and facts matter. There are real-world assessments, based on market realities. And so I do want to be very clear about that. All I'm saying is that we need to evaluate that. For example, when you take a business and you rip something out of it, it creates disruption. And it isn't always the case that when you remove employees from a business, when you remove products from a business, when you remove intellectual property from a business, when you sell it to somebody, that you're necessarily getting the kind of certainty that you had before the merger.

 

And I think it's important to be inquisitive about the implications of doing that, and whether that's going to remedy what otherwise is a violation of the law. Those are fair questions. And I think they're responsible questions to ask. And I think it's important to revisit whether we've been going about asking them in the right way, against the backdrop of perhaps an economy that's become too concentrated. And so that's all I'm saying.

 

And it's case-by-case, fact-by-fact. But there are real-world consequences. And it's not as always simple as just slicing off a business and selling it. It doesn't work that way. And you know what as well as I do, which is that these are often very complicated scenarios. And I will also point out that, traditionally, consent decrees don't protect against the risk of that remedy failing.

 

Hon. Charles "Rick" Rule:  Right, okay.

 

Hon. Jonathan S. Kanter:  They just ensure that the remedy gets done. But they don't actually protect the public if that competition that's lost disappears forever, because the remedy fails. And so we need to take this very seriously, because the consequences are very serious.

 

Hon. Charles "Rick" Rule:  Okay. Let me turn to something that I think is on everybody's mind, and I want to get to before we run out of time. And that's the merger guidelines.

 

Hon. Jonathan S. Kanter:  What are those?

 

Hon. Charles "Rick" Rule:  Well, I'm hoping you'll tell me that. Although maybe, given your description of the fact that there is no horizontal, there is no vertical, maybe there is no merger guidelines.

 

Hon. Jonathan S. Kanter:  That's not what I said, Rick, just to be very clear.

 

Hon. Charles "Rick" Rule:  Anyway, but you guys have announced that you are coming out with a new set of guidelines. There's a lot of thought, and, again, to some extent, to address what Sokol reports is the bar's view that there's a lot of opacity.

 

Hon. Jonathan S. Kanter:  I haven't read that.

 

Hon. Charles "Rick" Rule:  I know you haven't read it. But the fact that there's a lot of opacity and lack of clarity, in terms of what you mean --

 

Hon. Jonathan S. Kanter:  So, people criticize me for saying things --

 

Hon. Charles "Rick" Rule:  No, no, no.

 

Hon. Jonathan S. Kanter:  And then they criticize me for not saying enough. And it's like --

 

Hon. Charles "Rick" Rule:  But I'm hoping that you -- I mean, I'm basically trying to build up your guidelines that this will resolve a lot of the problems, Jonathan. But that is, I think, one of the reasons that people are anticipating them highly, because it appears that there's going to be a complete reworking of the guidelines. What can you tell us about the timeline?

 

Hon. Jonathan S. Kanter:  Sure.

 

Hon. Charles "Rick" Rule:  And what can you tell us, if anything, about what to expect from when you do release the draft?

 

Hon. Jonathan S. Kanter:  No, it's a fair question. So we are working hard on the guidelines. We're getting close. I think it's a matter of weeks and months, maybe, but not much longer than that. So relatively soon. It's a rigorous process. And so there are a few core animating concepts. One is fidelity to the law. So we started the process by doing a complete survey of the law --case precedents, anything that's binding precedent, we reviewed and we're reviewing and we're incorporating it. And it's ultimately an exercise in law enforcement. And so fidelity to the law is the first animating principle.

 

      Second is fidelity to economic realities and market realities. And so we start our question with how does competition present itself? And what are the potential threats to competition? And only when you understand the answer to those questions, can you really adequately conduct an investigation to determine whether, for example, a merger threatens that competition. And so we're going about it in a very systematic way. We're going about it in a very inclusive way.

 

So we have spent the last, probably three months now, engaging in a vibrant debate with our entire staff at the Department of Justice. This is not a few people in an ivory tower writing a think piece. This is a living, breathing process that involves feedback from the people who are on the frontlines, investigating mergers and understanding what issues they're confronting on a daily basis.

 

Our public comment period has been more robust than any other that I've seen ever. We had over 5,000 comments to our initial RFI. And when we issue the guidelines, we'll have another round of comments. And we're reading everything. We're taking the feedback seriously, both internally and externally. But, ultimately, we're guided by the law, and we're guided by market realities.

 

Hon. Charles "Rick" Rule:  And will we -- for example, will there still be HHI thresholds and that sort of thing? Or is that being swept away?

 

Hon. Jonathan S. Kanter:  Well if I tell you the end of the book, you won't buy it.

 

Hon. Charles "Rick" Rule:  Trust me, we'll buy it. We have no choice.

 

Hon. Jonathan S. Kanter:  I'll leave that for now.

 

Hon. Charles "Rick" Rule:  Okay. One thing that has been raised with me is whether or not these guidelines are going to have a separate section that applies to private equity. I think the questions arises because you, Andy, the FTC, have said a number of things publicly that indicate a focusing of attention to private equity deals that maybe in the past haven't been.

