[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE DEPARTMENT OF JUSTICE ANTITRUST DIVISION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE, REGULATORY REFORM, AND
ANTITRUST
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, NOVEMBER 14, 2023
__________
Serial No. 118-53
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
54-185 WASHINGTON : 2024
COMMITTEE ON THE JUDICIARY
JIM JORDAN, Ohio, Chair
DARRELL ISSA, California JERROLD NADLER, New York, Ranking
KEN BUCK, Colorado Member
MATT GAETZ, Florida ZOE LOFGREN, California
ANDY BIGGS, Arizona SHEILA JACKSON LEE, Texas
TOM McCLINTOCK, California STEVE COHEN, Tennessee
TOM TIFFANY, Wisconsin HENRY C. ``HANK'' JOHNSON, Jr.,
THOMAS MASSIE, Kentucky Georgia
CHIP ROY, Texas ADAM SCHIFF, California
DAN BISHOP, North Carolina ERIC SWALWELL, California
VICTORIA SPARTZ, Indiana TED LIEU, California
SCOTT FITZGERALD, Wisconsin PRAMILA JAYAPAL, Washington
CLIFF BENTZ, Oregon J. LUIS CORREA, California
BEN CLINE, Virginia MARY GAY SCANLON, Pennsylvania
KELLY ARMSTRONG, North Dakota JOE NEGUSE, Colorado
LANCE GOODEN, Texas LUCY McBATH, Georgia
JEFF VAN DREW, New Jersey MADELEINE DEAN, Pennsylvania
TROY NEHLS, Texas VERONICA ESCOBAR, Texas
BARRY MOORE, Alabama DEBORAH ROSS, North Carolina
KEVIN KILEY, California CORI BUSH, Missouri
HARRIET HAGEMAN, Wyoming GLENN IVEY, Maryland
NATHANIEL MORAN, Texas BECCA BALINT, Vermont
LAUREL LEE, Florida
WESLEY HUNT, Texas
RUSSELL FRY, South Carolina
------
SUBCOMMITTEE ON THE ADMINISTRATIVE STATE,
REGULATORY REFORM, AND ANTITRUST
THOMAS MASSIE, Kentucky, Chair
DARRELL ISSA, California J. LUIS CORREA, California,
KEN BUCK, Colorado Ranking Member
MATT GAETZ, Florida HENRY C. ``HANK'' JOHNSON, Jr.,
MIKE JOHNSON, Louisiana Georgia
DAN BISHOP, North Carolina ERIC SWALWELL, California
VICTORIA SPARTZ, Indiana TED LIEU, California
SCOTT FITZGERALD, Wisconsin PRAMILA JAYAPAL, Washington
CLIFF BENTZ, Oregon MARY GAY SCANLON, Pennsylvania
LANCE GOODEN, Texas JOE NEGUSE, Colorado
JEFF VAN DREW, New Jersey LUCY McBATH, Georgia
BEN CLINE, Virginia ZOE LOFGREN, California
HARRIET HAGEMAN, Wyoming STEVE COHEN, Tennessee
NATHANIEL MORAN, Texas GLENN IVEY, Maryland
CHRISTOPHER HIXON, Majority Staff Director
AMY RUTKIN, Minority Staff Director & Chief of Staff
C O N T E N T S
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Tuesday, November 14, 2023
Page
OPENING STATEMENTS
The Honorable Thomas Massie, Chair of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Kentucky.............................................. 1
The Honorable J. Luis Correa, Ranking Member of the Subcommittee
on the Administrative State, Regulatory Reform, and Antitrust
from the State of California................................... 2
The Honorable Jim Jordan, Chair of the Committee on the Judiciary
from the State of Ohio......................................... 3
The Honorable Jerrold Nadler, Ranking Member of the Committee on
the Judiciary from the State of New York....................... 4
WITNESS
The Hon. Jonathan Kanter, Assistant Attorney General, Antitrust
Division, Department of Justice
Oral Testimony................................................. 6
Prepared Testimony............................................. 8
LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING
All materials submitted for the record by the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust are
listed below................................................... 48
Materials submitted by the Honorable J. Luis Correa, Ranking
Member of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of California,
for the record
An article entitled, ``AbbVie, Amgen Among Coalition Formed
to Oppose New Merger Rules,'' Oct. 4, 2023, Bloomberg Law
News
A letter entitled, ``NAM to FTC: Withdraw Proposed Merger
Rules,'' Oct. 3. 2023, National Association of
Manufactures
A letter from multiple organizations, to Senator Dick Durbin,
Chair of the Senate Committee on the Judiciary from the
State of Illinois; Senator Lindsey Graham, Ranking Member
of the Senate Committee on the Judiciary from the State
of South Carolina; the Honorable Jim Jordan, Chair of the
Committee on the Judiciary from the State of Ohio; and
the Honorable Jerrold Nadler, Ranking Member of the
Committee on the Judiciary from the State of New York
An article entitled, ``Summers Says Tougher US M&A Rules Seem
Like `War on Business,' '' Jul. 20, 2023, Bloomberg
An article entitled, ``US Pushes to Change EU's Digital
Gatekeeper Rules,'' Jan. 31, 2022, Politico
A letter from various Members of Congress to President Biden,
Feb. 23, 2022
A letter from the Senate Finance Committee to President
Biden, Feb. 1, 2022
A letter from Members of Congress to President Biden, Jun.
21, 2023
A letter from the Senate Finance Committee to President
Biden, Mar. 9, 2023
A press release entitled, ``Digital Markets Act: Commission
designates six gatekeepers,'' Sept. 6, 2023, European
Commission
A letter from Lina Khan and Jonathan Kanter to Ambassador
Katherine Tai, Mar. 22, 2023, to Senator Dick Durbin, Chair of
the Senate Committee on the Judiciary from the State of
Illinois; Senator Lindsey Graham, Ranking Member of the Senate
Committee on the Judiciary from the State of South Carolina;
the Honorable Jim Jordan, Chair of the Committee on the
Judiciary from the State of Ohio; and the Honorable Jerrold
Nadler, Ranking Member of the Committee on the Judiciary from
the State of New York; submitted by the Honorable Darrell Issa,
a Member of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of California,
for the record
A letter from the U.S. Chamber of Commerce re antirust guidelines
for international enforcement and cooperation, Dec. 1, 2016,
submitted by the Honorable Jerrold Nadler, Ranking Member of
the Committee on the Judiciary from the State of New York, for
the record
Materials submitted by the Honorable Pramila Jayapal, Member of
the Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Washington, for the
record
A letter from the Honorable Pramila Jayapal, Member of the
Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Washington, and
Senator Elizabeth Warren from the State of Massachusetts,
to Sundar Pichai, CEO, Google LLC, Jan. 5, 2022
A letter from multiple Members of Congress to President
Biden, Nov. 6, 2023,
A letter from multiple Members of Congress to White House
Counsel Ed Siskel, Nov. 13, 2023
A letter from multiple organizations, Nov. 14, 2023, to Senator
Dick Durbin, Chair of the Senate Committee on the Judiciary
from the State of Illinois; Senator Lindsey Graham, Ranking
Member of the Senate Committee on the Judiciary from the State
of South Carolina; the Honorable Jim Jordan, Chair of the
Committee on the Judiciary from the State of Ohio; and the
Honorable Jerrold Nadler, Ranking Member of the Committee on
the Judiciary from the State of New York; submitted by the
Honorable Scott Fitzgerald, a Member of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Wisconsin, for the record
APPENDIX
A letter from Small Business Rising to The Honorable Thomas
Massie, Chair of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of Kentucky,
and the Honorable J. Luis Correa, Ranking Member of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust from the State of California, submitted by the
Honorable Becca Balint, a Member of the Committee on the
Judiciary from the State of Vermont, for the record
QUESTIONS AND RESPONSES FOR THE RECORD
Questions to the Hon. Jonathan Kanter, Assistant Attorney
General, Antitrust Division, Department of Justice, submitted
by the Honorable Ken Buck, a Member of the Subcommittee on the
Administrative State, Regulatory Reform, and Antitrust from the
State of Colorado; the Honorable Scott Fitzgerald, a Member of
the Subcommittee on the Administrative State, Regulatory
Reform, and Antitrust from the State of Wisconsin; the
Honorable Henry C. ``Hank'' Johnson, Jr., a Member of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust from the State of Georgia; the Honorable Jerrold
Nadler, Ranking Member of the Committee on the Judiciary from
the State of New York; and the Honorable J. Luis Correa,
Ranking Member of the Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust from the State of California
No response received at time of publication
OVERSIGHT OF THE DEPARTMENT OF JUSTICE ANTITRUST DIVISION
----------
Tuesday, November 14, 2023
House of Representatives
Subcommittee on the Administrative State,
Regulatory Reform, and Antitrust
Committee on the Judiciary
Washington, DC
The Committee met, pursuant to notice, at 10:09 a.m., in
Room 2141, Rayburn House Office Building, the Hon. Thomas
Massie [Chair of the Subcommittee] presiding.
Members present: Representatives Massie, Jordan, Issa,
Buck, Gaetz, Spartz, Fitzgerald, Bentz, Cline, Van Drew,
Hageman, Correa, Nadler, Johnson, Jayapal, Scanlon, Neguse,
McBath, and Ivey.
Mr. Massie. The Subcommittee will come to order. Without
objection, the Chair is authorized to declare a recess at any
time and that may be necessary today because I believe we are
going to votes at 10:30 a.m.
We welcome everyone to today's hearing on Oversight of the
Department of Justice Antitrust Division. I will now recognize
myself for an opening statement.
Assistant Attorney General Jonathan Kanter took the reins
of the Department of Justice Antitrust Division two years ago
this month. Today, the Subcommittee will examine and conduct
oversight of the Antitrust Division's approach during his
tenure to date. The DOJ's refocusing of efforts and revision of
antitrust guidelines raises questions for this Committee, but
it is not just Congress that has taken notice of DOJ's most
recent actions or lack thereof. Patrick Hedger, Executive
Director of the Taxpayers Protection Alliance, released a
statement ahead of today's hearing which reads:
Working in tandem with the FTC, the DOJ this year issued
revised guidelines the agencies will use in evaluating
potential antitrust cases. The revised antitrust guidelines fly
in the face of established antitrust precedent which focuses on
consumer welfare. The new guidelines signal these agencies will
pursue cases to achieve policy objectives outside of consumer
protection. Essentially, DOJ and FTC want to use antitrust as
another tool of administrative fiat to circumnavigate Congress
and bully companies into advancing progressive political and
policy ends. The latest legal adventurism at these agencies is
wasting taxpayer time and resources, chasing novel legal
theories beyond the mandate of Congress. These agencies are
ripe to be reined in and refocused on basic consumer
protection.
The mission of promoting consumer welfare and promoting
economic competition that defines the DOJ's Antitrust Division
seems to have fallen by the wayside of DOJ's current
initiatives and priorities. The lack of transparency in which
the DOJ operates raises many questions as to what those
initiatives and priorities are exactly. We hope to get some
clarity on that today. We have got a lot to get through so I
will yield back.
I now recognize the Ranking Member, Mr. Correa, for an
opening statement.
Mr. Correa. Thank you, Mr. Chair. I also want to welcome
Attorney General Kanter today. As you know, the United States'
gross domestic product and our economic growth is soaring.
Unemployment is very low, but still back home, many
Californians are still struggling. That is why I am pleased to
welcome you today to talk about the good work you have done.
Your efforts include efforts to make sure workers are paid
fairly, that small businesses can succeed, and that consumers
are protected from artificially high prices. Your efforts have
helped California, as well as many Americans survive during
these very difficult times.
It is also important that Congress and DOJ work together to
ensure small businesses can also thrive by assuring a plain
level field--an even playing level field by minimizing
anticompetitive forces that hinder innovation or opportunities
because consumers benefit from competition.
Your testimony, your written testimony, you highlight some
of the successes that you have heard about. You won a verdict
against fraudsters who illegally obtained $240 million granted
by the California Department of Transportation in fraudulent
contracts. Thank you for that work.
