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Vulture Magazine Highlights Moss Comments as DOJ Battles Consolidation in Publishing in the Merger of Penguin/Simon & Schuster

On August 25th, Vulture Magazine, a New York based online magazine, released the article “So who won the antitrust trial”, focused on the Department of Justice’s fight against the merger of  Penguin Random House and Simon & Schuster. The merger would reduce the industry’s so-called Big Five publishing houses (Penguin Random House, Hachette, HarperCollins, Simon & Schuster, and Macmillan) to four. The theme of the DOJ’s lawsuit opposing the merger is that the merger would create a powerful buyer in publishing rights, limiting authors’ leverage over advances.

The article quotes AAI’s Diana Moss:

“This book publisher merger case focuses on how the merger of Penguin/Simon & Schuster would create a dominant firm that will eliminate competition in publishing rights, to the detriment of writers. A merged Penguin/Simon & Schuster would be a more powerful buyer of book publishing rights. The firm would likely exercise this enhanced market power by lowering advances to authors. Consumers of leading books will ultimately feel the consequences of this harm.”

Moss, who was speaking generally of the case but not specifically about the trial, said this was a unique case compared to other antitrust actions given its focus on labor.

“Antitrust enforcers have, to date, not focused on mergers and anticompetitive practices that harm workers. Rather, they have focused on mergers that directly harm consumers,”

 “But many markets are dominated by powerful buyers that exercise substantial market power, as we see in food and agriculture and healthcare — and now here in publishing.”

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Daily Yonder Cite’s AAI Questions About DOJ’s Chicken Conspiracy Settlement as Some of Same Defendants Complete Another Merger

On August 23, 2022 The Daily Yonder published the article: ‘Big Chicken’ Merger Moves ahead Despite Investigations by the Biden Administration. The article notes that “Two of the largest poultry processing companies in the country, Wayne Farms and Sanderson Farms, will soon be merged to create one corporation amid a DOJ antitrust lawsuit against the companies. One expert fears the lawsuit won’t do enough to stop the merger from overpowering the chicken industry.” In quoting AAI’s Diana Moss, the article states:

“One antitrust expert isn’t convinced the lawsuit does enough to prevent the new Wayne-Sanderson Farms merger from exercising undue control over the poultry industry.

‘The American Antitrust Institute is concerned that any increases in concentration resulting from the [merger] may increase incentives for collusion in both input and output markets,’ wrote Diana Moss, president of the American Antitrust Institute, in an email to the Daily Yonder.

The American Antitrust Institute is looking into whether the lawsuit settlement agreement adequately polices the enhanced market power the new Wayne-Sanderson Farms will have in the poultry industry.”

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CBC Cites AAI Letter to USDOJ as Bruce Springsteen’s ‘Dynamic’ Ticket Prices Adds Additional Twist in Ticketmaster Saga

On August 3rd, The Canadian Broadcasting Corporation (CBC) released an article: Springsteen’s ‘dynamic’ ticket prices just the latest twist in Ticketmaster saga. The article notes that since the merger of Live Nation and Ticketmaster over a decade ago: ”Since then, there’s been a deluge of stories of music fans complaining — and suing — over antitrust violations, hidden fees and rising ticket prices.” The article goes on to explain that: 

“As recently as 2019, the Competition Bureau ordered Ticketmaster to pay a penalty of $4.5 million for misleading customers on online ticket sales, all while the bureau also ruled the company’s practice of recruiting scalpers to secretly purchase and resell Ticketmaster tickets for inflated costs was legal. 

But shortly after, the DOJ stated that Ticketmaster and Live Nation had ‘repeatedly and over the course of several years’ violated the legal agreement that allowed them to merge, using ‘threatening behaviour and retaliation’ to bully venues into sticking with Ticketmaster, ‘lest they risk losing Live Nation concerts, hindering effective competition for primary ticketing services.’ 

The two later reached an agreement that both extended the terms of the merger, which were set to expire in 2020, and toughened its rules. In response, the nonprofit American Antitrust Institute published a letter arguing that stronger amendments were needed, to address the fact that the harmful results of their merger on the entertainment industry ‘cannot be understated.’”

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New York Times Highlights Moss Comments on the FTC’s Lawsuit Against Meta

On July 28th, The New York Times released the article: F.T.C. Chair Upends Antitrust Standards With Meta Lawsuit. The article notes that Chair of Federal Trade Commission (FTC) “Lina Khan may set off a shift in how Washington regulates competition by filing cases in tech areas before they mature. She faces an uphill climb…The onus will now be on the agency to convince a judge that its predictions about the metaverse and Meta’s purchase would harm competition.” 

