Following is the unofficial transcript of a CNBC exclusive interview with U.S. Department of Justice Antitrust Division Assistant Attorney General Jonathan Kanter on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Monday, May 8 for his first broadcast interview since taking on the role as the Assistant Attorney General of the Department of Justice’s Antitrust Division. Following is a link to video on CNBC.com:
DOJ Antitrust Chief Kanter: Antitrust Laws Exist To Promote A Competitive, Resilient Economy
ANDREW ROSS SORKIN: Meantime, M&A activity pressured over the past year thanks in part to more skepticism from the Biden administration. The Department of Justice got to win when a federal judge blocked Penguin Random House’s takeover of Simon & Schuster.
On the other side, the DOJ ran into problems trying to block UnitedHealth’s acquisition of Change Healthcare, among other cases currently in focus, JetBlue’s bid to buy Spirit Airlines, and of course, Google and there’s potential for Apple and so much more. Joining us right now to talk about the state of antitrust scrutiny in the United States. Jonathan Cantor’s here.
He’s the Assistant Attorney General for the Antitrust Division at the US Department of Justice. This is his first broadcast interview since taking on that role and we very much appreciate him being at this table because so many of our viewers are trying to understand how your administration and everything that you’re doing may impact them so thank you for being here.
JONATHAN KANTER: Thank you so much for having me. It’s a real pleasure and honor to be here with you.
SORKIN: In addition, of course it’s been my, antitrust being one of my favorite topics in life. Help us to just understand how you’re thinking about this because I think a lot of the business community today looks at you and says, oh my goodness, this is a very aggressive, very different department of justice.
And in fact, some would even go so far as to say that this, you and the FTC and others, are pushing the law or trying to push the law in ways that are not even intended.
KANTER: So first, let me start by saying that, you know, we started this process with the wind in our sails. We have a president of the United States who issued an executive order that promotes competition and competition policy throughout the economy and throughout the government.
I have the honor of working for an attorney general that is himself a brilliant antitrust lawyer and believes in reinvigorating antitrust enforcement. So when it comes to enforcing the antitrust law, we are a law enforcement agency. We follow the facts and the law wherever it takes us. And we believe that the antitrust laws exist to promote a competitive, resilient economy, and that rising tide lifts all boats.
SORKIN: Let me ask you about this. Last year, the New York Times started a piece with the following quote, “President Biden’s antitrust regulators have adopted a mantra in order to win, they need to be willing to lose.” Is that right?
KANTER: So we bring every case because we believe we can win. We follow the facts and the law and we bring cases that we believe are right on the law and right on the facts.
SORKIN: But but the reason I say that is you’re not only trying to, you will not only bring a case that you think is absolutely a slam dunk win.
JOE KERNEN: He said they bring every case. I take him at, at his word. You’re trying to get together you’re gonna bring a, that’s what it looks like now.
KANTER: No, no so—
KERNEN: Well, you just said that.
KANTER: No, what what I said is that we find the facts in the law. If a merger is anti-competitive that harms competition and meets the standards of the Clayton Act, then we will consider bringing a case—
KERNEN: Aren’t, there’s too, there’s Europe out here and it’s it almost looks like it’s not about consumers. It’s almost about employees. It’s almost like buggy whip companies can’t be put out of business that can’t, anything that would harm anachronistic industries. You can’t even rationalize those businesses because there’s big job losses.
It’s is it still about customers here because a lot of times we see see things against tech, where the customers have never been damaged, they’ve never done better. It’s never been cheaper. And yet these two companies can’t get together because you’re worried about a competitor being put out of this.
KANTER: It’s about competition. Congress enacted the antitrust laws based on a value judgment that competition is good for society. Competition is good for consumers and lower prices. Competition is good for entrepreneurs in terms of access to to capital access to markets to compete with innovations. Competition is good for workers and their ability to earn a better wage. These are—
KERNEN: Does Europe have a different system and sometimes I think it actually hurts competition by keeping competitors that aren’t competitive in business because of worry about the economic effects of job losses, etc.
KANTER: I work at the U.S. Department of Justice and my mission is alongside my colleagues at the DOJ to enforce U.S. law and that’s where my focus is.
SORKIN: Okay, let me make it more complicated. We are in the midst of a banking crisis in America. And you have just seen some of the smaller banks get merged up with some of the bigger banks, the JPMorgan’s of the world. Some people would say you need to do that for the safety and soundness.
I would think that in the world of antitrust regulation, you would have to look at that and say, you know what, I don’t like that. But how do you weigh and balance those two different ideas?
KANTER: So the beauty of law enforcement is that it’s fact intensive, it’s deal intensive. We look at every deal on its merits. We apply the law as it’s written, and then we evaluate whether there is a substantial lessening of competition such that we have to go to court to challenge a deal.
It’s worth noting that the vast majority of deals don’t get challenged. We get thousands of filings every year. Only a small fraction get investigations and even a smaller fraction actually result in court challenges.
SORKIN: But how do you think about markets these days? Because the other piece of this is it used to be that you think of the media market, for example, as you know, the three or five different networks and that was it.
Today, you have to say that Apple’s there and Amazon’s there and you can go down the list and it all of a sudden it looks like this, you know, uniquely fractured market and yet, I think there’s a lot of media companies that would say I don’t know if I can actually merge with somebody else because of the way the Department of Justice could think about it.