Generic price area, you have reached deferred prosecution
agreement against two generic drug manufacturing companies,
resulting in criminal penalties of $250 million and also
divestiture of some of their drug lines. Again, ultimately, the
bottom line is you helped reduce drug prices for consumers in
California and throughout the United States.
Of course, the big issue is grocery store prices and I
applaud your efforts to stop anticompetitive practices that
have led to increasing food prices at the grocery store. Back
home, California families have been paying way too much for
groceries including chicken, pork, and turkey at the grocery
store.
Your Antitrust Division efforts have benefited many
Americans by uplifting them and providing a level playing field
for businesses. I support your efforts, but I do have some
concerns. Your expertise at DOJ, you have the primary authority
to pursue antitrust enforcement, together I should say, with
the FTC.
In the airline industry, both the DOJ and DOT have long
agreed that your department is the lead enforcement agency and
I agree. I am concerned that the DOT, that is the Department of
Transportation, has indicated that they may well ignore decades
of precedent and more importantly, Congressional intent and
will try to attempt to block mergers and acquisitions when your
Department of DOJ decides not to pursue legal election or fails
to secure a verdict in court.
I fear that if your department supports the DOT's efforts
to become the enforcer of antitrust laws, this will erode your
department's legitimacy and undermine the Subcommittee's
authority and frankly, be a poor use of Federal resources.
Another area, the Hart-Scott-Rodino changes are being
proposed. It is my understanding that you have mentioned
support for the changes to the draft merger guidelines and to
the proposed changes to the Hart-Scott-Rodino premerger
notification form, which the FTC developed in concurrence with
the Antitrust Division. I have heard significant concerns from
a wide variety of businesses with both of these efforts.
Let me submit for the record, without objection an article
dated October 4th on life science organizations opposing these
new draft merger guidelines; a statement by the National
Association of Manufactures asking FTC to withdraw the proposed
changes to the HSR form; letter to Chairs and Ranking Members
of both houses, including Ranking Member Nadler, from a wide
swath of businesses, including the Motion Picture Association
and the Consumer Technology Association, also expressing
concerns with the proposed HSR form; an article dated July
20th, 2023, quoting the former Treasury Secretary Summers
warning that the DOJ and FTC proposed guidelines on mergers and
acquisitions seem almost like a declaration of war on business.
Mr. Massie. Without objection.
Mr. Correa. Mr. Kanter, again, I applaud the work the
Antitrust Division has done to help American consumers and I
agree with your goals, but I caution the Division that in
following its mission to stamp out antitrust violations, it
needs to be careful not to unintentionally harm competition or
consumers. We need to make sure that no unintended consequences
are actually created and more importantly, that you don't hurt
American jobs.
Mr. Kanter, you, and I have talked in my office many times
and we have similar stories, immigration backgrounds. My father
was lucky. Many decades ago, he landed a good paying unskilled
labor union job making cardboard boxes in Orange County. He
wasn't the only one. Hundreds of workers in my community relied
on that manufacturing plant's jobs for survival, to put food on
our tables, healthcare, an opportunity for the future, and an
opportunity for kids from the street to make it to Congress.
Yet, this employer was a big company and more importantly, it
was the source of a good union job.
Thank you for joining us today and I look forward to the
discussion. With that, Mr. Chair, I yield.
Mr. Massie. Thank you, Mr. Correa. I now recognize the
Chair of the Full Committee, Mr. Jordan for his opening
statement.
Mr. Jordan. I thank the Chair for his good work for having
this hearing. Thank you, Mr. Kanter, for being here.
Across the United States, there is ample evidence of
collusion between powerful organizations. These groups join
together to force ESG policies on American consumers and
businesses and set policies to censor conservative voices. What
has the Assistant Attorney General for the Antitrust Division
done to rein in this blatant collusion among the most powerful
financial institutions and companies in the world? Not much.
The Assistant Attorney General has inserted himself into trade
negotiations. He has tried to strip protections for due process
rights in competitions and trade talks. His tactics have worked
as the Commerce Department has backtracked on its initial
position and no longer supports language from the Indo-Pacific
Economic Framework that protects American businesses. The Biden
Administration is no longer supporting language that appeared
in President Trump's U.S.-Mexico-Canada agreement to protect
Americans.
The Assistant Attorney General may not be an international
trade expert, but he should know that the protectionist
policies by foreign governments like the Chinese Communist
Party protect foreign businesses and create barriers for
American business. In addition, the DOJ under Assistant
Attorney General Kanter has certainly done its fair share of
losing. For example, when he tried to litigate the same
criminal price-fixing trial three times resulting in two hung
juries and ultimately the acquittal of all the defendants.
The DOJ also has a losing record in civil cases. The DOJ
has lost three merger challenges and won only one merger
challenge under the Assistant Attorney General's leadership.
Based on this record, Assistant Attorney General Kanter needs
to rearrange his priorities.
I look forward to hearing from the Assistant Attorney
General today and to answer for his decisions. With that, Mr.
Chair, I yield back.
Mr. Massie. The Chair yields back. I now recognize the
Ranking Member of the Full Committee, Mr. Nadler, for his
opening statement.
Mr. Nadler. Thank you, Mr. Chair. Mr. Chair, a fair,
competitive, and open market is essential to ensuring economic
opportunity for all Americans. A competitive marketplace means
more high-quality jobs and the ability to negotiate higher
wages or to switch employers. A competitive marketplace means
small businesses, farmers, and ranchers will have more choice
among suppliers and buyers leading to more revenue that they
can reinvest in their businesses. A competitive marketplace
means entrepreneurs have space to innovate, experiment, and
pursue new and novel ideas. For consumers, competitive
marketplace means more choices, lower prices, better service,
and a better quality of life.
In short, the marketplace with robust competition is
essential to preserving our country's role as the world's
leading economy. Decades ago, the Executive Branch, with the
assistance of the courts, took a radical turn away from
enforcement of the antitrust laws which have fostered
competition and led to unprecedented prosperity for nearly a
century. That failure by antitrust regulators led to massive
consolidation across the marketplace and gave rise to a handful
of dominant companies with the power to squash competition. The
rise of monopolies and monopsonies in several fields was a boon
to the corporate class, but it has been devastating to
consumers, workers, farmers, and small businesses.
I am pleased that the Biden Administration has begun to
turn the page and has announced several steps to reinvigorate
the enforcement of Federal antitrust laws, most notably through
its 2021 Executive Order titled ``Promoting Competition in the
American Economy.''
Since this order was released, the Department of Justice's
Antitrust Division under Jonathan Kanter has risen to the
challenge. The Antitrust Division is enforcing the law at
historic levels, despite being under resourced and
understaffed. The division has the largest number of active
civil antitrust cases in decades, affecting corporate
consolidation across the economy. In agriculture, the division
has cracked down on illegal schemes that raise the price of
meat at the grocery store and suppress workers' wages. In
healthcare, the division has achieved record criminal penalties
against pharmaceutical companies that fix prices for generic
drugs. It has taken on major cases to protect consumers in the
technology sector and in transportation. In the housing market,
the Division is investigating collusion among landlords to keep
rent prices high. In government procurement, the Division is
rooting out collusion in public contracts for the military and
elsewhere, saving millions of taxpayer dollars.
Responding to the Biden Administration's call to action,
the Department of Justice, in coordination with the Federal
Trade Commission, has released drafter merger guidelines that
reflect modern market realities and are grounded in Supreme
Court precedent and are the result of extensive outreach with
the public over 18 months.
Following passage of the bipartisan Merger Filing Fees
Modernization Act during the last Congress, the DOJ, and the
FTC have also announced draft changes to the Hart-Scott-Rodino
Act pre-merger filing form which will lessen the burden on
merging companies and increase efficiency by giving the
agencies the information they need to assess competitive
effects early on.
Thanks to the Biden Administration's whole-of-government
approach to competition, the economy is making historic gains
with rapid economic growth, low unemployment, and steady
progress in fighting inflation after the economic shocks of the
pandemic.
By faithfully interpreting the original intent of the
antitrust laws to ensure fair competition and prices, the
Division has announced that the party is over for large and
unfettered corporations. Industry concentration can cost the
typical American family $5,000 a year. Such concentration
undermines the ability of Americans to support their families
or to create the next successful business. That is why
Assistant Attorney General Kanter is working to protect
consumers, support workers, level the playing field for small
businesses and farmers, and ensure our economy continues to
lead the world.
Thank you for appearing here today, Mr. Kanter. I
appreciate the valuable work of the DOJ Antitrust Division and
all that you do to support its mission. I look forward to your
testimony and I yield back the balance of my time.
Mr. Massie. The Ranking Member yields back. Without
objection all other opening statements will be included in the
record. We will now introduce today's witness.
The Honorable Jonathan Kanter, Mr. Kanter is Assistant
Attorney General for the Antitrust Division at the Department
of Justice. He was confirmed on November 16, 2021. We welcome
our witness and thank him for appearing today. I would also
like to thank Mr. Kanter for making himself available to myself
and Mr. Correa on an informal basis.
We will begin by swearing you in, Mr. Kanter. Would you
please rise and raise your right hand? Do you swear or affirm
under penalty of perjury that the testimony you are about to
give is true and correct to the best of your knowledge,
information, and beliefs so help you God?
Let the record reflect that the witness has answered in the
affirmative. Thank you. Please be seated.
Please know that your written testimony will be entered
into the record in its entirety. Accordingly, we ask that you
summarize your testimony today in five minutes. Mr. Kanter, you
may begin.
STATEMENT OF THE HON. JONATHAN KANTER
Mr. Kanter. Thank you, sir. Chair Massie, Ranking Member
Correa, Chair Jordan, Ranking Member Nadler, and distinguished
Members of the Subcommittee, it is an honor to appear before
you today on behalf of the Antitrust Division, the Department
of Justice.
Antitrust enforcement is about economic liberty. A vibrant,
open, and competitive market economy sustains a thriving
democracy premised on individual liberty. Absent competition,
real people suffer real harm. Consumers pay more for less.
Farmers earn less. It is harder to start a business. The
benefits of the competitive process are too myriad to list, as
are the devastating consequences of markets that are beset by
consolidation and collusion.
Antitrust issues affect every aspect of American life. I am
mindful that next Thursday is Thanksgiving. For millions of
Americans, the cost of air travel will decide whether they are
able to make it home to see loved ones. Families getting
together to share gratitude and turkey dinners are also facing
the growing cost of putting food on their tables. For these
American families, competition or the lack thereof, has real
consequences. Simply put, harm to competition means harm to
real people.
As law enforcers, we must remain steadfast in our efforts
to hold wrongdoers accountable, especially when there is so
much at stake. We are taking action where people most feel the
effects of concentration and we are having success. With your
indulgence, I would like to share just a handful of our recent
efforts.
We have successfully blocked a de facto merger between two
major airlines that would have caused harm to air travelers
across the country. We won another large complex civil trial to
stop the proposed merger of two major book publishers that
would have harmed authors, readers, and the free exchange of
ideas. A small number of book publishers shouldn't decide which
books get published and which do not.
We have brought numerous actions to protect small farmers,
family farmers, from powerful middlemen and to protect American
consumers from higher prices at the grocery store. For example,
we won commitments from chicken processors to pay over $90
million in restitution directly to slaughterhouse workers and
to stop anticompetitive conduct that directly affects chicken
farmers.
We recently secured over $220 million in penalties for
criminal conspiracy by drug companies to raise prices, the
largest fine ever for a purely domestic cartel. On top of that,
we secured $50 million in free pharmaceuticals for people in
need, enforced the drug makers to divest the products at the
heart of their illegal conspiracy.
Our work also safeguards government and taxpayers from
collusion and from fraud. According to the OECD, governments
around the world pay 20 percent more for public projects due to
collusion and bid-rigging. To combat this, the Division leads
the Procurement Collusion Strike Force which combats antitrust
crimes related to fraudulent schemes that impact government
procurement, grant, and program funding. In its short
existence, the Strike Force has been amazingly successful. It
has launched more than 115 criminal investigations, secured
more than 50 guilty pleas and trial convictions. Most
importantly, it saved millions on millions of dollars for
taxpayers.
