Economics Series 3: Nicholas Hill / Working DOJ / FTC / JetBlue & Spirit / Anti-Trust & Monopolies

1
00:00:01,080 --> 00:00:04,000
Welcome to another episode of
Come Together

2
00:00:14,600 --> 00:00:16,440
Mr. Nicholas Hill.
Welcome to the show.

3
00:00:16,440 --> 00:00:18,240
So happy to have you on how you
doing today.

4
00:00:18,360 --> 00:00:22,000
Great, happy to be here.
Yes, I appreciate your time.

5
00:00:22,000 --> 00:00:24,240
I appreciate the generosity with
your time and I'm looking

6
00:00:24,240 --> 00:00:26,320
forward to hearing and learning
a lot from you.

7
00:00:26,360 --> 00:00:30,240
I have, I started an economic
series about a year ago and I

8
00:00:30,240 --> 00:00:33,720
had some fun guests on.
And, and the one thing that I

9
00:00:33,720 --> 00:00:36,760
did want to start looking a
little bit more into and perhaps

10
00:00:36,880 --> 00:00:40,960
trying to draw a little more
attention to is the importance

11
00:00:41,040 --> 00:00:44,360
and the relevance of antitrust,
breaking up monopoly.

12
00:00:44,360 --> 00:00:47,160
Because I think we live in a
world at the moment where big

13
00:00:47,160 --> 00:00:51,840
businesses are so enormous that
that the power that they have,

14
00:00:52,120 --> 00:00:55,040
it's certainly not
unprecedented, but you know, it

15
00:00:55,040 --> 00:00:58,080
kind of goes and ebbs and flows
with waves throughout history,

16
00:00:58,080 --> 00:01:01,560
particularly American history.
But but I wanted to just maybe

17
00:01:01,560 --> 00:01:03,920
understand this a little bit
and, and, and I think you're the

18
00:01:03,920 --> 00:01:05,800
right person to help me
breakdown some of these ideas in

19
00:01:05,800 --> 00:01:07,960
a really clear and coherent way.
Sure, happy to help.

20
00:01:08,240 --> 00:01:11,280
So, so just a little bit on your
background.

21
00:01:11,280 --> 00:01:15,640
You had some time working at the
DOJ and the FTCDOJ stands for

22
00:01:15,640 --> 00:01:18,640
the Department of Justice.
The FTC is the Federal Trade

23
00:01:18,640 --> 00:01:22,200
Commission.
And then you went private and,

24
00:01:23,000 --> 00:01:25,480
and I don't actually know where
you're working at the moment,

25
00:01:26,160 --> 00:01:29,520
but yeah, yeah, maybe.
A little background A.

26
00:01:29,520 --> 00:01:31,520
Little bit about about about
yourself and your past

27
00:01:31,520 --> 00:01:32,760
experiences.
Yeah.

28
00:01:32,760 --> 00:01:34,640
So I'll give you some background
and you can cut out all the

29
00:01:34,640 --> 00:01:38,520
parts that are boring.
So prior to going into

30
00:01:38,520 --> 00:01:43,760
antitrust, I actually worked in
demographic and health surveys

31
00:01:43,760 --> 00:01:46,480
in developing countries.
And I did that for about 5

32
00:01:46,480 --> 00:01:48,600
years.
And for various reasons, I was

33
00:01:48,600 --> 00:01:50,720
ready to change what I was doing
a little bit.

34
00:01:50,720 --> 00:01:53,200
And I went back to grad school
to get a PhD.

35
00:01:53,720 --> 00:01:58,480
And after I did that, when I was
applying to jobs, my supervisor

36
00:01:58,480 --> 00:02:01,520
at the time told me you should
apply to some government jobs.

37
00:02:01,560 --> 00:02:04,880
And he said it largely because
he said something not entirely

38
00:02:04,880 --> 00:02:07,400
flattering, like, yeah, most of
these academic places wouldn't

39
00:02:07,400 --> 00:02:10,240
hire Someone Like You, so maybe
you should try a government job.

40
00:02:11,160 --> 00:02:12,760
What made.
And so I did apply to a bunch of

41
00:02:12,760 --> 00:02:15,440
government.
You'll have to ask him.

42
00:02:16,560 --> 00:02:19,680
Possibly he was just right.
He was just possibly very

43
00:02:19,680 --> 00:02:22,880
perceptive.
So anyway, I, I interviewed with

44
00:02:22,880 --> 00:02:25,200
the Department of Justice
Antitrust Division.

45
00:02:25,200 --> 00:02:27,680
I didn't really know anything
about antitrust at the time.

46
00:02:28,280 --> 00:02:31,320
And they just, I heard them
talking about what they did and

47
00:02:31,320 --> 00:02:33,080
why.
And they they in particular

48
00:02:33,080 --> 00:02:35,040
talked about mergers.
You know, two companies are

49
00:02:35,040 --> 00:02:37,480
trying to merge and we have to
determine whether or not that

50
00:02:37,480 --> 00:02:40,440
would hurt consumers.
And they gave some examples and

51
00:02:40,440 --> 00:02:42,720
it just really caught my
imagination.

52
00:02:42,800 --> 00:02:44,880
I liked talking to them.
I thought it was great.

53
00:02:44,880 --> 00:02:46,880
So, you know, they invited me
out.

54
00:02:46,880 --> 00:02:49,360
I talked to their group.
I gave a presentation.

55
00:02:49,360 --> 00:02:52,000
And, you know, the more I talked
to them, the more I liked them

56
00:02:52,000 --> 00:02:55,720
and the more interested I was.
And, you know, eventually, for

57
00:02:56,000 --> 00:02:58,200
reasons that it will never be
clear to me, they offered me a

58
00:02:58,200 --> 00:03:01,800
job and I accepted.
And there was, there was

59
00:03:01,800 --> 00:03:03,440
definitely a learning
adjustment.

60
00:03:03,440 --> 00:03:05,720
I mean, I really didn't know
much about antitrust.

61
00:03:05,720 --> 00:03:09,200
So I learned through talking to
the economist, talking to the

62
00:03:09,200 --> 00:03:13,160
lawyers, working on cases, it's
really in that sense.

63
00:03:13,400 --> 00:03:15,040
You know, I had an economics
background on this.

64
00:03:15,040 --> 00:03:19,200
I have a PhD in it, but a lot of
it was just working with people.

65
00:03:19,360 --> 00:03:22,040
And so I was there for seven
years.

66
00:03:22,440 --> 00:03:26,200
I moved to the FTC, as you said,
the Federal Trade Commission.

67
00:03:26,560 --> 00:03:29,720
They do the same things in
general, but they have different

68
00:03:29,720 --> 00:03:33,440
industries, like DOJ and FTC
often work on different

69
00:03:33,440 --> 00:03:35,760
industries.
And I was interested to see how

70
00:03:35,760 --> 00:03:37,920
do these other interests in
these industries work.

71
00:03:38,480 --> 00:03:41,000
Do we come have the same
theories, the same ideas?

72
00:03:41,480 --> 00:03:45,200
And after being there for a
while, I moved back to DOJ to to

73
00:03:45,200 --> 00:03:47,640
be in a manager's role.
And then after a couple of years

74
00:03:47,640 --> 00:03:50,080
of that, I went private and I
joined Bates White Economic

75
00:03:50,080 --> 00:03:51,800
Consulting, which is where I
work today.

76
00:03:52,920 --> 00:03:53,920
Gotcha.
That's a lot.

77
00:03:54,040 --> 00:03:55,360
That sounds like quite a trip
to.

78
00:03:55,760 --> 00:03:57,680
There's a couple of things that
you said that I'm very curious

79
00:03:57,680 --> 00:03:59,840
about.
Maybe if you could help clarify

80
00:03:59,840 --> 00:04:05,160
#1 is it seems like the way that
you just phrased it, that the

81
00:04:05,840 --> 00:04:09,680
end goal or what the purpose of
the DOJ was that your impression

82
00:04:09,680 --> 00:04:12,320
was, which what got you excited
is that it's that the government

83
00:04:12,320 --> 00:04:15,080
was there to protect, excuse me,
protect consumers.

84
00:04:15,280 --> 00:04:18,079
So the, the, so the, the, IT
looked like that the, the

85
00:04:18,240 --> 00:04:21,320
audience or the people that the,
that the DOJ was looking to

86
00:04:21,320 --> 00:04:24,840
protect and defend are the, are
the American people, not

87
00:04:24,840 --> 00:04:27,920
necessarily the corporations
that in fact they'll be trying

88
00:04:27,920 --> 00:04:29,920
to prohibit them from growing.
Is that correct?

89
00:04:30,000 --> 00:04:33,200
Yeah, so not necessarily
prohibited from growing, but

90
00:04:33,200 --> 00:04:35,200
your your first part is
absolutely correct.

91
00:04:35,200 --> 00:04:38,520
The goal of both the Department
of Justice and the Federal Trade

92
00:04:38,520 --> 00:04:42,720
Commission is to make sure that
firms don't acquire market power

93
00:04:42,720 --> 00:04:46,000
or use market power in ways that
harm consumers.

94
00:04:47,280 --> 00:04:50,040
And so that is really their
foundational focus.

95
00:04:50,040 --> 00:04:53,680
Now, obviously whenever there's
an election, the the people who

96
00:04:53,680 --> 00:04:56,320
are in charge of the the
divisions that there's sort of

97
00:04:56,320 --> 00:04:58,840
the career staff, the people who
are there long term.

98
00:04:58,840 --> 00:05:02,160
And then there's political staff
who come in and different

99
00:05:02,160 --> 00:05:04,200
political staff may have
different views.

100
00:05:04,200 --> 00:05:07,960
And so one administration may be
very focused on breaking up

101
00:05:07,960 --> 00:05:10,600
monopolies.
One may be very focused on

102
00:05:11,040 --> 00:05:13,520
merger review.
You know, it really depends on

103
00:05:13,520 --> 00:05:16,640
their specific orientation.
And.

104
00:05:17,520 --> 00:05:20,680
Some, yeah.
And you know, the Federal Trade

105
00:05:20,680 --> 00:05:22,640
Commission, they actually
typically now they currently

106
00:05:22,640 --> 00:05:25,320
they have two, but they usually
have 5 commissioners, usually

107
00:05:25,320 --> 00:05:28,440
three from the majority party, 2
from the minority party.

108
00:05:28,800 --> 00:05:32,680
And what's interesting about
that is when I moved from DOJ to

109
00:05:32,680 --> 00:05:35,280
FTCI, found out that
commissioners don't always align

110
00:05:35,280 --> 00:05:36,960
the way you think.
You might think there would be a

111
00:05:36,960 --> 00:05:40,560
lot of three to two votes where
all the Republicans vote one way

112
00:05:40,560 --> 00:05:43,640
and all the Democrats the other.
That does happen, for sure.

113
00:05:43,640 --> 00:05:46,080
But there's also times when all
five of them vote together.

114
00:05:46,080 --> 00:05:48,880
And there's times when it's 4 to
1, and there's times when it's

115
00:05:48,880 --> 00:05:50,920
3:00 to 2:00.
But it's not a predictable

116
00:05:50,920 --> 00:05:52,760
coalition.
So, like, different people have

117
00:05:52,760 --> 00:05:56,000
different views at DOJ.
There's really usually the one

118
00:05:56,000 --> 00:05:58,440
decision maker.
Now, of course that person is

119
00:05:58,440 --> 00:06:00,400
responsible, ultimately the
attorney general.

120
00:06:00,520 --> 00:06:03,280
But you know, it doesn't have
quite that same structure.

121
00:06:04,160 --> 00:06:06,560
Right, right.
It's, it's, I'm so happy that

122
00:06:06,560 --> 00:06:08,840
you made that point because I'm
reading a book now called The

123
00:06:08,840 --> 00:06:11,720
Unstable Majorities by Morris
Fioran.

124
00:06:11,720 --> 00:06:14,840
I believe it was his last name.
And, and one thing that he was

125
00:06:14,840 --> 00:06:18,960
talking about was how the
population is much more

126
00:06:18,960 --> 00:06:23,440
polarized perhaps than they need
to be.

127
00:06:23,680 --> 00:06:27,240
And I was curious and, and, and
a lot of social issues are kind

128
00:06:27,240 --> 00:06:31,600
of worked into the political
parties now in order to help

129
00:06:31,640 --> 00:06:35,120
deviate, I think people from one
another or radicalize the, the

130
00:06:35,160 --> 00:06:38,120
extremes from either party.
And I was curious whether that

131
00:06:38,120 --> 00:06:40,720
kind of same environment exists
within the government itself.

132
00:06:40,720 --> 00:06:43,320
Because like you did mention,
there are people that come in

133
00:06:43,320 --> 00:06:46,440
every three, every 4-4 years or
so from, with, with whatever

134
00:06:46,440 --> 00:06:48,920
respected parties in, in the
position of power.

135
00:06:48,920 --> 00:06:51,200
And then there are people that
just work there throughout, you

136
00:06:51,200 --> 00:06:52,880
know, the whole time one way or
the other.

137
00:06:52,880 --> 00:06:54,880
And they say, OK, well, you'll
be gone in four years and we'll

138
00:06:54,880 --> 00:06:57,200
still be here in 20s.
So I'm curious.

139
00:06:57,200 --> 00:07:00,120
So, so, so, so it's very
interesting when you say that

140
00:07:00,120 --> 00:07:01,720
they're often, you know, 4 to
one or five.

141
00:07:01,720 --> 00:07:05,400
And OI guess it means that these
individuals, these commissioners

142
00:07:05,400 --> 00:07:11,920
tend to have their own ideas.
And then instead of judge going

143
00:07:11,920 --> 00:07:14,600
going partisan one way or the
other, they kind of elaborate.

144
00:07:14,600 --> 00:07:16,520
They kind of take a look at
what's going on around them and

145
00:07:16,520 --> 00:07:19,200
base what their decision is
going to be on their own values

146
00:07:19,200 --> 00:07:20,840
as opposed to just going along
with the party line.

147
00:07:20,880 --> 00:07:23,000
Yeah.
So that that's a rich question

148
00:07:23,000 --> 00:07:24,840
and I'll unpack it a little bit
if I can.

149
00:07:24,840 --> 00:07:29,920
So first of all, in your first
point, yeah, I mean, there is

150
00:07:29,920 --> 00:07:33,760
this eternal battle between the
civil servants and then the the

151
00:07:33,760 --> 00:07:36,960
politicals who have their own
political goals, which may or

152
00:07:36,960 --> 00:07:38,680
may not be what the civil
servants want.

153
00:07:38,840 --> 00:07:42,280
And I would say in general, the
people at both that I worked

154
00:07:42,280 --> 00:07:45,480
with at the DOJ and the FTC,
their focus usually is pretty

155
00:07:45,480 --> 00:07:47,560
heavily on protecting American
consumers.

156
00:07:47,560 --> 00:07:50,280
Like they they they get paid a
lot less than they would get

157
00:07:50,280 --> 00:07:53,240
paid in private practice.
And they work really long hours.

158
00:07:53,280 --> 00:07:57,360
And so they in general, they're
pretty motivated by the mission.

159
00:07:57,480 --> 00:08:00,280
Now, there are some people may
or may not be so motivated, but

160
00:08:00,520 --> 00:08:04,800
there's a lot of people who are.
And then yes, you do have

161
00:08:05,160 --> 00:08:08,080
there's a political overlay
where a particular party may be

162
00:08:08,080 --> 00:08:11,600
more or against a certain thing.
And sometimes the parties align.

163
00:08:11,600 --> 00:08:15,080
So one thing that's happened in
the recent past, possibly for

164
00:08:15,080 --> 00:08:19,120
different reasons, but both of
the major political parties have

165
00:08:19,120 --> 00:08:24,720
sort of had Amazon, Google,
Facebook in the crosshairs,

166
00:08:24,720 --> 00:08:27,400
Apple and they've been very
interested in large tech

167
00:08:27,400 --> 00:08:29,880
companies from the power that
they have and a desire to

168
00:08:29,880 --> 00:08:33,360
regulate them or not regulate,
sorry to investigate what

169
00:08:33,360 --> 00:08:35,760
they're doing.
So that's true.

170
00:08:35,760 --> 00:08:37,840
And then there are other time
periods when they have different

171
00:08:37,840 --> 00:08:42,159
views and they're sometimes
you're in a period of consensus,

172
00:08:42,159 --> 00:08:44,480
sometimes you're in a period of
discord.

173
00:08:44,560 --> 00:08:47,520
And at the moment, with respect
to big tech, there is some

174
00:08:47,520 --> 00:08:50,000
consensus about they need to be
investigated.

175
00:08:50,320 --> 00:08:53,240
The reasons why may vary.
And so the prescriptions about

176
00:08:53,240 --> 00:08:56,920
what should be done may vary,
but all of that's true.

177
00:08:56,920 --> 00:08:59,720
And then the the final overlay I
just want to put on all of this

178
00:08:59,720 --> 00:09:02,440
is let's just I'll just give you
a hypothetical situation.

179
00:09:02,440 --> 00:09:06,600
Let's say Coke said we're
merging with Pepsi and there was

180
00:09:06,600 --> 00:09:09,920
a big investigation, like, would
this hurt competition for soft

181
00:09:09,920 --> 00:09:13,200
drinks?
And, you know, the depending on

182
00:09:13,200 --> 00:09:15,440
which party is in power, they
may have their own view about

183
00:09:15,440 --> 00:09:18,800
whether that's true or not.
But if the government, whether

184
00:09:18,800 --> 00:09:21,840
it's the Department of Justice
or the Federal Trade Commission,

185
00:09:21,840 --> 00:09:24,080
says we want to block this
merger, we think this is going

186
00:09:24,080 --> 00:09:26,200
to lead to higher prices for
Colas.

187
00:09:26,200 --> 00:09:29,200
It's going to be the higher
prices for lemon lining soft

188
00:09:29,200 --> 00:09:30,840
drinks.
We think this needs to be

189
00:09:30,840 --> 00:09:33,600
blocked.
They then have to go to court

190
00:09:33,640 --> 00:09:36,280
and they have to convince a
court that this should be

191
00:09:36,280 --> 00:09:37,840
blocked.
And so then there's this other

192
00:09:37,840 --> 00:09:40,960
overlay.
Even if you have a big change in

193
00:09:40,960 --> 00:09:44,920
politics at the level of the
political administration,

194
00:09:45,200 --> 00:09:49,160
ultimately the either agency has
to typically convince a court.

195
00:09:49,280 --> 00:09:52,520
And so that's like a yet another
layer, like some federal judge

196
00:09:52,520 --> 00:09:55,720
is going to review this case.
My experience, I've testified, I

197
00:09:55,720 --> 00:09:59,440
think now I can't remember it's
seven or eight times in front of

198
00:09:59,440 --> 00:10:01,960
federal courts that the judges
are super smart.

199
00:10:02,160 --> 00:10:05,160
They ask a ton of questions,
they're really engaged and it's

200
00:10:05,160 --> 00:10:07,560
really hard to win those kinds
of cases.

201
00:10:07,560 --> 00:10:10,760
The, the judges are really going
to dig in and try to understand

202
00:10:10,760 --> 00:10:13,040
it.
And so all of these parties like

203
00:10:13,040 --> 00:10:16,080
the, the political parties,
judiciary and then the civil

204
00:10:16,080 --> 00:10:19,000
servants are involved.
And, and typically the way it

205
00:10:19,000 --> 00:10:22,480
works, if you have this Coke,
Pepsi, the career staff would

206
00:10:22,480 --> 00:10:24,360
investigate.
They would say, here's the fact

207
00:10:24,360 --> 00:10:26,000
pattern, here's what we
recommend.

