Biden’s Antitrust Team Signals a Big Swing at Corporate Titans

Biden’s Antitrust Team Signals a Big Swing at Corporate Titans
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Biden’s Antitrust Team Signals a Big Swing at Corporate Titans

Biden’s Antitrust Team Signals a Big Swing at Corporate Titans

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

Mr Biden’s decision last week to appoint Jonathan Kanter as the head of the Department of Justice’s antitrust division is the latest sign of his willingness to clash with US companies to promote more competition in the tech industry and in the the economy. Mr. Kanter has spent years as a lawyer battling giants like Facebook and Google on behalf of rival companies.

If confirmed by the Senate, he will join Lina Khan, who has helped reframe the academic debate on antitrust and now heads the Federal Trade Commission, and Tim Wu, a longtime supporter of separating Facebook and d other big business who is now the president’s special assistant for technology and competition policy.

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

They also stress that Mr Biden is prepared to use the power of his office and not wait for congressional action to harden, an approach that is both quicker and potentially riskier. This month, it issued an executive order tasked with 72 initiatives designed to fuel competition in various industries, increase merger control and curb the widespread practice of forcing workers to sign non-compete agreements.

Outside groups and ideological allies in the administration warn that if Mr. Biden is truly hoping to follow in the footsteps of his antitrust idols, Presidents Theodore Roosevelt and Franklin D. Roosevelt, he will have to push for sweeping legislation to grant new powers to federal regulators. , especially in the technology sector. Basic federal antitrust laws, which were written over a century ago, did not contemplate the kind of commerce that exists today, where large corporations can offer customers low prices but at the expense of competition. .

The administration has quietly backed current legislation in the House, but has yet to seek to lead a Mr Biden-style congressional antitrust push on infrastructure, child care and other items. of its $ 4 trillion economic program.

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This could prove problematic if judges continue to overturn actions by the Department of Justice, the FTC or other agencies.

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

Mr Biden’s antitrust choices argued that Facebook, Google and Amazon have monopoly power and have used their dominant positions in social media, search and online retail to crush competitors, leaving consumers less options, although this does not result in higher costs. .

Businesses and some economists disagree. Facebook cites TikTok, Snap, and Twitter as examples of competitors, and Amazon says it only owns 5% of all retail sales in the United States, despite eMarketer research study showing 40% of all retail sales. online occur on its platform.

The president and his staff have made his adoption of a “trustbuster” mentality a crucial step towards rebalancing the economy not only to lower prices, but also to fuel more competition and create well-paying jobs.

“I always thought that the free market system was not just that there was competition between companies, but guess what: companies should be competing for workers,” Mr Biden told an interview. CNN hearing in Ohio on Wednesday, promoting his executive order. “Guess what – maybe they’ll pay more money.”

White House officials argue that placing tenacious regulators in powerful positions can enable them to be successful in antitrust efforts in a way that President Donald J. Trump, who also issued an executive order on competition and talked about breaking technology and hospital mergers, did it. not.

“We are optimistic,” said Diana Moss, president of the American Antitrust Institute and a proponent of tougher competition. “But when the rubber meets the road, they will have to juggle an aggressive agenda with the realities of the courts, Congress and outside pressures.”

Some economists warn that those named by Mr Biden could go beyond efforts to break the concentration that really stifles competition and hurts consumers and in industries like restaurants or grocery stores. There, they say, the entry of national players into local markets has, in many cases, given clients more options and created more jobs.

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“I’m more concerned with the rhetoric,” said Chang-Tai Hsieh, an economist at the University of Chicago whose research found that a certain concentration of companies in recent years has produced economy-boosting innovation. “They look at what they see in the tech industry – and the tech industry is different. And they extrapolate from the tech industry to all other industries.

Corporate America is already fighting Mr. Biden’s efforts. Google, Facebook and Amazon have filled their legal teams with antitrust experts, hiring veteran government antitrust officials in recent years. Facebook and Amazon have asked for Ms. Khan’s recusal of antitrust cases related to their companies. They say Ms Khan, who worked on a House antitrust investigation into digital platforms, comes with prejudice against their companies. Critics of Mr. Kanter, a private antitrust lawyer, point to his past portrayal of Microsoft and News Corp as conflicts of interest as the Justice Department wears its legal battle against Google.

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

Thomas Philippon, an economist at New York University, concluded in 2019 that increasing market concentration has hurt the US economy and cost US $ 5,000 per year. Administration officials repeatedly cite this statistic to support Mr Biden’s recent executive order.

Suppressing 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 aide to Ms. Warren, said in an interview.

Mr Ramamurti cited the potential benefits of not only dismantling businesses, but also helping consumers have more and less expensive choices for checking accounts, allowing the sale of hearing aids without a prescription and limiting restrictions. of the company as to whether employees can work for a competitor.

The approach contrasts sharply with the view of regulators under the Obama administration, when Mr. Biden was vice president.

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

In 2011, regulators approved Comcast’s merger with NBCUniversal – combining a powerful cable and internet provider with a media giant – with terms that the company’s executive vice president David Cohen dismissed as n ‘not being “particularly restrictive”.

Only one of the three Democrats in the Federal Communications Commission opposed the deal, and Christine Varney, head of antitrust at the Department of Justice, said the merger “would bring new and innovative products to market, offering consumers more programming choices ”.

In 2016, Tom Vilsack, Secretary of Agriculture to Mr. Obama, who took over this role for Mr. Biden, played down the harms of farm mergers.

“I don’t think so just because a few of the major players are potentially going to merge or consider some other kind of arrangement which, necessarily in the long term, absolutely guarantees that farmers will have less choice,” Vilsack said in a statement. interview. with USA Today.

Mr Biden called on federal regulators to consider a tougher line against consolidating businesses in hospitals, health insurance, meat processing and technology, which could include reviewing past mergers that were approved.

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

These decisions came back to haunt the FTC The federal judge who dismissed his complaint on Facebook in June questioned the about-face and why the commission had waited so long to try to unwind these agreements.

Courts have become increasingly conservative in antitrust cases, embracing more the belief that higher prices are the strongest sign of competition violations.

Administration officials recognize this challenge and say they are scrutinizing the antitrust views of potential judicial candidates, hoping to tip the courts towards a more sympathetic view of the government’s efforts to block mergers and break monopolies.

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