“A fourth racing car team described NASCAR’s tactics as that of a ‘communist regime.’”

Yesterday, I was on NPR’s On Point to talk about Biden’s legacy on competition, and more broadly, the antitrust revolution that is currently in full swing. One of the key questions is whether what we’re seeing is a “flash in the pan” that can be easily reversed by the next administration.

I think the answer, as odd as it may seem, is contained in a lawsuit filed today by basketball legend Michael Jordan’s racing team, 23XI, against NASCAR, over control of stock car racing in America. Jordan is obviously the best player to ever play basketball, perhaps the greatest athlete of the 20th century. He’s also a billionaire with investments in everything from NBA teams to car dealerships, and he makes more money after retiring from basketball than he did while playing.

It’s matters that one of the most wealthy and famous athletes on the planet is using this particular form of law. One reason is that Jordan has traditionally shied away from political controversy. In 1990, Jordan made a famous remark during a North Carolina Senate race on why he didn’t get involved. “Republicans buy sneakers, too," he said. A few years ago, he talked about why he remained apolitical when many famous athletes did not. “I never thought of myself as an activist,” he commented. “I thought of myself as a basketball player.”

And yet, in this suit, he embraced a strong form of anti-monopoly politics. “I love the sport of racing and the passion of our fans, but the way NASCAR is run today is unfair to teams, drivers, sponsors and fans,” he said in a statement. “Today’s action shows I’m willing to fight for a competitive market where everyone wins.” That’s not a statement about Democrats or Republicans, but it’s a political argument nonetheless.

And Jordan, in some ways, is answering the question about whether the antitrust revolution is just a ‘flash in the pan.’ Because this suit is not the government enforcing antitrust law, it doesn’t hinge on Donald Trump winning or losing, or Kamala Harris’ political choices. It’s a private action that cannot be blocked or accelerated by government officials. Neither Lina Khan nor Jonathan Kanter are in the driver’s seat; Michael Jordan is. And Jordan wouldn’t have brought this suit if it weren’t likely to succeed, because his lawyer, Jeffrey Kessler, a specialist in antitrust and sports, has a very good track record. Kessler helped break the NCAA’s control over athletes at the Supreme Court in NCAA vs Allston in 2021, part of the new wave of populist thinking beginning to overtake the judiciary.

This complaint charges monopolization, and since the mid-2000s, private suits alleging monopolization have been quite rare, as after the Supreme Court laid down some bad case law, they were understood as expensive and difficult to win. But there’s now a wave of private antitrust suits, everything from Fubo blocking a joint venture of Disney, Fox, and WB, to Particle suing electronic medical records giant Epic Systems, to a successful private case against Google over app stores, to multiple lawsuits against cheerleading monopolist Varsity Brands, and similar ones against the Ultimate Fighting Championship over fighter pay.

And in reading this particular complaint about NASCAR, we can see why this new wave of private rights of action is coming into the courts. When the Antitrust Division’s Jonathan Kanter beat Google in court a few months ago, it set a precedent that lawyers like Kessler see very clearly. To understand why, we have to go into the details of the case a bit.

Jordan’s allegation is that NASCAR blocks rival top-tier stock car racing series from emerging so it can be the only place where racing teams can race. With its resulting monopoly buying power, NASCAR can underpays racing teams that compete in its events. The net effect is that NASCAR captures the bulk of the billions of dollars of revenue in the sport, and teams, even those helmed by famous racers, are almost always on the verge of bankruptcy. To give you a sense of how big this monopoly is and how long it has lasted, in 2004, “seventeen of the top twenty largest-attended United States sporting events [were] NASCAR races.”

NASCAR monopolizes in a number of ways. It buys rivals that might challenge its dominance. For instance, in 2018, it bought Automobile Racing Club of America (ARCA), which could have emerged as a competitor, but did not as a result of the merger. It also seeks to control the distribution and input channels in the industry. Over the years, especially with its purchase in 2018 of the International Speedway Corporation, NASCAR has bought up most of the viable race car tracks, such as Daytona International Speedway and Talladega Superspeedway.

Top tier tracks are expensive, requiring the ability to host tens of thousands of spectators, manage safety, infrastructure, track surface, promotional, mechanical facilities, insurance, and guest services, as well as staffing people with experience to run it. Those racetracks it doesn’t own it controls through contract, prohibiting independent tracks from hosting races of potential rivals as a condition of hosting NASCAR races. One result is that most of these tracks sit vacant throughout the year.

It’s not just mergers and control of tracks. Teams themselves are both gouged by NASCAR and blocked from competing in rival events. As the complaint puts it, "Teams are now required to shell out millions to purchase car parts dictated by NASCAR, but they do not retain ownership of these parts and are forbidden from using the cars containing these parts in any other racing event." And of course, there are also non-compete agreements that teams have to sign.

