Busting Big Business: Antitrust Comes for Google and Big Sandwich

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Transcript: Big Business and Antitrust Hubwonk Episode 180 December 5, 2023

This is Hubwonk. I’m Joe Selvaggi. Welcome to Hubwonk, a podcast of Pioneer Institute, a think tank in Boston. Is big business a threat to free markets and consumer choice? This question lies at the heart of antitrust regulation extending from the 1890 Sherman Antitrust Act targeting gilded age robber barons to the current U.S. Department of Justice suit against Google for anti -competitive practices. Indeed, the concern that as firms grow larger, they increasingly pose a risk to consumer welfare was perfectly distilled in a recent tweet by Senator Elizabeth Warren when she expressed her fear that a conglomerate’s proposed acquisition of Subway could lead to a sandwich shop monopoly. In the past, one need only remember the alarm bells that were sounded before Amazon acquired Whole Foods and as Google was acquiring Fitbit. And yet despite these warnings of politicians and the dearth of successful legal challenges to these mergers, the American economy seems remarkably free of any large conglomerate control of a single industry or market. Given the absence of any large firm dominance and the abundance of consumer choice in the U.S. economy, what should the role of constructive antitrust enforcement be? What characteristics of company mergers or acquisitions should warrant government intervention? And what substantive concerns, if any, might warrant a politician’s tweets about a sandwich monopoly. My guest today is Dr. Brian Albrecht, chief economist at the International Center for Law and Economics, a think tank that studies the nexus of economic principles and the law. Dr. Albrecht has written extensively on antitrust law and enforcement and has examined the degree to which public concerns over corporate size and power match the actual harm to consumers that critics predict. He will share with us the definitions and criteria for determining whether a firm has monopolistic market power and how that rubric can be applied to firms as large as Google or as small as a local sandwich shop. When I return, I’ll be joined by economist and antitrust expert, Dr. Brian Albrecht.

Okay, we’re back. This is Hubwonk. I’m Joe Selvaggi and I’m now pleased to be joined by Chief Economist at the International Center for Law and Economics, Dr. Brian Albrecht. Welcome to Hubwonk, Brian.

Brian Albrecht: Hey, thanks for having me. I’m excited about this conversation.

Joe: Okay, great. Well, we’re going to talk about the concepts of antitrust, why so-called trust can be economically harmful, and what government regulators can do to curtail any harm they may pose to consumers. But before we get there, I want to, you know, this is your first visit on the podcast. So, I hadn’t heard until fairly recently anything about the International Center for Law and Economics. So, let’s start off by letting you introduce to our listeners what you are and what you guys do over there.

Brian: Yeah. So, at the International Center for Law and Economics, I’ve been there about a year and a half. I was a professor before that. We work on a lot of areas within policy, but our real goal is to bring the tools of law and economics, which is this kind of blend of legal scholarship, but along with economic analysis, basically think, what can economic tools, economic reasoning inform us about the law? That’s a framework that developed in the academy over the last, you know, 60 years or so, and try to bring that to policy questions. I tend to work on antitrust,

which is something that we’ll talk about obviously today, but you know, economics has been applied to all sorts of things, torts, you know, lawsuits, First Amendment type of work with people on our team that work on telecommunication, spectrum, that sort of stuff. So, we kind of think of law and economics as a perspective. The thing that makes us unique as a think tank and why we’re not, you know, the world’s biggest think tank is because we kind of have a niche thing where our perspective is our methodology, our academic research, the tools that we bring. to answer these questions, that’s what makes us unique versus a particular policy, you know, answer that we’re going to come to are really the tools of economics or what going to drive our approach.

