Francis Chung/POLITICO via AP Images
Federal Trade Commission chair Lina Khan in March 2023
On Tuesday, a U.S. district court judge in Oregon, after a three-week trial, ruled for the Federal Trade Commission that the proposed $25 billion merger between Kroger and Albertsons should be blocked. Less than an hour later, President-elect Donald Trump announced his intent to depose FTC chair Lina Khan in favor of a fairly bog-standard Republican, former Mitch McConnell chief counsel and current FTC commissioner Andrew Ferguson. While Ferguson is expected to maintain an aggressive posture toward large tech platforms, the rest of his agenda would likely fit comfortably if presented in a paper from the Chamber of Commerce.
Yet these twin events say something important about the staying power of the viewpoints Khan and her fellow New Brandeis adherents brought during the Biden administration. The new approach will endure despite the federal changeover, precisely because the one segment of the government thought to be impregnably conservative and pro-business—the judiciary—has become quite accepting of neo-Brandeisian arguments.
The Sherman Act and other antitrust laws were uniquely constructed for state attorneys general and private litigants to use. Those cases will continue, armed with the backing of arguments and procedures put forth by Khan and Jonathan Kanter, her counterpart in the Justice Department’s Antitrust Division. The fact that judges have moved in Khan and Kanter’s direction suggests a revival of long-dormant laws restraining the power of corporations to dominate American life. That will not be suppressed.
I don’t want to overcomplicate the picture: During Donald Trump’s second term, merger booms, selective prosecutions, and a general backsliding on most forms of corporate concentration are most certainly ahead. But the cause of reversing these harms will live on, because the intellectual argument is being won in courtroom after courtroom.
IT’S WORTH LOOKING IN DEPTH at the Kroger-Albertsons ruling the FTC won this week, which has resulted in the parties calling off the merger. The FTC argued primarily that Kroger and Albertsons are leading supermarket rivals, and that a combination would lessen competition and create undue concentration across the country. Judge Adrienne Nelson, a Biden appointee, bought that entirely. In doing so, she reinforced arguments Khan and her colleagues have been making since taking over the antitrust agencies.
For example, market definition is a major component of antitrust cases. The FTC argued for a defined market in “one-stop shopping” groceries, where Kroger and Albertsons compete. In response, the companies claimed that people buy groceries at lots of locations: superstores like Walmart, discounters like Aldi or Dollar General, specialty stores like Whole Foods. Therefore they have lots of competition.
Judge Nelson sided with the FTC’s market definition, citing another recent FTC victory, which blocked a merger between fashion conglomerates Tapestry and Capri. The judge in that case, also a Biden appointee, ruled that “cross-shopping is not necessarily indicative of reasonable interchangeability”; in other words, just because people buy goods in several places doesn’t nullify head-to-head competition, in this case among large grocery stores.
Judge Nelson also made use of the 2023 update to the Merger Guidelines, authored by Khan and Kanter. This update, the first since 2010, basically tells the federal judiciary what standards antitrust agencies use to evaluate mergers. I was slightly skeptical that this would alter hardened judicial opinions, but it worked in this case.
The fact that judges have moved in Khan and Kanter’s direction suggests a revival of long-dormant laws restraining the power of corporations to dominate American life.
Applying the 2023 guidelines to Kroger-Albertsons showed that as many as 1,900 geographic markets would be anti-competitive after the merger. The companies’ main economic analyst, Dr. Mark Israel, just ignored the 2023 guidelines and pegged his analysis to 2010, claiming that the thresholds for the 2023 guidelines were “unreasonably low.” But Judge Nelson ruled that the 2010 guidelines actually had unreasonably high thresholds that were more generous toward mergers. (Hilariously, Israel also claimed there was no evidence that a combined Kroger-Albertsons would raise prices even if it had 100 percent market share; the judge shot that down too.)
Judge Nelson, then, explicitly endorsed the 2023 merger guidelines, which help judges, not all of whom have expertise in antitrust, understand the law. It’s certainly possible that Ferguson, the incoming FTC chair, and Gail Slater, the new DOJ Antitrust head, will redo those guidelines. But Trump’s enforcers didn’t alter the Merger Guidelines in his first term, and I’ve been told that Slater, who advised Vice President-elect JD Vance, represents at least some continuity with the Khan-Kanter way of thinking. I expect prosecutorial discretion to wave a lot through, but when Trump’s enforcers want to enforce, like against Big Tech, they may want the stronger guidelines in place. So the 2023 guidelines might stick around, at least for a few years.
Judge Nelson later cited a 1967 case in rebutting the idea that merger “efficiencies” could outpoint any lessening of competition: “Congress was aware that some mergers which lessen competition may also result in economies [of scale] but it struck the balance in favor of protecting competition.” That revives the notion that congressional intent is actually important in merger law, rather than whatever Robert Bork said.
The FTC also argued that labor unions would suffer from a Kroger-Albertsons tie-up, because having competition helps facilitate collective bargaining (Kroger workers on strike, for example, could send customers to an Albertsons store, gaining leverage over management). This labor market theory of harm, which goes beyond the usual “consumer welfare” approach, was part of the 2023 guidelines. While Judge Nelson said the evidence the FTC provided in this case was too limited to make a full assessment, she did say that the agency “present[ed] a compelling and logical case for applying traditional antitrust analysis to labor markets.” That brings back case law dating back to the 1940s that antitrust extends to workers, not just consumers.
