Episode Transcript
Speaker 0 00:00:00 Hello, and welcome to the AMI podcast. I am delighted to have Joe Miller, who is a returning guest to the podcast with us today. Joe Miller is co-chair of mins Levins antitrust practice, and is also a partner in the firm's healthcare practice group at admits Joe advises, health systems, physician groups, health plans, trade associations, and other healthcare related businesses on assessing and mitigating anti-trust risks as well as representation before antitrust enforcers, Joe has worked at the federal trade commission, grew off competition and at the DOJ antitrust division where he tried murder cases and later served as the suspense sheep of the division of care section, following his government service, Joe was general counsel for Asia America's health insurance plans, the national trade association for the health plan industry. Joe joined Ahab in 2010, just a few months before the affordable care act became law. And he oversaw the associations legal function, including filing images, bruise with the Supreme court on the first two challenges to the ACA. So Joe was very busy back then, Joe, also with a hips lead on healthcare competition issues. Frequently speaking before national audiences on the importance of the competitive process for delivering consumer benefits. Joe returned to private practice in 2015, where he continues to work at the intersection of healthcare law and competition policy. Joe, thank you for joining us today.
Speaker 1 00:01:43 Thanks for having me back and thanks again for the introduction.
Speaker 0 00:01:47 You're welcome. You're welcome. So we are six months into a new administration and all eyes are on 1600 Pennsylvania avenue. And on the hill, the determine what changes president Biden may make or encourage Congress to make regarding anti-trust enforcement. Now, thus far, we have heard rumblings of a federal ban on non-compete agreements and the employment context, and we've seen proposals for new legislation like the competition and antitrust law reform act or Calera that was proposed by Senator Klobuchar. I'm thinking companies may need to know how to prepare for changes in antitrust enforcement and how any new antitrust legislation might impact them. So thank you once again, for joining us to share your perspective on these important issues. And I think I want to kick it off by saying or asking what changes, if any, do you anticipate the Biden administration making in terms of antitrust enforcement? For example, I just mentioned Clara, is it likely to pass? And if so, what are its implications?
Speaker 1 00:02:58 So I think the only change I can, um, sort of moderately confidently predict is more, uh, so I think there's going to be more enforcement. There seems to be a lot of enthusiasm, both with the administration and also on the hill. The antitrust is kind of having a political moment. And so if you're in my position, so just actually finished law school 30 years ago, I've been doing antitrust, you know, ever since it's really a quiet little backwater or at least has been, which is great, but if you do what I do. And so there's, you know, what you're really not super enthusiastic about is a lot of political attention because the law evolves in a common law way that is it's made by judges enforcement agencies can influence law by their case selection and by, you know, the policies that they announced them, the cases they investigate.
Speaker 1 00:03:47 And so they're very influential, but they're not law givers. And so is Congress kind of stays out of things. The law is, you know, relatively settled. It changes over time. Academics have an outsize influence because it is a common law process and they can influence judges with their writing. Now we're seeing a lot of political Tom tunnels. Uh, and so it's really an uncertain time in antitrust. So what we're seeing is, uh, a commitment to do more of it, a bipartisan commitment to do more of it. And so you've got the administration saying that that's what they want. You've got Congress saying that there should be more of it. And again, not politically completely aligned except directionally, um, both Republicans and Democrats think there should be more enforcement. So I think you'll see more Biden has three significant appointments to make and he's made one of them.
Speaker 1 00:04:36 And so right now, in terms of making really much in terms of accurate predictions going forward, it's still too early. So we've got definite signals. Uh, there's two strong signals that we've seen. First one, at least in time was the appointment of Tim Wu. Who's a professor at Columbia university who's written extensively on antitrust and how it should be more involved in going after big tech and more expansive in the types of conduct that it catches. Uh, and so he's an influential thinker and has written extensively about this. And the fact that he's now a white house advisor, I think is a strong signal following on that president Biden appointed Lena Khan to the federal trade commission. And as soon as she got confirmed, like within hours, he named her to be the chair of the FTC. Lina Khan is 32 years old and has been wildly influential in changing the discussion in antitrust and changing the political orientation that we just discussed about a few minutes ago.