 

But are you going to treat them separately in the guidelines? Or is it the case that you think standard antitrust principles that apply to mergers maybe haven't been applied and the law hasn't been applied as it should to private equity companies, because they think they're financial institutions and not structural deals?

 

Hon. Jonathan S. Kanter:  Should I take this as a public comment from you, Rick?  Or --

 

Hon. Charles "Rick" Rule:  You shouldn't take anything as public. This is all off the record.

 

Hon. Jonathan S. Kanter:  Yeah, there you go. I appreciate the question. Ultimately, the antitrust laws apply to private equity companies. They apply to financial institutions. And, to the extent that those kinds of entities are significant participants in our economy, absolutely, we're going to apply the antitrust laws to private equity firms, and to venture capital firms, and to understand whether they are exercising command and control over markets in a way that's anti-competitive.

 

      And I think that's our responsibility. The antitrust laws apply to private equity firms, just like they apply to anyone else. And so I think it's important to make sure that we are applying the law faithfully and without fear or favor.

 

Hon. Charles "Rick" Rule:  Are there any particular areas, with respect to private equity plans or activities, that you think have gone ignored, and that you are focused on? It may not be mergers, but --

 

Hon. Jonathan S. Kanter:  Sure. So there have been a few I've talked about publicly. One is we are vitalizing Section 8 of the Clayton Act, our enforcement of Section 8 of the Clayton Act, which has existed since 1914. But it prohibits --

 

Hon. Charles "Rick" Rule:  Although, we did get it amended in 1990, just so you know, with Safe Harbors, because of -- but anyway, that's a --

 

Hon. Jonathan S. Kanter:  I think also Congress reaffirmed its commitment to Section 8 of the Clayton Act.

 

Hon. Charles "Rick" Rule:  Okay, all right.

 

Hon. Jonathan S. Kanter:  And so it prohibits interlocking directorates, because interlocking directorates can, essentially, concentrate an economy through board and officer interlocks. And so that's one area that people have interpreted as applying specifically to private equity firms, because of the investments that they make in companies and their board seats that they get in return, in order to give them influence over businesses.

 

And so we've made some public statements about that. I've talked about that. When I first started, I talked about the importance of enforcing Section 8. And we are following through on that priority. I've also talked about the importance of looking at rollups. When industries are being rolled up and there are trends toward concentration, something that is well-established in the law, it's important for us to make sure that we're looking at the complete picture, and those trends toward concentration and the rollups of industries that might provide the kind of lessening of competition that the Clayton Act was designed to address.

 

Hon. Charles "Rick" Rule:  Okay. I said that I was going to let you say a little bit more about the Penguin Random House-Simon & Schuster deal. And I think one thing that case stands for, in my mind, although it's not strictly a labor case, is kind of the focus that you guys have articulated on labor issues and on the impact of transactions and other things on labor. You have a series of no-poach criminal investigations going on. So labor's been very much a focus of this administration. Can you sort of tell me what you guys are doing that your predecessors missed, and how that fits into your broader theory?

 

Hon. Jonathan S. Kanter:  I'll focus less on predecessors. And I will also note that a lot of the great work around no-poach and labor started in the prior administration. And so there are many aspects that we are just continuing that started in the Trump administration. Competition, and, by association, antitrust enforcement, is designed to preserve all of the benefits that flow from competition. Benefits of competition can flow to consumers. They can flow to entrepreneurs. But they can flow to workers, too.

 

      The freedom to move jobs. The freedom to have upward mobility and get a better wage because someone wants to compete for your services, that's the essence of competition. That's the essence of a free-market economy. And there's nothing, in my mind, more righteous or important than preserving those benefits or addressing illegal conduct that can harm those benefits. And so it's really important that we are fighting for people who want mobility, and upward mobility, and the benefits of competition on the labor side. It's an effect, an important effect, potentially, from anti-competitive conduct, or anti-competitive concentration.

 

Hon. Charles "Rick" Rule:  And is that Penguin Random House-Simon & Schuster case at least some guidepost to how you're going to --

 

Hon. Jonathan S. Kanter:  It is a significant statement that those theories of harm are actionable under the law. And it is also an important statement about content creation, and making sure that, in the marketplace of ideas, that people who write books, who rely on advances to research and write and investigate and provide thought leadership, have the benefits of competition from publishers in order to get the money to help sustain themselves and their families while they do that important work.

 

I think these are all benefits of competition. And it's really important to me, and I think it's important to courts, and I think it's important to the public, that we preserve competition for all of those reasons, not just consumer prices. Of course, consumer prices are an important part of competition, just not the only part.

 

Hon. Jonathan S. Kanter:  Okay. And I promise to get you out of here in five minutes. But I want to quickly shift gears to one other topic that we've discussed and that you've spoken about publicly before, and that is the criminal enforcement of Section 2. And, I think, as I've told you, I get that Section 2 is a felony statute. That's the way the Sherman Act was written.

 

But, traditionally, within the Antitrust Division — and we thought about it back in the 80s — there's always been a view that it's very problematic to try to prosecute something under Section 2, because of the elements of the Section 2 claim, which include proof of monopoly power, which, it seems to me, very hard to keep out economic testimony on that topic.

