Showing 9 of 84 Publications by Dirk Auer

Doomsday Mergers: A Retrospective Study of False Alarms

ICLE White Paper Executive Summary A well-placed cadre of progressive scholars and advocates—several of whom have in more recent years come to occupy top positions in America’s antitrust . . .

Executive Summary

A well-placed cadre of progressive scholars and advocates—several of whom have in more recent years come to occupy top positions in America’s antitrust agencies—have long-focused their attention distinctly on high-profile mergers and acquisitions. For more than a decade, hardly a deal could be proposed without these critics claiming that it would create an unassailable monopoly, be the final nail in the coffin of small businesses, and/or cement the political sway of big business. For these so-called “neo-Brandeisian” critics, the repeated pattern has been, first, to entreat authorities to block these deals and then, should they be cleared nonetheless, to cite such approvals as evidence that U.S. antitrust law is in dire need of reform.

The bombastic rhetoric employed by these critics stands in sharp contrast with the technocratic and measured approach to enforcement that has traditionally been the norm for U.S. antitrust agencies and courts. Indeed, for better or worse, antitrust case law in the United States generally focuses on tangible and short-term metrics, rather than hypothetical doomsday scenarios that are notoriously hard to predict. Under this measured approach—rooted in the consumer welfare standard—theories of harm are dismissed if they rely on mere conjecture. Unsurprisingly, the critics have routinely lambasted this status quo.

But the paradigm has been shifting. With the elevation of progressive critics such as Lina Khan to chair the Federal Trade Commission (FTC), Jonathan Kanter to head the U.S. Justice Department’s (DOJ) Antitrust Division, and Tim Wu to serve as special assistant to President Joe Biden for technology and competition policy, the tide of U.S. antitrust enforcement may be turning. In recent months, the antitrust agencies have brought several high-profile suits that seek to combat what their new leadership believes to be excessive corporate consolidation. This includes the FTC’s failed challenge of the Meta-Within deal, as well as ongoing cases against the Microsoft-Activision Blizzard and Illumina-Grail mergers.

The rhetoric accompanying these challenges has departed significantly from traditional antitrust discourse and has instead been more closely aligned with the populist style that these agencies’ leaders employed before their nominations. For instance, in its Meta-Within complaint, the FTC argued that clearing the deal would put Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse.’” In the Illumina-Grail suits, the agency claimed that “after the Acquisition, Illumina will control the fate of every potential rival to Grail for the foreseeable future.”

Against this backdrop of increasingly alarmist merger claims, this paper analyzes whether previous doomsday merger scenarios have materialized, or whether the critics’ claims missed the mark. Our retrospective analysis shows that many of the alarmist predictions of the past were completely untethered from prevailing market realities, as well as far removed from the outcomes that emerged after the mergers.

Amazon-Whole Foods

The first merger we look at is Amazon’s purchase of Whole Foods. Critics at the time claimed the deal would reinforce Amazon’s dominance of online retail and enable it to crush competitors in physical retail. As now-FTC Chair Lina Khan put it: “Buying Whole Foods will enable Amazon to leverage and amplify the extraordinary power it enjoys in online markets and delivery, making an even greater share of commerce part of its fief.”

These claims turned out to be a bust. As we explain, at the time of writing, several large retailers have grown faster than Amazon; Whole Foods’ market share has barely budged; and several new players have entered the online retail space. Moreover, the Amazon-Whole Foods deal appears to have delivered lower grocery prices and increased convenience to consumers.

Beer-Industry Consolidation

A second notable example comes from the beer industry. In the early 2000s, the industry witnessed a wave of consolidation, culminating with ABI’s acquisition of SABMiller in 2016, which critics claimed would increase the price of beer and decimate the burgeoning craft-beer segment.

Instead, the concentration of the beer industry decreased after the mergers, prices did not increase on average, and the craft-beer segment thrived. This is not to say that all is rosy; the price of some beers did indeed increase after the wave of mergers. Regardless, it is clear the post-merger outcome was a far cry from the doomsday scenario that critics predicted.


Along similar lines, Bayer’s acquisition of Monsanto (along with the Dow-Dupont merger) was met with stern rebukes from policymakers and academics. Critics argued that the merger would raise the price of key seeds, such as corn, soy, and cotton. Perhaps more fundamentally, the deal’s opponents argued it would further concentrate the agri-food industry, forcing farmers to deal with only a handful of seed providers. Accordingly, many cited this merger as evidence that antitrust merger enforcement needed reform.

Fast forward to today, and these fears appear overblown. Seed prices have remained roughly constant (though we do not know the counterfactual), and there is little evidence that the life of farmers and rural communities has been significantly affected by the merger. There is thus little reason to believe that the mergers justified the legislative and policy changes that many called for at the time.


Google’s acquisition of Fitbit is another case where progressive scholars’ dire predictions failed to materialize. The deal’s opponents claimed the merger would reinforce Google’s position in the ad industry and prevent new entry; harm user privacy by enabling Google to integrate Fitbit health data into its other ad services (or sell this data to health insurers); and crush burgeoning rivals in the wearable-device industry.

At the time of writing, available evidence suggests the exact opposite has occurred: Google’s share of the online-advertising industry has declined, as has Fitbit’s position in the wearable-devices segment. Likewise, Google does not use data from Fitbit in its advertising platform; not even in the United States, where it remains free to do so. Meanwhile, the merger enabled Google’s entry into the smartwatch market as an upstart competitor against the market leader, Apple. In short, enforcers’ “terrible decision” to clear the merger appears vindicated.


Facebook’s acquisition of Instagram provides a different perspective. At the time, basically no one worried about it from an antitrust perspective and many pundits lambasted the purchase as a poor business decision. It is only in retrospect that people have started to see it as the merger that got away and evidence of the problems with allegedly weak enforcement. This perspective ignores the fact that enforcement agencies only ever have that data which is available at the time.

Even in retrospect, however, it is far from obvious that the acquisition was anticompetitive. Immediately upon purchase, Facebook was able to bring Instagram’s photo-editing features to a much larger audience, generating value for users. Only later did Instagram turn into the social-media giant that we know today. The recent rise of TikTok casts further doubt on claims regarding the supposed market dominance of a combined Facebook and Instagram. A merger that benefited consumers without generating impenetrable market dominance hardly seems like overwhelming proof of the failures of enforcement.

Ticketmaster-Live Nation

We close with Ticketmaster for two reasons. First, it has received significant negative attention recently due to technical failures during Taylor Swift’s latest concert sales, which has prompted the DOJ to investigate the company. Second, people have complained about Ticketmaster being a monopolist ever since it came to prominence. Yet, there was little outrage at the merger with Live Nation. While there was a congressional hearing at the time and some concern expressed in The New York Times, the contemporaneous claims were refreshingly mild relative to more recent comments by the neo-Brandeisians.

Despite having antitrust authorities investigate its previous acquisitions, including the merger with Live Nation, Ticketmaster has avoided having any of its mergers blocked outright. Perhaps more importantly, Ticketmaster’s market share appears to have fallen following the merger with Live Nation. There is thus little sense that the deal harmed consumers. So why the disconnect between longstanding frustration and antitrust enforcement? The agencies have seen the beneficial effects of mergers in a difficult multi-sided market between fans, venues, and artists. After investigation, the agencies found that the merger was primarily a vertical one between a ticketing website (Ticketmaster) and a concert promoter (Live Nation), which could be pro-competitive for the overall multi-sided market. The DOJ placed behavioral remedies in place and allowed the merger. We explain how a technical failure more than a decade later can hardly be blamed on the antitrust authorities for letting it slip through.

The Upshot

One potential counterargument to the focus of this paper is that the mergers we discuss may not be representative of broader trends—and, accordingly, that tougher antitrust enforcement may still be warranted. While this is a possibility, it misses our main point. Too often, mergers are met with alarmist fearmongering in policy circles, with many observers arguing a given transaction will irrevocably harm consumers and the economy. These calls for action occur despite the existence of a highly sophisticated merger-control apparatus that is designed precisely to minimize the likelihood of such harms, while enabling consumer-benefitting transactions to pass regulatory muster.

Our call for regulatory prudence may seem modest, but it increasingly faces challenges. The most high-profile challenge is perhaps the FTC and DOJ’s joint repudiation of the most recent (2010) merger guidelines, and their ongoing effort to revise the guidelines, almost certainly in ways to facilitate more aggressive merger enforcement. As FTC Chair Lina Khan remarked upon the initiation of the merger-guidelines-revision effort, in the wake of merger activity allegedly due to lax enforcement, “many Americans historically have lost out, with diminished opportunity, higher prices, lower wages, and lagging innovation…. These facts invite us to assess how our merger policy tools can better equip us to… halt this trend.”

And as Matt Stoller approvingly notes of the revision effort, “mergers are the key fulcrum that has consolidated power in American society. And now, for the first time in our lifetimes, antitrust enforcers are genuinely pushing back, with real merger challenges and now a revamp of this until-now catastrophic set of guidelines.”

Many in the media have similarly pushed for more aggressive merger enforcement, unmoored from its economic rigor. A recent Financial Times piece by Rana Foroohar, for example, encapsulates the prevailing zeitgeist, intimating as it does that authorities should ditch sophisticated and technocratic economics in favor of what she calls “kitchen table economics,” in which “economic policy discussions [should be in] the purview of not just economists, but also lawyers, activists and ordinary people.”

If there is one thing to take away from our paper, it is that basing merger enforcement on kitchen-table economics—the idiosyncratic preferences of “activists and ordinary people”—would be disastrous. Our retrospective study shows that popular and populist fears about corporate consolidation are often completely untethered from economic reality and wildly erroneous. The less these fears influence antitrust policy, the better.


Antitrust law and policy may be on the move. The neo-Brandeisian antitrust movement advocates radical reform,[1] and seems not so much ascendent as ascended, finding support in the White House[2] and at the head of the two federal antitrust agencies, the Federal Trade Commission (FTC)[3] and the Antitrust Division of the U.S. Justice Department (DOJ).[4]

In remarks often quoted or echoed by FTC Chair Lina Khan, President Joe Biden laments that “we’ve lost the fundamental American idea that true capitalism depends on fair and open competition.”[5] He lays that supposed loss at the feet of antitrust: “Forty years ago, we chose the wrong path, in my view, following the misguided philosophy of people like Robert Bork, and pulled back on enforcing laws to promote competition.”[6]

The bombastic rhetoric employed by these critics stands in sharp contrast with the technocratic and measured approach to enforcement that has traditionally been the norm for U.S. antitrust agencies and courts. Indeed, for better or worse, antitrust case law in the United States generally focuses on tangible and short-term metrics, rather than hypothetical doomsday scenarios that are notoriously hard to predict. Under this measured approach—rooted in the consumer welfare standard—theories of harm are dismissed if they rely on mere conjecture.[7] Unsurprisingly, the critics have routinely lambasted this status quo.[8]

These neo-Brandeisian ideas are now starting to filter into mainstream antitrust policy. With the elevation of progressive critics such as Lina Khan to chair the Federal Trade Commission (FTC), Jonathan Kanter to head the U.S. Justice Department’s (DOJ) Antitrust Division, and Tim Wu to serve as special assistant to President Joe Biden for technology and competition policy, the tide of U.S. antitrust enforcement may be turning. In recent months, the antitrust agencies have brought several high-profile suits that seek to combat what their new leadership believes to be excessive corporate consolidation. This includes the FTC’s failed challenge of the Meta-Within deal, as well as ongoing cases against the Microsoft-Activision Blizzard and Illumina-Grail mergers.[9]

The rhetoric accompanying these challenges has departed significantly from traditional antitrust discourse and has instead been more closely aligned with the populist style that these agencies’ leaders employed before their nominations. For instance, in its Meta-Within complaint, the FTC argued that clearing the deal would put Meta “one step closer to its ultimate goal of owning the entire ‘Metaverse.’”[10] In the Illumina-Grail suits, the agency claimed that “after the Acquisition, Illumina will control the fate of every potential rival to Grail for the foreseeable future.”[11]

Meanwhile, the FTC recently issued a new Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act[12] that turns the established methods, measures, and goals of antitrust on their heads.[13] It rejects, among other things, the consumer welfare standard and the rule of reason that are at the heart of contemporary antitrust jurisprudence. And more importantly for this paper, it is anticipated that the FTC and the Antitrust Division will soon release new merger guidelines, covering both horizontal and vertical mergers. The agencies have launched a “Request for Information on Merger Enforcement,”[14] soliciting public input on diverse issues that range from basic concepts, evidence, and analytical methods to the goals of merger enforcement, some 91 questions under 15 topical headings. More recent statements from the agencies suggest that new guidelines are forthcoming.[15]

The agencies’ aim seems clear: strengthening—or at least increasing—antitrust merger enforcement.[16] Khan has quoted from President Biden’s executive order that “industry consolidation and weakened competition have ‘den[ied] Americans the benefits of an open economy,’ with ‘workers, farmers, small businesses, and consumers paying the price.”[17] That same executive order includes a general condemnation of the state of U.S. competition, which it blames on “Federal Government inaction”—that is, on a putative failure of antitrust enforcement. Khan goes on to note that:

[The merger guidelines review] comes against the backdrop of a broader reassessment of the effects of mergers across the U.S. economy. Evidence suggests that decades of mergers have been a key driver of consolidation across industries, with this latest merger wave threatening to concentrate our markets further yet…. While the current merger boom has delivered massive fees for investment banks, evidence suggests that many Americans historically have lost out, with diminished opportunity, higher prices, lower wages, and lagging innovation. A lack of competition also appears to have left segments of our economy more brittle, as consolidated supply and reduced investment in capacity can render us less resilient in the face of shocks.

These facts invite us to assess how our merger policy tools can better equip us to discharge our statutory obligations and halt this trend.[18]

And as Matt Stoller approvingly notes of the revision effort, “mergers are the key fulcrum that has consolidated power in American society. And now, for the first time in our lifetimes, antitrust enforcers are genuinely pushing back, with real merger challenges and now a revamp of this until-now catastrophic set of guidelines.”[19] Whether or to what extent this drive for revision or reform might find support in the federal courts is less clear.[20]

Neo-Brandeisian scholars are not the only ones pushing for substantial reform and, specifically, considerably increased interventions by antitrust enforcers into mergers and other commercial conduct. For example, the American Antitrust Institute (AAI) identifies itself as an original and central player in “the modern ‘progressive antitrust’ movement.”[21] The AAI advocates for “vigorous” public enforcement, characterizing its mission as a reaction against “the conservative law and economics movement,”[22] which, AAI says, “steered antitrust policy in a non-interventionist direction marked by lax merger control and forbearance from policing monopolistic and other anticompetitive practices.”[23] While AAI has a decidedly pro-intervention perspective, it is arguably more moderate and research-based than the neo-Brandeisian movement. Yet, collectively, progressive antitrust advocates and neo-Brandeisians have formed a vocal movement in favor of more invasive antitrust enforcement, based on a shared view that lax enforcement has caused unremedied harm throughout the economy.

And many in the media have similarly pushed for more aggressive merger enforcement, unmoored from its economic rigor. A recent Financial Times piece by Rana Foroohar, for example, intimated that authorities should ditch sophisticated and technocratic economics in favor of what she calls “kitchen table economics.” Her piece encapsulates the prevailing zeitgeist:

The popularisation of antitrust is part of a much larger shift in which economic policy discussions are increasingly the purview of not just economists, but also lawyers, activists and ordinary people. These groups are less interested in technocratic debates about market mechanisms than in a grassroots discussion about how corporate power has distorted the market in ways that they find absurd….

Thus, traditional economic theories about markets are no more, or less, useful than the collection of real world facts that either side can bring to a case.”[24]

The classic problem with most antitrust enforcement—and merger enforcement, in particular—is that it is prospective; it entails making predictions about future effects and determining appropriate enforcement under conditions of uncertainty. Proponents of more vigorous enforcement assert that past failures to enforce have led to great economic harms and, thus, that merger policy should be categorically more stringent to protect against such harms in the future. But it is an open question whether these claims are accurate, and an even harder question to answer whether more stringent enforcement in any particular case would be desirable, even if it were established that an overall increase in enforcement would be. It is almost certain that separating merger enforcement policy from economic rigor would magnify this uncertainty.

This paper seeks to assess predictions from progressive and neo-Brandeisian advocates regarding the immense harm that past mergers would supposedly cause. We examine six selected mergers that were widely condemned, but nevertheless consummated, prior to the current administration’s appointment of its competition-policy team.[25] We assess whether the predictions concerning these mergers’ deleterious effects have ultimately materialized. The goal of this paper is not to provide rigorous, empirical analysis of the effects of these seven mergers, but rather to provide an accurate—but necessarily casual—assessment of the state of the post-merger markets. Using public information and relying on the insights of industry experts, we offer a detailed picture of these markets and an assessment of how they may have changed post-merger.

Our analysis shows that critics of the antitrust status quo routinely make dire predictions concerning the likely future effects of mergers that, as we explain, tend to be wide of the mark. This is not surprising: there is a reason why antitrust merger enforcement is entrusted to technocratic antitrust authorities with, among other assets, huge teams of PhD economists to run merger simulations. At the very least, however, our analysis suggests popular claims that given mergers will be harmful should be taken with a grain of salt; such claims tend to say more about the person making them than they do the likely effects of a merger. Likewise, these same scholars also routinely claim that antitrust merger enforcement is insufficient precisely because it enabled these mergers to go through unchallenged. Again, our analysis suggests that things are (unsurprisingly) more complicated: no single merger provides a silver bullet to sustain claims that antitrust merger enforcement is too lax—something that needs to be shown empirically.

While our selection of mergers is ultimately somewhat arbitrary, the list includes some of the most contentious mergers of the past decade. Our selection has been guided by public statements about these mergers by prominent neo-Brandeisians and others. Unifying themes are, first, the contention that antitrust enforcement had fundamentally dropped the ball and, second, that dire consequences would follow.

Two caveats are in order. First, statements from the neo-Brandeisian movement—sometimes called “populist”[26] or “hipster antitrust”[27]— have not been monolithic: this is an identifiable (and self-identified)[28] movement, but it is united by common concerns and an orientation, not by any official positions or definitive membership.[29] Still, there is an identifiable family of statements that has been directionally consistent, and often dire.[30] Second, although we cite to specific individuals, our focus is not on those individuals or the neo-Brandeisian movement per se. Rather, we examine certain dire predictions about specific mergers, and the reasoning that lay behind those predictions. While these are characteristic of certain staunch advocates of substantially greater intervention into mergers, the predictions were not all made by individuals associated with the neo-Brandeisian movement. Moreover, we do not assume that views or assessments, or methodological or theoretical priors, are uniform across a wider group of progressives. Given the considerable political influence of the neo-Brandeisians, however, it is not impertinent to ask whether they are generally correct in their policy prescriptions.

In brief, we examine a string of what might be called doomsday merger predictions. All of these mergers were supposed to damage competition and raise prices. For example, when Amazon acquired Whole Foods, Barry Lynn of Open Markets—an organization commonly associated with the neo-Brandeisians—provided a dire and sweeping assessment to the New Republic: “This is the crushing of competition. Amazon is monopolizing commerce in the United States.” “Commerce” seems an awfully broad market for antitrust analysis, but Lynn offered no further qualification about, e.g., “premium natural and organic food markets,”[31] online retail commerce, or even retail commerce writ large. Rather, the acquisition—a sizeable acquisition of a mid-sized grocery chain that was not among the 20 largest in the United States—would somehow lead to Amazon’s monopolization of commerce. Lynn would go on to say that only Uncle Sam would be able to save competitors from certain death.[32]

In less hyperbolic terms, in 2014, it was predicted that the merger of ABI and SAB Miller would “impose significant price increases on consumers” and “undermine the continued emergence of craft beer.”[33] While there is evidence of slight price increases associated with certain previous mergers, such as the Miller-Coors merger that we analyze in this paper, the growing craft-beer trend has continued apace. In 2020, six years after dire predictions about ABI/SAB Miller, the staffs of the FTC and the Antitrust Division jointly observed a long-running growth trend in comments on a proposed policy change in California: in California alone, there were 200 craft brewers in 2000 and 1,039 in 2020.[34] There, the staffs’ concerns had to do with regulatory barriers to competition, not manufacturer consolidation.[35]

One final prefatory note about this project and about merger retrospectives generally: Merger retrospectives have played an important role in incremental antitrust reform for several decades. For example, a series of retrospective studies of hospital mergers conducted by the staff of the FTC’s Bureau of Economics—sometimes in collaboration with academic economists—have been identified as key drivers in changing the way the federal courts view hospital mergers, where they seemed central to reversing a trend of agency losses in merger-challenge cases. They have, as well, helped to refine the tools available to enforcers and academic economists. In simplest terms, merger retrospectives examine quantifiable changes in competitively important market outcomes, such as price and output and, where demonstrable, quality or quality-adjusted price.[36] More specifically, retrospective analysis investigates “ex post how, if at all, a particular merger affected equilibrium behavior in one or more markets.”[37]

To be clear, these merger retrospectives are most informative when situated within a larger body of theoretical and empirical research. They do not, in themselves, determine the framework within which, or methods with which, mergers are scrutinized. Moreover, we cannot in this paper hope to rival the deep empirical dives of the FTC’s hospital-merger retrospective series, which ranges over some 20 publications scrutinizing diverse methods and models applied by agency staff in specific investigations and the outcomes of consummated mergers.[38] We can, however, examine competitively relevant indicators such as price and output (and price and output trends), as the merger-retrospective literature has done, as well as such signals as market valuations.

While both we and the reform advocates lack access to much of the granular data and privileged information available to enforcers, that is part of our point: informal or off-the-cuff assessments of the likely competitive effects of any given merger are very likely to be inaccurate, if not plainly wrong, as can be crude indicators of concentration, such as 4-digit NAICS codes, when taken to be indicators of market power. That is part of the insight behind the decades-long shift to fact-intensive, rule-of-reason scrutiny in antitrust, and a conspicuous complication for reformers’ advocacy in favor of a return to per se rules and the development of ex ante antitrust regulations.

I.        Amazon-Whole Foods

On June 16, 2017, Amazon revealed its intention to purchase the Whole Foods Market, known commonly as “Whole Foods,” a popular chain of organic and natural grocery stores. Despite Whole Foods’ small 1.2% share of U.S. food and grocery sales,[39] the announcement—along with the FTC’s rapid clearance of the deal—caused an uproar among progressive and interventionist commentators.[40] The merger was completed in August 2017, and Amazon quickly began implementing changes to the Whole Foods business model.

A.      The Predictions

Barry Lynn, director of the Open Markets Institute, claimed the deal would crush competition and allow Amazon to monopolize commerce in the United States, adding that only the government could save Amazon’s rivals from certain downfall.[41] Lina Khan—now chair of the FTC—intimated that Amazon would use its data to transfer its dominance from online to physical retail: “Buying Whole Foods will enable Amazon to leverage and amplify the extraordinary power it enjoys in online markets and delivery, making an even greater share of commerce part of its fief.”[42] And, in a now-deleted tweet, Tim Wu called the merger a super-monopoly, referring to the multiple monopolies that Amazon would hold after the merger (presumably adding a grocery monopoly to its dominance of online retail).[43] Writing in The New York Times, Khan further predicted that “this deal would allow Amazon to potentially thwart future innovations.”[44] Other critics, such as Marshall Steinbaum, acknowledged the merger was legal at the time, but that its legality simply showed the flaws in the antitrust doctrine. According to Steinbaum, “this merger is a no-brainer to approve under existing antitrust doctrines, which is exactly why those doctrines are flawed. We, but not the law, know that Amazon is anticompetitive.”[45] The list goes on.

To support their claims, many of these critics pointed to the merger’s short-term effect on the stock market—Amazon’s competitors took a heavy hit when the deal was announced. Because of the share-price losses suffered by the stocks of rival companies, Scott Galloway surmised that markets were failing, and that Amazon should be broken up.[46] Galloway added:

Within twenty-four hours of the Amazon–Whole Foods acquisition announcement, large national grocery stocks fell 5 to 9 percent.

When the subject of monopolistic behavior comes up, Amazon’s public-relations team is quick to cite its favorite number: 4 percent—the share of U. S. retail (online and offline) Amazon controls, only half of Walmart’s market share. It’s a powerful defense against the call to break up the behemoth. But there are other numbers. Numbers you typically won’t see in an Amazon press release: • 34 percent: Amazon’s share of the worldwide cloud business • 44 percent: Amazon’s share of U. S. online commerce.[47]

To summarize, critics claimed that Amazon’s market shares (for both its online-retail platform and physical-retail business) and its stock price would grow faster than rivals’ and lead to increased concentration in these markets and the exit of smaller rivals. This raises a simple question: have these prophecies come to pass?

B.      What Happened?

Five years after the merger was consummated, it has become increasingly evident that critics’ claims were wide of the mark. If anything, competition appears to have intensified in both the online and physical spaces, with new firms entering the market and Amazon’s share both markets appearing to decline or at least stagnate.

One important indicator is the stock prices of both Amazon and its rivals. Indeed, if critics were correct and Amazon did indeed grab significant sales from rivals, thus increasing its profits, then its stock price should have outperformed those of rivals. Given the idiosyncratic years we have been through—with the COVID-19 pandemic, a marked increase in inflation, and fears of a widespread recession creating the potential for large outliers—it is worth looking at those share prices both one and five years after the merger.

One year after the merger, the picture looked nowhere near as bad as critics’ most dire predictions. The stocks of Amazon’s main rivals registered significant gains in the year following the announcement of the Whole Foods deal. Kohl’s stock actually outperformed Amazon’s (+82.05% versus +64.81%) in the year following the merger. Target, Macy’s, Costco, BestBuy, Kohl’s, and Nordstrom’s also showed healthy gains, rising faster than the S&P 500 index. Of course, firms like J.C. Penney and Sears hit new lows, leading both companies to the edge of bankruptcy (although their decline started well before the Whole Foods merger). In short, the retail industry was still highly competitive, and rivals did not appear to be diminished one year after the merger.

From then on, the market appears to have become even more competitive. Looking at the situation almost five years after the merger, the stocks of many rival companies have significantly outperformed Amazon. These include Costco, Target, Kroger, Walmart, and BestBuy. Granted, this may have something to do with recent decline of tech stocks—a trend that could conceivably be reversed in the future. Whether this recent decline proves permanent or not, the bigger picture is that critics were mistaken when they claimed the merger would cause the food-retail industry to fall under Amazon’s control—notably because of its technological superiority.

Looking at (estimated) market shares tends to paint a similar picture. For a start, available evidence suggests the market share of Whole Foods has not meaningfully increased since its acquisition by Amazon—moving from 1.3% of the U.S. food-retail market to 1.6%.[48] This severely undermines critics’ claims that Amazon would transfer its purported dominance of online retail to physical retail.

