DOJ Antitrust Division is staffing up to match big tech gains, top economist says

News Analysis 24 January

DOJ Antitrust Division is staffing up to match big tech gains, top economist says

The US Department of Justice Antitrust Division is actively adding new tools and expertise to help enforce fair competition in an environment of increasingly complex technologies and industry structures, said Susan Athey, chief economist for the division.

Tools of federal antitrust enforcers have not kept pace with innovations in technology and business, and the agency is engaged in an effort to catch up, she told attendees at The Tech Antitrust Conference in Palo Alto, California, on Friday (20 Jan).

Her remarks were in line with themes struck by Assistant Attorney General Jonathan Kanter, head of the Antitrust Division, who has been vocal about his intention to curb big tech dominance and the need for new tools from Congress to do the job.

Since joining the DOJ in June of 2022, Athey has focused on helping to beef up the agency’s ability to understand new technological innovations and the sophisticated businesses behind them, and to develop new theories and models to carry into litigation.

“One of the first priorities that I’ve been working on at the DOJ is expanding the expertise of the Antitrust Division for that new reality,” she said.

In addition to Athey – a professor in the economics of technology at Stanford University – the agency’s new leadership has added the role of principal economist, and hired a new chief technologist with a background in software engineering and artificial intelligence, she explained.

They continue to add expertise in other areas, as well, she said. 

“Having people in-house that just understand what the technology is, at the moment that you first see something come across the door – especially in the context of mergers, where things go incredibly fast – is incredibly helpful,” said Athey.

Lawyers for federal antitrust enforcers have struggled in recent attempts to block major mergers, particularly in cases with vertical concerns or other novel theories. 

DOJ lost litigation to halt the unions of AT&T [NYSE:T] and Time Warner, as well as Change Healthcare with UnitedHealth [NYSE:UNH]. Meanwhile, the Federal Trade Commission came up short in its effort to stop Illumina’s [NASDAQ:ILMN] takeover of GRAIL.

Athey avoided mentioning specific cases but noted that modern industrial organization has created a landscape with byzantine industry structures and complex relationships among participants that can obfuscate motivations for mergers and the ultimate impact on markets.

“So, there may not be a single, off-the-shelf economic theory model that tells you the consequences for customers,” she said.

“The economic theory that really could answer these questions is not fully written,” Athey added. “We don’t have models that are as complex as the industries that we’re analyzing.”

Another challenge for enforcers comes from the growing in-house sophistication of companies in dealing with antitrust matters, from the latest data-analysis techniques to innovative and rigorous research, she said.

“We’re seeing a lot of work done inside companies, in academics and litigation, that goes beyond the traditional calculating market shares or understanding how your consumers respond in aggregate to changes in price,” she explained.

Many modern CEOs grew up in data-driven organizations and are comfortable with the types of complicated analyses routinely presented to them by staff economists to make business decisions. That is creating a knowledge disparity that can manifest itself during litigation to the disadvantage of the government, according to Athey.

“The ability of the CEO to understand is far beyond the capability of the attorneys and the law clerks, so we have to figure out how to bring these things back into balance,” she said.

Low salaries and the “cumbersome” nature of government jobs continue to pose headwinds for recruiting quality talent, forcing the agency to be creative about also engaging groups with needed expertise, from both academia and industry.

She reiterated the current administration’s philosophy against letting markets police themselves.

“The perfect outcomes are not just automatically going to happen,” Athey said. “We have to really work to make them happen.”

Athey also offered a glimpse into a joint effort by the DOJ and the FTC to modernize merger guidelines.

Federal antitrust enforcers have received thousands of public comments in the year since the announcement, many from small businesses calling for “more aggressive enforcement” of competition laws, she said.

One priority for the agency’s number-crunchers involves the precision of the guidelines’ economic discussions, she said.

“We need to make the economics clear,” Athey said. “You don’t want to be writing an expert report and spending pages in an expert report interpreting the guidelines or debating about what things mean.”

Toward that end, the new guidance will make heavy use of detailed examples and FAQs to show how the concepts apply to the real and complex cases the agencies are facing today.

“And then get the litigation to focus on the facts and the evidence in those cases, rather than a theory about what it should be about,” Athey said.

Examples will address areas like platforms, data and labor market monopsony.

“Those are all things that we didn’t have a lot of specific guidance on,” she said.

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