Mr. Chair, with your indulgence, I may have to get your
input so I can make my own tracker above my lapel, next to my
lapel, so I can keep track of the skyrocketing number that we
are saving for taxpayers by rooting out procurement and
collusion fraud.
Mr. Massie. Just make sure it goes up and not down.
Mr. Kanter. Yes, sir. It is, quick. We are also adapting
our own tools to better meet the moment. That is why we are
revising the Division's merger guidelines to better reflect the
law and to address the realities of our modern economy. We are
also building the technical and substantive infrastructure to
address competition questions that arise in connection with
artificial intelligence and other complex digital tools.
Last year, we launched the broadest enforcement effort on
record ever to enforce Section 8 of the Clayton Act, an
important statute that prohibits individuals or their
representatives from serving on the boards of competing
companies. We can't do this alone.
Finally, I would like to take a moment to share my regard
for the Antitrust Division staff, some of whom are with me here
today, my valued colleagues, but the entire staff of the
Antitrust Division. They are among the most exceptional,
talented attorneys, economists, paralegals, agents, and
professional staff in the country. Simply put, I am honored
each day to work with them. Because of their hard work and
perseverance, I am optimistic that together we will be able to
meet the moment and the competitive challenges of our future.
Thank you again for the opportunity to appear here today. I
look forward to working with Congress to strengthen antitrust
enforcement and am happy to answer your questions.
[The prepared statement of the Hon. Kanter follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Massie. Thank you, Mr. Kanter. We will now proceed
under the five-minute rule with questions. They have called
votes, but I am going to try and get a Republican and a
Democrat in before we go to vote. So, I will now recognize the
gentleman from California, Mr. Issa, for five minutes.
Mr. Issa. I thank the Chair. Attorney General Kanter, you
wrote a letter, along with the Federal Trade Commission Chair
Lina Khan, on March 22nd of this year. Do you remember that
letter?
Mr. Kanter. I do.
Mr. Issa. In that letter, I will just--a brief quote you
said to the Trade Representative--and I ask unanimous consent
it be placed in the record.
Mr. Massie. Without objection.
Mr. Issa. First, I will quote: ``Sets off concerns about
the Indo-Pacific economic framework for prosperity.'' This
framework, as you know, the IPEF, is President Biden's attempt
to create a trade agreement without Congress being involved.
You are familiar with that part of the quote, right?
Mr. Kanter. I have not seen the letter recently, but I take
your word for it.
Mr. Correa. OK, well, this document is highly redacted and
one of the questions I have is under Section 2 of the letter,
your letter draft competition, we would like to know what was
under the redactions, particularly Section 3 where they even
redacted what I believe is the word chapter. In the second one,
what I can read is a draft competition chapter. Third, it says
have--``nor had the opportunity to review this provision such
as provisions could.''
We are not used to having this level of redaction on a
nonclassified document. Can you briefly tell us what you said
in the third paragraph, paraphrase it for us?
Mr. Kanter. I have to refer your request to Office of
Legislative Affairs. I believe they provided a confidential
briefing, bipartisan briefing to staff and I am happy to take
your questions back.
Mr. Issa. So, you write a letter between two parts of
government and then your people turn it into black lines, and
you won't answer today. Is that correct?
Mr. Kanter. I can't speak to the redactions. I again will
have to refer that to our Office of Legislative Affairs.
Mr. Issa. OK, well, briefly, will you tell me is it correct
that you wrote a letter out of a concern for the Trade
Representative's handling of what is yours and the Federal
Trade Commission's historic duty that it might impact you
without correspondence with you or particularly with Congress?
Mr. Kanter. So, what I can say is there is a process in
place, one that Congress put in place, to make sure that the
Department of Justice Antitrust Division has the opportunity to
weigh in on issues that affect competition. Our goal is to make
sure that we can enforce U.S. laws in U.S. courts. There is an
interagency process whereby we can provide information,
questions, or concerns to other government officials who are
responsible for negotiating trade agreements.
Mr. Issa. Are you familiar that currently there is a
process where they sue in foreign countries or implement laws
in foreign countries and then insist that in order for a
company do business there, they have to essentially make a
worldwide agreement? This is particularly true on patents.
Mr. Kanter. Again, I can't speak to the laws of other
countries. I am focused on making sure that we are enforcing
the laws in the United States effectively and in U.S. courts
consistent with our Constitution.
Mr. Issa. I want to thank you for some past work done by
your Division. The Department of Justice went after the
airlines for price fixing and there were actual convictions,
American, United, and I think Delta. I am not positive it was
Delta, but there were three airlines that were involved. It
went all the way to the CEO level. Do you remember that? Were
you with them then?
Mr. Kanter. It predated my arrival.
Mr. Issa. OK, well, sounds like a good idea, but I happen
to be in San Diego, and I can tell you that price fixing isn't
just the money. It is also the routes. I would say that DOJ,
having had those kinds of consent decrees, having had that kind
of recognition of criminal conduct at the highest level of the
airline industry, has failed to look at many areas. San Diego
happens to be one of them I am experienced in, in which there
is little or no competition, meaning, for example, from here
there has historically been one nonstop flight from Dulles--
group of flights, they belong to one airline, United. During
the same time as the price fixing, American, which had a
nonstop from DCA to San Diego, quite coveted, canceled it. Only
recently, Alaska made a decision to add one flight. The
response from United was to go from two flights a day to three
flights a day including a super jumbo triple 7 and run them
empty to eliminate that competition.
So, I would strongly suggest that in addition to your heavy
workload that you relook at airline competition, not for the
overt act of price fixing, but for the basic schedules that, in
fact, show a convenience of not having overlap so that each of
them has, if you will, preferred routes.
Mr. Kanter. Yes, so we have prioritized enforcing the law,
as appropriate, in this area and we hear concerns in the entire
country about the lack of affordability and availability of
flights. We blocked for the first time ever in the history of
the Antitrust Division a merger of airlines just last year. We
are in court, as we speak at this very moment, seeking to block
another. So, we have prioritized this area. Because I said
before, as we head into Thanksgiving, people are wondering
whether they can afford to travel across the country and have
availability to see their family. When people fly to see a sick
loved one, they should have the right and the opportunity to
have a competitive fare and competitive benefits of multiple
routes.
Mr. Issa. Thank you. I yield back.
Mr. Massie. The gentleman yields back. This is going to be
the last question before we break for votes. I am recognizing
Ranking Member, Mr. Correa, for five minutes.
Mr. Correa. Thank you very much, Chair, and Mr. Kanter.
Later, let's talk about this airline merger, Jet Blue and
Spirit. I understand Jet Blue is losing money, so I would like
to figure out how they stay in business to continue to provide
affordable air fares to our consumers. The bottom line, Mr.
Kanter, I am interested in keeping good, middle-class jobs and
growing them in California, as well as in the United States. In
California, a big area for us, film, movie industry, and high
tech companies. These companies provide trillions of dollars of
revenue, good jobs, union jobs, and they are taxpayers in
California, some of the last taxpayers we have. The United
States has taken the lead--
Mr. Issa. Speak for yourself.
Mr. Correa. We will look at your disclosures later, sir,
and discuss that further. When it comes to digital, the United
States, in my opinion, still continues to lead the world. We
probably have a two-year lead on China and Europe, and both are
trying to catch up, both China and Europe are trying to get
where the United States is.
Last year, the Biden Administration raised concerns that
the European Union would not implement its digital agenda
fairly, or the DMA. As it turns out, the administration was
right. The European Union, through its Digital Markets Act, or
DMA, has targeted American companies for unfair treatment. I
would ask you, has anyone in the DOJ spoken to European Union
officials at any point during the development or implementation
of the DMA? The European Union has essentially designated
gatekeepers. Of the 22 core platforms named as gatekeepers, 21
are U.S. firms and one is TikTok, but no European companies
have been named as gatekeepers.
Mr. Kanter, I would ask you, do you know why the
administration has essentially changed course and stopped
advocating for U.S. interests or have we? Did the Department of
Justice encourage the administration to change course and weigh
in with the European Union policies when it came to designated
gatekeepers?
Before you answer that question, I have some articles that
I want to submit for the record without objection.
Mr. Massie. Without objection.
Mr. Correa. Thank you. A political article dated January
31, 2022, it says, ``U.S. Pushes to Change EU's Digital
Gatekeeper Rules''; bipartisan letters from both House and the
Senate Members raising similar concerns, Senator Crapo, Wyden,
as well as DelBene and LaHood.
Mr. Massie. Without objection.
Mr. Correa. If I can, Mr. Kanter, just addressing my
question in general terms, please.
Mr. Kanter. Thank you, Ranking Member Correa. I want to
start with the most foundational principle, which is the
Assistant Attorney General, Department of Justice, the
Antitrust Division, my responsibility is to make sure that we
can enforce U.S. law in U.S. courts in a manner consistent with
our Constitution. It is a long-standing tradition going back to
many administrations to make sure that we can protect our
rights to enforce our laws domestically by having proper and
appropriate coordination with jurisdictions across the world.
Mr. Correa. Sir, my question was: Did the DOJ weigh in with
European officials, is there a crafting of DMA and essentially
naming mostly American firms as gatekeepers?
Mr. Kanter. That is purely a matter for the European
Commission. We have--
Mr. Correa. Did we weigh in on that?
Mr. Kanter. Let me answer your question, sir, which is that
we provided an observer after the rules are written, so that we
can understand how the rules may affect our enforcement
domestically and that observer was there for a few weeks and is
now back home. Ultimately, when we interact with our
counterparts abroad, it is done to improve coordination so that
we can enforce our laws, U.S. laws in U.S. courts.
Mr. Correa. Observer, fairness, equity, trade, it is a two-
way street. We just observed and didn't opine?
Mr. Kanter. We regularly, and this goes back to all
administrations where there is regularly coordination. In fact,
I have a letter I got from the Chamber of Commerce or the
United States Department of Justice got from Chamber of
Commerce in 2017 requesting more coordination because it often
helps U.S. businesses when each of the jurisdictions with
overlapping authorities understand what the other is doing. The
goal of this work is to make sure understand how it may or may
not affect U.S. interests and specifically our ability to
enforce U.S. laws in U.S. courts.
Mr. Correa. I am out of time, Mr. Chair, but I would like
to followup on that comment later on. Thank you very much.
Mr. Massie. The gentleman yields back. The Subcommittee
will stand in recess until after votes conclude on the floor,
and I encourage everybody to try to come back here as soon as
possible as soon as the votes are over. I appreciate the
indulgence of the witness.
[Recess.]
Mr. Massie. The Subcommittee will come to order.
I would now like to recognize Ms. Hageman from Wyoming for
five minutes.
Ms. Hageman. Thank you, Mr. Chair.
I am concerned, Mr. Kanter, that some of the largest
players in the investment industry are colluding and conspiring
and using their power together to force environmental, social,
and governance policies, also known as ESG, on American
businesses and consumers. These institutions do not appear to
care about the preferences of Americans. Instead, they want to
force their agenda on everyone across this country, even if
that agenda keeps Americans from having access to a robust
choice of goods and services.
Assistant Attorney General Kanter, Supreme Court case law
makes clear that social justifications do not make
anticompetitive collusion any less unlawful. That is from
Superior Court Trial Lawyers Association, a 1990 case. In other
words, a desirable social policy does not excuse a violation of
the antitrust laws. Is that correct?
Mr. Kanter. Absolutely, that is correct.
Ms. Hageman. OK. The Supreme Court has also made clear that
courts should reject requests from litigants seeking special
exemptions or exclusions from the Sherman Act because of
important social objectives. This means that there is no
antitrust exemption for good social policy. Is that also
correct?
Mr. Kanter. That is also correct. I commend you on your
command of the antitrust precedents.
Ms. Hageman. So, regardless of whether the ESG policies are
good or bad, if those policies restrain trade and lead to
anticompetitive effects, then those policies violate the
antitrust laws. Is that also true?
Mr. Kanter. In all instances, we have to follow the facts
and the law. As the Supreme Court has said in other contexts,
``we don't engage in a balancing of social credits and
debits.''
