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Out with a Bang as FTC Beats the PharmaBros The FTC won a huge merger case yesterday to cap off the year. Plus, major decisions on crypto and private equity. Matt Stoller Dec 30

Today I was going to write the annual review of BIG. But some bigger antitrust news hit yesterday - Lina Khan’s FTC won an important court fight over a merger, and it looks like this might start reshaping corporate America. And that’s not all. There were two other rulings - one on crypto and one on private equity - that are helping to move us towards a better society.

Generally speaking we don’t choose to see court decisions - except extremely high-profile ones on social questions - as part of politics. But judges are politicians, and they often make policy just as much as they rule on factual questions.

So that’s what this issue is about. I’ll write the year end review of BIG and monopolies/finance in 2023, as well as predictions for 2024, in a day or so.

On Monday, I did a profile of an important merger trial that otherwise got zero press, where a $40 billion medical data corporation called IQVIA was trying to monopolize the business of advertising to doctors by buying an adtech company called DeepIntent. This acquisition was the same strategy, in miniature, that Google pursued fifteen years ago when it rolled up the general advertising market by purchasing DoubleClick, among other firms. The FTC challenged IQVIA’s buy-out of DeepIntent as unlawful, and yesterday an Obama appointed judge named Edgardo Ramos ruled in favor of the government, granting a preliminary injunction to block the merger.

Ramos didn’t release the full opinion, just the decision, as he didn’t want to divulge confidential business information. Ramos will let the parties redact what they want, and then publish the opinion at some point in January. It’s likely an important ruling, but since I don’t know what it says, I can only speculate on the legal questions. Practically, what this means is that the merger cannot be consummated unless IQVIA wins in the administrative court at the FTC. Typically parties abandon acquisitions after losing at the preliminary injunction stage, but they don’t have to, and maybe IQVIA won’t. But I think this one’s over.

Ok, so why does this decision matter? A few reasons. First, it’s a win for enforcers, and a real blow to the immensely arrogant antitrust bar. It look me awhile to understand the IQVIA case, but after reading the transcripts I realized the key theme was a culture of entitlement that is pervasive in corporate America.

The lawyers in the case were fancy, ex-government, and paid large sums of money. Yet they were quite… mediocre, with one arguing that the case, in his ‘gut,’ was meritless. There were very bro-y executives talking about bags of money and domination. It was as if none of these people had ever been told no when trying to grab something they wanted from someone less powerful than they are. It was beyond their comprehension that laws are anything more than polite suggestions. They hate Lina Khan, and as I found out when speaking to a room full of angry lawyers in April at the American Bar Association, they hate you and me. But it’s not personal, fundamentally the anger comes from a rage towards the concept of equality under the law, the idea that the peasants have rights.

More practically, this loss discredits the main argument from Wall Street. Dealmakers, and thinkers like Larry Summers, have often said that while Biden antitrust enforcers are aggressive, if corporations are willing to go to court, the government is likely to lose because judges won’t let them rewrite the law. This narrative was so strong that Lina Khan and Jonathan Kanter were questioned in Congress as to whether they were even trying to win. It’s always been a narrow and bad faith critique, but this victory, plus, the win in the Fifth Circuit over Illumina, should put that narrative to rest. Antitrust lawyers will tell their clients to go to court at their peril.

Second, this case had a few unusual legal elements, such as blocking an acquisition in which a firm was buying a supplier. These kinds of mergers weren’t challenged for forty years until Trump’s 2018 AT&T-Time Warner challenge, which means the dominant business model in everything from streaming to big tech to health insurance to shipping has become vertically integrated monopolies. When the government did start challenging these mergers, it lost, from AT&T-Time Warner to UnitedHealth Group-Change to Microsoft-Activision. But then Illumina-Grail happened. I suspect this one is another win, though we won’t know the legal details until the full decision is released.

Third, the Antitrust Division has a monopolization case against Google in Virginia, and the Texas AG has one in Texas, over the search firm’s vertical consolidation of the adtech space. This decision will help those cases, because it’s a very similar argument in a similar industry, which is to say, IQVIA does adtech in a healthcare vertical.

Fourth, this decision could buttress adoption of the new merger guidelines by the courts. The FTC didn’t rely on the new guidelines for its arguments, as they weren’t in force when the commission brought the case. But guideline five - mergers that “limit access to products or services that its rivals use to compete” are often unlawful - as well as guideline two on direct rivals being a signal of competition - were in play.

I’m sure there are other things I’m missing, since the decision isn’t public yet. (There is likely something on the standard the FTC must use in getting a preliminary injunction, which will annoy the defense bar. But I don’t know.)

And yet, that’s not all that happened over the past few days. Here are two other decisions by judges that are creating useful case law.