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Welcome to The Corner. In this issue, we take a look at how electric vehicle manufacturers’ move into the lithium business could lead to a lithium shortage, shortchanging sectors like solar and wind.

EV Makers Could Corner the Lithium Market, Limiting Supply in Renewable Energy

Audrey Stienon

Automakers are taking aggressive steps to secure lithium supply for electric vehicle (EV) battery production, in some cases going so far as buying majority stakes in mines and even building their own lithium refineries.

The automakers argue these deals will help prevent an impending lithium shortage from delaying their EV production goals. And these new investments indeed appear to be resulting in increased lithium production and other innovations within the industry.

Unfortunately, the moves to lock up lithium supply appear to pose a variety of threats to many other industries that depend on batteries. This includes renewable energy businesses, many of which are already struggling to find sources of metal not locked down by the automakers. Although some say such a lithium shortage would be temporary, any major disruption in the production of non-vehicle batteries could prove devastating to the broader electrification of the U.S. economy.

The long-delayed mobility transition got a boost from tax credits included in the Inflation Reduction Act (IRA) for EV purchases, provided a sufficient share of their components are made in the U.S. or other qualifying countries.

In the year since Congress approved the Inflation Reduction Act - with its unprecedented subsidies for EVs and other green technologies - automakers have scrambled to lock up lithium markets. General Motors, for instance, made a $650 million equity investment [[link removed]] to become the majority shareholder of Lithium America; Tesla broke ground on the construction of its own lithium refinery [[link removed]]; and Ford loaned $300 million [[link removed]] to the miner Liontown Resources.

Competition authorities have long frowned on efforts by corporations to buy their upstream suppliers when doing so would give them the ability to restrict competitors’ access to critical inputs—a tactic known as foreclosure. By contrast, competition law enforcers have generally tolerated such “vertical integration” in complex industries such as automobile production. The basic assumption was that gains in efficiency within auto companies, and in resilience across the sector, outweighed any near-term harms to competition in the public market for a particular component and material.

Lithium industry experts echo these traditional arguments, and say that the automakers’ investment in lithium production is resulting in a speedy expansion of manufacturing capacity, which will likely soon result in increased competition and innovation in the industry.

This marks a sharp reversal from the pattern of recent years. Despite long-standing projections that global lithium demand could rise between three- and five-fold [[link removed]] between 2020 and 2030, existing lithium producers made little effort to expand.

Until recently, the main problem was low prices due to low demand. One mine in Quebec, for example, closed twice in less than a decade after its owners went bankrupt. This volatility made it difficult for these mining corporations to secure the sorts of long-term investments necessary to bring a new mining project to market, a process that can sometimes take more than a decade.

Chris Berry of House Mountain Partners estimates that the industry needs to open between four and five new mines each year between now and 2030 to keep up with the surging demand.

The new relationships with automakers are particularly important for smaller lithium producers, who have struggled to attract investment and compete against larger miners. North America Lithium, the twice-bankrupt Canadian mine, reopened [[link removed]] after Tesla signed an agreement with its new owner.

One industry where producers are concerned about the new relationships between automakers and lithium suppliers is the electric storage system (ESS) sector. The industry is a key link in the larger renewables sector, and any delays in the production and deployment of ESS would slow growth in key renewables like wind and solar.

Fastmarkets forecasts that ESS lithium demand will grow by 48% annually through 2026, outstripping the 31% growth expected from EVs. Nonetheless, ESS’s overall market footprint is much smaller, and the industry’s engagement with lithium producers has been more restricted.

The automakers have other advantages over rival lithium consumers. As one industry expert noted, “it gives the [mining] company more negotiating power when they can go in with GM and say to the government: ‘we need this project advanced.’”

Less than a week after GM announced its investment in Lithium America, for example, a U.S. judge greenlit construction [[link removed]] at Thacker Pass, the company’s Nevada mining project that had been mired in a years-long lawsuit. GM will have rights to all the lithium [[link removed]] from Thacker Pass.

Some companies, like LG Chem, produce batteries for both EV makers and ESS producers. But here too the automakers efforts to directly engage lithium producers may push such companies to prioritize EV battery production.

Open Markets and Farm Action Grade Biden Agencies on Reducing Food Consolidation

Open Markets Institute and Farm Action on July 17 unveil a joint “ report [[link removed]] card [[link removed]]” grading the Biden administration’s progress in reducing concentration in the food and agriculture sectors. “A 2023 Review of the Biden Administration’s Commitment to Food System Competition” looks closely the Justice Department, Federal Trade Commission, and U.S. Department of Agriculture’s progress on all the food- and farm-related directives from the White House’s July 2021 executive order [[link removed]] promoting competition throughout the economy.

It was the second such review by Open Markets and Farm action, and follows a similar report card in June 2022. This year’s report recognizes that each agency made important improvements over the past year. But it also made clear that there is still a lot of essential work outstanding, and that all three offices need to speed their efforts to urgently to deliver long overdue reforms for farmers, workers, and consumers. Read the full report [[link removed]] for our new grades and assessments.

Open Markets Institute Hails New Merger Guidelines Replacing Consumer Welfare Standard

Open Markets Institute executive director Barry Lynn lauded [[link removed]] new merger guidelines released Wednesday by the Federal Trade Commission and Department of Justice that overturn Reagan-era guidelines that led to massive corporate consolidation across the U.S. economy. The widely anticipated new guidelines revive market-share tests for challenging mergers, replacing the consumer welfare philosophy that guided the previous merger guidelines.