KANTER: So competition plays out across a wide range of dimensions and our job is to make sure we understand those dimensions whether it’s price for subscribers, or advertising costs for advertisers, the ability of programmers to get funding to develop their programming. There are a wide range of considerations that go into antitrust enforcement and we have to look at the facts of each specific market on its own merit.
SORKIN: How do you think of foreign markets though because I will tell you, you’ve probably heard you’ve seen Meta for example, not your case, but FTC.
And they’ve said look, how is it possible that you’re going after us at the expense of, you know, or not at the expense of but you know, here’s TikTok, this Chinese owned company that they think is going to effectively become much bigger because of the regulation that’s going to come on to them. So how does the foreign piece of this work in your mind?
KANTER: Andrew, so I’ve heard people make the argument that we need to tolerate monopolies in the United States so that we can be more competitive abroad. I don’t subscribe to that view. It’s my belief that we are at our best as a society when we are a free, open, vibrant market.
We are at our best when we are competitive when we have opportunity for all businesses of all sizes of all stripes and by enforcing the antitrust laws, we’re preserving that competitive opportunity that for our economy and for all players in our economy, and as a result, we are better. We are more competitive.
KERNEN: What if a company, Jon, is just so good that it has a natural monopoly because its services, its products are so amazing. Do you need to target that?
KANTER: So our laws only focus on anti-competitive conduct that might illegally—
KERNEN: Sometimes it looks like, if you’re so, for example, even and I don’t, when I text someone and it comes back green, it’s like what’s wrong with you what kind of phone is that right? I mean, they’re so good. Apple is basically a monopoly.
KANTER: So you’re saying it’s not easy being green?
KERNEN: That too, but is Apple a monopoly? Don’t you think Apple is a monopoly?
SORKIN: Well, I think there’s a question as to whether they’ve, you know, gotten to such escape velocity, if you will, that they then that the App Store itself becomes a utility. I mean, it that’s, that’s the question. So I would tell you as a consumer—
KERNEN: I would celebrate it. Celebrate it.
SORKIN: I love the App Store. And I love that it’s secure. And I love all of that as a consumer. But there’s, there’s a lot of other folks who would say, especially people in the App Store who would like a different deal.
KANTER: So again, I won’t comment on any specific company or any specific investigation, but what I can say broadly is it really just depends on the conduct. So monopolization law, which is the cornerstone of our antitrust laws, focuses on whether a company has market power, monopoly power, and whether the company is using that power to exclude rivals and maintain their position.
SORKIN: I have a market power question for you, which is, we’re now in this moment. We talk about ChatGPT and we talk about AI all the time. But there is a whole number of next generation technologies that seem to require both scale and enormous sums of money, right, because to get this stuff to work you need to be buying the video chips and other chips.
You know, not by the dozen, but by, you know, the millions and the amount of money it takes just just the infrastructure to do it is enormous. And so I’m imagining that over time, there will only be a handful of players and I’m curious what you think of that.
KANTER: Yeah, so important inflection points of technology have often coincided with antitrust enforcement and so think about railroads and oil companies and microprocessors, software operating systems, telecommunications networks, because those inflection points create amazing opportunities for productivity, things that are beautiful.
At the same time, markets can tip especially markets that are highly dependent on scale on data in and in a world of algorithms in a world of AI some of those technologies, do have the tendency or may have the tendency to tip. So from our perspective, we want those benefits to be delivered to as many Americans as possible.
We just want to make sure those markets are free from anti-competitive impediments. But to do that, we have to understand the technology. Over a year ago, I hired a chief economist who founded the, was one of the cofounders of the AI Institute at Stanford.
And the reason we hired her who’s one of the leading experts in her field, world renowned and other data scientists, is because we knew that we had to ramp up our expertise so that we can understand how these markets work because only if we understand whether these markets work can we then apply the law effectively.
KERNEN: I was thinking about net neutrality. I just fundamentally have this sort of laissez faire about a lot of this stuff. I think the market forces take care of things a lot of times and sometimes I just don’t, the Hippocratic Oath don’t make things worse by by doing too much. Can you just can you just, will you think about that?
KANTER: Well, we want to make sure that things are not being made worse by illegal behavior and that’s our job. It’s law enforcement.
SORKIN: How much, final question for you, how much do you look at, I mean, we had Roger Altman on this broadcast and I don’t know if you saw a couple weeks ago. He was quoted everywhere, saying there’s so many deals that just don’t happen anymore because they’re worried about you bringing a case.
It’s not that they actually get get to a trial. It’s not that they actually get to be adjudicated like but as a result that he would argue, I think, and I don’t want to put words in his mouth, that this new approach is so intimidating unto itself that it’s that that that certain transactions that maybe should be happening aren’t.
KANTER: So I did see that interview and I listened to the rest of that clip where he said that there’s still plenty of deals that don’t have antitrust concerns that don’t raise competitive concerns that are happening. It’s just the ones that have potential to harm competition, that are not leaving the boardroom. To me, that’s an important distinction.
We care about making sure that deals do not substantially lessen competition and we enforce the law and if our enforcement, appropriate enforcement is keeping those bad deals from ever getting to us in the first place, then we view that as a sign of success.
SORKIN: Okay, we’re gonna leave it there, Jonathan, it’s great to see you.
KERNEN: You were watching Jonathan, so you watch the show.
SORKIN: He might have seen it on repeat, but hopefully—
KANTER: First time long time.
SORKIN: First time, long time, see? First time guest, long time watcher.
KERNEN: Yes, that’s what we like to hear.
SORKIN: Thanks, appreciate it.
KANTER: Thanks for having me.