Joe: Okay, that’s good. I found it very useful. I found what I’ve read there very, very useful. Your tools are useful. So, let’s talk about, you said your expertise is very much on antitrust or the theory of price theory competition. I want to have you on to talk about antitrust theory and practice. It’s a complex issue. It’s in the news right now. The Department of Justice cases against behemoths like Google make headlines. But I playfully invited you this week to talk about this issue because our own senior senator from Massachusetts, Elizabeth Warren, had an interesting tweet that I thought put a smile on a lot of people’s faces, particularly economic when she tweeted, I want to get it right. “We don’t need another private equity deal that could lead to higher food prices for consumers. The FTC is right to investigate whether the purchase of Subway by the same firm that owns Jimmy John’s and McAllister Deli creates a sandwich shop monopoly.” So, for our listeners who hadn’t heard that, that’s pretty provocative. There’s a lot going on in that tweet, but I don’t want to get too deep right away. I want to take a step back. Pioneer Institute, my think tank, is very much an advocate of free markets. I think it’s fair to say you would be as well. What for our listeners’ benefit is free market and why is it good for us?

Brian: Yeah, so free market can mean a lot of different things. And from an economic perspective, we kind of imagine this idealized free market. But I think broadly speaking, we think of markets where people can buy and trade as they wish. You know, if I want to buy that Apple, I can go to the store and buy it as long as I can find someone willing to sell it. And is that kind of a general principle or a general way in which people accumulate things the way people make decisions? We’re gonna call that a free market. There’s gonna be lots of subtleties about how much regulation is involved. But I think it’s fair to say that, you know, if I want to get something, I go to a store, I go online, I trade voluntarily with other people. That’s a major part of how I acquire the things in my life that I want to acquire, the material things, the economic things that I want to acquire. That’s a free market. And, you know, sometimes things — lots of regulations out there, some of them are meant to kind of enhance markets. We’ll talk about antitrust again. You know, some of them are really meant to hinder and kind of promote something else like, you know, maybe safety or something. But broadly speaking, I think we can all agree that markets, the way that we interact and the way that we trade freely, is different than under societies throughout history where that was not true. Or, you know, more recently where governments are more involved in particular production and distribution of goods.

So, we kind of have these, again, there’s idealized distinctions, but we have this, the U.S., the way trade happens in the U.S. for us, you know, the way we accumulate goods is fundamentally different than it was 300 years ago, kind of anywhere in the world, or let’s say 50 years ago in the Soviet Union, that okay, there’s a meaningful distinction between markets and non-markets.

Joe: Fair enough. And I, you know, it was a loaded question, very big opening, open-ended question, but I wanted to really tease out, for the purposes of our conversation, you say it’s free to buy what you want and sell what you want. And ultimately, the consumer is trying to optimize his results by finding the best products at the cheapest price. And the producers are trying to optimize their results by having the most consumers at the best price. So, we’ve got this equilibrium and this tension naturally between buyers and sellers. But really at the end of the day, freedom to access the market either as a consumer or producer is really what keeps that market free. So that’s my segue to ask you another loaded question is when markets aren’t free, and we’re going to talk specifically about trust, or I’ll use a more commonly understood term, monopoly, or monopolistic groups: When producers have control over the market, that is to say, they don’t act fairly either towards the consumer or to their fellow producers or competition — speak more about what is a monopoly and why is that a bad thing?

Brian: Yeah, so a monopoly is another loaded word that has lots of connotations. That’s why Senator Warren used the word monopoly and not some more jargony thing that maybe was a little more accurate to throw this idea of a monopoly. There’s all the control, and the basic idea of a monopoly actually goes back in history. I’m not a historian, I’m an economist, so forgive the details here, but it goes back in history to government-granted monopolies. Government said that you are the one organization that could have this job or operate this sort of industry. And so, it was a government-granted license to be the sole person, the mono, the only one. Okay. And over time, that that word has evolved to just mean kind of big — even if there’s a lot of other ones — monopoly is the big one, the one with, you know, with at a point in time, the most consumers, the most revenue, the most whatever it is. And that kind of flips it. In some sense, it flips the coming from a free market or, you know, state point of view, the modern form of monopoly kind of flips things on its head. So, in the old world, you convince the government, you convince the king to give you sole control. The way now — in relatively free markets — the way now to get the most consumers to become the monopoly is by pleasing consumers. The reason that Google has 90% of the search results is because most people think of them as the best search engine. The reason that Amazon has whatever percentage of online retail is because they’ve convinced the most amount of consumers. So, it’s going back to your point it’s a consumer-centric outcome versus a government granted privilege, and so there’s quite a big difference in the way that we use the word today. Some people kind of use it negatively versus historically what monopoly meant. Now, the reason that we kind of keep those connected is there’s a concern that yes, you became large because you satisfy a lot of customers, you want a lot of business in a legitimate way, but at some point you can then become so powerful that somehow you distort that relationship. And this idea that that this was a voluntary agreement no longer is true once you reach a certain size or you knocked out enough competitors, that there might be something that kind of gets in the way of this being this totally free market ease of entry idea of which now you’re really competing on, you’re no longer competing on kind of even ground.

