Podcast: Discussing Antitrust with Kevin Cox

Nate Adams: Welcome to our Florida Capital Conversations podcast series. Today, our subject is antitrust law. And our guest is Kevin Cox. My name is Nathan Adams. My co-host is Mia McKown. We're so pleased that you have joined us today to consider another important issue associated with state government affecting the business community and our daily lives as Floridians. There is none better than Kevin Cox to kick off our discussion on antitrust. Mia, let me turn to you to ask our first question.

What is Antitrust?

Mia McKown: Kevin, thanks so much for joining Nate and I today to talk about antitrust, which is pretty complicated in a lot of the nuances and the things that go into it. But could you give our listeners just a little bit of an idea of what antitrust is? And give us a framework from that, and then we'll move on to some of our other questions. But I think it's important to kind of give a little bit of a education on what this involves and what the purpose of it is.

Kevin Cox: Sure. And thanks, Nate and Mia. It's good to talk with you all. I think that's a good question, because antitrust can be a little overwhelming when it gets into a litigation phase. And lots of people hear about experts and measures of regression analysis and this and that to finding markets. And it can be, it can seem like it's more complicated than maybe it should be. It all boils down to one simple concept: competition. It is a bedrock of our American system, our capitalist system. The idea is that competition is the best way to get the most efficient results, the best prices, the best quality of service that if you preserve competition, then you're going to get the American way. And so what sometimes happens and it happens in historic businesses as well as modern businesses, is that sometimes there are things that happen that get in the way of competition. They are anti-competitive. And it could be because competitors join together to fix prices or to agree to allocate markets or to do anything that would basically disrupt what is a competitive marketplace. And so the bottom line is antitrust laws, both at the federal level and the state level are designed to preserve competition because that's what's going to lead to the best results for everybody, for consumers, suppliers, everybody in our economic system, if there is competition. And so there's a lot of cases that have developed the law regarding what is and what is not anti-competitive. And that's what makes antitrust law such an interesting arena, because it is constantly evolving, but it is constantly also focused on a really core principle that makes this country a great country, which is that we have a free market and we want to have competition to get to the best results.

It is a bedrock of our American system, our capitalist system. The idea is that competition is the best way to get the most efficient results, the best prices, the best quality of service that if you preserve competition, then you're going to get the American way.

Mia McKown: The idea in that just is that by encouraging competition, it supports innovation companies to be innovative, that they're competitive with their prices. All the things that in the end will benefit the end user, the consumer and protects them to have those type of things.

Kevin Cox: That's exactly it. Imagine if you only have two competitors out there and they're cooperating with each other and planning together, you're not necessarily going to get the best results. You're not going to necessarily get the best prices or the best service because they know that there's no other provider in town. The same would be true of a monopolist. If there's only one provider, then you don't have a lot of competition and there's not a lot of incentive for them to make sure that their prices are the best and their service is the best. And so bringing in competition, avoiding monopolies, avoiding competitors, working together basically is exactly what you said. It's going to help the consumer in the end.

Bringing in competition, avoiding monopolies, avoiding competitors, working together basically is exactly what you said. It's going to help the consumer in the end.

Evolution of Antitrust Enforcement

Nate Adams: Kevin, my understanding of American history a little bit is that antitrust law is actually one area of particular contribution by American law in the common law through statutory law and the like. And that, you know, it has a history dating back to maybe most prevalent enforcement was during the Teddy Roosevelt years when steel was a big issue and you know, antitrust monopolies in hard industry. If you were to think about how antitrust law has evolved now into 2022, where do we see it employed the most? You know, we hear on radio and television about big tech and sort of issues there. But am I correct that, you know, healthcare is another area that we see a lot of antitrust issues? And I'm just curious from your standpoint, you know, when you see enforcement activity today, what are some of the most common areas where antitrust law is at issue?