“There are many flaws with the ‘consumer welfare’ philosophy. Most dangerous is that it replaced simple rules governing market structure and corporate behavior with subjective attempts to predict consumer effects of mergers on a case-by-case basis,” Lynn said. “The result was a de facto license for the powerful few to build systems of autocratic control over the many,” Lynn’s statement was covered by Truthout [[link removed]].

📝 WHAT WE'VE BEEN UP TO: Courtney Radsch, director of OMI’s Center for Journalism and Liberty, spoke at the World News Media Congress [[link removed]] in Taipei, where she warned journalism was under threat from cascading crises, including geopolitical tensions and misinformation. “Instead of focusing all our energy on how to fight disinformation, mitigate online harms, and combat digital extremism, we need to focus on creating a positive vision of what we want and how to get there,” said Radsch. She recently published a report [[link removed]] on emerging threats to journalism.

Open Markets Institute and its European partners made a joint submission [[link removed]] to the European Commission calling for strong compliance by Big Tech platforms to the landmark Digital Markets Act. The submission lays out a framework for measuring compliance based on three dimensions (process, output and impact) and calls for a high degree of public transparency to ensure that third parties are able to hold both digital platforms and regulators to account. Read the full submission here [[link removed]].

Open Markets Institute Europe Director Max von Thun put out a statement [[link removed]] welcoming the European Commission’s investigation into Amazon/iRobot, which OMI and partners had called for earlier this year. “This deal is about far more than just vacuum cleaners. It would eliminate a potential future competitor in the larger smart home market, and give Amazon exclusive access to the sensitive data that iRobot’s devices collect in people’s homes,” he said.

Legal director Sandeep Vaheesan was featured on a Bloomberg Law [[link removed]] podcast [[link removed]]discussing the Federal Trade Commission’s proposed ban on non-compete clauses that he helped champion.

OMI’s strategic councilor on democracy and power, Caroline Fredrickson, was quoted in the Guardian [[link removed]] decrying a spate of ultra-conservative rulings that have recently come out of the Supreme Court. “Right now we have nine kings, who can set policy for eternity – their rulings cannot be undone in constitutional cases by the president or Congress,” she said. Fredrickson was also quoted in the Washington Post [[link removed]].

Fredrickson was quoted in Kansas City Star News [[link removed]] commenting on a recent federal court decision barring the Biden administration from engaging with social media companies on content moderation policies. She said, “With the court as receptive as it is now to political cases… it is an incredible opening for the very politicized system to take advantage of.”

OMI senior fellow Johnny Ryan spoke on a Euractiv [[link removed]] podcast, along with competition expert Cristina Caffarra, about the Germany competition authority’s efforts to rein in Facebook. Euractiv [[link removed]] also quoted Ryan on recent proposed reforms that would speed up cross-border cases under the EU’s General Data Protection Regulation.

Food program manager Claire Kelloway’s story on Walmart’s entry into beef production was republished in Fern’s AG Insider [[link removed]] . [[link removed]] “For one, vertically integrated, forward-contracted agreements like the ones struck between Sustainable Beef, Walmart, and Sustainable Beef’s suppliers take more cattle off the cash market where near-term buyers must outbid each other to secure cattle,” wrote Kelloway.

🔊 ANTI-MONOPOLY RISING:

The Federal Trade Commission opened a probe into OpenAI, the company behind ChatGPT. The investigation, which will examine whether the leading AI developer is skirting numerous consumer protection laws, represents U.S. antitrust authorities’ first serious review of the ascendant firm. ( Washington [[link removed]] Post [[link removed]])

The European Commission plans to investigate Microsoft for unfairly bundling its Teams web-conferencing service with its Office software suite. The probe is the body’s first antitrust action against Microsoft in over a decade. ( Financial [[link removed]] Times [[link removed]])

The United Kingdom’s Competition and Markets Authority has launched a “phase two” investigation into Adobe’s $20 billion acquisition of Figma based on initial findings that the move threatens to substantially lessen competition in the cloud-based design market. U.S. antitrust authorities are also reviewing the deal. ( The [[link removed]] Verge [[link removed]])

After a judge ruled that the deal between American Airlines and JetBlue violates antitrust law, the two airline giants ended their partnership in the northeast United States. The Justice Department said the NorthEast Alliance, which cover flights in New York and Boston, limited competition and drove up prices. ( WBUR [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: $596.27

The price per carton at which Mark Cuban’s Cost Plus Drugs will sell a generic version of Humira, a rheumatoid arthritis drug, vastly undercutting the list price of $6,922. AbbVie has long held a monopoly on the drug, once the world’s biggest selling medication, but Coherus Biosciences will soon release a biosimilar version of Humira called Yusimry. ( Reuters [[link removed]])

📚 WHAT WE'RE READING:

“Attacks on Tax Privacy” [[link removed]]: A new report led by Senator Elizabeth Warren details how tax preparation companies like H&R Block and TaxSlayer allowed Facebook and Google to get their hands on the sensitive tax information of millions of Americans in a potential violation of federal law. Facebook has used that data to serve advertisements. Authors argue that their findings bolster arguments for the IRS’s development of a public tax filing option by demonstrating that “Big Tax Prep” is incapable of safeguarding taxpayer information.

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Written and edited by: Barry Lynn, Audrey Steinon, Ezmeralda Makhamreh, and Anita Jain.

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