It’s been a good few weeks for opponents of further market concentration. Oil services firms Halliburton and Baker Hughes amid a Justice Department lawsuit. New rules on corporate inversions led to an abandonment of the . The White House issued a to take steps to foster competition, with an opening salvo of ending the . The Economist, of all places, started amid record corporate profits. The antitrust movement, in short, has gone mainstream.
And yet, even as this happens, Charter and Time Warner finalized their approval to create more concentration in the cable and internet sector, where something like 90 percent of all broadband cable comes from one of
two companies. While the mergers being stopped or resisted by the Justice Department fall under the category of extreme concentration, where the potential harm to consumers and the supply chain is obvious, those that fall just outside that, or even well within it in the case of Charter/Time Warner, are given the go-ahead. The amazing stat in my long from last year is that the Obama Administration willingly gave up on the types of mergers that create market concentration:
But when it came to actual enforcement, the administration largely took a pass. According to data collected by Northeastern University’s John Kwoka, from 2009 to 2011, for every merger that reduced competitors in a market to four or fewer, the administration made some investigation or challenge. But for mergers that left five or more competitors, they enforced none of them. Historically, a good chunk of those would have been challenged. “These are moderately concentrated industries, right on the cusp,” Kwoka says. “They took a pass on every one of them. It’s remarkable and a complete anomaly.”
In other words, that the Administration has been doing good work on antitrust lately reflects their own failure to prevent monopolies earlier on, reaching a point where they had to stop the bleeding. Although the Justice Department is talking about that would take the industry down from 5 major competitors to 3, that’s not actually enough. The laxity on industries on the cusp created a situation where rear-guard actions to prevent further concentration only lock in a dissatisfying status quo. And plenty of industries, particularly the platform monopolies in tech like Amazon and Google, remain untouched. The government needs to actually pull out its Section 2 power under the Sherman Act and prevent already existing antitrust behavior from harming the economy. Yet the Obama Administration has pursued only one anti-monopolization deal of this type in their entire two terms in office.
The only way to get the current or future Administration to move on that is through bipartisan pressure from Congress. We’ve already seen the example. Since the by the Senate Judiciary Committee, the first in three years, the enforcement agencies – the Antitrust division of the Justice Department and the Federal Trade Commission – have been noticeably more aggressive in challenging merger deals.
The question is, where’s the follow-up? And at this point, I have to single out Amy Klobuchar, the Democratic ranking member of the antitrust subcommittee.
The chairman of the committee, Mike Lee, has done a few things that suggest the possibility of bipartisan support on this traditionally more polarizing issue. He for anti-competitive behavior. He fought the egg industry’s of vegan mayonnaise companies. He over the Norfolk Southern/Canadian Pacific merger, which was eventually scuttled.
Klobuchar joined Lee on that last one, but since the promising hearing on antitrust in March there hasn’t been a lot of follow-through. Lee and others have displayed a willingness to work across party lines on this. Both sides know that the lack of competition stunts the economy, hurts consumers and producers, increases inequality, leads to the crapification of everything, and furthers instability in the supply chain. The ability to pressure the agencies and the White House is only strengthened when both parties come aboard.
The odd protocols of the Senate demand that the ranking member of key subcommittees like this lead the way on any bipartisan efforts. A junior member stepping out of line doesn’t happen all that much. If you want to exert maximum pressure in favor of aggressive antitrust enforcement, you need Klobuchar at the forefront.
In the March hearing, Klobuchar did get in a zinger about pay-for-delay schemes:
When questioned about other cases, the antitrust enforcers appeared to pad their stats. Ramirez, the FTC chair, mentioned on numerous occasions a $1.2 billion settlement with Teva Pharmaceuticals, over a “pay-for-delay” deal it reached with generic manufacturers, preventing competition to its sleep-disorder drug Provigil. But Klobuchar pointed out that the total harm to consumers in increased prices has been estimated between $3.5 and $5.6 billion. “The defendant got to keep 70 to 80 percent of the profits,” Klobuchar said. Ramirez only replied that the FTC tries to estimate the appropriate penalty.
But I’ve gone through Klobuchar’s press releases since the hearing. Outside of a on the end of the Canadian Pacific/Norfolk Southern merger, and a (where the FTC got more aggressive because of her questioning), there’s been one advance in two months – a bipartisan letter with Lee urging “” of the SABMiller/Anheuser-Busch InBev merger. That just seems like a wasted opportunity.
We’re coming out of one of the most intense periods of merger and acquisition activity in the country’s history. “Markets are now so concentrated and ripe for abuse,” wrote in the New York Times, “and the political will for enforcement so lacking, that our antitrust laws seem increasingly hopeless.” Among the only proven motivators to get the agencies working has been when leaders in both parties start yelling at them. Klobuchar hasn’t been on the field enough doing the yelling. That has to change.