Is yours, lena. [applause] chair khan good afternoon. Thanks so much to barbara and the whole Economic Club of new york team for hosting me. Thanks in advance for peter. Today, i am going to discuss why after decades of retreat, our nations longstanding commitment to free and Longstanding Commission has come roaring back to the forefront of policy and what we at the ftc are doing to advance it. One of the first people to speak at the Economic Club of new york to was louis brandeis. It was four days after the president ial election that had catalyzed an Actual National debate on how government should address monopolies. He made the case for a new administrative board or a commission of some sort to enforce the nations antimonopoly law. The idea that brandeis proposed came to fruition two years later when Congress Passed and president wilson signed the federal chain the federal trade commission act. The statue outlawed unfair methods of competition and created the ftc to enforce the provision and to study market so he could keep pace with trends and practices. Much has changed in the century sent but the ftcs basic job has been to promote healthy competition and stop mono ballistic challenges. Monopolistic challenges. Unless there be regulation of competition, its excesses will lead to the discretion this the destruction of competition, napoli will take its place. This vision has been a bedrock of american dynamism and economic success. Open and competitive markets mean the best idea wins. This is this get ahead not through exploiting special privileges provide competing on the merit. This National Party in favor of competition over consolidation enabled america to become an economic powerhouse. That allowed our country to harness the ingenuity and hard work of citizens and reap Breakthrough Innovations. Around 40 years ago, we decided to experiment with a different approach. Policymakers bought into a set of assumptions that markets tend to be very competitive and self correctly, selfcorrecting, and a handsoff approach to antitrust competition policies would deliver to great efficiencies that outweigh any cost. Consider some of the effects, the u. S. Spends more on health care per capita than any other country in the world yet millions of americans are left questioning or skipping medicines that they need. A single storm or out break can suddenly trigger outages of products, leaving nurses and families to scramble. One technological which can ground tens of thousands of flights for a week, upending travel for millions and asked twitter taylor swift fans can attest, even buying a concert ticket is rife with hidden feeds fees. A fifth of American Workers are locked down with noncompete clauses. The treasury apartment estimates that workers make 20 less due to labor market concentration while bracing worse conditions. Paul their Small Businesses across the country find themselves squeezed not because customers dont like their products but because they are unfairly muscled out of the market by bigger players. Entrepreneurs watch as their ideas get appropriated by the gatekeepers on which they depend, startups take up the risk of bringing up product to market but someone else reach the awards. Less competition means fewer pass to commercialization or exit evaluations depressed. Our country is less safe. Inequality has soared, and Rural Communities facing food deserts and hospitals shuttered. The Defense Department has said consolidation with the Defense Industrial base having shrunk from 51 firms to five, posed a risk to National Security. Our military lost access to its only domestic search of a essential type of gun power and we still have not gotten it back. Empirical research has documented rising consolidation, declining, titian a resulting assortment of economic ills and risks. Jumpstarting some of this scholarship was a 2015 paper by a leading economist jason furman and peter orszag, whose work advanced the idea that concentration was on the rise and decline in competition could be creating a causal role in writing inequality. President biden announced a break with this experiment. He said 40 years ago, we chose the wrong path and pulled back on enforcing laws to promote competition. I believe the experiment failed. By signing his executive order on promoting competition, the president put fair, open, and competitive markets back at the center of economic policy. Renewed and updated for a modern economy. It builds on new economic learning, revising the over simplistic there is a market that have underpinned our prior approach will stop it recognizes that approach. The resiliency of our market and the strength of our democracy. This reinterred this reorientation on competition policy goes hand in hand with a broader set of policy changes underway. Across domains including trade, economics, National Security, we are seeing the need to revisit outdated assumptions about how markets work and update our approach to meet the challenges of today. Earlier this year, National Security advisor Jake Sullivan in a seminal speech, tied unchecked corporate concentration to the frame of the socioeconomic foundation on which any strong and resilient democracy rests. That was the debate happening here at the Economic Club of new york more than a century ago and americans decision than to recommit competition help to establish the u. S. As a as the strongest might receive the world has ever known. Ftc is firing on all cylinders, using our tools to promote free and fair competition in the modern economy. We are tackling basis practices that unlawfully muscle out rivals. We sued two pesticide giants for schemes that block farmers