208
00:10:26,280 --> 00:10:28,040
And then the political
leadership would make a

209
00:10:28,160 --> 00:10:31,040
decision, are we going to sue?
Are we not going to sue and

210
00:10:31,040 --> 00:10:32,680
then, you know, you either move
to court?

211
00:10:33,080 --> 00:10:35,800
Hey everyone real quick if
you're enjoying the show, click

212
00:10:35,840 --> 00:10:38,680
subscribe and rate the show. 5
stars helps a time.

213
00:10:38,680 --> 00:10:41,680
Thanks so much.
Or, or if the parties, if you

214
00:10:41,680 --> 00:10:43,720
sue the court parties and they
say, OK, you're right, we're

215
00:10:43,720 --> 00:10:46,360
going to abandon the deal, then
it doesn't move to the

216
00:10:46,360 --> 00:10:49,360
judiciary, but otherwise you
would move into a trial.

217
00:10:50,240 --> 00:10:52,840
That's very interesting.
Out of curiosity, I don't know

218
00:10:52,840 --> 00:10:56,920
if this is something that the
DOJ or the FTC handles say, for

219
00:10:56,920 --> 00:10:58,840
example, and I want to talk
about this too.

220
00:10:58,840 --> 00:11:00,880
We're going to get into Spirit
Airlines a little bit.

221
00:11:01,120 --> 00:11:03,480
But part of what, you know,
Spirit were made spirits so

222
00:11:03,480 --> 00:11:06,680
successful and they kind of did
upend the whole flight industry.

223
00:11:06,680 --> 00:11:09,400
But I think either them or
Frontier, I'm not sure which one

224
00:11:09,400 --> 00:11:11,840
of them came first, but I think
they really radicalized and

225
00:11:11,840 --> 00:11:14,160
changed the way almost a similar
way to the way that Netflix

226
00:11:14,160 --> 00:11:16,960
affected the streaming and movie
business in a very, you know,

227
00:11:16,960 --> 00:11:19,200
they just kind of changed the
whole grounds and the whole

228
00:11:19,200 --> 00:11:21,000
under the whole public
perception of the way the

229
00:11:21,000 --> 00:11:23,080
business should be or is the way
it works.

230
00:11:23,480 --> 00:11:27,960
And now that spirits gone, say
hypothetically, and I've read

231
00:11:27,960 --> 00:11:30,480
this that airports that spirits
were flying out of were

232
00:11:30,480 --> 00:11:34,760
generally, I think 15 to 20%
cheaper than than airports that

233
00:11:34,760 --> 00:11:37,000
spirit would not fly out of.
And one of the reasons why was

234
00:11:37,000 --> 00:11:39,640
because they were so competitive
with their pricing, the other,

235
00:11:39,800 --> 00:11:44,080
the other organizations and
other airlines had to lower

236
00:11:44,080 --> 00:11:45,880
their prices just to compete
with them.

237
00:11:45,880 --> 00:11:48,560
But now that that's gone,
there's no barrier to or there's

238
00:11:48,560 --> 00:11:53,080
nothing to stop necessarily
these airlines from now marking

239
00:11:53,080 --> 00:11:54,720
up their flights to whatever it
is.

240
00:11:54,720 --> 00:11:57,560
And in fact, we do know, of
course, circumstantially due to

241
00:11:57,560 --> 00:12:00,840
the war right now, that air
travel is extremely expensive

242
00:12:00,840 --> 00:12:02,200
because of the rising cost of
fuel.

243
00:12:02,240 --> 00:12:06,960
So does DOJ get involved when a
whole industry becomes too

244
00:12:06,960 --> 00:12:10,200
expensive for, you know, for
people to be able to kind of

245
00:12:10,200 --> 00:12:13,560
participate in, or is that not
up their Roadhouse?

246
00:12:13,680 --> 00:12:14,840
Yeah.
So it could.

247
00:12:15,560 --> 00:12:18,320
So let me let me step back and
I'll start with your point about

248
00:12:19,040 --> 00:12:23,080
airlines.
So, and I'm not a, I've worked

249
00:12:23,080 --> 00:12:25,280
on the industry a number of
times, including I worked on

250
00:12:25,280 --> 00:12:27,800
JetBlue, Spirit on behalf of
JetBlue and Spirit.

251
00:12:28,640 --> 00:12:32,040
So, so let me just walk back
there a little.

252
00:12:32,040 --> 00:12:35,240
So my understanding of the
general industry trends, and

253
00:12:35,240 --> 00:12:38,600
some of this happened before I
was involved, was that after

254
00:12:38,600 --> 00:12:43,000
deregulation, what sort of
happened is airlines moved from,

255
00:12:43,600 --> 00:12:46,680
you could think of them as being
high quality, high price.

256
00:12:46,680 --> 00:12:49,720
New people came in competing and
saying like, look, I really

257
00:12:49,720 --> 00:12:53,080
don't care if it's luxury.
I just want to get from New York

258
00:12:53,080 --> 00:12:56,160
to Washington or I want to get
from Miami to Milwaukee.

259
00:12:56,160 --> 00:12:58,480
And I want to do it as cheaply
as I can.

260
00:12:58,800 --> 00:13:01,760
And there's been a series of
people who have entered and LED

261
00:13:01,760 --> 00:13:04,360
to lower fares.
And the most famous probably,

262
00:13:04,360 --> 00:13:06,480
and there's been a lot of
economic papers written about it

263
00:13:06,480 --> 00:13:11,000
is Southwest who entered flying
from point to point.

264
00:13:11,040 --> 00:13:14,520
They didn't have the same
structure as United or Delta or

265
00:13:14,520 --> 00:13:16,440
American, who often have
networks.

266
00:13:16,440 --> 00:13:19,240
They just were flying place to
place and they entered with low

267
00:13:19,240 --> 00:13:22,320
fares and lots of flights.
And they really reshape the

268
00:13:22,320 --> 00:13:23,720
industry.
There's, as I said, there's a

269
00:13:23,720 --> 00:13:26,240
ton of economic papers looking
at that and finding that

270
00:13:26,240 --> 00:13:28,440
Southwest had a really important
impact.

271
00:13:29,080 --> 00:13:31,520
And then over time, other people
entered.

272
00:13:31,520 --> 00:13:34,480
There was AirTran and there's
there's just been a whole long

273
00:13:34,480 --> 00:13:38,200
series of them.
And so the what the way people

274
00:13:38,200 --> 00:13:41,320
often talk about the industry
now is the legacy carriers, by

275
00:13:41,320 --> 00:13:44,920
which they mean often United,
Delta and American.

276
00:13:44,920 --> 00:13:47,760
So they have these networks and
hubs that fly.

277
00:13:47,960 --> 00:13:51,160
If you're in a small airport,
you usually fly to a big airport

278
00:13:51,160 --> 00:13:52,560
and then you fly to where you're
going.

279
00:13:52,760 --> 00:13:55,760
And then there's the point to
point low cost carriers.

280
00:13:55,760 --> 00:13:58,760
So like Southwest was the
classic example.

281
00:13:58,920 --> 00:14:01,200
JetBlue is often put into this
category.

282
00:14:01,400 --> 00:14:04,800
You can get a flight for less
and you'll fly place to place a

283
00:14:04,800 --> 00:14:06,880
Legion.
Well, they're going to be in an

284
00:14:06,880 --> 00:14:10,200
entirely different category.
But SW famously, they just gave

285
00:14:10,200 --> 00:14:11,800
you peanuts.
Like look, if you're looking for

286
00:14:11,800 --> 00:14:14,000
a fancy dinner, that's not going
to be us.

287
00:14:14,080 --> 00:14:16,880
And that attracted customers who
just wanted to fly.

288
00:14:16,880 --> 00:14:18,360
Like I don't need a fancy
dinner.

289
00:14:18,360 --> 00:14:19,640
I'll eat when I get to the other
end.

290
00:14:19,800 --> 00:14:26,080
And then Spirit Allegiant
Frontier Velo, there's a whole

291
00:14:26,080 --> 00:14:27,720
bunch of Velo.
Sorry.

292
00:14:27,720 --> 00:14:29,840
There's a whole bunch of what
are we then called ultra low

293
00:14:29,840 --> 00:14:32,200
cost carriers.
Like they cut it down even

294
00:14:32,200 --> 00:14:33,760
further.
Like do you want a pillow?

295
00:14:33,760 --> 00:14:35,200
If you do, you're going to have
to pay for it.

296
00:14:35,640 --> 00:14:37,360
And do you want any kind of food
or drink?

297
00:14:37,600 --> 00:14:39,360
You're going to pay for it.
You want a blanket, you're

298
00:14:39,360 --> 00:14:41,280
paying for it.
You want a bag, you pay for it.

299
00:14:41,560 --> 00:14:44,040
So it's like the ultimate.
You can get a flight for like

300
00:14:44,040 --> 00:14:47,760
rock bottom and it just as an
FYI, there was a company in

301
00:14:47,760 --> 00:14:50,040
Europe, I think, as far as I
know, they're still around

302
00:14:50,040 --> 00:14:54,040
EasyJet who just flies.
Really, really cheap prices.

303
00:14:54,040 --> 00:14:57,400
And that that that general idea
was popular with a lot of

304
00:14:57,400 --> 00:14:59,280
consumers.
Like if you don't have a lot of

305
00:14:59,280 --> 00:15:02,240
money, you don't pay a lot to
fly, but you do want to get from

306
00:15:02,240 --> 00:15:04,080
point A to point B in just a
couple hours.

307
00:15:04,080 --> 00:15:07,600
And so that that's sort of what
happened in A in a very high

308
00:15:07,600 --> 00:15:09,880
sense.
And then one thing that has

309
00:15:09,880 --> 00:15:12,920
happened is those ultra low cost
carriers are usually the easiest

310
00:15:12,920 --> 00:15:14,760
to enter.
Like if you wanted you and I

311
00:15:14,760 --> 00:15:17,720
wanted to start an airline, we
just need to round up a couple

312
00:15:17,720 --> 00:15:20,960
of airplanes and we and some
pilots and we'll fly back and

313
00:15:20,960 --> 00:15:22,360
forth between a couple of
cities.

314
00:15:22,360 --> 00:15:25,800
And so it's pretty common that
people enter there, that legacy

315
00:15:25,800 --> 00:15:30,240
airline space, the United, the
Americans, the Deltas, the very

316
00:15:30,240 --> 00:15:33,120
large airlines.
You know, I, I just named the

317
00:15:33,120 --> 00:15:35,640
three that people know about.
I guess you could add Southwest

318
00:15:35,640 --> 00:15:38,680
now as a very large airline, but
it's really hard to enter up

319
00:15:38,680 --> 00:15:40,840
there.
And also ultra, as we found with

320
00:15:40,840 --> 00:15:43,560
Spirit, ultra low cost carriers
run out of money, like they're

321
00:15:43,560 --> 00:15:45,280
operating on really tight
margins.

322
00:15:45,280 --> 00:15:48,280
And if something goes wrong,
like there's a shock to the cost

323
00:15:48,280 --> 00:15:52,200
of fuel, they can all fail.
And so coming now finally all

324
00:15:52,200 --> 00:15:55,960
the way back to your question,
like both of the agencies at a

325
00:15:55,960 --> 00:15:59,480
high level, they, they keep,
they, they are interested in

326
00:15:59,480 --> 00:16:02,280
what's happening in industries
and they typically specialize.

327
00:16:02,280 --> 00:16:05,840
So DOJ works on airlines, FEC
generally does not.

328
00:16:05,960 --> 00:16:09,320
And if they heard like everyone
is raising prices, they might

329
00:16:09,320 --> 00:16:12,240
launch an investigation to say
is this, our price is high

330
00:16:12,240 --> 00:16:14,440
because fuel is high.
So it's expensive for the

331
00:16:14,440 --> 00:16:18,000
airlines or are prices high for
some other reason, some reason,

332
00:16:18,000 --> 00:16:20,280
like competitions being
restrained in some way?

333
00:16:20,360 --> 00:16:23,680
And so that can happen.
Like, for example, a lot of the

334
00:16:23,680 --> 00:16:26,360
investigations into, you know,
there was a whole bunch of them

335
00:16:26,360 --> 00:16:29,640
into Amazon and Google,
etcetera, The big tech

336
00:16:29,640 --> 00:16:32,920
companies, those came out of
people saying these companies

337
00:16:32,920 --> 00:16:35,200
have too much power is leading
to higher prices.

338
00:16:35,200 --> 00:16:37,720
We want to investigate.
And when that happens, either

339
00:16:37,720 --> 00:16:39,880
the federal government could do
it or some states do it.

340
00:16:39,960 --> 00:16:44,400
So, you know, New York has been
active, California, Texas,

341
00:16:44,920 --> 00:16:46,760
sometimes states investigate
those things.

342
00:16:46,840 --> 00:16:48,240
Yeah.
And I want to I want to ask

343
00:16:48,240 --> 00:16:49,640
about that.
I want to stick on the I want to

344
00:16:49,640 --> 00:16:51,040
actually definitely want to talk
about that.

345
00:16:51,040 --> 00:16:53,440
I want to stick on the airline
question the topic just a little

346
00:16:53,440 --> 00:16:56,920
bit more because I want to hear
about your experience with the

347
00:16:56,920 --> 00:17:00,520
JetBlue case.
I want to hear what the train of

348
00:17:00,520 --> 00:17:04,040
thought or what the, what the
business plan was and why he was

349
00:17:04,040 --> 00:17:07,760
ultimately struck down.
And one of those something

350
00:17:07,760 --> 00:17:09,599
curious.
I don't, I don't believe in,

351
00:17:09,599 --> 00:17:11,839
correct me if I'm wrong.
I remember when JetBlue started,

352
00:17:11,880 --> 00:17:15,000
everyone was enthralled by it.
They had great snacks.

353
00:17:15,000 --> 00:17:17,839
They had the first cable
television, you know, and the

354
00:17:17,839 --> 00:17:20,119
seats in front of you.
And I think they had Wi-Fi in

355
00:17:20,119 --> 00:17:22,240
their flights and they were
really considered premier

356
00:17:22,240 --> 00:17:23,720
airline.
I remember I was jealous every

357
00:17:23,720 --> 00:17:26,160
time I I heard that my friends
are flying JetBlue and I was

358
00:17:26,160 --> 00:17:28,720
flying American.
And then somewhere along the

359
00:17:28,720 --> 00:17:30,880
line, you know, something,
something happened.

360
00:17:30,880 --> 00:17:33,920
And you know, I, I, it's funny
because I don't, I don't think I

361
00:17:33,920 --> 00:17:35,800
ever age until I talk to my high
school students.

362
00:17:35,800 --> 00:17:38,480
And that's when I realized how,
how much older I am than than I

363
00:17:38,480 --> 00:17:40,880
think I am.
But you know, so, but so, so it

364
00:17:40,880 --> 00:17:42,920
looks like that, that that
company kind of went from a flip

365
00:17:42,920 --> 00:17:46,040
to a premier airline to to a
budget airline or an ultra

366
00:17:46,040 --> 00:17:47,520
budget, depending on I don't
know how you're going to

367
00:17:47,520 --> 00:17:50,120
categorize it, but what is that?
How does that happen?

368
00:17:50,200 --> 00:17:52,520
And then if you could maybe walk
me through the case a little

369
00:17:52,520 --> 00:17:53,760
bit, I'd be really interested in
hearing about.

370
00:17:53,760 --> 00:17:56,160
That sure, I'll look through
both of those at a high level

371
00:17:56,160 --> 00:17:59,720
based on my experience.
So JetBlue in some sense

372
00:17:59,720 --> 00:18:02,920
positioned itself as you get a
little bit of the best of both

373
00:18:02,920 --> 00:18:04,920
worlds.
You we're going to have, as you

374
00:18:04,920 --> 00:18:09,560
say, they had comfortable seats,
extra leg room, other perks like

375
00:18:09,560 --> 00:18:13,320
free Wi-Fi, you know, look good
in their snacks, all those kinds

376
00:18:13,320 --> 00:18:15,760
of things.
And so they were sort of saying,

377
00:18:15,760 --> 00:18:19,040
look, you can get the high
quality and we're also going to

378
00:18:19,040 --> 00:18:23,240
charge less than the larger
carriers like American United

379
00:18:23,320 --> 00:18:27,080
and Delta and Southwest.
So that was sort of their pitch

380
00:18:27,080 --> 00:18:31,360
that in between space spirit was
we are flying, this is going to

381
00:18:31,360 --> 00:18:34,680
be a rock bottom fair.
You're going to fly for cheap.

382
00:18:35,200 --> 00:18:37,960
And then at the other end, you
have the legacy carriers who

383
00:18:37,960 --> 00:18:41,640
offer, you know, first class or
business class, more high touch,

384
00:18:41,680 --> 00:18:45,160
you know, sort of experience and
also like broader networks and

385
00:18:45,160 --> 00:18:47,880
like broader frequent Flyers.
Like it's surprising how many

386
00:18:47,880 --> 00:18:51,320
people you run into are like, I
only fly Delta or I only fly

387
00:18:51,320 --> 00:18:54,080
American.
Yeah, United cause all my points

388
00:18:54,240 --> 00:18:56,880
and I love my points and I want
them and that's why.

389
00:18:56,920 --> 00:18:59,680
And so they have those broad
networks where as most of the

390
00:18:59,680 --> 00:19:01,800
other airlines just aren't big
enough to do that.

391
00:19:01,800 --> 00:19:03,440
Southwest is also in that
category.

392
00:19:04,080 --> 00:19:07,960
And so the, the genesis of the
deal, the thesis for JetBlue was

393
00:19:08,040 --> 00:19:11,600
look, we when we enter a route
and you know, we looked, we

394
00:19:11,600 --> 00:19:13,360
analyzed this and found this to
be true.

395
00:19:13,520 --> 00:19:16,720
When we enter a route, prices
come down from the large

396
00:19:16,720 --> 00:19:19,560
carriers.
So United, American, Delta,

397
00:19:19,800 --> 00:19:23,760
Southwest, our quality is close
enough to them that they respond

398
00:19:23,800 --> 00:19:27,000
and they lower prices, but we're
really be struggling to get

399
00:19:27,000 --> 00:19:30,880
additional air airplanes and to
enter into more routes.

400
00:19:30,880 --> 00:19:33,400
Like we'd love to be competing
in more places, but we just

401
00:19:33,400 --> 00:19:36,760
don't have the aircraft.
And so they in some sense saw

402
00:19:36,800 --> 00:19:39,280
this as an opportunity.
And I, by the way, I'm just

403
00:19:39,280 --> 00:19:41,360
speaking for myself.
The JetBlue people may tell you

404
00:19:41,360 --> 00:19:43,760
something completely different,
but this was my perception, just

405
00:19:43,760 --> 00:19:47,360
working on behalf of them.
We can get all these additional

406
00:19:47,360 --> 00:19:51,400
airplanes and we can put more
pressure on the big, what I'll

407
00:19:51,400 --> 00:19:54,200
just call the big four just for
the purpose of this discussion,

408
00:19:54,800 --> 00:19:58,080
United, American, Delta and
Southwest.

409
00:19:58,520 --> 00:20:02,040
And something like 80% of all
flights in the country are on

410
00:20:02,040 --> 00:20:05,080
those four major carriers.
And so their thesis was if we

411
00:20:05,080 --> 00:20:06,840
could do this.
We're going to take those

412
00:20:06,840 --> 00:20:08,640
planes.
We're going to refit them to be

413
00:20:08,640 --> 00:20:11,360
like JetBlue planes, more
legroom than you would have had

414
00:20:11,360 --> 00:20:14,600
on Spirit, free Wi-Fi, good
snacks, you know, all that

415
00:20:14,600 --> 00:20:17,200
stuff.
And so we analyzed this and we

416
00:20:17,200 --> 00:20:20,200
did find our work was consistent
with JetBlue.