Ms. Hageman. OK. The Supreme Court has explained that
activity that prevents Americans from making free choices
between market alternatives is inherently destructive of
competitive conditions and may be condemned. This means that an
agreement that reduces consumer choice can violate the Sherman
Act. Would you also agree with that?
Mr. Kanter. The Sherman Act and the antitrust laws exist to
promote competition and choice. That is a noble value. Our
objective at the Antitrust Division is to make sure that we are
enforcing the law to promote those values.
Ms. Hageman. Quality, service, safety, and durability, all
these elements and not just the immediate price are considered
in the antitrust analysis according to Supreme Court case law,
correct?
Mr. Kanter. Correct. I wholeheartedly agree that antitrust
is not just about price. It is about quality. It is about
innovation. It is about choice as well, among many other
things.
Ms. Hageman. So, competition results not just in lower
prices, but also in better products. Would you agree with that?
Mr. Kanter. I absolutely agree with that.
Ms. Hageman. So, even if an ESG policy that companies
pursue together doesn't increase prices or decrease output, it
still might violate the Sherman Act if it reduces product
quality or limits the choices available to American consumers.
Is that correct?
Mr. Kanter. As a foundational matter, the antitrust laws
are not just about price and output. The antitrust laws are
about quality, innovation, and choice, among many other values.
Ms. Hageman. OK. Now, Mr. Kanter, you testified before the
Senate when you were being considered for confirmation to your
position as the head of the DOJ Antitrust Division. You took an
oath and swore to tell the truth at that time. Is that correct?
Mr. Kanter. Yes.
Ms. Hageman. You took an oath to tell the truth today as
well.
Mr. Kanter. Yes.
Ms. Hageman. All right. At that hearing, you testified
that,
The consumer welfare standard could encompass many factors
beyond price, like quality and innovation and consumer choice.
Do you remember that testimony?
Mr. Kanter. I do.
Ms. Hageman. OK. You also testified that,
If confirmed, your focus would be to work with the Department
of Justice to enforce the laws as Congress has written them and
to make sure that we're protecting competition and the
competitive process.
Do you remember that testimony?
Mr. Kanter. I absolutely do. I agreed with it then. I agree
with it today.
Ms. Hageman. All right. Did you testify truthfully at your
confirmation hearing?
Mr. Kanter. I did.
Ms. Hageman. Have you testified truthfully here today?
Mr. Kanter. Yes.
Ms. Hageman. Thank you. With that, I yield back.
Mr. Kanter. Thank you.
Mr. Massie. The gentlelady yields back. I recognize the
Ranking Member of the Full Committee, Mr. Nadler, for five
minutes.
Mr. Nadler. Thank you, Mr. Chair.
The Antitrust Division had around 1,000 staffers in 1979.
Today, even though the division is tasked with overseeing a
bigger economy and companies that are bigger than some Nation-
States, the division has just a little more than half that
staff. Despite the lack of adequate resources, the division is
enforcing the law at historic levels, reviewing over 3,500
transactions in your first year at the division, a record.
Mr. Kanter, how is your work affected by insufficient
resources? How can Congress help support your work through
appropriations?
Mr. Kanter. So, as the economy has grown, the complexity of
antitrust cases has grown exponentially. The amount of
information and the significance of concentration to the
American public has grown. We, as you point out, have over 200
fewer people today than we had in 1979. That is against the
backdrop of an expanding economy.
It is essential that we have the resources necessary to
keep pace with the issues that affect so many Americans,
whether it is a farmer looking for a reasonable return on
livestock, a consumer looking for affordable air travel, or a
consumer concerned about making sure that there is enough
choice so that they can get access to private communication
services. These are issues that affect every American and we
care about deeply. Without sufficient resources, we can't
adequately protect the American public from the harms that flow
from anticompetitive conduct and unlawful concentration.
Mr. Nadler. You have half the staff that you did in 1979.
Mr. Kanter. I could go back and find the specific numbers.
When I started at the Antitrust Division, we had over 350 fewer
people that we had in 1979.
Mr. Nadler. Thank you. Recently, governments around the
world have closely analyzed online market concentration.
Governments from Japan to Brazil, Australia to the EU, and even
our own Committee have deeply investigated the online market
finding that the high level of harmful consolidation and
anticompetitive conduct necessitates new rules and protections.
In 2016, the Chamber of Commerce urged the Executive Branch
to coordinate more closely with foreign governments. I ask
unanimous consent to enter their letter into the record.
Mr. Massie. Without objection.
Mr. Nadler. Thank you.
Now that such international coordination is resulting in
real change, the Chamber is pushing back on the international
coordination they called for so forcefully. Mr. Kanter, can you
share the division's perspective on international coordination?
Mr. Kanter. So, first and foremost, our job is to make sure
that we can enforce U.S. laws in U.S. courts. For decades there
is a bipartisan tradition of making sure that we have the
appropriate level of coordination, because we live in a global
economy with international enforcers, so that we can understand
how their actions abroad and their laws abroad may or may not
affect our domestic priorities. So, we have continued that
tradition. At all points, our goal is to make sure we are
enforcing U.S. law in U.S. courts and protecting our interest
to enforce U.S. law in U.S. courts.
Mr. Nadler. Thank you. The DOJ won a court victory in 2022,
last year, that blocked the merger between two of the five big
publishing houses, Penguin Random House and Simon & Schuster. I
believe you referred to this in your opening statement. This
decisive victory was premised on the fact that according to the
DOJ the merger would be bad for workers. In this case, the
writers would get paid less if the two companies consolidated.
As you said at the approach, we said that workers matter, and
this kind of harm matters.
In addition to this case, the department has also taken
workers into account in the draft merger guidelines under
consideration at the DOJ and the FTC. Mr. Kanter, can you speak
more about how antitrust enforcement is critical for workers?
Mr. Kanter. Absolutely. I think we can all know from our
own personal experiences that when we have competition for our
labor, we get better salaries. We get better benefits. We get
better working conditions. If workers have choice, they can
earn more money. They could be mobile. They can work not just
doing what they want to do but where they want to do it, and
whether it is in a rural community or an urban community.
So, the antitrust laws were designed by Congress not just
to protect the ability of consumers to get lower prices. That
is an important objective of the antitrust laws. It is
essential that workers, particularly hardworking people working
for an hourly wage, have the ability to benefit from
competition.
Mr. Nadler. Thank you, Mr. Kanter.
I yield back.
Mr. Massie. The gentleman yields back.
I now recognize the gentleman from New Jersey, Mr. Van
Drew, for five minutes.
Mr. Van Drew. Thank you, Mr. Chair. Thank you, Assistant
Attorney General, for being here today.
Like most Americans, small business owners are struggling.
They are struggling with an uphill battle against a stagnant
economy, a struggling supply chain, and ongoing inflation and
high interest rates. The combination of these results cause
operating costs to be higher and higher prices for the American
consumer. I don't want to get into all the reasons for that.
What many Americans might not know is about a hidden
factor, a hidden factor that is causing as much if not more
direct financial pain in their wallets. Each and every one of
those individuals out there pays for it. Everyone sitting here
pays it, swipe fees, swipe fees when you process a credit card,
charged to the business, and sometimes passed on to the
consumer.
Believe it or not, and these numbers startled me, these
hidden fees cost American families as much as $1,000 a month,
not a year, a month. In my State of New Jersey, swipe fees are
set to cost residents a staggering $2.74 billion, not million,
billion dollars.
While we could debate all day on the causes and solutions
to inflation, the reason swipe fees are so unfair I believe is
pretty clear-cut, the duopoly of Visa and Mastercard, these
corporations wielding control over approximately 80 percent of
the credit card market, 80 percent of it. They have set swipe
fee rates that average seven times higher than what those fees
are, for example, in Europe and other countries, seven times.
That is a lot. It is unfair. It is unacceptable. It is wrong.
At a time of great financial struggle, it is unfathomable
to me that this issue hasn't been addressed. Hopefully we will
address it through legislation.
Sir, my questions for you are Visa and Mastercard dictate
these fees that banks must charge to accept their credit cards.
It seems like a classic violation to me and to others of
antitrust. How can you tell this Committee if the DOJ Antitrust
Division is looking into this market duopoly and what work they
are doing? If so, what steps will you be taking on what I
believe is a very paramount issue?
Mr. Kanter. So, thank you for your interest and your
comments.
As I am sure you appreciate it, I can't comment on specific
companies or specific matters. I greatly appreciate your
recognition that antitrust enforcement can lead to lower
prices. It can lead to more competition. It can lead to better
outcomes for American consumers and, in particular, small
businesses. So, without weighing in on any specific matter, I
can say that preserving the ability of small businesses to save
consumers money is an extremely high priority for the Antitrust
Division.
Mr. Van Drew. So, this costs small businesses a lot of
money. It has gotten worse. It really is a problem. I don't ask
you to even comment on Mastercard and Visa when we all know,
everybody in the room knows who the elephant is. Can you
comment on the idea of swipe fees and that there is so little
choice?
See, I believe when somebody processes a credit card, they
should have a choice. When I say somebody, I mean a business of
going alternate routes. They don't and we have legislation to
work on that. Hopefully that will pass through this Congress. I
would like to know if just in the general idea of it, the
concept, the philosophy, have you all looked at this at all?
Mr. Kanter. So, I greatly appreciate the question. I want
to take great care not to comment on any matter that may or may
not be pending before the Department of Justice.
Mr. Van Drew. Not the answer I wanted. There have been a
lot of recent challenges in the Antitrust Division. I know we
have talked about a shortage of labor force there. Not to be
challenging you, but we have had trouble in securing courtroom
victories recently. I think we would all agree on that.
Don't you believe that maybe instead of these really
difficult challenges that you have had with courtroom victories
it might be better to look at these swipe fees? I guess what I
am asking you, at least from one Congressman to one Assistant
Attorney General, could you at least look at this? It is a
really big deal. People would appreciate it. It affects
everybody, what age, color, or income category. Every single
person in America is affected by this.
Mr. Kanter. Yes, I understand that. I am sure we can talk
about it. I am extremely proud of our court record, including
our numerous victories. None of that comes to the exclusion of
looking at other issues that have a significant impact and
resonate with the American public and small businesses.
Mr. Van Drew. I don't want to exclude other issues. I want
you to look at this issue.
Mr. Kanter. Duly noted, sir. I appreciate your question. I
will make sure that we take that back.
Mr. Van Drew. Thank you.
I yield back, Chair.
Mr. Massie. The gentleman yields back.
I now recognize Ms. Jayapal for five minutes.
Ms. Jayapal. Thank you, Mr. Chair. Assistant Attorney
General Kanter, thank you so much for your leadership and for
the critical work that your office is doing to revitalize
antitrust enforcement and promote robust competition.
You entered the Justice Department with bipartisan support
from nine former antitrust division heads. In your brief time
with DOJ, the Antitrust Division has already won its first
criminal antitrust case against employers that sought to
suppress pay and prevent workers from switching jobs. You have
opened investigations into corporate monopolies like
Ticketmaster. You have secured huge settlements for American
workers, for small businesses, and consumers. You continue to
vigorously defend our economic security and privacy interests
in court against big tech giants like Google.
Now, I know I have heard some of my colleagues say that
there are businesses that are concerned about some of the work
that you are doing. I am not surprised, because for the first
time their lobbying efforts on both sides of the aisle are not
necessarily working, because for the first time we have a
Justice Department and an Antitrust Division that is actually
promoting competition and using the tools that you have. So, I
for one am very grateful.
I am disappointed that our bipartisan efforts to strengthen
competition have stalled in Congress. I am proud that we are
doing what we can to put antitrust considerations front and
center. That is why I worked with Ranking Member Nadler to send
a letter yesterday urging the White House Counsel's office to
integrate competition-related questions into the
administration's judicial vetting process.
I seek unanimous consent, Mr. Chair, to enter into the
record that letter to White House counsel and the letter I
signed to President Biden requesting that any digital trade
provisions of an Indo-Pacific economic framework are consistent
with his whole-of-government competition policy agenda.
Mr. Massie. Without objection, so ordered.