The picture is more complicated when looking at Amazon’s online-retail platform. Since the merger, Amazon’s share of online retail has steadily increased from roughly 40% in 2017 to an estimated 56% in 2021 (though this is merely the continuation of a trend that predates the acquisition of Whole Foods).[49] This moderate market-share increase might, at first sight, appear more consistent with critics’ predictions, but a closer look paints a different picture. While Amazon’s share of online retail as a whole has increased relative to many of its rivals, this is not the case for its share of online grocery sales (the part of its online business that should presumably have benefited most from the Whole Foods acquisition). For instance, between 2017 and 2019, Amazon Fresh’s consumer base stagnated, while Walmart’s and Instacart’s grew rapidly.[50] A more recent study explains that, while Amazon’s share of online grocery is hard to estimate, several rivals (Walmart Grocery, Shipt, Peapod, and Instacart) grew significantly between 2018 and 2021,[51] with some data suggesting that their growth outpaced that of online-grocery sales as a whole.[52] While all of this should be taken with a grain of salt, the initial picture we get is certainly not one of Amazon excluding rivals and dominating either the world of physical retail or that of online-grocery sales.

This overall assessment is corroborated by more anecdotal evidence suggesting that the Whole Foods deal has failed to live up to expectations. For a start, Amazon’s executives have often been compelled to defend the deal against suggestions that Amazon overpaid and that the deal had failed.[53] As one piece surmised:

The success of the Whole Foods acquisition is difficult to measure because Amazon rolls its sales into the physical stores category, alongside its 60 Amazon Fresh grocery stores, an Amazon Style clothing store and 25 smaller Amazon Go stores. But Whole Foods is by far the biggest individual contributor in the group.

Earlier this year, things looked a little bleak. Days after Amazon missed estimates for its first-quarter earnings results, the company announced the closure of six Whole Foods stores.

As consumers get back into the habit of shopping in person, Whole Foods is showing signs of recovery. found the number of visits people make to Whole Foods is now hovering at about the same level as July 2017, before Amazon took over.[54]

Of course, some may retort (fairly) that rivals might have performed even better absent the merger, but that is not the harm that critics were predicting when the deal was cleared. Instead, they claimed that many of Whole Foods’ rivals would go out of business, and that Amazon would also dominate online-grocery retail. That simply was not the case.

Looking at the direct effects of the merger on Whole Foods’ business model, we see many innovations. One of the most notable changes was the introduction of lower prices on a selection of Whole Foods products, with Amazon Prime members receiving even deeper discounts.[55] This move aimed to make Whole Foods’ prices more competitive with other grocery stores, and it helped to increase foot traffic in stores.

In addition to lower prices, Amazon also introduced new technologies to Whole Foods stores, such as the use of cashier-less checkout systems[56] and in-store pick-up for online orders.[57] They’ve even introduced entire stores without checkout lines.[58] Whole Foods also began offering a wider selection of products through Amazon’s online marketplace.

The merger also had an impact on the broader grocery industry. Other major retailers, such as Walmart and Kroger, responded by also cutting prices and increasing their online-grocery offerings.[59] Kroger’s partnership with Ocado marks a major shift in the grocery industry. Through this collaboration, Kroger will be able to benefit from Ocado’s robotic technology for packing orders placed online.[60] Similarly, Target has tried to stay up to date with emerging technologies with its $550 million acquisition of Shipt, a startup offering same-day delivery services.[61]

Walmart followed suit by acquiring Parcel, another startup that offers same-day delivery services, and has announced a partnership with Alert Innovation, which employs automated carts to fulfill grocery-pickup orders at stores. Walmart first introduced grocery pickup in 2017 and initiated a harder push starting in 2019.[62] In 2018, the company also introduced same-day grocery delivery.[63] It’s hard to square these developments with Lina Khan’s prediction that the Whole Foods deal “would allow Amazon to potentially thwart future innovations.”[64]

The point is not that the Amazon-Whole Foods merger was the sole cause of these innovations. They required technological innovations that are separate from anything related to groceries. The important takeaway is that the grocery market continues to innovate, particularly in the direction of online orders and rapid delivery. These are exactly the areas in which Amazon specialized and was expected to bring to Whole Foods with the merger. Despite Stacy Mitchell’s claim that “delivery is key to sustaining a monopoly online” or that Amazon can “control rapid-package delivery,” it appears today that delivery is just another part of the competitive process, and all the players realize they need to offer the service. Lina Khan’s prediction that “]b]y bundling services and integrating grocery stores into its logistics network, the company will be able to shut out or disfavor rival grocers and food delivery services” has not panned out.[65]

The reality of the grocery market is that competition has increased, as retailers like Walmart, Kroger, Giant, Harris Teeter, and others have expanded their delivery offerings. Similarly, delivery companies like Instacart, DoorDash, and UberEats have also expanded their offerings to include groceries. This has led to the emergence of successful startups in the grocery-delivery market, such as Thrive Market. As a result, consumers now have more options for convenient and efficient grocery delivery, while retailers and delivery companies are adapting to meet the market’s demands.

All of these efforts demonstrate how traditional grocers are embracing new technologies in order to keep up with the ever-changing digital landscape and remain competitive in the market. These technological improvements allowed grocers to be better positioned for grocery pickup at the start of the COVID-19 pandemic. For example, online sales for Walmart grew 74% in the first quarter of 2020.[66]

C.      In Retrospect

Although it is still too early to draw any firm conclusions, it seems that the merger’s anticompetitive potential was dramatically overplayed by its opponents. Most of Amazon’s direct rivals are still making healthy profits (as reflected by their stock prices). This is inconsistent with the vertical-foreclosure and predatory-pricing stories put forward by critics. Under vertical foreclosure, rivals are deprived of key inputs (or outputs) that prevent them from competing. Predatory pricing occurs when a dominant firm prices below cost in the hope of recouping its losses once rivals have exited the market. Crucially, both of these scenarios necessarily imply that the bottom lines of rivals will suffer (ultimately falling to zero). At the time of writing, these theories have failed to pan out.

Of course, just because anticompetitive scenarios have not yet transpired does not guarantee that they will not occur in the future. Likewise, rivals’ overall profits may conceal losses in those markets where they actually compete with Amazon. Finally, it is possible that these rivals’ profits would have been higher still had the merger not gone through. Although these potential counterarguments might deserve some attention, they do not detract from the inescapable conclusion that, as of yet, Amazon has not managed to exclude any of its large retail competitors thanks to its acquisition of Whole Foods.

More fundamentally, it is important not to lose sight of the other side of the coin: Amazon’s purchase of Whole Foods may have generated important benefits that critics failed to consider. First and foremost, Amazon immediately implemented a number of price reductions following the deal.[67] It also started to harness the various synergies that existed between itself and Whole Foods. It notably made some of Whole Food’s items purchasable on Amazon, and placed Amazon lockers in numerous Whole Foods stores (allowing consumers to pick up packages from these locations).[68] The online retailer also ensured that its Prime members would receive various discounts when they visit Whole Foods stores.[69]

And thanks to the forces of competition, the benefits extend beyond Amazon and Whole Foods stores. Rivals notably reacted to the merger by replicating these cost reductions and innovative services. Walmart concluded a deal with Google to allow users to make purchases using Google’s voice assistant.[70] Kroger decreased its prices and expanded its delivery service.[71] And Target introduced a same-day delivery service.[72] Of course, some of these changes would have happened anyway—grocery delivery was always going to gather momentum thanks to consumers’ ever-improving access to the internet. It is also fair to assume, however, that Amazon’s purchase of Whole Foods accelerated this trend by signaling to rivals they needed to up their game rapidly, or Amazon-Whole Foods might ultimately eat their lunch.

Of course, it is hard to tell whether these benefits would have been achieved without the Amazon-Whole Foods merger. Amazon could conceivably have concluded a long-term contract with Whole Foods, leading rivals to introduce their improvements regardless of the merger. But this is far from certain. As Benjamin Klein, Robert Crawford, & Armen Alchian famously pointed out, long=term contractual relationships sometimes entail significant practical obstacles.[73] The upshot is that it is often more cost-effective for firms to opt for an outright merger. And if a merger was indeed necessary to generate synergies between Amazon and Whole Foods, then there is little doubt that it also played some part in the competitive response of rivals. In short, there are strong reasons to believe that Amazon’s acquisition of Whole Foods may have caused some of the benefits that U.S. retail consumers currently enjoy.

In short, many critics’ response to the Amazon-Whole Foods merger was simply kneejerk antitrust populism. Nothing at the time of the merger—other than a presumption that big is bad and a dystopian fear that big firms inevitably continue to increase their market shares[74]—justified the doomsday scenarios that were bandied about. This, among many other factors, is why the FTC ultimately allowed the merger to proceed without a protracted in-depth investigation.[75] Five years on, this decision appears fully vindicated, and critics’ arguments appear even more unreasonable with hindsight. The doomsday scenario failed to transpire.

II.      Consolidation in the Beer Industry

The beer industry has undergone significant changes in the 21st century, with a shift towards craft beers, an increase in the number of microbreweries, and a growing interest in different styles of beer. In the early 2000s, the industry was dominated by a small number of large multinational corporations, but over the past two decades, a wave of small, independent breweries has emerged, challenging the status quo and changing how consumers think about beer.

At the same time, there has been a reshuffling of ownership among the biggest U.S. brands: Anheuser-Busch, Miller, and Coors. In 2002, South African Brewing (SAB) acquired Miller Brewing to become SABMiller. In 2005, the Canadian brewing company Molson merged with Coors to become Molson Coors. In 2007, SABMiller and Molson Coors announced their “joint venture.” In 2008, InBev (itself a merger between the Belgian firm Interbrew and the Brazilian conglomerate AmBev) acquired Anheuser-Busch to become AB InBev or just ABI. In July 2016, ABI acquired SABMiller after approval from antitrust authorities. The deal included commitments from ABI to divest SABMiller’s 59% equity stake in Molson Coors. Given this list of major mergers within the space, it is appropriate to consider both the effects of specific mergers and also the general trends.

A.      The Predictions

While the earlier mergers were relatively underdiscussed, the final ABI-SABMiller merger received significant attention from antitrust watchers and commenters in the ABI-SABMiller merger process. The American Antitrust Institute warned that the merger would “eliminate competition,”[76] “impose significant price increases on consumers,” and “undermine the continued emergence of craft beer.”[77] AAI President Diana Moss told the Washington Post that the deal was “a terrible, terrible idea” and that “[t]his should be dead on arrival at the DOJ. There would be grave concerns over their power to control price … and the effects on the craft-brewing industry would be devastating.” President Biden’s 2021 executive order on competition singled out several sectors, including alcoholic-beverage production, as embodying apparently problematic concentration and a weakening of competition.[78] The U.S. Treasury Department report created in response to the executive order claimed that “[s]ome of the increased concentration may have resulted from the absence of consistent merger enforcement.”[79] While these claims are much less extreme than those we find in other contexts, it is still worthwhile to evaluate how reasonable they were and what evidence we have at this point about the effects of consolidation in the beer industry, to the extent that it has happened.

B.      What Happened?

First, has concentration been rising in beer? The Treasury report assessing competition in the beer market asserts that concentration is rising.[80] It is unclear what period was under consideration, although the citations are to older literature from the early 2000s. A recent study by Kulick & Card using U.S. Census data suggests otherwise.[81] They consider the concentration for the four largest firms in the industry. For breweries, that number was 90.8% in 2002, but has fallen to 68.6% in 2017, which is the most recent data. Instead of rising concentration, as commonly asserted, we actually see falling concentration within all alcoholic-beverage sectors, with the largest drop in beer brewing.

It is quite possible that those declines in concentration would have been even greater but for the mergers, but the falling concentration is an important datapoint to understand in this discussion.

If we want better identified estimates, we need to look at specific mergers and events. The ABI-SABMiller merger is too recent for the economics-publishing process, but the merger with the best econometric evidence is SABMiller and Molson Coors. SABMiller and Molson Coors announced their “joint venture” in October 2007 and was approved in June 2008. At the time, Miller had a 17.52% market share and Molson Coors had a 10.43% share.[82] Despite growing craft brewers, even at the time, almost 90% of beer revenue was from lagers.[83] In addition to high concentration, the main products were seen as close substitutes (Miller Lite and Coors Lite, for example).

Despite these possibly worrisome features of the market, the parties claimed large efficiency gains that would offset the market-power increases. The DOJ stated publicly that, in its investigation, “the Division verified that the joint venture is likely to produce substantial and credible savings that will significantly reduce the companies’ costs of producing and distributing beer.”[84] The reason was that “[p]rior to the merger, Coors was brewed in only two locations, whereas Miller was brewed in six geographically dispersed locations. The merger was expected to allow the combined firm to economize on shipping costs primarily by moving the production of Coors beer into Miller.”[85]

Ashenfelter, Hosken, & Weinberg (2015) use retail-scanner data collected by IRI.[86] The data used was only for supermarkets, which Ashenfelter, Hosken, & Weinberg estimate accounted for 23% of total sales for 2011. They have data on brand, package size, and container type. They find that the concentration effect was roughly (but not completely) offset by the efficiency effect. In their preferred specification, the increase in concentration from the merger was predicted to increase by 2% across all lager-style beers but that was nearly offset by efficiency created by the merger.[87] Overall, prices were unchanged on average.

If we focus on specific beers, Miller & Weinberg (2017) find a significant price increase (6%-8%) after the merger for the most popular beer brands (Coors Lite, Miller Lite, and Bud Lite) but no effect for Corona Extra and Heineken, which are seen as more differentiated.[88] The authors take this as evidence of a coordinated price effect between ABI and Miller-Coors, since the market now had only two major players, compared to three before the merger. Looking at a local level, Ashenfelter, Hosken, & Weinberg (2015); Miller & Weinberg (2017); and Azar & Barriola (2022) all find a positive correlation between increases in HHI and price increases. Overall, there is credible evidence that the merger led to a price increase for the flagship brands.

However, before we conclude that the merger was disastrous for the beer market, remember that concentration has been falling. That is because the big three are not the only players. Azar & Barriola (2022) study the effects of the merger on the craft-beer market.[89] They find that, in the average market over the four years following the merger, the merger led to over an 11% increase in the number of craft brewers, while the number of products per craft brewer remained the same. Since most of these entrants were small, the market shares were largely unaffected by entry. They point to the price increases as the driver of entry into the craft market, as it made entry profitable. This goes against a common theory that larger firms with more power will deter entry.[90] Another possibility, unexplored but consistent with higher entry, is that the merger increased the possibility that craft beers would be acquired by the large brewers.

At the same time, the large breweries are acquiring smaller breweries and changing their production process. For example, according to Elzinga & McGlothlin (2021), when ABI acquired Goose Island, there was a large increase in sales of craft beers, suggesting some sort of spillover from the big names to the craft beers.[91]

C.      In Retrospect

Overall, the effects of beer mergers seem to be neutral. While the prices of Coors Lite, Miller Lite, and Bud Lite increased, efficiency gains meant that the average price stayed flat, and we saw new entry from craft brewers. Continued growth in craft brewing suggests that Diana Moss’ concern that “the effects on the craft-brewing industry would be devastating” appear not to have panned out. One thing that makes predictions about the ABI-SABMiller merger hard to assess in retrospect, however, is that many came before the spin-off of Coors was finalized as part of the deal. It is possible that these concerns were conditional predictions that did not ultimately apply, as SABMiller needed to divest from Molson Coors as part of the DOJ agreement.

One aspect that affects the study of mergers in the beer market is that the alcohol market is extremely regulated, and those regulations change over time. Differences in regulatory regimes can serve to distinguish alcohol markets across states and over time, which makes it easier to compare more and less concentrated markets. At the same time, changing regulations also contaminate any causal analysis. The regulations introduce pressures to beer markets that differ from more standard product markets, such as smartwatches. As Barry Lynn of Open Markets described it: “The great effervescence in America’s beer industry is largely the product of a market structure designed to ensure moral balances…” (emphasis added).[92] He added that “consolidation can also threaten the primary outcome of this market — the ability of communities and individuals to manage for themselves this ever so extraordinary commodity.”[93]

Such moral questions, or questions about communities’ ability to manage themselves, are beyond the scope of this merger retrospective, but an unavoidable part of the larger policy debate surrounding beer.

III.    Bayer-Monsanto

The Bayer-Monsanto merger, completed in 2018, brought together two of the world’s largest and most innovative agricultural companies, creating a leading player in the industry. The merger, valued at $66 billion, has had a significant impact on the global agriculture industry and brought several benefits to farmers and consumers. After earning approval from the European Union, Russia, and Brazil, approval in the United States (particularly by the DOJ) was the deal’s final hurdle.

In order for the Bayer-Monsanto merger to pass, the DOJ required the companies to make certain divestitures. Divestitures are the process of selling off certain assets or businesses in order to mitigate concerns about the merger reducing competition in the market. The DOJ required Bayer to divest certain seed and herbicide assets in order to address concerns about the merger’s potential impact on competition in the seed and herbicide markets. In total, the two companies spun off $9 billion in assets.[94] Specifically, Bayer was required to divest its cotton, canola, soybean, and vegetable-seed businesses, as well as its Liberty herbicide business, to BASF, a German chemical company. This divestiture helped to ensure that there would continue to be strong competition in the seed and herbicide markets after the merger.

Additionally, Bayer was also required to divest certain assets to ensure that there would continue to be competition in the digital-agriculture market. Specifically, the company was required to divest its “Xarvio” digital-agriculture platform to an independent third party.

The DOJ also imposed restrictions on Bayer’s behavior to ensure that the company would not use its strengthened position in the market to harm competition. For example, Bayer was required to license certain intellectual property to competitors to ensure that they could continue to compete effectively.[95] These required divestitures and restrictions on behavior helped to ensure that there would continue to be strong competition in the market after the merger.

A.      The Predictions

Perhaps unsurprisingly, the merger drew stern rebukes from progressive advocates of more aggressive antitrust enforcement. Spencer Waller, a professor at Loyola University Chicago’s School of Law and the director of the Institute for Consumer Antitrust Studies, expressed standard fears about the merger: “The fear is that price is going to go up, quality is going to go down, and whichever company was trying super hard before, well, they got merged in, and they’re going to stop caring.”[96] Sen. Amy Klobuchar (D-Minn.) opined that “[l]arge-scale consolidations in the agricultural inputs sector could also significantly reduce competition, limit seed options for farmers, and raise prices for both farmers and consumers,” adding that the “company created by the Bayer-Monsanto merger would control about 24 percent of the world’s pesticides sales. Together, Bayer-Monsanto and Dow-DuPont would control 76 percent of the market for corn and 66 percent of the market for soybeans.”[97] These fears were echoed by academic work arguing that increased consolidation resulting from the Bayer-Monsanto and Dow-Dupont mergers would lead to significant price increases in the markets for corn, soy, and cotton seeds.[98]

More generally, the merger (as well as others deals in the food sector) was repeatedly cited as an example of the failing state of antitrust enforcement. For instance, the Democratic Party’s “Better Deal” platform, published in July 2017, cited the food sector as one of five key sectors that required more stringent antitrust merger enforcement.[99] It also argued that the Dow-Dupont, Bayer-Monsanto, and Syngenta-ChemChina mergers would harm farmers and rural communities. According to the document, these harms justified a more holistic approach to antitrust policy.[100]

Finally, in addition to standard market-power concerns, some critics raised fears about the use of data to harm farmers. Margrethe Vestager, the European Union’s top antitrust enforcer at the time of the merger, worried about the effects of collected data on farms. “Digitalization is radically changing farming,” Vestager told a German newspaper. “We need to beware that through the merger, competition in the area of digital farming and research is not impaired.”[101] “If they own the data, then they can dictate what they plant, where they plant it, and how they’re harvested,” said Joe Maxwell, executive director of the Organization for Competitive Markets.[102]

B.      What Happened?

The merger did increase market concentration within the agriculture industry. Prior to the merger, Bayer and Monsanto were already two of the industry’s largest players and the merger served to further consolidate their position. Increased concentration led to concerns about reduced competition and higher prices for farmers and consumers. But did they play out?

While people will point to rising seed prices as evidence of the merger’s harms, it is important to view the rising prices in context. Several factors, unrelated to any mergers, contribute to the rising cost of seeds over time. One reason is the ongoing development of hybrids that have higher yields, making the seed more valuable. Additionally, the incorporation of biotechnology traits in corn hybrids has provided farmers with management advantages, such as possible reductions in the use of pesticides and tillage, which further increases the value of the seed.[103] Improvements in seed genetics and technology have led to increased costs of seeds, specifically, but may reduce the true costs of corn per-bushel, as yields have increased.[104]

In addition, the merger has led to concerns about the potential for the newly merged company to wield significant influence over the regulatory process. The company will have significant resources at its disposal, which could be used to influence regulators and shape policies in ways that benefit the company, but not necessarily the public.

Regulators argued that, by merging with Monsanto, Bayer would become a major player in the corn-seed market. The newly merged company would have significant market share and an increased ability to influence prices. Additionally, since Bayer also sells a key seed treatment to corn farmers, the company would have an incentive to raise the price of the treatment, knowing that farmers would have fewer choices of seed suppliers, which was one of the concerns that the government raised about the merger. This argument ignores the complementarity between seeds and seed treatment, in that any increase in price for seed treatment lowers the demand for your seeds. The merger actually aligned these incentives.

One market where Monsanto had relatively large market share is in corn and soybean seeds. Sen. Klobuchar worried that “Bayer-Monsanto and Dow-DuPont would control 76 percent of the market for corn and 66 percent of the market for soybeans.” While hardly rigorous econometric evidence, we can look at global corn and soybean prices, as shown in Figure III, to assess how the corn and soybean markets are doing. Both prices stayed steady after the merger, but these prices are not adjusted for inflation. Corn and soybean prices actually fell in real inflation-adjusted terms. Only the onset of the COVID-19 pandemic, with the ensuing inflation and supply-chain issues, drove corn prices back on par with previous nominal highs from around 2012-2013.

Among the primary benefits of the merger have been increased efficiency and cost savings. By combining the resources and expertise of both companies, the newly merged company is better positioned to invest in research and development, improve yields, and reduce costs for farmers. In 2018, along with the acquisition of Monsanto, Bayer announced annual cost savings of around $1.5 billion.[105] In 2020, it announced an addition $1.8 billion in annual savings.[106] It is important to note, however, that this latter cost savings was partially in response to the COVID-19 pandemic and should not be directly attributed to the merger.

These sort of cost reductions do, however, tell us something about the relevant markets, as well as the market position in which Bayer now finds itself. The need to cut costs drastically does not comport with a firm soaking in monopoly profits. If the best of all monopoly profit is a quiet life, Bayer does not have that life. Over the past five years, since just before the merger was allowed, Bayer’s stock is down more than 50%.

C.      In Retrospect

Five years after the merger, there is no evidence that Bayer can “dictate what they plant, where they plant it, and how they’re harvested.”[107] Again, the direst predictions have not occurred. Farming remains a difficult life. The hours are long, and prices are volatile. But it is hard to find a break in any trends.

One of the challenges of a retrospective on the Bayer-Monsanto deal is the sheer variety of markets in which each company participates. This is a broader issue that applies to any retrospective analysis of mergers. We need to be careful that any perceived market harms are not actually the result of random chance. Even if most mergers are beneficial for competition, some will turn out to have generated a rise in prices. This is not conclusive evidence that allowing the merger was a mistake, even if it may appear so in hindsight. It is quite possible that at least one of the many markets affected by the Bayer-Monsanto merger did see a rise in prices. But looking across those many markets to find the particular one that generated a price rise is equivalent to p-hacking. We have the same problem in looking explicitly for markets where harm did not occur.

Instead, this retrospective focused on Bayer’s overall market position, as reflected in its stock returns and need to cut costs, as well as the market for corn and soybean seeds, because these were markets that were explicitly highlighted as areas of potential concern by progressive critics. Looking at these metrics suggests that, despite an increased level of market power from the merger, Bayer has failed to raise prices or exploit its position in any meaningful way.

IV.     Google-Fitbit

Google’s purchase of Fitbit was one of the largest tech acquisitions of 2019. The $2.1 billion deal marked Google’s entry into the wearables market and added Fitbit’s popular fitness-tracking devices to the tech giant’s portfolio.[108] The acquisition also sparked a debate among industry experts, privacy advocates, and consumers regarding the potential consequences of combining the vast data collected by Fitbit with Google’s already extensive data-collection and analysis capabilities.

A.      The Predictions

The deal’s announcement was swiftly met with cries of alarm from both privacy advocates, who feared it would enable Google to use consumers’ health information to target ads, and from progressive-minded competition scholars, who believed the deal would cement Google’s market position in online advertising. Lina Khan called allowing the acquisition a “terrible decision.” This was part of her larger complaint that “[e]nforcers spent the last two decades waiving through hundreds of acquisitions by Google, only to watch it illegally renege on commitments, exclude rivals, & monopolize markets.”[109]

The fears surrounding the Fitbit acquisition are perhaps best summarized in a joint statement, signed by several consumer associations and progressive-advocacy groups, including BEUC (Europe’s largest consumer organization), the Open Markets Institute, and the Omidyar Network.[110] Among other things, the organizations claimed the merger would prevent new firms from entering the market and would harm consumer privacy:

Wearable devices could replace smartphones as the main gateway to the internet, just as smartphones replaced personal computers. Google’s expansion into this market, edging out other competitors would thus be significant. Wearables like Fitbit’s could in future give companies details of essentially everything consumers do 24/7 and allow them to feed digital services back to consumers…. The exploitation of such data in a commercial context is an important concern that demands close scrutiny by regulators both for its anticompetitive effects (where huge bundles make it near-impossible for entrants to compete against incumbents) and anti-consumer effects (creating ever bigger bundles that undermine consumer choice).[111]

Along similar lines, Tommaso Valletti & Cristina Caffarra intimated the deal would enable Google to use data from Fitbit devices in order to better target its ads. According to them, this would harm user privacy and suppress competition from other advertisers:

With Google as the acquiror, the concern is that the acquisition is intended to pre-empt the emergence of a potential rival who could otherwise develop by exploiting a key ‘access point’ for the collection of data and for access to our attention, with the ultimate aim to defend and enhance its position in the core advertising business…

[Google] already owns locational data that is hugely important for targeted advertising…. Combining this existing stock with enormously valuable biometric and behavioural data that can inform on other dimensions of the user’s experience, Google will gain further strength in the supply of digital advertising in which it is already super dominant.[112]

In both cases, an important part of the argument was that the merger would harm competition because data from Fitbit devices would reinforce Google’s already strong position in the online-ad industry.[113] The authors supported this assertion by claiming essentially that the incentives to do so were simply too powerful for Google to ignore:

Google/Fitbit involves the acquisition by a giant digital platform—whose business is based on the monetisation of customers’ data through microtargeted ads, and is already sitting on a mountain of personal data and analytics capabilities—of a target with unique data-generating assets in the most sensitive of all areas: capturing biometric data (health, and even emotions) 24 hours a day, every day.[114]

Or, as seven Democratic senators claimed:

Adding Fitbit’s consumer data to Google’s could further diminish the ability of companies to compete with Google in… ad technology markets and could raise barriers for potential competitors to enter these markets,’ the lawmakers wrote.[115]

Others, including Gregory Crawford, speculated that Google would combine health data from Fitbit devices with more general data about those same users, and sell this to insurance providers, enabling them to better price discriminate between consumers:

Combining health and non-health data will allow Google to use non-health data to “customize” insurance offers. Does he gamble? Does she search for symptoms of life-threatening illnesses? It’s easy to see how such info could reduce the quality of insurance offers.[116]

Regulators, however, were largely unconvinced by these claims, with the world’s largest antitrust authorities clearing the merger with only limited remedies. In the United States, the DOJ essentially waved the deal through, while the European Commission required only limited API access and data-use-related remedies.[117]

In short, vocal critics made three key claims about the merger, all of which have since turned out to be false: (i) that Google would use data from Fitbit devices to better target its ads, (ii) that Google would obtain a dominant position in wearable devices and prevent the entry of rivals in this segment, and (iii) that Google would reinforce its already strong position in the online-advertising market. As explained below, not one of these claims has turned out to be even remotely accurate.