Joe: So, okay, so again, just to clarify this, because I’m talking about monopoly term, I don’t want to drag back into the sandwich shop issue, but imagine that again, it was intentionally provocative to use the word sandwich shop monopoly, we’ll accept that. But imagine, you know, in today’s market, what it would mean to be a sandwich shop monopoly or have control in a sense to be able to, what she asserts is affect the price of lunch by having so many sandwich shops. What would that involve? I mean, effectively, it would have to say, we’d have to have a lion’s share of all the sandwich shops, but also, you’d also have to have reasonable substitutes,  you know, taken away, which is going to the deli counter and buying sandwich meat. But say more about why monopolies should not be a word that is thrown around too lightly. It really takes a lot to have monopolistic power, not monopolist status, but not monopolist power to control. control prices.

Brian: Yeah. So, all of those examples that I gave of the current monopolies aren’t actually monopolies. There are multiple sellers in all these cases. There’s multiple search engines. And so now, if we’re going to extend the word monopoly to mean there could be more than one, well, how many? I don’t know. Is 20% enough? Is 30% enough? It’s kind of an arbitrary line between what we call a monopoly and what’s not. Like in antitrust sometimes it’s very common for 30% of a market however you’ve defined that, let’s say you’d say it’s you know sandwich shops, to have 30% of the market in terms of revenue makes you a monopoly well 30% is a long ways from 100 I don’t care I’m not that good at math but I can tell you that those are pretty different. So, economists have a different language and also shows up in antitrust among lawyers of an idea of monopoly power or market power, which is a little bit separate. There are there are relations, of course, but it’s this idea that you can kind of raise prices if you decide to, basically. That they’re not constrained by competition. So, the problem with using the word monopoly is you need to define what the market is. And then you can define whether you’re a monopoly or not to give an example. I am the monopoly me and my co-author are the monopoly sellers of our newsletter, but we have no market power we can’t charge insane prices, because there’s a million other newsletters out there that we’re competing with. I’ve just defined the market to be newsletters called Economic Forces. Okay. Therefore, I have the sole control over that we have the sole control over that we’re the monopolist well that’s not what we really care about you know we care about power we care about something about you know uneven bargaining turns maybe or something that ultimately hurts consumers you know an action by the producers that hurts consumers and so at the monopoly language it’s so pervasive I use it a lot because it is so pervasive but ultimately I think it’s it hides a lot of the important stuff, which is, yes, can — with this merger, with this acquisition, with that collusion, like, are we hurting customers? Are we helping customers? And that’s comes along with market power, monopoly power.

Joe: All right, I wanted to steal the concept out then. You’re right, these big terms, and we’re sort of, we’re straddling the line between technical economists and laypeople and the connotations attached to each of these terms we’re throwing around. But I want to tease out, our listeners probably can detect my intuition or bias against the fear of monopoly. But let’s talk then — let’s do the opposite and say, give me an example of where a firm has shown true monopolistic power, which is to say, if so much, such a large share of the market and such hostility or such a moat around them, that free competition can’t enter, and consumers actually get hurt. This is a question I don’t know the answer to. But what would you offer as a clear example of where the government needed to, and perhaps did, step in and divide up a company or curtail a company’s activity where it saw clearly that its monopolistic power for consumers?

