Washington, D.C. — A new analysis from the Center for American Progress lays out the reasons that the U.S. Securities and Exchange Commission (SEC) should integrate antitrust disclosures into its environmental, social, and governance (ESG) regulatory framework.
The analysis argues that requiring firms to disclose markers of market power would aid efforts by socially conscious investors to identify firms engaging in anti-competitive behavior, while helping other investors to escape economic shocks as antitrust enforcement becomes more vigorous. Including these antitrust markers would also make it easier for legislators, regulators, and antitrust agencies to identify firms and sectors where competition is weak, improving the overall functioning of capital markets.
CAP identifies several firm-level statistical markers that could be disclosed with minimal effort on the part of issuers and that, if taken in aggregate, would make analysis of market power easier and facilitate routine consideration of competition issues. These include:
- Ratio of market value to replacement cost of capital
- Profit margin
- Ratio of net investment to profits
- Labor share in firm value added
“Requiring antitrust disclosures is well within the mission and legal authority of the SEC,” said Marc Jarsulic, a senior fellow and chief economist at CAP. “Requiring companies to disclose markers of their anti-competitive behavior would not only be a boon to investors, but examining them in the aggregate would also allow policymakers and the public to better understand the pervasiveness of anti-competitive behavior in the United States.”
Read the issue brief: “Integrating Antitrust Laws Into Environmental, Social, and Governance Disclosures” by Marc Jarsulic
For more information or to speak to an expert, contact Julia Cusick at [email protected].