Speaker 1 00:05:39 So she wrote a as a law review note, that is the paper that some law students write while they're in law school. Law review oats are typically not influential. They're typically quickly forgotten. Uh, she wrote one about how antitrust law was really not up to the task and its current formulation of dealing with what she thinks of as monopolies in the tech sector. This was in 20 17, 20 18. So not that long ago. Uh, and then she had a series of policy oriented jobs. She worked for a progressive think tank, the open markets Institute. She was an attorney advisor to one of the current commissioners, Rohit Chopra, FTC commissioners. Um, she worked on Capitol hill for the antitrust to house antitrust subcommittee. She was very involved in their now famous tech report. And then she became an S uh, professor at Columbia. She couldn't have been there that long before she got this appointment.
Speaker 1 00:06:34 So she's 32 years old, as I said, and it's just a, a wildly impressive accomplishment. Even if you disagree, as I do with a lot of what she has to say, you have to really appreciate the amount of influence that she's had in a very short amount of time. So you've got those two, you know, um, nominations, including the chair, nomination to the FTC. Uh, however there's about to become another FTC spot open. So the commission works as five presidentially appointed commissioners. They've got staggered terms. Uh, one of the commissioner's terms is op Rohit Chopra. Uh, he's also a very progressive and he's going to be where has been nominated to be the director of the consumer protection financial bureau. So there's going to be an open seat right now. The commission is split to two it's along party lines, two to split. Although I don't typically think of antitrust in partisan terms.
Speaker 1 00:07:26 Uh, when I say a split, I think there's two commissioners who, you know, we call progressive and are relatively expansive and how they think about the antitrust laws. And there's two who happened to be Republicans who were more traditional lists. Uh, you need three votes to get something out of a commission. And right now it's split to two. So whoever that other appointment is going to be is going to be, you know, extremely important to how the commission looks over the next few years, if it's a Democrat, but somebody with, you know, relatively traditional views here, I think of the example of Bob Petoskey in the nineties. So he was a professor at Georgetown, wrote a well use a textbook, understood the law and the policy really well had written a lot of influential articles was not looking to expand antitrust beyond what the case law had provided for may wanted to push it in one direction or another may have wanted to set some precedents about how existing laws should be enforced or interpreted, but really within traditional bounds.
Speaker 1 00:08:27 You know, so if it's somebody like Petoskey and there's plenty of people like that today, the commission will look relatively. I think the same as it has over time. Uh, however, if you get someone as an appointee who really takes a very expansive view of what the commission should be doing and what its authority is, and start doing things like rule-making, as opposed to bringing case by case judication of potential violations, uh, and setting more industry-wide rules based on authority, that's never been tried. I think it will be quite an active time. So that's one appointment is the fifth FTC commissioner right now they've got five, but they're about to lose one these earliest next month. And so that appointment is really important. Also important are who actually, and this is really inside stuff, but who winds up being appointed to be director of the bureau of competition.
Speaker 1 00:09:16 So, um, the FTC is split between its consumer protection mission and this competition mission on the competition side. There's, you know, somebody who sits on top of that bureaucracy who comes in for 2, 3, 4 years and then leaves. Uh, and they're typically a very accomplished antitrust lawyer, uh, who either comes out of private practice or sometimes academia, but, you know, they actually run the, um, competition program day to day. If that person is sort of a more of a functionary, you get, you know, sort of typical stuff, if they're more of a visionary as this person could be, that would be something else to watch for somebody who could, um, sort of take a more expansive view because I think the staff that's there has been used to enforcing the law as it exists, uh, given by the courts, um, you know, given by Congress, but given by Congress over a hundred years ago.
