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Is There an Establishment Plan to Repeal Antitrust Laws?
The torpedoes from the Antitrust Division and the Federal Trade Commission are exploding, and Wall Street is very angry. Here's what they are planning if they win in 2024.
Welcome to BIG, a newsletter on the politics of monopoly power. If you’d like to sign up to receive issues over email, you can do so here. This issue is co-authored by Lee Hepner and Matt Stoller.
Last Monday, one of the large number of Washington, D.C. insider trade publications - Politico - called out Biden antitrust policy as the single most problematic area for financiers. “In taking on tech giants and forcing the collapse of lucrative deals,” said Politico Morning Money, “Lina Khan has earned the status of Wall Street nemesis.” It’s true. The torpedoes launched last year - from rule-makings to challenges of Google and Spirit-JetBlue - are now exploding.
In this issue, we’re going to describe how the establishment is hitting back, in ways you don’t see, but which might become a political issue if the consultants and candidates who run campaigns actually notice what’s happening in Congress.
The short story is that big business is using partisanship to try and persuade Congressional Republicans, and some Democrats, to repeal antitrust laws, as well as drag antitrust enforcers before committees and harangue them in public. But among voters, within academia, and even in the conservative legal movement, antitrust is becoming far more relevant.
First, let’s set the context. This week, polling came out again showing Americans oppose monopolies and support antitrust laws, which isn’t a surprise. People dislike junk fees and unfair prices. We’ve all noticed high-profile monopoly-driven problems with episodes like the baby formula shortages, the failure of Ticketmaster’s ability to sell tickets, and ludicrously high prices for EpiPens and asthma inhalers.
This parade of incidents is one reason two-thirds of all Americans support anti-monopoly laws. That holds among both Biden and Trump voters, with more than 70% of both camps agreeing that monopolies are bad for the economy. And only 5% of Americans - across party affiliations - think that antitrust laws should be weakened.
One thing that surprised us is though people generally like technology firms, 46% still think the government should break up big tech, versus just 28% who don’t. What’s also interesting is that 52% of voters have heard little or nothing about the Biden administration’s economic policies, which means few people know what antitrust enforcers are doing. That could change relatively soon. Here’s Montana Senator Jon Tester, running for reelection in a very Trump-friendly state as a Democrat, attacking consolidation in the meat-packing and seed industries as a point of distinction between the parties.
It’s not just certain Democrats making the case. After all, in 2020, it was Donald Trump’s administration which brought the major Google antitrust suit currently being litigated. In academia, today legal scholars and historians are trying to reorient the history of America as one grounded in anti-monopoly thought, as this interesting collection of essays put out by the Tobin Project shows. And in key ways, conservative legal thinkers are ahead of the curve on consolidation. Take the highly influential George Mason law professor Todd Zywicki, who interviewed Biden antitrust chief Jonathan Kanter on the new proposed merger guidelines, calling them a “moderate” way to split the difference between traditional Chicago School conservatives and a newer populist sentiment.
That interview happened at, of all places, the Federalist Society, which is the beating heart of the conservative legal movement, where law professors, high-powered lawyers, circuit court judges and Supreme Court justices spend time networking and learning from each other. Justices Alito, Barrett, Gorsuch, and Kavanagh all attended last Friday’s black tie Federalist Society event.
Indeed, that dinner was part of the organization’s National Lawyer’s Convention, which had multiple discussions of the threats to conservatives by monopolization, as well as originalism and antitrust law. Stephanos Bibas, Third Circuit Judge, was the moderator of the panel on antitrust, and he often expressed surprise and interest in some of the comments by panelists, which included, among others, Deputy Assistant Attorney General of Antitrust Doha Mekki, Michigan professor Daniel Crane, and conservative plaintiff lawyer Ashley Keller. It wasn’t just one panel, the interest was pervasive. Lina Khan, for instance, did a well-attended fireside chat. And the main event on Saturday was a debate between two conservatives over whether social media platforms had sufficient monopoly power that the state could regulate them as common carriers.
And yet, in certain corners of the establishment, the pro-monopoly tradition that started in the 1980s remains dominant. Last week, an appropriations bill in the House - one of the spending bills that keeps government working - was amended multiple times to repeal antitrust laws.
Let’s look at a few of those proposals. There was a pro-junk fee amendment from Rep. Scott Fitzgerald (R-WI), which would “prohibit funding for the FTC to make Unfair Competition rule-makings.” Such wording sounds anodyne. But if you strip away the legalese, Fitzgerald is seeking to do away with the rule-making authority the FTC is using to ban annoying junk fees, which deceive customers into paying higher prices for food, hotels, event tickets, car rentals and more. It’s also the authority the FTC is using to prohibit non-compete agreements, which trap people in their jobs and deprive workers of some $300 billion in wages per year.
There was another amendment which would prevent the FTC from enforcing its unfair methods of competition authority outside the bounds of the Clayton and Sherman Act. This one would effectively end or weaken key parts of the FTC’s case against Amazon, particularly its use of algorithms to raise prices in tacit collusion with other sellers, as well as its actions against pharmacy benefit managers on lower insulin prices and its work against price discrimination towards small and medium size grocers.