 

      But notwithstanding that, I think you've got a plea agreement in an attempt to monopolize, invitation to collude, case. But, very recently, yesterday, you unsealed an indictment of -- you spoke of his name — Donald Trump might have called "Some very bad hombres" — yesterday, who were involved in conduct that you allege violated Section 2, in terms of the, I guess transportation of used goods from the United States, through Mexico, to Central America. 

 

What can you tell us about -- you probably can't tell us anything about those cases. But why has the division historically been too shy to use Section 2 as a felony? How are you going to overcome that need to prove beyond a reasonable doubt things like monopoly power?

 

Hon. Jonathan S. Kanter: Yeah. So, again, I won't talk about live cases, and I want to be very careful when we're talking about criminal enforcement. Everything we do is consistent with the principles of federal criminal prosecution. And the law and the facts dictate whether we bring cases. Congress made monopolization a crime. Congress has reaffirmed that multiple times, including making it a felony.

 

And the words and the intent of Congress was that that could be prosecuted criminally under certain circumstances, just like Section 1 of the Sherman Act can. And so why others may have made different decisions, I'll defer to others to explain that. What I've tried to say, early on in my tenure, was that we're going to enforce the law the way Congress wrote it, and that criminal monopolization can be a crime. And if the facts and the law support prosecution of Section 2 as a crime, then we'll bring cases.

 

Hon. Charles "Rick" Rule:  Okay, and if you have conduct that is chargeable equally under a per se theory of Section 1 or some other criminal statute, and let's say that the sentencing guidelines mete out equally harsh punishments, what's the point of adding a Section 2 claim, in those circumstances?  What do you see as the benefit of doing that, particularly if it potentially compromises your ability to successfully prosecute the case?

 

Hon. Jonathan S. Kanter:  Well, it's the law. And we enforce the law. And I'll just leave it there.

 

Hon. Charles "Rick" Rule:  Yeah, but prosecutors, all the time, exercise their discretion. It's the essence of prosecutorial discretion, deciding what to charge.

 

Hon. Jonathan S. Kanter:  Of course. And we do that all the time as well. But if we see conduct that we believe violates Section 2 of the Sherman Act and is subject to criminal prosecution, pursuant to the federal principles of criminal prosecution, and the law, in fact, support it, then, if we believe it's appropriate, we'll exercise it. But, again, each facts pattern presents itself in a different way. You mentioned a plea agreement. That case was a stand-alone case. And so maybe that's your --

 

Hon. Charles "Rick" Rule:  Well, it probably could have been prosecuted, or they could have taken a plea for attempted wire fraud, which is the way, traditionally -- at least, for the last 40 years -- the division has handled those sorts of [inaudible 01:06:16].

 

Hon. Jonathan S. Kanter:  Well, then, let me ask you then, why?

 

Hon. Charles "Rick" Rule:  Why what?

 

Hon. Jonathan S. Kanter:  Well, why --

 

Hon. Charles "Rick" Rule:  I can tell you why, since I was the guy who came up with the theory for attempted wire fraud. We did it because we thought that was a much easier way to prosecute those claims than trying a Crandall attempt-at-monopolization claim. So that is why that was there.

 

Hon. Jonathan S. Kanter:  Okay.

 

Hon. Charles "Rick" Rule:  But let me ask it again, slightly differently. Again, those cases that you've referred to are pretty unique, in the sense that they involve some bad facts, at least on the face. I don't want you to -- you don't have to comment on that. But from what it --

 

Hon. Jonathan S. Kanter:  Bad facts in what sense?

 

Hon. Charles "Rick" Rule:  I mean bad facts for the defendants, I'm saying. Okay? But I'm asking the question of to what extent do you plan to litigate as felonies, sort of what I'll call more of your standard Section 2 violations: conduct, let's say, by -- pick your random platform company. To what extent is criminal prosecution confronting them? Because, again, in the Section 1 context, generally, you know if it's a per se violation, there's a threat of criminal prosecution. But if it's rule of reason, it's not going to be prosecuted. But there's not that sort of dividing line in Section 2.

 

Hon. Jonathan S. Kanter:  Yeah. We'll follow the facts and the law, in accordance with the principles of criminal prosecution.

 

Hon. Charles "Rick" Rule:  But is there a standard? Because there's a standard within the division, historically, that you don't prosecute rule of reason Section 1 cases. They have to be per se violations. So is there any internal standard that divides those that are --

 

Hon. Jonathan S. Kanter:  I think we're veering into broader conversation. We're here at the end. We're over time. All I'll say is that we've been very clear about the fact that if it's a criminal statute and the facts and the law support it, and the principles of criminal prosecution support it, we'll bring a case.

 

Hon. Charles "Rick" Rule:  Okay. Well, thank you, Jonathan. 

 

Hon. Jonathan S. Kanter:  Thank you, Rick.  I really appreciate it.

 

Hon. Charles "Rick" Rule:  I did go a bit past.

 

 

[Music]

 

Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.