Brian: Yeah, so to transition from what we think of these silly examples or maybe give another segue is, you know, if you give if you give sole ownership or sole control of let’s say the local power distribution to one company, that, in the United States and in most places that I’m aware of, comes with a bunch of regulations on it because there’s policy tradeoff that you recognize, you know, we want a company, we want someone to take control and to run, let’s say, the local power, but once we’ve given them the ability to run the local power, we don’t want them to charge a crazy high price, so then we regulate prices. And so, you see this granting of a privilege tied with a price regulation, it’s very common in situations that some people worry have monopoly concerns. Power distribution is one, telephone, things like this, okay? Now, the question is, you know, outside of some of these regulated utilities examples, are there other situations that are kind of like that and we could be worried?

Well, the most extreme example is the breakup of AT&T Bell. Now I’m forgetting the exact details, but basically they were given a bunch of telephone contracts and things like that. And then they were broken up into a bunch of smaller systems. Now this was something that was broken up by antitrust, okay, is broken up in a lawsuit to break up the company, but kind of was grounded in more government-granted privileges at the beginning, and so that’s why I had this segue. Now the question is, okay, outside of those examples, are there situations in which this sort of power ultimately accumulates? It depends. I should have a better example off the top of my head, as someone who works in this, but I’m skeptical of it being a super-common thing in terms of just pure monopolization. I can’t think of a really good monopolization clause. There are related things like price fixing and collusion that come to mind. But yeah, I should have a better example beyond AT&T. That would be, because that one’s easy, because it was a bunch of government — one arm of the government grants a monopoly, and then the other government comes in and breaks it up. And so, it’s like, it’s government versus government so I get to have the easy out there.

Joe: Well, I’m comfortable with your answer because I think in many cases and I’m gonna segue here then to a piece that you wrote earlier in the year talking about the name — the title gives it away the title is “Doomsday Mergers: A Retrospective Study of False Alarms,” so I think our listeners can probably anticipate the theme of that that that white paper. I, since we can’t sort of cite easily cases of monopolistic power over consumers, that is to say consumers still have a choice regardless how big a company is. Let’s talk about sort of the general sense that bigger is worse. In your view and your analysis, looking as companies go from small to big and we’re talking about very big, you know, billions and billions of dollars, the Amazons and the Metas of the world. I think there’s a general fear that as companies get bigger, their ability to act against consumer behavior is seemingly obvious — and also at the expense of smaller competitors. Do you see a direct correlation between, let’s say, anti-consumer behavior and size, or are there real reasons that companies merge, become larger? I’m thinking off the top of my head economy of scale, but why would let’s say a company want to merge and become bigger if not for more market power?

Brian: So, let’s separate those two out. It’s really important parts to it. The first is just about large and having power. And this was the tension that I alluded to earlier, that the way to get large is to satisfy customers, to have the best product. to do the best whatever. Take any antitrust case you can think of. Everyone should agree at the beginning of the business at least, the company succeeded, got big by pleasing customers, whether that’s Microsoft, and having the best personal computer operating system dealing with that, whether that’s Google and search, whether that’s Amazon and all of its lawsuits, like, the way you get big is by doing good things for consumers. Okay, that’s at least part of the force. Now, the question is, yes, that’s true, to some extent by pleasing consumers — is there a situation in which it kind of goes too far? The second question. So, I think it’s obvious that there are reasons for companies to get bigger. Companies push to get bigger internally. Amazon famously lost a ton of money early on for a long time because they’re making a bunch of long-term investments to get bigger, to achieve those economies of scale, but then allow them to keep prices low for longer, improve shipping and all of these things. Okay, so that’s, they internally chose to do that. They internally chose to become, you know, try to get big. That was the ultimate goal, to pick a business model that eventually you get big enough that you can make it work. The problem is if it doesn’t work, then you end up losing a ton of money. It’s a risky gamble, but we can look exposed and say that, okay, yes, Amazon succeeded at this. Now the question is, why can’t all companies do that? Why don’t you do that internally? Why do you need to merge as a separate reason to get to scale? And I think that there’s lots of reasons, some of them are more speculative, some of them are better backed by data, that not everyone can be so good internally. It’s difficult, we can pick out the success stories, the reason they’re success stories is that it’s hard to, you know, to go to scale internally. So sometimes one way that we can get around this is through something like an acquisition where there’s something — you know, I’m a big company, I want to get into a new space. I’m going to acquire a company in order to kind of harness specialty in that. And there’s some synergies — I hate that jargony, you know, business school term — but there’s some synergies between what we’re doing and what the other companies are doing. For example, a lot of retail has been really behind on getting into the kind of delivery, quick order shipment stuff that Amazon has done very well. Okay. So, companies like Target will purchase another company, Shipped, that specializes in that because Target didn’t do home delivery. That wasn’t their specialty. But by bringing in home delivery specialty into their company now they can integrate fully. I don’t know the details of how this arrangement works but they can integrate fully, you know, what Target has historically done very well on the retail side with the company that specializes in shipment. So, there you have an acquisition, which is not quite the same thing as a merger, a bigger company purchasing a smaller company, which has clear, I think we can all understand the benefit to the company of bringing these two different companies together.