The article quotes AAI’s Diana Moss on the burden that the agency will bear in litigation:

“’The burden is on the F.T.C. to show, among other things, reasonable probability that Meta would have entered the V.R.-dedicated fitness apps market, absent its acquisition of Within,’ said Diana Moss, president of the American Antitrust Institute.”



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Buyout Insider Highlights Moss Comments as Biden Administration Reviews Merger Applications

On July 11th, Buyout Insider released the article, Biden’s strict review of merger applications leads to PE deal delays, attorneys say, focused on the Biden Administration’s process of reviewing merger applications. The article states: ”The Biden administration has implemented a tighter review of filings that firms must submit before the completion of a merger, resulting in increased delays and costs for private equity manager and potential portfolio companies, according to two attorneys.” 

The article quotes AAI’s Diana Moss: 

“Diana Moss, President of the American Antitrust Institute, said her organization has also heard reports of more second requests made by the administration. 

‘This ‘closer look’ is in keeping with the administration’s needed, stronger stance on antitrust and especially merger enforcement,’ Moss said.”



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Stutz Discusses FTC Rulemaking and Legislation at the National Press Club

On June 27, AAI Vice President of Legal Advocacy Randy Stutz led a panel discussion at a joint conference of Concurrences and the Computer & Communications Industry Association at the National Press Club in Washington, D.C.  Stutz both moderated the panel and spoke about how FTC rulemaking and current legislative proposals in Congress represent contrasting means of pursuing similar kinds of antitrust reforms.  Both approaches attempt to improve antitrust law by moving away from case-by-case adjudication under an open-ended rule of reason standard and moving toward a rules-based approach and more structured form of analysis.

Stutz was joined by AAI Advisory Board Member Andy Gavil, TechFreedom Senior Competition Counsel Bilal Sayyed, and U.S. Chamber of Commerce Vice President Sean Heather.

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American Prospect Highlights Moss Comments on High Gasoline Prices and Refinery Consolidation

In the June 16, 2022 American Prospect article: The Hidden Driver of High Gas Prices: Reduced refinery capacity, in large part triggered by industry consolidation, has been a major factor, journalist David Dayen featured AAI perspective on refinery consolidation as a contributing factor to high gasoline prices. From the article:

The question, then, is what has driven refinery capacity down, and therefore profit margins and gas prices up?

The multifaceted story involves inaccurate predictions of demand, extreme weather events, disinvestment in new capacity, and yes, refineries taken offline in Russia during the war. But the ongoing story in refineries, according to Diana Moss of the American Antitrust Institute, is one of rampant consolidation.

“There has been a dramatic loss of numbers in physical refineries since the early 1980s,” Moss explained, pointing to Energy Information Administration statistics. Operable refineries narrowed from 301 in 1982 to 129 in 2021, and the reductions were even more pronounced in the diesel heating oil–reliant Northeast, with a 74 percent reduction over the same time frame. An Oil & Gas Journal article from 2015 demonstrates 20 years of consolidation, from 26 major refinery players to 11. In California, two firms control half the refinery capacity.

As these consolidations occurred, not a single major new refinery was built between 1977 and 2020. Nor did the Federal Trade Commission, which had jurisdiction over refinery mergers, act to stop many of them. “The FTC is very fond, as they are in pharma mergers, of approving deals with consent orders where they take divestitures,” said Moss. “We have a rapidly expanding record of failed divestitures. We’re trying to encourage the agencies not to settle these cases.”
 
Moss sees some of these shutdowns as more than a coincidence. “The most direct and effective exercise of market power is to take a plant out of service,” she said. “And it’s not illegal under the antitrust laws to restrict output and jack up the price.” But it’s very difficult to distinguish between accidents and business decisions. “It’s easy for a  company to say, ‘We’re not intentionally restricting output, we have this glitch,’” Borenstein said.
 
But the situation does reveal a general inattention to the important role of middlemen in the economy. With gas prices, “everyone goes immediately to the top of the supply chain, at the crude oil level,” said Moss, “or they go to the pump. Nobody looks in the middle of the supply chain for mischief and bad conduct. It’s a problem in energy and health care and food and agriculture. The middle of the supply chain is strategically a place to exercise market power.”

