We live in an era of big business that rivals or even surpasses the Gilded Age. Our president—our wealthiest ever—is a billionaire, as are his Secretaries of Commerce and Education. Meanwhile, Amazon and Apple both claimed valuations greater than $1 trillion in 2018. There is little doubt that big business is getting bigger and politics is getting richer. It should be no surprise, then, that the long-standing American tradition of antitrust action is reawakening in popular politics. Senators Sanders, Warren, and Klobuchar have each launched presidential campaigns with strong antitrust promises to reform the merger standard and break up tech giants, agricultural trusts, and, famously, the big banks. These political forays into antitrust are healthy. But the ideas being considered right now, while a step in the right direction, are missing some of the biggest issues that make concentrated big-business such a big concern. The resurgent debate around antitrust is still missing the opportunity for new laws and enforcement regimes to deal with monopsonies in labor markets and with the inappropriate political influence that comes with market concentration.
The first thing that comes to mind for people who know antitrust is likely the idea of busting up corporations that have gotten too big. Breaking up big companies, Teddy Roosevelt-style, certainly has its place in the debate. It offers a quick, blunt corrective to many of the problems of big-company abuse of power. One example that comes to mind is Facebook giving away the private user data of its 2+ billion users. A company at Facebook’s scale faces little competitive risk even when it lets Netflix read people’s private messages or non-consensually sells its users’ contact information to Amazon. These most recent rounds of privacy violations are nothing new for Facebook, which settled a similar issue of sharing private user data without user consent back in 2012. We all basically know the social media market isn’t a competitive market anymore. Facebook sits as an untouchable hegemon in the market and those who start to reach the scale where they might displace some of Facebook’s users, maybe for photosharing (Instagram) or private messaging (WhatsApp), are bought up before they are a threat.
So, breaking up companies like this can be a needed step backwards to rebalance markets. Trust-busting can remind companies, many of them now supranational economic forces of nature, that the US government is still the big dog in the park. It can head off the injustice of another bail-out for bad actors in an industry that has become “too-big-to-fail.” But for all its appeal, it also sets the government up for a game of whack-a-mole down the road, always chasing after the next company that’s gotten too big.
Proposals like Klobuchar’s change to the Merger review standards are more nuanced than those of her bombastic progressive counterparts. She proposes lowering the bar for what counts as illegal mergers from a “substantial” lessening in competition to a “material” one. She also wants to include monopsony power, the ability to lower prices as the market’s only buyer, as a potential threat in a merger. Monopsony power is especially important to consider in labor markets. If an employer is the only “buyer” of a certain type of labor, they have the power to deflate wages well below their proper market value. This, as you might expect, is bad for workers and great for a big company’s profit margins. Proposals like Klobuchar’s are certainly useful tweaks, but they may not be nearly enough. There are two major categories of antitrust thought that have been lagging far behind: already existing labor monopsony, and political capture by concentrated industry.
Dealing with labor monopsony should only require a fusion of the conversations of Bernie-style “break them up” with Klobuchar’s subtle merger standard realignment. In 2007, the Supreme Court in Weyerhaeuser made the wise decision to include monopsony in the definition of predatory pricing practices forbidden by the Sherman Act. Moreover, the courts have condemned a number of explicit uses of monopsony power wherein companies agreed not to hire each other’s employees, agreed to share wage data among subcontractors, and put non-compete clauses in low wage worker contracts. These are all more straightforward cases falling under § 1 of the Sherman Act.
However, there has yet to be any substantial pronouncement on the more general problem of flagging wages in concentrated markets a la Sherman Act § 2’s more general prohibition of monopolization. Recent studies suggest many American labor markets are highly concentrated and that such concentration is correlated with lower wages. So, while it makes sense to include a stronger merger prohibition against consolidation in labor markets, as Klobuchar’s proposal might, it is also important to address the concentration that already exists today. The “break them up” mentality should focus for a moment on labor markets that are currently concentrated, for example Walmart or Amazon’s logistics center markets, or Uber and Lyft’s driver markets. Beyond the overtly contractual practices of non-competes, and no-poach agreements, it is worthwhile to push a political dialogue on “monopsonization.” The standard here is still somewhat restrictive, requiring some showing of “willful acquisition or maintenance” of monopoly power, but it is ripe for new legislation, which re-expands § 2 of Sherman Act to any monopolist pricing goods too high, or monopsonist pricing labor too low.
Beyond this, there is a coincidence that is hard to ignore: that American industry has been getting more concentrated and that money has been occupying a growing place in American politics. The tech giants, for example, have been pouring more and more money every year into lobbying. A good bit of this is likely because recent Republican jurisprudence has declared money to be speech. But it’s hard to believe that is has nothing at all to do with the rising concentration of industry and the juggernaut rise of mega-companies with revenue streams larger than some countries’ GDP. Antitrust case law has a carveout, from the Noerr-Pennington line of cases that says political advocacy by a monopoly is immune from any antitrust scrutiny. Imagine a company is a monopoly, and is using its monopoly profits to lobby get special treatment from the government. Imagine a company is a monopsonist, paying workers below market rates, and using its savings to lobby government to lower minimum wages or fight protective labor laws. It takes very little to imagine that these actions constitute anti-competitive maintenance of market power: the exact issue § 2 of the Sherman Act is intended to address. There are a host of ways that political influence is enmeshed in antitrust concerns. This is only made more true as the Supreme Court grants increasing freedom to corporations to act as political citizens.
If antitrust is going to have its day in the sun now, it is worth examining all these wider political concerns and linkages. The presidential candidates, the congressional candidates, the talking heads, would all do well to stop imagining antitrust as only a wonky sideshow for lawyers, judges, and regulators to puzzle over while the real action happens in areas like healthcare and immigration. Antitrust has the potential to touch to the heart of some of the great debates of our era, from wealth inequality, to labor rights, to money in politics. These conversations should be leaned into, not relegated to technocrats. Antitrust is, at its core, a political decision to value competition and deconcentration. If America is going to preserve that core, our political conversation shouldn’t shy away from these debates.