Recently, the Rock Center for Corporate Governance, along with the Stanford Graduate School of Business and United States Department of Justice (DOJ) hosted a workshop examining one such intersection—that of antitrust law and venture capitalism. Academics, investors, legal and business experts gathered for the Wednesday, Feb. 12 event, according to Stanford University.
Makan Delrahim, Assistant Attorney General for Antitrust at the Department of Justice, touched on a broad array of challenges facing both regulators and venture capitalists, and further, what to do about them as they emerge. “In any case whether a merger is harmful, a restraint is unreasonable, or a course of conduct is exclusionary, antitrust enforcers have to ask the same question—what do we do about it now?” he asked. “In doing so, we focus on trying to restore competition in the market going forward. That often involves asking what new competitors need to thrive in a constantly changing marketplace. It is a difficult challenge, but one familiar to many investors who support early-stage companies.”
Delrahim also spoke about some of the common ground between investors and enforcers with respect to the role of antitrust regulation and the state of the industry. He said one characteristic they both share is a constant urge to prognosticate. The Supreme Court often has to, in its judicial capacity, predict how a merger will impact competition in both the near- and long-term. “We measure harm based on how the market might respond to a merger or to a course of conduct. This is not guesswork,” he said. “Neither is venture capital investment. Instead, we both look at the market, draw from economics, and make educated predictions.”
He pointed out other areas of overlap in the address: “Not only do venture capitalists and antitrust enforcers often ask similar questions, I think we share similar values. Dynamic competition should drive markets. Investment should go to the best ideas. Disruption can create consumer value,” said Delrahim. “These are the principles I have continually returned to in both of my tenures at the DOJ, and most recently as AAG. I first outlined these principles in my New Madison Approach to the intersection of antitrust enforcement and intellectual property rights. They are also part of venture capital’s DNA.”
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According to the organizers, other presenters included Michael Moritz of Sequoia Capital, Stanford Law Professor Doug Melamed and Dean Jonathan Levin of the Stanford Graduate School of Business. Melamed spoke on trends in the venture capital sector. Among some of the considerations he noted are the legal framework venture capitalists must work in, and the underlying principles of those investments. He touched on “kill zones;” investing in platform-dominated markets and monetizing data.