B.      What Happened?

Critics’ claims appear most mistaken in the advertising industry. Indeed, the fear was that, by purchasing Fitbit, Google would be in a position to better target ads throughout its entire platform, thereby increasing its hold on the broader advertising industry. Four years on, however, the opposite appears to have happened. From 2017 to 2022, Google’s share of online advertising spend has steadily declined, falling from 34.7% to 28.8%.[118] And it is not just in relative terms; the company’s quarterly earnings reports show a clear decline in ad revenue, including year-over-year drops in the fourth quarter of 2022 of 8.6% for the Google network and 7.0% for YouTube.[119] As usual, critics may retort that Google’s revenues and market shares would have declined even more absent the merger but, once again, that was not the initial claim. Instead, they wrote that the merger would give Google an unbreakable grip on the online-advertising industry—the “horse has bolted” as Gregory Crawford put it[120]—and that has not been the case.

A second major piece of the doomsday claims concerns the combination of health-related data from Fitbit with Google’s other data concerning its users, either with the purpose of using it for Google ads or in order to sell it to insurers. While the remedy imposed by the European Commission precluded Google from combining data across platforms with the purpose of selling Google ads, it said nothing about the use of Fitbit and Google data for insurance purposes.[121] Meanwhile, nothing prevented Google from doing any of this in the United States, where the DOJ chose not to challenge the acquisition.[122] And yet, at the time of writing, even in the United States, Google does not use Fitbit data to target Google Ads. Fitbit’s privacy policy is unambiguous in this respect. The “how we use information” section of the policy lists only four uses:





None of these categories (which the privacy policy delves into in great detail) could reasonably be construed as entailing the use of Fitbit data in order to better target Google ads. The same applies to the “how information is shared” section of the same privacy policy.[124] In short, Google does not use Fitbit data to target Google ads. As the company summarized in an explainer regarding the merger:

Currently, all customers log in to Fitbit with a Fitbit account, and so your Fitbit data syncs to your Fitbit account, not to a Google account. However, you may still choose to transfer some Fitbit data to Google in limited cases, like if you use Fitbit with a Google service. For example, you may authorize Google Assistant to provide your Fitbit activity, like your step count and calories burned. For more information on connecting Fitbit and Google Assistant, please see How do I use a voice assistant on my Fitbit smartwatch? and the related Google help article. For more information on how Fitbit shares data with others, including Google, please see the Fitbit Privacy Policy section titled “How Information Is Shared.”[125]

Thus, contrary to critics’ claims, Google does not integrate users’ Fitbit data into its broader advertising platform, nor does it share (or sell) that information with (to) insurers.[126] And nothing suggests it plans to do so in the future.

This leaves one final question: did the acquisition of Fitbit enable Google (and Fitbit) to significantly increase either of the firms’ market position in the burgeoning wearable-device industry? Once again, critics’ claims appear to fall short. Fitbit has been slowly losing market share. According to Counterpoint Technology Market Research, the overall smartwatch market grew by 22% from 2020 to 2021, but Fitbit’s share fell from 5.7% to 3.8%, as shown in Figure V. Counterpoint found similar declines in market share from 2021 to 2022.[127] Other competitors, such as Samsung and Garmin, saw an increase in their market shares, but Apple (rather than Google-Fitbit) remains the major player in the market by a substantial margin.


C.      In Retrospect

It is important to situate the Fitbit acquisition in a broader tech-hardware market that all of the major players are trying to enter. One year after the relevant merger took place, Amazon introduced its Amazon Halo, which it describes as “a new service dedicated to helping customers improve their individual health and wellness. Amazon Halo combines a suite of AI-powered health features that provide actionable insights into overall wellness via the new Amazon Halo app with the Amazon Halo Band, which uses multiple advanced sensors to provide the highly accurate information necessary to power Halo insights.”[129]

Many argued at the time that Amazon’s invention would become one of the biggest game-changers in the market for smartwatches. Nevertheless, two years after its launch, the Halo had not set the sales charts on fire and, in July 2022, the company cut its price steeply to $45. It continues to stand as a cheaper alternative to more entrenched producers. Market watchers saw Amazon’s struggles as similar to Fitbit’s, with one tech-news site noting: “The Fitbit comparisons are immediately obvious, given the similar design and form factor.”[130] Yet, neither cheaper option has been able to supplant the Apple Watch.

It is also important to note that the Google-Fitbit merger helped enable Google to enter the smartwatch market to compete with the market leader, Apple. And the Fitbit acquisition was not the only move Google made aimed at competing with its biggest smartwatch rival: In 2019 Google also acquired Fossil Group’s smartwatch-related IP and a portion of its R&D personnel.[131] Google introduced the Pixel Watch in late 2022, following two failed previous attempts (both cancelled ahead of their release) to introduce a Pixel-branded smartwatch to compete with the Apple Watch.[132]

Why did Google take so long to build a smartwatch? When I asked that question to Rick Osterloh, Google’s SVP of hardware…, his answer was one word: Fitbit. Google couldn’t make the smartwatch it wanted without a killer health and fitness platform, and until very recently, it simply didn’t have one.[133]

There have also been policy changes that have affected the market and particularly the data concerns that some observers raised. Among the significant legislative changes were the EU’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA), both of which took effect in in 2018. In 2019, Sens. Bill Cassidy (R-La.) and Jacky Rosen (D-Nev.) first introduced the Stop Marketing And Revealing The Wearables And Trackers Consumer Health (SMARTWATCH) Data Act, which proposes “prohibitions on the use, sharing, or selling of health data collected, stored, and transmitted by wearable devices, including smartwatches.”[134]

Those developments notwithstanding, it appears clear that critics’ fears concerning the Fitbit acquisition were dramatically overblown and failed to reflect the competitive reality that Google faced. With intense competition for wearable devices, integrating Fitbit data into the broader Google Ads ecosystem was always going to be an unpopular move that Google could ill afford. Meanwhile, integrating the Fitbit platform into Google’s smartwatch ecosystem was exactly the needed boost to finally enable it to compete with Apple in the smartwatch space.

V.      Facebook-Instagram (and WhatsApp)

Public reaction to the Facebook-Instagram merger (and, to a lesser extent, Facebook’s purchase of WhatsApp) could be seen as the inverse of what happened with the mergers discussed in the previous sections. While many progressives today see this merger as “the one that got away” from authorities, at the time, it was mostly seen as benign and was even derided as a poor business decision on Facebook’s part. Very few competition scholars or advocates of aggressive antitrust stepped forward to assert that it would harm competition. In other words, a deal that is now seen by many as the quintessential “killer acquisition”[135] struck most as harmless when it was announced. As in the previous case studies, this suggests that media coverage and the commentary surrounding a merger is often a poor predictor of its likely future effects on competition—or, at least, a poor predictor of which mergers critics will come to see as harmful in the future.

As the previous paragraph intimated, critics today (and a handful of them at the time of the deal) have come to see Facebook’s acquisition of Instagram (and WhatsApp) as uniquely harmful to competition. It has been described as a killer acquisition, not for actually killing Instagram, but for Instagram’s failing to develop as it might have but for being acquired.[136] It is worth noting, as we explain at length in a separate paper, that even this contemporary take is deeply flawed.[137] Indeed, there are important reasons to believe that, rather than kill a competitor, the merger is ultimately what enabled the Instagram platform to thrive in ways that would have been impossible without the merger.

A.     The Predictions

While they were few and far between, there were some objections to the deal when it was announced. For example, Om Malik opined that Facebook was essentially buying off a competitor: “Facebook was scared shitless and knew that for first time in its life it arguably had a competitor that could not only eat its lunch, but also destroy its future prospects.”[138] This critique aside, the merger did not draw anywhere near the amount of attention at the time as it currently occupies in policy discussions.

Indeed, the deal was widely derided when it was announced, not for antitrust reasons, but as a terrible purchase by Facebook. For instance, Florian Ederer remembers telling his MBA students, “This makes no sense.”[139] Others argued that it was evidence of a tech bubble. Charles Arthur, a columnist for The Guardian, wrote that:

[I]t’s hard to imagine how a service that just lets you take a photo of your breakfast, colour it blue and share it could possibly be worth anything. Perhaps Instagram isn’t really worth anything: if the electricity goes off, it will simply cease to exist, except as some bits on a hard drive somewhere. But until then, enjoy the bubble while it lasts.[140]

Along similar lines, another Guardian piece asked several progressive commentators, including Kara Swisher, what they thought was the rationale for the deal. None of them cited anticompetitive behavior—some even brushed that concern aside. Instead, the consensus appeared to be that the merger would reinforce Facebook’s platform and enable it to compete against Google’s now defunct Google+ social-media service:

Seeing the Instagram acquisition as merely quashing a potential competitor to one aspect of Facebook’s offering is far too narrow an outlook, though. Better, surely to view the deal against the increasingly familiar backdrop of Facebook’s “It’s complicated” relationship with Google and Apple. One of the things people like most about the Google+ social network is its photo-sharing features. Buying Instagram not only bolsters Facebook’s capabilities on that front—photo filters in its official app within a few months, anyone?—but also keeps the startup out of Google’s clutches, should it have been tempted to make its own acquisition bid.[141]

These reactions are understandable. The Instagram platform grew from roughly 24 million users and no revenue at the time of the acquisition to more than 1.2 billion users today.[142] Given that, contemporary observers unsurprisingly failed to imagine that the merger would later be construed as a ploy to take out Facebook’s budding rival.

With the benefit of hindsight (or perhaps the “benefit” of a newly accommodating political environment), however, many have come to see Facebook’s purchases of Instagram and WhatsApp as perhaps the quintessential “killer acquisitions”—in which an incumbent acquires a potential rival in order to preserve its market position.[143] This criticism ultimately led the U.S. House Judiciary Committee to open an investigation into competition in digital markets that focused heavily on Facebook’s acquisitions.[144] It also led the FTC and 46 state attorneys general to lodge antitrust complaints.[145] As Rep. Ro Khanna (D-Calif.) put it: “Imagine how different the world would be if Facebook had to compete with Instagram and WhatsApp. That would have encouraged real competition that would have promoted privacy and benefited consumers.”[146]

There has also been significant criticism of the deals in academic circles. Among the more restrained, Steven Salop has written that “while Instagram might have provided an efficient photo-sharing technology that Facebook could utilize, it might have grown into a social media competitor absent the acquisition.”[147] This led Jason Furman and his co-authors to conclude that the deal should likely have been blocked by authorities:

With the benefit of hindsight, we can now observe that Instagram has grown considerably since 2012 and offers a service that many see as an alternative to Facebook. Facebook owns both networks, meaning that consumers switching from its original network to Instagram do not cause it competitive concern, and does not provide an incentive for Facebook to improve its services in response. Analysis of the social media market in Chapter 1 illustrates how this acquisition may have offset some of the decline in Facebook’s share of the market….

While the CMA continues to be required to demonstrate at phase 2 that a substantial lessening of competition is more likely than not to occur, the panel is concerned that it could be unable to challenge mergers of this kind effectively, despite the scale of potential harm being very large.[148]

Writing only a couple of years ago, these scholars believed that, absent the merger, Instagram would have grown into a powerful social-media competitor to Facebook, leading to better services for users, cheaper advertising on both platforms, and facilitating market entry for new challengers.

Similarly, Tommaso Valletti & Cristina Caffarra have argued that Facebook’s purchase of WhatsApp magnified the company’s ability to extract personal data from users (although their reasoning likely extends to the Instagram purchase, as well):

We have also collectively recognised (ex post) that the review of Facebook/WhatsApp missed the true driver for the deal—capturing the millennial generation’s users and monetising yet more personal data, increasing Facebook’s power in advertising markets in disregard of privacy rules.[149]

In short, while Facebook’s purchase of Instagram was widely seen as benign when it was announced, it later came to be seen as cementing the company’s unassailable position in the social-networking space.

B.      What Happened?

Recent developments in the social-media space are making contemporary criticism of the Facebook-Instagram deal look increasingly misguided. Indeed, only a couple of years after many experts opined that the deal enabled Facebook to maintain its monopoly, the company’s social-media “empire” is showing significant cracks. With the entry and rapid rise of TikTok, there is now a strong sense that Facebook’s market position was never as secure as critics made it out to be. This might not be so bad if these critiques were not so quick to overlook the many consumer benefits that were likely generated by the Instagram deal, and that seem to have been obvious to observers when it was announced.

To begin, despite numerous assertions of the alleged anticompetitive nature of the Instagram and WhatsApp mergers, Facebook (now Meta) has, in fact, experienced a loss in daily users. “Meta’s once all-powerful, unmatched social graph is no longer the market advantage that it once was,” it has been noted. [150] Meanwhile, TikTok “has seen great success (…) with the app opening to a ‘For You’ feed of algorithmically-selected clips, based on your viewing habits.”[151] Thus, 11 years after the Instagram merger and only a couple of years removed from the most scathing condemnations of its effects, Meta is struggling to compete with the growing threat posed by TikTok. This stands in contrast to the many arguments that the merger had cemented Facebook’s long-term supremacy. As one observer put it:

As reported by WSJ, TikTok users are spending over 10x as many hours consuming content in that app as Instagram users currently spend viewing Reels. According to a leaked internal report, Reels engagement is also in decline, dropping 13.6% in recent months—while ‘most Reels users have no engagement whatsoever.[152]

It is estimated that TikTok will grow to 834.3 million monthly users worldwide in 2023.[153] There is thus reason to believe that, within a short time span, it could become the largest of the Big Five worldwide social networks (Facebook, Instagram, TikTok, Snapchat, and Twitter).

This competition is all the more worrying for Meta, given that many segments of the social-media industry are still growing, and new niches are still being discovered. New segments like the so-called “metaverse” and game-based communities such as Fortnite all potentially create new footholds for rivals to exploit. Similarly, older segments of the industry also continue to grow, opening avenues for rivals to compete for new users who are not already attached to one of Meta’s services. This is notably the case for messaging apps, which continue to attract millions of new users every year (see Figure VII).

Given what precedes, it is not surprising that many have started to suggest that Meta’s market position is under significant threat.[154] As one columnist wrote in the New Yorker:

Facebook, it seems, is moving away from its traditional focus on text and images, spread among people who know one another, to instead adopt TikTok’s emphasis on pure distraction. This shift is not surprising given TikTok’s phenomenal popularity, but it’s also shortsighted: platforms like Facebook could be doomed if they fail to maintain the social graphs upon which they built their kingdoms.

Along similar lines, the Washington Post published a piece titled “How TikTok Ate the Internet” that suggested that TikTok may have already won fight to become the largest social-media network:

In five years, the app, once written off as a silly dance-video fad, has become one of the most prominent, discussed, distrusted, technically sophisticated and geopolitically complicated juggernauts on the internet — a phenomenon that has secured an unrivaled grasp on culture and everyday life and intensified the conflict between the world’s biggest superpowers.

No app has grown faster past a billion users, and more than 100 million of them are in the United States, roughly a third of the country. The average American viewer watches TikTok for 80 minutes a day — more than the time spent on Facebook and Instagram, combined.[155]

To make matters worse, Meta’s stock has lost more than half its value between its peak in 2021, when antitrust criticism of Meta reached its apex, and today.[156] While this may be partly due to the increased competition mentioned above, it may also be due to more widespread concerns about the long-term prospects of Big Tech firms, especially in an environment of rising interest rates.

In short, critics of the Instagram and WhatsApp mergers claim that they essentially enabled Facebook to build an unassailable monopoly over social media. Fast forward a couple of years, and claims of competition’s demise appear to have been premature.

C.       In Retrospect

The Facebook-Instagram merger shows that critics are just as likely to underestimate the competitive significance of a deal as they are to overestimate its anticompetitive effects. On the one hand, observers at the time of the deal largely failed to grasp its rationale and implications. The merger was too often dismissed as Facebook overpaying for a photo-filter app, when in fact it was astutely negotiating the shift towards mobile-based social networking. On the other hand, critics writing only a couple of years ago seem to have gone too far in the other direction. The notion that Facebook built an unassailable monopoly over the social-networking industry by acquiring Instagram is largely refuted by the rapid rise of TikTok. While it is conceivable there would be even more competition in the market absent the merger, it seems clear that the deal did not create anything close to an unassailable monopoly. In short, the deal had complex ramifications for the industry. The alarms raised by academics and pundits largely failed to capture this.

Of course, we are not the first to say this. As Robert Crandall & Thomas Hazlett write in a forthcoming review of digital-platform mergers, the effects of the Facebook-Instagram merger are, at this point, “ambiguous.”[157] They summarize the tradeoffs thusly:

In hindsight, it may be that, had Facebook not acquired Instagram, for example, the independent start-up would have evolved more or less as it did (integrated with Facebook) into a large social media platform and, with perhaps fewer economies of scale and scope (but competing with a Facebook having fewer of either, as well), thus creating additional choices for social media users at modest efficiency cost.

We may have a better sense once the FTC’s monopoly maintenance case against Facebook (first filed in 2020 and re-filed in 2021), in which the agency seeks a divestiture of Instagram and WhatsApp, proceeds further in court.[158] With a more thorough analysis, it may become clear that this was, indeed, the tech merger that “got away” from regulators. Nonetheless, as is common in the examples put forth in this paper, there were also large beneficial effects for consumers that we cannot simply wave away. We need to take these market complications seriously.

Moreover, even after the FTC resolves its complaint, we need to be careful about extrapolating too much from this case and thereby overcorrecting. Regulators might have decided, for example, that since they made a mistake on Facebook-Instagram, they should draw a hard line and bar the next merger in the social-media space. In this example, that would have been Microsoft’s acquisition of LinkedIn, which Crandall & Hazlett classify as “competitive,” as it further allowed LinkedIn to compete with Facebook.

We cannot simply conclude that, since there are network effects in social media, therefore social-media companies must not be permitted to grow larger through mergers. Sometimes network effects are beneficial for consumers, as when they allowed Facebook to bring Instagram’s technology to a larger audience more quickly. And the rise of TikTok (and SnapChat, and other social-media platforms) demonstrates that these network effects do not completely seal off competition.

In short, the Facebook-Instagram merger demonstrates that predicting the competitive effects of mergers is incredibly challenging. Even with all the expertise and, often, sophisticated analytical methods deployed by antitrust agencies, there may still be anticompetitive deals that escape enforcers’ vigilance—and the Facebook-Instagram may or may not be one such instance (we believe it is not). While this case-by-case, evidence-based process of adjudication may not be perfect, it remains vastly superior to relying on the intuitions of pundits, activists, and academics. The commentary surrounding the Facebook-Instagram deal suggests that such pronouncements often fall wide of the mark and are thus unreliable for policymaking purposes.

VI.    Ticketmaster-Live Nation

For our last merger, we turn to Ticketmaster, which was back in the headlines in late 2022 after experiencing website issues during its sale of tickets for Taylor Swift’s first tour in five years. Antitrust proponents have used the incident to call for investigations into Ticketmaster and its dominant position within the ticket-sales market. In an open letter to Ticketmaster’s CEO, Sen. Klobuchar wrote “to express serious concerns about the state of competition in the ticketing industry and its harmful impact on consumers.” The New York Times has reported that the DOJ has opened an investigation into Ticketmaster’s parent company, Live Nation Entertainment.[159]

Klobuchar and others have pointed to Ticketmaster’s 2010 merger with concert promoter Live Nation as the primary source of problems in the market. Not mincing words, Rep. Alexandria Ocasio-Cortez wrote in 2022: “Daily reminder that Ticketmaster is a monopoly, it’s merger with LiveNation should never have been approved, and they need to be reigned in. Break them up.”[160] With Ticketmaster back in the news, now is a good time to review its history of mergers and acquisitions and what role they may have played in the public’s current frustration with the company.

As we explain below, recent media coverage of Ticketmaster—particularly its failings related to the Taylor Swift tour—-and the accompanying calls for tougher merger enforcement are largely unmoored from any actual antitrust issues. Indeed, there is little reason to believe that Ticketmaster’s failings would have been averted absent its merger with Live Nation (or, more generally, if it faced tougher competition). Put differently, these issues appear to have little to do with market power and its reinforcement—the harm that antitrust merger enforcement seeks to prevent.[161]

It is also important to note that antitrust enforcers were not naïve about the state of competition in the ticketing market at the time of the merger. They clearly acknowledged that Ticketmaster held a dominant market position. Their assessment, however, was that, conditional on several remedies, the merger would not significantly increase the company’s market power. With hindsight, this assessment appears vindicated, as Ticketmaster’s market share does not appear to have materially increased in the years since. And, as we have repeatedly noted with respect to other mergers discussed here, there may well have been important benefits from the vertical combination of Ticketmaster and Live Nation.[162] The upshot is that not all business failings can be pinned on insufficient competition or lax antitrust enforcement. Progressive policymakers, scholars, and pundits often fail to acknowledge this, and their ensuing calls for tougher enforcement thus lack a sound basis.

A.      The Predictions

In February 2009, concert promoter and venue operator, Live Nation, announced that it had reached an agreement to merge with Ticketmaster in a $2.5 billion, all-stock deal. In January 2010, the DOJ approved the merger under a settlement agreement. Both the merger and the DOJ’s approval were controversial at the time.[163] At the time of the announcement, a columnist for The New York Times wrote that the company was “known for the ever-rising cost of an assortment of tacked-on fees.”[164]

This was not new territory for Ticketmaster. Complaints about Ticketmaster go back decades, and they are not uniquely tied to any one merger or event. In 1993, Variety reported that “Ticketmaster Corp. has been summoned to court Wednesday on allegations the nation’s largest ticket distrib has become an entrenched monopoly whose ‘service charges’ have gouged thousands of Southern Californians for years.”[165] The piece continues: “At stake is the $1 billion-a-year tix purveyor’s unrivaled market position in the Southland for computer-and-telephone sales of seats to live events, from opera to ice hockey, from the Greek Theatre to the Whiskey.”[166] Despite all the technological changes since 1993, Ticketmaster has remained the big name in concert tickets and the complaints have followed it throughout.

Maybe surprisingly for a company that has been called a monopolist for so long, the concerns around the Live Nation merger were rather mundane, in contrast to the-sky-is-falling reaction to many of the mergers mentioned above. David Balto, for example, testified before Congress and argued:

The proposed merger raises serious vertical concerns. By combining a ticketing monopolist with a dominant firm in marquee concert promotion, the merged firm will be able to foreclose competition in both markets, leading to less choice and higher prices…. The proposed merger poses a significant threat to independent concert promotion…. The proposed merger will diminish competition from secondary ticket services which offer the potential for greater rivalry in the ticketing market.[167]

At a 2010 presentation at South by Southwest, DOJ Assistant Attorney General Christine A. Varney noted:

  • “Ticketmaster had maintained a market share of over 80% in the 15 previous years.”
  • “Consolidation has been going on for some time, resulting in economic pressures on local management companies and promoters.”
  • “Entry by new competitors was difficult for reasons of both technology and reputation.”
  • “People view Ticketmaster’s charges, and perhaps all ticketing fees in general, as unfair, too high, inescapable, and confusing.”
  • “Live Nation posed an ‘existential threat’ to Ticketmaster when it launched its own ticketing system.”[168]

Subsequently, of course, critics have laid blame for virtually all perceived problems in concert and sports ticketing at the merger’s feet. In late 2022, a coalition led by the Economic Liberties Project (ELP) launched “Break Up Ticketmaster,” a campaign aimed at pressuring the DOJ to break up the merger, blaming it for “hiking up ticket prices, charging rip-off junk fees, and exploiting artists, independent venues, and fans.”[169] As noted by ELP’s executive director Sarah Miller (now an advisor to Chair Khan at the FTC):

Ticketmaster’s market power over live events is ripping off sports and music fans and undermining the vibrancy and independence of the music industry. With new leadership at the DOJ committed to enforcing the antitrust laws, our new campaign helps connect the voices of fans, artists, and others in the music business who are sick and tired of being at the mercy of Ticketmaster’s monopoly with enforcers who have the power to unwind it.[170]

B.      What Happened?

With the passage of time—13 years and counting—the DOJ’s decision to clear the merger increasingly appears to have been the correct one. While Ticketmaster remains the leading ticketing company, it has failed to materially increase its market share and has not stopped new competitors from entering the market and achieving some measure of success.

At the time of writing, Ticketmaster’s market share appears to be about 70%, although potentially as low 65%,[171] in contrast to the 80% market share the company enjoyed at the time of the merger.[172] Precise estimates are hard to come by and it is, of course, possible that this number would be higher if the relevant market were narrowed to certain key segments. Nevertheless, the big takeaway is that Ticketmaster’s market share is no larger than it was in 2010, and it is probably somewhat smaller.

This shouldn’t be surprising. There is considerable competition in event ticketing, even though Ticketmaster continues to be the largest provider. As Live Nation’s 10-K notes:

We also face significant and increasing competition from companies that sell self-ticketing systems, as well as from venues that choose to integrate self-ticketing systems into their existing operations or acquire primary ticketing service providers. Our competitors include primary ticketing companies such as, AXS, Paciolan, Inc., CTS Eventim AG, Eventbrite, eTix, SeatGeek, Ticketek, See Tickets and Dice; secondary ticketing companies such as StubHub, Vivid Seats, Viagogo and SeatGeek; and many others, including large technology and ecommerce companies that we understand have recently entered or could enter these markets.[173]

Ticketmaster faces important competitors that stand to gain should failures such as the Taylor Swift fiasco repeat themselves. These competitors include the likes of StubHub and SeatGeek—companies that, together, hold an estimated 30% of the market.[174] In fact, SeatGeek entered the market in earnest only after Live Nation’s acquisition of Ticketmaster, dispelling the notion that the merger would make the entry and growth of new rivals impossible.[175] Whatever one thinks of the merger, it clearly is not a story of Live Nation acquiring Ticketmaster and succeeding to dominate the market as a result. Instead, the story is more consistent with Ticketmaster and Live Nation maintaining their positions in a complicated, multi-sided market via the merger.

As in our previous case studies, it is of course conceivable that the market would have become even more competitive without the merger. But while this is a possibility, it reinforces—rather than undermines—the central point of this paper. Predicting the competitive effects of mergers is complicated. That is why we entrust this task to—usually—technically proficient agencies. Popular calls to prohibit mergers because they create even bigger firms fail to capture this reality. Similarly, ongoing attempts by the agencies’ current leadership to move away from this technocratic paradigm toward a more populist approach are fundamentally misguided.

