Florence is not only the birthplace of the Renaissance but also the birthplace of mercantile capitalism. In the late thirteenth and fourteenth centuries, the Florentines invented “double-entry bookkeeping, marine insurance, partnership with branches, holding companies, bills-of-exchange” and developed an international-banking network that stretched outward to France and London. Like most economic revolutions, the power and wealth of the newly minted Florentine “elite” eventually provoked significant popular discontent, culminating in the rise of a political faction led by one of Europe’s most famous reformers: the Dominican friar Girolamo Savonarola. Savonarola did not preach against the acquisition of wealth but rather raged against the Florentine elites’ refusal to distribute the benefits of that wealth to the commons. But fellow Florentine Niccolo Machiavelli drew an important lesson from Savonarola’s populism. The people “desire neither to be commanded nor oppressed by the great,” while the elites “desire to command and oppress the people.” From this, Machiavelli concluded that an aspiring ruler would do better to establish his rule by an alliance with the people, as Savonarola did, rather than the elite. That is, a government aimed at pleasing the people, rather than the elites, is more likely to achieve success.
This lesson is relevant to contemporary antitrust enforcement. As enforcers of competition law, we exercise coercive power over actors in the marketplace, but our role is a limited one: to protect the people from anticompetitive behavior in the marketplace. Just as our job is not to protect the interests of those businesses we regulate, so too our job is not to shape markets in accord with our own ideological visions or partisan preferences. Enforcers of competition law should resist the “elitist” temptation either to take a cribbed view of our role and defer to the judgments of the C-Suite, or to take a more expansive view of our power and try to plan the economy from our conference rooms. Instead, we should embrace the American founders’ more “populist” vision of a restrained government.
To do so, I think, we need a greater appreciation of the virtue of prudence. Not prudence in the sense of being overly cautious or timid, as it is sometimes thought of today, but the classical view of prudence as a moral virtue by which one identifies, selects, and executes the best means to one’s end. Thus, when we think about enforcing competition law, we must keep in mind its purpose, namely, to promote the well-being and flourishing of our nation and her citizens. Our laws aim to promote free, fair, and competitive markets because long experience has taught us that such a free-enterprise system incentivizes citizens to be productive, innovative, and profitable for every citizen: the laborer as much as the merchant, the farmer as much as the banker.
America’s free-enterprise system has produced the greatest nation, the strongest economy, and the most innovative and dynamic business culture in the history of the world. It has lifted countless millions from poverty. I therefore do not denigrate the profit-seeking motive, because it has helped provide the material comfort that in turn promotes civic and private virtue. I suggest only that Americans must always recall that it is a tool to advance the common good of all, not an object intrinsically worthy of pursuit. When profit-seeking stimulates production, innovation, and competition among our citizens, it promotes their common flourishing and the well-being of their nation. But when it does not, the profit-seeking motive must be restrained and regulated. Our antitrust and consumer-protection laws are a species of moral restraint, designed to channel the profit-seeking motive into the moral ends of a political economy—the common flourishing of all citizens. After all, even Adam Smith—the patron saint of the libertarian opponents of antitrust enforcement—recognized that monopoly is an enemy of the common good. His solution was not to restrain profit-seeking, but to expand the number of individuals and businesses seeking profits in that monopolized industry.
For a potential merger, prudence requires careful investigation of the facts of the merger and its likely effects on the competitive marketplace. If that investigation demonstrates that the merger will not substantially impair competition, the enforcer’s decision is simple: he just needs to get out of the way. But not every case is that simple. In fact, the most important ones rarely are. In many cases, what you find is that the merger will likely produce some procompetitive effects and some anticompetitive effects. The challenge of enforcement in these circumstances is to determine whether one can disentangle the two, and if so, whether a proposed remedy will provide the same level of protection to competition as would a successful litigation. The answer to that question will turn on an assessment of several interrelated inquiries: whether a settlement will effectively cure the anticompetitive harm associated with the merger; the enforcer’s likelihood of success in bringing the litigation at all; and the potential harm to consumers and potential consequences to the agency’s enforcement mission going forward should the court deliver an adverse ruling.