Kevin Cox: Sure. And you're right that sometimes when we think of the antitrust context, we think of things like the Sherman Antitrust Act and Teddy Roosevelt, the Trust Buster and the Clayton Act. And these are things that are 100 years or more old. And we think about steel and these big old industries from the Gilded Age, and when you had a lot of economic power concentrated in a few hands. And you can see why in those types of industries at that time with the concentration of economic might that would be shared by only a few hands or monopolists, it's sort of obvious based on kind of the things we already talked about, of the dangers of these trusts and how that could affect consumers. But as you point out, you know, the most powerful economic interests evolve over time. They change over time. The way that products are packaged and delivered and services are packaged and delivered has changed over time. And it's not as if antitrust concepts go away. Antitrust concepts still routinely apply as these industries evolve. And as you know, I don't know how complicated healthcare was at the time of Teddy Roosevelt, but it's extremely complicated now with lots of different partnerships and alignments and things that are really, I know, designed to facilitate great delivery of care, but can be extremely complicated. And I think antitrust laws had to catch up with that.

The most powerful economic interests evolve over time. They change over time. The way that products are packaged and delivered and services are packaged and delivered has changed over time. And it's not as if antitrust concepts go away. Antitrust concepts still routinely apply as these industries evolve.

If you're in the healthcare industry, I think it's always worth being very mindful of what is going on in the antitrust enforcement arena, as well as in the civil litigation, because there are unforeseen traps that you might fall into as a healthcare provider. I think there's a lot of activity in the healthcare arena. You also mentioned big tech and some of the, you know, emerging technologies. And that's another one where obviously that didn't exist at all in Teddy Roosevelt's time. But those are one of the great industries of today. That might be the steel industry of today. And it's rapidly evolving, just like some of those early industries were evolving. And they have enormous influence in our lives and in every person's everyday life. And there is a lot of complicated alignments and obviously sharing, sometimes there is information shared, sometimes not. And whenever you've got potential competitors who are sharing information, whether it's in healthcare or in data services or in any industry in our economic lives and the economic lives of our leading corporations are not becoming simple. Due to technology, they are proliferating in complexity, globalization and the number of partners that are able to work together fairly seamlessly because of technology and because of the information that is out there, it actually creates an even more fertile and active environment for potential problems. Maybe unforeseen, maybe intended, but that is I know that in particular here in those types of industries, you should be as mindful as ever we see now, just in the last few years, some of the most active enforcement going on by the government in terms of looking at these types of industries and really trying to figure out where is the line to regulate. Obviously, you don't want to enforce against innovation. You don't want to enforce against some of the creative things that they're doing that may be very beneficial and pro-competitive for consumers, but you don't want any abuse based on the amount of power that they have economically and what is a monopoly in terms of data, in terms of, you know, what is the market when you're talking about data platforms and social media platforms, it raises a whole series of new questions that all go back to those same principles that we talked about before.

You don't want to enforce against innovation. You don't want to enforce against some of the creative things that they're doing that may be very beneficial and pro-competitive for consumers, but you don't want any abuse based on the amount of power that they have economically and what is a monopoly in terms of data.

Enforcement Actions Based on Political Party

Mia McKown: And it varies, too. I mean, antitrust, depending on, frankly, which political party is in power. It seems like the Biden Administration has been a lot more aggressive in the FTC approving mergers, or what they're looking at so that also shifts into what priorities are and the direction that they want to go. I mean, that's what it seems like in my experience, would you agree with that?

Kevin Cox: You do see the influence of whatever political administration, both in terms of legislation, and we're seeing more legislation these days at the congressional level being proposed. We're also seeing the DOJ and the FTC have taken a slightly different position than what we saw before. And like I said, it's been very, very active these days. But I think, it's interesting, there are also opportunities for sort of things that maybe there's going to be a bipartisan approach on certain of these issues in protecting people that, you know, when there's privacy issues out there. So I think what you're describing Mia, is exactly right. And it's a little unpredictable, it is dynamic. It changes what the definition of, you know, what's over the line can change depending on the political will, who's in office and those sorts of things. Although there are some fundamental principles that I think will always be agreed upon, it's very unpredictable. And then, of course, you have the courts and what are the courts going to do and what are the courts going to say? I think we've seen the courts taking stronger positions and in certain regards against, for instance, state action immunity, as the courts have cut back further on that just in the last few years and issues like this, that every time they evolve slightly, everybody has to readjust and figure out, 'ok how does that affect my planning? How does that affect my risk mitigation strategy? And how does that, you know, inform me about the best way to innovate, to grow, to have a very successful business, while also at the same time making sure that I'm not running afoul of something that someone might call anti-competitive.'

