How could a 32-year-old academic carry such weight in the world of high finance? At the mention of her name, titans of business shudder.
Here is a sample of her work.
Washington — The Federal Trade Commission sued to block the largest proposed supermarket merger in US history — Kroger Companies $24.6 billion acquisition of the Albertsons Companies, Inc. — alleging that the deal is anticompetitive.
The sad reasons most often quoted for high grocery prices is delays in the supply chain and the war in Ukraine. However, Sleuths look elsewhere — monopolies.
The proposed merger would produce more than 5,000 locations for the two largest supermarkets in the US.
FTC's argument: The FTC claims that the merger would reduce competition, which could harm consumers and raise prices. The FTC also says that the merger would be bad for workers and that C&S Wholesale Grocers would be left with hundreds of stores that it can't run.
Kroger and Albertsons' argument: The companies say that the merger would allow them to compete more effectively with large retailers like Walmart, Amazon, and Costco. They also say that the merger would lower prices and preserve union jobs.
Other states involved: Washington and Colorado have also filed suits against the merger.
A federal district court judge in Portland, Oregon will decide whether to grant the FTC's request for a preliminary injunction. If the judge grants the injunction, the merger would be delayed while the FTC conducts an in-house case against the deal. Both sides are expected to appeal if they don't win.
Insiders laugh at the notion that inflation alone creates these exorbitant food prices. Instead they call it, not inflation, but greedflation. Executives have been overheard boasting that inflation helps their bottom line. Unchecked by competition, consumers have nowhere else to go.
A larger market still is HealthCare.
HealthCare watchdogs have observed big Pharma playing tricks with asthma inhalers, for example. They attach the inhaler cap in such a way that it doesn’t easily get lost. Then they get a patent on the cap and illegally extend the life of the patents on the contents of the inhaler. Trickery gives them a license to jack up prices and keep it jacked up for years.
The FTC sent them warning letters, and three of the four companies overnight dropped their prices from $100 an inhaler to $35.
There will certainly be pushback. For example, investment bankers accused the FTC of picking on winners just because they are winners. Others say that they are whiners and poor losers?
The ensuing decades after the Reagan era was a period of no government regulations on giant businesses. This has permitted big companies to morph into supergiants.
Now with a new sheriff in town, there are crackdowns on Ticketmaster, META, Amazon and Microsoft. In fact, there is a revolution of checks and balances, long overdue.
What is the Amazon antitrust paradox?
Although Amazon has clocked staggering growth, it generates meager profits, choosing to keep prices low and expand widely instead. In this way, the company has positioned itself around e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. So it is still a monopoly.
Not surprisingly, Amazon denies the charge.
Tech giants buy up smaller companies under the guise of reducing prices for consumers; but the price reduction seldom happens. In fact, they quickly spike.
This is a big country and businesses are many. For example, 90% of the mergers go through uncontested. And many other proposed mergers that we contest are, in fact, withdrawn instead of going to court.
The result is that very few proposed mergers are blocked. The other side of the coin is that the courts do not always agree with the FTC. So we then ask ourselves, what went wrong? And what could we have done differently to convince the judge that our objections are valid?
In another example, there were five big players who asked to merge. We didn’t contest them. So what happened? As soon as the merger went through, they raised prices.
Also following some mergers, policies change overnight. When warranted, we probe many such things.
We have sued Facebook and Instagram and WhatsApp to block their proposed mergers with various entities. It remains to be seen what judges will rule in these pending cases.
When interviewed by Jon Stewart, he asked Khan if CEO of behemoths are afraid of her? Khan laughed and quipped that “we’re just doing our job.” Large corporations don’t want to be tied up in court because it is expensive and time consuming, and the outcomes are not always clear.
Its is clear to us that eliminating competition stifles innovation. Our filing suits can have a dominos affect in that a wave of potential mergers may just withdraw before they go public with their intentions.
The power of the FTC needs to be exerted. Monopolies destabilize the economy. Our position is that no one is above the law.
Although the FTC does not regulate banks, but just to make a comparison, there is the notion that banks are too big to fail. That premise could be conveniently used to make the case that the pendulum has swung too far in the wrong direction.
The FTC does not need to be flirting with the idea that large corporations have the best interest of the public or the economy in mind. They are often narrowly interested in making more money and improving their position in the market. Why should the FTC reduce its power by opting to do nothing?
The political landscape is complex and treacherous. For example, some Democratic donors want to get rid of Lina Khan. So its not just Republicans who push back.
Khan’s following comments are drawn from a recent Jon Stewart visit to the daily show.
The FTC opposes the idea of less competition in the marketplace. That hurts Americans. Titans call for a new algorithm that allows them to have a wide girth. Apple bought 30 AI models as a hedge against the future. Let’s seek, they muse, which one will pan out the best. So the AI arms race is on.
Stewart asked Khan why did Apple ask him “please don’t talk to Lina”? He was talking about an interview scheduled for April 2, 2024. Clearly powerful companies get fidgety when their ideas and practices are challenged in court or are aired for public view.
There is a massive problem when so much power is concentrated in a small number of companies. Where are the checks and balances?
The Sherman Antitrust Act was enacted in 1890. It was modified in 1914 and again in the 1950s. AI is not exempt from existing laws. These same bedrock laws will still apply to the emerging industry of AI. We are on the alert that no AI innovation should become a monopoly.
We are the decision makers, not AI; and certainly not conglomerates. We need to use our tools at the FTC to safeguard the marketplace and our future.
Stewart was so pleased with these comments that he blurted out the question, “Would you stay forever?”
Deterring illegal behavior is always at the forefront of our efforts.
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