Open Markets Institute research associate, Garphil Julien, writes in The American Prospect about how Amazon, private equity, and real estate conglomerates are doing what discounters like Walmart did in the 1970s to the retail industry.

The COVID-19 pandemic has accelerated the long decline in retail. Twenty-nine retail companies have filed for Chapter 11 bankruptcy, leading to the shuttering of 2,368 apparel stores, 1,433 home furnishing stores, and 907 department stores. The carnage has also given rise to a new trend of ownership in the industry.

In September, real estate companies Simon Property Group and Brookfield Property Partners purchased J.C. Penney for $800 million, after the department store chain had filed for bankruptcy in May. The same real estate firms bought Forever 21 in February. Simon also acquired clothing retailer Brooks Brothers this year after its bankruptcy filing. As Simon and Brookfield coordinate and purchase stakes in wobbly retailers, it helps ensure that the outlets keep paying rent at their shopping malls.

These acquisitions signal the imminent end of the model of brick-and-mortar retail chains, a model that has dominated the U.S. retail landscape for decades. Even before the pandemic, brick-and-mortar retail outlets were struggling to stay profitable and competitive; the reasons for the struggle were many. Many apparel retailers never recovered from the Great Recession, and private equity vultures then bought up these troubled retailers, loading their balance sheets with massive amounts of debt and turning many retailers into “zombies.” In addition, one of the most powerful causes of the retail apocalypse has been the rise of Amazon. Amazon has an increasing monopoly over e-commerce and this year became the country’s largest apparel retailer, with $30 billion in sales.

But Amazon’s dominance, the long-standing frailty of the retail industry, private equity takeovers, and massive consolidation in the sector are all largely the result of lax antitrust enforcement. This has allowed Amazon to deploy an array of anti-competitive practices to increase market share, and has allowed private equity vultures to burden businesses with debt and extract all the value away from workers.

This lax antitrust enforcement mirrors regulators’ and courts’ failures in the 1970s and 1980s, when discount chains abused and culled the retail landscape of the time, which was dominated by department stores. Consolidation was the flawed response to this past crisis, much as we are seeing today. The outcomes, then and now, include losses of independent local businesses, labor rights, and civic community. The only way to remedy this and to prevent further damage is to reverse these changes in antitrust enforcement that began decades ago.

The rise of discounters such as Walmart, Sears, Kmart, and others in the late 1960s had an adverse effect on department store retailers, because of the discounters’ much lower prices for consumer goods. Some might interpret this market share gain as simply fair competition with benefits for consumers, but weakened antitrust enforcement enabled this outcome.

Discounters had lower operating costs because they spent less on inventory maintenance. They passed on these savings to customers, which increased market share and pressured their competitors. But discounters could offer lower prices also because they frequently paid less for their wholesale goods than did smaller, independent department stores—and that was illegal. Under the Robinson-Patman Act, passed by Congress in 1936, price discrimination in the form of discounts by manufacturers or suppliers is illegal. Under the Miller-Tydings Act, passed in 1937, manufacturers were required to charge the same price to all customers. This practice, known as resale price maintenance (RPM), created a competitive playing field for smaller, independent retailers. But weaknesses in Miller-Tydings, its repeal in 1975, and the feeble antitrust enforcement of Robinson-Patman and other laws all account for the success of discounters.

Read the full article on The American Prospect here.