Center for American Progress

RELEASE: Citing Rising Inequality and Increasing Market Domination, New CAP Report Calls for Revitalization of Underutilized Antitrust Authority
Press Release

RELEASE: Citing Rising Inequality and Increasing Market Domination, New CAP Report Calls for Revitalization of Underutilized Antitrust Authority

Washington, D.C. — Rising income inequality, stagnant wages, and increasing market power in parts of the U.S. economy require a renewed focus on antitrust enforcement, a new report from the Center for American Progress says, and revitalizing antitrust enforcement will help strengthen competition and opportunity in important parts of the economy. In order to combat market concentration and reduced competition—which has a pernicious effect on consumers, workers, small businesses, and the political system—CAP’s report offers a series of recommendations specifically targeted at reinvigorating antitrust enforcement.

“We’ve long known in theory that market concentration is bad news for consumers, but data now indicate that reduced competition is a serious problem in our economy. Strikingly, we are also seeing that concentrated economic power hampers innovation, holds down wages for workers, keeps small and medium-sized businesses from the opportunities they need to succeed, and has a corrosive influence on public policy. Unfortunately, antitrust policy and enforcement mechanisms have not kept pace with the growing challenge,” said Marc Jarsulic, Vice President for Economic Policy at the Center for American Progress. “Following up on the Obama administration’s recent review of competition policy, there are immediate, practical steps that federal antitrust authorities can take to revitalize competition in the economy, reduce inequality, and protect consumers, workers, small businesses, and our political process.”

CAP’s report lays out the growing evidence that sectors of the U.S. economy have become less competitive. This evidence includes the long-run divergence in profit rates, the divorce between profitability and investment, the increasing concentration in many industries, and the slowing rate of entry of new firms. Increasing market power has the effect of increased prices, reduced innovation, barriers to entry for new firms, stagnant wages, and lesser-quality goods. It also has a significantly corrosive influence on the U.S. political system.

The CAP report sketches out how antitrust law has become more difficult to enforce, and how antitrust agencies have—until recently—been less aggressive in using the tools they have available to combat overly concentrated market power. These changes have produced measurable harm for ordinary households and have potentially significant implications for the longer-term course of innovation and productivity growth in the U.S. economy. To help reverse these trends, CAP’s report outlines a set of reforms designed to reinvigorate competition policy and increase the real incomes of ordinary American households. These recommendations, none of which require new statutory authority, include:

  • Changing the strategy for merger enforcement: Establish enforceable presumptions against concentration and shift the burden of proof in favor of competition; end the safe harbor for mergers that fall below the guidelines upper threshold; and require verifiable efficiency arguments.
  • Revising the U.S. Department of Justice and Federal Trade Commission guidelines for vertical agreements: A growing body of evidence shows that vertical integration—along supply or production chains—has the capacity to produce anticompetitive exclusion, collusion, and other competitive harms. The Justice Department’s Vertical Merger Guidelines, which has not been updated since 1984, should be revised to reflect up-to-date antitrust analysis, and then vigorously applied.
  • Increasing the focus on anticompetitive conduct by dominant firms: Between 2009 and 2014, the DOJ brought only one unilateral conduct case. While it is possible that the complexity of these cases, together with the hurdles erected by court precedents that favor doing nothing, have created significant obstacles, there are ways around these obstacles, for instance through Section 5 of the Federal Trade Commission Act, or through the Justice Department’s ability to set precedent.
  • Making antitrust enforcement more transparent: Establish a network of experts, in order to provide more eyes on consolidation and anticompetitive behavior; require companies to submit post-merger data for a three- to four-year period; and disclose more data on agency actions.
  • Increase executive branch focus on competition policy: Create executive branch competition advocates; appoint a deputy director for competition policy at the National Economic Council; pick strong antitrust leaders at the FTC and DOJ; and increase antitrust enforcement staffing at those agencies.

Click here to read “Reviving Antitrust: Why Our Economy Needs a Progressive Competition Policy” by Marc Jarsulic, Ethan Gurwitz, Kate Bahn, and Andy Green.

For more information or to speak with an expert, contact Allison Preiss at apreiss@americanprogress.org or 202.478.6331.