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PORTLAND, Ore. (Dec. 18, 2023) — Final updated merger-enforcement guidelines  published today by the Federal Trade Commission (FTC) and U.S. Justice Department (DOJ) fail to incorporate copious public feedback about the benefits of mergers and acquisitions, and as a consequence, courts may be unlikely to follow them, according to scholars of the International Center for Law & Economics.

“As we noted when the draft guidelines were first circulated, the agencies are seemingly looking to reverse time and return to an outdated set of policies from which courts, enforcers, and mainstream antitrust scholars have all steered away,” ICLE President Geoffrey Manne said. “The primary effect of these updated guidelines is to reduce their utility to courts as a reflection of current legal and economic understanding.”

Chief Economist Brian Albrecht added: “While the final guidelines appear to have softened some of the most bellicose language contained in the draft, and to place slightly more emphasis on market power, they still lack clarity in many areas, and particularly with respect to when merging parties can invoke pro-competitive efficiencies as a defense. They focus on the thousand ways the agencies could bring a case and what does not count as a defense, instead of offering real guidance reflecting the state of antitrust law.”

ICLE’s response to the original draft guidelines can be found here. Geoffrey and Brian are available all week to discuss the far-reaching implications of the final guidelines. To schedule an interview with either, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or 919-744-8087.

PORTLAND, Ore. (Nov. 15, 2023) – The International Center for Law & Economics (ICLE) offers the following statement from ICLE Director of Innovation Policy Kristian Stout in response to today’s Federal Communications Commission (FCC) vote to adopt “digital discrimination” rules pursuant to the Biden administration’s larger digital equity plan and its interpretation of the relevant provisions of the Infrastructure Investment and Jobs Act (IIJA):

The FCC has unfortunately chosen to move forward with highly controversial provisions of its digital-discrimination rulemaking, including the adoption of a disparate-impact standard and an extension of the rules to cover broadband service characteristics, such as pricing and quality. Such rules will have a host of unintended consequences, including introducing de facto rate regulation, which the FCC has historically eschewed. The move is particularly curious given the Supreme Court’s emerging “major questions” jurisprudence, which will pose a major obstacle for the FCC to implement these rules.

For more on the topic, see ICLE’s reply comments to the FCC, as well as this ex parte letter and this “tl;dr” explainer. To schedule an interview with Kristian about the FCC’s planned regulations, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Oct. 19, 2023) – The International Center for Law & Economics (ICLE) offers the following statement from ICLE Director of Innovation Policy Kristian Stout in response to today’s vote by the Federal Communications Commission (FCC) to initiate a rulemaking proceeding reinstating Title II regulations on broadband providers:

This attempt by the Federal Communications Commission (FCC) to reintroduce Title II regulations (often referred to as “net neutrality”) stands on even shakier ground now than it did in 2015. The wisdom behind the commission’s 2018 Restoring Internet Freedom Order is more evident with each passing year, as the broadband market continues to demonstrate no need for utility-style regulations.

The justifications the FCC has put forward for imposing Title II obligations on broadband providers not only lack merit, but emphasize the likely legal challenges this order will face. The commission’s rulemaking present a “major questions doctrine” issue that will leave the FCC in an uphill battle before the U.S. Supreme Court in the face of inevitable legal challenges.

After considering the record in the pending proceeding, one hopes the commission will realize that Title II is simply a mistake for the broadband industry, and that it will abandon this ill-fated effort.

To schedule an interview with Kristian about the FCC’s planned regulations, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Oct. 17, 2023) – The proposed $24.6 billion merger between supermarkets Kroger Co. and Albertsons Cos. Inc. has reportedly drawn regulatory scrutiny, including from the Federal Trade Commission (FTC) and California Attorney General Rob Bonta.

But according to a new International Center for Law & Economics (ICLE) white paper, attempts to block the transaction would go against the analytical framework historically used to evaluate similar mergers, as well as historical precedent of accepting divestures as a remedy to address localized problems where they arise.