Ms. Jayapal. So, Mr. Kanter, I understand that you prefer
to litigate cases to a decision instead of seeking settlements.
Can you briefly explain why?
Mr. Kanter. Yes. So, we will always entertain remedies when
they are sufficient to solve the competitive problem. What we
are not going to do is put the risk of a failed remedy on the
shoulders of the American public. At the end of the day,
antitrust is law enforcement. It is about the rule of law. We
follow the facts and the law wherever it takes us. We bring
cases to courts. We focus on convincing courts to protect
competition for the betterment of the American public.
Again, we will always listen to a settlement proposal if it
solves the problem. What we are not going to do is to ask the
American public to shoulder the burden of a failed settlement.
Ms. Jayapal. Under your leadership, the Antitrust Division
has helped revive the enforcement of our Nation's antitrust
laws after decades of neglect. How is your division also
creating a new antitrust language that remains accessible to
everyday Americans and reflects how they think about
competition?
Mr. Kanter. Wonderful. So, we have created what we call an
Antitrust Access to Justice program, nicknamed AT2J. It focuses
on making sure that antitrust, which is the people's law, is
accessible to the people. Antitrust, for too long, has been the
exclusive domain of a small number of folks inside the Beltway
whose exclusionary words and terms and are, have excluded the
participation of farmers, workers, and small business owners.
These are the people who are directly affected by corporate
concentration.
So, it is important that we make efforts, whether it is in
how we revise our merger guidelines, how we manage our citizen
complaint portal, how we go about seeking comments on mergers
and acquisitions, to include the public, because the public
matters. We are doing this for the public. We need their input.
Guess what? They know what they are talking about. Small
businesses, consumers, and workers, they get it. They
understand their industries better than we do. By going out and
talking to them, we can learn what we need to learn to enforce
the law effectively.
Ms. Jayapal. That is fantastic. The American people I think
would be shocked to learn that, despite overseeing a bigger
economy with more companies and more mergers, the Antitrust
Division has been operating today with half the staff that the
Carter Administration had in 1979.
Mr. Kanter, while we in Congress have a duty to provide
your office with the funding and resources you need, can you
just highlight how your office has been able to continue
protecting consumers and promoting competition by forming
strategic partnerships with agencies like the FTC and the FBI?
Mr. Kanter. Absolutely. So, the whole-of-government
approach is really important. There are competition statutes
and rules that Congress enacted that exist throughout the
government. So, the Packers and Stockyards Act is a great
example at the U.S. Department of Agriculture. The Department
of Transportation has competition-oriented statutes that they
enforce. The FCC has long had concurrent jurisdiction with the
Department of Justice on certain types of telecommunications
and media transactions. These are important efforts.
Competition policy is important to make sure that businesses
have opportunity and that our economy has the ability to grow.
Ms. Jayapal. Thank you so much.
Mr. Chair, I seek unanimous consent to enter into the
record a letter that Senator Warren and I sent to Google
calling on it to cease efforts to bully Assistant Attorney
General Kanter into recusal and just want to be clear that I
and many of my colleagues staunchly oppose those efforts.
Mr. Massie. Without objection, so ordered.
Ms. Jayapal. Thank you. I yield back.
Mr. Massie. The gentlelady yields back. The gentleman from
Colorado is now recognized for five minutes.
Mr. Buck. Thank you, Mr. Chair. Welcome, Assistant Attorney
General Kanter.
Mr. Kanter. Thank you.
Mr. Buck. The United States has a long history of fighting
against trusts. In fact, there was a debate during the drafting
of the Constitution about trusts. We even, our country's
history goes back to fighting against the East India Company.
Certainly, many Americans have heard about the Tea Party. They
haven't heard about the antitrust side of the Tea Party. They
have heard about the taxation side of the Tea Party.
In 1788, Thomas Jefferson wrote to James Madison,
It is better to abolish monopolies in all cases than not to do
it in any.
To which Madison replied,
Monopolies are sacrifices of the many to the few, where the
power is in the few, it is natural for them to sacrifice the
many to their own penalties and corruptions.
When I was in law school, I took a class on antitrust and
remembered absolutely nothing from that class. I do remember
there was a case in that town, a small town, where six gas
station owners would get together on Monday morning, and they
would set the price for gasoline at the retail pumps in town.
They owned almost all the retail pumps.
You would be surprised to learn that they set the price
above the price that was prevalent in other areas, and they
made more profit as a result of that little coffee they had.
They were prosecuted by the Department of Justice. I said
prosecuted. They were criminally charged by the Antitrust
Division. That stopped and prices came down, not a
revolutionary thought to most of us. The work of the Antitrust
Division for well over a 100 years has been instrumental in the
prosperity that we enjoy in this country because of the
competition that has been spurred by that.
I want to just go over a couple of cases and just get a
quick answer before I ask you a more general question. Standard
Oil case in 1911, did it increase competition and reduce
prices?
Mr. Kanter. Yes, sir.
Mr. Buck. What we refer to, well, the U.S. Steel case,
1948, increase competition, reduce prices for consumers?
Mr. Kanter. Yes, sir.
Mr. Buck. How about the Ma Bell case, 1983?
Mr. Kanter. That one, too.
Mr. Buck. One of our favorites because it happened when we
were all sort of thinking about post-Reagan/Bork antitrust
enforcement, but the Microsoft case in 2000?
Mr. Kanter. Yes, antitrust has spurred not just lower
prices but more innovation.
Mr. Buck. So, I do remember some things from my
Constitutional law class. I do remember that in Article I, the
power is given to Congress to legislate and not to the Article
III Courts. I have a vague memory, and some people based on my
vote that I took yesterday are saying that I lost my mind. Am I
right in that?
Mr. Kanter. I seem to recall that your articulation of the
Constitution is correct.
Mr. Buck. In general principles, in general principles.
Mr. Kanter. Yes.
Mr. Buck. So, who developed the consumer welfare standard?
Mr. Kanter. It was not Congress.
Mr. Buck. It was the courts.
Mr. Kanter. Which one? So, if you asked five antitrust
lawyers what is the consumer welfare standard, you will often
get six different answers.
Mr. Buck. OK.
Mr. Kanter. A standard isn't a standard unless everyone
agrees as to what it is.
Mr. Buck. You won't find a single statute where the
consumer welfare standard is defined.
Mr. Kanter. That is correct.
Mr. Buck. We now have a much different economy that we had
50 years ago, 30 years ago with the advent of e-commerce and
really online everything. In fact, if you had been here 1\1/2\
years ago, this probably would have been online with Members
participating virtually in this hearing. Based on the drastic
change in the economy, has Congress kept up with its duty to
legislate?
Mr. Kanter. So, I take very seriously, and consistent with
your words earlier, that it is ultimately up to Congress to
determine how to legislate and to write the law. As an
enforcer, it is our job to enforce the law as you write it. So,
I deeply respect that division. We will make sure that we are
enforcing the law and using our taxpayer resources to bring
about the vision that Congress sets forth in its statutes.
Mr. Buck. My memory from being in DOJ years ago is--are
there 93 districts, judicial districts in the United States?
Mr. Kanter. Yes.
Mr. Buck. Oh, good. I have a good memory. In those 93
districts, if you went to each of the district courts and asked
for a ruling on cases, you would get a variety of answers. If
you come to Congress and ask for an answer on big tech, you
would get one. What is the need for, and what would you
prioritize in terms of our job to legislate on big tech?
Mr. Kanter. So, again, I want to be deeply respectful that
ultimately it is the prerogative of Congress to write the law,
and it is our job to enforce that law as you write it. From
time to time, we provide technical assistance or views with
respect to pending legislation. We did that in the last
Congress, including with respect to legislation that you
sponsored, providing our input.
As I said before, and as you indicate from your questions,
it is extremely important that in antitrust law we respect that
it is the words of Congress that we, Congress writes the law
and we enforce the law as written by Congress and ultimately
interpreted by the Supreme Court.
Mr. Buck. I yield back. Thank you.
Mr. Massie. The gentleman yields back. The gentleman from
Georgia, Mr. Johnson, is now recognized for five minutes.
Mr. Johnson of Georgia. Thank you, Mr. Chair. Assistant
Attorney General Kanter, thank you for being here and for your
testimony and for your work on behalf of the American people.
Mr. Kanter. Thank you.
Mr. Johnson of Georgia. You have heard the term used
``defund the police,'' correct?
Mr. Kanter. I have heard that, yes.
Mr. Johnson of Georgia. You have also heard my friends on
the other side of the aisle talk about defunding the DOJ,
haven't you?
Mr. Kanter. I have heard that from time to time.
Mr. Johnson of Georgia. Recently, you testified that the
Antitrust Division has almost 400 fewer employees than it did
in 1979 despite its mandate, which is to police an economy
where the rich and the powerful have become more rich and
powerful, and where workers have been low-balled and consumers
have been paying higher prices. The work of the Antitrust
Department is vital to ensuring that our economy thrives, that
our consumers can afford to purchase goods, and that our
workers are paid fair wages for the work that they do.
Mr. Kanter, you have spoken about how the DOJ lacks the
resources to enforce our Nation's antitrust laws as robustly as
possible. How can the DOJ's capacity for antitrust enforcement
capacity be strengthened?
Mr. Kanter. So, thank you for the question. You are right.
Even sitting here today we have significantly fewer resources
and personnel than we did in 1979.
These are complex cases. They involve a lot of data. They
involve a lot of technology and a lot of resources. It is
imperative that we have the people necessary given the scope of
the concerns. We deal with issues from agriculture to
healthcare to pharmaceuticals to energy to technology. To
enforce the law as Congress wrote it, we need sufficient
resources to make sure that we are fighting to protect the
American public. We will put those resources to good use as
Congress determines and sees fit.
Mr. Johnson of Georgia. Last year under Democrat control of
the House, we passed the bipartisan Merger Filing Fee
Modernization Act, which was signed into law. How does that
bill help the DOJ improve antitrust enforcement?
Mr. Kanter. So, the Department of Justice came out in
strong support of that legislation. We are extremely grateful
to the Congress and for the overwhelming bipartisan support for
that legislation. It ensures that the merger filing fees are
updated for the first time in roughly 20 years and that those
fees can help fund, are available to help fund the Antitrust
Division and so that we can protect the American economy.
I should note that it also continues a longstanding
tradition, which is that we are a significantly fee-funded
component, which means our burden on the general fund, our
burden on taxpayers is quite minimal.
Mr. Johnson of Georgia. Thank you. Despite incessant
attempts to defund your operation, you have robustly enforced
our Nation's antitrust laws from opening investigations into
Ticketmaster's anticompetitive conduct and pursuing litigation
against Google's monopoly in online search and online
advertising. Why does the DOJ need help from Congress for it to
be able to robustly enforce the Nation's antitrust laws?
Mr. Kanter. Ultimately, it is, as I said before, ``it is
the prerogative of Congress to write the law.'' If Congress
sees fit, based on the challenges in our economy and the
expansive corporate concentration to update or clarify the laws
to provide more authorities, then that is the role of Congress.
In some instances, the DOJ has provided technical assistance or
specific support.
At the end of the day, again, that is, it is all about the
rule of law. We need to make sure that we are enforcing the law
effectively. When and until that time, we will make sure that
we use the resources that we have to enforce the law to the
greatest extent possible to help as many people as possible
during our time.
Mr. Johnson of Georgia. Thank you. During the coronavirus
pandemic, it was essential workers who stepped up to the plate
and continued to help their fellow Americans, despite their
risk of exposure. Despite their heroic work, companies that
employed these essential workers also worked to suppress their
wages and restrict their job opportunities. In light of these
illegal actions, the DOJ enforced the law and won indictments
against these lawbreakers, including four managers of a home
healthcare agency or home healthcare agencies in Maine. Why is
it important that DOJ act on behalf of workers like these
healthcare practitioners?
Mr. Kanter. These people are the beating heart of our
economy. They put themselves in harm's way as healthcare
workers. People work hard and they should have the benefits of
competition.