Now the real, the hard question is, what if they’re two companies that kind of do the same thing? You know, it’s not called a vertical integration between a shipping company and a retail company. These are companies that kind of do the same thing, whether they’re exactly the same thing or they’re sort of competitors, that’s a harder sell. But that’s the concern now in this Subway example that we have a company, Broad Capital, that runs Jimmy John’s as another one that after they’ve been acquired, they’re going to run Subway as well. And now, okay, Subway is not going to necessarily — it’s not as obvious that Subway is going to make Jimmy John’s more efficient in the same way that Target and Ship kind of go together. And that’s the question that people get hung up on these horizontal mergers between competitors, are there efficiencies? And it’s not as obvious that there are, but let me throw out a few possible ones that may be relevant in this case. Okay, in fact, food, in food distribution more generally, this is a super hard market. Margins are thin, kind of like retail overall. Margins are thin, stores open up, franchises open up and close. A possible argument is that by having a company like Rourke Capital own multiple of these brands, you know, exactly how they own it doesn’t necessarily matter. What they’re actually providing is the capital to storm to weather the storms to go through the ups and downs and that the thing that really kills restaurants is not that they’re not viable over a long term, is that they’re not viable for this year when business is bad. But if they’re still around in the next year, they could be bad. And maybe the benefit is having the capital there by having this big, diversified company that can then facilitate loans and things like that. Again, I don’t, I don’t, that may not be true. That may be just sales pitch, but it’s plausible to me.

Joe: No, I appreciate what we’re talking about strategic mergers where, you know, complement each other. And who knows, it might be as simple a thing like they, they can buy lettuce and even larger bulk and that’s enough to, you know, Jimmy John’s end subway more profitable. My point, and I hope it comes through in my questions and your answers, that it’s very difficult for the government to understand when it’s a hostile kind of a merger or not. And I think what I really like about your writing, and I’m going to pivot here now, reference it earlier, to — if we look backward, and you’re talking about prospectively, might this be dangerous or might this be useful merger? But if we look backward, the history books or the newspapers are replete with all these doomsday, as you quote, doomsday predictions of these mergers that if they were allowed to pass, if the FEC and the Department of Justice are, quote, “asleep at the wheel” and allow these mergers to happen, we’re all, as you say, doomed. I think I’m going to cite just a few of the cases that our listeners, I’m sure, will remember in the not-too-distant past. I’m gonna start off with the first one you cite in your paper, which is how did it go when Amazon purchased Whole Foods? I remember hearing that this was the, I don’t know, death app of  —between clicks and bricks that we’d have this conglomerate that no other grocery store or no other online ordering could survive this future monopoly. Share with our listeners, with the wisdom of hindsight, why wasn’t this the end of the world?