Of course, it is important to highlight the important role that sound remedies—themselves the fruit of even-handed antitrust scrutiny—appear to have played in averting the worst-case scenarios. If Live Nation posed an existential threat, why did the DOJ allow the merger that would remove this threat? The Ticketmaster-Live Nation merger had elements of both a vertical merger and a horizontal merger. The combination of venues and promotion services with ticketing was considered vertical integration in the concert business. Because of Live Nation’s entry into ticketing, the merger was also seen as horizontal. As AAG Varney pointed out:

To be sure, Ticketmaster and Live Nation were strongest at different points in the live music chain, but Live Nation’s foray into ticketing only made clearer that the merger would help to preserve Ticketmaster’s power in the primary ticketing line of its business. Thus, the merger posed a threat to growing competition in primary ticketing.[176]

In light of these concerns, the DOJ required several remedies—both structural and behavioral—from the merging parties. To start, the settlement included several structural remedies to address the DOJ’s concerns, including creating two new competitors to Ticketmaster. Ticketmaster was also required to license its ticketing platform to AEG, another major promoter and owner of venues. In addition, Ticketmaster would be forbidden from servicing AEG venues in the future. This second condition effectively required AEG to have its own ticketing platform or to direct its business to one of Ticketmaster’s competitors. Ticketmaster was also required to divest its Paciolan line of business to Comcast-Spectacor. Paciolan allows venues to host their own primary-ticketing service on their own websites. It was thought that this divestiture would introduce competition against Ticketmaster from the venues themselves.

The settlement also included several behavioral remedies for the next 10 years, or until 2020. Ticketmaster and Live Nation would be expressly prohibited from retaliating against any venue that works with or considers working with another primary-ticketing service. The businesses also would be prohibited from creating mandatory bundles of their services. For example, the merged firm would not be allowed to require that a client accept Live Nation as a promoter in order to access Ticketmaster’s primary-ticketing services, or vice versa. Ticketmaster would either (1) be forbidden from using its ticketing data in its promotion and management business, or (2) must give that information to other managers and promoters.

The vast settlement agreement and list of remedies highlights the ways that technocratic antitrust can protect from the most doomsday scenarios. One complication, however, is that remedies take monitoring and may not ultimately be implemented. In this case, the DOJ accused Live Nation-Ticketmaster of withholding or threatening to withhold concerts from a venue if the venue chose a ticketer other than Ticketmaster. Variety reported that the company was not fined for the action but had agreed to pay the DOJ’s attorney fees.[177] In 2019, the DOJ and the merged company agreed to extend the settlement agreement by another five years.[178]

A final important point is that the failings that surfaced regarding Taylor Swift’s tour appear largely unrelated to Ticketmaster’s dominant market position, and much less to its merger with Live Nation. As mentioned above, Ticketmaster was back in the news after technical issues when sales opened for Taylor Swift’s latest tour. The event is worth studying for what it can tell us about antitrust and what it cannot. According to Ticketmaster, more than 3.5 million fans registered to be able to buy tickets. Historically, around 40% of registered fans ultimately show up to buy tickets. Yet Ticketmaster found it had 3.5 billion total system requests, which was four times the previous peak.[179]

On its face, a bad user experience would not seem to be an antitrust violation, and the Taylor Swift incident does not appear to be at all relevant to the company’s 2010 settlement with the DOJ. Nonetheless, some have tried to frame a technical glitch—albeit a significant one—into an antitrust offence. For example, Yale economist Florian Ederer argued:[180]

The allegations against Ticketmaster are that it abused its dominant market position by underinvesting in site stability and customer service. Thus, rather than causing harm to consumers by charging exorbitant prices, Ticketmaster is alleged to have caused harm by providing inferior quality—which it could not have done had it faced credible competitors.

It’s a bit of a stretch to connect the dots between the Taylor Swift ticketing fiasco and a merger that occurred more than a decade earlier. The Taylor Swift concerts were going to sell out, regardless of the issues that Ticketmaster experienced. That’s just what happens when there are vastly more people who want to buy tickets than there are tickets available. We need to understand the realities of the business.

At the same time, it is nearly impossible to plan for big, unexpected traffic. For example, in 2018, Amazon’s website experienced a major service disruption due to an unexpectedly large influx of traffic on “Prime Day.”[181] Two facts make the Prime Day crash even more surprising. First, Amazon is the best in the world at handling web traffic at scale. Their main profit-making unit, Amazon Web Services, was born out of the company’s success at handling web traffic. Part of their business includes consulting on how to scale information-technology services.[182] Yet despite Amazon’s technological capabilities and economic incentive to keep its website up and running, the website still went down for more than an hour. Second, each second the website was down on Prime Day decreased sales on that day. The feedback was immediate.

Finally, it is worth noting that the link between market concentration and investment is even less clear than that between concentration and prices.[183] For example, the effect that market structure might exert on innovation—one type of investment—has been subjected to significant theoretical and empirical scrutiny, and the jury is mostly still out.[184] In other words, even if Ticketmaster’s merger with Live Nation increased both firms’ market position, empirical economic research offers little reason to believe that this would affect the reliability of the Ticketmaster platform.

In short, antitrust is not a Swiss Army knife to be used to solve whatever complaints society might have about how companies run their operations. As much as people hate Ticketmaster and as much as Taylor Swift fans want to shake their fists at the company’s bungled tour rollout, that fiasco was not an antitrust violation. Whatever one concludes about the effects of the Ticketmaster-Live Nation merger, website issues from the largest traffic they have ever experienced are not evidence of anticompetitive effects.

C.      In Retrospect

Looking at the merger 13 years later, three conclusions rapidly emerge. First, Ticketmaster’s market share does not seem to have materially increased since the merger—it may even have decreased. This tends to vindicate authorities’ decision to clear the deal. Second, this outcome may be due to the complex package of remedies extracted by authorities. This is an important reason to entrust merger review to technocratic agencies and courts, and for authorities to resist calls for tougher merger enforcement based on popular—kitchen table[185]—economics. Finally, the failings that surfaced around Taylor Swift’s tour appear unrelated to the Ticketmaster-Live Nation merger.

More broadly, Ticketmaster’s story is much more complex and nuanced than critics typically recognize. Ticketmaster did not come to dominance with the 2010 merger. In many ways, the story starts in 1991, with the company’s acquisition of Ticketron.[186]

For a short period of time, Ticketron and Computicket were the only two companies competing in the field of computerized ticketing. But Computicket went under in 1970 and Ticketron was left as the only firm in the industry. In 1976, Ticketmaster was founded and quickly grew.

In some ways, Ticketmaster’s story is that of a scrappy upstart trying to compete against the then-monopolist Ticketron. One way Ticketmaster competed successfully was by paying advances to venue owners and promoters, instead of just charging ticket fees.[187] This practice fostered long-term exclusive agreements between Ticketmaster, venues, and promoters. Apparently, this practice was successful.

Contrary to popular belief, concentration at the ticketing level is far from the only parameter that affects the price of event tickets, and some levels of the distribution chain may be (far) less competitive than the one where Ticketmaster operates. Ticketmaster sits at the intersection of a two or three-sided market, as an intermediary among fans, venues, and artists. The other sides of the market will not magically become perfectly competitive if the Ticketmaster-Live Nation merger were to be unwound tomorrow. As Irving Azoff (longtime music-industry executive and former CEO of Ticketmaster) has aptly noted:

“The biggest issue is that demand sometimes exceeds supply for many artists,” he continued. “More people want to see Taylor Swift, Beyoncé, Adele or Garth [Brooks] than there are tickets for sale. There’s not a congressional hearing in the world that fixes the reality that demand exceeds supply. There’s nothing that Ticketmaster, the building, the promoter or the artists can do to fix that.[188]

Indeed, arguably it is the venues’ market power that Ticketmaster’s fees embody, not those of Ticketmaster as ticketing platform. The Ticketmaster model, pioneered by former CEO Fred Rosen (and copied by the entire market today), treats venues as its primary customer. Which makes sense: many venues inherently have market power because there aren’t very many of them. Each major city generally has only one or, at most, a few large-scale venues, which are typically local sporting arenas or stadiums. An artist like Taylor Swift in a city like Minneapolis will perform only at the professional football stadium. If disputes could not be resolved, she could maybe downgrade to the professional baseball stadium, but other professional sports stadiums (e.g., hockey or basketball) are far smaller. Stepping down from the largest venues, the number of options available still does not increase massively. Of course, there is some competition between the biggest arenas in different cities to attract performers. But even then, the competition is limited, and certain cities are surely “must-play” locales for the biggest touring acts.

Meanwhile, although venues may be its primary customers, servicing artists is also important to Live Nation’s success. As a result, Live Nation has continually increased its investment in putting on concerts, to “over $9.6 billion [in 2022 vs. 2019] as Live Nation continues to be the largest financial supporter of musicians.”[189] This latter claim bears out, as the most recent data suggests record label annual A&R spending amounts to only $5.8 billion.[190] Thus, while ticket prices might be rising, it may well be that this increase reflects in substantial part a shift in the basis for artists’ income, with fans presumably paying less for recorded music in exchange.

Indeed, as the primary revenue source for performers has shifted from selling recorded music to selling concert tickets, ticket prices have increased.[191] As the late Princeton economist Alan Krueger identified, the primary source of increasing concert-ticket prices was “the erosion of complementarities between concerts and album sales because of file sharing and CD copying.”[192] The subsequent rise of online streaming and the continued significance of music piracy have only exacerbated this trend.

Artists have a virtual monopoly on tickets for their shows, and their performing schedules (and, of course, the limits of physical time and space) are the primary determinant of the number of tickets available and at what price:

The facts are simple and inarguable. Taylor Swift is playing 52 shows in venues with approximately 2.5 million seats available. As these shows are already being held in football stadiums, the only way to provide more seats is for Swift to add more shows, something Garth Brooks does routinely. Brooks will play two shows a day for as many days as it takes to absorb all the demand in a city before moving on to the next location. Each added stadium show opens another 50,000+ tickets for sale.

Math is both simple and brutal. For Swift’s North American tour there are only 2.5 million seats…. Only one thing brings more seats: adding shows. Only one person can decide to add more shows: Taylor Swift.[193]

While it may be that Ticketmaster-Live Nation could have done a better job managing the ticket sale process for Taylor Swift’s tour, it had no control over the number of tickets for sale. “Demand, it turns out far exceeded available seats. This is not a problem of monopolistic practice, it is one of undersupply.”[194]

Of perhaps greatest importance, particularly for concert tickets, the real action in ticket sales occurs today in the secondary or resale market. There are several reasons for this, but it must be noted at the outset that the presence of a vibrant resale market in which ticket prices are generally higher means, at the very least, that primary ticket sales (including service fees) are not occurring at their highest possible prices.[195] Indeed, because of a combination of promoter, artist, and venue hold-backs, artists’ interest in keeping ticket prices relatively low, fan-club and credit-card pre-sales, and the like, vanishingly few ticket purchasers actually buy tickets on the open, primary market where Ticketmaster is dominant.[196] In the secondary ticket exchange market Ticketmaster is far from dominant; rather, ticketing platforms like StubHub, Vivid Seats, Viagogo, and SeatGeek are the market leaders.[197]

Overall, it seems unlikely that blocking the Ticketmaster-Live Nation merger would suddenly solve the difficult problems that plague this multisided market.


Antitrust enforcement is a difficult job, with many tradeoffs. To some doomsayers, no merger or acquisition is acceptable, and all mergers risk ruining one or more markets. In truth, the picture is much murkier. This retrospective examined the predictions and the aftermath for a set of mergers over the past 20 years. One major takeaway is that we should be skeptical of kneejerk projections of doom, whether from activists, competition scholars, or media pundits.

Against this backdrop, we find that calls to tighten antitrust merger enforcement to assuage popular concerns about corporate consolidation have little merit. The same is true of the FTC and DOJ’s joint repudiation of the most recent (2010) merger guidelines and their ongoing effort to revise the guidelines, almost certainly in ways to facilitate more aggressive merger enforcement. In both cases, the underlying assumption is that today’s technocratic approach to merger enforcement has failed consumers by allowing monopolies to consolidate and thrive while regulators are “asleep at the wheel.”[198] These claims are often rooted in anecdotal evidence pertaining to high-profile mergers that, allegedly, marked the turning point in an industry’s shift towards monopoly, or (when pundits are commenting before the fact) suppositions that such deals will have disastrous consequences for consumers.

By reviewing some of these claims, our paper sheds light on their inherent weakness. For all their bombast and intuitive appeal, claims of competition’s demise have little connection to the competitive reality of the concerned markets. Some recent mergers, such as Amazon-Whole Foods, saw a huge number of dire predictions, despite quickly proving to be extremely procompetitive. Others, such as Facebook-Instagram, drew almost no concerns at the time, but are now seen as terrible mistakes on the part of antitrust enforcers. These failed prophecies are not surprising. It is a truism that predicting the future is a difficult task. That is why antitrust enforcers have historically focused on short-term and tangible metrics like prices, quantities, market shares, and barriers to entry, rather than speculative claims that mergers will be the death knell of competition. At the very least, if there is evidence that this relatively restrained approach has failed, it is not to be found in the public pronouncements of neo-Brandeisian scholars and media pundits.

More fundamentally, these claims fail not only because the future is hard to predict, but also because the world is too complex to fit the simple narrative that underpins populist calls for antitrust reform. Most mergers, even the ones we picked as noteworthy, are largely benign but pose a set of tradeoffs. This can be readily observed in the beer mergers which have raised some prices but lowered others, while opening new avenues for craft beer to flourish. In the end, reality failed to match the rhetoric. These ambiguous effects are precisely why evidence-based antitrust enforcement—along with careful remedies that can separate the wheat from the chaff—is as important today as it has ever been.

Unfortunately, our call for regulatory prudence is increasingly contested. As FTC Chair Lina Khan remarked upon the initiation of the merger-guidelines-revision effort in the wake of merger activity allegedly due to lax enforcement, “many Americans historically have lost out, with diminished opportunity, higher prices, lower wages, and lagging innovation… These facts invite us to assess how our merger policy tools can better equip us to… halt this trend.”[199] For the most part this reassessment of “merger policy tools” seems to contemplate a lessening of the role of rigorous economic analysis in exchange for “kitchen table economics” in which “technocratic debates about market mechanisms [give way to] a grassroots discussion about how corporate power has distorted the market in ways that [‘lawyers, activists and ordinary people’] find absurd.”[200]

If there is one thing to take away from our paper, it is that basing merger enforcement on kitchen-table economics—the idiosyncratic preferences of “activists and ordinary people”—would be disastrous. Our retrospective study shows that popular and populist fears about corporate consolidation are often completely untethered from economic reality and wildly erroneous. The less these fears influence antitrust policy, the better.

[1] See, e.g., Lina Khan, The New Brandeis Movement: America’s Antimonopoly Debate, 9 J. Eur. Competition L. & Practice 131 (2018); Matt Stoller, How Democrats Killed Their Populist Soul, The Atlantic (Oct. 24, 2016),

[2] See, e.g., Exec. Order No.14, 036, 86 Fed. Reg. 36,987 (Jul. 9, 2021).

[3] Lina M. Khan Sworn in as Chair of the FTC, Fed. Trade Comm’n (Jun. 15, 2021), (noting Khan’s prior role at the Open Markets Institute).

[4] See, e.g., Jonathan Kanter, Assistant Attorney General Jonathan Kanter of the Antitrust Division Testifies Before the Senate Judiciary Committee Hearing on Competition Policy, Antitrust, and Consumer Rights (Sep. 20, 2022) (advocating for statutory reform and increased funding for antitrust enforcement).

[5] Remarks by President Biden at Signing of an Executive Order Promoting Competition in the American Economy, The White House (Jul. 9, 2021).

[6] Id. (In the very same speech, Biden—curiously, if not paradoxically—states that “America is on track. We’re now on track for the highest economic growth in 40 years and among the highest growth records on record”); see also Lina Khan, Chair, Fed. Trade Comm’n, Remarks at Charles River Associates Conference Competition & Regulation in Disrupted Times Brussels, Belgium (Mar. 31, 2022) (quoting President Biden’s remarks with approval); Guy Rolnick, Q & A with FTC Chair Lina Khan: “The Word ‘Efficiency’ Doesn’t Appear Anywhere in the Antitrust Statutes”, ProMarket, (Jun. 3 ,2022), (“the change is being driven by a deep recognition that something has been awry in how we’ve been doing antitrust,” in response to a question about “this takeover of the Khan, Kanter, and Wu partnership over Washington.”).

[7] Phillip E. Areeda & Donald F. Turner, Antitrust Law Vol. V, 1103c (1980) “public policy cannot rationally seek to prevent the realization of more efficient production modes out of the speculative fear that monopoly might result”.

[8] See, e.g., Lina M. Khan, The End of Antitrust History Revisited, 133 Harv. L. Rev. 1655, (2020) (“The fact that antitrust had shed its public appeal in favor of an expert-driven enterprise becoming “less democratic and more technocratic” – was generally seen as further evidence of its success. Today, however, it is clear that what may have appeared as the end of antitrust history proved instead to be a prolonged pause in an enduring clash over the purpose and values of the U.S. antitrust laws.”); See also, Maurice E. Stucke & Marshall Steinbaum, The Effective Competition Standard: A New Standard for Antitrust, 87 U. Chi. L. Rev. 596 (2020) (“If the United States continues with a light-if-any-touch antitrust review of mergers and turns a blind eye to abuses by dominant firms, concentration and crony capitalism will likely increase, competition and our well-being will decrease further, and power and profits will continue to fall into fewer hands…. This trend is reversible if we restore antitrust as a guarantor of effective competition. To tackle today’s market power problem, we offer an effective competition antitrust standard to replace the prevailing consumer welfare standard…”).

[9] FTC Seeks to Block Microsoft Corp.’s Acquisition of Activision Blizzard, Inc., Fed. Trade Comm’n (Dec. 8, 2022),; FTC v. Illumina, Inc., U.S. Dist. LEXIS 75172 (2021); FTC v. Meta Platforms Inc., U.S. Dist. LEXIS 29832 (2023).

[10] FTC v. Meta Platforms, Inc., 3:22-cv-04325, 6 (2022) (complaint).

[11] In the Matter of Illumina, Inc., and Grail, Inc., No. 9401, 6 (complaint).

[12] Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act, Fed. Trade Comm’n (Aug. 13, 2015),

[13] For a general discussion, see Daniel Gilman & Gus Hurwitz, The FTC’s UMC Policy Statement: Untethered from Consumer Welfare and the Rule of Reason, International Center for Law & Economics (Nov. 16, 2022),

[14] Request for Information on Merger Enforcement, Fed. Trade Comm’n (Jan. 18, 2022),

[15] Assistant Attorney General Jonathan Kanter Delivers Remarks on Modernizing Merger Guidelines, U.S. Dep’t Justice (Jan. 18, 2022), (“And ultimately, that’s what today’s announcement is about: strengthening our joint merger guidelines to meet the challenges and realities of the modern economy.”); See also, Remarks of Chair Lina M. Khan Regarding the Request for Information on Merger Enforcement, Docket No. FTC-2022-0003, Fed. Trade Comm’n (Jan. 18, 2022), (“Keeping with past practice, the DOJ and FTC today are issuing a request for information, identifying key questions and topics on which we are particularly keen to receive public comment. These public comments will be critical for informing our review of the existing guidelines and our process for considering potential revisions and updates.”)

[16] Kanter, id.; see also Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers, Fed. Trade Comm’n (Press Release) (Jan. 18, 2022),

[17] Khan, supra note 15 (quoting Exec. Order No. 14,036, 86 Fed. Reg. 36,987 (Jul. 9, 2021)).

[18] Id. Notably, the evidence posited to support these contentions is far from settled. Indeed, it is not even clear that concentration is increasing. See Brian Albrecht, Is Market Concentration Actually Rising?, Economic Forces (Dec. 8, 2022),

[19] Matt Stoller, Mergers Ruin Everything, BIG (Feb. 4, 2022),

[20] Both agencies have suffered some setbacks already, but numerous cases remain under investigation or in-process, and the U.S. Supreme Court has yet to rule on any of the neo-Brandeisians’ novel theories of harm or established law. For example, the FTC recently declined to appeal the case it lost regarding Meta’s purchase of Within. See, Diane Bartz, U.S. FTC Will Not Appeal Decision Allowing Meta to Purchase VR Content Maker Within, Reuters (Feb. 6, 2023),

[21] Mission and History, American Antitrust Institute, (last accessed Feb. 2, 2023).

[22] Id.

[23] Id.

[24] Rana Foroohar, The Rise of Kitchen Table Economics, Financial Times (Feb. 20, 2023),

[25] That is, FTC Chair Lina Khan, Assistant U.S. Attorney General Jonathan Kanter, and Tim Wu, who served as special assistant to the president for technology and competition policy from 2021 to early 2023, and who is widely considered to have been the architect of President Biden’s July 2021 executive order on competition policy. See, e.g., David McCabe, An Architect of Biden’s Antitrust Push Is Leaving the White House, NY Times (Dec. 30, 2022), (describing Wu’s role at the White House and his status as “one third of a troika—along with Lina Khan at the Federal Trade Commission and Jonathan Kanter at the Justice Department” leading “aggressive” attempts at antitrust reform); Josh Sisco, White House Antitrust Adviser Tim Wu Set to Depart, Politico (Dec. 30, 2022),

[26] See, e.g., Carl Shapiro, Antitrust in a Time of Populism, 61 J. Indus. Org. 714, (2018); Elyse Dorsey, et al., Consumer Welfare and the Rule of Law: The Case Against the New Antitrust Populism, 47 Pepp. L. Rev. 816, (2020).

[27] Joshua D. Wright, et al., Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust, 51 Ariz. State L. J. 293, (2019).

[28] Khan, supra note 8.

[29] In addition, the predictions and assessments of the neo-Brandeisians are not always precise, or even sufficiently clear to be susceptible to testing.

[30] The statements comprise, among other things, predictions and concerns about the likely competitive effects of these mergers: namely, competitive disaster.

[31] “Premium natural and organic food markets” is the product market the FTC had identified in challenging a prior transaction involving Whole Foods—that is, its proposed acquisition of Wild Oats. See, FTC v. Whole Foods Market, Inc., Case. No. 1:07-cv-01021 (D. D.C. 2007) (complaint for temporary restraining order and injunction pursuant to Sect. 13(b) of the FTC Act).

[32] Dirk Auer, The Amazon/Whole Foods Overreaction: Antitrust Populism Exposed, Truth on the Market (Aug. 28, 2018),

[33] Albert Foer & Sandeep Vaheesan, The American Antitrust Institute to the U.S. Department of Justice, American Antitrust Institute (Nov. 19, 2014),

[34] Joint Comment of the FTC Staff and the DOJ Antitrust Div. Staff to the California State Assembly Concerning California Assembly Bill 1541, Fed. Trade Comm’n (Mar. 20, 2020),

[35] Id.

[36] Overview of the Merger Retrospective Program in the Bureau of Economics, Fed. Trade Comm’n, (last accessed Feb. 3, 2023).

[37] Joseph Farrell, Paul Pautler, & Michael Vita, Economics at the FTC: Retrospective Merger Analysis with a Focus on Hospitals, 35 Rev. Indus. Org. 369, (2009); For an example of merger reviews regarding non-price effects, see Patrick S. Romano & David Balan, A Retrospective Analysis of the Clinical Quality Effects of the Acquisition of Highland Park Hospital by Evanston Northwestern Healthcare, 18 Int. J. Econ. Bus. 45, (2011).

[38] See, e.g., Christopher Garmon, The Accuracy of Hospital Merger Screening Methods, 48 RAND J. Econ. 1068, (2017) (comparing predictions of screening methods based on pre-merger data with post-merger prices for 28 hospitals); Romano & Balan, id. (clinical quality effects of one merger); Orley Ashenfelter, Daniel Hosken, Michael Vita, & Matthew Weinberg, Retrospective Analysis of Hospital Mergers, 18 Int. J. Econ. Bus. 5, (2011). For a bibliography of merger retrospectives, including but not limited to hospital studies, see Merger Retrospective Studies Bibliography, Fed. Trade Comm’n, (last accessed Mar. 9, 2023).

[39] Lauren Thomas, Don’t Worry, Wal-Mart; Amazon Buying Whole Foods Is Just a ‘Drop in the Bucket’, CNBC (Jun. 21, 2017),

[40] Statement of Federal Trade Commission’s Acting Director of the Bureau of Competition on the Agency’s Review of, Inc.’s Acquisition of Whole Foods Market Inc., Fed. Trade Comm’n (Aug. 23, 2017),

[41] Alex Shephard, How Amazon Is Changing the Whole Concept of Monopoly, The New Republic (Jun. 19, 2017),

[42] Lina Khan, Amazon Bites Off Even More Monopoly Power, NY Times (Jun. 21, 2017),

[43] Auer, supra note 32.

[44] Khan, supra note 42

[45] Washington Bytes, Will Amazon-Whole Foods Survive Antitrust Scrutiny Under Trump?, Forbes (Jul. 3, 2017),

[46] Insider Business, Scott Galloway Says Amazon, Apple, Facebook, And Google should be broken up, YouTube (Dec. 1, 2017),; See also Scott Galloway, Silicon Valley’s Tax-Avoiding, Job-Killing, Soul-Sucking Machine, Esquire (Feb. 8, 2018),

[47] Id.

[48] Matt Day, Amazon Is Still Trying to Digest Whole Foods, Bloomberg (Aug. 31, 2022),; see also Daniel Keyes, Amazon and Whole Foods Have Failed to Upend Grocery, Insider (Jun. 17, 2019),

[49] Amazon’s Share of US eCommerce Sales Hits All-Time High of 56.7% in 2021, PYMNTS (Mar. 14, 2022),; other sources suggest Amazon’s share of e-commerce increased from 37% to 50% between 2017 and 2021, see Stephanie Chevalier, Projected Retail E-Commerce GMV Share of Amazon in the United States from 2016 to 2021, Statista (Jul. 27, 2022),

[50] Sujay Seetharaman, The Story of Amazon’s Market Share, Pipe Candy (Oct. 30, 2019),

[51] Thomas Ozbun, Online Grocery Shopping Sales in the United States from 2019 to 2024, Statista (Jan. 27, 2022),

[52] Janie Perri, Instacart and Walmart Lead the Pack in Grocery Delivery Sales, Bloomberg Second Measure (Jul. 20, 2021),

[53] Michele Gelfand, Sarah Gordon, Chengguang Li, Virginia Choi & Piotr Prokopowicz, One Reason Mergers Fail: The Two Cultures Aren’t Compatible, Harvard Business Review (Oct. 2, 2018),; see also Keyes, supra note 48; Lane Gillespie, 5 Years Later: Amazon’s Whole Foods Buy a Study in Hubris and Determination, Bisnow (Jun. 15, 2022),; Brittain Ladd, This Is Why Whole Foods Is Failing, Brittain Ladd (Oct. 7, 2020),

[54] Katie Tarasov, Amazon Bought Whole Foods Five Years Ago for $13.7 Billion. Here’s What’s Changed at the High-End Grocer, CNBC (Aug. 25, 2022),

[55] Steve Watkins, Kroger Rival Amazon Cuts Whole Foods Prices (Video), Biz Journals (Apr. 2, 2019),

[56] Jon Porter, Amazon Opens First Whole Foods Equipped with Cashierless Technology, The Verge (Mar. 1, 2022),

[57] Heather Haddon, Whole Foods Introduces Grocery Pickup for Online Orders, The Wall Street Journal (Aug. 8, 2018),

[58] Tarasov, supra note 54.

[59] Id.

[60] Russell Redman, Kroger Launches Another Pair of Ocado ‘Spoke’ Facilities, Supermarket News (Aug. 23, 2022),

[61] Jonathan Shieber, Target Is Buying Alabama-Based, Same-Day Delivery Service Shipt for $550 Million, TechCrunch (Dec. 13, 2017),

[62] Barbara Messing, Introducing Our Biggest Walmart Grocery Pickup Campaign, Walmart (Jan. 6, 2019),

[63] Hayley Peterson, Walmart Is Offering Same-Day Delivery of Groceries Across the US — Here’s How to Get It for Free, Insider (Mar. 14, 2018),

[64] Khan, supra note 42.