If you indulge me, I think about an email that I saw in one
of our investigations. This was a woman who was an in-school
nurse for children with special needs who couldn't afford her
own health insurance. She couldn't afford her own healthcare
and tried to get a better job and couldn't because of an
anticompetitive agreement that prohibited her from going to
another employer.
These are real effects for real people. We have an
obligation to fight for them, to make sure that they are able
to have the pathway to upper mobility, and to earn a decent
living based on their hard work.
Mr. Johnson of Georgia. Well, thank you for your efforts.
I yield back.
Mr. Kanter. Thank you.
Mr. Massie. The gentleman yields back. The gentleman from
Florida, Mr. Gaetz, is now recognized for five minutes.
Mr. Gaetz. Mr. Assistant Attorney General, I think you are
doing a good job. That is a painful admission for me to make
about anyone who works at the Department of Justice, an entity
that I believe has been victimized by political capture.
I am perhaps just as concerned about the monopoly power of
Google. Please talk to us about the enforcement actions that
you have led against Google.
Mr. Kanter. Thank you for your question. We have, and it is
a matter of public record, two open enforcement matters against
that defendant. I can't speak specifically about those matters
because they are pending in court, including one right down the
street as we speak.
Mr. Gaetz. Well, we heard the Chair of the Committee
critique your work and say that the real problem is you keep
losing, that you guys are losers, you are not getting
victories. Tou are, just not speaking about the merits but the
procedural posture regarding one of your cases against Google,
you are in trial right now against Google, right?
Mr. Kanter. Correct. Yes, we have two cases, one of which
succeeded on a summary judgment, the other that survived a
motion to dismiss.
Mr. Gaetz. While I am a few years away from my time as a
practicing lawyer, usually when you are at trial that means you
prevailed on summary judgment, right?
Mr. Kanter. Correct.
Mr. Gaetz. It usually also means you prevailed on motions
to dismiss, right?
Mr. Kanter. Correct.
Mr. Gaetz. Sometimes you got to prevail on multiple motions
to dismiss, don't you?
Mr. Kanter. From time to time.
Mr. Gaetz. In the other matter where you are not at trial
against Google, but you are making really important allegations
about how Google has vertically integrated advertising
brokerage and advertising monetization, in that matter you have
prevailed on the motion to dismiss, right?
Mr. Kanter. As a matter of public record, that matter
prevailed on the motion to dismiss.
Mr. Gaetz. So, are you tired of winning?
Mr. Kanter. Well, I can give you a whole other list of our
victories, including those in court against mergers. We have
had--
Mr. Gaetz. Well, I want to stay on big tech because it is
really concerning to my constituents. Why should our fellow
Americans be concerned about any entity that has the ability to
vertically integrate search and ad brokering?
Mr. Kanter. So, I think it is important to go back to the
foundation and the formation of the antitrust laws. In
preparation for this hearing, I went back and looked at the
namesake of the Sherman Act, John Sherman. He said at the time
that the law was passed,
If we will not endure a king as a political power, we should
not endure a king over the production, transportation, and sale
of any of the necessities of life.
Ultimately, monopolies threaten our liberty. If companies
engage in anticompetitive conduct, exclusionary conduct, or
break the law to sustain their monopoly power, it threatens our
liberty and threatens our democracy and goes to the heart of
our freedom. So, we have an obligation to enforce the law.
Mr. Gaetz. I would double-tap the importance of that in the
information space. I am proud of the work that you have done
for food processors and to stop consolidation in our food
supply. I am very worried about that. I think that the work
that you are doing on the supply chain as well is really
critical to drive down inflation and help our fellow Americans.
In the information space, if you get these powerful
monopolies that get to define the nature of truth itself, it
really is a threat to the republic, isn't it?
Mr. Kanter. This is the marketplace of ideas. The free flow
of information is critical to a free and open society. It is
right there in the Constitution in the First Amendment. When
companies control the information highways, they control access
to information, it threatens the marketplace of ideas.
Mr. Gaetz. I want to encourage you to continue to pursue
those cases, because a dynamic that I have observed at DOJ, and
it is not a criticism of you but of others, is that what they
want to do is go create these enforcement actions that are just
enough virus for those people to then go and sell the antidote
when they leave DOJ and go work for some big, high-priced law
firm. So, they create a little virus, then they go sell the
antidote. I don't think that is what you are doing.
Sometimes that means you have to take some intermittent
losses along the way. When going up against the toughest and
the worst companies, it seems as though you have got the human
resources and the financial resources to pursue that. Am I
correct?
Mr. Kanter. I have a job to do. We are going to enforce the
law without fear or favor. Sometimes when you go up against the
biggest companies in the world, it results in attempts to
intimidate you not to do your job. We are not going to be
subjected to that intimidation.
Mr. Gaetz. Well, I think you are doing your job. Frankly, I
think we would do our job if we continued to advance the
legislation that Congresswoman Jayapal and Congressman Buck and
I worked on to reshape some of these companies by force of
legislative power.
There is a competing doctrine here. There are some who just
say strip some of these monopolies of their defenses and send
you all and other lawyers off to feed on them. In a way, that
is an abdication of our Article I authority to be able to
reshape these entities that are impairing the marketplace of
ideas. So, I really hope we will get back to that Jayapal
legislation and to write that in tandem with the good work you
are doing.
I yield back.
Mr. Kanter. The rule of law starts with the laws written by
Congress.
Mr. Gaetz. Thank you.
Mr. Massie. The gentleman yields back.
I now recognize Ms. Scanlon from Pennsylvania for five
minutes.
Ms. Scanlon. Thank you. Thank you, Assistant Attorney
General Kanter, for joining us today in an era of increasing
concentration and anticompetitive behavior. I really want to
commend you in the Antitrust Division for your efforts to
strongly enforce our existing antitrust laws against monopolies
in a whole range of industries, as you have suggested.
We have heard some mention of Google's anticompetitive
practices. You mentioned there is a couple cases right now. As
you and your staff are aware, during the last Congress, this
Subcommittee under the leadership of the former Chair from
Rhode Island and our colleague, Mr. Buck, from Colorado
undertook an extensive and largely bipartisan examination of
the anticompetitive practices of the largest tech companies,
including Google.
I know your current cases, one is regarding Google's
dominant position in online search and the other on Google's
control over online advertising, as we have suggested, have the
potential to promote competition and fairness in an industry
that has been dominated by a handful of large companies.
I found it particularly interesting that the Department of
Justice's online search case has revealed some shocking
practices, including that Google paid $26 billion two years ago
to make its search feature the default on iPhones and most
internet browsers. I think that is important information for
the public to know. As we talk about the importance of fighting
anticompetitive behavior, it defies logic to see how an
industry can be deemed competitive if one company can afford to
pay its competitors not to compete.
As you engage in these prosecutions, I see some takeaways.
While I understand in certain cases settlement might be an
appropriate choice, I do think the sunlight that is provided by
a public prosecution is important. A second takeaway would be
that the discovery and public disclosure of evidence is
necessary, as I said, to help the public understand what these
companies are doing and how it impacts on our consumers and
small businesses.
If there is trouble moving to a successful conclusion of
those cases, I suspect it will be not because Google's action
were not anticompetitive, but that we may need to update some
of our hundred-year-old statutes that are in your legal toolkit
to go after monopolies. I would appreciate any suggestions you
have on how we might do that, understanding that you might not
be able to refer to the cases currently under prosecution.
Mr. Kanter. Thank you for the question. As I indicated
before; I can't comment on active litigation matters. I very
much appreciate your recognition of the hard work of my
colleagues, some of whom are with me today and many of whom are
in court today and back at the Department of Justice, who work
tirelessly at great personal expenses to fight for the American
public. I am so proud to call them colleagues.
With respect to the role of Congress, as I mentioned
before, the rule of law starts with the writing of the law.
Ultimately, that is the prerogative and the role of Congress.
As a law enforcement authority, we have to enforce the law
using the tools that you give us.
In the last Congress, there was a robust discussion in this
Committee about changes to the law. We have provided input
based on our technical understanding of those proposals and our
views and would be happy to re-share that with the Committee
and working through our Office of Legislative Affairs provide
input as appropriate.
Ms. Scanlon. Yes, some of those bills, the American
Innovation and Choice Online Act and the ACCESS Act were
designed to improve antitrust enforcement and promote
competition. So, we are very interested in your views and your
colleagues' views on how those would help us move forward.
I see my time is almost up. I think we are going to submit
some additional questions. I have been talking with some of our
colleagues overseas, in the EU, in Ireland, about some of the
measures they have been able to move forward with. They are far
ahead of us. Obviously, we need to either catch up or buy in.
So, I would be interested in submitting some additional
questions on those issues.
Mr. Kanter. Thank you. I very much look forward to
answering your questions.
Ms. Scanlon. OK. Thank you. I yield back.
Mr. Massie. The gentlelady yields back.
The gentlelady from Indiana, Ms. Spartz, is recognized for
five minutes.
Ms. Spartz. Thank you, Mr. Chair.
Thank you, Mr. Kanter, for being here today. We talk a lot
about monopoly/oligopoly problems, and we talk about individual
liberties, but we do have a serious problem in every sector of
the market with oligopoly/monopoly problems, whether it is
healthcare, whether it is agriculture, whether big tech. They
are all things that you have taken, tough cases, and I actually
appreciate that you are willing to take tough cases.
I actually had some agreements even on bipartisan to adjust
our legal framework. We cannot just allow companies to have
unlimited immunities. We cannot allow companies not to have
proper accountability and protection of property rights,
including data protection, because that has become a new type
of property. We didn't define them.
We do have challenges with consumer welfare standard, which
may need to be defined a little bit more broadly and everything
else, but don't you believe--we passed a lot of different laws,
but in reality you are treating the symptoms, but it seems like
a lot of your cases you get dismissed or have weak evidence.
You are really treating the symptoms. Unless we start looking
at the causes--we passed Dodd-Frank for too big to fail. Our
institutions became even bigger.
So, don't we need to start looking at barriers of entry and
barriers to market competition of entry?
Mr. Kanter. So, absolutely. When we deal with
monopolization concerns, we need to make sure that we're
focused on core monopolies, core considerations, or conditions
that if they violate the law sustain monopoly or oligopoly
positions. So, we've undertaken that effort in our
investigations and our--
Ms. Spartz. You can do only symptoms. The barriers of entry
that we create in a lot of ways, either through USDA
regulation, or through bills, you cannot deal with that. Is
that correct?
Mr. Kanter. Well, we are a law enforcement--
Ms. Spartz. You cannot come after USDA, right? We are the
only people who can, right, enforce if our agency creates a
barrier of entry. Is that correct?
Mr. Kanter. So, again, we are focused--I have a very--our
job is to enforce the antitrust laws as written by Congress.
Ms. Spartz. Right. So, I think the challenge is you will
not be able to deal with this. It has become very ineffective.
We have oligopoly problems in every sector of the market. Is
that correct?
Mr. Kanter. Well, I think we have--
Ms. Spartz. In most.
Mr. Kanter. In many markets there are monopolies and
oligopolies. I do believe that antitrust enforcement can be an
effective tool and, when the facts of the law support it, to
help promote competition. You can't have a functioning
marketplace without market participants.
Ms. Spartz. Right. So, generally, barriers of entry, if we
don't have new entries too, that causes significant problems.
Is that correct?
Mr. Kanter. There can be many causes for barriers of entry,
yes.
Ms. Spartz. Right. So, and a lot of them are legislative?
Mr. Kanter. I will defer to Congress regarding legislation.
Again, I'm focused on anticompetitive conduct that violates the
law.
Ms. Spartz. So, what are your thoughts about the consumer
welfare standard? What are your thoughts about that?
Mr. Kanter. So, as I indicated before, I think if you ask
five antitrust lawyers, ``What does the consumer welfare
standard mean?'' you often get six different answers. It's
difficult to have a standard if there's no broad-based
agreement as to what it means. The welfare of consumers is an
important objective. It's an essential objective for the
antitrust laws, but so is the welfare of workers, so is the
welfare of--
Ms. Spartz. It is probably--in some cases it is more than
just price, correct?
Mr. Kanter. It's absolutely more than price.
