On May 12, 2022, the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ) concluded their Listening Forums on Firsthand Effects of Mergers and Acquisitions, a collection of four virtual sessions that focused on competition in the food and agriculture, healthcare, media and entertainment, and technology industries, respectively. The stated purpose of the forums was to gain a wide breadth of perspectives and input from real-world market participants in advance of revising the merger guidelines. Accordingly, each session began with opening remarks from FTC Chair Lina Khan and DOJ Assistant Attorney General Jonathan Kanter, followed by scheduled speakers and concluding with an open forum for public comment.
While each forum illuminated a different sector of the economy, there were a number of recurring themes, including concerns over decreased consumer choice; decreased innovation; the negative impact of mergers and market dominance on labor markets; and the effect of exclusionary practices, including self-preferencing, on small market players. It is noteworthy that the participants largely ignored the impact of consolidation on prices, historically the focus of antitrust scrutiny. In fact, when speakers mentioned pricing, it was often to complain about the ability of large companies to charge consumers less than their smaller competitors. The below sections summarize the topics covered in each listening section and highlight these common themes. Also notable are the sectors that were selected for each session, which provide some signal of where the antitrust agencies expect to focus their resources.
Food and Agriculture
The March 28 forum included speakers from the beef, pork, dairy, wheat, and grocery sectors. They explained that, from their individual perspectives, consolidation and exclusionary practices decrease consumer choice, dampen innovation, and endanger food security. In her opening remarks, Chair Khan spoke of the government's approach to ensuring "fair and competitive" markets, stating that "some evidence" suggests that consolidation in the sector has resulted in increased prices, lower farmer income, and a less resilient food system.
The speakers largely echoed these concerns. Owners of independent grocery stores complained about the inability to compete with large box stores like Walmart, which they argued could use its buying power to dictate terms to suppliers, demand priority delivery, and extract prices that its smaller competitors could not. This Walmart effect has left smaller community grocery stores struggling to compete. The participants explained that as these community grocers become less competitive and exit local markets, consumers will see decreased product variety and selection or a supply of products that is unresponsive to consumer demand.
Speakers also argued that large companies co-opted niche labeling markets created by smaller suppliers, and that the dearth of players in agriculture R&D has decreased innovation in weed control chemicals, which could result in future weed resistance and lower crop yield.
Of particular note, in her later comments, Chair Khan stated that consolidation in one market could have "cascading ramifications" in "seemingly unrelated markets" that the agencies should keep in mind. Such concerns generally have been dismissed previously, as enforcement has focused on effects in the particular product markets where the merging firms actually compete. Concerns about potential impacts in other markets largely are considered too distant and subject to exogenous market forces potentially unrelated to the merger, making it too speculative to serve as the basis for enforcement. While agencies certainly could consider such effects going forward, it seems as though that will not be the predominant issue in future merger reviews as, if there isn't a problem in the market that is the subject of the merger, it seems unlikely that the deal would cause problems in other, unrelated markets.
Healthcare
The healthcare forum, held on April 14, focused primarily on the hospital sector, with the bulk of the session dedicated to hospital staff concerned with horizontal and vertical integration decreasing staff salaries, decreasing the quality of patient care, and increasing prices. Participants reiterated the opinion that private equity firms' investments in the healthcare sector created market incentives whereby increasing profits led to decreased patient care. The speakers also argued that hospital mergers led to staffing shortages that contributed to the decrease in care, particularly in rural and underserved communities. Whether the agencies will consider private equity firms' investments themselves as antitrust issues seems unlikely absent situations where such firms also have investments in (or own) competing businesses.
Speakers also argued that the vertical integration of pharmacy benefit managers (PBMs) with insurers has led to decreased quality and choice of care and increased prices.
Media and Entertainment
The April 27 forum featured a host of speakers from the news, television, and music sectors that were primarily concerned with the reduction in quality and quantity in their respective industries. Journalists stated that consolidation in the news industry has diminished the quality of news by increasing the number of mistakes and failing to stop the spread of disinformation. They also argued that the reduction in the quantity of newspapers has resulted in the neglect of local concerns as merged companies focus on national news topics.
Speakers from television and media stated that their industries are uniquely "cultural" and that "extraction-based" business models not only fail to account for this aspect of the market, but that they reduce the quantity and variety of content, often to the detriment of diverse voices.
Finally, like the prior forums, speakers from all sectors bemoaned consolidation's effects on the labor market, resulting in decreased wages for their services.
Technology
The final listening session, which took place on May 12, featured a wide variety of voices from the technology sector and beyond, including a start-up founder, a venture capitalist, a member of a privacy advocacy organization, and the owner of a small bookstore.
The speakers largely reiterated the same concerns as those in prior forums, namely that consolidation in their respective markets has decreased the quality, quantity, and variety of consumables, while depressing wages.
Responding to the panelists, Chair Khan acknowledged concerns that large technology platforms can become "key arteries of commerce" that have become essential to everyday life. She was sympathetic to the idea that such platforms can exert their dominance over their users with little to no checks, depriving them of meaningful choice, dampening innovation, and eating up the "lion's share" of a user's profits. She also stated that consumer protection issues can arise in mergers in which sensitive consumer data is transferred from one company to another, potentially subjecting locked-in users to worsened privacy terms. Finally, she expressed concern about mergers of large companies and small, emergent organizations in adjacent markets that could become potential competitors.
AAG Kanter similarly expressed concern with network effects, lock-in, and self-preferencing in some technology markets. As he also explained during the media and entertainment forum, AAG Kanter stated that consolidation and the use of AI can limit the flow of information to the detriment of political health.
The primary purpose of these forums was to hear from industry participants and, as expected, the range of topics was broad and varied. The forums emphasized non-price factors such as quality, variety, and innovation, which is in line with the agencies' recent interest in exploring the reach of antitrust law and novel theories of harm. It remains to be seen the extent to which these listening forums will influence the regulators' thinking in revising the merger guidelines, but they do offer a glimpse into the potentially expansive interpretations of anticompetitive harm that the agencies could adopt.