from accessing lower cost alternatives, resulting in farmers and the eating public been charged over millions of dollars. Public being overcharged millions of dollars. In january, we opposed proposal will proposed a rule that would eliminate noncompete clauses from Employment Contracts. These causes also impede entrepreneurial growth, depriving new firms of access to talent and dampening competition in products and Service Markets as well. Our rule estimates that banning block noncompete in Employment Contracts with rate raise worker wages and cut health care spending. Second, we are scrutinizing mergers and blocking deals that may threaten competition. Robust merger enforcement is our first line of defense against locke unlawful consolidation as preventing markets from coming monopolized. From becoming monopolized. We successfully blocked the fit nvidias acquisition of farm arm. The case also highlighted how competition policy and be a key component of industrial strategy, inducing production productive investment. The ftc challenge lockheeds attempted acquisition of aerojet. As we noted in our complaint, the deal would have taken out the last independent supplier of critical missile input, further need to . The prices our government pays. We are also updated our tools and frameworks. We published a draft revision of her merger guidelines, the enforcement manual that the ftc Injustice Department uses to analyze deals. Informed by over 5000 Public Comments and several listening sessions with market participants, the updates are designed to reflect the realities of how businesses grow and compete in the economy. We are working to tackle unfair and deceptive practices, the kinds of daily indignities that waste peoples time. For example, we are taking on dark patterns and other manipulative design tactics to firms used to trick people into making a purchase or handing over data. We proposed a rule that will require companies to make it as easy to cancel a subscription asked subscribing for one. We are scrutinizing jump theories we are scrutinizing jump fees. Taking on fair unfair committing firms to compete through lying about their prices entered disadvantaging honest businesses and setting baseline rules about the practices that are not fair again can help ensure firms are competing on the dimensions we want to promote. As artificial intelligent tools becomes more widely adopted, we hear from some that the time has come to embrace consolidation over competition, especially as other nations directly Problem National champions, it can be attempting attempting to adopt the view that we are into a arms race. Our history can be instructive. During the cold war, antitrust investigators investigated ibm and at t, they face arguments that we should shield these runs from competition to win locally but enforcers were not persuaded that protecting monopoly is the path to longterm success. They trusted that sticking with the free and fair competition facing antitrust scrutiny in the 1960s, ibm unbundled software from its software system, catalyzing the rise of American Software industries and creating trillions of dollars in growth. Antitrust action required at t to open up its pets involved, spurring the expansion of countless young firms. Antitrust action against microsoft stopped the giant from leveraging its power to centralize control over internet, allowing scrappy startups to grow and bring their services to market. The strength of america has been its combination of democratic government and open, competitive markets that offer opportunity and mobility. This political economy set up us apart from centralized systems and history shows that enforcing the rule to fair market has been the key ingredient to economic success. The ftc is at the forefront to put free and open competition in the center of policy and if we succeed, the american democracy can emerge strengthened. Thank you and i look forward to the conversation. [applause] thank you for those comments. We had a lot of questions that members have submitted ahead of time and i have so i want to start by thanking you for being here today. I remember being with you on a panel in 20 at the university of chicago. That is the here where you graduated from law school. We will come to the buyer biographical questions may be at the end but i want to jump into questions that are on peoples minds and some of the questions we have received from the new York Community in particular. And to go to the heart of perception, which may or may not be correct, i think that it is fair to say that in many parts of the new York Community, there is a perception that underlying your approach to antitrust in particular is some degree of aversion to m a. You want to expand on if there are benefits to dealmaking . Chair khan i think it is a perception out there. To put things in context, any given year, the antitrust agencies get anywhere between 5002 3000 1500 to 3000 filings. A few deals get a second request so we can do a deeper investigation and a smaller fraction results in a legal challenge. There is the antitrust actions that Congress Passed, including the clayton act weighs out that mergers that have substantially less in competition or create a monopoly are unlawful. Congress used the word may. Merger enforcement is always the predicted exercise. We can never know what will happen and it is basically a risk that we have to do. Our whole set of factors we look at and the merger guidelines we put out are designed to do a good for canvassing of the law and look at the market developments and provide guidance including to the Business Community to identify what types of deals and what types