The paper finds that only one supermarket merger has been challenged in court since American Store’s acquisition of Lucky Stores in 1988: the Whole Foods/Wild Oats merger in 2007. Over the last 35 years, authors Brian C. Albrecht, Dirk Auer, Eric Fruits and Geoffrey A. Manne note, the FTC has allowed every other supermarket merger and most retail-store transactions to proceed with divestitures.

Moreover, the authors argue, critics of the deal fail to consider the significant changes over the past quarter-century in how consumers shop for food and groceries, including the growth of wholesale clubs, delivery services, e-commerce, and other retail formats. Supermarkets’ share of retail sales have fallen from 81% in 1994 to 56% in 2021, while warehouse clubs and supercenters grew from 14% to 42% over that same period, they note.

“The product-market definition that the FTC has employed in its consent orders over the past more than two decades is likely to be—and should be—challenged to include warehouse clubs, in addition to accounting for online retail and delivery,” the authors write.

Kroger is currently the fourth-largest food and grocery retailer in the United States, behind Walmart, Amazon, and Costco. If the merger goes through, the combined firm will move into third place in market share, but would still account for just 9% of nationwide sales, the authors note.

In September 2023, Kroger and Albertsons announced a $1.9 billion divestiture plan that would see the firms sell 413 stores, eight distribution centers, and three store brands to C&S Wholesale Grocers, who would retain the right to purchase up to 237 additional stores if needed to resolve antitrust concerns.

“With the FTC’s knowledge of the industry and of its own past successes and failures, divestitures remain an appropriate and adequate remedy for this merger,” the authors write. “The parties appear committed to working cooperatively with regulators to craft divestitures that fully resolve competitive concerns. Rather than blocking the deal outright, the FTC can allow the merger to proceed, conditioned on acceptable divestitures that protect consumers, while permitting efficiency gains across the majority of stores.”

The full white paper can be downloaded here. To schedule an interview with one of the authors, contact Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Sept. 27, 2023) – As California leaders move to take emergency action to stabilize its rapidly collapsing market for property insurance, a new International Center for Law & Economics (ICLE) white paper examines the role that the state’s 35-year-old Proposition 103 has played in leaving the state unable to keep pace with national trends and product innovations.

Written by ICLE Academic Affiliate Lars Powell, Editor-in-Chief R.J. Lehmann, and Executive Director Ian Adams, “Rethinking Prop 103’s Approach to Insurance Regulation” outlines how the Prop 103 rating system is slow, imprecise, inflexible, and unpredictable, and details the questionable value provided by the state’s unique rate-intervenor system.

The authors argue that these factors have played a key role in the ongoing collapse of the property-insurance market, highlighted in recent months by decisions from insurers representing 63% of the state’s homeowners market to either cease or severely limit writing new policies in California.

“Prop 103’s suppression of property-insurance rates in the private market has contributed to an availability crisis and the shunting of policyholders into the surplus-lines market and the California FAIR Plan, both of which will inevitably have to raise rates accordingly to be able to meet their obligations,” the authors write. 

“Prop 103 has created an insurance market that struggles to work efficiently even in the best of times and is virtually impossible to sustain in periods of acute stress,” they add.

The paper concludes with administrative and legislative recommendations for reform, including allowing insurers to use catastrophe models and account for the cost of reinsurance in their rate filings; broadening the availability of telematics in auto insurance; fast-tracking noncontroversial filings; refocusing rate proceedings; and requiring intervenors to publicly account for their substantive contributions to the ratemaking process.

The full paper can be downloaded here. To schedule an interview with one of the authors, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Sept. 26, 2023) – The International Center for Law & Economics (ICLE) offers the following statement from ICLE Director of Innovation Policy Kristian Stout in response to today’s announcement by Federal Communications Commission (FCC) Chair Jessica Rosenworcel that the FCC plans to open the process for reimposing net neutrality:

Despite dire predictions, the internet has thrived in the absence of utility-style net-neutrality regulations. When the FCC repealed net neutrality in 2018, advocates claimed that without these rules, innovation would cease and access would suffer. But the opposite has occurred: more services are available at faster speeds than ever before. During the COVID-19 pandemic, our broadband networks proved remarkably robust, supporting a massive shift to remote work and school. U.S. networks also outperformed those in many countries with net-neutrality rules. These facts demonstrate that heavy-handed regulation is not needed to preserve a free and open internet.

