This article was originally published on August 10, 2020 and is being updated continuously
Congress and the antitrust enforcement agencies have given unprecedented attention to the monopoly issues surrounding Big Tech in recent months. The scrutiny is one step toward rebalancing our increasingly concentrated economy, especially in the time of COVID-19, when small businesses are struggling to survive and corporations are further entrenching their power. But the problem of economic concentration extends far beyond Big Tech. It defines almost every corner of our economy. With the upcoming election and a potential shift in power, Joe Biden has an opportunity to reduce economic consolidation across the board, using executive branch powers including, but not limited to, reforming the antitrust enforcement agencies.
The House Judiciary Subcommittee on Antitrust’s explosive hearing with the CEOs of Facebook, Apple, Google and (for the first time) Amazon was an incredible example of Congress holding these modern-day robber barons accountable. As the Revolving Door Project’s Eleanor Eagan wrote in the American Prospect, the hearing could be replicated for many other actors, like private equity, which similarly drive economic concentration. Nonetheless, in this context, the hearing drew out the antitrust enforcement agencies’ complicity in our current concentrated economy. As our Max Moran wrote in The New Republic, “throughout the hearing, the figures who really came off looking inept were the federal antitrust enforcement agencies—the Federal Trade Commission (FTC) and the Department of Justice (DOJ) antitrust division.”
This ineptitude might not surprise those of us who pay attention to who actually runs the agencies. As the Revolving Door Project continues to investigate, there is a crisis of incentives at the FTC and the Department of Justice Antitrust Division (ATR), driven by the well-trodden path between government service and corporate boardrooms. We found that career-level officials leave the FTC for private law firms with alarming regularity, and the economists that advise the government on merger cases receive similar opportunities at economic consulting firms. Some officials just skip the middleman and become in-house economists or counsel at large corporations like Facebook and Amazon (in fact, as our Andrea Beaty wrote in Talking Points Memo, Big Tech poached many such officials in the run-up to the antitrust subcommittee hearing). In all cases, these former government officials end up working for firms on the other side of the courtroom from the antitrust enforcement agencies. They bring their insider knowledge of government tactics to their private employers and clients, who often try to avoid government oversight altogether.
Officials in leadership positions at the FTC and ATR are just as influenced by the revolving-door pattern as their career colleagues, and have even more power over merger case outcomes. This year, the Revolving Door Project began tracking merger cases investigated by the FTC and ATR. We’ve found cases riddled with conflicts of interest from both sides of the aisle, in many sectors of the economy, including the regular approval of pharmaceutical mega-mergers that drive up drug costs for Americans. Merger cases are often settled with consent agreements that require the merging parties to divest specific assets, but ultimately still allow consolidation across entire industries. We plan to share our research tracking all second-request cases with the public in hopes of drawing further scrutiny to the former leadership and career officials who switch their loyalty from public interest to private.
Some merger cases show their full effect well after the fact — take for example, the FTC-approved Covidien-Newport acquisition that forestalled the country’s planned stockpile of ventilators, a decision that had deadly consequences during the coronavirus pandemic. As Andrea Beaty wrote in the American Prospect, all five commissioners and the Bureau of Competition head at the time of the decision went on to work at private law firms after leaving the FTC. On the other side of the aisle, pharma giant Covidien’s counsel included a former FTC lawyer who also helped get approval for Google’s acquisition of DoubleClick. And these are the respected experts, the high-profile appointees — the antitrust experts that a future Biden administration might rely on to enact ostensibly progressive reforms.
As the Revolving Door Project noted in Washington Monthly, the world of liberal antitrust experts has been hard at work brainstorming future anti-monopoly policies under a Biden administration. But most calls for change don’t include closing the revolving door between the agencies and corporate entities. Perhaps the omission is tied to how respected officials and academics frequently benefit financially from consultancies at economics firms that sell expert testimony to the government and merging parties alike. The highest-profile example is Fiona Scott Morton, a Yale professor, former ATR chief economist, and consultant for Apple and Amazon. She revealed her work for the two tech giants (as well as a pharmaceutical giant, a medical technology company, and a health insurance organization) while promoting her recent papers on the government antitrust case against Facebook and Google. While her clear conflict of interest shocked onlookers, the many former government officials working for various economic consulting firms suggest the problem is much larger than just one professor. On the whole, our research details how conflicts of interests at the FTC and ATR are a systemic obstacle to real anti-monopoly action.