of issues are the ones that will be raised. And a percent of deals going through without even a second question. It is an issue on the margins of other types of deals that in hindsight, we realize ended up lessening competition and leading to problems i mentioned. We want to make sure we are course or erecting for course correcting for. Peter the 98 or go through, do you see them as things that are not locked up but or are they affirmative sit affirmatively good . Chair khan these very on a casebycase basis. It is really not about deciding which deals are good and which deals are bad. We look through it through a Law Enforcement perspective. We are not businesspeople. We are not in the business of figuring out why is this deal going to be good. We are looking at it through a Law Enforcement frame. We have heard that sometimes, certain types of acquisitions are necessary for commercialization or the only exit path especially since ipos is no longer as much of a available paths of those arguments we hear, we think about. An instance where you have a pharma deal which is an acquisition at an early stage will land differently than acquisition of fully formed drug of a fully formed drug. Peter we will talk about those guidelines but there is another perception about an aversion to big business, that biggest bag that date is bad that big is bad. Are there benefits to big businesses . Chair khan the rule of the ftc is to not have our own personal philosophical beliefs about big versus small. It is about the statutes. Congress was setting up the policy preference for competition over monopoly, that said the statute still prohibits being a monopoly. They only prohibit becoming a monopoly through illegal tech this. That is what we look at. Competition has been a key we have seen other domains, economies of scale, network externalities, require big business and in those instances, our government has historically applied a different set of tools to make sure they will not be checked and disciplined at competition. That there are a a different set of rules to check their power so historically, we have seen different paradigms. Our paradigm is competition but there are instances that you need big firms to deliver the services at scale we need. Peter to on this for a second, you referenced the paper with jason furman which talked about the growing dispersion in capital returns and productivity and different forces across firms, which could be caused by lack of competition but it could also be because my other things it could be caused by other things. I want you to comment on the causal linkage between the think you are aiming at and the committed behavior and a whole set of social ills that may or may not be causal we causally linked to that. I want to read something from matt stoler, who wrote, nearly to social despair, to the inability to to ship Energy Resources is a result of monopolization. Do you think that is right . Chair khan i worry about generalizing to back to group to that degree but i think there has been away in where we see monopolization upstream from a set of problems. The first question seems slightly first part of your question seems slightly different. If we are seeing concentration, to what extent is it just friends being better versus firms engaging in anticompetitive tactics. We instead are going to see oligopolies or monopolies so we need a set of rules. Peter nick bloom at stanford along with others have done research into this version of cross firms and what we need to do. Some firms gaining market share. What he would say is part of what happens here is better management teams can lead to growth and often lead to benefits from mergers and you cannot look at price markups or concentration and conclude that underlying driver has been lack of enforcement, the antitrust rules. I think the tone of most of the discussion including the remarks you gave suggests putting much more weight on anticompetitive behavior as opposed to potential causes of that concentration. Do you want to unpack that . Chair khan i would think that that area of focus is a result of the top that i have which is to be identifying and rooting out these anticompetitive tactics. You are right, there are a whole set of factors and causes that could drive some of these trends we see. You mentioned Profit Margins and concentration which are important. One that off often its time for me which is difficult to measure is innovation and this goes back to the longstanding debate between what are the right conditions conditions to that favor, innovation. Unsurprisingly, it depends, that the pipe the type of innovation you want to promote. There is a big literature. For the types of Breakthrough Innovations that are paradigm shifting, competition is a better bet because often times, people are already invested in existing technologies. It is really the destructors that are the disruptors that are most responsible for breakthrough innovation historically. Big firms can be great at the marginal innovation that can lead to product improvements. They have a lot more that they can be reinvesting so those are the questions that are challenging for us because how do you quantify the innovation that has been lost is extremely difficult and one conversation that happening that is happening now around the state of digital markets. Given the challenges of never being able to get back what has been lost or being able to quantify it, historically, if you go back to the legislative debate, that is why congress [no audio] peter lets turn to recent cases. The noted philosopher Michael Tyson said everyone has a plan until they are punched in the face and the