Anti-Monopoly

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.

Below you will find some of the project’s writing and research on anti-monopoly policy. For a selection of quotes and interviews on the topic, please visit this page.

August 10, 2020

Jeff Hauser Max Moran Andrea Beaty Miranda Litwak

Blog Post

Anti-MonopolyEthics in GovernmentRevolving DoorTech

The Revolving Door Project on Fighting Monopoly Power

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.

July 29, 2020 | Talking Points Memo

Andrea Beaty

Op-Ed

Anti-MonopolyDepartment of JusticeFTCTech

Today’s Congressional Hearing Will Test Big Tech’s Simplest Algorithm: If An Ex-Regulator, Then Hire

The tech companies set to testify before the House today knew for years that a reckoning was in the works. They’ve been building up their defenses, and a key component of that defense is the antitrust enforcement officials who take a trip through the revolving door to the benefit of corporate clients.

June 19, 2020 | Washington Monthly

Andrea Beaty

Op-Ed

2020 Election/TransitionAnti-MonopolyFTC

How Biden Can Prove He’s Serious About Busting Corporate Monopolies

At the beginning of the coronavirus outbreak, Americans quickly learned just how unprepared the country was for a pandemic. One of the most alarming revelations was that the U.S. had nowhere near the number of ventilators and other life-saving medical equipment it needed to fight the virus. That’s largely because of a surprising culprit: the Federal Trade Commission (FTC).

June 04, 2020

Andrea Beaty

Blog Post

Anti-MonopolyBigLawFTC

Another BigLaw Alum Ascends at the FTC

In late May, the Federal Trade Commission promoted Patty McDermott to Deputy Assistant Director of the Anticompetitive Practices (ACP) division. The ACP division’s work “involves not only stopping illegal conduct but also shaping the law,” making McDermott’s new position one of interest to corporations overseen by the FTC, beyond run-of-the-mill enforcement.

May 20, 2020 | Talking Points Memo Cafe

Miranda Litwak

Op-Ed

Anti-Monopoly

We Can’t Let Him Get Away With It: Trump Chose Wall Street Over Main Street

In an advertisement released earlier this month, the Lincoln Project, an anti-Trump PAC, claimed that the Trump administration bailed out big banks via its coronavirus stimulus legislation (the CARES Act), leaving Main Street to suffer the effects of the pandemic. “Trump bailed out Wall Street, not Main Street,” a grim voice-over tells the viewer. President Donald Trump quickly took to Twitter hurling insults at the leaders of the PAC. Soon after, Politifact reported the advertisement’s claim was false, and Facebook subsequently labeled the advertisement “partially false.” But the Lincoln Project’s statement is true by any measure: The Trump administration played a central role in crafting the CARES Act, a piece of legislation that has bailed out Wall Street and not Main Street. The designers of the CARES Act must be held responsible for their actions.

May 14, 2020

Andrea Beaty

Blog Post

Anti-Monopoly

Bezos Conveniently Ignores Congress’s Call to the Hot Seat

In late April, Amazon caught heat from members of the House Judiciary Committee for seemingly lying about the company’s use of data on third party vendors selling in Amazon’s marketplace. Contradicting Amazon in-house counsel (and former DOJ Antitrust official) Nate Sutton’s sworn testimony on the subject in July of 2019, the Wall Street Journal broke the story on April 23rd that Amazon is using proprietary information generated for third-party sellers on the platform to develop its house-brand products.

May 11, 2020

Andrea Beaty Miranda Litwak

Report

Anti-MonopolyCoronavirusForeign Policy

International Antitrust Response to Coronavirus

The Pandemic Anti-Monopoly Act would preemptively stop harmful mergers that not only affect American consumers, but economies all over the world that rely on the same global supply chains. Undoubtedly, companies looking to acquire struggling businesses during the pandemic will try to take advantage of the “failing firm” argument to justify acquisitions. But what actions have lawmakers and antitrust enforcement officials in other countries undertaken to prevent predatory mergers while businesses struggle?

May 07, 2020

Miranda Litwak

Blog Post

Anti-MonopolyCoronavirus

Why is Congress Ignoring EIDLs?

Over the past several weeks, the SBA has been criticized for its administration and oversight of its Paycheck Protection Program (PPP), which offers forgivable loans designed to be spent on payroll expenses. But little attention has been paid to the SBA’s second COVID-response loan effort: the Economic Injury Disaster Loan (EIDL) program. EIDLs provide small businesses affected by disasters with emergency loans. Over the past few decades, the SBA has provided EIDLs after major disasters such as Hurricane Katrina and 9/11.

May 06, 2020

Jeff Hauser

Press Release

Anti-MonopolyBigLawFTCRevolving Door

RDP Bemoans Big Pharma Merger Facilitated by Revolving Door BigLaw Lawyers

Revolving Door Project Executive Director Jeff Hauser said, “This anti-competitive merger further entrenches Big Pharma at the expense of all Americans. Big Pharma’s playbook here is no less dangerous for having become rote: They hire well-connected revolving door FTC alumni to secure approval for mergers that undermine the public interest. To restore the public interest at the FTC, we will need to end the FTC-to-BigLaw pipeline that has helped bring about an economy that works well for rich investors rather than American consumers or workers.”

May 01, 2020

Miranda Litwak

Report

Anti-MonopolyIndependent Agencies

The SBA's Office of Advocacy: What is it and Why is it Relevant?

The Small Business Administration’s Office of Advocacy (“Advocacy”) is a little known corner of the executive branch that wields a surprising amount of power, particularly in the regulatory process. This research memo explores the powers Advocacy possesses, how the office gained this power, and the potential Advocacy may have in a progressive administration to be a strong anti-consolidation voice in the regulatory process.