Ms. Spartz. Right. It is very difficult to argue in any
other cases if it is not a price. It has become much more
difficult, because precedent has been just the price issues,
correct?
Mr. Kanter. Well, I think we have an obligation to make
sure that we are bringing cases to courts that present issues
in the way they appear in the marketplace. Sometimes that will
be in the form of higher prices, but sometimes that might be in
the form of less innovation or harm to, for example, the
marketplace of ideas.
Ms. Spartz. Yes, access. One more question: So, we had a
kind of discussion, and it is a very convoluted process. Your
relationship is FTC and DOJ. If you would literally look to
restructure that process, because it is very strange how it is
set up, how would you do that to make it more efficient
antitrust enforcement?
Mr. Kanter. If you beg my indulgence, I think my kids would
answer that by saying new phone, who dis? So, I think
ultimately that it's up to Congress to create institutions and
determine how those institutions--and what their authorities
are. Ultimately, at the end of the day I've got a job which is
to be an antitrust enforcer at the Department of Justice, and I
will focus on doing that job to the best of my ability and with
the trust of the public.
Ms. Spartz. So, do you believe you efficiently set up your
agency as you are in charge of your division? Is your division
set up as efficient as it can be or are there some improvements
in your division that we should address for your division
specifically?
Mr. Kanter. Yes, there are always improvements.
Ms. Spartz. Can you state some?
Mr. Kanter. Yes, for example, we've looked to make our
information more accessible to the public, to change the
language of antitrust. We've opened investigations that focus
on labor effects. We have created organizational streamlining
to make sure that processes are more efficient, and decisions
can be made more expeditiously but with the same level of
protection and oversight. We are constantly making sure that we
are evaluating how we run our division so that we can deliver
the best results for the public as efficiently and as
inexpensively as possible.
Ms. Spartz. Thank you. My time expired. Yield back.
Mr. Massie. The gentlelady yields back.
I am glad to see my good friend Mr. Neguse is also skipping
the other hearing we are supposed to be in our Rules Committee,
and I appreciate him coming to attend this. I recognize Mr.
Neguse from Colorado for five minutes.
Mr. Neguse. Well, I certainly thank the Chair. I wouldn't
miss a hearing being held by Chair Massie. So glad to be here.
Grateful to him and Ranking Member Correa for hosting this
hearing.
Of course, welcome back to the Assistant Attorney General.
We are grateful to you for your hard work at the Department of
Justice and for the work for all the folks within your agency
that they are doing each and every day to protect the public
and to protect consumers. I really think that the work you have
done and, of course, in partnership with the Chair of the
Federal Trade Commission.
Chair Kahn has been incredibly important and meaningful in
terms of putting consumers first, fighting against monopolistic
power. As we have heard during the course of this particular
hearing, and I suspect you have heard elsewhere, that kind of
work obviously offends the concentration of power in different
places, and the blowback that ensues is not all too surprising.
Nonetheless, we are grateful for your diligence in returning
the antitrust division's work as mandated by Congress under the
Sherman Act and the Clayton Act efforts that in my view were
long overdue.
I want to talk a bit about the merger filing fee bill,
which as you know we passed last year. The Congress had enacted
it; the President signed it into law; on a bipartisan basis
passed overwhelming in both chambers. It was an effort that I
was proud to lead alongside my Republican colleague from
Colorado on a bipartisan basis, Congressman Buck, which
essentially would ensure that the DOJ and the FTC had the
resources that they so desperately needed from an antitrust
enforcement perspective.
You noted, I believe this was last year, in your testimony
to the U.S. Senate, that your division is operating with 400
fewer employees than it did in 1979. That was at least at that
time that you were testifying, and I suspect it hasn't changed
materially. Of course, that was before I was born. So, you
think about all that has changed over the course of the last
half a century--less than half a century, four years, and yet
you are operating with less people than your predecessors did.
The merger filing fee guidelines were intended to help
change that, the Modernization Act, I should say.
Unfortunately, it appears that the budget that Republicans have
proposed for the next Fiscal Year contravenes that
Congressional intent that we had all arrived at in terms of a
consensus less than a year ago, because the budget that my
colleagues on the other side of the aisle have submitted would
only further cut your already insufficient funding levels and
prevent you from carrying out the work that is so needed to
protect American consumers and small businesses. I think it
will have a lasting impact.
I am curious if you might want to expound a bit on if the
current proposed levels in the appropriation bill that we are
taking up today in the Rules Committee, as Chair Massie
mentioned--if those levels were to be enacted into law, how
would that impact, or in my view impede the work of your
agency?
Mr. Kanter. Thank you, Congressman, and thank you for your
work and your leadership on the legislation from last term.
Indeed, it provides much needed available funds for the
Antitrust Division so that we can enforce the law, which as you
indicate covers the entire economy. The work that we do lowers
prices for consumers. It saves taxpayers millions on millions
of dollars in collusion and procurement fraud. It opens
opportunities for new businesses to start and thrive.
The return on investment from antitrust enforcement is a
multiple that would be the envy of Wall Street. So, we are
working to make sure that we can take the scare resources that
we do have and invest it efficiently and effectively for the
betterment of the public. I'm proud of what we've been able to
do with the little that we have, but as you indicated we are
still substantially smaller today than we were in 1979. With
greater resources we can do more to protect the public and save
taxpayers money.
Mr. Neguse. I couldn't agree with you more. I think it is a
no-brainer. The ways in which the American people will benefit
from the work that you are doing--I mean those benefits accrue
directly to the American consumer in a number of different
industries and segments of our economy, as the gentlewoman from
Indiana I think correctly articulated, and the nature of the
concentration of market power in a variety of industries that
impact the everyday life of countless Americans.
So, I am grateful for the work you do, and would I guess
ask that you extend the gratitude I suspect of most Members of
this body to your team and the front-line attorneys in the DOJ
that are doing that hard work. I yield back the balance of my
time.
Mr. Kanter. Thank you for that. They inspire me to get out
of bed every morning and they are an incredibly talented and
dedicated group of people who have delivered meaningful results
to the public.
Mr. Massie. The gentleman yields back.
The gentleman from Wisconsin, Mr. Fitzgerald, is recognized
for five minutes.
Mr. Fitzgerald. Thank you, Mr. Chair.
Thank you, Mr. Kanter, for being here. I don't want to rain
on everybody's parade here, but the first thing I wanted to do
was ask unanimous consent to submit for the record that was
received by the Full Committee Chair, Chair Jordan, as well as
the Ranking Member, Mr. Nadler.
Mr. Massie. Without objection, so ordered.
Mr. Fitzgerald. Thank you. This letter opposes the FTC and
DOJ's proposed changes to Hart-Scott, the premerger
notification form. It has got about 30-some associations and
trade groups that have signed off on it. So, once again, Chair,
thank you for allowing me to enter that into the record.
Mr. Kanter, in June of this year you announced that your
division is changing its review of bank mergers to look beyond
the traditional metrics used in bank merger review. Certainly,
a lot has happened in that industry since 1995--however, it
appears that bank concentration levels have remained really
unchanged in local markets across the country for the last 25-
plus years.
As I am sure you are aware, Congress has tasked the Federal
financial regulators, not really DOJ, with assessing matters on
financial stability and systemic risk. Making matters worse, I
think the administration has been inconsistent on this issue. I
am concerned that any change in the current analysis that would
depart from long-existing and accepted standards may not
reflect actual changes in the competitive environment.
So, let me ask you: Have you been in your assessment of
this accounting for increased regulatory burdens that drive
consolidation and result in strong banks acquiring struggling
ones in your revised bank merger guidance?
Mr. Kanter. So, the process for revising bank merger
guidelines is still very much underway. The purposes of the
remarks that you referred to is to say that if we're going to
enforce the antitrust laws and provide assessment of
competitive impact, it's important that we do so against the
backdrop of today's market realities.
So, in 1995 people would line up at their bank on Friday to
take cash from their teller. They'd sign up for banks and get a
free toaster. The role of local and community banks were
different than they are today, and certainly FinTech was not
even a term that people used.
So, what we're seeing is that if we're going to go about
conducting an analysis, it's really important that we conduct
it against the backdrop of how the markets work today. They've
changed. So, I think it's an effort to bring it up-to-date
first and foremost.
Mr. Fitzgerald. So, the President's Executive Order on
competition, it called on the AG in consultation with the Fed,
FDIC, and the Comptroller of the Currency to come up with a
plan regarding bank mergers by January 5, 2022. Can you
describe that process and was there a cohesive plan?
Mr. Kanter. Yes. So, that--
Mr. Fitzgerald. How was that tackled, I guess is what my
question is.
Mr. Kanter. Yes. That process is still underway, and we're
doing so in coordination with the bank regulators. As you may
be aware, we are working on it. Some of the other Members of
this Committee have asked about our draft merger guidelines. We
are in the process of ingesting a large number of public
comments with respect to those merger guidelines, which will
also have significant instructive value with respect to the
bank merger guidelines. So, we look forward to taking all that
input and working closely with our colleagues across the
government to come up with sensible bank merger guidelines that
are reflective of today's market reality.
Mr. Fitzgerald. I happen to be in a unique position of
being--I am the only Member of Congress right now that is on
Financial Services as well as Judiciary, so there is a lot of
discussion in both Committees about this. If the agencies adopt
a draft, they will reduce the value of those guidelines to
little more than just a policy statement. Do you feel like we
are in a position where you are going to be able to be more
public on these issues?
Mr. Kanter. Yes, certainly with respect to the--let me
respond first with respect to the general merger guidelines
which are in draft form. We wrote them as a--first and foremost
for the rule of law. These are the first guidelines ever to
cite Supreme Court cases because ultimately, we are a law
enforcement agency. If we have to adhere to the rule of law,
and how we enforce the mergers and merger law.
So, we have written these to be durable and tractable, but
I should note that we've also submitted them for public comment
and we've received tens of thousands of comments from
individuals, businesses, farmers, and overwhelmingly supporting
our draft merger guidelines. We are in the process of reviewing
every single one of those comments and then making updates to
the draft. It's an important process that we can learn before
we finalize the existing merger guidelines.
Mr. Fitzgerald. Thank you, Chair. I yield back.
Mr. Massie. The gentleman yields back.
I now recognize the gentleman from Maryland, Mr. Ivey, for
five minutes.
Mr. Ivey. Thank you, Mr. Chair.
Mr. Assistant Attorney General, I appreciate you being
here. Appreciate the great work you have been doing. It is a
great opportunity to have a chance to ask a few questions of
you today, but I want to start with a comment.
There have been a couple of my colleagues who have talked
about the Google case. I join those views. I think it is a
tough--those are tough cases. I know a lot of times when people
come and testify before the Judiciary Committee you hear--wins
and losses end up being sort of how people get measured. This
one where I thought it was important to take it on. You might
lose it. I mean it is a very tough case. I don't want to put
bad mojo on you. You might win it as well, and I think that
would be a good thing for the American people. I know you can't
comment on it anyway because it is live litigation.
I did want to ask you about artificial intelligence and
what your shop is doing on that front. We have heard testimony
about the need to hire additional staff overall. Carter era
numbers--Mr. Neguse hadn't been born yet in 1979. Those were
good days for me; I remember 1979 fondly, but--
[Laughter.]
Mr. Ivey. I did want to ask you about that because in your
testimony you mentioned that you are hiring more scientists. It
seems to me that AI is something that is really moving very
rapidly and evolving very rapidly, and I am always concerned
that the government isn't able to keep up with that. I want to
get your sense of what you are doing to try and address that.
Mr. Kanter. Yes, thank you. So, first and foremost, it's
important that we understand how the stuff works. So, AI is a
term that is used to describe lots of different things; machine
learning and computer science, and in a wide range of areas. At
the end of the day any time you have a significant
technological transformation it creates both opportunities and
risk. So, from an antitrust perspective we are focused on
making sure that we are preserving the many wonderful
opportunities that can flow from new innovations and new
technologies, so that the marketplace has the opportunity to
spread the benefits around to the public broadly.
With respect to AI and data-driven technology sometimes the
aggregations of data, large data at scale could lead markets to
tip or become a barrier to entry. So, it's really important
that we understand those market realities so that we can apply
the law effectively.
