Normally, Eakinomics is pretty much in the food is food, parts are parts, a sandwich is a sandwich camp – those hallway gourmand conversations don’t cut the mustard. But one lesson of the policy life is that everything is more complicated than you might think. So when Senator Warren launched on Big Sandwich, it was time to beef up on sandwich issues.

Wikipedia gives the basics: “The sandwich is named after John Montagu, 4th Earl of Sandwich, an eighteenth-century English aristocrat. It is commonly said that Lord Sandwich, during long sessions of cribbage and other card games at public gambling houses, would order his valet to bring him salt beef between two pieces of toasted bread. He was fond of this form of food because it allowed him to continue gambling while eating, without the need for a fork, and without getting his cards greasy from eating meat with his bare hands.” (The idea of being able to eat without stopping work and getting the keyboard greasy would seemingly make sandwiches perfect for AAF staff.) The Oxford English Dictionary delivers a similar definition.

But when sandwiches enter the realm of competition policy, the definition can produce some real heartburn. AAF’s Fred Ashton’s Is a Hot Dog a Sandwich? walks through the issues. The triggering event is Roark Capital’s $10 billion acquisition of Subway, which would give Roark four of the top seven largest U.S. sandwich chains based on 2022 sales, including Arby’s, Jimmy John’s, and McAlister’s Deli.

The first question is whether this produces monopoly power. Obviously, this hinges on whether the competition is between Subway and Jimmy John’s (“limited-service sandwich shops” in the jargon) or much broader, including the hot dog vendor on the street corner. How does the Federal Trade Commission (FTC) decide? Per Ashton: “Using the potential Subway case as an example, the agency would first test whether Roark Capital’s ensemble of sandwich shops can profitably impose an SSNIP [small but significant and non-transitory increase in price] in the most narrowly defined limited-service sandwich shop market. If it can, the relevant market is properly defined. If not, that is evidence that there are competitive restraints applied to the industry outside of sandwich shops as strictly defined. The agency must broaden its definition to include reasonably substitutable products until the hypothetical monopolist can profitably increase prices.”

Obviously, where the FTC lands on what is “the” sandwich market is crucial.

The second issue is how Roark Capital got here: a roll-up strategy. This is a common tactic among private equity firms. Ashton notes that “the process begins with the purchase of one company, followed over time with the acquisition of several additional small firms, to create one large organization. In turn, the larger organization can leverage economies of scale, reducing costs while expanding products and services offered, to the benefit of consumers. Acquisitions included in a roll-up strategy can take place over a period of years, or even decades.”

The FTC and Department of Justice are skeptical of any consumer benefits and are focused on market power issues. Thus, they are raising the reporting requirements: “Current reporting criteria require acquiring firms to disclose prior acquisitions made within the last five years. The proposed changes would expand the scope to include the same information from the acquired entity. The agencies would also require the time frame be extended from five years to 10 years.”

Now one might argue (Eakinomics did) that it does not matter how one gets there. Regardless of the past, at some point there will be a proposed acquisition that will not produce sufficient consumer benefits and should be blocked. From this perspective, the enhanced reporting requirements are the moral equivalent of expensive jawboning.