Brian: Yeah, it’s a good question. And it’s a fun example to start with, especially ’cause I don’t have the quote in front of me, but Lena Kahn wrote in The New York Times that this would lead to basically, will all be feudal serfs under Amazon once they have Whole Foods. In hindsight, there’s been so many stories about the struggles of the merger in Amazon moving into Whole Foods. I think that with all of these, I think an important thing to remember is how resilient markets are like the U.S. has. Ups and downs, whatever it is, like people who try to have monopoly power, even if they succeed for a little bit, there’s ups and downs and competitions right on their heels. And so, I think if you’re ever gonna bet kind of broad against the U.S. economy, that’s a bad idea. And so, when you have a bunch of people just continually saying, “Oh, this thing’s gonna be bad, this thing’s gonna be bad!” You look back and you see economic growth keep going up. They tend to be wrong. So, why were these particularly wrong? I think I think they were over optimistic in the same way that maybe Amazon was over-optimistic of the efficiencies. But they saw that Oh, maybe now Amazon and Whole Foods would be just so effective that they would then have a bunch of power. And it just turns out that there are diminishing returns at some point, people hit a scale and there’s things that they aren’t good at. Amazon is not good at making phones, right? They couldn’t sell their Fire phone. They really struggled at that. And maybe getting into foods is somewhere in between. It’s not the things that they did great at like putting up, you know, book or selling books and making web servers, but it’s not terrible and so they’ve kind of kept Whole Foods in kind of the same spot.

I think the fundamental thing among all the doomsday mergers that we talk about is just pure hyperbole — that if you go out there and you read newspapers, good bad or indifferent, sorry, good or bad, not indifferent — good or bad, you’re going to hear people make extravagant claims. And turns out good or bad, those extravagant claims tend to be wrong. Most mergers don’t have that bad of an effect or that good of an effect because if they were, it’s kind of the inherent contradiction of these things. If they were just so good, why wouldn’t they emerge 10 years earlier? Why wouldn’t they notice two years later? before it just happens to be that because people are fighting in these markets incremental purchases here and there just don’t make that big of an effect. Sometimes they’re good, sometimes they’re bad, but you know when you see people in the newspaper that are claiming this is going to revolutionize the beer industry or this is going to destroy the beer industry — probably the beer industry is just going to keep going like it was regardless of this merger.

Joe: Again, yeah I don’t want to go through all the instances in your paper. You do mention the Anheuser-Busch acquisition of SAB Miller, which was supposed to wipe out the craft beer market or Google and Fitbit merging and Facebook and Instagram. And with the wisdom of hindsight, it seems to be much ado about nothing. So, let’s we’re getting close to the end of our time together. And I always love to ask experts or people who study matters like this, if they were king for a day, if you were head of the SEC, if Lina Kahn goes and finds something else to do with her time and they appoint you to be head of the SEC, what criteria would you use to determine whether when bigger is better for the consumer or when bigger is worse for the consumer? Where should the government draw the line and actually step into this wonderful free market that seems to be chugging along, as you say, just fine without intervention? When is it appropriate for the government to step in? What are the danger signs?

Brian: You’ve actually already answered it, which is, when is it going to be better for the consumer? OK, that has been an overarching guidepost called the Consumer Welfare Standard that has directed antitrust for the last 40 years. Current enforcers, Lina Kahn is the exemplar of it, but a lot of others as well, do not want to use that as the lodestar. Okay. And so, I would, I would push back that everything is about: Will it help the consumer or will it not? With the caveat is like, you know, how certain are we because we never know in, in, in practice and how likely are we to make a mistake one way or the other, the way that I would direct my focus. And in this a little bit unfair to the current FTC, but I would direct my focus away from these big picture cases, these headline grabbing cases, because most of the good that the FTC can do —which they’re still doing this, so I don’t mean to put them down too much — but most of the good that they can do is very mundane stuff. These contractors are colluding on prices. This local dialysis company has bought up every single dialysis clinic in the greater, you know, greater metro, whatever greater metro area. That sort of stuff, you know, hospitals merging in local markets. This is the sort of stuff that you really have the clear example in the story of why consumers would be hurt, versus the current DOJ case or the lawsuit against Amazon about its integration of Prime and other stuff — like these are they’re great in terms of grabbing headlines because everyone knows Google everyone knows Amazon you can get people riled up good bad or indifferent but it’s really kind of you have to spin yourself in the wheels you know you have spin yourself into knots I mean to try to come up with a case in which Google is like hurting these other hurting consumers — not hurting Microsoft, but consumers by having a worse product, right? You have to find ways to say stuff like, Amazon has a bad search engine because of certain things it’s done. When if you ask anyone, you poll people, this isn’t just me thinking from experience, you poll people and something like 90% of consumers are satisfied, very satisfied with their Amazon experience, so, like a crazy number compared to others. And so I would as much as you can ditch the focus on the big companies that get headlines, focus on the local markets where you have a very clear story, a very clear economic theory of how you hurt consumers and how this merger, how this, you know, practice of collusion or price fixing or something, how that hurts consumers, focus all of your energy on that, do as much of it as you can. Block as many local mergers as you can that are in this environment, and let’s back off from this other more speculative stuff that you hope will work in court, but then it turns out that if you look at the FTC’s track record, they’re oh for whatever in court, because the courts reject it when you go on a limb. If you bring normal mainline cases of big company merging with a similar big company, then you’re not going on such a limb. And so, there you have a chance to actually implement what you want.

