FIGHTING BACK AGAINST MONOPOLISTIC CORPORATIONS AND RECLAIMING DEMOCRACY
The key takeaways from this post are:
· The Biden administration is taking strong actions to rein in monopolistic corporations and reinvigorate competition in our economy.
· Some members of Congress are pushing to revitalize antitrust enforcement.
· Results are already evident and will benefit workers, consumers, the public, and democracy.
(Note: If you find my posts too much to read on occasion, please just read the bolded portions. They present the key points I’m making.)
Corporations and other business interests spend billions of dollars each year on election campaigns and lobbying. (See this previous post for details of their spending.) This spending is an investment in influencing public policies and the enforcement of them that provides benefits that are much, much greater than what the business interests spend. (See this previous post for more details on the benefits they get.)
The good news is that the Biden Administration and some members of Congress are working to turn the tide on monopolistic corporate power. In 2022, Congress passed the first significant update to antitrust laws in 50 years. It includes a new merger fee that will be used to fund the Federal Trade Commission’s (FTC) and the Department of Justice’s (DOJ) antitrust enforcement efforts, as well as to support states’ attorneys general in enforcing antitrust laws at the state level. [1]
Senator Warren (D-MA) is introducing the Prohibiting Anticompetitive Mergers Act in Congress, which would set clearer rules for what makes a merger illegal and create a streamlined process for breaking up monopolistic corporations. There are also three bills with bipartisan support that would rein in some of the monopolistic practices of the Big Tech companies, Amazon, Apple, Google, and Facebook. Bills to further update antitrust laws, make meat processing more competitive, and increase competition in defense contracting are also being introduced in Congress.
On July 9, 2021, President Biden signed a sweeping Executive Order. It included 72 separate actions all focused on reinvigorating competition in the U.S. economy and pushing back against monopolistic corporate behavior. He described it as being “about capitalism working for people” and noted that “Capitalism without competition isn't capitalism; it's exploitation.” [2]
Seventeen federal agencies were specifically named in the Executive Order and even ones that weren’t responded with explanations of what they would do to foster competition in the economy. Key Biden appointees leading the revitalization of competition are Lina Kahn, chair of the Federal Trade Commission and Jonathan Kanter, head of the Department of Justice’s Antitrust Division. A new White House competition council was created, led by the National Economic Council, to monitor implementation of the executive order, including complementary legislative and administrative efforts.
Results are already evident. The Federal Trade Commission (FTC) has promulgated new definitions of unfair or deceptive acts and practices. And it’s taking action based on them. It has proposed a ban on non-compete clauses in employment contracts, which depress wages and limit workers’ career advancement. At least one-third of U.S. companies require non-compete clauses, including for fast food workers, dog groomers, and custodians. The FTC has also filed a lawsuit to force Meta (parent of Facebook) to spin off Instagram and WhatsApp. It has sued Meta over its acquisition of the virtual reality company, Within. Last February, Lockheed Martin dropped its proposed merger with Aerojet in the face of an FTC lawsuit. The FTC is working to restore consumers’ right to repair equipment they have purchased, from cell phones to farm tractors. There’s also new scrutiny of bank mergers, pricing practices in the pharmaceutical industry, anti-competitive practices by the giant railroad corporations, price fixing in ocean shipping, abusive use of patents to restrict markets and jack up prices, and junk fees in banking, credit cards, airlines and elsewhere.
For example, according to research by the Center for Responsible Lending, TD Bank charges U.S. customers more than $100 a day for overdrafts by levying a $35 fee three times in a day. These are junk fees that bear no relationship to actual costs; they are opportunistic price gouging. In Canada, where these practices are regulated, TD and other banks may charge overdraft fees only once a day of no more than five Canadian dollars (about $3.50 in USD). This is one reason TD Bank’s proposed merger with Memphis-based First Horizon Bank, a $13.4 billion deal, should be blocked. [3]
The Department of Justice (DOJ) and FTC are rewriting merger guidelines to strengthen antitrust enforcement. The DOJ has already begun a number of antitrust enforcement actions. One would require Google to separate its online advertising business from its search engine business. The DOJ has successfully blocked the merger of publishing houses Simon & Schuster and Penguin Random House. It has filed suit against three giant poultry processors who are alleged to have colluded to deny workers $85 million in pay and benefits.
