Welcome to The Corner. In this issue, Sandeep Vaheesan lists some actions the next administration could take on day oneto fight concentrated power. And we explain why Senator Mike Lee is getting the U.S. constitutional philosophy wrong when he criticizes regulatory overlap between the DOJ Antitrust Division and the FTC.

Sandeep Vaheesan Shows How Next President Could Use Existing “Anti-Monopoly Arsenal” to Fight Corporate Power

In a new article for The American Prospect, Sandeep Vaheesan discusses how a future president already has the power to check monopolistic behavior without needing to change the law. Vaheesan writes, “The question is will he or she appoint officials—to the Department of Justice (DOJ) Antitrust Division, Federal Trade Commission (FTC), U.S. Department of Agriculture (USDA), and other agencies—determined to tame corporate dominance of our economy and politics.” Vaheesan lists some problems a future administration could address on Day One: “The next president can free workers from the grip of noncompete clauses, stop monopolists from walling out rivals, promote affordable prescription drugs, brake corporate consolidation, restore consumers’ right to repair their possessions, and protect farmers from abusive meat-packers.”

Read the full article here.

Sen. Mike Lee Struggles to See Point of Competition, Checks and Balances

At a Senate oversight hearing last month, antitrust subcommittee Chairman Mike Lee, R-Utah, reacted to reports of disagreements between the Federal Trade Commission (FTC) and the Department of Justice (DOJ) over who would investigate Facebook for antitrust violations.

Lee criticized the two enforcers for the conflict, saying that it “will have the agencies stumbling over each other and will inevitably undermine rather than further the enforcement efforts of both agencies.” DOJ Antitrust Division head Makan Delrahim told Lee, “I cannot deny that there are instances where Chairman Simons and my time is wasted on these types of squabbles.”

Lee used the episode to repeat a favorite criticism of his: that having the FTC and DOJ both enforce the antitrust laws is“inefficient.” Both FTC Chairman Joseph Simons and Delrahim agreed at the hearing that they would not recommend the United States’ system of enforcement, which also includes state attorneys general and antitrust laws by private actors, as a model for other countries.

The whole exchange, however, revealed a deep misunderstanding of American’s antimonopoly tradition and political philosophy generally. Previous generations of lawmakers intentionally fostered competition among many different enforcers over who could best protect people from corporate power. The resulting multiplicity of enforcers is not a bug; it’s a carefully engineered and vital feature.

When Progressive reformers passed the Clayton Act in 1914, for example, they intentionally extended the power to enforce its provisions not only to federal agencies, but also to the states, and even private parties. The same year, they created the FTC “to recover the power to control antitrust policies,” as one legal scholar put it, from reactionary judges who were prone to interpreting the Sherman Act in ways that helped corporate monopolies and hurt farmer co-ops and labor unions. Instead, Congress wanted to make sure that a federal agency, accountable to Congress, would be able to study and police new and potentially abusive business practices.

To be sure, neither the FTC or the DOJ today is striving hard to outpace the other in checking corporate concentration. A body of research, led by Northeastern University economist John Kwoka, has found that the DOJ and FTC have frequently failed to challenge mergers that led to price increases and other harms.

But the FTC and DOJ have differed, with one enforcer or the other taking a more aggressive stance in particular cases. For example, the DOJ has disagreed with the FTC in federal court this past year over how to punish chipmaker Qualcomm for abusing its patent over essential chips. In response, the FTC characterized the DOJ’s argument as basically exempting Qualcomm from antitrust laws. The case is in front of the Ninth Circuit currently, but Delrahim’s highly–criticized deference to patent holders suggests that if it were up to the DOJ, there wouldn’t even be a case.

Another disagreement came in 2008 when the FTC called a DOJ report on enforcing the Sherman Act against dominant corporations “a blueprint for radically weakened enforcement.” A three-member majority declared the FTC “ready to fill any Sherman Act enforcement void that might be created if the Department actually implements the policy decisions expressed in its Report.”

New York University law professor Harry First wrote, about states enforcing antitrust laws, “No single antitrust enforcement agency always gets it right; the benefit of [shared] enforcement is that persuasion must be used rather than command.”

