It’s been a good few weeks for opponents of further market concentration. Oil services firms Halliburton and Baker Hughes called off their merger amid a Justice Department lawsuit. New rules on corporate inversions led to an abandonment of the Pfizer-Allergan merger. The White House issued a directive to federal agencies to take steps to foster competition, with an opening salvo of ending the monopoly of cable set-top boxes. The Economist, of all places, started agitating for increased competition 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 profile of antitrust policy 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 blocking health insurance mergers 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 March antitrust hearing 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 investigated the FTC’s failure to prosecute Google for anti-competitive behavior. He fought the egg industry’s bullying of vegan mayonnaise companies. He expressed concern 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 victory lap on the end of the Canadian Pacific/Norfolk Southern merger, and a follow-up on pay-for-delay (where the FTC got more aggressive because of her questioning), there’s been one advance in two months – a bipartisan letter with Lee urging “careful consideration” 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 Chris Sagers of Cleveland State University 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.
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Thanks for following this, dday. IMO, it’s as important as the Fight for $15, since what good is a higher wage if the dominant companies just raise prices in response?
+100
Yes – minimum wage increase can’t happen in a vacuum and expect to be successful. It needs to be a package deal along with changes in fiscal policy to take away the incentive to do as you suggested.
And as a side note, if the US were ever to legalize cannabis across the board it would put what is evidently a multi-billion dollar sleeping pill industry out of business and make that particular example moot.
Here Here!
Yes, glad Dave Dayen wrote this. It doesn’t get enough attention.
If you’re a lawmaker being unfavorably compared to Mike Lee you really need to re-evaluate your career path.
Now that Prof. K has issued a fatwa stating that facts have a well-known center-left bias,
the Dems should take anti-trust off the table.
Because nothing says center-left more than empowering our innovation leaders through market concentration.
Important post. It is time for more focus on Senator Klobuchar (D-MN) on a range of issues, including anti-trust. The mention of Senator Klobuchar as a potential Clinton running mate merits examination of what Senator Klobuchar truly stands for. Good luck thinking there will be any “yelling” from her office on the critical issues you pose.
As a former County Attorney, she has an excellent background to take lead on some key legal issues. However, Senator Klobuchar appears to have one interest: rising to the top, without taking a stand on our nation’s most critical issues, for fear of losing favor and not getting ahead personally. She is the opposite of Senator Wellstone.
She had the opportunity to take charge and answer constituent gave concerns and questions prior to the funding of TARP. She chose to completely ignore constituent concerns and side with Wall Street, without the dignity of a response to a constituent, beginning with the March Minnesota Caucus on March 15, 2008, the day before the Bear Sterns failure.
Constituent concerns about the financial services firms and the role of Wall Street do not even merit a response from Senator Klobuchar’s office. In fact her office responded on concerns prior to her voting for TARP in 2008, with a stock response, “Thank you very much for your interest in the health care agenda.” A constituent concerns with the financial services industry during the financial crisis was ignored time and time again. In fact the request for discussion went totally ignored.
Senator Franken and Rep Keith Ellison have taken their responsibility to address constituent concerns with mandatory arbitration in the financial services industry. Senator Klobuchar would not even respond to the constituent. Democracy and representative government seems to have eluded the focus of her responsibility as a representative of the people.
Sen. Klobuchar is exhibit number one of Wall Street funding congressional representatives and a vote that follows the money. She is tight with the insurance industry and other financial services firms, pushing their Agenda over what is best for the middle class.
Of course she is silent on Minnesotans overwhelming supporting Senator Sanders in their March caucus, as the Party supports Clinton. The old Minnesota DFL party is status-quo and out of touch. The old DFL of VP Mondale, Senator McCarthy, Senator Wellstone is gone. Rep Keith Ellison gets it.
http://minnesota.cbslocal.com/2016/03/02/bernie-sander-win-minnesota-caucus-super-tuesday/
Very critical post. Thank you.
Have to agree with this :
Senator Klobuchar appears to have one interest: rising to the top, without taking a stand on our nation’s most critical issues, for fear of losing favor and not getting ahead personally.
And further expanding : Even when she is taking a stand, she is pretty calculative. Recently, she voted to get the DARK Act out of the Agri committee. Then later realising that there are not enough votes to get it through , she voted “NO” in the senate. Whenever I call her office, I am told that she is “looking to see what comes out in the bill in the committee” before taking a stand. What a strong stand! Rachel Maddow has done puff pieces about how she will never ever bring up a bill without a Repub co-sponsor.
Our dear Ms. Amy is solidly behind Her Slyness and the #HandsOffBusiness agenda. There’s no “indifference” – it is now the DemocRATic Party’s insiders’ position, isn’t it?
Even when it came to SOPA/PIPA being pro business, when her position — and Franken’s too — nearly ended their careers.