In other words, there is no viable path to enduring and effective antitrust enforcement without reform to both the rules and norms around who enforces the law on behalf of the public. Reining in unfair competition by corporate America shouldn’t be a stint to turbocharge a private sector career but rather a long term calling — a calling which should be accorded appropriate prestige and compensation.
Finally, the FTC and ATR are not the only agencies that can work to dismantle monopoly power. Agencies like the Department of Agriculture, Department of Defense, Federal Communications Commission and more also have cross-cutting responsibilities that can effectively reduce economic concentration. As our Miranda Litwak wrote for In These Times, the Small Business Association was established by Congress to provide “opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons…” And yet, business owners of color face the same disadvantages they did when the SBA was founded, and are in fact in increasingly precarious situations due to the pandemic with little support from the SBA. Ensuring the survival of small businesses, particularly those owned by members of marginalized communities, is vital to dismantling monopoly power.
To truly tap into the powers that could reduce economic consolidation on the whole, a future Biden administration would need a central force to install anti-monopoly thinking across the executive branch. The National Economic Council functions as a clearinghouse for all policies and programs consistent with the larger domestic economic goals of an administration. This would make it a fitting forum to both monitor and spur anti-monopoly work. Taking down monopolies will require more than policy reform and closing the revolving door; it will take a concerted effort from all government agencies which oversee the actors seeking to consolidate the economy.
The Project’s anti-monopoly work and interviews:
Eleanor Eagan | The American Prospect | 8/5/2020
Max Moran | New Republic | 7/31/2020
Andrea Beaty | Talking Points Memo | 7/29/2020
Jeff Hauser | The Revolving Door Project | 7/28/2020
Max Moran | Sludge | 7/21/2020
Jeff Hauser, Max Moran, and Andrea Beaty | Washington Monthly | 7/18/2020
Miranda Litwak | In These Times | 7/8/2020
Andrea Beaty | Washington Monthly | 6/19/2020
Andrea Beaty | The Revolving Door Project | 6/04/2020
Andrea Beaty | The Revolving Door Project | 5/28/2020
Andrea Beaty | The Revolving Door Project | 5/14/2020 Updated: 6/19/2020
Miranda Litwak | Talking Points Memo | 5/20/2020
Miranda Litwak | The Revolving Door Project | 5/12/2020
Andrea Beaty and Miranda Litwak | The Revolving Door Project | 5/11/2020
Miranda Litwak | The Revolving Door Project | 5/7/2020
Max Moran | The American Prospect | 5/6/2020
Jeff Hauser | The Revolving Door Project | 5/06/2020
Miranda Litwak | The Revolving Door Project | 5/1/2020
Andrea Beaty | The Revolving Door Project | 4/29/2020
Andrea Beaty | The Revolving Door Project | 4/14/2020
Max Moran | Washington Monthly | 4/11/2020
Andrea Beaty | The American Prospect | 4/02/2020
Max Moran | The American Prospect | 12/4/2019
Max Moran | The American Prospect | 10/23/2019
Max Moran | The Revolving Door Project | 9/11/2019
Max Moran | The American Prospect | 9/10/2019
Max Moran | The Revolving Door Project | 9/5/2019
Harper Neidig | The Hill | 8/28/2019
Max Moran | The Revolving Door Project | 7/22/2019
Eleanor Eagan | The Revolving Door Project | 5/13/2019
Jeff Hauser | Tuscaloosa News | 4/1/2019
Jeff Hauser | Revolving Door Project | 2/25/2019
Jeff Hauser | Buzzflash | 5/22/2018