You do see the influence of whatever political administration, both in terms of legislation, and we're seeing more legislation these days at the congressional level being proposed. We're also seeing the DOJ and the FTC have taken a slightly different position than what we saw before.

Antitrust Violations: Not Always Intentional Nor Obvious

Nate Adams: So, Kevin, some of our listeners may have read books like Upton Sinclair's The Jungle or, you know, books from that era where they have in their head the idea of a bunch of people sitting around in a room smoking cigars, divvying up the countries markets and deciding what, you know, what ought to be the price for goods. But am I correct that there's a lot of companies that get caught in antitrust that, there was never any intentional conduct here in terms of, you know, conspiracy to set pricing and that kind of thing. And so what about those companies that may not realize that they're in the crosshairs of antitrust law because their understanding of what antitrust is all about may be somewhat dissimilar from the way it's actually typically happened.

Kevin Cox: That's a great point. And it's not always an obvious monopolist. It's not always competitors sitting back in a smoke filled room sort of making these intentionally conspiratorial deals. It's actually quite the opposite, I think, in the sense that the company should be careful any time, any time, no matter how good its intentions are about sharing information that could provide an advantage, you know, within a small group of competitors, that includes not just the prices that they're going to charge, but what they're going to pay their employees. Anything that has a competitive, potentially a competitive benefit that if it's shared within a few competitors and the folks that are left out, are going to be at a disadvantage I mean, this could be a problem. And whoever is hurt by this may raise a claim. And that's something that is often times not foreseen by the entities involved. I mean, I think, too, about examples of trade associations, which are wonderfully pro-competitive and do wonderful things. And when I say pro-competitive, I mean they are good for consumers. I mean, they help establish better standards for services and products. They help make each other more efficient by talking and they help advance the industry. At the same time, they have to be very careful. And I know associations are very careful about not sharing information that's going to be competitively sensitive and that's going to basically allow them to not have to compete as hard because they know certain things about their competitors. And so that's a great example, and Nate I think this is kind of what you're getting too, is that there are, an example of an association or example of just competitors are kind of watching, maybe discussing not with any intent to because they happen to be in the same industry. That same business is very important to all of them. They have to be very careful that the type of information that they share, the type of discussions that they have, are not at bottom unintentionally proving to be anti-competitive.

It's not always an obvious monopolist. It's not always competitors sitting back in a smoke filled room sort of making these intentionally conspiratorial deals. It's actually quite the opposite, I think, in the sense that the company should be careful any time, any time, no matter how good its intentions are about sharing information that could provide an advantage.

Antitrust in the Healthcare Space

Mia McKown: And Kevin, is that to a certain extent what you're talking about in that regard, I remember reading something I want to say at the end of the year of 2021, I don't know if it was a congressional report or something where we talked about the tech issues, right? That there was an interest in that. But also, I think there was some concern about pharmaceutical pricing. Is that kind of another area where they're ebbing and flowing and we don't know, you know we've got to see where they're going. I don't know. I want to say it was a it was like a congressional report that they had some serious concerns about pharmaceutical industry pricing and business practice. Have you seen any activity in that regard?