417
00:20:20,200 --> 00:20:23,760
When they entered, they put more
pressure on the large, the four

418
00:20:23,760 --> 00:20:26,200
largest carriers than other
carriers did.

419
00:20:26,720 --> 00:20:31,280
And so and then the the DOJ
story though was wait a minute,

420
00:20:31,440 --> 00:20:34,440
that may all be true, but there
are some routes today where

421
00:20:34,440 --> 00:20:38,080
Spirit competes with JetBlue.
So I'll just take a made-up

422
00:20:38,080 --> 00:20:39,440
route.
Let's just, and this is

423
00:20:39,440 --> 00:20:42,040
completely made-up because I
don't remember, let's say Fort

424
00:20:42,040 --> 00:20:44,640
Myers to Cincinnati.
They're the only two people

425
00:20:44,640 --> 00:20:46,760
flying that.
And today they're competing

426
00:20:46,920 --> 00:20:49,840
customers on that route.
And what's going to happen is

427
00:20:50,000 --> 00:20:52,560
now people flying from
Cincinnati to Fort Myers are

428
00:20:52,560 --> 00:20:56,200
going to have to pay more.
And our counter argument was,

429
00:20:56,200 --> 00:20:58,840
OK, but JetBlue is going to
enter a whole bunch of new

430
00:20:58,840 --> 00:21:01,360
routes, put pressure on the
airlines that most people

431
00:21:01,360 --> 00:21:03,720
actually fly with.
So that's going to benefit a lot

432
00:21:03,720 --> 00:21:06,680
of consumers.
And so, and then another part of

433
00:21:06,680 --> 00:21:10,400
it was, look, ultra low cost
carriers, they're constantly

434
00:21:10,400 --> 00:21:14,720
breeze entering A Velo, entering
a legion, entering, expanding.

435
00:21:14,720 --> 00:21:16,520
There's always new entrants
there.

436
00:21:16,560 --> 00:21:19,760
And so you shouldn't be too
worried about Spirit

437
00:21:19,760 --> 00:21:22,960
disappearing because it'll be
replaced and we'll use Spirits

438
00:21:22,960 --> 00:21:25,160
planes.
And Spirit had nice new planes,

439
00:21:25,160 --> 00:21:27,800
just FYI.
So that was sort of the

440
00:21:27,800 --> 00:21:31,080
battleground DOJ saying we're
going to lose this competition.

441
00:21:31,080 --> 00:21:33,520
We like this competition between
JetBlue and Spirit.

442
00:21:33,800 --> 00:21:36,520
We were saying you may lose that
competition, but you're going to

443
00:21:36,520 --> 00:21:40,480
gain additional competition.
And the court eventually my

444
00:21:40,480 --> 00:21:42,960
reading of what the court said
was I think it's true that you

445
00:21:42,960 --> 00:21:44,560
would get this additional
competition.

446
00:21:44,720 --> 00:21:47,320
I think that's good.
But I think that there are a lot

447
00:21:47,320 --> 00:21:50,120
of people who like flying on
Spirit and they're going to lose

448
00:21:50,120 --> 00:21:53,720
their choice because the idea
was to replace the Spirit planes

449
00:21:53,720 --> 00:21:55,760
and make them JetBlue planes.
So they'd be a little more

450
00:21:55,760 --> 00:21:57,720
expensive, they'd be higher
touch.

451
00:21:57,880 --> 00:22:00,160
And he the court was saying, but
there are people who don't want

452
00:22:00,160 --> 00:22:01,960
that.
And I'm not convinced that the

453
00:22:01,960 --> 00:22:05,640
smaller ultra low cost carriers
could expand and replace that

454
00:22:05,640 --> 00:22:08,160
lost competition.
And so that's essentially what

455
00:22:08,160 --> 00:22:10,200
happened.
And then obviously in the since

456
00:22:10,200 --> 00:22:13,720
then Spirit went bankrupt, it's
not clear where its planes are

457
00:22:13,720 --> 00:22:15,600
going to go.
You know, there's been a lot of

458
00:22:15,600 --> 00:22:19,240
people who've lost access to
that service, and so that didn't

459
00:22:19,240 --> 00:22:21,880
turn out very well.
Retrospectively, you know the

460
00:22:21,880 --> 00:22:25,840
bankruptcy wasn't a thing.
Not at all not at all.

461
00:22:26,360 --> 00:22:29,160
I, I that that the whole
deliberation process is very

462
00:22:29,160 --> 00:22:32,360
interesting and it's really
fascinating to hear how, what,

463
00:22:32,360 --> 00:22:35,240
what, what the arguments kind of
came down to in the sense that

464
00:22:35,440 --> 00:22:39,120
also because if the federal
government was really concerned

465
00:22:39,120 --> 00:22:43,600
about losing that route to all
to that, that, that customers

466
00:22:43,600 --> 00:22:47,280
wouldn't have the opportunity to
take an economically feasible

467
00:22:47,400 --> 00:22:49,440
flight, you know, from
Cincinnati to Fort Myers.

468
00:22:49,440 --> 00:22:53,040
Hypothetically, we do have
airlines like Frontier and

469
00:22:53,040 --> 00:22:55,360
Allegiant.
And there I, I mean, I, I would

470
00:22:55,360 --> 00:23:00,400
imagine that the natural, the
natural nature of competition is

471
00:23:00,400 --> 00:23:03,600
that someone will emerge or
something will emerge to fill in

472
00:23:03,600 --> 00:23:06,080
that spot.
Don't we, don't we believe that

473
00:23:06,080 --> 00:23:08,840
or wouldn't you argue or make, I
guess you did right representing

474
00:23:08,840 --> 00:23:12,040
JetBlue that, that, that, that
someone else would just step in

475
00:23:12,040 --> 00:23:13,640
and, and, and take that over.
Yeah.

476
00:23:13,640 --> 00:23:17,240
So there was testimony on this
point of the trial and in

477
00:23:17,240 --> 00:23:19,720
general, I would say
characterizing it at a high

478
00:23:19,720 --> 00:23:21,720
level from when I was sitting in
the courtroom.

479
00:23:21,840 --> 00:23:25,480
The ultra low cost Carrier said,
if, if there is an opportunity,

480
00:23:25,480 --> 00:23:29,200
you know, if Spirit exits are
because of the merger and prices

481
00:23:29,200 --> 00:23:32,720
go up, we're always looking for
routes we can enter and compete

482
00:23:32,840 --> 00:23:36,400
and we are definitely going to
take advantage of that.

483
00:23:37,120 --> 00:23:40,760
The the, the counter argument
from DOJ was lipid Spirit is the

484
00:23:40,760 --> 00:23:43,520
largest and most influential of
these.

485
00:23:43,520 --> 00:23:45,080
It would be hard to replace
them.

486
00:23:45,440 --> 00:23:48,360
And so that's sort of and the
court was persuaded by that.

487
00:23:48,400 --> 00:23:50,960
And that was, I think, I mean, I
think that I'm, again, I'm

488
00:23:51,000 --> 00:23:52,760
reading between the lines in the
court's opinion.

489
00:23:53,280 --> 00:23:55,680
And so the court said this would
be a really serious loss.

490
00:23:55,680 --> 00:24:00,160
I don't know that I I don't know
that the court appreciated the

491
00:24:00,440 --> 00:24:03,640
OR understood the because it
wasn't super clear at the time

492
00:24:03,880 --> 00:24:08,400
concluding to me that how much
at risk Spirit was of bankruptcy

493
00:24:08,440 --> 00:24:11,520
and it they started running into
financial problems pretty

494
00:24:11,520 --> 00:24:15,240
quickly afterwards.
And also just context, I don't

495
00:24:15,240 --> 00:24:17,760
know if you know, but there was
also prior to the merger deal

496
00:24:17,760 --> 00:24:23,440
between JetBlue and Spirit,
Spirit had a, an agreement with

497
00:24:23,440 --> 00:24:26,240
or was being coordinated by
Frontier and there was an idea

498
00:24:26,240 --> 00:24:30,120
to Frontier and Spirit merge.
And so there was a big tussle

499
00:24:30,120 --> 00:24:32,800
between who would try to merge
and eventually Spirit and jet

500
00:24:32,800 --> 00:24:35,480
flow emerge.
The Spirit and Frontier would

501
00:24:35,480 --> 00:24:38,320
have also been interesting.
I didn't personally work on that

502
00:24:38,320 --> 00:24:40,200
or analyze that.
That would have been the two

503
00:24:40,200 --> 00:24:43,000
largest ultra low cost carrier
purging.

504
00:24:43,000 --> 00:24:45,480
And, you know, there are
problems.

505
00:24:46,680 --> 00:24:49,520
It would certainly have gotten a
hard look from the agency to

506
00:24:49,520 --> 00:24:52,000
say, wait a minute, you've got
the two biggest now.

507
00:24:52,000 --> 00:24:53,080
Maybe they would have cleared
it.

508
00:24:53,080 --> 00:24:54,960
I don't know.
I, I didn't work on that.

509
00:24:54,960 --> 00:24:57,720
I didn't analyze it.
But they're also pretty similar.

510
00:24:57,840 --> 00:25:00,560
And whereas JetBlue and Spirit,
at least, were relatively

511
00:25:00,600 --> 00:25:02,640
different from each other.
So when you're getting called

512
00:25:02,640 --> 00:25:05,720
to, to testify on this on, on
the, on this stuff, or you're

513
00:25:05,720 --> 00:25:11,200
called to represent a company
like JetBlue, how, what's,

514
00:25:11,200 --> 00:25:13,600
what's your process for learning
the argument?

515
00:25:13,600 --> 00:25:15,280
What's your process for
defending them?

516
00:25:15,280 --> 00:25:16,520
What's the process for your
homework?

517
00:25:16,520 --> 00:25:18,600
How do you go about preparing
yourself for this?

518
00:25:18,600 --> 00:25:22,160
Because I mean, you're going,
you're, you're kind of getting

519
00:25:22,160 --> 00:25:24,760
brought into a whole world.
And I mean, you know, there's so

520
00:25:24,760 --> 00:25:26,840
many different universes you
could talk about supermarkets

521
00:25:26,840 --> 00:25:29,960
and airlines and, and studios
and tickets and everything like

522
00:25:29,960 --> 00:25:32,080
that.
And you got to learn about all

523
00:25:32,080 --> 00:25:33,720
these worlds.
And these are complicated worlds

524
00:25:33,720 --> 00:25:35,880
that you have to dive into.
How much time do you generally

525
00:25:35,880 --> 00:25:37,760
have to prepare?
How do you go about that?

526
00:25:37,840 --> 00:25:38,960
What's that like?
Yeah.

527
00:25:38,960 --> 00:25:43,040
So that, that is 1 reason why I
love working on antitrust and it

528
00:25:43,240 --> 00:25:46,120
keeps it fresh.
Like each new case you work on

529
00:25:46,240 --> 00:25:49,960
is like some new industry where
they compete in a different way

530
00:25:49,960 --> 00:25:52,840
and you have to figure out who's
competing with whom.

531
00:25:52,840 --> 00:25:55,480
How does this business work?
What are they really selling?

532
00:25:55,480 --> 00:25:58,080
Who's supplying them?
You have to understand all of

533
00:25:58,080 --> 00:26:00,400
those details.
And that is just, it's both

534
00:26:00,400 --> 00:26:04,640
sometimes extremely complicated
and it's also it's almost always

535
00:26:04,880 --> 00:26:09,440
really worthwhile to learn and
exciting to you.

536
00:26:09,520 --> 00:26:12,000
So you do it a lot of ways.
You read documents, you read

537
00:26:12,000 --> 00:26:15,480
about the industry generally you
talk to people in the industry.

538
00:26:15,640 --> 00:26:19,320
And so, you know, I should just
say also stepping back a tiny

539
00:26:19,320 --> 00:26:22,440
bit, I work both for firms.
So, for example, on JetBlue

540
00:26:22,440 --> 00:26:24,360
Spirit, I worked on behalf of
the parties.

541
00:26:26,040 --> 00:26:28,640
I also worked on the Kroger,
Albertson's merger, which is

542
00:26:28,640 --> 00:26:32,160
where the FTC challenged that
merger and they won in court.

543
00:26:32,200 --> 00:26:34,400
The court ended up blocking that
merger there.

544
00:26:34,400 --> 00:26:36,600
I testified on behalf of the
FTC.

545
00:26:36,600 --> 00:26:38,760
So I was testifying on behalf of
the government.

546
00:26:38,760 --> 00:26:41,520
And so I've, I've testified
throughout my career pretty

547
00:26:41,520 --> 00:26:44,360
evenly for both sides.
And that that's a key point.

548
00:26:44,360 --> 00:26:46,760
And it goes to your question.
Like, the first thing I try to

549
00:26:46,760 --> 00:26:50,240
do is look at the data, look at
the documents, look at the facts

550
00:26:50,400 --> 00:26:54,360
and try to determine would this
merger, say, have an impact on

551
00:26:54,360 --> 00:26:56,920
competition?
Would it make consumers worse

552
00:26:56,920 --> 00:26:59,400
off?
Or, you know, is this one where

553
00:26:59,600 --> 00:27:01,800
there's already plenty of
competitors present in the

554
00:27:01,800 --> 00:27:03,960
industry, it's not likely to
have a big effect.

555
00:27:04,480 --> 00:27:08,440
And so that's because, you know,
unlike the lawyers whose job is

556
00:27:08,440 --> 00:27:11,880
to advocate for their client, as
an economic expert, your job is

557
00:27:11,880 --> 00:27:14,680
to tell the truth like you are
under oath and everything you

558
00:27:14,680 --> 00:27:17,360
say in court has to be the truth
and the whole truth.

559
00:27:17,880 --> 00:27:21,240
And so if you don't believe,
whichever side you're with, you

560
00:27:21,240 --> 00:27:23,880
tell them as soon as you can.
Like I by the way, I don't

561
00:27:23,880 --> 00:27:26,440
think, I think if you're talking
to the parties, I think your

562
00:27:26,440 --> 00:27:29,160
deal is anti competitive, you
should find a different expert.

563
00:27:29,520 --> 00:27:31,480
Or if you're talking to the
government, I don't think this

564
00:27:31,480 --> 00:27:33,960
deal's a problem.
So probably find somebody else.

565
00:27:34,120 --> 00:27:36,440
Those are always awkward
conversations to have.

566
00:27:36,920 --> 00:27:38,720
But ultimately you have to tell
the truth.

567
00:27:38,720 --> 00:27:41,880
So you know, that's that's the
first part.

568
00:27:41,880 --> 00:27:44,160
And but it is you're right, it's
fascinating.

569
00:27:44,160 --> 00:27:47,240
You end up becoming, for a
while, an expert in a part of

570
00:27:47,240 --> 00:27:50,520
the world that sometimes, you
know, the very first case I ever

571
00:27:50,520 --> 00:27:53,360
testified on involved this
chemical called titanium

572
00:27:53,360 --> 00:27:56,400
dioxide.
It's used in paints to make them

573
00:27:56,400 --> 00:27:59,280
brighter, for example, like
white make it really white.

574
00:27:59,800 --> 00:28:02,000
Sometimes it's used in other
things, you know, to make the

575
00:28:02,000 --> 00:28:05,160
like the the different kind,
different kinds are used for

576
00:28:05,160 --> 00:28:07,880
different products, but it's
sometimes used in toothpaste to

577
00:28:07,880 --> 00:28:10,240
make toothpaste look very white
and bright.

578
00:28:10,960 --> 00:28:13,240
I didn't know this product
existed before I worked on it.

579
00:28:13,320 --> 00:28:15,520
I had not the slightest clue
what it was.

580
00:28:15,880 --> 00:28:18,200
And it turns out there are
different ways of making it.

581
00:28:18,480 --> 00:28:20,360
Different people compete to make
it.

582
00:28:21,080 --> 00:28:24,480
And so that whole process of
learning and then you then you

583
00:28:24,480 --> 00:28:27,040
have to understand how does the
economics of the industry work?

584
00:28:27,040 --> 00:28:29,720
It's just fascinating and you
just learn something new every

585
00:28:29,720 --> 00:28:32,040
day and you interact with a lot
of people, which is fun.

586
00:28:33,040 --> 00:28:35,320
I bet it sounds incredible.
It really sounds very cool.

587
00:28:35,320 --> 00:28:38,480
And as someone that you know,
loves doing this just, you know,

588
00:28:38,480 --> 00:28:40,720
just for fun, just because I
think this is valuable and I

589
00:28:40,720 --> 00:28:43,000
think that people, I think these
are important things for people

590
00:28:43,000 --> 00:28:44,760
to learn.
I think the pursuit of

591
00:28:44,760 --> 00:28:46,080
information in general is
awesome.

592
00:28:46,080 --> 00:28:49,280
If you could do that as as, As
for a living, then then all the

593
00:28:49,280 --> 00:28:54,120
credit to you for sure.
Do do people make decisions as

594
00:28:54,120 --> 00:28:58,360
to whether or not how they're
going to conduct business moves

595
00:28:58,360 --> 00:29:02,000
or attempt to make business
choices based on the political

596
00:29:02,000 --> 00:29:04,120
parties that are in charge at
the time?

597
00:29:04,120 --> 00:29:07,480
So, for example, Netflix and I'm
not sorry any I'm not saying

598
00:29:07,640 --> 00:29:09,240
spared JetBlue.
Again, I don't know.

599
00:29:09,400 --> 00:29:10,760
We can stick with stick with the
same example.

600
00:29:10,760 --> 00:29:14,640
Would they be inclined in the
same way to try to make the deal

601
00:29:14,640 --> 00:29:19,000
with a left or right candidate
in, you know, in the executive

602
00:29:19,240 --> 00:29:22,480
office or would they typically
it doesn't make a difference.

603
00:29:22,480 --> 00:29:25,160
The DOJ is pretty objective or
at least representatives that

604
00:29:25,160 --> 00:29:28,720
are working there full time like
yourself that are that are going

605
00:29:28,720 --> 00:29:32,560
to be the the real life of most
of the operations are are they

606
00:29:32,560 --> 00:29:34,920
objective enough that people are
comfortable just doing that?

607
00:29:35,000 --> 00:29:38,280
Yeah, it the answer is they can
be.

608
00:29:38,440 --> 00:29:42,840
So it, it, it mostly shows, I
think it shows up probably most

609
00:29:42,840 --> 00:29:46,560
in mergers.
And typically stereotypically

610
00:29:47,400 --> 00:29:51,280
Republican administrations are
more likely to approve mergers

611
00:29:51,280 --> 00:29:54,480
than Democratic administrations.
Now the opposite definitely

612
00:29:54,480 --> 00:29:56,040
happens.
There may be a deal that a

613
00:29:56,040 --> 00:29:59,320
Democratic administration would
block and a Republican one would

614
00:29:59,320 --> 00:30:00,720
not.
And then and vice versa, one

615
00:30:00,720 --> 00:30:03,920
that a Republican administration
would block and a Democratic one

616
00:30:03,920 --> 00:30:06,240
would not.
And so it still comes down to

617
00:30:06,240 --> 00:30:08,240
the individual.
But I think the way people

618
00:30:08,240 --> 00:30:11,000
usually perceive it as you're
more likely to have a challenge

619
00:30:11,000 --> 00:30:13,960
under a Democratic
administration of two firms are

620
00:30:13,960 --> 00:30:17,120
thinking about merging and they
think this one's a little more

621
00:30:17,120 --> 00:30:19,680
challenging, like the facts
aren't quite as strongly in our

622
00:30:19,680 --> 00:30:22,360
favor.
The general perception would be

623
00:30:22,360 --> 00:30:24,280
that's more likely to happen
under a Republican

624
00:30:24,280 --> 00:30:27,160
administration, that it is under
a Democratic one.