The states increasingly appear to be “getting it right” more than their federal counterparts. States have worked to make up for many recent high-profile failures by federal enforcers. To name a few, the DOJ and FTC have failed to arrest the concentration and abuse of power in T-Mobile’s blockbuster acquisition of Sprint, Facebook’s abuses of users’ data privacy, and Google’s power over online search. In each of those cases, bipartisan coalitions of state attorneys general have stepped into the “enforcement void” left by the two federal enforcers.

Speaking after Lee in the hearing last month, Ranking Member Amy Klobuchar, D-Minn., summed up the value of multiple enforcers neatly: “I’d rather have a split investigation than no investigation.”

Perhaps the most concise and eloquent statement of the basic American attitude about seeking “efficiency” in the exercise of state power came from Supreme Court Justice Louis Brandeis. In a 1926 dissent, Brandeis argued that the Constitution’s Framers wanted a separation of powers “not to promote efficiency but to preclude the exercise of arbitrary power. The purpose was not to avoid friction, but, by means of the inevitable friction incident to the distribution of the governmental powers among three departments, to save people from autocracy.”

ANTI-MONOPOLY RISING:

• Senator Warren’s presidential campaign called on Congress to reopen the Office of Technology Assessment (OTA). The OTA was created in 1972, and closed in 1995, as a congressional center that would research science and technology and help inform legislative efforts. Warren and others have called for a new and improved OTA especially so Congress can better understand platforms like Facebook or Google. “When Congress decides whether it should break up big tech companies our representatives shouldn’t have to rely on Google’s policy team to understand the effects of technology consolidation.” (Read Open Markets’ press release from last November calling on Congress to re-open the Office of Technology Assessment here.)

• Senator Elizabeth Warren, D-Mass., responded this week to leaked audio of Facebook CEO Mark Zuckerberg saying that he would plan to contest any legal challenges that a potential Warren presidency might launch against the tech giant. Warren said that she is “not afraid to hold Big Tech companies like Facebook, Google, and Amazon accountable.”

• Rep. Alexandria Ocasio-Cortez, D-N.Y., called on New York state’s Liquor Authority to reject Total Wine & More’s application for a liquor license. Ocasio-Cortez called the mega-retailer the “Walmart of Liquor” and cited its “history of loss leader pricing — selling alcohol at or below cost in order to sell high-end products at a generous margin” while expressing concern over the harms it would inflict “on the local small business community.

• In a letter this month, investigators for the House Judiciary Committee asked Google for information about its “decisionregarding whether to adopt or promote the adoption” of an internet protocol, which the Alphabet Inc. company said is aimed at improving internet security. The protocol will affect data access to third-parties. The request is part of the committee’s ongoing effort to investigate dominant platforms.

• California Governor Gavin Newsom signed a bill on Monday that will permit college athletes to hire agents and pursue endorsements, in a challenge to the National Collegiate Athletic Association’s long-running by-law that student-athletes should not be compensated in an employment-like relationship. Newsom lauded the bill as “a big move to expose the farce [of college sports] and to challenge a system that is outsized in its capacity to push back” against student-athletes.

WHAT WE’VE BEEN UP TO:

• Olivia Webb wrote an article for The American Prospect about private equity groups’ control over the concentrated market for ambulance services, with tragic results for patients. “What was once a community service, provided at little or no charge to the patient has become a financialized moneymaker for the wealthy,” Webb writes.

• Barry Lynn made two presentations at the Averting Systemic Collapse conference at the OECD in Paris. The conference is part of the New Approaches to Economic Challenges group at the OECD and was attended by the ambassadors to the OECD and the heads of all OECD committees. Barry spoke on “Systems Thinking, Anticipation and Resilience” and on“Understanding the New Economy.”

• Barry Lynn delivered a speech on the threat that Google and Facebook pose to the free press in the United States, Europe, and in democracies around the world, in Copenhagen, in an event sponsored by the Danish Media Association. The speech was followed by a debate between executives from Google and Facebook, members of the Danish Parliament, and Danish journalists.

• Matt Stoller published a piece in ProMarket discussing the dangerous path that platform monopolies follow to gain market control and, eventually, produce profits for their investors. “Capitalism itself is breaking down in the face of business models that are simply organized around loss-making and endless access to the small number of (largely) men who can enable unlimited access to the capital markets.”