[65] Id.

[66] Kelly Tyko, Walmart Sales Increase 10% as Online Buying Grew 74% During Coronavirus Pandemic, USA Today (May 19, 2020),

[67] Andria Cheng, Two Years After Amazon Deal, Whole Foods Is Still Working to Shed Its ‘Whole Paycheck’ Image, Forbes (Aug. 28, 2019),

[68] Amazon & Prime at Whole Foods Market, Whole Foods Market, (last accessed Jan. 18, 2023).

[69] Vicki Salemi, 7 Amazon Prime Member Benefits You Can Get at Whole Foods, Retail Me Not (Jan. 19, 2023),

[70] Andrew Sun, Walmart Makes Voice Shopping Even More Affordable with New Google Device, Walmart (Oct. 4, 2017),

[71] Erin Caproni, Kroger Expands Home Delivery with Latest Partnership, Biz Journal (Mar. 12, 2018),

[72] Kelly Tyko, Target Launching Same-Day Delivery in First Markets Feb. 1, USA Today (Jan. 25, 2018),

[73] Benjamin Klein, Robert G. Crawford, & Armen A. Alchian, Vertical Integration, Appropriable Rents, and the Competitive Contracting Process, 21 J. L. & Econ. 297, (1978).

[74] Such fears are a common driver of progressive antitrust policy. See Geoffrey Manne & Dirk Auer, Antitrust Dystopia and Antitrust Nostalgia: Alarmist Theories of Harm in Digital Markets and Their Origins, 28 Geo. Mason L. Rev. 1286 (2021) (“Underlying this pessimism is a pervasive assumption that new technologies will somehow undermine the competitiveness of markets, imperil innovation, and entrench dominant technology firms for decades to come. This is a form of antitrust dystopia. For its proponents, the future ushered in by digital platforms will be a bleak one-despite abundant evidence that information technology and competition in technology markets have played significant roles in the positive transformation of society.”).

[75] Statement of Federal Trade Commission’s Acting Director of the Bureau of Competition on the Agency’s Review of, Inc.’s Acquisition of Whole Foods Market Inc., Fed. Trade Comm’n (Aug. 23, 2017),

[76] Albert A. Foer, AAI Warns DOJ that Beer Merger Would Eliminate Competition in the United States, American Antitrust Institute (Nov. 20, 2014),

[77] Albert Foer & Sandeep Vaheesan, The American Antitrust Institute to the U.S. Department of Justice, American Antitrust Institute (Nov. 19, 2014), available at

[78] Executive Order on Promoting Competition in the American Economy, The White House (Jul, 9, 2021),

[79] Competition in the Markets for Beer, Wine, and Spirits, U.S. Treasury Department (Feb. 9, 2022), available at

[80] Id. (Citing Kenneth G. Elzinga & Anthony W. Swisher, The Supreme Court and Beer Mergers: From Pabst/Blatz to the DOJ-FTC Merger Guidelines, 26 Rev. Indus. Org. 245, (2005)).

[81] Industrial Concentration in the United States: 2002-2017, U.S. Chamber of Commerce (Mar. 9, 2022),

[82] Orley C. Ashenfelter, Daniel S. Hosken, & Matthew C. Weinberg, Efficiencies Brewed: Pricing and Consolidation in the US Beer Industry, 46 RAND J. Econ. 328, 332 (2015).

[83] Id.

[84] Ken Heyer, Carl Shapiro, & Jeffrey Wilder, The Year in Review: Economics at the Antitrust Division, 2008-2009, 35 Rev. Indus. Org. 349, (2009).

[85] Ashenfelter, Hosken & Weinberg, supra note 82.

[86] Id.

[87] Id. at 330.

[88] Nathan H. Miller & Matthew C. Weinberg, Understanding the Price Effects of the MillerCoors Joint Venture, 85 Econometrica 1763 (2017).

[89] José Azar & Xabier Barriola, Did the MillerCoors Joint Venture Strengthen the Craft Beer Revolution?, 85 Int’l J. Indus. Org. (2022).

[90] Anthony M. Marino & Ján Zábojník, Merger, Ease of Entry, and Entry Deterrence in a Dynamic Model, 54 J. Indus. Econ. 397 (2006).

[91] Kenneth G. Elzinga & Alexander J. McGlothlin, Has Anheuser-Busch Let the Steam Out of Craft Beer? The Economics of Acquiring Craft Brewers, 60 Rev. Indus. Org. 147 (2022).

[92] Barry C. Lynn, Big Beer, A Moral Market, and Innovation, Harvard Business Review (Dec. 26, 2012),

[93] Id.

[94] Brian Fung & Caitlin Dewey, Justice Department Approves Bayer-Monsanto Merger in Landmark Settlement, The Washington Post (May 29, 2018),

[95] David Evans, The Bayer/Monsanto Digital Farming Licensing Remedy: Structural or Behavioral?, JD Supra (Apr. 4, 2018),

[96] Robert Holly, Weeding Out Competition: Farmers Left Paying Steep Prices As Seed Firms Merge, Illinois Public Media (Dec. 9, 2016),

[97] Amy Klobuchar, Klobuchar, Merkley, Senators Urge DOJ Antitrust Division to Conduct Thorough and Impartial Analysis of Bayer AG Acquisition of Monsanto Company, Klobuchar.Senate (Jul. 21, 2017),

[98] Texas A&M, Effects of Proposed Mergers and Acquisitions Among Biotechnology Firms on Seed Prices, Agricultural & Food Policy Center (Sep. 2016), available at

[99] Pat Mooney, Too Big to Feed, International Panel of Experts on Sustainable Food Systems 82 (Oct. 2017), available at

[100] Id.

[101] EU Antitrust Chief Says “Beware” of Bayer-Monsanto Control of Farm Data, Food & Power Newsletter (Feb. 23, 2018),

[102] Id.

[103] The Food and Drug Administration cites lower pesticide use as an advantage of genetically modified seeds (GMOs). See, Why Do Farmers in the U.S. Grow GMO Crops?, Food & Drug Administration (Feb. 17, 2022),,the%20soil%20to%20control%20weeds; There is evidence, however, that pesticide use has increased with genetically modified crops. See, Charles M. Benbrook, Impacts of Genetically Engineered Crops on Pesticide Use in the U.S. — The First Sixteen Years, 24 Environ. Sci. Eur. 24 (2012),

[104] Erik Stokstad, New Genetically Modified Corn Produces up to 10% More than Similar Types, Science (Nov. 4, 2019),

[105] Liam Proud, Breakingviews – Bayer Investors Get Unwelcome Antitrust Present, Reuters (Apr. 10, 2018),

[106] Angus Liu, Beleaguered Bayer Adds $1.8B to Cost-Cutting Goal Amid COVID-19 Slowdowns, Fierce Pharma (Oct. 1, 2020),

[107] Bayer AG, Google Finance, (accessed Jan. 24, 2023).

[108] Fitbit to Be Acquired by Google, Business Wire (Nov. 1, 2019),

[109] Leah Nylen, Facebook, Google’s Quintet of Antitrust Suits, Politico (Dec. 18, 2020),

[110] Heather Landi, Consumer Groups Warn Google’s Fitbit Buyout Could Harm Data Privacy, Competition, Fierce Healthcare (Jul. 2, 2020),; Consumer and Citizen Groups Have Serious Concerns About Google Fitbit Takeover, NGO Joint Statement (2020), available at


[112] Tommaso Valletti & Cristina Caffarra, Google/Fitbit Review: Privacy IS a Competition Issue, Vox EU (Mar. 4, 2020),

[113] Id., “This deal is coming forward against a background of perceived major deterioration in privacy standards, as competition between data collectors has dwindled and users’ attention is now funneled into very few giant ‘attention brokers.’”

[114] Id., The authors add: “Just as Google today promises that ‘Fitbit health and wellness ‘personal’ data will not be used for Google ads,’ Facebook at the time swore blind they would not exploit WhatsApp data and would monetise the $21 billion by selling emojis—something they actually never did.”

[115] Seven Democratic Senators Urge Caution on Google’s Purchase of Fitbit, Reuters (Jul. 23, 2020),

[116] @GregorySCrawfor, Twitter (Dec. 22, 2020, 5:37 AM),; see also, @GregorySCrawfor, Twitter (Dec. 22, 2020, 5:44 AM), (“More generally, consumers care about how their data is combined and used (even in the aggregate) and the combination of health and non-health data can also be interpreted as a quality-adjusted price increase of using Google’s *existing* services.”).

[117] Ron Amadeo, Google Says It’s Closing the Fitbit Acquisition—Uh, Without DOJ Approval?, ArsTechnica (Jan. 14, 2021), (“1. Google commits not to use any Measured Body Data or Health and Fitness Activity Location Data in or for Google Ads. 2. Google commits to maintain Data Separation. 3. Compliance with the commitments set out in paragraphs 1 and 2 above is to be achieved through a technical structure for data storage consisting of auditable technical and process controls, reflected in the following approach…”).

[118] Sara Fischer, Slow Fade for Google and Meta’s Ad Dominance, Axios (Dec. 20, 2022),

[119] Nicole Farley, Google Search, Network, and YouTube Revenue All Fell in Q4 2022, Search Engine Land (Feb. 3, 2023),

[120] @GregorySCrawfor, Twitter (Dec. 22, 2020, 5:37 AM),

[121] Commission Decision of 17.12.2020 Declaring a Concentration to Be Compatible with the Internal Market and the EEA Agreement (Case M.9660 – Google/Fitbit), European Commission (Dec. 17, 2020), available at (“1. Google commits not to use any Measured Body Data or Health and Fitness Activity Location Data in or for Google Ads. 2. Google commits to maintain Data Separation. 3. Compliance with the commitments set out in paragraphs 1 and 2 above is to be achieved through a technical structure for data storage consisting of auditable technical and process controls, reflected in the following approach…”); see also, Mergers: Commission Clears Acquisition of Fitbit by Google, Subject to Conditions, European Commission (Dec. 17, 2020), (“Google will not use for Google Ads the health and wellness data collected from wrist-worn wearable devices and other Fitbit devices of users in the EEA, including search advertising, display advertising, and advertising intermediation products. This refers also to data collected via sensors (including GPS) as well as manually inserted data.”).

[122] Amadeo, supra note 117.

[123] Fitbit Privacy Policy, Fitbit (Sep. 16, 2022),

[124] Id.

[125] What Should I Know About “Fitbit by Google”?, Fitbit, (last accessed Mar. 10, 2023).

[126] Note, however, that according to the Fitbit privacy policy, insurers themselves may share that information with Google if they provide Fitbit devices to their insureds. Id. (“We receive this information from you, your device, your use of the Services, your coach if you use our Live Coaching Services, third parties (like the other services you have connected to your Fitbit account, or your employer or insurance company if they offer you Fitbit Services as an employee or customer), and as otherwise described in this policy.”)

[127] Infographic: Smartwatch Market | Q1 2022, Counterpoint (Jun. 10, 2022),

[128] Andrew Wooden, The Smartwatch Market Hit Record Levels in 2021, (Mar. 14, 2022),

[129] Introducing Amazon Halo and Amazon Halo Band—A New Service that Helps Customers Improve Their Health and Wellness, Amazon (Aug. 27, 2020),

[130] Ted Kritsonis, Amazon Halo View Review: A Lightweight Fitness Tracker Tied to a Deeper App, Android Police (Oct. 20, 2022),

[131] Pixel Watch, Wikipedia (last visited Mar. 15, 2023),

[132] Id.

[133] David Pierce, Google Thinks Smartwatches Are the Future Again—Are You Buying It?, The Verge (Oct. 6, 2022), (emphasis added).

[134] Smartwatches: Regulatory Trends, Verdict (Jul. 20, 2020),

[135] Although it is commonly bandied about to describe the Instagram acquisition because of its pejorative connotation, the term “killer acquisition” is decidedly inapt given the ongoing maintenance and enormous success of Instagram following the acquisition.

[136] Mikah Roberts, Killer Acquisitions and the Death of Competition in the Digital Economy, 24 Tenn. J. Bus. L. 61 (2022).

[137] Geoffrey A. Manne, Samuel Bowman, & Dirk Auer, Technology Mergers and the Market of Corporate Control, 86 Missouri L. Rev. 1047, 1118 (2021) (“At the very least, this raises the prospect of an alternative story in which Facebook’s acquisition of Instagram was mostly about improving both firms’ products. This story is consistent with the tremendous growth of both Facebook and Instagram since the acquisition.”); John M. Yun, Potential Competition, Nascent Competitors, and Killer Acquisitions, 18 The Glob. Antitrust Inst. Rep. On The Digit. Econ. 652, 652–53 (2020),

[138] Om Malik, Here Is Why Facebook Bought Instagram, GIGAoM (Apr. 9, 2012),

[139] Roberta Kwok, A Wave of Acquisitions May Have Shielded Big Tech from Competition, Yale Insights (Mar. 7, 2023),

[140] Charles Arthur, Instagram and Facebook: The Next Tech Bubble?, The Guardian (Apr. 10, 2012),; see also, John Gapper, Facebook Is Scared of the Internet, Financial Times (Apr. 11, 2012),

[141] Amanda Michel & Amanda Holpuch, Why Did Facebook Buy Instagram for a Whopping $1bn?, The Guardian (Apr. 9, 2012),

[142] See, e.g., Case No. COMP/M.7217 Facebook/WhatsApp, 2014 O.J. (L 24) 1; see also, Anticipated Acquisition by Facebook Inc. of Instagram Inc., ME/5525/12 (OFT Aug. 22, 2012); see also, S. Dixon, Number of Instagram Users Worldwide from 2020 to 2025, Statista (Feb. 15, 2023),,percent%20of%20global%20internet%20users.

[143] See Collen Cunningham, et al., Killer Acquisitions, 129 J. Pol. Econ. 649 (2021).

[144] See, Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations (Oct. 2020),

[145] Fed. Trade Comm’n v. Facebook, No 1:20-cv03590, 2021 WL 2643627. (Dec. 9, 2020) (Complaint for Injunctive and other Equitable Relief), available at ook_ftc_ddc_complaint2020_12_09.pdf; see also, State of New York, et al. v. Facebook, 1:20-CV-03589 (Dec. 3, 2020) (Complaint), available at ok_states_ddc_complaint2020_12_09.pdf.

[146] Regina Balana, Facebook’s Merger Is Causing Privacy Concerns Among Regulators, Tech Times (Jan. 28, 2019),

[147] See, generally, Steven C. Salop, Potential Competition and Antitrust Analysis: Monopoly Profits Exceed Duopoly Profits, Geo. Univ. L. Ctr. 7 (2021), (emphasis added).

[148] Unlocking Digital Competition, OGL 98 (Mar. 2019), available at

[149] Valletti & Caffarra, supra note 112.

[150] Andrew Hutchinson, New Report Highlights the Decline of Facebook and IG, as TikTok Becomes the New Home of Entertainment, Social Media Today (Sep. 12, 2022),

[151] Id.

[152] Id.

[153] TikTok Users Worldwide (2020-2025), Insider Intelligence (Jan. 19, 2023),

[154] Sam Anderson, ‘TikTok Will 100% Kill Instagram’: Social Experts on Influencers and Authenticity, The Drum (Jun. 1, 2022),; see also, Juxtaposed Ideas, Meta Platforms vs. ByteDance: The Impact of TikTok on Instagram, Seeking Alpha (Feb. 10, 2022),; Cal Newport, TikTok and the Fall of the Social-Media Giants, New Yorker (Jul. 28, 2022),

[155] Drew Harwell, How TikTok Ate the Internet, Washington Post (Oct. 14, 2022),

[156] Meta Platforms, Inc. (META), Yahoo! Finance,; see also, Abram Brown, Meta Stock Falls Over 20% After Metaverse Project Loses over $10 Billion in 2021, Forbes (Feb. 2, 2022),

[157] Robert W. Crandall & Thomas W. Hazlett, Antitrust in the Information Economy: Digital Platform Mergers, J. Law & Econ. (forthcoming).

[158] See Amended Complaint, FTC v. Facebook, Inc., Case No.: 1:20-cv-03590-JEB (D.D.C. Sep. 8, 2021)

[159] David McCabe & Ben Sisario, Justice Dept. Is Said to Investigate Ticketmaster’s Parent Company, NY Times (Jan. 24, 2023),

[160] @AOC, Twitter (Nov. 15, 2022, 7:35 PM),

[161] See, e.g., William M. Landes & Richard A. Posner, Market Power in Antitrust Cases, Harv. L. Rev. 495 (1981). (“Section 7 of the Clayton Act also requires proof of market power; in fact, the main purpose of section 7 is to limit mergers that increase market power.”)

[162] See Alan J. Meese & Barak D. Richman, A Careful Examination of the Live Nation-Ticketmaster Merger, William & Mary Law School Research Paper No. 09-41 (Nov. 2009) at 93-104, available at

[163] See, e.g., David Segal, Calling Almost Everyone’s Tune, NY Times (Apr. 24, 2010),

[164] Id.

[165] Variety Staff, Ticked Over Tix, Buyers Take ‘Master to Task, Variety (Aug. 10, 1993),

[166] Id. (emphasis added).

[167] David Balto, The Ticketmaster-Live Nation Merger: What Does It Mean for Consumers and the Future of the Concert Business?, CAP Action (Feb. 24, 2009),

[168] Christine A. Varney, The Ticketmaster/Live Nation Merger Review and Consent Decree in Perspective, U.S. Justice Department (Mar. 18, 2010),

[169] Break Up Ticketmaster (last visited, Mar. 18, 2023),

[170] Press Release, New Campaign Launches to Break Up Ticketmaster, Economic Liberties Project (Oct. 19, 2022),

[171] Anna Edgerton & Leah Nylen, Senators Blast Ticketmaster ‘Monopoly’ for Taylor Swift Woes, Bloomberg (Jan. 24, 2023),

[172] See, e.g., Daniel CH, Ticketmaster Revenue and Growth Statistics (2023), SignHouse, (last visited, Mar. 21, 2023); Emily Lorsch, Why Live Nation and Ticketmaster Dominate the Live Entertainment Industry, CNBC (Jan. 25, 2023),; Gabriel Smith, Ticketmaster and Live Nation Were Not Supposed to Create a Monopoly. Here’s Why Music Fans, Lawmakers, and Taylor Swift Are Fed up with the Ticketing Platforms, Fortune (Jan. 27, 2023),

[173] Live Nation Entertainment, Inc., Annual Report (Form 10-K) (Feb. 23, 2023) at 9.

[174] Id. See also, Jonathan Briskman, Top Ticketing Apps in the U.S. for Q1 2019 by Downloads, SensorTower (Jun. 2019),; Adam Blacker, Ticketmaster Is the Ticket Master, Apptopia (May 9, 2019),

[175] SeatGeek, Wikipedia, (last visited Mar. 21, 2023).

[176] Id.

[177] Jem Aswad, Live Nation Settles With Dept. of Justice Over Ticketmaster Merger, Variety (Dec. 19, 2019),

[178] Justice Department Will Move to Significantly Modify and Extend Consent Decree with Live Nation/Ticketmaster, U.S. Justice Department (Dec. 19, 2019),

[179] Ben Sisario & Madison Malone Kircher, Ticketmaster Cancels Sale of Taylor Swift Tickets After Snags, The New York Times (Nov. 17, 2022),

[180] Florian Ederer, Did Ticketmaster’s Market Dominance Fuel the Chaos for Swifties?, Yale Insights (Nov. 23, 2022),

[181] Dennis Green, Amazon’s Likely Multimillion-Dollar Disaster on Prime Day Proved It’s Not Immune from Embarrassment, Business Insider (Dec. 14, 2018),

[182] AWS Well-Architected, Amazon, (last accessed Mar. 10, 2023).

[183] For an introductory discussion of the latter, see Brian Albrecht, Econ 101 Ignores 50 Years of Economic Science, Economic Forces (Mar. 16, 2023),

[184] Richard Gilbert surveys the econometric literature concerning the effect of industry structure on innovation. See Richard Gilbert, Innovation Matters: Competition Policy for the High-Technology Economy 116 (2020). He concludes that the relationship between both is indeterminate. See id. (“Table 6.1 summarizes the conclusions from these interindustry studies for the effects of competition and industry structure on innovation. Unfortunately, these studies do not reach a consensus, other than to note that innovation effects can differ dramatically for firms that are at different levels of technological sophistication. Although some studies find a positive relationship between measures of innovation and competition (alternatively, a negative relationship between innovation and industry concentration), others find that the relationship exhibits an inverted-U, with the largest effects at moderate levels of industry concentration or competition, and at least one study reports a negative relationship between competition (measured by Chinese import penetration) and innovation (measured by citation-weighted patents and R&D investment). One consistent finding is that an increase in competition has less of a beneficial effect, and may have a negative effect, on innovation incentives for firms that are far behind the industry technological frontier.”); see also Ronald L. Goettler & Brett R. Gordon, Does AMD Spur Intel to Innovate More?, 119 J. Pol. Econ. 1141, 1141 (2011) (“Consistent with Schumpeter, we find that the rate of innovation in product quality would be 4.2 percent higher without AMD present, though higher prices would reduce consumer surplus by $12 billion per year. Comparative statics illustrate the role of product durability and provide implications of the model for other industries.”); Mitsuru Igami, Estimating the Innovator’s Dilemma: Structural Analysis of Creative Destruction in the Hard Disk Drive Industry, 1981–1998, 125 J. Pol. Econ. 798, 798 (2017) (“The results suggest that despite strong preemptive motives and a substantial cost advantage over entrants, cannibalization makes incumbents reluctant to innovate, which can explain at least 57 percent of the incumbent-entrant innovation gap.”); Elena Patel & Nathan Seegert, Does Market Power Encourage or Discourage Investment? Evidence From the Hospital Market, 63 J.L. Econ. 667, 667 (2020) (“We find a negative relationship between competition and investment. In particular, hospitals in concentrated markets increased investment by 5.1 percent ($2.5 million) more than firms in competitive markets in response to tax incentives. Further, firms’ investment responses monotonically increased with market concentration.”).

[185] See Foroohar, supra note 24.

[186] Paul Farhi, Competitor to Acquire Ticketron, The Washington Post (Feb. 28, 1991),

189 See, e.g., Peter Tschmuck, The Economics of Music 113 (2021).

[188] Peter Larsen, Garth Brooks, industry pros blame resellers, not Ticketmaster, for problems, Los Angeles Daily News (Feb. 22, 2023), (emphasis added).

[189] Live Nation Entertainment Reports Fourth Quarter & Full Year 2022 Results, LiveNationEntertainment,com (last visited March 21, 2023),

[190] Industry Data, (last visited March 21, 2023),

[191] See, e.g., Lucas Shaw, Concerts Are More Expensive Than Ever, and Fans Keep Paying Up, Bloomberg (Sep. 10, 2019),

[192] Alan B. Krueger, The Economics of Real Superstars: The Market for Rock Concerts in the Material World, 23 J. Labor Econ. 1, 1 (2005). See also id. at 25-26 (“Each band has some monopoly power because of its unique sound and style. So my hypothesis is that, in the past, when greater concert attendance translated into greater artists’ record sales, artists had an incentive to price their tickets below the pro?t-maximizing price for concerts alone. New technology that allows many potential customers to obtain recorded music without purchasing a record has severed the link between the two products. As a result, concerts are being priced more like single-market monopoly products.”).

[193] Eric Fuller, Shoot First, Aim Later. The United States Senate Attacks Event Ticketing, Forbes (Jan. 25, 2023), (emphasis added).

[194] Id.

[195] See Michael Clements, Event Ticket Sales: Market Characteristics and Consumer Protection Issues, U.S. Government Accountability Office, GAO-18-347 (Apr. 12, 2018) at 12-14, available at (collecting economic studies).

[196] New York State Attorney General Eric Schneiderman, Obstructed View: What’s Blocking New Yorkers from Getting Tickets (Jan. 28, 2016) at 11-15, available at (“Indeed, for many of the top shows, less than 25% of tickets were actually released to the general public in an initial public on-sale.”).

[197] See, e.g., Drew Gainor, Secondary Ticket Market Share Analysis, Automatiq (Jul. 28, 2021),

[198] Luiz Blanquez, Strong Winds of Change in the Antitrust World in Europe and the United States: Big Tech Under Cross Fire, The Antitrust Attorney Blog (Mar. 14, 2021),

[199] Khan, supra note 15.

[200] Foroohar, supra note 24.

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Antitrust & Consumer Protection

Europe’s New SEP Regulation: All Quiet on the Patent Front?

TL;DR Background: The European Commission is about to unveil draft regulation that will more tightly regulate how patents are incorporated into technology standards. The Commission’s expert . . .

Background: The European Commission is about to unveil draft regulation that will more tightly regulate how patents are incorporated into technology standards. The Commission’s expert report and call for comments suggest that it wants to create a regime of third-party checks that would verify whether inventors’ patents are truly essential to a technology standard (i.e., “essentiality checks”). The goal ultimately is to ensure that standard-essential patents (SEPs) are adequately disclosed to would-be licensees. There are thousands of SEPs that underpin the technologies powering the digital economy, thus making it essential that firms coordinate to develop and implement these technologies.

However… It is unclear that such regulation would improve upon the status quo. While it might not be perfect, the existing approach to essentially checks has seen SEP-reliant industries provide countless technological breakthroughs. This has led industries where SEPs are particularly relevant to occupy key geostrategic positions. By contrast, imposing heavy-handed regulation risks not only that there will be harm to consumers, but the potential that the West’s strategic position relative to adversarial foreign powers like China or Russia may be weakened.


Technical standards (e.g., 5G, WiFi, USB-C, etc.) often rely on hundreds—sometimes thousands—of distinct inventions that can each be covered by multiple patents. 

Firms that commercialize goods incorporating these technologies need to know which patents are essential to those standards—thus avoiding situations where license fees are paid for technologies that are not necessary to practice a given standard.

Essentiality checks can potentially streamline this process, thereby limiting the over- and/or under-disclosure of SEPs. But this is a complex and costly endeavor. The benefits of achieving perfect disclosure of SEPs—be it via market forces or regulation—are thus unlikely to outweigh the costs.


As things stand, a patent’s essentiality is determined in various ways. These include the use of patent pools, self-assessments by inventors, and evaluations outsourced to third-party experts. 

Whatever one thinks of that heterogeneous approach, it is clear that the SEP industry has thrived under this laissez-faire paradigm, and that competition among the various inventors, implementers, and standards-development organizations (who bring inventors and implementers together) has played a useful role in optimizing these processes. Regulators should thus be wary not to upset the apple cart.

In contrast, the Commission’s expert report and its call for comments both suggest that it favors a more centralized system in which government institutions, such as patent offices, would act as backstops for essentiality checks. 

Such a system would not be without risks. Indeed, there is little evidence that SEP-heavy industries are underperforming. Any reform thus risks creating more friction than it removes.


There are fears that excessive sanctions for failing to adequately disclose essential patents could tilt the bargaining power in SEP-reliant industries toward implementers. In turn, this could undermine inventors’ incentive to produce new technologies.