historical success rate in court cases of ftc berries. You correctly note that you lose every case you leave every case you dont break. I am wondering how you think about, how are you thinking about adapting your approach in the face of recent Court Decisions or full speed ahead . Chair khan we in federal court have lost two merger cases. We have brought somewhere between 13 and 20 and have gotten abandonment. In the scheme are of our merger program, losing two are ok. We only bring cases that we think we should win. Every time we have that setback, we look closely, where could we have done better and use that to inform our approach moving forward. Some of the setbacks have been interesting because even in instances where we did not win the preliminary injunction, we got clarification of case law. The argument in response that we got was this is an old doctrine and does not apply to these markets and even if it did, it does not make sense. The judge was rejected that and laid out why it is potential competition in these markets are so important because even if you have a market where you are seeing a lot of rapid entry and exit, that is not a proxy for thinking there is no competition problem because you can sing you can still have an incompetent. Things that seemed not helpful but in the scheme of wanting to move forward and being 20 to clarify the law, instances everyone to be understand as the court, how did these traditional principles, some of which have not been litigated recently, apply in these the context, that clarification is these new contexts, that clarification is helpful. Peter there are cases in where i think most people think there is a market departure from maybe you can agree or disagree with. Any updated thinking on vertical cases . Chair khan there is no question that vertical mergers can be tougher to litigate. The two myrtle those vertical challenges. Shirley after, we shortly after, we filed the parties locked away. We saved resources but i think there has been instances in which we have seen a step forward. In 2017, the doj filed it challenge at t time warner. At that moment in time, there was a real sense of surprise and i think you saw a lot of commentary saying the government almost never counters vertical mergers. These are presumptively beneficial. You will see that connotation commentary with lockheed. There has been a step forward in thinking about what are the risks that are created that will make it more likely that one of these will run into legal issues. Peter i know you can comment on specific cases you cannot comment on specific cases. There is an appeal that challenges Administrative Law of the ftc. Can you articulate why, and this is one of the questions that came in from a member, why is that court system needed and why not just use the regular court system . For those who are not familiar with the mechanics of the ftc, we, like many other federal, trade of agencies, have the options of either filing a lawsuit in federal court or following in what is known is as our inhouse federal budget adjudication. Bill is available to the commission and the commissions opinion can be appealed to any federal court. It is an interesting to question two about why the federal court design ftc and other courts this way. For the ftc, congress was adamant that the Reason Congress created the ftc because conference was frustrated on how antitrust raw law was developing in the court. Shortly after the oil decision, congress jumped in to create the ftc and that was because in the standard oil decision, the court had introduced what is known as the role in region standard the role rule and readance standard. Congress saw this opinion as a power grab by the court and they worried that its judiciary being exclusively in the drivers seat of the involvement of antitrust law was a problem and they exclusively accredit the ftc to have these commissioners that are supposed to be coming with expertise, for that to be able to study the passing in the market and congress wanted the ftc commissioners to be playing a role in the development of the antitrust law. That was a history on why Congress Gave us this function. It is not unique to the ftc. There are other, shade of agencies including securities and Exchange Commission have a similar feature and the challenges youre are seeing in the court to this type of administrative adjudication is happening agencywide. Peter lets turn to the merger guidance you mentioned. I think arc they are seeing seen has a significant departure. In the context of that, you have referred to and i think you did your opening remarks also, something that you have sent with regard to losing cases, you are following the law. The law has not changed. The guidelines have so i understand the economy has changed. Is it really, you are mechanically following the law or is the law elastic enough to allow different interpretations of it because if not, how do you explain a significantly different set of guidelines unless they are not following the law . Chair khan what we did when setting off on this revision problem process was to make a list of every litigated merger decision starting with the Supreme Court, a whole set of district Court Decisions and when we set out to figure out what is the law. We did see areas where there had been divergence beats joint between what the guidelines have said previously and what the law said. More often, there are whole areas of doctrines that were not acknowledged in the guidelines we wanted to make sure this document was faithfully candidacy the law on the books faithfully canvassing the law on the books. Also, but remains good and prevailing law what