That theory has been reinforced in other cases, like the Justice Department’s successful blockage of a publishing merger in which it claimed worker pay (in the form of author advances) would be reduced. The FTC win blocking Tapestry-Capri also cited labor harms, and the Communications Workers of America is opposing a proposed deal between T-Mobile and US Cellular along similar lines.
LET’S BE VERY CLEAR. At the federal level, there will be a weakening of antitrust enforcement. There’s a reason that private equity is readying for a merger surge, that Hollywood is salivating over the consolidation to come, that mega-deals have already been pursued in everything from construction materials to animal health care. A $14 billion merger was announced this week between Omnicom and Interpublic Group, two of the nation’s biggest advertising conglomerates, which an analyst praised for the “tremendous industrial logic” in the combination, a real doozy of a statement. Even CNBC’s Jim Cramer had to concede how “monopolistic” that deal would be.
Khan’s replacement, Ferguson, has described an “evolution” on antitrust of sorts, but only as it relates to the partisan bugaboo of alleged conservative censorship on Big Tech platforms. (To the extent that such censorship exists, it goes far deeper than any one party.) On everything else, Ferguson will likely revert to the status quo: He opposes banning noncompete agreements, opposes banning junk fees, and even opposed a recent enforcement action meant to prevent systematic wage suppression for employees in the building sector.
Mark Meador, the Republican who will, technically speaking, replace Khan on the Commission, is quite a bit better than Ferguson on many issues. If you squint, you could imagine a left-right coalition on discrete topics. But the holder of the gavel is not going to be amenable to that. And unlike the Biden administration, which handed over management of these agencies to those he hired, Trump will likely have a far heavier hand, weaponizing antitrust enforcement against disfavored enemies and vanishing it when it comes to allies.
Ferguson also pitched himself for the job by vowing to fight wokeness and “terminate uncooperative employees” at the FTC, which is darkly comic considering that a central complaint from pro-monopolists during Khan’s term was her effect on agency morale. Seeing people fired for uncooperativeness would probably frustrate staff!
And yet, despite all this, there is hope. There is hope because Lina Khan and Jonathan Kanter have started to turn around the most implacable force in American life: the judiciary. The wins have piled up so fast that the story New York magazine published a year ago today, “Lina Khan’s Rough Year,” now stands as one of the worst evaluations of a public official since “Dewey Defeats Truman.” Khan’s FTC won on Kroger-Albertsons, won on Tapestry-Capri, won on getting its Meta case to trial, won on Illumina and IQVIA and Sanofi and numerous others; gamers just started getting money returned to them after a win over Epic Games involving illegal billing inside Fortnite. Kanter’s Antitrust Division won the aforementioned publishing case, and stopped JetBlue from acquiring Spirit, and got Google labeled a monopolist, and much more.
These aren’t just discrete victories; they are precedent-setting cases that have brought antitrust enforcement back to life. In future cases, they will be cited, and used again, validating the theories of the neo-Brandeisians.
Breaking through the ice of the judiciary will give like-minded state attorneys general the wherewithal to pursue cases. In fact, a judge in King County, Washington, blocked the Kroger-Albertsons merger on the same day that the FTC won its case. That can be repeated, with judges more willing to put a check on corporate power and state-level enforcers more emboldened to do so.
Just this week, DOJ Antitrust got another important theory accepted in federal court, in the matter of algorithmic price-fixing for rental housing. The department has argued that landlords colluding with a third party to send proprietary data and get recommendations for higher rental prices is inherently illegal, just as it would be if the landlords went into a room and colluded directly. Just because the lessors used an intermediary “does not preclude the existence of an agreement or change its unlawful nature,” Judge Robert S. Lasnik (a Clinton appointee) wrote in the ruling, reversing two previous judges who threw out similar cases.
Importantly, that ruling, which allowed a case to move forward in Washington state against Yardi Systems (a leading algorithmic tool for price-setting in rental housing), was a private class action litigation. Even if the new regime withdraws Kanter’s case against RealPage that turns on these issues, antitrust lawyers can use this and other theories that Khan and Kanter successfully got past judges to bring cases, and attack anti-competitive conduct.
Khan and Kanter have inspired a small army of litigators and policymakers, some of whom will remain in the government, and some of whom will fight the good fight in courts. FTC commissioners Alvaro Bedoya and Rebecca Kelly Slaughter were quick out of the gate to question Ferguson on his priorities around health care, grocery prices, consumer fraud, and more. During the first Trump administration, Rohit Chopra showed the power of dissent at the FTC to influence the overall agenda. Bedoya and Slaughter’s early feistiness could be a harbinger. And if Ferguson and Slater cancel the cases against, say, Ticketmaster, or shutter the investigation into UnitedHealth, there will be serious blowback.
Personnel is policy; that Elizabeth Warren watchword remains true. But in the case of antitrust, once the personnel set the policy, there’s a whole movement underneath that can maintain it. Robert Bork was solicitor general for a while and acting attorney general for about three months, but his real power in antitrust came from the outside, when he led the way in convincing the judiciary to essentially rewrite the law. Khan and Kanter have showed the path back, and whether on the inside or outside, their intellectual force is actually winning where it counts: with judges who have backed up their views. Others can now take up this cause, and continue to nudge the country in a better direction.