625
00:30:27,400 --> 00:30:29,400
And that brings up a separate
issue.

626
00:30:29,520 --> 00:30:30,320
Oh, sorry, go ahead.
No.

627
00:30:30,440 --> 00:30:32,480
I'm just going to say I'm sure
that changes with time because

628
00:30:32,560 --> 00:30:35,520
because party, because party
standards shift over as time

629
00:30:35,520 --> 00:30:37,480
goes on too.
So I'm sure we're just talking

630
00:30:37,480 --> 00:30:40,920
about the moment, you know, the
present relatively modern

631
00:30:40,920 --> 00:30:43,280
history.
Yeah, that's absolutely true.

632
00:30:43,400 --> 00:30:46,800
And one of the areas where it
sometimes comes up is there's

633
00:30:46,800 --> 00:30:50,280
this idea in mergers where you
might have a remedy.

634
00:30:50,360 --> 00:30:54,080
So suppose you have some merger
that causes a problem in some

635
00:30:54,080 --> 00:30:58,880
particular area but doesn't in
another part of the country.

636
00:30:59,200 --> 00:31:03,080
Imagine you have two firms that
are making some product, and the

637
00:31:03,080 --> 00:31:05,920
product doesn't go very far.
So if you've got a factory,

638
00:31:05,920 --> 00:31:08,880
you're serving 100 miles, 150
miles, something like milk, you

639
00:31:08,880 --> 00:31:10,320
know, just can't travel that
far.

640
00:31:10,440 --> 00:31:13,280
If you and I both own dairies
and we want to merge, let's say

641
00:31:13,280 --> 00:31:15,120
you have a bunch of dairies on
the West Coast.

642
00:31:15,160 --> 00:31:17,560
I have some dairies up in the
upper Midwest.

643
00:31:17,600 --> 00:31:20,360
And then we both have one dairy
in Florida that are right next

644
00:31:20,360 --> 00:31:22,400
to each other and there's nobody
else nearby.

645
00:31:22,720 --> 00:31:25,160
So you might, if we want to
merge, we might say to the

646
00:31:25,160 --> 00:31:28,080
government and hey, look, you're
right, we compete pretty heavily

647
00:31:28,080 --> 00:31:29,680
in Florida.
But look, there are all these

648
00:31:29,680 --> 00:31:32,240
other places we don't compete
and we think there are benefits

649
00:31:32,240 --> 00:31:35,960
for us joining.
So how about this, We will merge

650
00:31:35,960 --> 00:31:38,640
in all those other areas in the
West Coast, in the upper Midwest

651
00:31:38,640 --> 00:31:41,800
and in Florida, we'll sell,
we'll sell my dairy.

652
00:31:41,920 --> 00:31:44,400
So we'll sell it to some third
party who'll compete.

653
00:31:44,440 --> 00:31:46,920
And that way going forward, you
have the same competition

654
00:31:47,080 --> 00:31:51,320
because today you and I compete.
So that's a typical remedy.

655
00:31:51,320 --> 00:31:53,640
It's what's known as a
structural remedy, like we're

656
00:31:53,640 --> 00:31:55,880
just getting rid of some
productive assets somewhere,

657
00:31:55,880 --> 00:31:58,880
giving them to somewhere else.
That can surprisingly run into

658
00:31:58,880 --> 00:32:02,440
problems because it's sometimes
the case that it's pretty hard

659
00:32:02,440 --> 00:32:05,440
to do whatever the business is,
and you might worry that it

660
00:32:05,440 --> 00:32:07,240
wouldn't work very well
afterwards.

661
00:32:07,240 --> 00:32:11,040
So, for example, I worked on the
Kroger Albertson's merger, and

662
00:32:11,040 --> 00:32:14,000
there the parties were proposing
to divest a bunch of stores.

663
00:32:14,000 --> 00:32:17,000
They said, look, OK, these
stores are close to the other

664
00:32:17,000 --> 00:32:19,720
side store.
We'll sell one of the stores,

665
00:32:19,720 --> 00:32:21,440
and that should resolve the
problem.

666
00:32:21,560 --> 00:32:25,520
And an issue they ran into is
that there had been past mergers

667
00:32:25,680 --> 00:32:28,640
where grocery stores got
together and they divested

668
00:32:28,640 --> 00:32:30,600
stores.
And what happened in a few of

669
00:32:30,600 --> 00:32:33,520
those is any of those stores
failed.

670
00:32:33,760 --> 00:32:36,880
And so the competition didn't
get maintained.

671
00:32:36,880 --> 00:32:39,600
It would be like in my dairy
example, you and I merged, we

672
00:32:39,600 --> 00:32:42,120
sell my dairy in Florida.
The new person can't quite

673
00:32:42,120 --> 00:32:43,840
figure it out.
It goes out of business.

674
00:32:44,000 --> 00:32:47,520
And now customers in Florida, in
this example, they just have

675
00:32:47,520 --> 00:32:50,680
your dairy to buy from and they
can't play it off against mine

676
00:32:50,680 --> 00:32:53,280
anymore.
And so with those remedy

677
00:32:53,280 --> 00:32:57,240
questions, you know, one thing,
the previous administration, the

678
00:32:57,240 --> 00:33:01,640
Biden administration, they were
very strident about, consumers

679
00:33:01,640 --> 00:33:04,200
shouldn't take the risk that a
divestiture is going to fail.

680
00:33:04,360 --> 00:33:06,680
And so if you have a divestiture
that we're pretty sure is not

681
00:33:06,680 --> 00:33:09,520
going to fail, that's fine.
We'll consider that and we might

682
00:33:09,520 --> 00:33:12,280
accept it.
But we're not super interested

683
00:33:12,280 --> 00:33:15,000
in divestitures where there's
any kind of risk and we don't

684
00:33:15,000 --> 00:33:16,560
think consumers should bear that
risk.

685
00:33:16,720 --> 00:33:19,840
Another administration might
say, yeah, look, maybe it'll

686
00:33:19,840 --> 00:33:22,360
fail, maybe it won't.
And but we're we're pretty

687
00:33:22,480 --> 00:33:25,680
confident that it's likely not
to and so we'll be happy to go

688
00:33:25,680 --> 00:33:27,520
ahead.
So that's another thing that

689
00:33:27,520 --> 00:33:30,880
comes up, and it's not uncommon
to be arguing in court, like, is

690
00:33:30,880 --> 00:33:33,680
this divestiture enough to
resolve the competitive problem?

691
00:33:34,600 --> 00:33:38,480
And does that happen often in
the case that companies will

692
00:33:38,480 --> 00:33:42,960
merge and then and then they
just won't be able to conduct a

693
00:33:42,960 --> 00:33:44,600
business?
I mean, I guess the one of the

694
00:33:44,600 --> 00:33:48,440
most famous case was the was it
the AOL case in the early 2000s?

695
00:33:48,440 --> 00:33:50,680
Where would they, would they
buy?

696
00:33:50,720 --> 00:33:52,760
It was a Verizon AOL?
I don't remember what it was.

697
00:33:52,760 --> 00:33:55,240
I remember that there was a
spectacular failure in the early

698
00:33:55,240 --> 00:33:58,480
2000s with with a with a tech
company.

699
00:33:58,560 --> 00:34:01,080
Yes.
And and so that one I'm not

700
00:34:01,080 --> 00:34:04,120
familiar with, but in general
both agencies do what are called

701
00:34:04,120 --> 00:34:06,160
retrospective studies from time
to time.

702
00:34:06,160 --> 00:34:09,560
So they look back and say we
made a divestiture, did it work?

703
00:34:09,560 --> 00:34:13,360
Did it not work?
And often the answer is it

704
00:34:13,360 --> 00:34:15,600
worked.
So I worked on a beer merger

705
00:34:15,600 --> 00:34:18,560
when I was at DOJ and we
divested a brand.

706
00:34:18,560 --> 00:34:25,120
So it it was Labatt's in sort of
upper upper New York's upper in

707
00:34:25,120 --> 00:34:29,639
New York, let's just say.
And it was divested to a buyer.

708
00:34:29,639 --> 00:34:33,480
The buyer got a Brewer, a
brewery, they continue to make

709
00:34:33,480 --> 00:34:35,880
it, they continue to compete.
It all went fine.

710
00:34:36,040 --> 00:34:38,480
And then there are other ones
where, you know, for example, in

711
00:34:38,480 --> 00:34:40,800
Kroger, Albertson's, in one of
the previous deal, which is

712
00:34:40,800 --> 00:34:43,600
being between Albertson's and
Safeway, some of the grocery

713
00:34:43,600 --> 00:34:46,880
stores went out of business.
And part of the reason was if

714
00:34:46,880 --> 00:34:50,080
you think about wherever you buy
your groceries, the name of that

715
00:34:50,080 --> 00:34:52,120
is what's called in the industry
the banner.

716
00:34:52,120 --> 00:34:54,480
So if it's Safeway, Safeway is
the banner.

717
00:34:55,480 --> 00:34:57,760
Consumers are attached to that.
Like I know when I go to a

718
00:34:57,760 --> 00:35:00,400
Safeway, what I'm going to find
if I rebranded his Hills.

719
00:35:00,400 --> 00:35:03,680
And people may be like, I don't
know about this hill guy, I

720
00:35:03,680 --> 00:35:06,440
don't know about his stores.
And now I lose a bunch of my

721
00:35:06,440 --> 00:35:08,320
customers and now I'm out of
business.

722
00:35:08,320 --> 00:35:10,720
You know, something like that
happened with Whole Foods.

723
00:35:10,720 --> 00:35:13,800
Whole Foods had an earlier
merger with Wild Oats and a

724
00:35:13,800 --> 00:35:16,040
couple of the divested stores
just completely failed.

725
00:35:16,080 --> 00:35:19,080
Once you lose that brand, that
can be really challenging.

726
00:35:19,080 --> 00:35:23,320
Phasingly there's a lot of sort
of things that look like a

727
00:35:23,320 --> 00:35:27,160
remedy that might work, and yet
there's a there's nevertheless

728
00:35:27,160 --> 00:35:29,280
there's a challenge in court.
That's really cool.

729
00:35:29,320 --> 00:35:31,200
It's really, it's a really
fascinating, it's really

730
00:35:31,200 --> 00:35:34,200
fascinating examples as to how,
because, you know, you could

731
00:35:34,200 --> 00:35:36,360
just take two books and compare
them with one another and say,

732
00:35:36,360 --> 00:35:38,480
Hey, it should work out.
But there's a lot of factors, I

733
00:35:38,480 --> 00:35:41,000
guess that we don't that we that
we wouldn't naturally think

734
00:35:41,000 --> 00:35:43,880
about like like brands and and
stuff like that.

735
00:35:43,880 --> 00:35:44,880
And you're and you're completely
right.

736
00:35:44,880 --> 00:35:47,760
I mean, it's the reason why
people like to buy Rice Krispies

737
00:35:47,760 --> 00:35:50,360
instead of crispy rice, all
these or something like that,

738
00:35:50,360 --> 00:35:54,280
you know, or it's we, we have a,
we have an attachment and I love

739
00:35:54,280 --> 00:35:56,960
to get sold.
So I'm certainly, I'm certainly

740
00:35:56,960 --> 00:35:59,160
guilty of being one of these
participants.

741
00:35:59,160 --> 00:36:01,560
But I think that there is
something, I think that there is

742
00:36:01,560 --> 00:36:03,800
a value to, to brands.
And I think that you're right,

743
00:36:03,800 --> 00:36:06,600
people do have attachments and
it's really, it's really cool.

744
00:36:07,040 --> 00:36:09,840
I would love to touch a little
bit on the state's versus the,

745
00:36:09,880 --> 00:36:14,880
the state's versus federal
application of antitrust and

746
00:36:14,880 --> 00:36:19,160
monopolies and stuff, because I
didn't even really realize that

747
00:36:19,160 --> 00:36:22,480
this was, that this could have
been, it could be a state issue.

748
00:36:22,480 --> 00:36:24,880
When would this be?
When would this come up that a

749
00:36:24,880 --> 00:36:28,120
state would hypothetically have
an issue with a merger but a

750
00:36:28,120 --> 00:36:30,400
government wouldn't or vice
versa?

751
00:36:30,400 --> 00:36:33,880
And what is and how does that
get resolved between the state

752
00:36:33,880 --> 00:36:34,840
and the government?
Yeah.

753
00:36:34,840 --> 00:36:38,040
So the federal government has
the DOJ and the FTC.

754
00:36:38,040 --> 00:36:40,360
Let's just say that those are
the two biggest antitrust

755
00:36:40,360 --> 00:36:43,240
agencies.
But then most states of Florida,

756
00:36:43,240 --> 00:36:47,040
for example, will have, as part
of its attorney general's office

757
00:36:47,280 --> 00:36:50,280
will have someone who's looking
at antitrust issues in Florida.

758
00:36:50,520 --> 00:36:54,120
And so an earlier example, if we
just have a merger in Florida

759
00:36:54,120 --> 00:36:57,400
between your dairy and my dairy
and people are concerned about

760
00:36:57,400 --> 00:36:59,720
it, Florida might move in and
look at that.

761
00:36:59,720 --> 00:37:02,320
Or if it's in the, you know,
whatever state you want to pick

762
00:37:03,120 --> 00:37:05,800
could be in Minnesota there,
there's two dairies there.

763
00:37:06,000 --> 00:37:10,040
That state may look at it if all
the merging parties are located

764
00:37:10,040 --> 00:37:14,720
in that state or if they think
for some reason their consumers

765
00:37:14,720 --> 00:37:18,640
are vulnerable under the merger
and the federal government, for

766
00:37:18,640 --> 00:37:22,040
whatever reason, doesn't.
And so an early example of this

767
00:37:22,080 --> 00:37:26,520
and, and was the Sprint,
T-Mobile merger and their Sprint

768
00:37:26,520 --> 00:37:29,240
and T-Mobile were merging.
And at a high level, you could

769
00:37:29,240 --> 00:37:32,400
say there were four at the time,
large cell phone providers,

770
00:37:32,400 --> 00:37:36,080
Verizon AT AT&T, Sprint and
T-Mobile.

771
00:37:36,320 --> 00:37:39,800
Sprint and T-Mobile where I
think it's fair to say #3 and #4

772
00:37:40,000 --> 00:37:45,680
And so they were merging and the
federal government worked out a,

773
00:37:46,880 --> 00:37:50,520
a remedy, certain, some
agreement with the Sprint and

774
00:37:50,520 --> 00:37:53,200
T-Mobile will make certain
you'll do certain things, you'll

775
00:37:53,200 --> 00:37:55,840
take certain actions.
And if you do that, we think

776
00:37:55,840 --> 00:37:59,120
that the transaction is OK.
But a bunch of states led by New

777
00:37:59,120 --> 00:38:02,320
York said even with those
remedies, we still think this is

778
00:38:02,320 --> 00:38:03,960
going to hurt consumers in New
York.

779
00:38:04,040 --> 00:38:06,360
And so they brought, they
brought a lawsuit in New York

780
00:38:06,360 --> 00:38:08,400
and they actually ended up
losing that.

781
00:38:08,400 --> 00:38:12,040
You know, it is a challenging
position for the state sometimes

782
00:38:12,040 --> 00:38:15,000
because in that case, the
federal government had reached

783
00:38:15,000 --> 00:38:18,080
an agreement saying we don't
think this transaction is going

784
00:38:18,080 --> 00:38:19,800
to harm consumers in the United
States.

785
00:38:19,920 --> 00:38:21,960
And then New York says what we
think it does.

786
00:38:22,080 --> 00:38:26,000
And so that can be that can be a
challenge, You know, in the the

787
00:38:26,000 --> 00:38:29,320
dynamics in the courtroom is New
York because now the judge may

788
00:38:29,320 --> 00:38:32,600
be thinking, but wait, you guys
say it's not, but the federal

789
00:38:32,600 --> 00:38:34,480
government said it was.
Why do you have different

790
00:38:34,480 --> 00:38:36,000
positions?
And you sort of have to work

791
00:38:36,000 --> 00:38:38,040
through that.
But you can also have cases

792
00:38:38,040 --> 00:38:42,880
where, let's say 2 hospitals
merge in Wyoming and the Wyoming

793
00:38:42,880 --> 00:38:45,600
attorneys general is interested,
but the federal government just

794
00:38:45,600 --> 00:38:47,880
says, you know what, Wyoming,
you can deal with this.

795
00:38:48,280 --> 00:38:51,880
Traditionally, many of the cases
have been done by the FTC and

796
00:38:51,880 --> 00:38:54,920
the DOJ.
They've typically had larger

797
00:38:54,920 --> 00:38:57,040
resources.
These antitrust cases can be

798
00:38:57,040 --> 00:38:59,360
pretty expensive, time
consuming.

799
00:38:59,360 --> 00:39:01,720
But yeah, one thing that's
happened over the last, I would

800
00:39:01,720 --> 00:39:06,440
say four years, the the states
have really become very active

801
00:39:06,440 --> 00:39:09,920
in bringing antitrust cases on
their own groups of states or

802
00:39:09,920 --> 00:39:12,680
individual States and has really
changed things a lot.

803
00:39:12,680 --> 00:39:14,640
Like there's a whole new set of
people.

804
00:39:14,640 --> 00:39:17,400
If you're thinking about doing a
deal, you don't need to just get

805
00:39:17,400 --> 00:39:18,960
approval from the federal
government.

806
00:39:19,120 --> 00:39:21,720
You need to make sure that the
states are also on board with

807
00:39:21,720 --> 00:39:23,520
your merger.
I don't know, lose.

808
00:39:23,560 --> 00:39:24,920
Each other.
Hang on.

809
00:39:24,920 --> 00:39:28,280
I think, OK, sorry about that.
We had an extended break longer

810
00:39:28,280 --> 00:39:31,080
than I wanted.
But my question was, I'm sorry

811
00:39:31,080 --> 00:39:33,920
about that.
Was is there a precedent for

812
00:39:33,920 --> 00:39:36,720
states being more involved now
in antitrust?

813
00:39:36,720 --> 00:39:40,840
Is this, do you think, temporary
thing because of a cultural or

814
00:39:40,840 --> 00:39:44,320
social phenomenon that's going
on or do you or what do you

815
00:39:44,320 --> 00:39:46,840
think is the reason why so many
states are getting involved as

816
00:39:46,840 --> 00:39:48,040
opposed to the federal
government?

817
00:39:48,200 --> 00:39:49,880
Yeah, it's an interesting
question.

818
00:39:50,120 --> 00:39:53,320
I definitely think they have
become more involved and I don't

819
00:39:53,320 --> 00:39:59,160
think it's as simple as, I mean,
antitrust has now become in some

820
00:39:59,160 --> 00:40:01,360
ways a more popular political
issue.

