“When you talk about monopolization claims, the main issue is exclusion, unfair exclusion,” John Roberti said.
Roberti is the head of the Washington antitrust practice at the law firm Allen & Overy.
“So all these companies are going to be asking themselves: Is there anything we are doing that is excluding competitors?”
That question may cause some in the manufactured housing industry to wince.
To be clear, the discussion was about antitrust in tech, specifically with respect to Apple. The Supreme Court ruled earlier this week, giving potential litigants the green light to sue Apple for antitrust concerns connected to the alleged monopolistic practices on their App Store. A video on that aspect of the issue is linked below. That hold’s a separate relevance to the manufactured home industry – and the nation at large – in terms of the varied impact of tech giants on communications, marketing, media, and business related.
But Roberti’s point about ‘unfair exclusion’ from the marketplace could be relevant to manufactured housing, specifically, to Berkshire Hathaway owned brands covered in the report linked below.
New Kevin Clayton Video Interview
Especially in the light of a new video interview with Kevin Clayton yesterday by CNBC, there could be new fodder for legal and antitrust experts to unpack regarding Berkshire Hathaway’s intentions regarding Clayton Homes and the U.S. housing market.
Diana Olick at CNBC asked Kevin Clayton what might be one of the best mainstream media questions put to Clayton in some time.
First ticking through a list of some of Berkshire Hathaway’s varied investments connected to the housing market, Olick then asked Clayton – “Is this his [Warren Buffett’s] master plan to own every aspect of the U.S. Housing Market?”
Clayton’s response was interesting too.
“You know Charlie [Munger] is a huge builder, designer, architect – he has always loved us from the beginning and so has Warren. We are so blessed to have the capital and the 100 plus year vision.” That’s hardly a denial.
The timeline of “100 years” Clayton shared may arguably be a deliberate understatement, given that Clayton has gone from 13 percent of the HUD Code manufactured housing production in 2003, to some 48 to 50 percent market-share by 2018, depending on what data-source one refers to for Clayton’s market-share data.
Back to the interview, Clayton said that: “Right now, our whole goal is to make, you know, attainable home ownership available to more people. Democratization of home ownership. They [Buffett and Munger] love that. The whole [Berkshire Hathaway] board toured our factory recently.”
“So, they [Buffett, Munger, the Berkshire Board] are excited too about us trying to blur the lines and bring some of the factory-built efficiencies into the on-site built housing, and that we’ve learned on the off-site side.”
Clayton admitted to CNBC that he wanted to be in the top ten of site builders.
“We do. We want to learn that aspect,” Clayton said. “With the nine [site] builders that we have now we are at a run rate in the next 12 months to be in the top ten. One of those [site builders] already has two penalization facilities. We are starting a new penalization facility. We’ll try to be one of the first companies to put more in the panel. Really help cost efficiency.”
Clayton agreed that it would be a Lego-like paradigm ahead.
“That’s right. The homes in the future they will be this blurring of the lines between pieces built off site and on site. So, a panel that already has insulation, windows, and all of that,” per Clayton. “So, we are working with a lot of robotics in doing that.”
The video underscores several ‘enduring competitive advantages’ that Clayton’s commentary de facto pointed to, viewed through the Buffett-Berkshire castle-moat mindsight.
“But we are equally excited about the manufactured housing side,” Clayton pivoted. “Because Fannie Mae and Freddie Mac just announced their new programs where if it has these high end features, the roof pitch, porch, foundation, they’ll finance on par with traditional housing and appraise those.”
What he was referring to is what they’ve dubbed a ‘new class of homes,’ that are under the HUD Code, but stipulate certain features in order to qualify for Fannie Mae or Freddie Mac (Government Sponsored Enterprises, or GSEs) lending.
There was no mention of Clayton Homes and MHI’s role in making those GSE and ‘new class of homes’ standards come to pass.
To wrap up his interview comments, Clayton said, “That’s that important price point from 149 to 200 [thousand], and then we are trying to bring that site-built side down too.”
The video opens with a discussion of tariffs. The interview is posted below.
Excluding Competitors? Back to Possible Antitrust Angles
By purportedly manipulating the GSEs via lobbying and closed door meetings where the minutes have not been released, the comments and implications beg several questions that may involve antitrust concerns.
“Before this case, it wouldn’t have been clear if I, as a consumer, went on Amazon and purchased something from a third party seller, that I could sue Amazon for anticompetitive damages related to that sale,” said Valarie Williams, a partner at the law firm Alston & Bird. “But that’s clear now.”
“I think [other technology companies] have to be watching it very, very closely,” said Roberti. It may not be only big tech, but big conglomerates, such as Berkshire Hathaway, and their subsidiaries, such as Clayton and their related lenders. There is a lot to unpack in this video, and we may return to it in the days ahead.
To see more concerns about market manipulation, which include potential antitrust or fraud aspects, see the related reports, linked below the by line, free ‘read hot’ x2 weekly email headline news, and other notices. There are also reports that obliquely raise the question, is Clayton and Berkshire really concerned about the ‘democratization of housing?’ If so, why aren’t they and MHI pushing for enhanced preemption, or a full implementation of the Duty to Serve by the GSEs, to raise but two of several possible topics?
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