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Biden’s antitrust team signals big change at Corporate Titans

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Biden’s antitrust team signals big change at Corporate Titans

WASHINGTON – President Biden has assembled the most aggressive antitrust team in decades, stacking his administration with three legal crusaders as he prepares to take on corporate consolidation and market power with efforts that could include blocking mergers and dissolving large companies. .

Biden’s decision last week to appoint Jonathan Kanter to head the Justice Department’s antitrust division is the latest sign of his willingness to take on American corporations to promote greater competition in the tech industry and throughout the economy. Kanter has spent years as a lawyer fighting giants like Facebook and Google on behalf of rival companies.

If confirmed by the Senate, he will join Lina Khan, who helped reframe the academic debate on antitrust and now leads the Federal Trade Commission, and Tim Wu, a longtime advocate for the Facebook split and other big companies that He is now the special assistant to the president of technology and competition policy.

The appointments show both the Democratic Party’s renewed antitrust activism and the Biden administration’s growing concern that the concentration of power in technology, as well as other industries such as pharmaceuticals, agriculture, healthcare and finance, has hurt consumers and workers and has retarded economic growth.

They also underscore that Mr. Biden is willing to use the power of his office and not wait for the harsh routine of congressional action, an approach that is faster and potentially riskier. This month, he issued an executive order packed with 72 initiatives aimed at stoking competition in a variety of industries, increasing scrutiny of mergers and curbing the widespread practice of forcing workers to sign non-competitive deals.

Outside groups and the administration’s ideological allies warn that if Biden truly hopes to follow in the footsteps of his antitrust idols, Presidents Theodore Roosevelt and Franklin D. Roosevelt, he will need to push through comprehensive legislation to give federal regulators new powers. , particularly in the technology sector. Fundamental federal antitrust laws, written more than a century ago, did not provide for the kind of commerce that exists today, in which large companies can offer customers low prices but at the expense of competition.

The administration has quietly supported legislation making its way through the House, but has yet to attempt to lead an antitrust push from Congress the way Biden has on infrastructure, childcare, and other components of his $ 4 trillion economic agenda. of dollars.

That could prove problematic if judges continue to crack down on actions by the Justice Department, the FTC, or other agencies.

Last month, a federal judge dismissed an FTC lawsuit against Facebook, saying the agency had not made a persuasive argument that the company is a monopoly and ordered that it better substantiate its claims. Ms. Khan faces her first big trial when she resubmits that lawsuit, and on Friday the agency asked the court for more time.

Biden’s antitrust elections have argued that Facebook, Google, and Amazon have monopoly power and have used their dominant positions on social media, search, and online retail to crush competitors, leaving consumers with fewer options. even if that doesn’t result in higher costs. .

Businesses and some economists disagree. Facebook points to TikTok, Snap, and Twitter as examples of competitors, and Amazon argues that it has only 5 percent of all retail sales in the United States, despite a research study by eMarketer showing that 40 percent of all online retail sales happen on their platform.

The president and his aides have voiced their adoption of a “confidence hunting” mentality as a crucial step toward rebalancing the economy not only to lower prices but to drive more competition and create high-paying jobs.

“I always thought that the free market system was not just that there was competition between companies, but guess what: companies should have to compete for workers,” Biden told a CNN audience in Ohio on Wednesday, touting his executive order. . “Guess what, maybe they will pay more money.”

White House officials argue that putting tough regulators in powerful positions can allow them to succeed with antitrust efforts in a way that President Donald J. Trump did, who also issued an executive order on competition and spoke of breaking up mergers. technology and hospitals. do not.

“We are hopeful,” said Diana Moss, president of the American Antitrust Institute and an advocate for stricter enforcement of competition. “But when the rubber hits the road, they will have to juggle an aggressive agenda with the realities of the courts, Congress and pressure from outside.”

Some economists warn that Biden’s appointees could go beyond efforts to break the concentration that actually stifles competition and hurts consumers and industries like restaurants or grocery stores. There, they say, the entry of national players into local markets has in many cases given customers more choice and created more jobs.

“What worries me most is rhetoric,” said Chang-Tai Hsieh, an economist at the University of Chicago. whose research has found that some business concentration in recent years has produced an innovation that has boosted the economy. “They are seeing what they see in the tech industry, and the tech industry is different. And they are extrapolating from the tech industry to all other industries. “

Corporate America is already fighting Biden’s efforts. Google, Facebook and Amazon have filled their legal teams with antitrust experts and hired veteran antitrust government officials in recent years. Facebook and Amazon have requested Khan’s disqualification of antitrust matters related to their companies. They say that Ms Khan, who worked on a House antitrust investigation on digital platforms, is prejudiced about her corporations. Critics of Mr. Kanter, a private antitrust attorney, point to his previous representation of Microsoft and News Corp as conflicts of interest as the Justice Department fights its legal battle against Google.

Biden’s measures reflect the growing influence of a movement to restrict corporate power that has spread from progressive academics and liberal leaders like Massachusetts Sen. Elizabeth Warren to some of the more conservative Republicans in Congress.

Thomas Philippon, an economist at New York University, completed in 2019 that increasing market concentration had hurt the American economy and cost typical Americans $ 5,000 a year. Administration officials repeatedly cite that statistic to support Biden’s recent executive order.

Cracking down on market concentration and working to promote competition “can make a huge difference in the lives of millions of people in this country,” Bharat Ramamurti, deputy director of Mr. Biden’s National Economic Council and former assistant to Ms. Warren said in an interview.

Ramamurti mentioned the potential benefits of not only dissolving companies, but also helping consumers have more and cheaper options for checking accounts, allowing hearing aids to be sold without a prescription and limiting the company’s restrictions on whether or not to use them. employees can work for a competitor.

The approach stands in stark contrast to the opinion of regulators during the Obama administration, when Biden was vice president.

The number of merged hospitals quadrupled during President Barack Obama’s first term, leaving millions of patients with fewer options and higher prices for health care.

In 2011, regulators approved Comcast’s merger with NBCUniversal, which combines a powerful cable and Internet provider with a media giant, with terms that the company’s own executive vice president, David Cohen, dismissed as not being “particularly restrictive. “.

Only one of the three Democrats on the Federal Communications Commission opposed the deal, and Christine Varney, antitrust chief for the Justice Department, said the merger “will bring new and innovative products to market, giving consumers more programming options. “.

In 2016, Tom Vilsack, Obama’s agriculture secretary, who has taken that role back for Biden, downplayed the damage from farm mergers.

“I don’t think that just because a couple of the major players are going to merge or consider some other kind of arrangement that necessarily in the long term absolutely guarantees that farmers will have fewer options,” Vilsack said. saying in an interview with USA Today.

Biden has directed federal regulators to consider a tougher line against corporate consolidation in hospitals, health insurance, meat processing and technology, which could include reviewing past mergers that were approved.

And its antitrust regulators are trying to undo the mergers approved during the Obama years. The recent Federal Trade Commission lawsuit to split Facebook focuses on the company’s purchases of Instagram in 2012 and WhatsApp in 2014. The agency did not block the mergers, saying it did not see enough evidence of harm to consumers and competition. .

Those decisions have come back to haunt the FTC. The federal judge who dismissed his complaint on Facebook in June questioned the sea change and why the commission had waited so long to try to undo those deals.

The courts have become increasingly conservative in antitrust cases, adhering more firmly to the belief that higher prices are the strongest sign of competition violations.

Administration officials acknowledge that challenge and say they are analyzing the antitrust views of potential judicial candidates, hoping to tilt the courts toward a more comprehensive view of the government’s efforts to block mergers and break monopolies.

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