Mr. Ivey. I did want to ask you about this, too. I am not
technological--Mr. Massie is an MIT graduate. I had to go to
law school instead. I did want to ask you about the potential
of the collusion issue. I guess traditionally in antitrust law
you talk about collusion. We are really thinking about humans
communicating with each other about the--Mr. Buck had the six
people having coffee together.
With the AI possibly there where there is information
sharing going on that might or might not involve conduct that
seems like that might be an area that is going to potentially
create antitrust issues where you don't have the traditional
human communications that you have looked at before.
Let me move onto another thing really quick. I think
noncompete clauses--have you discussed that already?
Mr. Kanter. Yes, we have.
Mr. Ivey. How broad is that? That is a big deal for a lot
of people who are industries. Lawyers make sure we don't have
noncompete clauses and you can go from one law firm to another
overnight. For many industries that is not the case. What are
you doing about that?
Mr. Kanter. So, we have a very active program both on the
criminal and civil dockets to ensure that we protect workers
from noncompete clauses.
I'll give you an example that's near and dear to my heart:
We weighed in on an Appellate Court proceeding in a matter
involving a woman who was a fast food worker and had the
opportunity to become a manager at another fast food
establishment, but was denied that opportunity because of an
agreement like the one that you're describing. In a world
where, and in an economy where, in the country where upward
mobility is the opportunity to succeed on the basis of your
hard work and the merits of your hard-earned efforts the
ability to switch jobs and to do so free from anticompetitive
restraints is foundational to our freedom.
Mr. Ivey. Agree. I got to reclaim my time quickly.
Last question: Mr. Correa asked you about the airline
merger issue, and I guess the question I would raise there--
because I think the point he was making was that the
department's actions might have been aimed at making sure that
there wasn't an impact on reducing competition. These were two
businesses that I guess are struggling economically. To what
extent does the department take into consideration that this
merger might be necessary for these two businesses, or
generally speaking to remain economically viable?
Mr. Kanter. I appreciate that. I can't comment on active
litigation or pending matters. We take in all considerations.
We want to make sure we understand market realities.
The issue that you're talking about--there is, actually, a
legal doctrine called the failing firm defense. So, there are
legal requirements that have be met before that defense can be
applied. Ultimately, we want to make sure that companies
compete, to offer the best opportunity and options to the
public, but each case presents its own issues and there is a
very long and substantial body of law on how to deal with some
of the questions you're presenting.
Mr. Ivey. Thank you. I appreciate your testimony and I
yield back.
Mr. Massie. The gentleman yields back.
Thank you for pointing out I don't have a law degree. I
think that is--
Mr. Ivey. Stop bragging now.
[Laughter.]
Mr. Massie. I have served on the Science Committee. I have
seen what passes for credentials up here. They have given me a
hard time for not having a law degree occasionally.
Thank you for showing up today, Assistant Attorney General
Kanter. My constituents; I have had lots of interactions over
11 years, nobody has told me that they are worried about Google
taking over their lives and asking me to come in here to
Congress and do something about Google. None of my 750,000
constituents. They do have concerns--and by the way, I have got
some search engines on my phone and they don't include Google.
There are options out there.
There are things that my constituents do care about where
you may be able to improve their lives or improve competition.
One is airlines at the Cincinnati Airport, which is in
Kentucky, my district. Another is the farmers worried about
this oligopoly that exists in the meat market. In fact,
President Biden addressed it in his State of the Union, at
least acknowledged the problem that four meat companies control
85 percent of the meat that is consumed in the United States. I
have also got grocers who are concerned about their ability to
compete. So, I want to cover some of those things.
Congress vested the authority to review airline mergers
with you, the DOJ, and for decades the DOT, Department of
Transportation, has deferred to you on the competitive
analysis, or your department. I don't want to imply you have
been there for decades. Recently, we heard the Secretary of
Transportation referring to a lawsuit that you are bringing
against--in the context of the merger of two airlines: JetBlue
and Spirit.
In a statement of support of that lawsuit the Secretary of
Transportation said they have not, generally, gotten involved
with these merger cases, but that is changing today. So, the
DOT has expressed that they are now going to countermand
decades of policy, policy that Obama supported, and that they
are going to basically put all these mergers in double
jeopardy.
This begs the question: Are you able to effectively analyze
the competitiveness of these, and the effect of competitiveness
at the DOJ, or do you need the Department of Transportation
second-guessing your analyses in cases?
Mr. Kanter. So, when we approach these issues, we approach
it as a matter of law enforcement. So, in the context of a
merger we enforce, for example, Section 7 of the Clayton Act.
So, our analysis is limited to the four corners of that
statute, which was written by Congress.
There are numerous industries, including
telecommunications, agriculture, and others, where there are
other statutes that have other considerations and where law
enforcement authority is provided to other agencies. They can
go based on the four corners of the--
Mr. Massie. In the domain of competitiveness do you have
the subject matter expertise? I actually serve on the
Transportation Committee and had the Secretary of
Transportation there and asked him what his criteria for
analyzing these things would be. I asked him three times three
different ways and he had no answer.
Mr. Kanter. Yes.
Mr. Massie. I think this expertise resides in your
department, not theirs. Do you agree that they shouldn't be
reevaluating what you have already done?
Mr. Kanter. I don't want to speak for the Department of
Transportation. I can say that again when we look at a matter,
we're looking at what statutes do we enforce? So, the Clayton
Act is the statute that we are empowered to enforce at the
Antitrust Division. So, our analysis is undertaken not only
pursuant to the text of the Clayton Act, but the legal
precedents that interpret the Clayton Act. So, our analysis is
strictly within the four corners of that statute.
Mr. Massie. My constituents benefit from low-cost carriers
at the CVG Airport. I want to make sure they are viable, and
sometimes they require a merger to remain viable. They don't
control an inordinate amount of the market share. So, that is a
concern that I have.
Can you tell us what you have done for farmers at the DOJ?
Mr. Kanter. I think we have been more active with respect
to protecting farmers and family farmers than we have been in
over a century. We have brought criminal and civil cases to
protect the ability of family farmers to get a better return, a
fair return on their crop and on their livestock. We are
protecting the ability of farmers to exist in small and rural
communities that have the infrastructure, whether it's a local
hospital or a local bank or a local grocery store. These are
the--it's the bleeding heart of our Nation.
Interestingly, when the antitrust laws were enacted by
Congress there was a vibrant discussion of farmers. I had the
privilege of sitting with family farmers just a few weeks ago
learning more about their businesses and the struggles that
they have and whether it's how much they have to pay for
inputs, whether it's the ability or inability to repair their
tracks, or the difficulty negotiating for a fair return on
their cattle. These are all real issues that they are
confronting on a regular basis.
At the Antitrust Division we have brought a significant
number of matters. We have a matter that we filed just a couple
of weeks ago relating to meat packers and pricing. We had a
matter just last week, a consent decree that will protect the
ability of farmers to switch meat processors without incurring
substantial penalties for taking advantage of competition. We
entered into another matter--we brought another matter focusing
on protecting poultry farmers from the tournament system.
There's a whole long list of actions that we've undertaken
because these issues matter.
Mr. Massie. I appreciate your efforts. I think you are
fighting in some ways a losing battle until we address what
Mrs. Spartz said, which is ``we erect barriers to entry here in
Congress.'' The USDA has barriers to entry. There is the same
amount of regulation at a mom-and-pop processor with four
people working there as there is at an Oscar Meyer Wiener
factory.
We need not scale prejudicial regulations, but scale
appropriate regulations so that these farmers--you can help
them on the back end try to fight the oligopoly of four
processors; and I appreciate you doing that, but we need to
figure out how we can have little processors as well to help
the little farmers.
With that my time has expired. I really--oh, I see Ms.
McBath is here and I recognize her for five minutes.
Ms. McBath. Thank you so much. I just kind of popped in on
you, didn't I?
Mr. Massie. Yes.
Ms. McBath. Thank you so much.
Mr. Massie. Appreciate you coming though.
Ms. McBath. Thank you.
AAG Kanter, thank you so much for appearing before us
today. I am so sorry; I have been running in between Committee
hearings today and just--but thank you for all your work to
keep our industries competitive and fair.
America has prospered because of competition and whether
they aspire to grow into a large company or to remain in their
communities, small to medium-sized businesses have benefited
from the Antitrust Division's hard work and President Biden
economic plan.
As I mentioned at the FTC Oversight hearing with Chair
Khan, we absolutely must uphold and enforce antitrust laws to
promote competition across our industries. That means doing our
homework. Following the cases regarding these massive mergers
and listening to those most impacted by these dealings and the
work the division does is how we protect American dollars.
AAG Kanter, I want to take a moment to applaud the
division's efforts in identifying and challenging
anticompetitive deals and collusion. Your work helps to protect
our markets and ensure that they remain fair and competitive. I
understand that the Antitrust Division needs more staff to
continue this fight and the good fight to protect our markets
and to protect our consumers and our workers.
As Congress looks for ways; and we always need to be
looking for ways, to fund the budget, I hope my colleagues
become better aware of your critical work and take the step to
fund your division. I think that is very critical that we look
toward doing that, so that we can protect our fair and
competitive market.
AAG Kanter, I am a huge supporter of fair market
competition and find that it is necessary for our industries to
prosper. As major companies begin their mergers and their
acquisition pursuits what considerations does the division use
to determine if the acquisition would be harmful?
Mr. Kanter. Thank you for your question, and I appreciate
the sentiment very much. The American Dream depends on access
to markets, the American Dream depends on upward mobility for
workers, and the America Dream depends on the opportunity of
anybody in the country with a great idea to build a business,
whether it's in an urban community or a rural community, and we
fight day in and day out to preserve that opportunity by
enforcing the antitrust laws.
The considerations that go into bringing a merger first and
foremost are written in law. Congress passed the Clayton Act.
We enforce the Clayton Act. It's been interpreted for over a
century by courts. We are very much adherent to those core
precedents, and we follow the law and the facts wherever it
takes us.
At the same time sometimes, facts change; sometimes market
realities change and evolve. That's a wonderful thing, but we
have to make sure that we keep pace. That is why we're in the
process of updating our merger guidelines to make sure that we
can reflect and stay consistent with the applicable legal
precedent, but also understand that the world as it exists
today is different than it existed 20 or 30 years ago. As
market realities change, the tools that we use to understand
those market realities need to evolve as well.
Ms. McBath. Thank you for that. As these mergers continue
to take place, which we know that they will, what
considerations are made by the Antitrust Division to determine
if suppliers, small businesses, and local service providers are
actually protected?
Mr. Kanter. So, one of the most important things that we
have not done, but need to do is to make sure that we're having
a conversation with those who are most impacted by
concentration and consolidation. So, we've taken an effort to
not just make sure that we are enforcing the law effectively,
but to have a conversation to change the language of antitrust
so that we can engage with those communities who are most
affected. They understand better than anyone what the effect of
a transaction might be, whether it's a small business looking
to survive, whether it's a consumer looking to get a lower
price, or a new entrant looking to start a new business and
thrive.
So, we are working diligently and vigorously to make sure
that we are changing the language of antitrust and our process
so that it is more accessible and more open to the public.
Ms. McBath. As we always say, just go to the source.
Correct?
Mr. Kanter. Correct.
Ms. McBath. Thank you so much. I appreciate it.
Thank you so much, Chair.
Thank you for your testimony today, AAG Kanter, and I yield
the balance of my time.
Chair Jordan. Thank you, Ms. McBath. The gentlelady yields
back.
That concludes today's hearing. We thank the witness for
appearing before the Committee today. I thank you for making
yourself available to us between hearings as well.
Without objection, all Members will have five legislative
days to submit additional written questions for the witness or
additional materials for the record.
Without objection, the hearing is adjourned.
[Whereupon, at 12:42 p.m., the Subcommittee was adjourned.]
All materials submitted for the record by Members of the
Subcommittee on the Administrative State, Regulatory Reform,
and Antitrust can be found at: https://docs.house.gov/
Committee/Calendar/ByEvent.aspx?EventID=116568.
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