Rep. Kat Cammack (R-FL) proposed an amendment to block the finalization of all rules that would affect more than $100 million of activity. This would get rid of things like the FTC’s ‘Click to Cancel’ provision that stops entities from cheating you with subscriptions, or the pre-merger notification requirement rule, which would help stop predatory acquisitions by private equity firms in health care. These are gifts to the Chamber of Commerce, at the expense of hundreds of millions of real people.
But this isn’t about Republicans, who in many ways are just being partisan and/or exercising muscle memory from the 1990s. In a separate appropriations bill, Rep.’s Massie (R-KY) and Democrat Lou Correa (D-CA) led a bi-partisan amendment to strip the Department of Transportation of its authority to investigate airline mergers. JetBlue, in other words, is doing a lot of lobbying, and is trying to win - through spreading around cash in Congress - what it can’t win in the JetBlue-Spirit merger proceeding. As a reminder, internal documents say this merger raises airfares by up to 40% overnight, so Correa and Massie are working hard to raise airline ticket prices.
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The Massie-Correa amendment failed, with mostly Democrats against it. But a handful of Democrats who did vote for it - in addition to Correa, Rep.’s Lofgren (D-CA), Meeks (D-NY), Morelle (D-NY), and Panetta (D-CA) also voted to promote airline concentration - should have to answer for why. Correa is a particularly odd case and has attracted a lot of scrutiny for parroting big tech talking points, despite his district being near Los Angeles. Lofgren, from Silicon Valley, is also important, since she could take over the leading slot on the Democratic side of the Judiciary Committee if the current chair, Jerry Nadler, retires.
In other words, most, though not all, House Republicans seem out of touch with their own base on antitrust and monopoly issues. A whopping 206 House Republicans, many of whom represent “flyover states” most harmed by airline concentration, voted to block the Department of Transportation from investigating higher airfares and worsening airline service. So, even though 70% of the Republican base wants monopolies to be held accountable, only 13 House R’s - including Rep. Matt Gaetz (R-FL) and outgoing Rep. Ken Buck (R-CO) - want the federal government to keep doing so.
But it’s not just these amendments that matter. Tomorrow at 10am, there’s an antitrust oversight hearing in the Judiciary Committee, which is the main part of the House of Representatives that controls antitrust law. The Chair of that committee, Jim Jordan, is hostile to the anti-monopoly project, and the main witness is Antitrust Division chief Jonathan Kanter, who Jordan wants to rake over the coals for his aggressive attempts to go after big tech. I got a copy of the memo that Jordan’s staff prepared, and it reads a lot like it was written by lawyers for big business.
Under Kanter, it reads, antitrust enforcers have “pursued costly policy changes that harm American businesses and empower foreign governments.” This memo attacks the proposed merger guidelines that conservative Zywicki praised, and generally argues that antitrust enforcers are both losers who can’t do anything right, and also all powerful policymakers who block too much economic activity. Basically, it’s the old Yiddish joke about a restaurant. The food is terrible, and the portions are too small!
How much does this Congressional noise matter? Well the hope is this stuff is just a lagging indicator, and that House Republicans will catch up to their voters. It’s worth highlighting that none of the amendments will make it into law. The underlying funding bills were never brought to the House floor because of disarray among Republicans. And even if they did pass the House, the Senate would likely reject most of these amendments, with the possible exception of the auto dealer one. After all, there’s substantial support in many parts of Congress for stronger antitrust action.
However, there’s a catch. These proposals are a possible indication of what monopolists hope they can get done next Congress, if the elections go the way they want. I think that’s unlikely, since there are important Republicans in the Senate who are supportive of antitrust, but it’s possible.
Perhaps more importantly, these amendments and hearings are also an indication that members of Congress do not think voters will notice their choices that affect their constituents. All that said, the juxtaposition of very popular antitrust with ham-fisted efforts to weaken antitrust provides fertile terrain for doing some brute politics.
Another way to think about this is that establishment politicians like Rep. Fitzgerald are out of touch with actual voters. Fitzgerald is from a pretty red district in Wisconsin, a state that narrowly voted for Biden in 2020. Given where most Republican and Trump voters are on issues of corporate power, the attack ads write themselves: Establishment Republicans want you to pay more for groceries, healthcare, and travel, and are perfectly fine letting monopoly corporations make decisions about your daily life.
That kind of ad could be done in a Republican primary, or a general election. They could also be used in Democratic primaries, or general elections. It really does not matter. The point is, right now, lower prices are the top priority for over two-thirds of voters. Yet, most voters haven’t heard about what antitrust enforcers are doing. So while it sounds politically insane to propose knee-capping rules that would bring prices down, it will only be problematic if voters hear about it. As we saw above, Senator Jon Tester thinks it’s politically salient enough to bring up. It won’t take much more for big business to be on the ballot in 2024.
The pro-monopoly world is hoping that doesn’t happen, and they can keep these conflicts as quiet as possible. Unfortunately for them, people really do like complaining about Ticketmaster.
Thanks for reading!
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If you want to reach me, my email is Lee.a.hepner (at) gmail.com.