821
00:40:01,400 --> 00:40:05,040
There used to be something of a
sort of a consensus of consensus

822
00:40:05,040 --> 00:40:09,360
view of antitrust and there's
been attacks on that in various

823
00:40:09,360 --> 00:40:12,320
ways.
And so now there's maybe more

824
00:40:12,320 --> 00:40:15,680
diverse opinions.
And so different states just see

825
00:40:15,680 --> 00:40:19,280
things differently, and they're
moving forward with cases that

826
00:40:19,280 --> 00:40:21,960
in the past, you know, at the
beginning of my career,

827
00:40:21,960 --> 00:40:24,960
certainly.
It was not uncommon for states

828
00:40:24,960 --> 00:40:27,680
to be involved.
So the federal government filed

829
00:40:27,680 --> 00:40:30,520
A lawsuit.
Some states would join, but

830
00:40:30,520 --> 00:40:34,200
usually the federal government
was doing most of the actual

831
00:40:34,200 --> 00:40:36,440
litigating.
And now you have states doing

832
00:40:36,440 --> 00:40:38,760
cases that have never involved
the federal government.

833
00:40:38,840 --> 00:40:42,280
And you know, in the Live Nation
case, for example, the federal

834
00:40:42,280 --> 00:40:46,200
government settled and then the
states went ahead and, and there

835
00:40:46,200 --> 00:40:47,840
are, there are definitely other
examples.

836
00:40:47,840 --> 00:40:52,120
And you know, a little while, it
was a little while ago, but

837
00:40:52,120 --> 00:40:53,600
there's also the Sprint T-Mobile
case.

838
00:40:53,600 --> 00:40:57,600
So you know, now the, the states
are in there also bringing these

839
00:40:57,600 --> 00:40:59,680
cases.
And it's just a, it's a real

840
00:40:59,680 --> 00:41:01,640
shift.
And I, I don't know how long it

841
00:41:01,640 --> 00:41:03,520
will last.
It'll be interesting to see.

842
00:41:03,520 --> 00:41:05,400
I mean, antitrust cases are
expensive.

843
00:41:05,400 --> 00:41:09,000
And so, you know, if if the
people in the states feel like

844
00:41:09,000 --> 00:41:11,120
they don't want their
representatives spending money

845
00:41:11,120 --> 00:41:12,960
that way, then maybe that'll
change.

846
00:41:13,040 --> 00:41:17,760
But for now, that's definitely
seems to be a major shift and it

847
00:41:17,760 --> 00:41:22,120
doesn't seem to be going away.
And I would venture a guess and

848
00:41:22,120 --> 00:41:26,600
say that the public sentiment at
the moment has shifted from

849
00:41:26,600 --> 00:41:29,920
issues of left to right, that a
federal government could at

850
00:41:29,920 --> 00:41:33,360
least put say, you know, say
that they're, that they're

851
00:41:33,360 --> 00:41:36,280
participating in.
And I feel, and I think a lot of

852
00:41:36,280 --> 00:41:40,680
people feel that big
corporations are more of an

853
00:41:40,680 --> 00:41:43,880
issue for for everyday Americans
than a left or right party

854
00:41:43,880 --> 00:41:45,920
member.
And so I think that the general

855
00:41:45,920 --> 00:41:48,560
sentiment at right now, they're
just my, it's just my feeling of

856
00:41:48,560 --> 00:41:51,400
the zeitgeist at the moment that
that there's just more of a,

857
00:41:51,640 --> 00:41:56,360
there's a political blame going
towards big corporations.

858
00:41:56,360 --> 00:41:58,440
And perhaps rightfully so, I'm
not sure exactly.

859
00:41:58,440 --> 00:42:01,240
I don't know enough the details,
but you know, I could imagine

860
00:42:01,240 --> 00:42:04,480
that that is what would
popularize such such a movement.

861
00:42:04,520 --> 00:42:09,680
Yeah, no, I mean, it's it kind
of in some ways it took a lot of

862
00:42:09,680 --> 00:42:12,720
people by surprise, you know,
the the building of this

863
00:42:12,720 --> 00:42:16,400
momentum for looking into the
big tech companies and for

864
00:42:16,520 --> 00:42:19,400
investigating them closely.
I think prior to all those

865
00:42:19,400 --> 00:42:22,320
investigations.
And I'm not intending to pick on

866
00:42:22,320 --> 00:42:24,840
Google at least at all.
It's just that their cases have

867
00:42:24,840 --> 00:42:27,360
been out there and have been the
most public.

868
00:42:27,560 --> 00:42:30,520
I think most people probably had
a positive view of Google.

869
00:42:30,600 --> 00:42:33,240
And then there were, you know,
from both the left and the

870
00:42:33,240 --> 00:42:35,240
right, people said we need to
look into Google.

871
00:42:35,440 --> 00:42:37,880
There was an investigation.
There were these cases.

872
00:42:37,960 --> 00:42:41,960
They lost two of them, which are
now they're trying to decide how

873
00:42:41,960 --> 00:42:44,120
they're going to remedy the the
harm.

874
00:42:44,600 --> 00:42:46,080
And, you know, that's a real
shift.

875
00:42:46,120 --> 00:42:48,880
I mean, I think 10 years ago,
Google would have been pretty

876
00:42:48,880 --> 00:42:51,200
popular with the average
consumer.

877
00:42:51,200 --> 00:42:54,160
And so it is a fascinating
development.

878
00:42:54,160 --> 00:42:57,680
And yes, it's not entirely clear
what's driving.

879
00:42:58,160 --> 00:43:01,280
You, you could almost imagine by
the way, I and I was, I was

880
00:43:01,280 --> 00:43:03,360
curious about this while I was
thinking about this in the MO,

881
00:43:03,600 --> 00:43:05,920
while we're thinking about our
conversation was there's an

882
00:43:05,920 --> 00:43:09,480
enormous amount of competition
in the AI world, which seemingly

883
00:43:09,480 --> 00:43:14,960
strouted from the enormous tech
world of Google and Amazon and

884
00:43:14,960 --> 00:43:17,840
Meta.
But, and, and you have kind of

885
00:43:17,840 --> 00:43:21,400
this company open AI with that
was the real forefront of the AI

886
00:43:21,400 --> 00:43:23,960
world and almost did feel like
they were unanimous with the,

887
00:43:24,040 --> 00:43:27,760
with the AI movement, at least
in the from the consumer level

888
00:43:27,760 --> 00:43:29,400
or from a very superficial
level.

889
00:43:29,720 --> 00:43:34,600
And all of a sudden with and,
and perhaps it coincides as far

890
00:43:34,600 --> 00:43:38,440
as time goes with the scrutiny
on the big tech companies, but

891
00:43:38,600 --> 00:43:42,480
there was an explosion of, of a
variety of, of very successful

892
00:43:42,480 --> 00:43:45,640
AI companies, including
Anthropic and Claude, which are

893
00:43:45,640 --> 00:43:48,000
which just got the trillion,
almost a trillion dollar

894
00:43:48,080 --> 00:43:50,360
valuation after just five years
of existence.

895
00:43:50,640 --> 00:43:54,120
And so you that that that market
seems extremely competitive, but

896
00:43:54,120 --> 00:43:57,000
it's funny that they comes out
of such a out of a market that

897
00:43:57,000 --> 00:44:00,120
only had a few player.
Yeah, no, it is very

898
00:44:00,120 --> 00:44:04,160
interesting.
And you know, I think something

899
00:44:04,160 --> 00:44:07,440
similar.
Well, a couple of thoughts.

900
00:44:07,440 --> 00:44:10,760
One early in my career, I worked
on a case that involved like

901
00:44:10,760 --> 00:44:12,760
text to speech.
You know, when you used to call

902
00:44:12,760 --> 00:44:15,960
the airline and say, hey, I want
a flight and it would say please

903
00:44:15,960 --> 00:44:18,240
enter the first 3 digits of your
city name.

904
00:44:18,240 --> 00:44:20,600
And then you never understood
what you're talking about and

905
00:44:20,600 --> 00:44:22,680
you ended up just an operator
operator.

906
00:44:23,200 --> 00:44:26,520
And like those early, there was
an early case about like, you

907
00:44:26,520 --> 00:44:28,960
know, a couple people had that
tech were like merging and it

908
00:44:28,960 --> 00:44:30,360
was like the type is so
terrible.

909
00:44:30,360 --> 00:44:34,320
Will anyone notice or not?
And now AI is so, so much better

910
00:44:34,320 --> 00:44:35,920
at that.
You know, the other day I got an

911
00:44:35,920 --> 00:44:38,160
e-mail and it's we dropped a
response for you.

912
00:44:38,360 --> 00:44:41,040
It wasn't perfect, but it was
not just coherent.

913
00:44:41,040 --> 00:44:45,000
It was like using turns of
phrase that I use in my very

914
00:44:45,000 --> 00:44:48,160
idiosyncratic punctuation, like
the way I always write my last

915
00:44:48,160 --> 00:44:50,760
name and H just because it's
quicker, like I don't have to

916
00:44:50,760 --> 00:44:52,200
write Nicholas or Ridiculous
Hill.

917
00:44:52,440 --> 00:44:54,640
And it did that.
And, you know, obviously it's

918
00:44:54,640 --> 00:44:57,360
drawing all this data in and
trying to make things come out

919
00:44:57,360 --> 00:44:59,080
and that, you know, that is
coming.

920
00:44:59,280 --> 00:45:01,920
Look, this is one of those
things I've observed over my

921
00:45:01,920 --> 00:45:05,280
career that new technologies
create a lot of anxiety.

922
00:45:05,280 --> 00:45:08,160
Like, what is it going to do?
How is it going to affect me?

923
00:45:08,400 --> 00:45:11,080
And the more powerful a
technology seems, the more

924
00:45:11,080 --> 00:45:13,440
threatening it is.
Like we don't know what the end

925
00:45:13,440 --> 00:45:16,240
game is going to be.
We don't know who it's going to

926
00:45:16,240 --> 00:45:20,200
replace, whose jobs are going to
disappear or how your day-to-day

927
00:45:20,200 --> 00:45:22,240
life will change.
And that creates anxiety and

928
00:45:22,240 --> 00:45:25,080
people worry about it.
And then to your point, you

929
00:45:25,080 --> 00:45:28,920
know, it's a little bit like,
you know, was it 20 years ago,

930
00:45:28,920 --> 00:45:32,120
30 years ago, Microsoft was in a
very strong position with

931
00:45:32,120 --> 00:45:34,800
operating systems on computers.
It seemed like they had the

932
00:45:34,800 --> 00:45:37,200
whole world locked up.
And then here came the

933
00:45:37,200 --> 00:45:43,160
smartphone and Apple had the
first really interconnected, You

934
00:45:43,160 --> 00:45:45,440
know, the iPhone came out and
people like this, this is

935
00:45:45,440 --> 00:45:47,400
amazing.
And then rivals appeared.

936
00:45:47,480 --> 00:45:49,080
Microsoft tried to get into that
game.

937
00:45:49,080 --> 00:45:51,760
They had their own operating
system for a while, and nobody

938
00:45:51,760 --> 00:45:53,800
really liked it.
And so it kind of disappeared

939
00:45:53,800 --> 00:45:57,200
from the market.
And now it's kind of Samsung and

940
00:45:57,680 --> 00:45:59,120
Apple.
And then, you know, there's

941
00:45:59,120 --> 00:46:02,520
other players, like I have a
Pixel phone and that world is

942
00:46:02,520 --> 00:46:05,280
kind of it's your point, like
you might have guessed,

943
00:46:05,280 --> 00:46:08,120
Microsoft will definitely be the
next person.

944
00:46:08,120 --> 00:46:09,960
They'll dominate the cellular
thing because they know how to

945
00:46:09,960 --> 00:46:12,000
do operating systems and yet it
didn't happen.

946
00:46:12,000 --> 00:46:15,320
And you're right, IAI, it seems
like there's hundreds of people

947
00:46:15,320 --> 00:46:18,840
out there fighting to be on the
top and who's going to be there?

948
00:46:18,840 --> 00:46:21,920
And the royal for antitrust
eventually will be, you know, if

949
00:46:21,920 --> 00:46:25,080
someone gets into a strong
position, are they using their

950
00:46:25,080 --> 00:46:28,560
strong position to exclude
rivals like antitrust?

951
00:46:28,560 --> 00:46:31,640
People are happy when firms
compete with each other because

952
00:46:31,640 --> 00:46:34,280
that competing with each other
makes consumers better off.

953
00:46:34,520 --> 00:46:38,800
They don't like it when you do.
You find some way, potentially

954
00:46:38,800 --> 00:46:42,120
underhanded way to present
prevent people from competing

955
00:46:42,120 --> 00:46:44,680
with you.
And as of now, I agree with you.

956
00:46:44,680 --> 00:46:46,360
It just seems like the wild,
Wild West.

957
00:46:46,360 --> 00:46:48,280
There's just lots of people out
there doing it.

958
00:46:48,280 --> 00:46:51,400
So who knows where it'll end up.
But it is a fascinating and

959
00:46:51,400 --> 00:46:54,160
anxiety inducing, you know,
development.

960
00:46:54,320 --> 00:46:56,760
It's it certainly is.
It certainly is.

961
00:46:56,880 --> 00:46:58,600
It's funny.
I just did I think actually my

962
00:46:58,600 --> 00:47:02,720
last podcast episode that I
recorded was with former CFO of

963
00:47:02,720 --> 00:47:04,880
Pixar when he took the company
public.

964
00:47:04,880 --> 00:47:08,960
He was selected by Steve Jobs to
to do it ordinarily sweet and

965
00:47:08,960 --> 00:47:11,240
intelligent guy.
And one thing that he was

966
00:47:11,240 --> 00:47:13,640
describing to me, one of the
challenges that he would that he

967
00:47:13,640 --> 00:47:17,880
describes was when it was Pixar
was in a Pixar also started by

968
00:47:17,880 --> 00:47:21,040
Steve Jobs had $50 million
invested into the privately by

969
00:47:21,040 --> 00:47:24,280
himself into the company to fund
it at a low point in his career

970
00:47:24,280 --> 00:47:26,040
after he was already tossed out
from Apple.

971
00:47:26,360 --> 00:47:31,120
And they and he says, you know,
I I started Pixar has had four

972
00:47:31,120 --> 00:47:33,880
main businesses.
Three of them were awful and the

973
00:47:33,880 --> 00:47:37,400
only one that was left was
motion pictures and there and

974
00:47:37,400 --> 00:47:39,920
you're stuck dealing with
Disney, you know, who's the

975
00:47:39,920 --> 00:47:44,120
absolute behemoth and he's like,
and we had, and then Steve Jobs

976
00:47:44,120 --> 00:47:47,160
calls me and he goes, we need to
negotiate with Disney.

977
00:47:47,160 --> 00:47:50,800
We have like a 10 year contract
with them and they get 8090% of

978
00:47:50,800 --> 00:47:54,160
the money, you know, of the
revenue and, and all the, and

979
00:47:54,160 --> 00:47:58,720
then any kind of, I think any,
the second, any sequel to any

980
00:47:58,720 --> 00:48:01,360
movie did not count as original
IP that was going to the

981
00:48:01,360 --> 00:48:04,000
contract.
And it felt like, and he said

982
00:48:04,040 --> 00:48:07,640
you, you were just fighting this
enormous, enormous behemoth.

983
00:48:07,800 --> 00:48:09,720
And somehow we did it.
Somehow we kind of just poked

984
00:48:09,720 --> 00:48:11,280
this little hole in it.
And we had this, you know, we

985
00:48:11,280 --> 00:48:13,680
had this enormous overnight
success with Toy Story.

986
00:48:13,880 --> 00:48:18,160
And all of a sudden, overnight,
despite how enormous Disney was,

987
00:48:18,360 --> 00:48:21,600
Pixar became a legitimate enough
player that we were able to go

988
00:48:21,600 --> 00:48:25,680
to the the biggest names and the
most powerful names in industry

989
00:48:25,800 --> 00:48:27,480
and say, Hey, we want to see it
at the table.

990
00:48:27,480 --> 00:48:29,800
We're going to read, we're going
to, we're going to renegotiate

991
00:48:29,800 --> 00:48:32,320
our contract and we're going to
change the terms and, and make a

992
00:48:32,320 --> 00:48:35,440
little more favorable to us.
So it shows that this kind of

993
00:48:35,440 --> 00:48:38,560
could be done without even
needing any kind of government

994
00:48:38,560 --> 00:48:40,560
or formal intervention.
It shows that if you kind of

995
00:48:40,560 --> 00:48:43,640
leave the market by itself and
you have individuals like the

996
00:48:43,640 --> 00:48:47,120
Steve Jobs or the Apples or the
Pixar's of the world, that that,

997
00:48:47,400 --> 00:48:49,560
that, that, that that they could
really shake things up.

998
00:48:49,560 --> 00:48:51,440
It's similar, like you said,
with microphone, Microsoft and

999
00:48:51,440 --> 00:48:53,600
the phones that, that, that,
that, that that can really

1000
00:48:53,600 --> 00:48:55,440
happen.
And it's really, really

1001
00:48:55,440 --> 00:49:00,160
wonderful.
And one thing that might make it

1002
00:49:00,160 --> 00:49:02,840
a little bit more difficult, and
I would love to kind of branch

1003
00:49:02,840 --> 00:49:06,640
this into the next part of our
conversation, although you can

1004
00:49:06,640 --> 00:49:09,240
obviously respond to that first
if you'd like, is the difference

1005
00:49:09,240 --> 00:49:11,080
between a monopoly and a
conglomeration?

1006
00:49:11,280 --> 00:49:13,760
Because I think that that's kind
of the direction that we're

1007
00:49:13,760 --> 00:49:15,360
heading towards.
And maybe you could just give me

1008
00:49:15,360 --> 00:49:17,600
some thoughts on what, you know,
what, if you have any?

1009
00:49:17,600 --> 00:49:20,480
If not, we could just jump into
that conglomeration idea.

1010
00:49:20,520 --> 00:49:23,040
Yeah, Yeah, I'll give you, I'll
give you thoughts on that.

1011
00:49:23,040 --> 00:49:25,560
First one that that actually
you've identified what's a key

1012
00:49:25,560 --> 00:49:28,160
issue in antitrust.
Like, for example, if you're

1013
00:49:28,160 --> 00:49:31,280
thinking about a merger, so you
and I are thinking of merging

1014
00:49:31,280 --> 00:49:36,240
our lemonade stands and we are
the only two lemonade stands in

1015
00:49:36,240 --> 00:49:39,280
Washington, DC or Florida,
wherever you want.

1016
00:49:40,600 --> 00:49:42,520
It's not that hard to make a
lemonade stand.

1017
00:49:42,640 --> 00:49:46,040
So like if you and I merge and
we raise prices, somebody else

1018
00:49:46,040 --> 00:49:48,480
is going to just set up a
lemonade stand.

1019
00:49:48,680 --> 00:49:50,680
And then there are other
businesses where it's a lot more

1020
00:49:50,680 --> 00:49:53,240
challenging.
Like, for example, I was just

1021
00:49:53,240 --> 00:49:55,120
talking about this with a
colleague this morning.

1022
00:49:55,120 --> 00:49:58,720
Microsoft Word and Microsoft
Excel are in a really, really

1023
00:49:58,720 --> 00:50:02,320
strong market position.
And it's just hard today sitting

1024
00:50:02,320 --> 00:50:06,920
here to imagine who is going to
replace those products and ever

1025
00:50:06,920 --> 00:50:08,960
displace them.
And so when you're thinking

1026
00:50:08,960 --> 00:50:11,920
about a merger, you often think
about it and one of the things

1027
00:50:11,920 --> 00:50:14,520
you think about is, could
somebody just start a business

1028
00:50:14,520 --> 00:50:17,680
and enter this and compete?
If so, then maybe I'm not so

1029
00:50:17,680 --> 00:50:21,200
concerned about mergers.
If though it's really hard to

1030
00:50:21,200 --> 00:50:24,600
enter or really unlikely to
enter, then maybe I do care.