Joe: And I’m reminded that I was watching some of the testimony in some of these cases. And it was a pretty provocative statement by a senator who said he lived in a small town. I think it was in Missouri. And there was five gas stations. And every Monday, the owner of the gas station sat down for lunch and decided what the price of gas would be in that town. That was found to be anti-competitive, right? That’s like, that’s collusion. And it was, you know, brought in front of the FTC and, you know, it was prosecuted. So, they should focus on those kinds of things rather than these, as you say, headline-grabbing mega-mergers.

Brian: And there’s lots of work to be done on this. Like the FTC is constantly in front of Congress asking for more money because they don’t think they have enough resources. Well, if you have a certain amount of dollars that you could spend as an agency and you devote a bunch of it to going after these big cases that may not win, probably won’t win, you know, that means you have less to investigate these local markets. And so, when I think — when you’re thinking about, you know, where are you actually going to get the most bang for your buck in terms of helping consumers — again, it’s always about helping consumers. I’ve been a little bit flippant here, it could also be about helping workers or things like that. The trading partners are the word that sometimes people use. Importantly, not about helping the people you’re competing against. Competition ends up running out competitors. We’re not worried about them. We’re worried about the other side of the market and that’s who you want to try to protect. So, devote your resources to protecting those areas in which — using your resources in those areas that we are fairly confident have a good return on their kind of investment.

Joe: That’s right. So, we’re not advocates for competition for competitions. If Amazon outcompetes its competitors, so be it. It does it by making consumers happy.

Brian: And that’s a big change has happened in the antitrust world over the last 60 years. Sixty years ago, you could bring a lawsuit in which the victim of the lawsuit was the people who lost to the new competitor. That’s just not a thing anymore because of antitrust evolution, because of economics being brought in, now the lodestar at the courts is are the consumers, are the other side of the market, are they gonna benefit from that? And this is the type of thing that Lina Khan has been vocal since law school, that this is not what she is about, right? It’s not okay. The problem with Amazon in the Amazon antitrust paradox is that prices are too low, right? Whereas most of us, when we see low prices for consumers, you know, of course, putting aside concerns about, you know putting aside very extreme examples of, you know, slave labor or something — like, in general, low prices are good for consumers in Khan’s worldview, and the thing that brought her to fame, that is not true. That’s not, that’s not what we, sorry, that could be true, but that’s not what antitrust is solely concerned with. And I think that that’s fundamentally the wrong way to think about it. I think it’s destructive to markets. And I think ithe courts have been, you know, the courts have been pushing back with good cause.

Joe: So, to bring this full circle and put a bow on it, we’ve got, we started off by saying that the purpose of your organization is to combine the wisdom of economic theory and law,

the nexus of those two sciences or studies and apply them to policy. What you’re saying is over time, antitrust legislation has become more informed by economics, and it’s stopped focusing on worrying about competitors that are outcompeted and disappear and rather return their focus to what really matters is the benefit of consumers and as you say workers and a recent development with a more, dare I say progressive perspective, which is returning back to ensuring that smaller firms or competitive firms remain competitive and are not outcompeted with firms that have lower prices, better service, and all things consumer-wide. Let’s turn the whole thing on its head. So, this is perhaps a glitch in the arc towards better antitrust legislation and action. Perhaps maybe the ship is turning. We’ve got to wrap it up here. I want to give you an opportunity to tell our listeners where they can find your writing and please share with us how we can read more about you, but close that loop for me. Are we turning the ship or is this a glitch in the arc towards better FTC enforcement?