In recent years, courts around the world have sought to strike an appropriate balance between the interests of inventors and implementers. In doing so, they have foiled attempts by several regulators to limit the royalties that inventors can extract; to prevent them from obtaining injunctions against infringers of their patents; and to determine the level of the value chain at which royalties are to be calculated. 

One concern is that the draft regulation may seek to forward those goals by assessing penalties for failing to comply with its provisions. For instance, inventors may lose the ability to bring injunctions against infringers if a third party deems their patent to be non-essential. Given the vital role that these injunctions play, such a policy would be misguided.


Finally, overburdening firms that are active in the SEP space could erode the West’s technological leadership relative to states with manufacturing-reliant economies whose political leaders routinely undermine the intellectual property rights of foreign firms.

Many SEPs, particularly those relevant to the telecommunications sector, are held by companies in the West and specifically in the United States. The lion’s share of implementers, by contrast, are based in China. Policies that impose significant costs on inventors and benefit implementers may thus amount to a subsidy to Chinese firms and a tax on Western innovation.

These harmful consequences are magnified in light of China’s strategic effort to shape international technology standards. With European firms systematically deterred from participating in the development of open technology standards, Chinese firms—directed by their government authorities—will gain significant control of the technologies that underpin tomorrow’s digital goods and services. The consequences are potentially catastrophic.

For more on this issue, see ICLE’s academic output on standard essential patents here and here, and our response to the Commission’s recent consultation here

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Intellectual Property & Licensing

Killer Acquisition or Leveling Up: The Use of Mergers to Enter Adjacent Markets

TOTM In the world of video games, the process by which players train themselves or their characters in order to overcome a difficult “boss battle” is . . .

In the world of video games, the process by which players train themselves or their characters in order to overcome a difficult “boss battle” is called “leveling up.” I find that the phrase also serves as a useful metaphor in the context of corporate mergers. Here, “leveling up” can be thought of as acquiring another firm in order to enter or reinforce one’s presence in an adjacent market where a larger and more successful incumbent is already active.

Read the full piece here.

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Antitrust & Consumer Protection

Brief of ICLE and Law & Economics Scholars in Deslandes v. McDonald’s

Amicus Brief Interest of Amicus Curiae[1] The International Center for Law & Economics (“ICLE”) is a nonprofit, non-partisan global research and policy center aimed at building the . . .

Interest of Amicus Curiae[1]

The International Center for Law & Economics (“ICLE”) is a nonprofit, non-partisan global research and policy center aimed at building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law and economics methodologies to inform public policy debates and has longstanding expertise in antitrust law.

Amici also include twenty scholars of antitrust, law, and economics at leading universities and research institutions across the United States. Their names, titles, and academic affiliations are listed in Appendix A. All have longstanding expertise in antitrust law and economics.

Amici respectfully submit that their amicus brief will aid the Court in reviewing the order of dismissal by explaining that Plaintiffs did not plead and could not prove any plausible product or geographic market. This is a point that Plaintiffs attempt to elide in their appellate brief that warrants this Court’s attention. The foundation of almost every antitrust claim is a plausible market definition, yet Plaintiffs’ claims in this case are premised on a labor market—limited to one company (McDonald’s), but nationwide in scope—that has no basis in economic reality.

In addition, amici explain why Plaintiffs’ claims are subject to rule of reason scrutiny. This case involves a vertical, intrabrand restraint between McDonald’s and its franchisees, which promoted interbrand competition. It was not a naked restraint on trade, but rather an ancillary restriction that furthered McDonald’s procompetitive goal of creating a strong and stable brand. Treating such a restraint as per se unlawful, as Plaintiffs ask this Court to do, would stifle the type of legitimate cooperation that facilitates output and would ultimately harm consumers.


Until 2017, McDonald’s franchise agreements included a provision that prevented franchisees from hiring workers from other McDonald’s restaurants within the six-month period immediately following the workers’ prior employment. Two employees sued McDonald’s in a putative class action, alleging that this provision—which the parties refer to as “Paragraph 14”—was an unlawful agreement under Section 1 of the Sherman Act, 15 U.S.C. § 1, that harmed competition by artificially suppressing wages. Plaintiffs argued that Paragraph 14 was per se unlawful or failed “quick look” review; on appeal (but not below), Plaintiffs also argue that Paragraph 14 fails scrutiny under the rule of reason. Brief of Appellants at 31-33, Deslandes v. McDonald’s USA LLC, No. 22-2333 & 22-2334 (7th Cir.) (“App. Br.”).

Under the rule of reason, Plaintiffs had the burden to plead and prove the relevant product and geographic markets within which McDonald’s allegedly exerted market power and caused the alleged anticompetitive effects. Plaintiffs’ claim has always been premised—explicitly or implicitly—on a single-brand and nationwide labor market for McDonald’s employees. (§ I.A). Although Plaintiffs shy away from that market on appeal, it is the only one discernible from the record and the only one on which Plaintiffs’ claims could possibly be premised. But that market is fatally flawed along the two axes that typically delineate antitrust markets: (1) geography and (2) products or services.

First, the relevant labor market is local: there is no national market for fast-food restaurant employees, as Plaintiffs suggest. Low-skilled restaurant workers sell their labor in local markets, primarily to avoid long commutes or relocation. The economic (and commonsense) reality is that a person applying for a McDonald’s job in Chicago, Illinois is not also looking for a McDonald’s job in Florida or Montana; nor are local McDonald’s restaurants recruiting employees nationwide. (§ I.B). Second, there is no McDonald’s-specific labor market for restaurant employees. McDonald’s restaurants compete vigorously with other fast-food and quick-service restaurants—and with firms outside the restaurant industry—for labor. Empirical economic evidence refutes Plaintiffs’ arguments to the contrary. (§ I.C).

Further, Plaintiffs cannot avoid the rule of reason (or their burden to plead and prove a relevant market) by invoking per se scrutiny. (§ II). First, Paragraph 14 was not a horizontal restraint; it was a vertical, intrabrand restraint between McDonald’s and its franchisees. (§ II.A). Second, Paragraph 14 was not a naked restraint on trade but was instead “ancillary” to McDonald’s procompetitive endeavor of developing its brand. (§ II.B). Third, Paragraph 14 does not fall in the narrow class of restrictions—like price fixing—universally condemned as anticompetitive. Nor are there sufficient economic studies showing that restraints like Paragraph 14 have a demonstrable and negative impact on trade, such that there would be a basis to depart from the default rule of reason standard. (§ II.C).

I.             There is no Nationwide, Single-Brand Market for McDonald’s Employment

Market definition enables courts to determine whether firms possess market power capable of restricting competition. The market provides a locus for the assessment of that market power and of whether that power has been exploited to harm competition and consumers.

Accordingly, “courts usually cannot properly apply the rule of reason without an accurate definition of the relevant market.” Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285 (2018). The rule of reason requires a court to assess the “actual effect” that a defendant’s conduct has on competition. Id. at 2284 (quoting Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 768 (1984)). And without knowing the relevant market, “there is no way to measure the defendant’s ability to lessen or destroy competition.” Id. at 2285 (quoting Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 177 (1965)).[2]

A.             Plaintiffs Must Allege and Prove a Relevant Market

In the district court, Plaintiffs did not clearly define the relevant market in which Paragraph 14 allegedly harmed competition; and that failure defeats their claim under the rule of reason. See Agnew v. Nat’l Collegiate Athletic Ass’n, 683 F.3d 328, 347 (7th Cir. 2012) (affirming dismissal where “[p]laintiffs appear to have made the strategic decision to forgo identifying a specific relevant market,” and rejecting “post hoc arguments attempting to illuminate a buried market allegation”).

Plaintiffs are wrong to assert that they can rely on “direct evidence” of anticompetitive harm to avoid establishing a relevant market. App. Br. at 31. Even if they had such evidence, Plaintiffs would still have the burden to sketch out the “rough contours” of the relevant market and to show that McDonald’s commanded a substantial share of that market. See Republic Tobacco Co. v. N. Atl. Trading Co., 381 F.3d 717, 737 (7th Cir. 2004) (“[I]f a plaintiff can show the rough contours of a relevant market, and show that the defendant commands a substantial share of the market, then direct evidence of anticompetitive effects can establish the defendant’s market power[.]” (emphases added)). But Plaintiffs never inform this Court what product or geographic markets are involved here, even “roughly” speaking. Accordingly, Plaintiffs’ references to their supposed “direct evidence” of anticompetitive harm, without regard to any market boundaries, App. Br. at 31-32, do not suffice.[3]

Rather than define a market, Plaintiffs fault the district court for assuming that their claim “depended upon a single, nationwide geographic market.” App. Br. at 31. But that assumption came not from the district court but from Plaintiffs themselves—as that was the only market potentially discernible in their complaints. See First Am. Compl. ¶¶ 1, 117; Turner Compl. ¶¶ 109-13 (implying a single-brand, nationwide market). While Plaintiffs try to obscure their single-brand, nationwide market for McDonald’s labor on appeal, that is the only one that Plaintiffs rely upon in their opening brief, albeit obliquely. See App. Br. at 31 (arguing that Paragraph 14 “suppressed worker pay nationwide”); id. at 33 (arguing that McDonald’s and its franchisees were the “discrete group of buyers” that were able to “hold down wages”).

Plaintiffs’ proposed market is both implausible and economically unsound. Antitrust markets typically have two dimensions: (1) a geographic market and (2) a product or services market. See Brown Shoe Co. v. United States, 370 U.S. 294, 324 (1962). Plaintiffs’ single-brand, nationwide market fails along both dimensions.

B.        The Relevant Market is Local, not National

First, to identify a relevant geographic market, the court must make a “careful selection of the market area in which the seller operates, and to which the purchaser can practicably turn for supplies.” Republic Tobacco, 381 F.3d at 738 (citing Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961)). In labor markets, the “sellers” are workers or job applicants selling their services (like Plaintiffs), and “purchasers” are employers (like McDonald’s) that compete with other firms to hire, employ, and retain the workers.

As the district court correctly found, low-wage restaurant employees sell their labor locally and McDonald’s restaurants compete only with geographically proximate employers to purchase that labor. See D.E. 372 (“Class Cert. Op.”) at 20-21. Fast-food and quick-serve restaurant employees are generally low-skilled and/or entry-level workers who “are looking for a position in the geographic area in which they already live and work, not a position requiring a long commute or a move.” Id. at 21.

While some employees might relocate for other reasons first, and then seek a restaurant job, it is not economically plausible that they would “search long distances for a low-skill job with the idea of then moving closer to the job.” Id. The costs of relocation—in economic terms, the “search” costs and “transition” costs—would far exceed any cost-adjusted increases in pay and benefits.

In practical terms, an hourly McDonald’s worker in Apopka, Florida who does not otherwise desire to move to California would not uproot her life, and leave family and friends, for a McDonald’s job in Los Angeles—even if the Los Angeles franchisee offers to raise her wages a few dollars per hour. The employee has many alternative opportunities that do not require relocation and, in any event, the higher cost of living in Los Angeles would negate the benefits of the wage increase. The total costs of relocation likely outweigh the marginal wage gain.

For similar reasons, an employee is unlikely to commute long distances—for example, from Urbana to Chicago, Illinois—to work at a McDonald’s, even if the McDonald’s in Chicago pays slightly higher wages than the one in Urbana. A marginal wage increase would not offset the time and “commuting costs”—i.e., gas and mileage. See Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶ 552 (5th ed. 2022) (explaining that “commuting costs” limit a supplier’s ability to operate in a distant geographic market).

Nor is it plausible that a McDonald’s franchisee in Apopka, Florida would recruit workers nationwide. That franchisee also faces search costs in the labor market. It must advertise its job openings, hire recruiters, and interview applicants, among other things. It would not be worthwhile to incur the substantial costs of a nationwide search for employees, when those employees would likely remain at the job for a relatively short time, and when there are many local workers with similar skills who could fill the role.

To be sure, some highly skilled employees in other industries—for example, corporate executives or professional athletes—undoubtedly search for high-paying or prestigious jobs nationwide. And their potential employers recruit nationwide. For those types of job-seekers, their decisions turn on the scarcity of those jobs, the substantial personal and financial investments (“sunk costs”) they have made to be qualified for such positions (which essentially “lock” them into the nationwide market), and the high salaries or total compensation that make relocation worthwhile. Likewise, for the hiring firm, the search is justified by the small number of qualified candidates, widely distributed across the country, and by the expected benefits. For example, it would be worthwhile for a firm to  search far and wide for a new CEO, knowing that there are only a few people in the country with the skills and leadership ability to lead the company out of financial troubles.

These rarefied exceptions confirm that the vast majority of labor markets are “geographically quite small.” Herbert Hovenkamp, Competition Policy for Labour Markets, U. Pa. Inst. L. & Econ. ¶ 12 (May 17, 2019). Applicants for low paying and fungible jobs have fundamentally different incentives than do corporate executives and professional athletes. The former do not have adequate incentives for a national search, given the substantial costs, plus relocation or long-distance commuting.

These intuitive points are supported by data and established economic methods. Several recent economic studies demonstrate that, “in a wide range of industries[,] geographic markets for employment are rather small,” and that this is “particularly true of low-wage employees.” Areeda & Hovenkamp, supra ¶ 550b (collecting studies). One empirical study shows that “more than 80% of [all] job applications occur where the applicant and prospective employer are within the same ‘commuting zone.’” Ioana Marinescu & Roland Rathelot, Mismatch Unemployment and the Geography of Job Search, 10(3) Am. Econ. J. Macro. 42 (2018).

The U.S. Bureau of Labor Statistics (“BLS”) employs a methodology that confirms the district court’s findings with respect to localized markets. When BLS collects employment and unemployment statistics, it examines the “economically integrated geographic area within which individuals can reside and find employment within a reasonable distance or can readily change employment without changing their place of residence.” BLS, Local Area Unemployment Statistics Geographic Concepts, (Mar. 20, 2020). According to BLS, metropolitan and micropolitan areas are the “major” “labor market areas” (LMAs)—not the country as a whole. Id. The balance of the nation’s LMAs comprise a larger number of smaller geographic areas. Id. BLS identifies thousands of these small LMAs for each decennial census, based on its analysis of highly localized commuting flows. Id; see also Data.Gov, Commuting Zones and Labor Market Areas,  (Nov. 10, 2020).

Plaintiffs’ own expert witnesses acknowledged that a nationwide market was implausible in this case. Dr. Peter Capelli conceded that restaurant workers are employed in local geographic markets, defined by commuting distances. Class Cert. Op at 22-23 (citing Capelli Dep. at 235-36, D.E. 302-1 at 608-09) (“My testimony is that for the restaurant employees in particular, the crew employees, there may be labor markets of different geographic size and that the key issue there might not even be size, it might be commuting distance.”). And Dr. Hal Singer calculated that only 8% of McDonald’s employees commute ten or more miles to work. Id. at 23 (citing Singer Rep. ¶ 64, D.E. 271-5 at 54).

Other evidence in this case also demonstrates that market conditions vary substantially by location. McDonald’s own guidelines on worker pay account for local conditions. D.E. 302-19 at -997; D.E. 302-19 at -432, -444; see also D.E. 380 ¶¶ 40-50. The guidelines do not set forth a single, rigid nationwide formula—which one would expect to see if McDonald’s understood that its franchisees were competing for labor nationwide.

As this Court recently explained, “[t]he antitrust statutes require a ‘pragmatic’ and ‘factual’ approach to defining the geographic market,” and “[t]he market must ‘correspond to the commercial realities of the industry.’” Sharif Pharmacy, Inc. v. Prime Therapeutics, LLC, 950 F.3d 911, 917 (7th Cir. 2020) (quoting Brown Shoe, 370 U.S. at 336). Plaintiffs’ proposed nationwide market is neither pragmatic nor factual. It ignores the obvious commercial reality that local McDonald’s franchisees do not compete nationwide for low-skilled labor, and it ignores the empirical evidence that McDonald’s employees (and similarly situated low-wage employees) do not commute long distances or relocate for these types of jobs.

C.        The Market is not McDonald’s-Specific

The outer boundaries of a product market are defined by the “reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.” Sharif Pharmacy, 950 F.3d at 918 (quoting Brown Shoe, 370 U.S. at 325). Cross-elasticity of demand, here, reflects the degree to which a significant increase or decrease in wages paid by alternative employers changes the number of workers hired or hours worked (quantity demanded) at the employer in question. In the classic company town, the cross-elasticity of demand is zero. When there are substitutes, it is positive, indicating that “consumers would respond to a slight increase in the price of one product by switching to another product.” Todd v. Exxon Corp., 275 F.3d 191, 201-02 (2d Cir. 2001); IIA Areeda & Hovenkamp, supra ¶ 562a.

In a “buyer-side” labor monopsony, such as Plaintiffs have alleged, the market is defined not by the competing sellers (employees), but by the availability of competing buyers (employers). See Todd, 275 F.3d at 201 (citing Roger D. Blair & Jeffrey L. Harrison, Antitrust Policy and Monopsony, 76 Cornell L. Rev. 297, 297-301, 308 (1991)). Thus, the key question is whether employees would see the various employers as reasonable substitutes for one another, such that they would respond to compensation changes by seeking those substitutes. Id. If so, then any of the reasonable substitutes must fall within the market definition for the plaintiff’s market to be plausible. See Rock v. Nat’l Collegiate Athletic Ass’n, 928 F. Supp. 2d 1010, 1021 (S.D. Ind. 2013) (“Plaintiffs’ proposed market is impermissibly narrow because it ignores the existence of [substitutes].”).

In a properly defined labor market, the greater the availability of substitute employers, the less “market power” each employer can have, as employees can go elsewhere when one employer lowers its wages or fails to meet wage increases by others. When a labor market is highly concentrated, by contrast, the employer may be able to exert monopsony buying power. For example, a pure labor monopsony might exist in the classic “company town,” where there is only one large employer—such as a lumber mill or coal mine—that has wide discretion to set wages without employees leaving for other jobs. Those employees are, in effect, “locked in” to selling their labor to the single employer. Cf. Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 472-73, 476 (1992) (seller can “lock in” customer to aftermarket for equipment repairs, if customers already purchased equipment in the foremarket and switching costs are high). In the modern economy, however, such examples are rare; and the market for hourly restaurant employees bears no resemblance to a company town.

Nevertheless, Plaintiffs here allege that McDonald’s is a monopsony buyer of labor—not just in a highly concentrated market, but in a single-brand market for McDonald’s labor. App. Br. at 7. In other words, McDonald’s allegedly has monopsony power to set the wages at which it hires and retains employees because employees (or applicants) generally would not see any non-McDonald’s employment opportunities as reasonable substitutes.

Plaintiffs’ theory thus depends upon implausible assumptions about McDonald’s market power and the elasticity of demand: that substantial wage increases by alternative local employers—including, but not limited to, fast food or quick-service restaurants like Wendy’s, Burger King, KFC, and Subway—would have little or no impact on the ability of a local McDonald’s franchise to hire or retain workers at a given antecedent wage. That is not only implausible in this case, but there is no evidence that it is the norm across low-wage labor markets. See, e.g., Jordan D. Matsudaira, Monopsony in the Low-Wage Labor Market? Evidence from Minimum Nurse Staffing Regulations, 96(1) Rev. Econ. & Statistics 92, 102 (2014) (empirical data in low-wage labor markets are “difficult to reconcile with the notion that low-wage labor markets such as those for fast food workers are monopsonist”).

These assumptions underlying Plaintiffs’ alleged market defy basic economic principles and common sense. Courts are highly skeptical of alleged single-brand markets with no substitutes at all, as those markets are almost always artificial and litigation-driven. See, e.g., Sheridan v. Marathon Petroleum Co., 530 F.3d 590, 595 (7th Cir. 2008) (rejecting single-brand market); Todd, 275 F.3d at 200 & n.3 (“Cases in which dismissal on the pleadings is appropriate frequently involve . . . failed attempts to limit a product market to a single brand, franchise, institution, or comparable entity….” (collecting cases)).

McDonald’s does not have monopsony power in any relevant market because, from an employee’s perspective, there are many reasonable substitutes in the geographic areas in which a given McDonald’s franchisee operates. McDonald’s franchisees compete vigorously for labor with other local employers within and without the quick-service industry. As the district court observed, there are multitudes of adequate, substitute employers for low-wage employees—including (1) other quick-serve restaurants, like Burger King, Wendy’s, Arby’s, KFC, Taco Bell, Chick-fil-A, Chipotle, and Jimmy John’s; (2) other restaurants, like Applebee’s; (3) larger retailers, like Walmart, Sam’s Club, and Costco; and (4) a host of other businesses like grocery stores and hotels. Class Cert. Op. at 21-22.

Even narrowing substitutes to just quick-service restaurants, the district court found numerous (even hundreds of) substitute employers within close geographic proximity to each of the named Plaintiffs, and the number of alternative quick-service restaurants dwarfed the number of McDonald’s franchises in the same area. Id. at 6.

Plaintiffs’ claim of monopsony buying power thus depends on the far-fetched premise that McDonald’s can suppress wages, notwithstanding hundreds of non-McDonald’s quick-service restaurants—and numerous other alternative employers—near Plaintiffs and other putative class members. In reality, if McDonald’s lowered its wages (or other employers raised theirs, and McDonald’s did not match), McDonald’s would lose its supply of labor. See Madison 92nd St. Assocs., LLC v. Courtyard Mgmt. Corp., 624 F. App’x 23, 29 (2d Cir. 2015) (in labor markets involving entry-level work, “it is beyond doubt that [employers] would have to increase their wages to retain any employees” if nearby employers “suddenly doubled the wages they paid to their employees”).

To evade this economic and commonsense reality, Plaintiffs and their expert, Dr. Singer, attempted to attribute monopsony power to McDonald’s as a structural feature of the labor economy in general. In other words, in their view, all employers of low-wage workers enjoy monopsony power in their labor markets, and, ipso facto, McDonald’s has market power in a single-brand market nationwide (or in each and every local labor market) because it employs low-wage workers.

In his expert report, for example, Dr. Singer characterizes economic literature as arguing that the ability of firms to suppress wages is “surprisingly common throughout the economy.” D.E. 271-5 (Singer Rep. ¶ 17). Thus, he stated, it “would be consistent with this literature . . . [t]hat McDonald’s-branded restaurant owners also face a low elasticity of labor supply[.]” Id.; see also id. ¶ 39 (“In light of [the economic literature], it is likely that both McDonald’s Franchisees and the McOpCos would continue to exercise some degree of monopsony power over their employees, even in the absence of the No-Hire Agreement.”).

On appeal, Plaintiffs point to Dr. Singer’s opinions about labor monopsonies, in general, as evidence that McDonald’s, specifically, had market power and could suppress wages in a proposed single-brand market for McDonald’s labor. See App. Br. at 30-33 (arguing that Plaintiffs “buttressed their direct proof of detrimental effects with substantial economic scholarship showing that low?wage employers, including those in the fast food sector, possess market power over their employees”); see also id. at 51 (arguing that “an overview of economic research demonstrat[es] that employers exercise significant monopsony power over their employees”).

Whatever the “structural” features of broader markets—comprising many low-wage employers and firms—those features say nothing about one company’s individual market power and ability to harm competition in a properly defined market. In any event, even if such a sweeping claim could suffice to carry one’s burden of proof as to a specific defendant, the claim is still inaccurate and inconsistent with the economic features of the quick-service restaurant industry. That industry is characterized by low barriers to entry for employees, extremely high turnover rates, and substantial wage growth.[4]

First, “[f]ood and beverage serving and related workers typically have no requirements for formal education or work experience to enter the occupation.” BLS, Occupational Outlook Handbook, Food and Beverage Serving and Related Workers, (Sept. 8, 2022). Unlike corporate executives and professional athletes, fast-food restaurant employees do not make large investments to obtain restaurant positions. Thus, they are not “locked in” to any one restaurant or even the restaurant industry, contrary to Plaintiffs’ argument that there are “high switching costs” for restaurant employees. App. Br. at 34.

Indeed, recent data show that the turnover in the quick-service sector is incredibly high, at around 144%—which means that if a restaurant has a total of 30 people on staff at any given time, it faced about 43 departures in the last year alone. See Daily Pay, The Turnover and Retention Rates for QSR Businesses (Nov. 15, 2022). BLS also recently found that the seasonally-adjusted “quit rate” for the accommodation and food services industry was 5.8% as of October 2022—higher than any other industry. See BLS, Economic News Release, Job Openings and Labor Turnover, Table 4, Quits levels and rates by industry and region, seasonally adjusted (Jan. 4, 2023). When restaurant workers quit, moreover, they frequently leave the restaurant industry altogether, creating high numbers of job openings for new entrants into restaurant sector employment. See BLS, Occupational Outlook Handbook, Food and Beverage Serving and Related Workers, (Sept. 8, 2022).

Moreover, fast-food workers in 2021, on average, benefitted from a 10% wage increase from 2020. See Dominick Reuter and Madison Hoff, A 10% pay increase and 8 other stats show how crazy it is to work in fast food right now, Business Insider (Aug. 24, 2021). Such rapid wage growth undermines Plaintiffs’ claim that monopsony power is a structural feature of the restaurant industry. To the contrary, this wage growth suggests that normal market factors of supply and demand are at play. Cf. Richard A. Epstein, Antitrust Overreach in Labor Markets: A Response to Eric Posner, 15 NYU J. L. & Liberty 407, 432 (2022) (“There is no global evidence, given the chronic fluctuations and frequent shortages, to believe that labor markets are rife with hidden pockets of monopsony power that function as economic black holes.”).

Finally, the most robust study of the relationship between wages and hours worked in fast-food labor markets yielded results that are consistent with competitive labor markets, rather than a monopsony model. See David Neumark and William Wascher, Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment, 90 Am. Econ. Rev. 1362, 1382 (2000) (critiquing the famous Card & Krueger minimum-wage study using direct data, rather than surveys, and looking at hours worked rather than overall employment; and finding that fast-food employers make wage and hour decisions consistent with “the prediction of the textbook [competitive] model”); see also David Neumark and William L. Wascher, Minimum Wages 106 (MIT Press 2007) (reviewing literature on low-wage restaurant workers and concluding that “the low-wage labor market can be reasonably approximated by the neoclassical competitive model”).

Overall, the empirical data show that the labor markets in which restaurants participate are dynamic and competitive, not dominated by monopsonists with the power to suppress wages at will.

II.         Paragraph 14 is Subject to the Rule of Reason

Plaintiffs cannot avoid their burden to plead and prove a market by insisting on per se analysis or even “quick look” review of Paragraph 14. The rule of reason governs Plaintiffs’ antitrust claims with respect to Paragraph 14 for at least three reasons. First, the restriction was a vertical, intrabrand restraint, not a horizontal one. Second, even if it were horizontal, it was still ancillary to the procompetitive franchise agreement. Third, Paragraph 14 does not fall within that narrow class of restrictions—such as price fixing—universally and historically condemned as anticompetitive. See Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2155-56 (2021) (explaining “spectrum” of antitrust analysis).

As noted above, McDonald’s vigorously competes with numerous firms in both labor markets and the output market. Its competitive efforts have included various intrabrand restraints among its franchisees that foster a strong, consistent brand identity, along with shared marketing and product development. That successful brand identity is what attracts individual franchisees to open and operate McDonald’s restaurants. Because Paragraph 14 was such a vertical restraint, and ancillary to McDonald’s procompetitive objectives, it cannot be per se unlawful. Rather, it is subject to full rule of reason analysis.

