The State Anti-Monopoly Machine is Waking Up; Even More Can Be Done
Daniel Hanley writes about the vast regulatory powers to restructure markets and curb excessive concentrations of corporate power that U.S. state governments have.
Under the American system of government, state governments have broad, and oftentimes underappreciated powers to regulate and structure markets. These include the use of “police powers” to prevent corporations from threatening the public interest with pollution or unsafe business practices. States also exercise significant powers over contracts, corporate governance, torts, property, and much more. Finally, states have historically played a strong role in enforcing laws and regulations designed to prevent and constrain monopolies.
Today, as the problem of corporate concentration becomes more acute and widely recognized, many states are once again returning to this anti-monopoly tradition. Ten states have joined in bringing an antitrust suit against Google, 46 states joined the federal government to break up Facebook, and many more are enacting or considering laws that go beyond antitrust enforcement.
These state proposals fall into three broad categories:
Noncompete Agreements
At least six states and the District of Columbia have proposed or enacted laws to limit or abolish employers’ use of noncompete contracts. Such contracts prohibit or constrain the ability of workers to seek another job in a similar line of work or establish a competing business. A large body of evidence shows that these agreements, which affect somewhere between 34 million and 60 million workers, deter workers from seeking alternative employment, suppress wages, and inhibit the growth of new firms.
Right to Repair
Half of the states have also proposed laws aimed at substantially limiting or prohibiting the ability of dominant firms to monopolize replacement parts and repair services for their own products. Most of the legislative proposals require manufacturers across several industries to provide access to parts, tools, service documentation, firmware and diagnostic software for their products to third-party repair technicians on fair and reasonable terms.
Privacy and Digital Corporations
Many states have also proposed a variety of measures that would prevent a dominant technology platform, such as Apple, from requiring that application developers use its payment system. Some states also are proposing laws that will expand internet access, impose fair taxation on digital firms, impose net neutrality-like requirements on broadband companies, and restrict certain abusive and restrictive surveillance practices used by digital firms.
Using extensive datasets from U.S. PIRG and the National Conference of State Legislatures, the Open Markets Institute has assembled a database of more than 100 significant state anti-monopoly proposals and laws enacted or considered between 2018 and 2021. See map below.
States should continue to embrace use their vast regulatory powers to restructure markets and curb excessive concentrations of corporate power. Moreover, as states enact policies that are beneficial, such successes can serve as a foundation and template for similar legislative acts to be enacted at the federal level.
For more on the harmful effects on noncompete agreements, check out Open Markets’ petition to the FTC to use its Section 5 authority to ban them outright.
For more on the harmful effects of restrictive repair practices, check out Open Markets’ extensive set of work on this issue here.