The net effect is that NASCAR presents terrible deals to teams, and having invested a lot of capital, teams have no choice but to agree. Several anonymously discussed the level of fear they experience. NASCAR “put a gun to our head[s],” they were “coerced,” or put “under duress.” One team called NASCAR’s tactics that of a “communist regime.” That’s classic fear of retribution from a monopolist, which we see all over the economy.

So what does any of this stuff have to do with Google? Well, while the business of internet search and running stock car series differ, the monopolizing tactics of NASCAR and Google are quite similar. Google distributes its search engine through phone operating systems and browsers, which are extremely expensive to build. It owns a big phone OS, Android, as well as a browser, Chrome. It also has contracts with Apple, Mozilla, Verizon, and so forth to distribute its search as a default, and to prevent the distribution of its rival search engines. All of these actions are meant to foreclose competitors from the market.

That’s almost exactly what NASCAR does with racetracks. It owns a bunch of them, and it contracts with those it doesn’t own to thwart rivals. There are even scale elements, just as there are for Google. To build a good search engine, you need lots of users and data. To run a real racing car series, you need 18-24 events a year. If Google’s behavior is unlawful, then so is NASCAR’s. Or so goes the theory.

Now that doesn’t mean Jordan will win. His lawyers still has to get to discovery, marshal evidence and win a trial. And NASCAR will argue it has competition in the form of Formula 1 and IndyCar. But bringing an antitrust case is much more viable after the Google loss, which means that it’s easier to get to a settlement to change NASCAR’s business model.

And that’s a revolutionary change in the law.

For almost two decades, we didn’t have many real cases on monopolization, and so lawyers could easily discourage private suits by suggesting they would be expensive losers. Antitrust is outdated, the courts will strike it all down, antitrust is a dead letter, et al. But after Google was declared a monopolist, the floodgates started to open. Monopolization is once again illegal. And it’s become clear that judges, contrary to conventional wisdom, are quite open to antitrust suits. (Just today, a judge smacked down Ticketmaster on an important procedural motion.)

And for this change, we can largely thank Jonathan Kanter at the Antitrust Division, whose legacy will be reviving this area of law, with suits against Google, Live Nation/Ticketmaster, Visa, and Apple, as well as the first major DOJ monopolization victory in 20 years.

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Of course, there will be appeals in these cases, but there’s no reason to assume that these appeals will turn out to weaken the law instead of strengthen it. Moreover, as more cases wind their way through the courts, more forms of monopolization will come under scrutiny. For instance, the FTC filed a suit against pharmacy benefit managers for manipulating the price of insulin to people with insurance. That kind of scam is exactly how glass repair shop Safelite seems to operate, it runs glass benefit management services for auto insurers, and then steers customers with insurance to its own shops. If PBMs can’t self-deal, then neither can Safelite, or the many other corporations that are engaged in this kind of behavior. (I’ve heard its pervasive in certain medical specialties.)

As another example, earlier this week, the Federal Trade Commission won a major ruling in court against Amazon, when Judge John Chun said that yes, squeezing merchants by manipulating their access to Amazon Prime customers, and thus driving up fees and prices, is unlawful monopolization. Judge Chun didn’t say Amazon was in fact doing that, as that’s a question for trial, but his ruling is critical because he’s articulating the bounds of monopolization law. No doubt Amazon will argue that it has competition, that third party merchants have other options, that Temu and Shein are real competition, et al.

I don’t want to overstate the success. If you’re a pharmacy facing a PBM, a publisher facing Google or a merchant dependent on Amazon, life is getting worse all the time. Newspapers are still closing, as are pharmacies; even CVS is shutting locations.

And monopolists, even those under scrutiny, are continuing to act as predators. Last month, for instance, an Amazon merchant sent me a note on all the new fees he’s getting hit with. There are new charges for managing where inventories are stored, charges for holding too much or not enough inventory (‘Low Level Inventory Fee’), new fees for returns processing, and coercion to force merchants to buy stamps from an Amazon company they acquired called ‘Veeqo.’ As he put it, “Generally speaking, I feel like there are just a bunch of MBAs hired at Amazon whose job is to think of new ways to charge fees and have no idea / care very little about how this actually impacts the marketplace and the sellers.” That means, as he put it, that operating costs are going up across the board. So “what,” he asks, “do you think will happen to PRICES?”

So that’s the dynamic. The law is advancing, and antitrust lawyers and business leaders are starting to go on offense to address coercive practices in the economy. And yet, it’s not happening rapidly enough to prevent large scale damage. Still, we’re about to witness some significant positive changes, since Google remedies will be hitting fairly soon. I suspect, as more actions go from the courts into the real world, we will start to see less and less coercive behavior and more open and fair competition. And that’s a good thing.

Moreover, while the next administration can slow or accelerate this change, they can’t stop it. I mean, Michael Jordan didn’t win every game, but he has six NBA championships for a reason.

Thanks for reading. Send me tips on weird monopolies, stories I’ve missed, or comments by clicking on the title of this newsletter. And if you liked this issue of BIG, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.

cheers,

Matt Stoller