Kevin Cox: Well, I think in terms of and we talked about healthcare a little, touched on healthcare a little bit before. Healthcare is in its portion of the economy and the portion of the money that flows through, whether it be healthcare services, whether it be pharmaceutical, it's going it has become, you know, a dramatic part of our economy. And you're right, there is increased tension not only because of the scale of it, but also because of the, you know, the complexity of the relationships between pharmaceuticals and between each other, between the providers, between all of the various components of the supply chain. And given the amount that some people pay for medication and that purchasers, whatever the entity may be, including insurers, obviously there's going to be and there will continue to be a very close eye on how those prices are being dictated. Is there something in there that, you know, prices are artificially inflated? That folks, obviously for consumers, this is a big deal, not just because it's a price, but because this a price to take care of yourself. And so I think you're going to see, I think you're right Mia that there has been increased attention on that. And I don't think that's going to go away. I think that's going to continue to be a significant focus both in the pharmaceutical industry as well, as well as in healthcare more broadly.

What Should the Average Consumer Know About Antitrust?

Nate Adams: Kevin, tell us a little bit about sort of what it is, let's say you're a company, you're concerned whether you're in compliance with antitrust law. What are the kinds of things that you do in antitrust practice to explain to the average consumer how the firm might be helpful to them?

Kevin Cox: Sure. Well, I think, for one, you should have someone who is aware of these kinds of issues, whether it be internal legal counsel or outside counsel, who can understand what you're doing as a business and see things that may not be immediately obvious to you. When we counsel clients, we walk through sort of the most obvious traps in terms of the way that they communicate with their competitors, the way that they look at pricing, look at the agreements they have with partners, and just see sometimes spot things that aren't immediately obvious. Because, again, a lot of these folks, if not all the ones are doing everything based on trying to accomplish something good for their customers and their business. Sometimes those steps just are things that courts have found to be not quite in line with antitrust laws or close to the edge. And so before going too far down those roads, particularly when you are communicating with competitors and partners, can sometimes or oftentimes be competitors, particularly if you're involved in associations, particularly if you are a company that is thinking about a creative new kind of coalition to deliver your services or to produce your services and products. Oftentimes it makes sense just to do a sanity check. And this is the kind of work we do quite often to counsel, just to have someone read over it, not only for the basic contractual, you know, risk mitigation, but specifically from an antitrust perspective, because those issues don't, they're just not as immediately apparent unless you spend some time in this area. And so that's what I would recommend to any company, especially these days. As you know, we talked about the enforcement seems to be perking up. And that will lead to some redefinition and some increased activity probably on the civil side as well.

When we counsel clients, we walk through sort of the most obvious traps in terms of the way that they communicate with their competitors, the way that they look at pricing, look at the agreements they have with partners, and just see sometimes spot things that aren't immediately obvious.

Mia McKown: Nate, one of the things that Kevin and I experience just with clients when they're working on deals, just even how they're communicating with each other about the deal, what they're saying, they need to be mindful that all of their emails, everything that they say at some point could come under scrutiny. So there is a lot of complicated things, right, that go with it, with all the things that are antitrust. But still, at the end of the day, the email traffic, the communication back and forth, even though it may not be what you meant, it could be interpreted very differently. Right, Kevin we've seen that in cases that we've had? And so those would be some things that I would, you know, if we were encouraging folks, that's one area that I would remind them about. And that sounds really simple, but it can really come back and hurt the company when there was really no ill intent. If something is interpreted the wrong way.

Kevin Cox: That's right. Now, I would keep in mind that competition is good for consumers and competition is good. If you're a company, you should want competition. That should be your goal. And if someone were to read your internal memoranda about what you were trying to do and your objectives, it should be apparent that you were trying to, you know, compete fairly. You know, I know that's going to be what's the best. But sometimes things are misinterpreted. And so you want to make sure that everybody's on the same page with your organization. And that's something that, you know, sometimes a steady reminder can always be helpful.

I would keep in mind that competition is good for consumers and competition is good. If you're a company, you should want competition.

Nate Adams: Well, I want to thank Kevin Cox for this informative and interesting discussion about antitrust law. And I want to thank my co-host, Mia McKown. Mia, you I know also do a fair amount in this antitrust area, so it's a pleasure to have you on this podcast in particular. And most of all, I want to thank all of those listening for joining us today. Please plan to join us for our next Florida Capital Conversations podcast. Have a great day.