1031
00:50:24,600 --> 00:50:26,640
And mergers can really reduce
competition.

1032
00:50:26,680 --> 00:50:29,920
And so one area where you often
see this is like hospitals, like

1033
00:50:29,920 --> 00:50:32,280
people don't tend to build a lot
of hospitals.

1034
00:50:32,280 --> 00:50:35,160
And so if all the hospitals in
an area were to be owned by one

1035
00:50:35,160 --> 00:50:37,840
person, you could imagine they
might have some market power.

1036
00:50:37,960 --> 00:50:42,000
And, but if we owned all the
lemonade stands, you know, you

1037
00:50:42,000 --> 00:50:44,640
just buy some lemons, you buy
some sugar, you buy some water

1038
00:50:44,640 --> 00:50:46,040
in a blender and you're ready to
go.

1039
00:50:46,320 --> 00:50:49,120
And maybe you might want
something to filter it so you

1040
00:50:49,120 --> 00:50:51,280
get rid of the lemon rind, but
it's not that hard.

1041
00:50:51,600 --> 00:50:54,240
And so that is what you're
saying is really a key issue.

1042
00:50:54,240 --> 00:50:56,560
And then you, you touched on
something else that does come up

1043
00:50:56,560 --> 00:51:00,600
too, which is, and you can also
connect to hospitals.

1044
00:51:00,600 --> 00:51:03,040
And I'll, I'll do that in a SEC.
But generally, this idea of a

1045
00:51:03,040 --> 00:51:07,800
conglomerate, I own, you know, a
potato chip business, and I also

1046
00:51:07,800 --> 00:51:12,000
own a bunch of soft drinks.
Like, is that problematic?

1047
00:51:12,000 --> 00:51:13,720
Do those compete?
Like usually if I'm thinking

1048
00:51:13,720 --> 00:51:15,320
about potato chips, I'm like,
you know what?

1049
00:51:15,320 --> 00:51:16,760
I'm not going to have a potato
chip.

1050
00:51:16,760 --> 00:51:18,080
I'm going to have a Pepsi
instead.

1051
00:51:18,200 --> 00:51:20,200
Like, that's not.
You don't think about those.

1052
00:51:20,200 --> 00:51:22,400
In antitrust, we often think
about what would consumer

1053
00:51:22,400 --> 00:51:24,320
substitute to.
Those aren't really direct

1054
00:51:24,320 --> 00:51:26,960
substitutes for each other.
But in some settings, it might

1055
00:51:26,960 --> 00:51:30,200
be the case that if you own
products that don't seem to be

1056
00:51:30,200 --> 00:51:33,160
related, they can affect each
other and they can reduce

1057
00:51:33,160 --> 00:51:35,680
competition.
And so that's where theories of

1058
00:51:35,720 --> 00:51:39,360
conglomeration start to come in.
And one area that's been a

1059
00:51:39,680 --> 00:51:42,320
pretty hot area of discussion
and people are still trying to

1060
00:51:42,320 --> 00:51:45,920
figure out how does it work, how
does it not work is hospital

1061
00:51:45,920 --> 00:51:49,120
cases.
So traditionally it was remind

1062
00:51:49,120 --> 00:51:50,600
me what city you're in, in
Florida.

1063
00:51:50,640 --> 00:51:53,080
I'm in Hollywood.
The big system here is memorial.

1064
00:51:53,080 --> 00:51:54,400
Memorial.
Healthcare is huge here.

1065
00:51:54,440 --> 00:51:56,680
Yeah.
And so you just take your local

1066
00:51:56,680 --> 00:51:58,920
hospital and the largest local
system.

1067
00:51:58,920 --> 00:52:01,560
And if they were buying the
second largest system, you might

1068
00:52:01,560 --> 00:52:04,480
say, wow, that's a lot of, you
know, hospitals that are under 1

1069
00:52:04,480 --> 00:52:06,080
owner.
That could be a problem.

1070
00:52:06,120 --> 00:52:08,200
I don't know, maybe not.
I don't know the local market.

1071
00:52:08,560 --> 00:52:10,560
But now suppose they said, you
know what we're going to do?

1072
00:52:10,600 --> 00:52:14,400
We're going to buy a bunch of
hospitals in Hollywood, CA and

1073
00:52:14,400 --> 00:52:17,520
there's no way that you are
saying, gosh, I just

1074
00:52:17,520 --> 00:52:20,560
accidentally cut off part of my
finger with my weed wacker.

1075
00:52:20,800 --> 00:52:22,320
I need to go to the emergency
room.

1076
00:52:22,560 --> 00:52:25,240
I'm either going to go to the
Hollywood hospital or I'm going

1077
00:52:25,240 --> 00:52:26,680
to drive to California and go
there.

1078
00:52:26,680 --> 00:52:27,760
You're not, that's not
happening.

1079
00:52:27,880 --> 00:52:32,720
And he's similarly, but maybe
maybe there's some way in which

1080
00:52:32,720 --> 00:52:35,880
owning those hospitals in a
bunch of states could give them

1081
00:52:35,880 --> 00:52:38,560
market power in a way that we
haven't thought about before.

1082
00:52:38,560 --> 00:52:41,080
And so people really are trying
to think about this in the

1083
00:52:41,080 --> 00:52:44,560
context of hospitals and figure
out is there an effect.

1084
00:52:44,560 --> 00:52:46,560
Now that's not quite the
conglomerate because at least

1085
00:52:46,560 --> 00:52:50,680
it's all just hospitals, but
people will also think about if

1086
00:52:50,680 --> 00:52:53,600
you what's called a vertical
antitrust case.

1087
00:52:53,720 --> 00:52:56,720
So an easy way to think about
it, I find is milk.

1088
00:52:56,800 --> 00:53:00,240
So the cows produce raw milk and
that's you can't, you can drink

1089
00:53:00,240 --> 00:53:02,440
it, but that's not what's sold
at the grocery store.

1090
00:53:02,760 --> 00:53:05,840
That milk is then processed at a
processing plant and then that

1091
00:53:05,840 --> 00:53:09,200
goes to the grocery store.
If you had a vertical merger

1092
00:53:09,200 --> 00:53:14,080
where somebody who owned all the
cows bought a lot of processing

1093
00:53:14,080 --> 00:53:17,480
plants and said we're not going
to let other people have their

1094
00:53:17,480 --> 00:53:20,920
milk at our processing plant,
maybe they would cut off access.

1095
00:53:21,000 --> 00:53:24,360
Now there's been a bunch of
cases on that and I think it's

1096
00:53:24,360 --> 00:53:27,240
really fact dependent.
So that may or may not be true,

1097
00:53:27,240 --> 00:53:30,720
but if you own an input into
somebody else's business and you

1098
00:53:30,720 --> 00:53:34,240
won't let them have it or vice
versa, you commit to not buying

1099
00:53:34,240 --> 00:53:36,960
someone else's input, you could
really damage someone else's

1100
00:53:36,960 --> 00:53:39,080
business even if you don't
compete head to head.

1101
00:53:39,160 --> 00:53:42,360
And so those kinds of theories
do exist and they're out there a

1102
00:53:42,360 --> 00:53:45,240
lot and people are thinking
about them and they're just

1103
00:53:45,240 --> 00:53:46,960
finally, very briefly, I think
you're right.

1104
00:53:46,960 --> 00:53:51,080
I mean, something of what made
people get interested in these

1105
00:53:51,080 --> 00:53:57,240
tech cases was Google and
Facebook and Ale and Amazon and

1106
00:53:57,240 --> 00:54:00,720
others, They do play an outsized
role in people's lives.

1107
00:54:00,720 --> 00:54:03,480
And so people were thinking,
these people do have a lot of

1108
00:54:03,480 --> 00:54:05,160
market power.
We really love them.

1109
00:54:05,240 --> 00:54:08,000
Is there something they're doing
that is reducing competition?

1110
00:54:08,000 --> 00:54:09,840
Because we're using their
products all the time.

1111
00:54:09,920 --> 00:54:11,840
And if they are, then we really
want to know about it.

1112
00:54:12,080 --> 00:54:15,280
Right.
Does the DOJ or FTC ever step in

1113
00:54:15,280 --> 00:54:18,920
if, and this kind of happens not
necessarily through merger and

1114
00:54:18,920 --> 00:54:22,240
acquisitions, but say Amazon is
a great example where Amazon

1115
00:54:22,480 --> 00:54:25,640
starts as a book business and
then gets into data and gets

1116
00:54:25,640 --> 00:54:30,280
into servers and gets into the,
you know, storage and then they

1117
00:54:30,280 --> 00:54:32,880
get into the film studios and
stuff like that.

1118
00:54:33,200 --> 00:54:36,160
And like you said, all of a
sudden this company has an

1119
00:54:36,160 --> 00:54:40,280
outsized proportional relevance
or impact on, on, on really

1120
00:54:40,280 --> 00:54:42,560
everyone's lives.
And they might make the

1121
00:54:42,560 --> 00:54:45,160
argument, hey, we just kind of
developed this in house in their

1122
00:54:45,160 --> 00:54:47,360
own business and this is America
and aren't we allowed to do

1123
00:54:47,360 --> 00:54:49,120
that?
And you know, this is, this is

1124
00:54:49,120 --> 00:54:51,000
just free business, isn't this?
Yeah.

1125
00:54:51,000 --> 00:54:53,200
And you're hitting what's a
really tricky issue for

1126
00:54:53,200 --> 00:54:57,400
antitrust, which is we want
companies competing as hard as

1127
00:54:57,400 --> 00:54:59,480
they can.
And when you compete as hard as

1128
00:54:59,480 --> 00:55:03,280
you can, that sometimes means
you get really big because

1129
00:55:03,280 --> 00:55:05,360
you're really good at what you
do and you become really

1130
00:55:05,360 --> 00:55:08,160
successful.
And the line is usually it's

1131
00:55:08,160 --> 00:55:11,840
fine for you to become big
through growth.

1132
00:55:12,120 --> 00:55:14,920
You know, you just do a great
job, you serve your customers

1133
00:55:14,920 --> 00:55:16,480
well.
People really want your

1134
00:55:16,480 --> 00:55:18,400
products.
Most antitrust people would say

1135
00:55:18,400 --> 00:55:20,400
that's great.
That's exactly what we want you

1136
00:55:20,400 --> 00:55:23,520
to do, get out there and try to
give the consumer a better deal

1137
00:55:23,760 --> 00:55:27,480
and win customers in that way.
What antitrust gets upset about

1138
00:55:27,480 --> 00:55:30,560
is if you say, you know what,
it's a lot of hard work figuring

1139
00:55:30,560 --> 00:55:32,800
out what customers want, I tell
you what we're going to do.

1140
00:55:32,800 --> 00:55:34,520
We're going to buy our rival
instead.

1141
00:55:34,520 --> 00:55:36,960
And that way we can get rid of
that competition and we can just

1142
00:55:36,960 --> 00:55:38,920
take it a little easy here
because we're really tired of

1143
00:55:38,920 --> 00:55:41,680
running at full speed.
Or you say, you know, we're

1144
00:55:41,680 --> 00:55:43,560
going to do something, we're
going to tell our suppliers.

1145
00:55:43,560 --> 00:55:46,240
Just making up an example.
Hey, you can do what you want,

1146
00:55:46,280 --> 00:55:49,680
but if I find out that you're
supplying your products with our

1147
00:55:49,680 --> 00:55:52,040
rival, we're not going to buy
from you anymore.

1148
00:55:52,160 --> 00:55:54,640
And if you're the bigger
company, and I'm just making up

1149
00:55:54,640 --> 00:55:57,120
an example here, you might be
able to drive a rival out of

1150
00:55:57,120 --> 00:56:00,040
business or raise their costs
enough that you can just have a

1151
00:56:00,120 --> 00:56:02,160
little bit of your breathing
space and now you're not

1152
00:56:02,160 --> 00:56:04,320
competing for your customers in
the way you would.

1153
00:56:04,480 --> 00:56:06,400
And that hurts American
consumers.

1154
00:56:06,520 --> 00:56:11,920
And so then, yes, the FTC and
the DOJ, there are the various

1155
00:56:12,160 --> 00:56:14,640
groups there are keeping an eye
on industries.

1156
00:56:14,640 --> 00:56:17,560
And if it comes to their
attention, you know, usually the

1157
00:56:17,560 --> 00:56:19,240
way it works is somebody
complaints.

1158
00:56:19,240 --> 00:56:22,520
So a customer says, I used to
have competition for my

1159
00:56:22,520 --> 00:56:25,480
business, but now somebody is
doing this thing that makes it

1160
00:56:25,480 --> 00:56:28,720
hard for me to compete.
Another source of complaints is

1161
00:56:28,720 --> 00:56:33,120
a rival might say, hey, I used
to compete with Nicholas's

1162
00:56:33,120 --> 00:56:36,160
business, but now he's been like
threatening my suppliers and I

1163
00:56:36,160 --> 00:56:37,520
can't compete with this guy
anymore.

1164
00:56:37,520 --> 00:56:42,240
You got to do something here.
And the, the both agencies will,

1165
00:56:42,240 --> 00:56:44,480
if they get that kind of
complaint and the complaint is

1166
00:56:44,480 --> 00:56:46,840
credible, they'll look into it.
And they may or may not bring a

1167
00:56:46,840 --> 00:56:48,600
lawsuit.
They may send a letter saying,

1168
00:56:49,520 --> 00:56:52,720
Nicholas, stop threatening your
rival's suppliers or whatever it

1169
00:56:52,720 --> 00:56:54,560
is.
Or if you know whatever I'm

1170
00:56:54,560 --> 00:56:57,200
doing, I just keep doing.
They might bring a lawsuit and

1171
00:56:57,200 --> 00:57:00,040
challenge me in court.
Right, right, right.

1172
00:57:00,240 --> 00:57:03,960
And so that lawsuit would
hypothetically prevent the

1173
00:57:03,960 --> 00:57:06,400
business from expanding into
other businesses where the,

1174
00:57:06,440 --> 00:57:09,480
where the government will say,
hey, Amazon, you got, you have

1175
00:57:09,600 --> 00:57:11,880
too much of A market share.
You can't, you can't also get

1176
00:57:11,880 --> 00:57:14,240
into the movie studio business.
You can't also buy a 21st

1177
00:57:14,240 --> 00:57:16,680
century or whatever 21st century
or Lionsgate or whatever,

1178
00:57:16,800 --> 00:57:18,960
whatever it was they bought.
But that would only have to it

1179
00:57:19,160 --> 00:57:21,120
would only be the case if it was
brought to their attention

1180
00:57:21,120 --> 00:57:24,280
actively by the consumers and
they were and and and they were

1181
00:57:24,280 --> 00:57:25,560
actually having an impact on
people.

1182
00:57:25,600 --> 00:57:27,320
I think, I think they they
bought MGM.

1183
00:57:27,320 --> 00:57:32,240
So, yeah, I think so, right.
It's a nuanced dancer generally

1184
00:57:32,240 --> 00:57:36,240
expanding into new businesses.
They will generally think, hey,

1185
00:57:36,240 --> 00:57:39,880
that might be pro competitive.
So today we have a bunch of

1186
00:57:39,880 --> 00:57:44,360
people competing to sell coffee
to us and Amazon says we're

1187
00:57:44,360 --> 00:57:46,760
launching Amazon coffee.
We're going to buy a bunch of

1188
00:57:46,760 --> 00:57:49,200
beans super cheap.
It's going to be like the spirit

1189
00:57:49,200 --> 00:57:52,160
of coffee.
It's going to be cheap and it

1190
00:57:52,160 --> 00:57:54,600
may not be the very highest
quality, but boy is it going to

1191
00:57:54,600 --> 00:57:58,080
be affordable.
And you know that they might say

1192
00:57:58,080 --> 00:58:00,080
that, well, that seems like
competition now that's going to

1193
00:58:00,080 --> 00:58:03,000
put pressure on pizza and
Starbucks and whoever else you

1194
00:58:03,000 --> 00:58:06,120
buy your coffee from.
And so they might like that If

1195
00:58:06,120 --> 00:58:09,560
Amazon said, and I'm just using
this as a purely hypothetical, I

1196
00:58:09,560 --> 00:58:12,480
don't think there's any plans to
enter the coffee business.

1197
00:58:12,480 --> 00:58:16,400
But if they took some kind of
action to enter coffee and

1198
00:58:16,400 --> 00:58:19,880
restrict the ability of others
to compete, then they might have

1199
00:58:19,880 --> 00:58:22,560
an investigation.
And so that's really the key

1200
00:58:22,560 --> 00:58:27,040
thing, like the generally you're
OK if you enter an industry and

1201
00:58:27,040 --> 00:58:30,280
you just compete.
If you take some kind of action

1202
00:58:30,280 --> 00:58:33,360
that makes it harder for others
to compete, other than the fact

1203
00:58:33,360 --> 00:58:36,280
that you're competing with them,
that's when you're at risk of

1204
00:58:36,280 --> 00:58:37,960
getting an antitrust
investigation.

1205
00:58:38,040 --> 00:58:41,280
Both DOJ and FTC, they'll
certainly respond if they're

1206
00:58:41,280 --> 00:58:43,440
complaints.
But just in the ordinary course,

1207
00:58:43,440 --> 00:58:45,800
if they learn about something,
you know, then their own life,

1208
00:58:45,800 --> 00:58:48,400
they see, hey, there used to be
different coffee on every

1209
00:58:48,400 --> 00:58:50,160
corner.
And now Hill's coffee has driven

1210
00:58:50,160 --> 00:58:52,440
them all out of business.
Someone may say we should take a

1211
00:58:52,440 --> 00:58:54,440
look at Hill's coffee.
How did how did this happen?

1212
00:58:54,600 --> 00:58:56,280
Yeah.
But I would imagine and I would

1213
00:58:56,280 --> 00:59:00,240
imagine though, that this would
probably, for example, let's say

1214
00:59:00,240 --> 00:59:03,080
again, I'm sorry with the with
the studio, with the film

1215
00:59:03,080 --> 00:59:06,440
studio, with Amazon, right?
And you know, this had really

1216
00:59:06,440 --> 00:59:07,760
happened.
They got the Lord of the Rings

1217
00:59:07,760 --> 00:59:09,440
franchise and they got the
rights to it.

1218
00:59:09,440 --> 00:59:11,720
And they developed a script and
they made, I believe it's a

1219
00:59:11,720 --> 00:59:13,240
series.
I don't think I believe it's a

1220
00:59:13,240 --> 00:59:17,320
series.
And they already had the

1221
00:59:18,040 --> 00:59:20,080
tracking, they had the
operations at the marketing

1222
00:59:20,080 --> 00:59:23,080
power, they had the ability to
take a piece of tape on every

1223
00:59:23,080 --> 00:59:27,320
single Amazon Prime box that
anyone was buying and, and, and

1224
00:59:27,320 --> 00:59:30,400
stick their Lord of the Rings
logo and marketing and

1225
00:59:30,400 --> 00:59:34,920
advertising on it.
And they're entering an industry

1226
00:59:35,080 --> 00:59:38,560
with a whole nother level of
power that and, you know, I'm

1227
00:59:38,560 --> 00:59:40,280
not talking about Amazon in
particular because there are a

1228
00:59:40,280 --> 00:59:41,360
lot of studios that are doing
this.

1229
00:59:41,360 --> 00:59:44,080
Apple does this too.
I'm I'm sure, you know, Apple

1230
00:59:44,080 --> 00:59:47,240
has no problem throwing money at
a lot of, you know, they have

1231
00:59:47,240 --> 00:59:48,520
more cash than they want to do
with.