• Barry Lynn commented on Massachusetts Senator Elizabeth Warren’s proposal to bring back the Office of Technology Assessment and increase funding for congressional support agencies in an effort to educate lawmakers and reduce their reliance on lobbyists to Gizmodo.  “If Congress is to do its job, and counterbalance the executive, it has to know what it’s talking about. This is especially true in today’s era of platform monopoly and AI. A new Office of Technology Assessment would help members from both parties to understand and address some of the most pressing challenges in our society.”

• Matt Stoller spoke with the New York Times about WeWork’s unsustainable growth and valuation, a concern for investors that pressured former CEO Adam Neumann to step down. “Investors saw through Lyft, and they saw through Uber as well,” said Stoller. “This one has simply been rejected. Investors are saying, ‘We’re not going to tolerate this nonsense anymore.’”

• Matt Stoller talked with Investopedia about Facebook’s stock rebound and why, despite the current FTC antitrust investigation, investment analysts still give the company positive ratings. “For any anticompetitive behavior they want to get away with, they’re going to say, ‘The FTC made us,’” Matt Stoller said. “That’s what they bought for $5 billion.”

• Sarah Miller discussed why dominant platforms can get away with mistreating customers, with GQ Australia. Miller said, “Consumers don’t have any power in the way that they would in a functioning market, where if they’re unhappy with the way customers or workers are being treated, they can take their business elsewhere.”

• Sandeep Vaheesan explained to The Hill why DOJ Antitrust Division head Makan Delrahim’s justification behind his opening an antitrust investigation into four carmakers who agreed to California’s emission standards makes little sense.“The conduct at issue here, appears to be protected petitioning,” Vaheesan said, adding that the investigation “suggest[s]that the antitrust division is picking to use its powers to advance the White House’s agenda on environmental policy. Even if they ultimately don’t bring a suit, the investigation itself will get other car companies to think twice before working with states like California to raise emission standards to promote air quality.”

• In an op-ed for The Guardian, Brookings Senior Fellow Richard Reeves cited a recent op-ed from Matt Stoller, also in The Guardian, to argue that “the concatenation of political and economic power, especially in the US, is intrinsically damaging.” “Capitalism works best,” Reeves writes, “when it acts in a centrifugal manner to disperse power, less well when it tends towards concentration.”

• Matt Stoller spoke with Politico about Mark Zuckerberg’s unrelenting position to defend his company, despite escalating pressure from both the government and the public at large, who question Facebook’s power and incentives. “Zuckerbergis personalizing what is actually an increasing consensus. He’s kind of unwilling to deal with the fact that there is now an increasingly political consensus that the economic model for Facebook doesn’t work.”

• Matt Stoller discussed the rapidly growing movement against Facebook’s monopoly power with The Stranger. “It was an open secret that Hillary Clinton was thinking of appointing [Facebook COO] Sheryl Sandberg to her cabinet,” said Stoller,”and now Elizabeth Warren is talking about breaking Facebook up.”

VITAL STAT: $20,576

Amount that the average employer and employee together spend on health insurance premiums for a family of four each year, according to a newly-released survey from the Kaiser Family Foundation (KFF). Commenting on a similar findingfor large employers in August, KFF President and CEO Drew Altman noted that that’s enough money to buy a new basic sedan every year.

WHAT WE’RE READING:

• “The Day One Agenda” (The American Prospect): From energy to drug prices and banking, The American Prospect’s new special issue lays out where and how the next President could make decisions “for constructive change—without abusing executive authority.”

• “Hospital Mergers: The Forgotten Problem of American Health Care” (ProMarket, Stefano Feltri and Luigi Zingales): A review of studies on hospital mergers; over one hundred hospital mergers take place every year, and many experts and studies find higher prices and worse quality.

• “Moving Backwards: Consolidation, Deregulation & Lack of Accountability in the US Media and Broadband Industries” (Gigi Sohn): In a speech before the Center for Research and Teaching in Economics in Mexico City, former FCC official Sohn explains how the Trump administration’s FCC, FTC, and DOJ are all working to undermine competition in broadband and media markets.

Written by: Barry Lynn, Phil Longman, and Matt Buck
Edited by: Barry Lynn, Phil Longman, Krista Brown, Udit Thakur, Claire Kelloway, Daniel A. Hanley, and Matt Buck