Moreover, the FCC does not have clear authority from Congress to reclassify broadband as a common-carrier service or to impose utility-style regulations. As the U.S. Supreme Court has made clear through its “major questions” doctrine, federal agencies cannot make major regulatory moves without explicit authorization from Congress. Regulating net neutrality involves complex economic and political considerations that Congress has actively debated, without granting the FCC power to resolve them. Any attempt by the FCC to adopt net-neutrality rules through reclassification would likely be struck down by the Supreme Court as exceeding the agency’s authority. Rather than wasting time and resources pursuing legally dubious regulations, the FCC should allow Congress to legislate on this major policy issue.

To schedule an interview with Kristian about the FCC’s planned regulations, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Sept. 26, 2023) – With the Federal Trade Commission (FTC) and 17 state attorneys general announcing today that they have filed a major antitrust action in U.S. District Court in Seattle targeting Amazon, the following statement can be attributed to International Center for Law & Economics (ICLE) President and Founder Geoffrey A. Manne:

Lina Khan and her agency have been looking into Amazon for a long time, so today’s move was expected. What was less expected is the sheer breadth of the suit, and the far-reaching remedies that are being demanded. These extreme demands greatly undermine the chances that the agency will prevail in court.

If successful, the FTC’s suit could profoundly undermine central features of the Amazon retail platform. This is the case for Amazon’s Prime program and its logistics network, as well as Amazon’s house brands, all of which are all essential to maintaining low prices for consumers. 

In short, the case could greatly harm consumers, all in an attempt to shift the course of U.S. antitrust policy against the will of Congress and the courts.

To schedule an interview with Geoffrey or other ICLE scholars about the Amazon case, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Sept. 7, 2023) – The International Center for Law & Economics (ICLE) is pleased to announce its 2023 Awards and Grants Program for Junior Scholars. This program seeks to recognize junior scholars doing important research using economic methods applied to contemporary and emerging law and public-policy issues. Awards and grants will be considered on a rolling basis.

Consideration for an award or grant requires nomination by a current ICLE academic affiliate or scholar. All pre-tenure academics are eligible for this program, including post-docs, fellows, and individuals in non-tenure track academic research appointments.

Research awards may be given to publishable papers (including those that have not been submitted for publication but that are substantially complete) that have been completed primarily in the past 12 months. These awards include a $1,000 honorarium.

Research grants are intended to support new or recently undertaken projects with relevance to current or emerging policy topics. These grants are generally $7,500, and may be awarded to individual researchers as honoraria or, at their discretion, to their institutions. In rare instances, larger awards may be made to support specific costs necessary to the research.

Research on all topics is considered. We are particularly interested in work relating to conglomerate and ecosystem business models, the relationship between labor markets and competition policy, empirical investigations of the effects of vertical integration, and assessments of the effectiveness of industrial policy and regulatory efforts to structure markets.

Submissions and inquiries should be sent to [email protected].

PORTLAND, Ore. (Sept. 1, 2023) – In light of Amgen Inc.’s announced agreement with the Federal Trade Commission (FTC) and attorneys general from six U.S. states settling challenges to the company’s planned acquisition of Horizon Therapeutics, the International Center for Law & Economics (ICLE) offers the following statement from ICLE President Geoffrey A. Manne:

“This is the result that ICLE and 11 antitrust law and economics scholars recommended in our brief to the court. The FTC suit to stop the merger was clear overreach.

“The FTC had no chance to win. This is a clear admission of that fact. Every recent merger settlement with the FTC has included a provision requiring that all future mergers get prior approval from the FTC. In this settlement, prior approval is required only for those drugs that compete directly with the Horizon drugs. This would never have been allowed anyway, as those drugs have no competitors currently.”

ICLE’s amicus brief is available to download here. To schedule an interview with Geoff Manne or other ICLE scholars, contact R.J. Lehmann at [email protected] or (908) 265-5272.