A.        Paragraph 14 is a Vertical, Intrabrand Restraint

Paragraph 14 is a vertical, not horizontal, restraint. It was conceived and imposed by the franchisor, McDonald’s—not competing franchisees.

In 1955, McDonald’s included in its franchise agreement the predecessor to the Paragraph 14 restriction as part of an initial bundle of brand standards. That original franchise agreement also included limits on, among other things, product offerings and territorial exclusivity, as many franchise agreements do. D.E. 380-20. The terms of the agreement were consistent across franchisees, and were designed, insisted upon, and monitored by McDonald’s itself. Paragraph 14 was not created as part of an agreement among horizontal competitors, nationally or in any particular geographic labor market. Indeed, the large national (and subsequently international) network of McDonald’s franchises did not yet exist when the key elements of the franchise agreement were established.

Plaintiffs suggest the restraint was per se unlawful because corporate-owned restaurants, McOpCos, were horizontal competitors with independently owned franchisees. See App. Br. at 25, 44. In those local markets comprising both McOpCos and independently owned franchises, the district court found the restraint horizontal, but ancillary and subject to the rule of reason. Op. at 9. But the district court also identified vertical aspects to the terms that, in fact, obtain in most geographic markets. Id. at 4-5.

Paragraph 14 was necessarily a vertical restraint in the twenty states in which there were no McOpCo restaurants at all. Class Cert. Op. 17. In the remaining states, Paragraph 14 still operated as a vertical restraint in the local labor markets that had only independently owned franchisees or McOpCos, but not both. In other words, it was impossible for the restraint to operate horizontally on a national level, because the putative competition between independent franchisees and McOpCos could not have occurred in the many labor markets in which there were no McOpCos. Id. (finding that Plaintiffs have “not [ ] put forth evidence that McOpCos compete with franchisees in every part of the United States”).

Vertical restraints, like Paragraph 14, are generally evaluated under the rule of reason because they often foster interbrand competition. Thus, for decades, the Supreme Court has whittled down the types of vertical restraints that are subject to per se condemnation. In 1977, the Court refused to extend per se illegality to vertical non-price restraints, noting that vertical restrictions tend to promote interbrand competition, “the primary concern of antitrust law.” Cont’l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 49, 52 n.19, 58 (1977). A decade later, the Court observed that “a rule of per se illegality for vertical nonprice restraints was not needed or effective to protect intra brand competition.” Bus. Elecs. Corp. v. Sharp Elects. Corp., 485 U.S. 717, 725 (1988). And, in 2007, the Court repudiated the prohibition of vertical price restraints that it had adopted nearly a century earlier. See Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (overruling Dr. Miles Med. Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911), and subjecting vertical price restraints to rule of reason analysis).

In these decisions, the Court repeatedly emphasized that any departure from the rule of reason “must be based on demonstrable economic effect, rather than . . . upon formalistic line drawing.” Bus. Elecs., 485 U.S. at 724; see also Leegin, 551 U.S. at 889 (applying rule of reason in part because “economics literature is replete with procompetitive justifications for a manufacturer’s use of resale price maintenance”).

While Plaintiffs seek a departure from the rule of reason here, economic research confirms that vertical restraints—including franchisor-franchisee restraints—tend to be procompetitive. Reviewing the empirical and theoretical literature on vertical restraints, Lafontaine and Slade observed that:

[T]he empirical evidence concerning the e?ects of vertical restraints on consumer wellbeing is surprisingly consistent. Speci?cally, it appears that when manufacturers choose to impose such restraints, not only do they make themselves better o? but they also typically allow consumers to bene?t from higher quality products and better service provision.

Francine Lafontaine & Margaret Slade, Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy, 10 Handbook of Antitrust Economics 391, 408-09 (Buccirossi ed., 2008); see also Francine Lafontaine & Margaret E. Slade, Transaction Cost Economics and Vertical Market Restrictions—Evidence, 55(3) The Antitrust Bulletin 587 (2010).

The rule of reason is especially appropriate here because Paragraph 14 is not only a vertical restraint, but an intrabrand one as well. And intra-franchise no-hire agreements are fundamentally different from inter-company restraints for two principal reasons.

First, intra-franchise labor restraints do not restrict output or price in the labor market because they do not affect the ability of alternative employers to compete for workers—whether those employers operate other types of quick-service restaurants or any of the myriad establishments that compete for the same pool of lower-skilled workers.

Second, even if McDonald’s did have the ability to confer labor monopsony power on local franchisees (it does not, see infra), it had no economic incentive to do so. Creating local labor monopsonies would suppress wages in those areas. That would reduce the quantity of labor employed and, in turn, suppress output in the downstream product market (i.e., food sales). See, e.g., Herbert J. Hovenkamp, Worker Welfare and Antitrust, __ U. Chi. L. Rev. 1, 10, 13 (2022) (“[T]he demand for labor as an input is closely correlated with the amount of product or service output that the firm is generating.”). But McDonald’s as a franchisor depends on product output for royalties; it has no desire to reduce its royalties by creating dysfunction in the labor market.

Because Paragraph 14 is a vertical and intrabrand restraint, it must be subject to the rule of reason.

B.        Paragraph 14 is Ancillary to the Franchise Agreement

Paragraph 14 is also subject to scrutiny under the rule of reason (rather than per se or quick look analysis) because it was “ancillary” to a procompetitive franchise agreement. In other words, there was a clear procompetitive rationale for the entire bundle of vertically imposed restraints embodied in the McDonald’s franchise agreement: brand quality and consistency. Paragraph 14 promoted that larger endeavor and was not a naked restraint on trade.

For example, Paragraph 14 limited the ability of individual franchisees to free-ride on training investments by McDonald’s and other franchisees. That in turn encouraged investment in employee development and training, and in the McDonald’s system and brand more generally. Limits on intrabrand employee raiding foster brand consistency and stability, which also are advantageous for the growth of a nationwide brand. See, e.g., Gregory J. Werden, The Ancillary Restraints Doctrine after Dagher, 8 Sedona Conf. J. 17, 21 (2007).

Plaintiffs nonetheless argue that Paragraph 14 cannot be regarded as ancillary because it was not “reasonably necessary” to the procompetitive goals of the franchise agreement, purportedly demonstrated by the fact that the cessation of the restraint in 2017 was not fatal to McDonald’s franchise system. App. Br. at 23. That argument claims too much and shows too little.

As a legal matter, ancillarity does not require a showing that restraints are strictly necessary, but only that they “may contribute to the success of a cooperative venture.” Polk Bros., Inc. v. Forest City Enters., Inc., 776 F.2d 185, 189 (7th Cir. 1985). A restraint is ancillary, in other words, if, “at the time it was adopted,” it bears a reasonable relationship to the joint venture’s success. Id. (emphasis added); see also Major League Baseball Props., Inc. v. Salvino, Inc., 542 F.3d 290, 339-40 (2d Cir. 2008) (Sotomayor, J., concurring). By pointing to the fact that McDonald’s was still able to sign franchisees after 2017, Plaintiffs implicitly argue that a restraint can be ancillary only if its removal destroys the entire endeavor. That is not the law. In other words, a company’s decision to remove one part of a bundle of its practices does not mean the part that was removed never contributed to success of the business. Moreover, to require that businesses precisely calibrate the timing of their policy changes and the substance of those changes would chill the ability of businesses to develop and test new policies and business models. Cf. Werden, supra, at 23-24 (comprehensive analysis by DOJ economist rejecting strict-necessity test).

C.        Paragraph 14 Does not Fall in the Narrow Category of Per Se Unlawful Conduct

Paragraph 14 is not one of those few restrictions—such as price fixing and boycotts—that have been universally and historically condemned as anticompetitive; we are aware of no cases holding that this restraint is per se unlawful, and Plaintiffs cite none. See App. Br. at 25 (citing only inapposite decisions and Arrington v. Burger King Worldwide, Inc., 47 F.4th 1247, 1257 (11th Cir. 2022), which held that a no-hire agreement was “concerted activity” under Section 1 of the Sherman Act but instructed the district court “in the first instance” to determine the level of scrutiny). Accordingly, there is a strong presumption that the rule of reason applies. Bus. Elecs., 485 U.S. at 726; see also Alan J. Meese, In Praise of All or Nothing Dichotomous Categories: Why Antitrust Law Should Reject the Quick Look, 104 Geo. L.J. 835, 878-79 (2016) (“Declaring all horizontal restraints inherently suspect would presumptively condemn all manner of cooperation necessary to allocate resources to their highest valued use, relegating economic actors to cooperation achieved through atomistic interaction in the spot market or complete integration.”).

Plaintiffs do not offer any reason to depart from that standard, nor is there one. As the Supreme Court has held, a departure from rule of reason must be “justified by demonstrable economic effect.” Id. Yet there is a dearth of economic studies on the effects of this type of intrabrand no-hire or no-poach agreement on the labor market. Indeed, the Ashenfelter and Krueger study, on which Plaintiffs’ expert relied, states that “systematic evidence on the impact of no-poaching agreements on workers’ pay and within-franchise job mobility is unavailable.” Ashenfelter & Krueger, supra n.4, at 21. Moreover, to evaluate the impact of no-poach agreements on pay and mobility, one would have to control for a number of important variables—e.g., inter-firm variation in the terms of no-poach agreements, inter-firm variation in the bundling of employment restrictions, and interstate variation in the enforceability of employment restrictions. The only study we are aware of that attempts to do so concludes that elimination of no-poach clauses “causes minimal reductions in job concentration and no increase in wages.” Daniel S. Levy, et al., No-Poaching Clauses, Job Concentration and Wages: A Natural Experiment Generated by a State Attorney General, Advanced Analytical Consulting Group, Inc., at 1 (Jan. 23, 2020).

While the Court has said that a departure from the rule of reason should not be based on “formalistic line drawing,” that is precisely what Plaintiffs (and amici Federal Trade Commission and U.S. Dept. of Justice) propose. For example, Plaintiffs argue that per se treatment is appropriate because (1) in a small number of geographic markets, there are both McOpCos and independently owned franchisees,[5] and (2) interbrand no-poach agreements have been found by some courts analogous to market allocation agreements. App. Br. at 25, 44. But two analogies do not an equivalence make. Even in the limited and atypical markets comprising both McOpCos and independently owned McDonald’s franchises, there is still no evidence of monopsony power over the labor market. As the district court noted regarding Plaintiff Deslandes, alternative employers outnumbered McDonald’s franchises by more than a factor of twenty.

Judicial inexperience and limited economic literature, as well as the facts on the ground, all suggest that this was precisely the type of business practice for which more elaborate economic study is needed before subjecting it to per se condemnation.


For the foregoing reasons, this Court should affirm.


Amici Scholars of Law and Economics

Dirk Auer is the Director of Competition Policy at the International Center for Law & Economics and Adjunct Professor at the University of Liege in Belgium.

Jonathan M. Barnett is the Torrey H. Webb Professor of Law at the University of Southern California Gould School of Law.

James C. Cooper is a Professor of Law at George Mason University School of Law.

Richard A. Epstein is the Laurence A. Tisch Professor of Law at New York University School of Law.

Luke M. Froeb is the William C. Oehmig Chair in Free Enterprise and Entrepreneurship at Vanderbilt University Owen School of Management.

Harold Furchtgott-Roth is a former commissioner of the Federal Communications Commission and a senior fellow at the Hudson Institute.

Daniel J. Gilman is a Senior Scholar at the International Center of Law & Economics.

Janice Hauge is a Professor of Economics at the University of North Texas Department of Economics.

Justin (Gus) Hurwitz is a Professor of Law at the University of Nebraska College of Law.

Stan J. Liebowitz is the Ashbel Smith Professor of Economics at the University of Texas at Dallas.

Abbott (Tad) Lipsky, Jr. is an Adjunct Professor at George Mason University School of Law.

Daniel A. Lyons is a Professor & Associate Dean for Academic Affairs at Boston College Law School.

Geoffrey A. Manne is President and Founder of the International Center for Law & Economics and a Distinguished Fellow at the Northwestern University Center on Law, Business & Economics.

Scott E. Masten is a Professor of Business Economics and Public Policy at the University of Michigan Ross School of Business.

Alan Meese is the Ball Professor of Law and Dean’s Faculty Fellow at William & Mary Law School.

Paul H. Rubin is the Samuel Candler Dobbs Professor of Economic Emeritus at the Emory University Department of Economics and Law School.

Vernon L. Smith is the George L. Argyros Endowed Chair in Finance and Economics at the Chapman University Argyros School of Business of Economics. Professor Smith was awarded the Nobel Memorial Prize in Economic Sciences in 2022.

Michael E. Sykuta is an Associate Professor of Economics at the University of Missouri.

Gregory J. Werden is a retired economist at the U.S. Department of Justice, Antitrust Division.

John M. Yun is an Associate Professor of Law at George Mason University School of Law.

[1] All parties have consented to the filing of this brief. Pursuant to Federal Rule of Appellate Procedure 29(a)(4)(E), counsel for ICLE represents that no counsel for any of the parties authored any portion of this brief and that no entity, other than amicus curiae or its counsel, monetarily contributed to the preparation or submission of this brief.

[2] See Gregory J. Werden, Why (Ever) Define Markets? An Answer to Professor Kaplow, 78 Antitrust L.J. 729, 741 (2013) (“Alleging the relevant market in an antitrust case . . . identifies the competitive process alleged to be harmed.”); Jonathan B. Baker, Market Definition: An Analytical Overview, 74 Antitrust L.J. 129, 129 (2007) (“Market definition is often the most critical step in evaluating market power and determining whether business conduct has or likely will have anticompetitive effects.”).

[3] Cf. Toys “R” Us, Inc. v. FTC, 221 F.3d 928, 937 (7th Cir. 2000) (“direct evidence” suffices where the parties agreed on a nationwide market, and the defendant held “20% of the national wholesale market and up to 49% of some local wholesale markets”).

[4] Dr. Singer misconstrues a key study in the limited economic literature regarding franchise hiring terms. That study—Orley Ashenfelter & Alan B. Krueger, Theory and Evidence on Employer Collusion in the Franchise Sector, IZA Discussion Paper, No. 11672 (July 2018) (cited at Singer Rep. ¶¶ 20, 23)—did not employ a causal design, and it did not establish—nor even purport to establish—that employers generally have or exercise antitrust-relevant market power, as Dr. Singer suggests. Singer Rep. ¶ 23. The study also found widespread use of no-poach terms among many brands that did not enjoy significant market, indicating that market power is not a prerequisite for a franchise to impose no-poach agreements.

[5] FTC and DOJ argue that assessing the horizontality of “employee-allocation agreements in the franchise context . . . requires a fact-bound evaluation of whether the agreement limits rivalry between actual or potential competitors.” DOJ & FTC Br. at 26-27 n.8. But, as noted above, there is undisputed evidence that in several states and local markets there was no competition between independently owned franchisees and McOpCos. Class Cert. Op. 17.

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Antitrust & Consumer Protection

Implementing the DMA: Great Power Requires Great Procedural Safeguards

TL;DR Background… In December 2022, the European Commission launched a public consultation on the regulation to implement the Digital Markets Act, including how the DMA will . . .


In December 2022, the European Commission launched a public consultation on the regulation to implement the Digital Markets Act, including how the DMA will be enforced procedurally. Among the issues the regulation covers are parties’ rights to be heard, firms’ deadlines to submit documents to the Commission, access to those documents and to the Commission’s case file, and how confidentiality will be protected.


While reasonable people may disagree about the merits of digital-markets regulation, appropriate procedural rules that safeguard parties’ rights and create legal certainty are essential. The timing, background, and content of the Implementing Regulation, however, all raise legitimate concerns and underscore broader issues in the DMA.

Read the full explainer here.

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Antitrust & Consumer Protection

Brussels Effect or Brussels Defect: Digital Regulation in Emerging Markets

TOTM The blistering pace at which the European Union put forward and adopted the Digital Markets Act (DMA) has attracted the attention of legislators across the globe. In . . .

The blistering pace at which the European Union put forward and adopted the Digital Markets Act (DMA) has attracted the attention of legislators across the globe. In its wake, countries such as South Africa, India, Brazil, and Turkey have all contemplated digital-market regulations inspired by the DMA (and other models of regulation, such as the United Kingdom’s Digital Markets Unit and Australia’s sectoral codes of conduct).

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Antitrust & Consumer Protection

The Growing Legacy of Intel

Scholarship Bullet Points Starting with the Intel ruling, the European judiciary has slowly crafted a coherent framework for Article 102 enforcement. However, doubts persist concerning the . . .

Bullet Points

  • Starting with the Intel ruling, the European judiciary has slowly crafted a coherent framework for Article 102 enforcement.
  • However, doubts persist concerning the exact scope of Intel and whether it is truly the lodestar that some make it out to be.
  • It is arguably still unclear whether “non-price” conduct, such as self-preferencing, should be assessed under the general framework laid out in Intel, which concerned price-rebate schemes.
  • With this in mind, the upcoming Google Shopping ruling will likely be the bellwether that reveals the true legacy of Intel and the future direction of European competition law.


Competition cases routinely hinge on the fundamental distinction between conduct that anti-competitively serves to exclude competitors, on the one hand, and competition on the merits that may lead firms to exit the market, on the other.[1] While even first-year law students intuitively understand this critical distinction, it can prove challenging to distinguish between the two in real-world cases. The reason is simple: anticompetitive foreclosure and competition on the merits both ultimately result in the same observable outcome: namely, that rivals exit the market. In order to draw the line, policymakers must infer both the root causes and the effects of firms’ market exit.

Against this backdrop, it is becoming increasingly clear that the 2017 Intel ruling marked a crucial turning point in the enforcement of Article 102 TFEU.[2] The ruling’s powerful legacy notably looms large over other recent court cases, such as the European Court of Justice’s (“ECJ”) ruling in Servizio Elettrico Nazionale and Others, as well as the General Court’s (“GC”) Intel Renvoi and Qualcomm judgments.[3] In these Intel-inspired rulings, the European judiciary appears to have settled largely on a workable effects-based standard that sorts the wheat from the chaff in all Article 102 TFEU cases. It does this, notably, by looking at the effect that a firm’s behaviour has on “as-efficient competitors”, while also creating an administrable standard of proof to govern such proceedings.

This is not to say that Article 102 TFEU case law is entirely settled—far from it. For instance, it is arguably still unclear whether “non-price” conduct, such as self-preferencing, should be assessed under the general framework laid out in Intel, which concerned price-rebate schemes. To wit, the GC’s Google Shopping judgment marks a clear departure from the Intel framework under the justification that “[i]n the present case, the practices at issue are not pricing practices”.[4] Despite nominally looking into the effects of Google’s “self-preferencing”, the GC eschewed key aspects of the Intel framework, such as the effect of Google’s behaviour on “as efficient competitors”.[5] This and other aspects of the ruling led to criticism that the GC failed to establish a clear boundary between anticompetitive self-preferencing and permissible instances of firms favoring their own products. As Elias Deutscher has observed:

Although the Court considered various pathways to determine the legality of self-preferencing, it failed to articulate a clear legal test that establishes limiting principles as to when self-preferencing by a dominant firm violates EU competition law.[6]

With this in mind, the pending Google Shopping appeal ruling offers the ECJ a unique opportunity to settle the debate. Namely, the ECJ may confirm that the lessons from the Intel strand of case law apply across the board, and reaffirm the dividing line between anticompetitive and benign conduct, including self-preferencing under Article 102 TFEU. This may prove a politically fraught endeavor, as the Digital Markets Act (“DMA”) will essentially outlaw the same behaviour—at least for so-called “gatekeeper” firms.[7] It is, however, vital to safeguard the internal consistency of competition enforcement under Article 102 TFEU.

     I.        Intel and the analysis of foreclosure

The history leading up to the Intel cases is well-known. In 2009, the European Commission (“commission”) found that rebates granted by Intel to certain original equipment manufacturers (“OEMs”) foreclosed its competitor AMD from the market.[8] During the administrative procedure, the Commission claimed it did not need to take into account the effects of the practice, as the exclusivity rebates in question were automatically illegal under Article 102 TFEU.[9] The Commission nevertheless carried out an “as efficient competitor” (“AEC”) test “for the sake of completeness”.[10] In a nutshell, the AEC test inquires whether a rebate scheme is able to exclude competitors from the market that are at least as efficient as the dominant firm.

During the subsequent annulment proceedings, Intel claimed the Commission had failed to apply the AEC test correctly. The GC dismissed Intel’s appeal on grounds that its conduct was per se illegal. The Commission was thus not required to assess the effects of the exclusivity rebates.[11]

Intel took the case to the ECJ, which overturned the GC’s ruling and found that—while the Commission can, under certain circumstances, rely on a presumption of illegality—exclusivity rebates are not automatically illegal under Article 102 TFEU.[12] In other words, the anticompetitive effects of a practice must always be assessed, regardless of how the burden of proof is allocated.

The ECJ laid out the standard of proof that parties must meet in such cases. It held that:

138. [W]here the undertaking concerned submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects.…

139. [T]he Commission is not only required to analyse, first, the extent of the undertaking’s dominant position on the relevant market and, secondly, the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also required to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market (see, by analogy, judgment of 27 March 2012, Post Danmark, C?209/10, EU:C:2012:172, paragraph 29).[13]

The underlying standard appears rather straightforward: if and when a defendant raises such an objection, the Commission must show that the firm’s conduct is capable of excluding “as efficient” competitors. The focus on AECs is repeated in the following paragraph:

140. That balancing of the favourable and unfavourable effects of the practice in question on competition can be carried out in the Commission’s decision only after an analysis of the intrinsic capacity of that practice to foreclose competitors which are at least as efficient as the dominant undertaking.[14]

The ECJ’s ruling sparked numerous debates. Scholars notably questioned how it would be interpreted by the lower court when it reexamined the case. The key question was whether Intel should be read mostly as a procedural ruling—in which case, the main problem was merely that the Commission and GC did not appropriately respond to certain of Intel’s claims, something that could be corrected upon reexamination[15]—or whether, instead, the ECJ had ultimately outlined a substantive framework to assess (at least) rebates under Article 102 TFEU.[16]

While the finer points of its so-called “renvoi” ruling are beyond the scope of this article, the GC appears to have opted for a maximalist interpretation of Intel. It examined the effects of Intel’s rebates in great detail, following each step of the ECJ’s framework. As it explained:

125. Having regard to the wording of paragraph 139 of the judgment on the appeal, the Commission is, as a minimum, required to examine those five criteria for the purposes of assessing the foreclosure capability of a system of rebates, such as that at issue in the present case.[17]

Following this logic, the GC examined several aspects of Intel’s rebates under a detailed-effects analysis, including their duration, market coverage, and age, as well as their effect on AECs (three of the five criteria set out in Intel).[18]

The Intel framework was also central to the GC’s more recent Qualcomm ruling, which appears to confirm and develop insights from Intel.[19] In the judgment, the GC quashed a EUR 1 billion fine the Commission imposed on Qualcomm under Article 102 TFEU. Under scrutiny was an agreement pursuant to which Apple received payments conditional upon sourcing all of its LTE chips from Qualcomm. According to the Commission, such “exclusivity payments” were capable of foreclosing competition, in that they reduced the incentives of a major purchaser of baseband chipsets to switch to competing producers.[20]

The GC ultimately overturned the Commission’s decision on both procedural and substantive grounds. It notably found that the Commission had carried out an improper analysis of anticompetitive effects. According to the Court, the Commission failed to show that Apple would not have sourced all its LTE chips from Qualcomm absent the impugned agreement. In fact, at the time of the “exclusive payment” agreement (2011-2015, and half of 2016), Qualcomm was the only company capable of satisfying Apple’s demand for LTE chips.[21] Accordingly, Qualcomm’s decision to buy exclusively from Qualcomm could easily be attributed to “competition on the merits”, rather than anticompetitive conduct.[22]

The GC reiterated that the Commission must consider all the relevant facts of the case, as well as the supporting evidence submitted by Qualcomm that its conduct could not restrict competition and, in particular, could not have the alleged foreclosure effects.[23] As the Court put it:

Indeed, if such conduct is to be characterised as abusive, that presupposes that that conduct was capable of restricting competition and, in particular, producing the alleged exclusionary effects, and that assessment must be undertaken having regard to all the relevant facts surrounding that conduct (see judgment of 30 January 2020, Generics (UK) and Others, C?307/18, EU:C:2020:52, paragraph 154 and the case-law cited).[24]

The upshot is that Qualcomm’s exclusivity payments were incapable of excluding competitors, as there were no competitors to exclude in the first place.[25] By failing to make the link between the relevant factual circumstances and its theory of harm (i.e., the alleged lessening of Apple’s incentives to switch to a competitor to source all its LTE chipset requirements for iPhones), the Commission had fallen afoul of a line of case law, epitomized by Post Danmark, establishing that competition-law analysis cannot be purely hypothetical.[26]

Throughout its judgment, the Qualcomm court makes numerous references to Intel and its key finding that anticompetitive behaviour must be capable of excluding as efficient competitors.[27] For instance, in paragraph 356 of the judgment, the GC states that:

the Court must examine all of the applicant’s arguments seeking to call into question the validity of the Commission’s findings as to the foreclosure capacity of competitors that are at least as efficient, relating to the practice in question (see, to that effect, judgment of 6 September 2017, Intel v Commission, C?413/14 P, EU:C:2017:632, paragraph 141).[28]

The judgment also highlighted the importance of identifying the difference between anticompetitive conduct and competition on the merits. The Commission had conflated the two, and it had cost it the case. As the GC found:

The fact – which was not properly taken into account in the contested decision – that Apple sourced LTE chipsets from the applicant, and not from the applicant’s competitors, in the light of the absence of alternatives fulfilling its own technical requirements could fall within competition on the merits, and not an anticompetitive foreclosure effect resulting from the payments concerned.[29] (emphasis added)

It had also failed to show how the conduct in question prevented competitors that were as efficient as Qualcomm from developing products that fulfilled Apple’s requirements, but “that Apple’s incentives to switch to the applicant’s competitors for all its LTE chipset requirements had been reduced”.[30]

Taken together, the two Intel rulings and Qualcomm mark a clear rejection of the forms-based approach that initially enabled the Commission to ignore the economic arguments put forward by firms like Intel and Qualcomm. At least as far as rebates are concerned, the rulings marked the end of a policy of excessively deferential judicial review that turned a blind eye to, arguably, important errors of economic analysis.

   II.        The Intel reasoning is not confined to the realm of price-related conduct

The preceding paragraphs raise an important question that goes to the very foundations of European competition law. Since its adoption in 2017, there have, broadly speaking, been two competing views concerning the ECJ’s Intel ruling.

The first view held that Intel was a contained statement of the law applying to rebates.[31] For instance, Marc Van der Woude, a judge at the GC, has argued that the Google Shopping case was correctly decided, among other things, because the Intel case law had little bearing on it. As reported by Mlex:

He said… [t]he Intel case involved the application of a framework set out by the EU’s top court, while “Google is a new phenomenon.”