Speaker 1 00:10:02 So you're not looking for legislative change or, or, you know, you're not looking to the statute as written for inspiration here. You're looking to the courts and the policies of the agencies. So you wouldn't expect the staff to take a really expansive view. It's not been their jobs. And so if you're looking for that leadership, that's going to be important thing to look for. And then finally, there's another agency that enforces the antitrust laws, the antitrust division of the U S department of justice, where I spent a long time, that's headed up by an assistant attorney general who has not been appointed yet. And so there's another place where we can look to see if there's somebody who, you know, views antitrust in a really more traditional way where it takes this more progressive expansive view. That'll be more important. So to get to the question that you asked, it's too soon to tell really what's going to happen. We've got signals, we've got the start headed in one direction, but the next set of appointments I think will be really critical and understanding what's going to be happening.
Speaker 0 00:10:56 So in the midst of all of this, you, you have companies that are still trying to do deals, still trying to push ahead with their strategic objectives. Given the state of the appointments, both at the DOJ and the FTC should a company hold off on their M and a and joint venture activity, what should they do if they have transactions currently pending before either agency? Uh, if I were
Speaker 1 00:11:21 Advising such a company and looking to thread the needle, I would say, you know, get this done as quickly as possible when you don't know what those other appointments are going to be. And you've got Rohit Chopra about to rotate off the commission, you'll have a two, two split there, and you've got somebody in charge of the antitrust division. Who's a career criminal enforcer. And so is not going to be looking to do anything really innovative here in the merger space. So now's, now's probably a pretty good time compared to what it could be later. These appointments wind up being relatively traditional appointments, you know, fine. It shouldn't make much of a difference, but you don't want to be released as a company. I wouldn't want to be in the position of being the new test case to try it a new theory. It just, as a practical matter, it winds up being expensive. So as are, um, you know, sort of looking to new ways to think about the law, there's no guideposts and there's nothing you can turn to. So it takes a lot of extra discovery, a lot of creativity, I'm part of everybody, um, and all that costs money. So obviously put your deal at risk. So I think, you know, now's good, uh, later, uh, maybe good or it may not be good, but if I were betting, I'd say try to get it done quickly. Yeah,
Speaker 0 00:12:36 That makes a lot of sense. So just before the inauguration, the criminal antitrust anti-retaliation act with pass, and actually interestingly enough came out of a Republican administration. So a couple of questions about that first, do you think that the Biden administration is likely to heavily enforce this new statute? Um, do you know any, have there been any prosecutions to date? Can you give us any insight there and what do you make of the fact that this came out of a Republican administration? So I
Speaker 1 00:13:09 Want to push back a little bit on what I hear to be the foundation of your question, which is, uh, Republicans, you know, have a bias against enforcement and the Democrats have a bias toward enforcement in the criminal area that may or may not be true, but it's really hard to tell from the outside because the criminal cases takes so long. So grand jury investigations can take years. I've never really done criminal work, but part of my time at DOJ, uh, my section split a floor with a criminal section. And so you could see these people in the hallways, uh, and, you know, talk to them about what they've got going on and, you know, grand juries take a long time, especially in a very complex conspiracy case. And so, um, if you think about the criminal pipeline, it's, you know, sort of unlike how you think of a local prosecutor, a crime was committed, um, and you know, everybody understands what that was.
Speaker 1 00:13:57 It's a robbery either. You've got the evidence to prosecute that case, or you don't, you can make a decision relatively quickly, uh, and you get on with life. Either you bring the case or you don't get a conviction or you don't, but it's all over within a timeframe that you can imagine, a complicated antitrust conspiracy case, uh, unfolds over a long time. The grand jury materials take a long time to get through and, uh, and sift and analyze, you know, getting all the witnesses before the grand jury, getting the case through the division takes a long time. Uh, I think there's a lot of, you know, due process there, if you're a defendant, you know, you're going to get a series of meetings there's, um, separate counsel for, you know, individual potential criminal defendants who work for the company, or they'll get the, a little bit like a prosecutor on an individual basis.