There is a reason many MN blogs keep track of Ms. Klobuchar’s campaign donations.
Amy Klobuchar- MN DFL Democrat-Farmer-Labor. The “labor” represents Indian H1b labor, however. What democrat signs on with Little Marco Rubio and Orrin Hatch to increase foreign labor in an economic downturn? This fraud gets a free pass in Minnesota for some reason. She hides her ruthless, nasty, personality behind a plain-Jane, folksy, simple-spoken veneer that the coddled old minnesota boomers just eat up. Labeling of gmo foods? Not if Amy can help it. She’ll decide if you need to know that info or not. (You don’t)
Thanks for this. Amy isn’t serving the people that voted her into office, nice to see her called out.
Amy Klobuchar was bought not long after she got to the Senate, if not before. Take it from a native Minnesotan who’s been paying attention for a while now.
Color me unsurprised. I keep reading blogs where those who suggest that there’s not much difference between the D and R Teams get blasted for such heresy. Yet time and again, when one gets down into the weeds, this is what we see.
Those who read NC regularly are well aware of the mergers and acquisitions problems in this country – to name but two: a) health insurance companies, and 2) cable/internet providers. Where has Klobuchar been? Not in evidence, that’s for sure. But hey: there’s this vast great difference between the R and D Teams, doncha know?
Not from where I sit. Thanks for highlighting this issue. Some of us are paying attention. Would be nice if Klobuchar did her job for a change.
Letter to Sen. Nelson Fl:
Dear Sir:
I wish to state my strong opposition to the merger of Bright House networks (Internet and telephone services in Florida) to two much larger companies (Charter, and Time Warner).
All three already have vast economies of scale, (Bright House is the smallest and
operates in seven states) and the huge debt for this transaction can only be
paid for by customers through substantial price increases. Even a fool knows
that putting three pounds of plutocrats in a one-pound bag is both useless and
expensive; but the principals don’t care as long as they can play debt games
and swindle the customers. Promises about progress are just senseless propaganda.
FCC has already approved the merger; only strong opposition in Congress can prevent or severely modify it to better better serve Floridians and many others.
Bright House has already started changing; billing due dates are now variable and confused which only shows that such mergers always have victims: Customers!
Thank you for your attention, etc
————————————-
Unfortunately, this is his last Congress, so we’re stuck.
I dug up this StarTribune article from February because I remembered that the Klobuchar quote at the end seemed to be greasing the skids for the TPP. Could be my imagination.
New Obama executive orders hit illegal steel
President looks to thwart foreign dumping in order to help mining industry.
By ALLISON SHERRY; STAFF WRITER
WASHINGTON – The Obama administration announced new executive actions Thursday to thwart illegal foreign steel dumping into the market, which workers on the Iron Range and Minnesota politicians blame for the slowdown in the mining industry there.
The executive actions include adding more inspectors of steel imports at ports of entry and bringing on more staffers to enforce trade laws. The White House also said it will add personnel to the Commerce Department to help ensure that tariffs are enforced against those who dump steel in the U.S.
The executive actions come after a visit in December from President Obama’s chief of staff, Denis McDonough, to the Iron Range to hear from some of the 2,000 miners who have been laid off in the last year.
Minnesota’s politicians — including Gov. Mark Dayton, Sens. Amy Klobuchar and Al Franken, and Rep. Rick Nolan — have urged the executive branch to do more. Obama told Dayton earlier this week in a meeting at the White House that he’s been more aggressive than other administrations in cracking down on steel dumping.
“These steps are urgently needed to prevent further damage to the lives and livelihoods of the great people on the Iron Range,” Dayton said in a statement.
Klobuchar said the next step is for Congress to pass bills to strengthen America’s trade enforcement capabilities and “ensure laid-off workers affected by steel dumping receive the support they deserve.”
Appreciate shining the spotlight on individual congresspeople and unelected officials who we need to know more about (whether it’s their action or inaction). I’m grateful to know more about what is going on beyond what shows up in the usual headlines.
Where is Amy Klobchar? Probably not too far away. I just saw her last night (Mon 5/9/16) on Rachel Maddow’s show. Maybe someone with standing on this issue should call her up and ask about it. Without checking too carefully, I’m willing to bet no one here has.
Klobuchar endorsed by, and donated to, by right-wing publisher in the leadership of Trump’s PAC:
Hubbard Broadcasting CEO Explains Switch From Trump Blocker To Backer [NPR]
(at the end of the interview if the transcript isn’t yet available)
Feel the pragmatic progressivism that gets things done!
Senator Klobuchar will issue a statement about taking a stand as soon as she hears, from whoever she hears from about these things, what the stand should be. Whether that leads to taking a stand remains to be seen.
(Not so incidentally, Superdelegate Mondale is a Clintonite.)