The DOJ is also investigating the Live Nation – Ticketmaster merger. This is an all-too-frequent example of a merger that was allowed with conditions, but where the merged entity has not complied with the conditions. Live Nation and Ticketmaster promised that after their merger they would not block events from taking place at venues that did business with their competitors. It now appears that Live Nation – Ticketmaster have done just that. In many cases in the past, there has been no enforcement when merger conditions were violated. Hopefully, this is changing. Furthermore, Senator Warren (D-MA) argues that a merger that requires conditions simply shouldn’t be approved. If it’s illegal, then it’s illegal and authorities should just say, “No.” The government shouldn’t be put in the position of having to spend time and money monitoring compliance with merger conditions and then having to go through a typically long and costly process to enforce them when violations occur. [4]
Several federal agencies, not just the FTC and DOJ, have the power to block anticompetitive mergers in their areas of jurisdiction. The Department of Transportation can stop anticompetitive mergers and practices by airlines and other transportation corporations and banking regulators can do so for banks. The Department of Agriculture can regulate mergers and practices of food processors and can protect farmers and ranchers from exploitation by monopolistic agribusinesses. The Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau is investigating monopolistic consolidation among beer makers and also the distributors of alcoholic beverages.
In 2017, Congress passed bipartisan legislation allowing the purchase of hearing aids without a prescription. The requirement for a prescription had allowed a small cartel to control the market and jack up prices by thousands of dollars. As a result, less than one-fifth of the Americans who would have benefitted from a hearing aid got one. The Trump administration failed to implement the law. Biden’s executive order gave the Food and Drug Administration 120 days to implement it. People are now able to buy hearing aids for thousands of dollars less than before.
It’s past time to take on corporate power in America and return power to workers, consumers, and the public, i.e., to rebuild democracy. The Biden administration has made a good start at doing so. Partially as a result of its efforts, merger and acquisition activity in the last half of 2022 slowed sharply. (See this post for more on ways to take on corporate power and rebuild democracy.)
Competition is essential to the vitality of our economy – and of our democracy. A shift seems to be taking place in government and public consciousness about what it means to be a democracy, both politically and economically. Taking back our democracy requires regulating capitalism so it serves multiple stakeholders and the public good, not just wealthy shareholders and executives.
I urge you to contact President Biden and thank him for his efforts to reinvigorate competition in our economy and democracy in our society. You can email President Biden at http://www.whitehouse.gov/contact/submit-questions-and-comments or you can call the White House comment line at 202-456-1111 or the switchboard at 202-456-1414.
I also urge you to contact your U.S. Representative and Senators to ask them to support efforts to strengthen antitrust laws and rein in monopolistic behavior by big tech, meat processors, defense contractors, and others. You can find contact information for your US Representative at http://www.house.gov/representatives/find/ and for your US Senators at http://www.senate.gov/general/contact_information/senators_cfm.cfm.
[1] Warren, Senator E., 2/15/23, “Keynote speech at the Renewing the Democratic Republic Conference,” Open Markets Institute (https://www.warren.senate.gov/imo/media/doc/FINAL%20-%20Senator%20Warren%20Speech%20Antitrust%20Open%20Markets%202023.pdf)
[2] Dayen, D., 1/25/23, “A pitched battle on corporate power,” The American Prospect (https://prospect.org/economy/2023-01-25-pitched-battle-corporate-power/)
[3] Kuttner, R., 3/3/23, “Excessive bank overdraft charges demand regulation,” The American Prospect blog (https://prospect.org/blogs-and-newsletters/tap/2023-03-03-bank-overdraft-charges-regulation/)
[4] Warren, Senator E., 2/15/23, see above