Speaker 1 00:14:42 The company will get prosecuted as a company, assault takes a long time. And so your question is, you know, what do we see right now? What we see right now has been in the pipeline for a very long time. And so the cases that, you know, if there's going to be an uptick in criminal activity, by the Biden administration, you won't know it by looking at least what cases they bring or what indictments they announce for awhile. And so there's that aspect to it. I also think in terms of, you know, any new criminal legislation, I think there's been a longstanding bipartisan consensus about criminal enforcement and the antitrust laws, which there are some antitrust violations was deserved to be criminally prosecuted. And I think there's been a fair amount of enthusiasm across the board for doing that. You know, the new legislation kind of, you know, interesting some new tools, you know, but I don't think there's really much to read into it, uh, in terms of, uh, how the administration may do things differently. Okay.
Speaker 0 00:15:37 Let's, let's step away a little bit from the federal government and the Biden administration. And talk a bit about some of the major changes that we're seeing on the state legislative front, for example, just what two weeks ago, New York passed the 21st century antitrust pack. And there are a number of other states that haven't actually enacted pre-merger notification statutes that mirror the federal part, Scott Rodino act. What's your take on what I view as somewhat of a sea-change Japan actually led to legislation from the state perspective. So
Speaker 1 00:16:15 I think the states are becoming more active, uh, traditionally the roles of the states of play because they have standing under the federal antitrust laws to bring a case either on behalf of their citizens or as a customer, but you've seen really uneven commitment among the states to do this. Uh, they tend to ramp up the state AGS tend to ramp up when they see a lack of enforcement on the federal level, they see themselves as a counterweight to that, uh, and they have played that role. And, you know, sometimes they work often they work collaboratively with the federal government, but again, there's certain states that have been more sort of institutionally dug in on an interest in some that are less. So, so New York for instance, has always had a very good antitrust bureau. Um, state of California, state of Washington has been very active.
Speaker 1 00:17:01 Uh, Florida has always had someone who's been paying attention, Texas, same thing. And you know, other states just either don't have the resources or don't have a particular interest in doing that. I think that's changing. So you see more and more states getting involved as co-plaintiffs with the federal government and bringing a case and they'll work collaboratively with the federal government and doing investigations, but also they're more willing now to do things on their own, the area that I focus on healthcare. So you see the state of Washington bringing its own cases. You see the state of Pennsylvania bringing its own cases, state of Massachusetts bringing its own cases in response to some, to some consolidation. It's not that the feds weren't involved, but the states, you know, have shown that they're capable of doing this on their own. And so you've seen, I think that trend over time building on that you see now things like, you know, new York's 21st century antitrust act, which kind of is I wouldn't say modeled on, but looks more like European style antitrust enforcement, um, where you've got different standards, where if you've got a dominant position in some industry, there's much less than you can do.
Speaker 1 00:18:06 Uh, then you can, you know, the typical United States enforcement regime where you still have to prove a violation. Um, there's some, some of these acts have a change in presumption, which sounds technical and legal, but I can tell you as a former enforcer is not, uh, so the idea of, you know, investigating a case and needing to bring it before a federal judge who cares about the law, this aspect of the law, a lot less than you do. And we'll put you to a burden of proof, which you carry as, as the government. You're just like any other civil plaintiff. You, you carry the civil burden of proof. That really makes you sharp. Right? The idea of being embarrassed in federal court, the idea of having judge who may not know very much about NAC trust, typically they won't right. They're generalists. Um, and so, you know, that is a sobering, um, set of realities.
Speaker 1 00:18:53 Um, if however, their presumption was changed and you can go into court saying, you know, here's some very basic facts about the industry and it's very basic facts about the defendants, uh, in this particular transaction. Now they have to prove that this is a pro competitive thing that discipline has really diminished. I wouldn't say it's completely gone. Um, you know, there are those who say, Hey, gets kind of how the law functions today that if the government can prove a few things, they get a presumption, which can then be rebutted. But I really, I do think that there's a big difference here. And so some of those states are experimenting. I'll call it an experiment with, uh, some more aggressive procedural postures that you shouldn't really ignore. Um, the other thing that you mentioned that I think is really important is pre-merger notification, which again, at the federal level is a really technical area of the law.