remains good and prevailing law. Many of the decisions are ones that are still routinely cited in modern merger decisions. One decision that came down the other week was citing heavily the brown two decision, so there has been away in each it merger decisions have not reached the Supreme Court in the same level of frequencies we saw al a decade ago. That old law is still good law. There is no statute of limitations for prevailing supreme Court Decisions. That remains good law unless and until a Supreme Court decision overturns it. For antitrust lawyers, these cases are the bread and butter. They are being briefed back and forth all the time that we wanted to make sure these guidelines are being faithful to the law, to a whole set of doctrines to make sure the market was fully on notice. Peter i am not a lawyer. You are. Your citation of previous cases in the guidelines attracted attention because that was not the norm historically. The specific cases you say have also cornered attention because the also garnered attention, because the assertion is, you have some cases decades in the past and skipped recent cases. Is that fair . Chair khan i dont think it is fair. I am curious to see which cases people think we left out but we cited cases that have less than adverse outcomes for the the department of justice and the ftc. We got an adverse decision free days three days before the guidelines without. They stood for an important proposition of law. These are the first merger guidelines citing to law. He saw that as a feature, if these guidelines are designed to faithfully represent what the law is, we want to make sure we are showing our work. Peter you propose changes in the hsr filing report requirements for smaller mergers that are under the guideline threshold. How do you evaluate i can call it merger tax, the additional cost in terms of inefficiencies, not that law firms are inefficient, but from the paper work and other Filing Requirements associated with those additional requirements which i think happened estimated at 350 million a year. You have any way do you have any way you balance the Additional Information with the cost of complying with it . Some people think i am trying to give you an opportunity to respond to all the things that might be helpful to qualify, that it was a purposeful approach to kind of impose a merger tax . Chair khan just to step back, this is a regime that has been in place since the mid70s and the idea was that if the agencies are getting a hedge a heads up on deals, they have the opportunity to block it before they consummate or the vast majority of deals dont post legal issues. As part of that scheme, the agencies only get 30 days from the date that a deal filing comes in to determine whether to take a closer look. If you go back to the legislative history, congress thought that we would get 150 merger filings a year. That number has exploded but we still only get 30. I came into office during during a huge surge in dealmaking. The number of people we have stays the same, or merger a number strains on our staff and terms of getting the information they needed and being able to decide if there are legal issues here. This project stemmed out of that experience. This form had not been substantively updated since the 1970s. One of my colleagues likes to say the form was designed to figure out if you are paying the right filing fee rather than providing for the agencies accurate snapshot on whether there is accurate issues. My sense is that it is not going to be creating that much additional burden. For us, we see it as facilitating a more efficient and effective review process, where if we can decide on page 29, we already got this information, and we determined there is no issue. We hope that can provide more business to the certainteed to the Business Community provide more certainty to the business committee. Community. Peter the question is, are you concerned that with a fixed budget and i know you may not want to accept of fixed budget but within a fixed budget of resources for the agency, all that additional work means there may be some deals that not are not getting discreetly invested . Chair khan it is a challenge for us and one challenge is that is that it is a fluid process. A deal that you might want today, deserves a second work look another filing that has come in that seems to raise more flake and issues so it is a dynamic process and one that we have to be involved in to make the tradeoffs. We are making decisions based on what we know today but there are filings coming every week. It is a challenge and one that we are doing our best to navigate, hoping that being able to get more information on day one. And then information that is readily available for both parties, hoping that that can streamline a lot of this analysis going forward. Peter we will open it up to questions. I have plenty of the questions if you dont have any, which i doubt. I remember being 37 coming to the congressional budget of office. They wrote they do so when you are shifting course is challenging. I wanted to see if you wanted to talk about your leadership style, there have been concerns about how the ftc and the partnerships of the Public Service surveys shows them the number concern on the number of departures. How are you are approaching those questions . Chair khan we are privileged to have talented and hardworking career staff that are totally out resourced by the companies they are going against. There is no doubt that when i came in, a lot of people said, what is she doing here . A fraction of my age. It is true that my career previously have been focused on critiquing the approaches of