ProMarket - Three Steps the Biden Administration Should Take to Tackle America’s Monopoly Problem

Daniel Hanley, policy analyst for Open Markets Institute, writes in ProMarket about how the Biden Administration can revive federal anti-monopoly enforcement after 40 years of little action, even when faced with congressional opposition.

The new Biden administration will face countless tasks to repair America’s economy, distressed by decades of pro-monopoly policies and fragile supply chains strained by the Covid-19 pandemic. It will also likely encounter significant congressional resistance. Nevertheless, the new president and his administration should take at least three unilateral actions to start tackling America’s pervasive monopoly problem. 

First, the Biden Administration should revive federal antimonopoly enforcement after 40 years of little action. In October, the Department of Justice (DOJ) filed its first significant monopolization case in twenty years against the search giant Google. The Federal Trade Commission’s (FTC) widely expected lawsuit against Facebook will likely be the agency’s most important lawsuit in a generation. Building on the landmark 450-page House Antitrust Subcommittee report on Big Tech released last month, the Biden Administration can reverse the trend set by previous Democratic and Republican administrations and bring more antitrust cases by these federal agencies. 

Second, President Biden should instruct the DOJ and FTC to publish new merger guidelines that follow a bright-line rules-based framework. Using bright-line rules would impose strict and precise limits on mergers and acquisitions, particularly for concentrated industries such as banking and technology that are at the center of the acquisition frenzy.  

For more than a decade, the two federal agencies have anemically enforced American merger law and have failed to protect consumers from dangerous concentrations of corporate power. Substantial research has confirmed that the current merger framework, with its myopic and sole focus on prices, has failed by its own analytical benchmarks. Professor John Kwoka, in his landmark 2015 merger review study, found that one-third of mergers led to price increases of at least 5 percent. Additionally, the current version of the guidelines affords the agencies too much discretion and encourages subjective decision-making. The agencies’ merger guidelines can be easily changed and are offered significant deference by the federal courts. 

The Biden Administration should use historical antitrust policy and practice in developing new merger guidelines and restrain continuing concentration across the American economy. In 1968, the DOJ announced bright-line merger guidelines that clearly explained when it would challenge a merger in court under the Clayton Act. The result was a vigorous merger enforcement landscape. However, lackluster merger enforcement since the 1980s has allowed countless industries to be controlled by only a handful of dominant corporations. 

Read the full article on ProMarket here.