Speaker 1 00:19:41 Like when do you have to notify the governments? How do you go about doing that? It's sort of a, you know, sort of well-oiled machine and a very, very narrow set of people who understand all that stuff perfectly. I don't, we have somebody at my firm who's awesome at it, which I'm really grateful for us. I'm very familiar with that person, but the states are thinking about doing something similar. So, you know, notifying transactions, the difference here is that they're notifying, you know, threatening to what not threatening. They're thinking about notifying transactions at a very low threshold. So the federal threshold is $92 million. If your deal is not worth $92 million, and there's technical ways to measure that it doesn't need to get notified to the federal government states, I think have been looking specifically again, in my area, healthcare there's been transactions that they think have proven to be anti-competitive, but just were never notified because they were too small in the physician markets.
Speaker 1 00:20:37 If you're sort of rolling up all these specialties in one geography, sort of let's say all the pediatricians or all the orthopedic surgeons, um, or the rheumatologists, you know, that would be a typical antitrust investigation that would, that you'd have to sort of look at it and say, is that a problem here? Because of the nature of those transactions being relatively low dollar transactions, they never get notified. And so the government never finds out about them unless it's by happenstance or somebody complains about it, uh, that could change. Uh, the other thing, and you see this in California, there was a bill, I think it was a Senate bill 9 77 last year. I think I've got that number, right. Uh, they take a particularly dim view of private equity. And so there's a policy debate now about the form of financing of the transactions. And there are some, there are some enforcers and certainly some on the hill who think of private equity as bad. And so I do think you're seeing a little bit of interest in, you know, looking at a new way to think about an antitrust case, which is what are the incentives brought on by the financing and is that good or bad for competition? And they, you see that in some of the state legislation as well.
Speaker 0 00:21:50 Yeah, absolutely. I mean, there's so much to be mindful of right now for companies. And I can imagine a certain businesses that get has, but more importantly, the number of chief compliance officers with the hair standing up on the back of their necks, looking at all this change occurring. So given that what can a company do to prepare for anti-trust regulatory changes? I mean, what are some of your key takeaways or tips?
Speaker 1 00:22:17 Now's the time to get on top of this, right? So there's going to be more activity. You may not call it, caught up in it, then, you know, if so good for you. But, um, you know, there's, uh, especially in some sectors in the tech sector and the health sector, I think there's going to be, you know, an uptick in enforcement. And there's been a relatively recent in the last couple of years change at least the justice department in crediting compliance efforts. And so it used to be the policy of the justice department of antitrust division is if you have a compliance program, but you still have violations the compliance program wasn't working very well and you get zero credit for that, they've changed that policy quite explicitly to encourage compliance programs. So, uh, I think, you know, getting sentencing credit for compliance programs. And so I think there's been a really big change in incentives to focus on this.
Speaker 1 00:23:08 If you're a company that's not going to have a criminal problem first check yourself because often companies are surprised to find out they do have criminal problems, but beyond that, um, even the uptake in civil enforcement means you should be paying attention now, before it all, uh, gathers a full head of steam. So, you know, think about your compliance efforts in a couple of different dimensions. One is typical with other compliance efforts, which is what is your document retention policy and how do you enforce it? That's not only for antitrust, but that's just good hygiene, you know, documents that are, you know, 30, 40, 50 years old, um, probably outlived their usefulness documents that are four or five years old might have outlived their usefulness sometimes not, but you need to pay attention to it. You need to bear down on it because the path of least resistance is to keep stuff, right. And so, you know, focus, focus on that to the actual antitrust compliance programs should be updated, right? So you should make sure that you've got the training in place that you've got your audit trails in place. And so not only can you help better defend, uh, an investigation if it comes, but you can understand where your vulnerabilities are and address them in a proactive way. And so I think a compliance program can be very helpful for that as well. Well, this
Speaker 0 00:24:24 Has all been so wonderful, Joe, you know, I always like working with you. It's always good to chat with you about all things antitrust, and we just really want to thank you for your expertise and time today.
Speaker 1 00:24:37 Thanks. Uh, thanks again for having me. This has been fun.