prior administrations and the decisions that prior ftcs have made and i can see how that credit being put into this position can create frictions. We should have done a better job making it clear that those critiques were not intended to be impugning the integrity are questioning the talent and skill of art career staff. All of our decisions are made by career leadership. I think the other big thing is there has been an enormous amount of learning over the last decade. The public choices, conversations that are happening today are different from the ones that are happening even in government and probably that is because we were not alive. I think all of that is healthy and i feel honored to be serving with the people we have at the ftc. Peter we are going to open it out up. There is only one requirement, that you actually ask a question. I am jay markovich. Thank you for this excellent discussion and presentation. Working at a firm that is involved in a Company Creation in the life sciences, i am all for your comments about the importance of innovation. In this industry, the ecosystem, the innovation innovative ecosystem relies on life and m a and the smaller and Innovative Companies which are the sources of innovation and when folks like me view some of the policies that may be putting a damper on the ability of the Bigger Companies to provide the capital necessary to find the creation of some of these new products, we are concerned that your well intended efforts will stop the flow of importing important new drugs which is the way to bring more prices down. More good drugs means better competition and Better Health for people and lower prices. Im curious if you can comment on the appreciation on this particular ecosystem and what you can do to reduce anticompetitive practices but improve or in maintain the rc of a vital or maintain the by the lessee maintain the vital sea of an important industry . I no one of our portfolio companies, a very Small Company wants to do a licensing deal with the big company and the ftc has intervened in that so those are three that come to mind. Chair khan that is helpful in these type of hearings, what folks in your seat are thinking about and seeing it is very helpful for us. I will say, former pharma is an area we are looking at closely. The merger that you mentioned, amgen that the ftc is finishing. But we laid out in the complaint is concern over the cross market bundling that our staff in the complaint notes, we have concerns. In instances where you have worked drugs for drugs where you have newer drugs are drugs that have not come to market that has a different set of facts in instances in which we see acquisitions of existing blockbuster drugs so those are a distinction that we keep in mind. We have also heard from other Capital Allocators about the ways in which having a smaller number of exit paths or a handful of companies that are providing that commercialization, that there is a worry that that in and of itself is dampening the valuation or impeding their ability to actually negotiate on the deal term. Even if you will have those acquisitions for that commercialization path, more competition and more jostling among the potential buyers, we think, is going to be better for the innovators themselves as well as for the trajectory of innovation. Peter can i comment on this because i have seen it elsewhere. You cite the Supreme Court, a preference for internal growth rather than inorganic acquisitions or any kind of external relationship as being just more attractive from a economic and social perspective writ large. Can you articulate why . Chair khan in the guidelines, we quote the case law, we quote congress. It is a question of congress articulate in this preference and the Supreme Court interpreting that law and noting that preference. Even for congress, it was not categorical. Congress said mergers that made less in competition tend to be prohibitive. There is a line there and in certain contexts, we have seen a trend of consecration centration. Those are instances where congress has been instructed us to be more vigilant. As to why, there is legislative history that congress chooses competition over consolidation because they thought it correlated with outcomes and values. Some of them economic. Peter any final questions . I will take last one over there. Thanks so much. In your introduction remarks, you broadened the scope of optimizing, not just for the cost of consumer, but also resilience factors. Those have ramifications, things like return on equity, return on capital and other things so how do you think about balancing those different set of factors when previously, the ftc have been more focused on that singular factor . Peter what if they are in conflict . What if something is bad for consumers but good for workers Small Businesses . Chair khan that is a great question and one where there is a supreme decision on point where the court says the good law says in any line of commerce are prohibited, it is not the job of the ftc or the doj to engage in some type of cross market bouncing, where it is not for us to be subordinating the interest of consumers to make make it better for workers. Consumers for consumers, you have to make it a market by market that is something that under the law is illegal. From our professorial discretion perspective, those are things that we think about but the law explicitly discourages and prohibits us from engaging in that type of exercise because courts worry that it would put us in a position of being some type of regulator making social tradeoffs and that is not our job. Peter ok. If everyone can join me for thinking the chair