1232
00:59:48,680 --> 00:59:50,520
And they have no problem
throwing money at Martin

1233
00:59:50,520 --> 00:59:54,080
Scorsese or, or any big
director, any big actor's name

1234
00:59:54,320 --> 00:59:57,440
to be able to develop a movie
for $500 million.

1235
00:59:57,440 --> 00:59:59,280
And you know what?
But that's because we're Apple.

1236
00:59:59,280 --> 01:00:01,480
And normally no one would have
made this, you know, whatever

1237
01:00:01,480 --> 01:00:03,680
you know, the, the, the studios
wouldn't have necessarily even.

1238
01:00:03,760 --> 01:00:07,080
And created this and now because
we are in another business or

1239
01:00:07,080 --> 01:00:10,240
other businesses and we have
other forms of backing and we

1240
01:00:10,240 --> 01:00:13,520
have, we, we now have, we
therefore have I guess more

1241
01:00:13,520 --> 01:00:19,240
effective means or a better, a
much bigger advantage than

1242
01:00:19,240 --> 01:00:20,920
anyone else.
And we're just getting started

1243
01:00:20,920 --> 01:00:22,160
in the game.
Does that is that, does that

1244
01:00:22,160 --> 01:00:23,920
ever come into consideration or
not really?

1245
01:00:23,920 --> 01:00:27,440
Yeah, so nuanced answer.
It's a very interesting question

1246
01:00:27,440 --> 01:00:30,280
and I'll just give you some
anecdotes to to talk about it.

1247
01:00:30,280 --> 01:00:34,880
So I, I testified on the, the
Penguin Random House's attempt

1248
01:00:35,280 --> 01:00:37,600
to require Simon and Schuster
and I testified for the

1249
01:00:37,600 --> 01:00:40,160
government and we eventually
prevailed in court and the

1250
01:00:40,160 --> 01:00:43,160
merger was blocked.
And what is 1 issue there that

1251
01:00:43,240 --> 01:00:45,480
we said, hey, look, there's
going to be a reduction in

1252
01:00:45,480 --> 01:00:48,720
competition like authors today
can play off the members of the

1253
01:00:48,720 --> 01:00:53,600
big 5 and that this is going to
lead to lower reimbursement for

1254
01:00:53,600 --> 01:00:55,120
authors.
So they'll get paid less.

1255
01:00:55,360 --> 01:00:58,360
And that's that.
And the, the defense said, hey,

1256
01:00:58,360 --> 01:01:00,960
but look, there's entry and
expansion here.

1257
01:01:01,000 --> 01:01:05,200
And you could look, if we reduce
competition, some other student,

1258
01:01:05,200 --> 01:01:07,000
some other publisher will come
in and compete.

1259
01:01:07,000 --> 01:01:09,200
So you and they had other
arguments as well.

1260
01:01:09,200 --> 01:01:12,640
I don't mean to short give him
short shrift, but the the key

1261
01:01:12,640 --> 01:01:15,720
issue there was this one key
issue was this entry question.

1262
01:01:15,880 --> 01:01:18,720
And there it ties back to your
question, because Amazon at one

1263
01:01:18,720 --> 01:01:22,520
time tried to enter publishing.
And you know, you could say

1264
01:01:22,680 --> 01:01:26,400
Amazon has a lot of money.
They're a very large company.

1265
01:01:26,400 --> 01:01:28,400
And you might say if, well, if
they try to enter publishing,

1266
01:01:28,400 --> 01:01:31,480
they're going to be successful.
They weren't successful and

1267
01:01:31,480 --> 01:01:34,280
they're not today playing any
material role, as far as I know

1268
01:01:34,280 --> 01:01:35,920
in publishing.
It's been a while since I looked

1269
01:01:35,920 --> 01:01:38,560
at it, but they're not a major
publisher.

1270
01:01:38,840 --> 01:01:41,480
And this is one of those
interesting things.

1271
01:01:41,520 --> 01:01:44,440
You pick almost any industry,
you could say, well, Apple has

1272
01:01:44,440 --> 01:01:46,200
enough money to enter that if
they want to.

1273
01:01:46,280 --> 01:01:49,120
But from Apple's perspective,
the question is, OK, I'm going

1274
01:01:49,120 --> 01:01:51,120
to have to spend a bunch of
money to do this.

1275
01:01:51,200 --> 01:01:54,520
Is it worth my while to do it?
Or should I invest in making an

1276
01:01:54,520 --> 01:01:58,360
even better iPhone or an even
better iPad or something like

1277
01:01:58,360 --> 01:02:00,520
that?
And so, you know, you can always

1278
01:02:00,520 --> 01:02:03,680
think somebody could do it and
an antitrust.

1279
01:02:03,680 --> 01:02:06,080
The question is, would they
actually do it?

1280
01:02:06,080 --> 01:02:09,120
Like, would it be profitable for
them to do that?

1281
01:02:09,280 --> 01:02:14,080
And so in general, if firms are
trying to enter new markets,

1282
01:02:14,120 --> 01:02:16,760
they'll get a reasonable amount
of leeway.

1283
01:02:16,800 --> 01:02:20,080
You know, if to tomorrow pick
your favorite tech company,

1284
01:02:20,080 --> 01:02:23,080
let's say Google said we are
launching Google Airways and

1285
01:02:23,080 --> 01:02:26,120
we're going to fly from place to
place, people would say, OK,

1286
01:02:26,160 --> 01:02:28,920
well we'll see where this goes.
Maybe this will be great, maybe

1287
01:02:28,920 --> 01:02:30,920
it won't.
But they would generally I would

1288
01:02:30,920 --> 01:02:34,800
think the attitude of the FTC or
DOJ does airlines and I think

1289
01:02:34,800 --> 01:02:36,040
they would say let's see what
happens.

1290
01:02:36,040 --> 01:02:38,480
Like this could be new valuable
competition.

1291
01:02:38,680 --> 01:02:42,320
The way it would cause a problem
is if you know, whoever the new

1292
01:02:42,320 --> 01:02:46,440
entrant was took some kind of
actions to restrict the ability

1293
01:02:46,440 --> 01:02:49,040
of others to compete.
Like it's fine to compete on the

1294
01:02:49,040 --> 01:02:51,360
merits.
You can go in there and say we

1295
01:02:51,360 --> 01:02:53,960
are going to offer a better deal
to customers and that's why

1296
01:02:53,960 --> 01:02:56,920
we're going to win.
And if you do that, that's

1297
01:02:56,920 --> 01:02:58,720
great.
What they're what's going to get

1298
01:02:58,720 --> 01:03:01,160
you in hot water is if you say,
you know what, it's hard to do

1299
01:03:01,160 --> 01:03:05,120
that, we don't like doing that.
We're going to make it hard for

1300
01:03:05,120 --> 01:03:07,920
Efron to compete because right
now he's got a really big market

1301
01:03:07,920 --> 01:03:09,440
share.
We're going to cut off his

1302
01:03:09,440 --> 01:03:11,640
supply or we're going to do
something else.

1303
01:03:11,640 --> 01:03:14,600
That's what gets you in trouble.
But if you just go in and say

1304
01:03:14,600 --> 01:03:16,960
we're going to out compete in by
offering a higher quality and a

1305
01:03:16,960 --> 01:03:19,720
lower price, generally people
will be saying that's fine,

1306
01:03:19,840 --> 01:03:21,280
there's no antitrust problem
now.

1307
01:03:21,480 --> 01:03:22,440
That's it.
That's cool.

1308
01:03:22,440 --> 01:03:26,120
That's very interesting.
I am curious though, you would

1309
01:03:26,560 --> 01:03:29,400
again, you know, back just to
the Hollywood example and this

1310
01:03:29,400 --> 01:03:31,760
could apply this to any industry
you want, but it does make a

1311
01:03:31,760 --> 01:03:34,560
difference when you know,
obviously you're correct.

1312
01:03:34,560 --> 01:03:37,440
Zon is not guaranteed success in
the, you know, in the in the

1313
01:03:37,440 --> 01:03:38,720
film, in the movie, in the movie
space.

1314
01:03:38,720 --> 01:03:40,160
And neither is it and neither is
Amazon.

1315
01:03:40,200 --> 01:03:41,840
I mean, historically, I don't
even think they have been

1316
01:03:41,840 --> 01:03:44,400
particularly, you know, they're
there as far as the Nielsen

1317
01:03:44,400 --> 01:03:47,000
charts and as far as the eyes on
the screen, you know, they're,

1318
01:03:47,040 --> 01:03:50,880
they're, they're far from the
top, but they do affect the

1319
01:03:51,040 --> 01:03:54,040
competition chain and the actual
mark and the ability to get

1320
01:03:54,040 --> 01:03:56,720
movies made.
If, and I think Netflix even

1321
01:03:56,720 --> 01:03:59,640
started this practice where they
say, hey, Adam Sandler, your

1322
01:03:59,640 --> 01:04:01,400
typical rate for a movie is $100
million.

1323
01:04:01,400 --> 01:04:03,920
We'll give you $300 million.
And all of a sudden you're just

1324
01:04:03,920 --> 01:04:07,120
completely changing the entire
scape of, of what the, of what

1325
01:04:07,120 --> 01:04:09,240
the industry is.
Do you say that that's just

1326
01:04:09,240 --> 01:04:11,760
natural, That's natural part for
the course competition.

1327
01:04:11,760 --> 01:04:14,440
We'll see what comes out of it.
Or do you say, Hey, you're too

1328
01:04:14,440 --> 01:04:17,000
busy changing the game And, and,
and you're, you're causing a

1329
01:04:17,000 --> 01:04:19,400
real rapid change in a lot of
this stuff.

1330
01:04:19,400 --> 01:04:22,080
And, and, and right now, and by
the way, consumers do suffer

1331
01:04:22,080 --> 01:04:23,920
from that.
And, and I'm and, you know, and

1332
01:04:23,920 --> 01:04:27,440
I'm sure that people say that,
that, hey, we're not necessarily

1333
01:04:27,440 --> 01:04:30,920
thrilled with the fact that we
have to that, that, that XY and

1334
01:04:30,920 --> 01:04:32,760
Z contents not great.
And we're paying a lot of money

1335
01:04:32,760 --> 01:04:34,840
for it.
Or, you know, their excuse that

1336
01:04:34,840 --> 01:04:38,000
why, why our membership costs
are going up twice or three

1337
01:04:38,000 --> 01:04:40,800
times a year is because they're
putting out more content.

1338
01:04:40,800 --> 01:04:44,320
But, you know, I mean, no one's
asking you to put bid $500

1339
01:04:44,400 --> 01:04:47,360
million for a movie that, that
could have been made for 120,

1340
01:04:47,360 --> 01:04:52,600
you know, a couple years ago.
So I, I, I am curious that is

1341
01:04:52,600 --> 01:04:56,880
this just deliberation in court?
Is this just nuance and battling

1342
01:04:56,880 --> 01:04:58,720
this out intellectually?
Is that is that really what a

1343
01:04:58,720 --> 01:05:00,400
lot of this comes down to?
Yeah.

1344
01:05:00,400 --> 01:05:04,600
So backing up, I'll take your
Amazon purchase of MGM.

1345
01:05:06,000 --> 01:05:08,880
So what the the review process
there?

1346
01:05:08,880 --> 01:05:11,920
I think one way you could think
about it is to switch the

1347
01:05:11,920 --> 01:05:14,040
context and think about
airlines.

1348
01:05:14,080 --> 01:05:19,040
So suppose American was for sale
and United said we want to buy

1349
01:05:19,040 --> 01:05:22,280
American.
This was this was rumored in the

1350
01:05:22,280 --> 01:05:23,480
press.
I have no idea if there's any

1351
01:05:23,480 --> 01:05:25,800
truth to it or not, whether
they're considering it or not.

1352
01:05:25,960 --> 01:05:28,840
But if that did happen, then I
think what DOJ would say is,

1353
01:05:28,840 --> 01:05:32,480
well, today you guys overlap and
compete on a bunch of routes.

1354
01:05:32,480 --> 01:05:36,120
Like today there are routes
where customers are choosing or

1355
01:05:36,120 --> 01:05:39,080
considering between American and
United and potentially other

1356
01:05:39,080 --> 01:05:42,240
competitors.
And so they would take a look at

1357
01:05:42,240 --> 01:05:48,000
that if Apple came in and said
we are buying Puja Savers for

1358
01:05:48,000 --> 01:05:50,880
sale American, we're buying
American then or we're buying

1359
01:05:50,880 --> 01:05:53,920
United, whichever one DOJ would
certainly be entrusted and say,

1360
01:05:53,920 --> 01:05:57,080
OK, what are the effects here?
But they would probably say,

1361
01:05:57,080 --> 01:06:01,200
well, you don't today compete to
fly people from place to place.

1362
01:06:01,200 --> 01:06:04,960
So I guess this could reduce
competition, but I don't really

1363
01:06:04,960 --> 01:06:08,200
see the issue.
And so in all of these things,

1364
01:06:08,200 --> 01:06:10,920
when somebody buys somebody
else, it comes sort of down to

1365
01:06:11,360 --> 01:06:14,560
if you're both competing to
serve the same customers today.

1366
01:06:14,600 --> 01:06:17,240
So you're competing with each
other head to head every day.

1367
01:06:17,400 --> 01:06:20,280
The more you do that, the more
if you try to merge, the

1368
01:06:20,280 --> 01:06:23,160
government's going to say wait a
minute for a lot of customers,

1369
01:06:23,160 --> 01:06:25,920
you 2 are among their best
options and you're saying you're

1370
01:06:25,920 --> 01:06:27,800
going to merge and not compete
for them anymore.

1371
01:06:27,960 --> 01:06:30,280
We want to know whether what's
going to make them worse off?

1372
01:06:30,280 --> 01:06:31,880
Is that going to reduce their
options?

1373
01:06:31,960 --> 01:06:33,960
So the same thing with Amazon
and MGM.

1374
01:06:34,120 --> 01:06:35,800
Are you both making a lot of
movies?

1375
01:06:35,800 --> 01:06:37,880
If so, are there other
competitors?

1376
01:06:37,880 --> 01:06:39,640
Is this going to reduce
competition?

1377
01:06:39,640 --> 01:06:41,880
What does that all look like in
that big picture?

1378
01:06:42,000 --> 01:06:43,240
And I.
Didn't look at industry

1379
01:06:43,240 --> 01:06:47,280
disruption as a whole.
Sorry, I'd say, yeah, sorry.

1380
01:06:47,280 --> 01:06:49,320
So an industry disruption,
really.

1381
01:06:49,320 --> 01:06:52,680
Again, I would call the price of
going up triple the price.

1382
01:06:52,680 --> 01:06:55,880
I would call that a disruption
in the industry, wouldn't you?

1383
01:06:56,360 --> 01:06:58,640
Yeah.
So it would depend like remember

1384
01:06:58,640 --> 01:07:02,280
in an antitrust merger, well,
there's two kinds of antitrust

1385
01:07:02,280 --> 01:07:05,160
mergers.
One reviews 1 is before the deal

1386
01:07:05,160 --> 01:07:07,560
happens.
So United says we're buying

1387
01:07:07,560 --> 01:07:09,920
American or Apple says we're
buying American.

1388
01:07:10,720 --> 01:07:14,880
The, the, the DOJ and the court
have to make a decision where

1389
01:07:14,880 --> 01:07:17,960
the states have to make a
decision before they know what's

1390
01:07:17,960 --> 01:07:19,920
going to happen.
So it's a really, if you think

1391
01:07:19,920 --> 01:07:23,880
about a normal crime and this, I
mean, I'm, you know, it's not a,

1392
01:07:24,000 --> 01:07:27,320
it's a different kind of issue.
But if you think about theft,

1393
01:07:27,440 --> 01:07:30,560
like you asked the question, did
Nicholas steal money from FM or

1394
01:07:30,560 --> 01:07:32,520
not?
And if I did, if I stole that

1395
01:07:32,720 --> 01:07:35,440
picture that's on the wall
behind you, it's like, OK, he's

1396
01:07:35,440 --> 01:07:36,720
got it.
He did it or he didn't.

1397
01:07:36,840 --> 01:07:38,760
You wouldn't be able to go to
court and say, I think Nicholas

1398
01:07:38,760 --> 01:07:41,280
is planning to steal my poster.
People would say, OK, well,

1399
01:07:41,280 --> 01:07:44,080
that's great, but let us know
when he does and then we'll take

1400
01:07:44,080 --> 01:07:46,600
action.
In antitrust mergers, you have

1401
01:07:46,600 --> 01:07:48,360
to make a decision before it
happens.

1402
01:07:48,520 --> 01:07:52,560
That said, there are cases in
antitrust where people have gone

1403
01:07:52,560 --> 01:07:55,720
back and said, hey, by the way,
we didn't think there was a

1404
01:07:55,720 --> 01:07:58,640
problem here, but you guys
merged and then you raised price

1405
01:07:58,640 --> 01:08:01,000
500%.
So it looks like we got

1406
01:08:01,000 --> 01:08:03,040
something wrong.
So we need to look at this

1407
01:08:03,360 --> 01:08:04,400
there.
Were cases of.

1408
01:08:04,400 --> 01:08:07,600
That yeah, yeah.
There's a famous hospital case

1409
01:08:07,600 --> 01:08:10,840
called the Evanston case where
two hospital systems merged.

1410
01:08:11,480 --> 01:08:14,400
And afterwards the FTC said, we
can't help but notice that you

1411
01:08:14,400 --> 01:08:18,040
guys have raised price since you
merged and you raised price more

1412
01:08:18,040 --> 01:08:20,080
than other people.
And it seems like maybe that

1413
01:08:20,080 --> 01:08:23,680
merger is anti competitive.
And then the FTC won and they

1414
01:08:23,680 --> 01:08:26,760
ended up, I can't remember what
the exact remedy was.

1415
01:08:26,760 --> 01:08:31,319
But so to your point, if you
merge, let's say you and I merge

1416
01:08:31,319 --> 01:08:34,880
and we raise our lemonade prices
500% and the government comes in

1417
01:08:34,880 --> 01:08:36,880
and says, well, guys, you know
what?

1418
01:08:36,880 --> 01:08:39,479
I think I see a problem here.
We might be in trouble.

1419
01:08:39,560 --> 01:08:43,359
Or here's where we might not be
if we said, hey, we did raise

1420
01:08:43,359 --> 01:08:45,720
price 500%.
But here's what you should know.

1421
01:08:45,920 --> 01:08:48,800
The price of lemons and sugar
went up 500%.

1422
01:08:48,800 --> 01:08:51,240
That's why we raise price
because otherwise we'd be

1423
01:08:51,240 --> 01:08:52,800
selling all this stuff for a
loss.

1424
01:08:52,960 --> 01:08:55,960
And by the way, go down the
street from us and we're not

1425
01:08:55,960 --> 01:08:57,680
making any money like we're
making.

1426
01:08:57,720 --> 01:09:01,000
In fact, our margin amount we
make on a glass of lemonade is

1427
01:09:01,000 --> 01:09:03,160
exactly the same as before we
merge.

1428
01:09:03,640 --> 01:09:05,960
If those were the facts, then
we'd have a good story.

1429
01:09:06,279 --> 01:09:09,720
If it was the case that lemons
and sugar didn't change price

1430
01:09:09,720 --> 01:09:12,240
and water didn't change price,
and you and I just jacked up the

1431
01:09:12,240 --> 01:09:15,479
price 500% after the burger,
we'd probably be in pretty hot

1432
01:09:15,479 --> 01:09:17,800
water.
So I hope so.

1433
01:09:17,960 --> 01:09:19,439
I would hope so.
Yeah, Exactly.

1434
01:09:19,960 --> 01:09:21,439
That's that's how it's supposed
to work.