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FTC Commissioners Cite AAI Study on Private Equity in Healthcare in Support of Merger Action

On June 13, 2002, FTC Chair Lina M. Khan, joined by Commissioners Rebecca Kelly Slaughter and Alvaro M. Bedoya released a Statement in the matter of JAB Consumer Fund/Sage Veterinary Partners, a proposed acquisition of a veterinary practice group by a JAB, a private equity fund. The FTC determined the proposed acquisition would be anticompetitive and proposed an order allowing the transaction to proceed, but only with divestitures and with additional conditions to “establish key safeguards against future dealmaking that may also prove unlawful.” In particular, the proposed order would require JAB to seek advanced approval from the FTC for any acquisitions of veterinary practices within 25 miles of existing JAB facilities in three states and to provide advance notice for all veterinary acquisitions within 25 miles of a practice nationwide that is owned by JAB.  The statement explains that the provisions “allow the FTC to better address stealth roll-ups by private equity firms like JAB/NVA….” Citing AAI’s pathbreaking May 2021 joint report with the Petris Center, Soaring Private Equity in the Healthcare Sector: Consolidation Accelerated, Competition Undermined, and Patients at Risk, the Commissioners noted that “[a] focus on short-term profits in the health care context can incentivize practices that may reduce quality of care, increase costs for patients and payors, and generate appalling patient outcomes.” In line with the recommendations in the AAI/Petris report, the Commissioners state: “Strategic use of prior notice and prior approval provisions is one way that the Commission can better track and prevent unlawful acquisitions by private equity firms and other corporations.”

 

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Senator Richard Blumenthal Receives the American Antitrust Institute’s 2022 Antitrust Achievement Award

The American Antitrust Institute (AAI) presented Senator Richard Blumenthal the 2022 Alfred E. Kahn Award for Antitrust Achievement today at AAI’s 23rd Annual Policy Conference at the National Press Club in Washington, DC. Listen to Senator Blumenthal’s remarks here.

AAI President Diana Moss stated “We are delighted to grant this award to Senator Blumenthal. His career-long work and commitment to fair competition has had demonstrable, positive impact on our markets, consumers, and workers. The Senator is a model for how thhttps://www.antitrustinstitute.org/wp-content/uploads/2022/06/blumethal-audio-updated.mp3e legislative branch can play a vital role in shaping strong antitrust enforcement and coherent competition policy.”

Among other committee assignments, Senator Blumenthal is a member of the Senate Committee on the Judiciary and Committee on Commerce, Science, & Transportation, and chairs the Consumer Protection Subcommittee. As former Attorney General for the state of Connecticut, where he played a leading role among the states that sued Microsoft in 1998, and in serving in the Senate for over a decade, Senator Blumenthal is a strong proponent of vigorous enforcement of the antitrust laws.

For decades, Senator Blumenthal has worked to strengthen U.S. antitrust law to limit harmful conduct by dominant firms, to prevent illegal mergers, and to ensure that the antitrust laws protect consumers and workers that are harmed by anticompetitive consolidation and conduct.

As a long-standing member of the Subcommittee on Competition Policy, Antitrust, and Consumer Rights, Senator Blumenthal has been an integral part, as a sponsor and co-sponsor, of numerous legislative proposals to strengthen and modernize antitrust law and competition policy and to draw attention to anticompetitive practices and mergers. This Congress, for example, Senator Blumenthal led the introduction of the Open App Markets Act, which would create clear, enforceable rules to protect competition and consumers within the app market.  AAI has supported a number of Senator Blumenthal’s sponsored and co-sponsored bills as vital to the mission of revitalizing antitrust enforcement in the U.S.

The AAI Alfred E. Kahn Award for Antitrust Achievement, first presented in 2000, honors outstanding contributions to the field of antitrust. Senator Blumenthal joins the following past honorees: Joel Klein, Robert Pitofsky, F.M. Scherer, Alfred E. Kahn, Lloyd Constantine, Thomas B. Leary, Senators Herb Kohl and Mike DeWine, Maxwell Blecher, John Shenefield, Eleanor M. Fox, Steven Salop, Mario Monti, Roger G. Noll, Kathleen Foote, John M. Connor, Donald I. Baker, Jonathan W. Cuneo, William Baer, Senator Amy Klobuchar, Stephen Calkins , Albert A. Foer, and Robert Skitol.

Information about AAI’s 23rd Annual Policy Conference on June 15 is available at https://www.antitrustinstitute.org/event/23rd-annual-policy-conference/  Event-related questions can be directed to sfrey@antitrustinstitute.org.

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AAI’s Moss Tells Time Magazine That Massive Consolidation in Refining Has Contributed to Tight Capacity and Higher Prices

In the May 31, 2022 article, Inflation is Going to Get Worse. Blame a Lack of Diesel, Time Magazine quoted AAI’s Diana Moss on oil refinery consolidation. From the story:

“The story of why there are fewer refineries has become politicized, like just about everything else in the economy. One explanation is that a lack of antitrust regulation in the U.S. allowed refinery mergers and acquisitions that might have been good for their bottom line but not for diesel supplies in the U.S. “We have been following petroleum refining for years—the amount of consolidation is just staggering,” says Diana L. Moss, the president of the American Antitrust Institute, a progressive nonprofit that advocates for more antitrust enforcement. The federal government was lax on stopping refinery mergers, she argues. And, she adds, when industries consolidate, companies can raise prices because customers have fewer options.”