Van der Woude said… that the Commission did not always need to delve into economics. “It depends on the theory of harm you will develop as a regulator.”.[32]

Conversely, the second view contends that the Intel court was actually fleshing out a framework that undergirds all European competition law under Article 102 TFEU.[33] According to this interpretation, Intel is but the latest in a series of rulings, including Post Danmark and Cartes Bancaires, that seek to bring economic clarity to European competition law.[34]

There are important reasons to believe this second view is most likely the correct one. First, the GC’s Intel Renvoi and Google Shopping rulings appear to imply that Intel is not merely a rebate-specific rule. The Intel Renvoi ruling, while ostensibly dealing with the topic of rebates, ultimately rests on what appears to be a more generalized framework of presumptions and effects analysis:

124   [A]lthough a system of rebates set up by an undertaking in a dominant position on the market may be characterised as a restriction of competition, since, given its nature, it may be assumed to have restrictive effects on competition, the fact remains that what is involved is, in that regard, a mere presumption and not a per se infringement of Article 102 TFEU, which would relieve the Commission in all cases of the obligation to conduct an effects analysis.[35]

Second, the GC’s Google Shopping ruling adds two important pieces to this puzzle. The court notably reaffirms the idea that there are no “per se” or “by object” infringements under Article 102 TFEU, suggesting that the Shopping case should be assessed under an effects-based framework similar to the one laid out in Intel:

435    [U]nlike Article 101 TFEU, Article 102 TFEU does not distinguish forms of conduct that have as their object the prevention, restriction or distortion of competition from those which do not have that object but nevertheless have that effect.

Google Shopping also contains several important references to Intel. This is a clear sign the GC believes Intel is relevant outside the realm of rebates:

[W]here, in order to classify a practice in the light of the provisions of Article 102 TFEU, the Commission attaches real importance to an economic analysis, the Courts of the European Union are required to examine all of the arguments put forward by the undertaking penalised concerning that analysis (see, to that effect, judgment of 6 September 2017, Intel v Commission, C?413/14 P, EU:C:2017:632, paragraphs 141 to 144).[36]

157    Thus, not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation (see judgment of 6 September 2017, Intel v Commission, C?413/14 P, EU:C:2017:632, paragraph 134 and the case-law cited).[37]

Along similar lines, Advocate General Nils Wahl had, in his Intel opinion, unequivocally endorsed the notion that effects analysis undergirds all of Article 102 TFEU enforcement—and not just rebate cases.[38] The AG notably surmised that “ an abuse of dominance is never established in the abstract”, and that courts should consider “the legal and economic context of the impugned conduct”. That AG Wahl subsequently uses predatory pricing (in a rebates case) to illustrate his point is further confirmation of this broad reading.[39]

Finally, and perhaps most dispositively, the ECJ’s recent Servizio Elettrico Nazionale and Others ruling, while pertaining to non-price conduct, is replete with references to Intel and to the notion that behaviour is only anticompetitive if it is capable of foreclosing competitors that are at least as efficient[40]:

En revanche, ainsi que la Cour l’a déjà souligné, ladite disposition ne s’oppose pas à ce que, du fait d’une concurrence par les mérites, disparaissent ou soient marginalisés sur le marché en cause des concurrents moins efficaces et donc moins intéressants pour les consommateurs du point de vue, notamment, des prix, du choix, de la qualité ou de l’innovation (arrêt du 6 septembre 2017, Intel/Commission, C?413/14 P, EU:C:2017:632, point 134 et jurisprudence citée).[41]

As if this reference to Intel—the passage is originally from the Post Danmark ruling, which also concerned rebates[42]—was not sufficiently clear, the judgment explicitly states that a practice’s effect on “as-efficient competitors” is a key part of the legal test for both price and non-price restrictions of competition. According to the court, it is this criterion, among others, that differentiates competition on the merits that forces less-efficient firms to exit the market from anticompetitive foreclosure that causes as-efficient ones to exit, too:

La pertinence de l’impossibilité, matérielle ou rationnelle, pour un hypothétique concurrent aussi efficace, mais n’étant pas en position dominante, d’imiter la pratique en cause, aux fins de déterminer si cette dernière repose sur des moyens relevant d’une concurrence fondée sur les mérites, ressort de la jurisprudence relative aux pratiques tant tarifaires que non tarifaires. [The case has not yet been translated to English][43]

This interpretation finds further support in the opinion issued by AG Rantos, who writes that:

[T]he case-law of the Court, in my view, confirms that exclusionary conduct of a dominant undertaking which can be replicated by equally efficient competitors does not represent, in principle, conduct that may lead to anticompetitive foreclosure and therefore comes within the scope of competition on the merits.

[A]s regards exclusionary practices not related to pricing – such as, for example, refusal to supply – the case-law seems to confirm the relevance of the test as regards the possibility of replication, inasmuch as a dominant undertaking’s decision to reserve for itself its own distribution network does not constitute a refusal to supply contrary to Article 102 TFEU when a competitor is able to create a second distribution network of a comparable size. In other words, there is no abuse if inputs refused by the dominant undertaking can be duplicated by equally efficient undertakings by purchasing them from other suppliers or developing them themselves.[44]

The Servizio Elettrico Nazionale and Others ruling thus appears to confirm the substantive importance of Intel; clearly, it is not just a procedural ruling. It also appears to confirm Intel’s significance for Article 102 TFEU enforcement beyond rebates. Indeed, the numerous important references to Intel and its analytical framework would suggest that the case marks a clear turning point for European competition law. Moreover, the court explicitly acknowledges that the Intel framework also applies to “non-price” conduct.

All of this reinforces the sense that all Article 102 TFEU cases are ultimately subject to an effects analysis, with the implication that the Commission and courts cannot summarily disregard economic arguments put forward by the parties. None of this is entirely new, of course. Several scholars have observed that other cases, like Post Danmark and Cartes Bancaires, already went a long way toward bringing European competition law more in line with economic analysis.[45] However, the Intel cases crystallize this trend in a way that increasingly looks like a general framework for all Article 102 TFEU cases.

 III.        The Implications of Intel as a General Principle of European Union Competition Law

Subjecting all Article 102 TFEU cases to the Intel framework has far-reaching implications, including for ongoing cases such as Google Shopping. At its heart, the Intel framework ultimately seeks to ascertain whether conduct that can eliminate competitors is also anticompetitive. As the ECJ has explained in cases such as TeliaSonera and Post Danmark:

Not every exclusionary effect is necessarily detrimental to competition […]. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.[46]

In the Intel proceedings, the AEC test was one of the relevant tools used to establish whether that was indeed the case. However, under different circumstances, other tools may well be more useful in separating conduct that disadvantages or even eliminates competitors—and is also anticompetitive—from conduct that has essentially the same effect but is not. The Court of Justice says this much in its Servizio Elettrico Nazionale and Others ruling:

[L]’importance généralement accordée audit test, lorsque celui?ci est réalisable, n’en démontre pas moins que l’incapacité qu’aurait un hypothétique concurrent aussi efficace de répliquer le comportement de l’entreprise dominante constitue, s’agissant des pratiques d’éviction, l’un des critères permettant de déterminer si ce comportement doit être considéré comme étant ou non fondé sur l’utilisation de moyens relevant d’une concurrence normale.[47]

Several recent cases fall short in this respect, making them vulnerable to challenges under Intel. Google Shopping is a prime example. In its ruling, the GC appears to suggest that it is anticompetitive for a dominant platform to favor its downstream services if doing so reduces web traffic to rivals:

445. [T]he Commission was fully entitled to conclude… that those practices had led to a reduction of that traffic for almost all competing comparison shopping services and, secondly, that those practices had led to an increase in traffic to Google’s comparison shopping service…. and it may be concluded that the Commission established actual effects that are more or less pronounced, depending on the country, but in any event significant.

But unlike the detailed effects analysis of Intel, the GC’s approach is tantamount to a per se condemnation of so-called “self-preferencing”. Indeed, favoring one’s own services necessarily puts competitors at a disadvantage, some of whom might even exit the market. As Pablo Ibáñez Colomo has written:

If the notion of anticompetitive effects were equated with a competitive disadvantage, then self-preferencing would become, de facto and by definition, prima facie unlawful[48].

This forms-based analysis withers under the Intel framework. Indeed, in what would later turn out to be a direct contradiction of the upper court’s Servizio Elettrico Nazionale and Others ruling, the GC consciously ignores whether foreclosed rivals are as efficient as the dominant company:

538. The use of the as-efficient-competitor test is warranted in the case of pricing practices (predatory pricing or a margin squeeze, for example)…. In the present case, the practices at issue are not pricing practices.

We believe this is an unduly narrow reading of Intel. In Intel, the ECJ carefully distinguished the AEC test from the notion of “less attractive” or “less efficient” rivals. While the former is rightly confined to the realm of pricing practices, the latter offers a framework for deciding a much broader range of competition cases.

Few would argue it is desirable for less attractive websites to be displayed as prominently as more attractive ones, or that less efficient firms should be shielded from market exit if they cannot profitably compete in an auction (as is the case for rivals complaining about the Google Shopping remedy).[49] Focusing on efficiency (or attractiveness, to use the ECJ’s words) is critical to draw the line between market exit that occurs due to consumer demand and that stemming from an anticompetitive strategy that harms consumers. The standard outlined in Google Shopping ignores this distinction.

This error has important consequences. Practices whereby some firms—including dominant ones—give a leg up to their own products or services often result from competition on the merits.[50] This is especially true when one considers the Servizio Elettrico Nazionale and Others finding—quoted in full above[51]—that a dominant firm’s conduct is more likely to result from competition on the merits when non-dominant firms deploy similar strategies. Unfortunately, this very argument was rejected by the GC in Google Shopping:

Secondly, even if, as Google indicates in the application, ‘Bing’s product ads must link to pages where users can purchase the offer’, that does not address the competition concern identified. What is at issue in the present case is not Microsoft’s conduct via its Bing search engine, which, moreover, is not in a dominant position on the market for general search services, but Google’s conduct. The fact that Bing’s ads also link internet users to merchants does not preclude Google’s conduct from being anticompetitive.[52]

To be clear, nothing in the case law we have discussed suggests that non-dominant firms implementing the same practice as a dominant firm is dispositive proof that the conduct belongs to competition on the merits. It does, however, suggest that the GC was wrong to dismiss Google’s claim out of hand. Indeed, as explained above, whether non-dominant firms also implement a practice is part of the appropriate analysis to determine whether it amounts to competition on the merits. Ultimately, however, the clearest dividing line is whether the dominant firm’s conduct is capable of excluding as-efficient rivals.

This has important ramifications for policy. Allowing firms to exploit advantages obtained on the market—as opposed to government-granted privileges—may be precisely what stimulates those firms and their rivals to compete and innovate in the first place.[53] Self-preferencing is also at the core of certain franchising agreements, which have the advantage of allowing the rapid expansion of a successful brand.[54] In the specific case of Google, the “Google Shopping Box” may provide a better experience by giving users a more direct answer, instead of forcing them to scour through hyperlinks and retype their query.[55] All of these scenarios may be procompetitive.

In his opinion in Intel, AG Wahl argued that:

Experience and economic analysis do not unequivocally suggest that loyalty rebates are, as a rule, harmful or anticompetitive, even when offered by dominant undertakings. That is because rebates enhance rivalry, the very essence of competition[56].

If there remains insufficient empirical evidence to condemn an age-old practice like rebates without properly examining its ability to foreclose competitors, then policymakers should be particularly careful when drawing the boundaries for such comparatively novel practices as self-preferencing in digital markets.

In short, the Google Shopping ruling appears incompatible with the effects analysis that underpins Article 102 TFEU. It essentially rests on a per se prohibition that does not distinguish procompetitive and anticompetitive exclusion, rather than the efficiency analysis imposed by Intel. It thus provides no way to draw a line in the sand separating self-preferencing practices that disadvantage competitors and are also anticompetitive from instances in which dominant undertakings favor their own (usually downstream) products to the disadvantage of competitors but are not anticompetitive.

At the time of writing, Google has appealed the GC’s ruling.[57] It is more than likely that these distinctions will be pivotal to that case. Among other things, Google argues that:

The General Court erred in upholding the Decision despite the Decision’s failure to identify conduct that deviated from competition on the merits.… The General Court’s additional reasons as to why Google did not compete on the merits are legally invalid. [58]

Given what precedes, it goes without saying that the ECJ’s conclusions on this point will be pivotal for the future of European competition law. In light of its Intel and Servizio Elettrico Nazionale and Others rulings, the ECJ’s upper court has essentially two options.

The first would be to affirm the lower court’s distinction between price and non-price conduct. This would be unfortunate. From a purely legal standpoint, it would amount to no less than a soft renunciation of Servizio Elettrico Nazionale and Others and a pruning of Intel. It would further convey that the court’s Article 102 case law has no clear direction and is not guided by clear overarching principles. From a more substantive perspective, this first path would create an unfortunate distinction between price-related conduct—assessed under a single unified framework—and the rest of Article 102, in which formalistic distinctions determine what idiosyncratic criteria under which types of conduct are ultimately assessed.

The second option would be for the court to confirm that the potential exclusion of as-efficient competitors is a key part of the legal test for all conduct under Article 102. Not only would this conclusion safeguard the consistency of Article 102, but it would also give lower courts and competition authorities some guiding principle to assess whether novel conduct—such as self-preferencing—does or does not stem from competition on the merits. It would be insufficient for the Commission to prove (a) that a vertically integrated undertaking favors its own downstream products and (b) that this reduces the incentives of consumers to buy competing products. Accordingly, this second outcome would likely tee up so-called renvoi proceedings, where the General Court would reassess whether the Commission adduced sufficient evidence of anticompetitive foreclosure.

In short, there is every reason to believe that, when it is finally decided, the Google Shopping appeal will be a huge milestone for European competition enforcement.


European competition law has come a long way. From early cases like United Brands and Hoffman Laroche—widely derided for their lack of economic literacy—the European judiciary has slowly crafted a coherent framework for Article 102 enforcement.

Although many failed to recognize it at the time, it is increasingly clear that the 2017 Intel ruling was a major catalyst of this upheaval. The ruling indicates that, for any given conduct under EU competition law, there needs to be a way to discern competition on the merits from anticompetitive conduct. In most cases, this includes asking whether the conduct under investigation is capable of excluding as-efficient competitors. However, as we have explained throughout this article, this judicial revolution is not yet complete. Doubts persist concerning the exact scope of Intel and whether it is truly the lodestar that some (including us) make it out to be.

The upcoming Google Shopping ruling will likely be the bellwether that reveals the true legacy of Intel and the future direction of European competition law. The ECJ has an opportunity to clarify when self-preferencing is illegal under Article 102 TFEU. To do so, it must look at the broader implications and recognize that self-preferencing practices that disadvantage some competitors may nevertheless still be procompetitive, and that the two must be differentiated.

Such an outcome might, however, prove somewhat bittersweet. With the Digital Markets Act (“DMA”) just around the corner, careful assessment of effects under the Intel framework will largely be a thing of the past in most digital markets. For instance, both Article 102 and the DMA cover “self-preferencing practices”, but under Article 102, a prohibition is subject to different standards, a higher burden of proof, and certain limiting principles that the DMA does not possess. By its own admission, the DMA cares little about the distinction between procompetitive and anticompetitive conduct, or between competition on the merits and foreclosure, which it replaces with concepts such as fairness and contestability:

The purpose of this Regulation is to contribute to the proper functioning of the internal market by laying down rules to ensure contestability and fairness for the markets in the digital sector in general, and for business users and end users of core platform services provided by gatekeepers in particular.[59]

This does not make Intel and its legacy any less important. With the DMA in force, it will be even more important for competition policymakers to understand the difference between self-preferencing under Article 102 TFEU, which is not per se prohibited and which aims to protect competition to the benefit of consumers, and self-preferencing under the DMA, which aims to protect downstream competitors (“fairness”). By the DMA’s own admission, these are two different things. The DMA’s standards should not be unduly grafted unto competition law, even if it would be politically convenient to interpret longstanding EU competition-law principles in this still nascent and uncertain light.[60]

The stage is thus set for the European Court of Justice to put the finishing touches on the Intel framework, thereby bringing much-needed clarity and consistency to Article 102. This would complete a remarkable turnaround for a body of law that has often been criticized for its lack of unity and economic proficiency. Whether or not this will ultimately prove to be a swan song—with the DMA attracting the bulk of enforcement—is another question.

[1] Case C 209/10 Post Danmark, EU:C:2012:172, para 22; Case C?52/09 TeliaSonera, ECLI:EU:C:2011:83, para 43.

[2] Case C-413/14 P Intel v Commission, ECLI:EU:C:2017:788.

[3] Case C-377/20 Servizio Elettrico Nazionale and Others, ECLI:EU:C:2022:379 (“Servizio Elettrico Nazionale and Others”); Case T-286/09 RENV Intel v Commission, ECLI:EU:T:2022:19 ; Case T-235/18 Qualcomm v Commission, ECLI:EU:T:2022:358.

[4] Case T-612/17 – Google Shopping, ECLI:EU:T:2021:763.

[5] Id., para 538 (“[A]s regards the arguments summarised in paragraph 514 above, according to which the Commission failed to demonstrate that competing comparison shopping services that had experienced difficulties were as efficient as Google, when in fact they are not, the Commission is correct in maintaining that it was not required to prove this. The use of the as-efficient-competitor test is warranted in the case of pricing practices (predatory pricing or a margin squeeze, for example), in order, in essence, to assess whether a competitor that is as efficient as the dominant undertaking allegedly responsible for those pricing practices, and which, in order not to be driven immediately from the market, would charge its customers the same prices as those charged by that undertaking, would have to do so at a loss and accentuating that loss, causing it to leave the market in the longer term…. In the present case, the practices at issue are not pricing practices.”).

[6] Elias Deutscher, ‘Google Shopping and the Quest for a Legal Test for Self-preferencing Under Article 102 TFEU’ (2022) 6 European Papers, 1345-1361; see also Pablo Ibañez Colomo, ‘Self-Preferencing: Yet Another Epithet in need of Limiting Principles’ (2020) 43 World Competition, 417, 443.

[7] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) [2022] OJ L 265; on the potential overlaps and conflicts between EU competition law and the Digital Markets Act, see Giuseppe Colangelo, ‘The European Digital Markets Act and Antitrust Enforcement: A Liaison Dangereuse’ (2022) ICLE White Paper. A revised version of the paper is forthcoming in European Law Review, Available at SSRN: or

[8] Intel (COMP/C-3/37.990) Commission Decision of 13 May 2009.

[9] Id., paras 920-24; 1760-61. See e.g., at 1760: “thirdly, the as efficient competitor analysis conducted in section VII.4.2.3 is not relevant for the purpose of deciding whether the Commission should impose a fine or for determining its level as it does not relate to the existence of the infringement or to the question whether it was committed intentionally or by negligence, or to its gravity within the meaning of Article 23(2)(a) of Regulation (EC) No 1/2003 and of the Guidelines, in particular points 19 to 23 thereof”.

[10] Id., paras 1002-1153.

[11] Case T-286/09 Intel v Commission, 145 and 152.

[12] Case C-413/14 P Intel v Commission.

[13] Id.

[14] Id.

[15] See, e.g., Ruppert Podszun, ‘The Role of Economics in Competition Law: The “Effects-Based Approach” After the Intel Judgment of the CJEU’ (2018) 7 Journal of European Consumer and Market Law 57, 64 . “Intel does not reconceptualise Article 102 TFEU. It is a case on procedural fairness. It does not call for an effects-based approach in competition law”.

[16] See, e.g., Pablo Ibáñez Colomo, ‘The Future of Article 102 TFEU after Intel’ (2018) 9 Journal of European Competition Law & Practice 293.

[17] Case T-286/09 RENV Intel v Commission.

[18] Id., para 128 et seq.

[19] Qualcomm v Commission.

[20] Qualcomm (Case COMP/AT.40220) Commission Decision of 24 January 2018.

[21] Id., para 405-417.

[22] Id., para 414

[23] Id., paras 354, 396.

[24] Id., para 355.

[25] Id., para. 410. (“The undisputed fact that, on the relevant market, there was no technical alternative to the applicant’s LTE chipsets for a very large part of Apple’s requirements during the period concerned is a relevant factual circumstance which must be taken into account when analysing the capability of the payments concerned to have foreclosure effects, since the Commission found that capability in the light of Apple’s total requirements for LTE chipsets and, in particular, in the light of the reduction of Apple’s incentives to switch to the applicant’s competitors for all its requirements.”).

[26] Id., paras 397, 412, 415; see also Case C?23/14 Post Danmark, EU:C:2015:651, para 65-68.

[27] For instance, id., para349-356.

[28] Commission v. Qualcomm, para 356.

[31] Nicholas Hirst, “Intel, Google Shopping Rules Don’t Conflict, Top EU Judge Says”, (Mlex, 31 March 2022), available at

[32] Id.

[33] See, e.g., Ibáñez Colomo (2018) 293. “The Court of Justice (hereinafter, the ‘Court’ or the ‘ECJ’) introduced an important clarification that will have a significant impact on the analysis of abusive practices under Article 102 TFEU…. Intel makes two fundamental contributions to our understanding of the notion of abuse.”

[34] Post Danmark; Case C?67/13 P Cartes Bancaires, ECLI:EU:C:2014:2204.

[35] Case T-286/09 RENV Intel v Commission, para 124.

[36] Google Shopping, para 131.

[37] Google Shopping, para 157.

[38] Opinion of AG Wahl in Case C-413/14 P Intel v Commission, ECLI:EU:C:2016:788, para 73. “In this section, I shall explain why an abuse of dominance is never established in the abstract: even in the case of presumptively unlawful practices, the Court has consistently examined the legal and economic context of the impugned conduct. In that sense, the assessment of the context of the conduct scrutinised constitutes a necessary corollary to determining whether an abuse of dominance has taken place. That is not surprising. The conduct scrutinised must, at the very least, be able to foreclose competitors from the market in order to fall under the prohibition laid down in Article 102 TFEU.”

[39] Id., para 78. “As I see it, the analysis of ‘context’—or ‘all the circumstances’, as it is termed in the Court’s case-law —aims simply but crucially to ascertain that it has been established, to the requisite legal standard, that an undertaking has abused its dominant position. Even in the case of seemingly evident exclusionary behaviour, such as pricing below cost, context cannot be overlooked. Otherwise, conduct which, on occasion, is simply not capable of restricting competition would be caught by a blanket prohibition. Such a blanket prohibition would also risk catching and penalising pro-competitive conduct” (footnotes omitted for ease of reading).

[40] Servizio Elettrico Nazionale and Others, paras 45, 46, 51, 73, 74 & 86.

[41] Id. para 45.

[42] Post Danmark, para 22.

[43] Id., para 79.

[44] Opinion of AG Rantos in Case C-377/20 Servizio Elettrico Nazionale and Others, paras 69-74.

[45] See, e.g., Jao Cardoso Pereira, ‘Groupement des Cartes Bancaires: Reshaping the Object Box’ (2015) 18 Competition and Regulation 265, 266. “This judgment shows how economic analysis plays an increasing role in shaping the boundaries of competition policy. In this judgment, the ECJ has taken insights from recent advances in the economic analysis of two-sided markets to reach the conclusion that the pricing measures adopted by the Groupement could not be treated as a restriction of competition by object.” See also, Dirk Auer & Nicolas Petit, ‘Two-Sided Markets and the Challenge of Turning Economic Theory into Antitrust Policy’ (2015) 60 The Antitrust Bulletin, 447.

[46] Post Danmark, para 22.

[47] Servizio Elettrico Nazionale and Others, para 82.

[48] Pablo Ibañez Colomo, ‘Self-Preferencing: Yet Another Epithet in need of Limiting Principles’ (2020) 43 World Competition, 417, 443.

[49] Dirk Auer, “Case Closed: Google Wins (for now)” (Truth on the Market, 19 November 2021), available at

[50] See. e.g., Geoffrey Manne, “Against the Vertical Discrimination Presumption” (2020) 2-2020 Concurrences 1. “The notion that self-preferencing by platforms is harmful to innovation is entirely speculative. Moreover, it is flatly contrary to a range of studies showing that the opposite is likely true. In reality, platform competition is more complicated than simple theories of vertical discrimination would have it, and there is certainly no basis for a presumption of harm.”

[51] Servizio Elettrico Nazionale and Others, para 79.

[52] Google Shopping, para. 354.

[53] Forcing those firms to share such advantages with rivals’ might encourage them to slack off and free-load. See, in this respect, Opinion of AG Jacobs’ opinion in Case C-7/97 Oscar Bronner, EU:C:1998:264. For a more detailed discussion, see. e.g., Dirk Auer, ‘Appropriability and the European Commission’s Android Investigation’ (2017) 23 Columbia Journal of European Law 647.

[54] Case 161/84 Pronuptia, EU:C:1986:41, para 15.

[55] Jakob Kucharczyk, “When Product Innovation Becomes a Competition Law Infringement: Preliminary Thoughts on the Google Shopping Decision”, (2017) 1 European Competition and Regulatory Law Review 193; see also Geoffrey Manne, “The Real Reason Foundem Foundered” (2018) ICLE Antitrust & Consumer Protection Research ProgramWhite Paper 2018-2, available at

[56] Opinion of AG Wahl in Case C-413/14 P Intel v Commission, para 90.

[57] Appeal brought on 20 January 2022 by Google LLC and Alphabet, Inc. against the judgment of the General Court (Ninth Chamber, Extended Composition) delivered on 10 November 2021 in Case T-612/17, Google and Alphabet v Commission (Case C-48/22 P)

[58] Id.

[59] Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act), point (7) of the preamble.

[60] Margethe Vestager has recently claimed the Apple Pay investigation would “inform the future application of the Digital Markets Act. It will set a precedent with regard to the analysis of the security concerns, and a recipe for effective and proportionate access to NFC for mobile payments.” See European Commission, “Remarks by Executive Vice-President Vestager on the Statement of Objections sent to Apple over practices regarding Apple Pay” (Brussels, 2 May, 2022), available at


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Antitrust & Consumer Protection

Journalism Competition and Preservation Act: Not What It Says on the Box

TL;DR Background… As leaders of the U.S. Senate work to pass the National Defense Authorization Act (NDAA) in the ongoing lame-duck session, some reports suggest that . . .


As leaders of the U.S. Senate work to pass the National Defense Authorization Act (NDAA) in the ongoing lame-duck session, some reports suggest that S. 673, the Journalism Competition and Preservation Act (JCPA), could be added to the legislative package. Approved in September 2022 by the Senate Judiciary Committee, the JCPA aims to boost the fortunes of traditional media companies by forcing “covered” online platforms to pay for digital journalism accessed via their services. The bill would require that platforms continue to display digital journalism, while setting out an intricate process whereby digital-journalism providers would collectively negotiate the price of content with platforms.


This quixotic attempt to prop up flailing media firms will create legally sanctioned cartels that harm consumers, while forcing online platforms to carry and pay for content in ways that violate long-established principles of intellectual property, economic efficiency, and the U.S. Constitution.

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Antitrust & Consumer Protection

There Isn’t Such a Thing as Free Privacy Protection

Popular Media Hardly a day goes by without the Federal Trade Commission announcing plans to clamp down on the tech industry. Its latest foray, a proposal for far-reaching . . .

Hardly a day goes by without the Federal Trade Commission announcing plans to clamp down on the tech industry. Its latest foray, a proposal for far-reaching rules to counter the bogeyman of “commercial surveillance,” comes like a great dark cloud: essentially hazy but portentous and sweeping.

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Data Security & Privacy