1435
01:09:22,479 --> 01:09:25,240
I would love to and now I want
to talk about this.

1436
01:09:25,800 --> 01:09:30,640
And you know, obviously as
objectively as possible is

1437
01:09:30,640 --> 01:09:32,960
there, you know, there's always,
I emailed you about this

1438
01:09:32,960 --> 01:09:35,399
beforehand.
There's always the, in a lot of

1439
01:09:35,399 --> 01:09:38,120
big industries or anything that
has regulation, quote, UN quote,

1440
01:09:38,120 --> 01:09:42,080
revolving door, the revolving
door phenomenon where people go

1441
01:09:42,080 --> 01:09:45,319
from private to public sectors
and they take with them a lot of

1442
01:09:45,319 --> 01:09:48,880
times relationships, trade
secrets, different perspectives

1443
01:09:48,880 --> 01:09:51,120
or insider knowledge that they
may have to put them in a

1444
01:09:51,120 --> 01:09:54,040
uniquely and unique position
within the company.

1445
01:09:54,279 --> 01:09:57,200
You know, so for example, when
Purdue Pharma would hire people

1446
01:09:57,200 --> 01:10:01,200
from the FDA to, after their
careers, the FDA or after people

1447
01:10:01,200 --> 01:10:03,960
at the DEA would, you know,
would, would, would get hired by

1448
01:10:04,320 --> 01:10:07,720
a pharmaceutical company.
Part of their role was to be

1449
01:10:07,720 --> 01:10:11,360
almost advisory in how, hey,
how, how do we, how do we, how

1450
01:10:11,360 --> 01:10:13,920
do we kind of avoid the
regulation?

1451
01:10:13,920 --> 01:10:16,520
How do we, how do we get around
this and, and, and succeed and

1452
01:10:16,520 --> 01:10:19,000
be as successful as a
corporation as it could be?

1453
01:10:19,000 --> 01:10:22,200
And by the way, I, I hear, I
hear where that game plan comes

1454
01:10:22,200 --> 01:10:24,080
from.
I, you know, I, I can't say I

1455
01:10:24,080 --> 01:10:27,880
like the idea, but as a, as a
consumer, but whatever, I can

1456
01:10:27,880 --> 01:10:29,080
understand where they're coming
from.

1457
01:10:29,680 --> 01:10:32,960
Does, does this, does this
happen with the DOJ and the FTC?

1458
01:10:32,960 --> 01:10:35,480
How would this manifest?
Does this happen based on

1459
01:10:35,480 --> 01:10:37,760
industry exclusively?
And it's like the DOJ and the

1460
01:10:37,760 --> 01:10:40,480
FTC, because there's so many
different cases that you're

1461
01:10:40,480 --> 01:10:44,080
taking on, you're not
necessarily inclined to be drawn

1462
01:10:44,080 --> 01:10:46,160
into one particular privatized
industry.

1463
01:10:46,160 --> 01:10:47,960
How does it, how exactly would
that or doesn't?

1464
01:10:48,000 --> 01:10:51,320
Does it or does it not work?
Yeah, So it's interesting.

1465
01:10:51,320 --> 01:10:53,640
It doesn't.
Vary a little bit by agency.

1466
01:10:53,640 --> 01:10:56,960
I would say the DOJ,
traditionally a lot of its

1467
01:10:56,960 --> 01:11:00,080
recruiting came from what was
known, I think is still known as

1468
01:11:00,080 --> 01:11:03,640
its honors program.
So it would hire attorneys

1469
01:11:03,640 --> 01:11:06,320
straight out of law school.
And so they and then they were

1470
01:11:06,320 --> 01:11:09,720
just trained and I don't know
what the percentages were, but

1471
01:11:09,720 --> 01:11:13,840
my observation was a lot of DOJ
attorneys came through that

1472
01:11:13,840 --> 01:11:15,920
route.
So DOJ was sort of recruiting

1473
01:11:15,920 --> 01:11:18,560
people fresh.
FTC definitely does that too.

1474
01:11:18,960 --> 01:11:22,040
The FTC would also say, here's
someone who's been in private

1475
01:11:22,040 --> 01:11:24,880
practice for five years.
They're good at what they do,

1476
01:11:25,000 --> 01:11:26,560
they're credible and they
present to us.

1477
01:11:26,840 --> 01:11:28,480
We want that person to work for
us.

1478
01:11:28,480 --> 01:11:31,760
Like they know how things look
on the other side and they can

1479
01:11:31,760 --> 01:11:33,880
give us a perspective we
otherwise wouldn't have.

1480
01:11:34,040 --> 01:11:36,920
And so the two eight, I'm not
one approach or the other is

1481
01:11:36,920 --> 01:11:40,760
better, but they they both
certainly I would say DOJ tended

1482
01:11:40,760 --> 01:11:44,240
to be more the honors and FTC
tended to be a mix of hiring

1483
01:11:44,240 --> 01:11:49,320
people out of it from law firms
or hiring people fresh out of

1484
01:11:49,320 --> 01:11:51,680
law school.
And then people will work at the

1485
01:11:51,680 --> 01:11:56,200
agencies and they will leave and
they will go to work at a law

1486
01:11:56,200 --> 01:11:57,840
firm.
Or in my case, they'll go from

1487
01:11:57,840 --> 01:12:02,200
working in the agency as an
economist and go to work for a

1488
01:12:02,200 --> 01:12:05,720
consulting firm.
And a couple thoughts on that

1489
01:12:05,720 --> 01:12:06,880
one.
There isn't.

1490
01:12:07,120 --> 01:12:10,320
If you think about the revolving
door, like going back and forth

1491
01:12:10,320 --> 01:12:12,880
frequently, that really doesn't
happen that much.

1492
01:12:13,040 --> 01:12:16,440
Like what happens a lot is
someone works for the agency,

1493
01:12:16,440 --> 01:12:19,400
they do it for like say 10-15
years, and then they think, I'd

1494
01:12:19,400 --> 01:12:21,320
like to try private sector and
they do that.

1495
01:12:21,520 --> 01:12:23,920
Or vice versa.
They go to the law firm, they

1496
01:12:23,920 --> 01:12:26,200
build a career, and then they
say, I'd like to see what it's

1497
01:12:26,200 --> 01:12:29,640
like being at the government.
Multiple spins through that door

1498
01:12:29,640 --> 01:12:32,440
are relatively uncommon, at
least in my experience.

1499
01:12:32,440 --> 01:12:34,800
Usually you start one place, you
might go the other.

1500
01:12:34,960 --> 01:12:38,480
Some people do there, there and
back, but that's relatively

1501
01:12:38,480 --> 01:12:41,640
rare.
And then I would say from my

1502
01:12:41,640 --> 01:12:46,080
experience at both agencies, if
you're an ex agency alumni, so I

1503
01:12:46,080 --> 01:12:49,360
worked with you, I know you.
I'm usually a little more polite

1504
01:12:49,360 --> 01:12:52,680
in my questions, but it doesn't
change the analysis.

1505
01:12:52,680 --> 01:12:56,080
Ultimately, if you come in with
a dumb story, you know, you and

1506
01:12:56,080 --> 01:13:01,080
I have done our 500% deal and
you know, an ex agency person

1507
01:13:01,080 --> 01:13:03,480
comes in and says, oh, you
shouldn't worry about it because

1508
01:13:03,800 --> 01:13:05,760
look, I mean, lemonade,
whatever, it's not that

1509
01:13:05,760 --> 01:13:07,720
important.
They come up with some really

1510
01:13:07,880 --> 01:13:10,280
reason why we shouldn't care.
The staff are going to say the

1511
01:13:10,280 --> 01:13:12,240
exact same thing.
They're going to say, yeah, this

1512
01:13:12,240 --> 01:13:15,480
isn't a credible story.
Like we still like Bob, great

1513
01:13:15,480 --> 01:13:17,000
guy.
We really enjoyed working with

1514
01:13:17,000 --> 01:13:20,000
him, but on this one, his story
doesn't make a lot of sense.

1515
01:13:20,200 --> 01:13:23,680
And then on top of that, you
have two other layers. 1 is the

1516
01:13:23,680 --> 01:13:26,520
political layer.
Those people generally are not,

1517
01:13:26,720 --> 01:13:28,960
don't have those past
relationships with works.

1518
01:13:28,960 --> 01:13:32,920
And then ultimately in our US
system, things end up in court

1519
01:13:33,040 --> 01:13:36,040
and for sure the judge has no
idea who these people are and

1520
01:13:36,040 --> 01:13:37,920
the judge is just going to look
at the merits.

1521
01:13:38,560 --> 01:13:41,240
Like in all these cases, you
work backwards from what would

1522
01:13:41,240 --> 01:13:43,520
happen in court.
Like if you and I do our merger,

1523
01:13:43,520 --> 01:13:46,800
we raise price 500% and we know
we're going to lose in court.

1524
01:13:47,040 --> 01:13:49,320
Then when we're dealing with the
agency, we're really in a

1525
01:13:49,320 --> 01:13:51,480
posture where we're saying,
let's try to figure out if

1526
01:13:51,480 --> 01:13:54,040
there's a solution or we just
have to go back to competing

1527
01:13:54,040 --> 01:13:56,800
independently.
And so those because of those

1528
01:13:56,800 --> 01:13:59,960
various layers, I, at least in
my time in the agencies, I

1529
01:13:59,960 --> 01:14:03,840
really didn't see any example
where it was, well, we kind of

1530
01:14:03,840 --> 01:14:07,320
like, you know, Janet, because
she was here and we worked with

1531
01:14:07,320 --> 01:14:08,720
her.
So we're going to say yes to our

1532
01:14:08,720 --> 01:14:10,360
client when we had otherwise
said no.

1533
01:14:10,960 --> 01:14:14,480
Ultimately, especially the
agencies, the people tend to be

1534
01:14:14,480 --> 01:14:17,720
really mission focused.
Like they do work for a lot less

1535
01:14:17,720 --> 01:14:19,800
money.
They work really long hours.

1536
01:14:19,840 --> 01:14:23,600
They're doing it because they
care about US consumers.

1537
01:14:23,720 --> 01:14:29,360
And that sort of Trump's any we
worked together once or Taos and

1538
01:14:29,400 --> 01:14:31,240
you know that at least that's
been my experience.

1539
01:14:31,240 --> 01:14:32,840
Others may have had a different
experience.

1540
01:14:33,680 --> 01:14:36,080
Sure.
And I I I totally get that.

1541
01:14:36,640 --> 01:14:39,280
And I, you know, that that makes
a lot of sense.

1542
01:14:39,360 --> 01:14:41,720
I, I was actually thinking a
little bit more along the lines

1543
01:14:41,720 --> 01:14:44,040
and to take it back to our
lemonade stands that you and I

1544
01:14:44,040 --> 01:14:46,080
have our lemonade stands.
And I know that if we Jack up

1545
01:14:46,080 --> 01:14:49,200
our prices 500%, the federal
government's going to come after

1546
01:14:49,200 --> 01:14:51,720
us.
But I do know that having spent

1547
01:14:51,720 --> 01:14:55,760
three years, you know, if I
spent three years at the DOJ or

1548
01:14:55,760 --> 01:15:00,160
the FTC and I know that jacking
up to 100%, you know, will

1549
01:15:00,160 --> 01:15:02,480
probably fly under the radar.
And so, you know, I say, hey,

1550
01:15:02,480 --> 01:15:06,000
you know, Nicholas, you know, I,
I, I had a couple of, you know,

1551
01:15:06,000 --> 01:15:08,960
I spent a couple of years there.
And I do know that we don't want

1552
01:15:08,960 --> 01:15:11,040
them coming after us.
So why don't we, why don't we

1553
01:15:11,040 --> 01:15:14,680
just stick it to what I know is
202 hundred 50%.

1554
01:15:14,680 --> 01:15:17,920
And then anything above that is
it's already getting greedy, but

1555
01:15:17,920 --> 01:15:19,280
that's also going to attract
attention.

1556
01:15:19,280 --> 01:15:24,080
I know that their XY and Z.
Yeah, I see.

1557
01:15:24,240 --> 01:15:25,000
I got.
I got you.

1558
01:15:25,240 --> 01:15:26,880
Yeah.
Yeah, that makes sense.

1559
01:15:26,880 --> 01:15:29,880
So I think, yeah.
So from the perspective of, so

1560
01:15:29,880 --> 01:15:33,160
usually, let's say our, our
joint lemonade company, we're

1561
01:15:33,160 --> 01:15:36,160
hiring an antitrust lawyer and
we say, look, if you looked at

1562
01:15:36,160 --> 01:15:39,880
the agencies, because we want
to, we want to know what you

1563
01:15:39,880 --> 01:15:43,720
know, and it's that experience
of working at the agencies can

1564
01:15:43,720 --> 01:15:46,360
be very helpful for
understanding how the process is

1565
01:15:46,360 --> 01:15:48,000
going to work.
They'll say to us, look, here's

1566
01:15:48,000 --> 01:15:50,040
how it's going to work.
You guys want to merge, you're

1567
01:15:50,200 --> 01:15:52,120
going to have to file your HSR
form.

1568
01:15:52,120 --> 01:15:53,840
That's a form you have to file
to merge.

1569
01:15:54,120 --> 01:15:56,880
Then they'll probably review it.
We might have some calls, you

1570
01:15:56,880 --> 01:15:59,000
know, like they can walk you
through the steps and tell you

1571
01:15:59,000 --> 01:16:01,640
how it's going to work.
And so that direct experience of

1572
01:16:01,640 --> 01:16:03,920
the process can be really
valuable.

1573
01:16:05,160 --> 01:16:08,520
I'm, I'm not an attorney, so I
don't really see them counseling

1574
01:16:08,520 --> 01:16:10,920
outside of, you know, when I'm
on the phone.

1575
01:16:11,880 --> 01:16:15,080
What I will say is on the phone,
what they will typically say is,

1576
01:16:15,080 --> 01:16:17,160
look, I can't tell you what to
do.

1577
01:16:17,160 --> 01:16:20,320
I'm, I'm just a lawyer here.
But I can tell you here are the

1578
01:16:20,320 --> 01:16:23,160
things that are likely going to
get you into, we are going to

1579
01:16:23,160 --> 01:16:25,480
present risk for you on the
antitrust side.

1580
01:16:25,480 --> 01:16:31,440
And if you and Nicholas merge
and F1 Hill Lemonade now is 500%

1581
01:16:31,440 --> 01:16:34,080
more, that's very likely to
attract attention and you

1582
01:16:34,080 --> 01:16:36,360
probably shouldn't be thinking
about doing that.

1583
01:16:36,880 --> 01:16:40,000
And, you know, I think there's
this risk of somebody noticing

1584
01:16:40,000 --> 01:16:43,080
and coming after you.
So in a sense, that's the way

1585
01:16:43,080 --> 01:16:45,480
I've usually seen that play out.
They give that kind of

1586
01:16:45,480 --> 01:16:48,400
assessment.
And if, and people ask, which

1587
01:16:48,400 --> 01:16:50,640
they rarely do because I'm an
economist, they usually want to

1588
01:16:50,640 --> 01:16:53,760
know what the lawyers think.
I will say, look, if I was

1589
01:16:53,760 --> 01:16:58,320
sitting in my hat at the DOJ and
I saw this case fax, then this

1590
01:16:58,320 --> 01:17:00,000
is probably the way I would
think about it.

1591
01:17:00,160 --> 01:17:02,480
And that can be value for them
to understand.

1592
01:17:02,720 --> 01:17:05,520
Look, if I saw your merger, I'd
probably tell you, I think this

1593
01:17:05,520 --> 01:17:07,080
was this one's going to get you
into trouble.

1594
01:17:07,080 --> 01:17:09,760
Like if I was the person of the
agency reviewing this, I would

1595
01:17:09,760 --> 01:17:13,040
say I've got real concerns and
it's going to take a while.

1596
01:17:13,040 --> 01:17:14,920
You're going to have to work
with the agency and go through

1597
01:17:14,920 --> 01:17:17,120
their whole process.
Or I can say, look, if this had

1598
01:17:17,120 --> 01:17:19,880
come to me when I was a DOJI
would have said, I don't think

1599
01:17:19,880 --> 01:17:21,680
it's a problem.
This merger is fine.

1600
01:17:21,680 --> 01:17:24,280
It doesn't reduce competition,
is not going to harm consumers.

1601
01:17:24,280 --> 01:17:27,440
And so that's usually how that
counseling process works.

1602
01:17:27,440 --> 01:17:30,720
I've not really seen the, hey,
I've been at the agency and I

1603
01:17:30,720 --> 01:17:33,880
can tell you guys, you're in
your new brand of lemonade.

1604
01:17:33,880 --> 01:17:38,320
You could raise price 313%, but
if you go to 314, that's going

1605
01:17:38,320 --> 01:17:40,880
to be bad news.
So go up to 313 and stop there.

1606
01:17:41,240 --> 01:17:43,760
That's not usually how it plays
out like the businesses.

1607
01:17:43,960 --> 01:17:46,080
And I just want to emphasize
that when I do work directly

1608
01:17:46,080 --> 01:17:48,880
with the clients, they're almost
invariably really nice people.

1609
01:17:49,200 --> 01:17:52,240
Often in these mergers, they're
not thinking about it in the way

1610
01:17:52,360 --> 01:17:55,680
the antitrust is.
But anyway, they're usually

1611
01:17:55,680 --> 01:17:57,920
thinking about the deal for
reasons that are sort of

1612
01:17:57,920 --> 01:18:01,120
unrelated to antitrust concerns.
And often they'll say, hey, we

1613
01:18:01,120 --> 01:18:05,240
know this area is a problem,
could we fix that problem

1614
01:18:05,240 --> 01:18:08,600
because the rest of the deal we
think is good, right.

1615
01:18:08,800 --> 01:18:10,120
OK, that sounds.
Great.

1616
01:18:10,440 --> 01:18:13,680
Well, I I want to thank you so
much for your time.

1617
01:18:13,680 --> 01:18:16,560
This was such a first of all
this hour and a half slip by

1618
01:18:17,360 --> 01:18:19,600
real quickly, but I want to say
I really enjoyed this.

1619
01:18:19,600 --> 01:18:24,400
I this was very clear, a lot of
fun and gave me a lot of insight

1620
01:18:24,400 --> 01:18:25,840
and is giving me a lot to think
about.

1621
01:18:26,280 --> 01:18:28,680
So thank you so much for your
time and for your patience and

1622
01:18:28,680 --> 01:18:31,200
your generosity with your time
and information.

1623
01:18:32,360 --> 01:18:36,280
I really, I think this is
really, really wonderful and I

1624
01:18:36,280 --> 01:18:39,320
think that this hopefully will
serve as a really good

1625
01:18:39,320 --> 01:18:42,880
educational tool for people to
have a general idea as to how a

1626
01:18:42,880 --> 01:18:45,200
lot of this stuff works, what
the government's role is.

1627
01:18:45,200 --> 01:18:48,200
And hopefully you and I covered
a lot of information that could

1628
01:18:48,200 --> 01:18:49,520
be very useful for people down
the line.

1629
01:18:49,600 --> 01:18:50,600
Thank you.
I hope so.

1630
01:18:50,600 --> 01:18:51,880
I really appreciate it.
Thank you.

1631
01:18:51,880 --> 01:18:53,320
And I had a lot of fun.
Good.

1632
01:18:53,440 --> 01:18:54,640
I'm happy to hear.
Have a great day.

1633
01:18:54,640 --> 01:18:55,440
Take care.
You too.

1634
01:18:55,440 --> 01:18:56,200
Hello.
Thanks.