Vertical mergers pose a special difficulty for prudent antitrust enforcers. Unlike a horizontal merger, it does not involve a merger between actual and potential competitors; rather, it involves a merging of “parties … active at different levels of the same supply chain.” Whereas a horizontal merger raises the specters of increased market power and concentration, vertical mergers rarely do. In other words, the loss of a competitor in a horizontal merger may shift the incentives of the remaining firms in the relevant market for all their future strategic decisions. A vertical merger, on the other hand, often presents subtler threats to competition. On the anticompetitive harms side of the ledger, the merged firm may have the ability and incentive to foreclose its rivals and to misuse their competitively sensitive information. With respect to the first concern, a party that acquires part of its rivals’ supply chain may be able to impose unfavorable terms of trade on those rivals while retaining favorable terms for its own business, limiting the rivals’ access to the inputs or raising their costs. With regard to the second concern, vertical acquisitions can give the merged firm access to its rivals’ competitively sensitive information, which would disincentivize those rivals from future investment and cooperation with the acquired supplier. Equally considerable, though, are certain efficiencies associated with vertical integration that may come to pass. For example, a vertical deal can eliminate double marginalization, reduce transaction costs, and ameliorate contracting problems for the newly merged firm. By eliminating transaction costs, a vertically integrated firm becomes more cost-efficient, which can promote innovation by the merged firm and can also lead to the end user paying lower prices for the merged firm’s goods or services. Importantly, these effects occur in nearly every vertical transaction; efficiencies in horizontal acquisitions, by contrast, are highly context specific.
A settlement with appropriately structured behavioral remedies is sometimes the best approach to vertical-merger problems for two reasons. First, behavioral remedies can reduce or eliminate the anticompetitive harms a vertical merger would pose while facilitating the merger’s procompetitive benefits. That is particularly true in cases where a vertical merger raises serious short-term concerns—like temporary supply-substitution difficulties—but generally obvious long-run benefits. Blocking such a merger in litigation would deny society its benefits while eliminating only those concerns that the market likely eventually would have resolved on its own. Second, in the United States we must be realistic about vertical-merger challenges in U.S. courts. From 1980 until 2017, antitrust agencies in the United States did not bring a single vertical-merger case to trial, although they settled a range of cases using behavioral remedies. Since 2017, the U.S. antitrust agencies have litigated five cases challenging vertical mergers, and lost all but one of them. In most of those cases, the parties unilaterally offered behavioral remedies—and courts treated those proffered remedies as weighty evidence against the risk of anticompetitive effects.
Behavioral remedies cannot fix every vertical merger’s antitrust issues. For example, some incentive changes may be powerful enough, or have effects destructive enough, to warrant proceeding to litigation, even though risks of litigation are always high. And even where we predict that behavioral remedies in theory can fix the identified anticompetitive effects for a sufficient time, we should approach that with substantial caution. For one, it is easy for the antitrust enforcer to fall into the trap of cobbling together a remedy that merely papers over a bad deal, be it horizontal or vertical. Behavioral remedies in the United States have a mixed record of effectiveness and can burden competition enforcers with the task of indefinitely monitoring an individual firm rather than guarding competition across the entire economy. All of these concerns augur caution, but not the previous administration’s categorical rejection of remedies. Outright rejection leaves enforcers with the choice either of killing a deal or doing nothing, which means that anticompetitive mergers will survive. Budget limitations will require forgoing challenges to mergers that could have been remedied with a settlement but for which resources cannot be found for full litigation. But in addition to requiring the traditional behavioral remedy provisions, like nondiscrimination commitments and information firewalls, with which we are all well versed, we must be open to more exacting terms designed to undercut incentives for the merged firm to shirk compliance, to aid in the detection of non-compliance, and to promote quick resolution. For example, a consent order could include an arbitration provision requiring the merged firm to arbitrate, potentially at its own expense, unresolved contractual disputes with its new customers. A remedy could also include robust whistleblower protections, which would give customers an incentive to provide the agency with intelligence about noncompliance. And finally, a consent order could include a provision requiring a merged firm to assist customers who have expressed a desire to switch suppliers, such as where the merged firm is the dominant provider in the relevant market or where we might expect new entrants who could supply the merged firm’s customers to emerge in a few years in the future but who currently can’t match the supply demanded.
In sum, prudent enforcement of competition law requires a sober assessment of the effectiveness of the enforcement paths available informed by prior experience, present circumstances, and likely outcomes. Imprudent enforcement of competition law occurs when enforcers adopt an elitist, rigid, and expansive view of their role—driven either by deference to corporate elites or by an ivory-tower fetish with central planning that blinds them to the real constraints imposed by the law, precedent, and market realities. To appreciate these constraints, one needs a humbler vision of one’s power and responsibility as an enforcer of competition law. That is the “populist” vision of a pragmatic approach to antitrust. Adopting a more populist vision of antitrust will make us not only more prudent, but also more successful enforcers of competition law.
Source: U.S. Federal Trade Commission (FTC), remarks at the International Bar Association (IBA) competition conference (Sept. 5, 2026, Florence, Italy)
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