Brian: I think it’s a sign of the U.S. legal system that it’s a slow thing to change. It comes out of the common law system. It’s not that a few intellectuals came into, you know, antitrust seminars and said we’re going to change the world and therefore it changed. It took decades and decades of convincing judges and, you know, people at the agencies, lots of people getting consensus that there was a better way to do antitrust and over, over, you know, from the ‘70s, you know, up till 2010, that was kind of a very clear direction in which lots of people were moving. Now there’s a pushback, there’s been a pushback to trying to change that, but it takes more than just convincing one chair of the FTC. The courts need to be convinced, and so far they have not. And so, I don’t, we’ll see. I mean, I could come up here and say that this is going to be the end of the American market unless you support ICLE. But as I said at the beginning, the American markets are pretty resilient. And so, I’m never gonna bet against the U.S. economy barring some very extreme thing. And so, I don’t think it’s gonna be too bad. There’s bad policy here and there, but that stuff gets to be worked out.

Joe: So, where can our listeners find your work if they want more wisdom than this 30 minutes can offer?

Brian: Yeah, well, laweconcenter.,org is our organization’s website, lots of stuff on there, great search engine there to find everything that we write from academic papers to op-eds to quotes in local newspapers, things like that, great spot to find. I also write a Substack that I mentioned earlier, economicforces.xyz. It’s on Substack, we write a lot on antitrust and different policy stuff, that’s with a colleague at University of Mississippi, Josh Hendrickson, so I write a lot of stuff there. And embarrassingly, I spend a lot of time on Twitter, so if, or X, sorry, I’m too old for this, on X, and so you can find me at Brian Albrecht, Brian C. Albrecht on X too. And so there, I talk a lot about my frustrations with the FTC there.

Joe: Wonderful, I’ll continue to read it and I hope you’ll consider coming back. If, in fact, it turns out that Senator Warren was right, and Subway does create a sandwich shop monopoly and we’re all forced to eat Subway sandwiches for lunch, I hope you’ll come back if that were to happen.

Brian: When that happens, I will definitely be back but hopefully we can find some other case to talk again.

Joe: All right, well, thank you for joining me. Thank you very much for joining Hubwonk, Brian.

Brian: Thanks, Joe.

Joe: This has been another episode of Hubwonk. If you enjoyed today’s show, show, there are several ways to support Hubwonk and Pioneer Institute. It would be easier for you and better for us if you subscribe to Hubwonk on your iTunes Podcatcher. It would make it easier for others to find Hubwonk if you offer a five-star rating or a favorable review. We’re grateful, of course, if you want to share Hubwonk with friends. If you have ideas for me about future episode topics, you’re welcome to email me at hubwonk@pioneerinstitute.org. Please join me next week for a new episode of Hubwonk.


Joe Selvaggi talks with Dr. Brian Albrecht, an economist with the International Center for Law and Economics. They separate fact from fiction when it comes to the public’s and politicians’ concerns over allegedly anti-consumer practices of big business and discuss when antitrust action by the federal government is justified.

Brian Albrecht is Chief Economist of the International Center for Law & Economics (ICLE), which he joined in February 2022. In his role, he is responsible for the application and integration of theoretical and empirical economic methodologies into ICLE’s research. He is also an assistant professor of economics in the Coles College of Business at Kennesaw State University, where he has taught since 2020. Brian’s research focuses on price theory, information economics, competition and innovation, and political economy.

He has published in both academic journals, such as Contemporary Economic Policy, Public Choice, PLoS ONE, Journal of Macroeconomics, and the Journal of Economic Methodology, as well as popular media like the Boston Globe, Star Tribune, The Hill, and City Journal. Brian also writes the Economic Forces newsletter for Substack.

He earned his PhD in economics from the University of Minnesota in 2020. He previously earned his MA in economics, also from the University of Minnesota, and an MSc in economics of public policy from the Barcelona Graduate School of Economics. He received his bachelor’s degree in physics and political science from St. Olaf College.