{"id":3926,"date":"2021-04-19T08:24:49","date_gmt":"2021-04-19T13:24:49","guid":{"rendered":"http:\/\/blogs.luc.edu\/compliance\/?p=3926"},"modified":"2021-04-19T08:24:49","modified_gmt":"2021-04-19T13:24:49","slug":"breaking-up-the-monopoly-on-antitrust","status":"publish","type":"post","link":"https:\/\/blogs.luc.edu\/compliance\/?p=3926","title":{"rendered":"Breaking Up the Monopoly on Antitrust"},"content":{"rendered":"

Patrick Gilsenan<\/em><\/span>
\nAssociate Editor<\/em><\/span>
\nLoyola University Chicago School of Law, Weekend JD 2023<\/em><\/span><\/p>\n

Antitrust laws regulate the concentration of economic power, the core of which was passed under the Sherman Act in 1890 and remain central to antitrust today.\u00a0 However, the laws are not applied today the way they were in their heyday of antitrust regulation \u2013 in the 1970s and 1980s, the Chicago School of Economics<\/a> took hold over the courts\u2019 antitrust jurisprudence, and since then the courts have been far more amiable to market concentration.\u00a0 The Chicago School\u2019s economic analysis of law argued that big firms were not a threat to growth and prosperity and have successfully argued for a hands-off approach to monopolies and mergers outside of a narrow focus on consumer welfare.\u00a0<\/span><\/p>\n

<\/span><\/p>\n

It has been within this environment of a hands-off approach that wealth in the United States has become extremely concentrated<\/a> and wage growth<\/a> for most workers has stagnated.\u00a0 Economist and former Secretary of Labor Robert Reich recently wrote<\/a> on the parallels between these circumstances and the circumstances under which the Sherman Act was passed in the first place.\u00a0 Similarly, economist Paul Krugman has echoed<\/a> those sentiments, lamenting over the collapse of antitrust enforcement in the Reagan years leading to a return of the robber barons.\u00a0 Those sentiments are not shared by all, however, as prominent antitrust scholars such as Daniel Crane<\/a> have argued that \u201cthe trust-busting prescription to cure wealth inequality is highly speculative, at best.\u00a0 Economy-wide, the wealth distribution effects of anticompetitive conduct and remediation through antitrust enforcement are too ambiguous, attenuated, and dynamically interactive to permit the sort of broad claims commonly advanced in the monopoly regressivity thesis.\u201d\u00a0<\/span><\/p>\n

The next era of antitrust<\/strong><\/span><\/p>\n

Despite push back from scholars like Crane, politicians like Elizabeth Warren<\/a> and small think tanks like the Open Markets Institute<\/a> have pushed Washington to crack down on this generation\u2019s monopolies for years \u2013 notably Big Tech monopolies such as Facebook, Amazon, and Google.\u00a0 And recently with the Biden Administration appointing high profile anti-monopolists to federal agencies such as Lina Khan<\/a> to the Federal Trade Commission, Amy Klobuchar introducing sweeping legislation<\/a> to strengthen antitrust enforcement, and the appearance of bipartisanship<\/a> in the face of Big Tech, it\u2019s clear that antitrust is having a political moment.<\/span><\/p>\n

In this political moment, scholars, journalists, lawyers, and organizers have come together to form a new school of thought – the New Brandeis Movement<\/a>. The group advocates for a return to stronger antitrust enforcement aimed at a more democratic distribution of power in the economy.\u00a0 Their ideas trace their intellectual roots to Justice Louis Brandeis, who as a Supreme Court Justice between 1916 and 1939 laid the groundwork for a great strengthening of antitrust enforcement in the United States and an antitrust philosophy that held sway into the 1970s.\u00a0 In addition to rejecting the Chicago School\u2019s contention that consumer welfare is the only thing that regulators should focus on, the New Brandeis Movement is concerned<\/a> with issues such as freedom of the press and privacy.<\/span><\/p>\n

Backlash to the backlash<\/strong><\/span><\/p>\n

The New Brandeis Movement certainly hasn\u2019t been welcomed in every corner of antitrust.\u00a0 Daniel Crane<\/a> has said that \u201cit\u2019s one thing to say that antitrust enforcement has gotten far too weak, it\u2019s a bridge much further to say we should go back to the populist goal of leveling playing fields and checking \u2018bigness.\u2019\u201d\u00a0 Bigness, in this case, refers to what Brandeis called \u201cthe curse of bigness\u201d in which he expressed hostility and concern about either business or the government accumulating too much power.\u00a0 Others on the right<\/a> have derided the movement as \u201chipster antitrust\u201d and accuse it of abandoning the consumer welfare standard in favor of a hodgepodge of social goals.\u00a0 Additionally, Crane<\/a> elsewhere has noted that this is a play we have seen before \u2013 Congress announces that the antitrust laws are too weak and that reforms are necessary, and then the courts take whatever reform is intended from new statutes and read them down to the benefit of industrial interests.\u00a0<\/span><\/p>\n

New Brandeis Movement proponents also face skepticism outside of antitrust of its ability to deliver on progressive change after decades of growing inequality and concentration.\u00a0 Matt Bruenig of People\u2019s Policy Project<\/a> has written about how even with more antitrust enforcement, the idea that the U.S. economy would be truly competitive is an illusion.\u00a0 Bruenig argues that because wealth is concentrated in the hands of so few, competitors often share common owners. If competitors are largely \u201cowned in significant part by the same investors, it hardly matters which one you choose: the money all goes to the same place.\u201d\u00a0 In reconciling that reality, Bruenig would argue that antitrust remedies are inadequate, and that policymakers must turn elsewhere.<\/span><\/p>\n

The concern around common ownership is heightened by the rise of index funds<\/a> as an important investment vehicle, with enforcers and academics taking notice.\u00a0 The three largest asset management firms, BlackRock, Vanguard, and State Street, known as the \u201cBig Three<\/a>,\u201d manage over $15 trillion in assets under management.\u00a0 The problem is pervasive – according to the American Economic Liberties Project<\/a>, the largest shareholder for 88% of companies on the S&P 500 are one of the Big Three.\u00a0 Economists<\/a> have found a relationship between prices and the stakes owned by the big funds as well. \u00a0As Bruenig noted, competition is more complicated when you boycott one airline in favor of another, just to learn that they\u2019re owned by the same investors.\u00a0<\/span><\/p>\n

Chicago\u2019s monopoly may be ending \u2013 for now<\/strong><\/span><\/p>\n

As Zephyr Teachout<\/a> told the House antitrust subcommittee last April, \u201cforty years of weak antimonopoly policy has led to such extreme concentration, that case-by-case efforts will not lead to decentralization quickly enough. We need new tools to enable break-ups.\u201d\u00a0 Regardless of what the future of antitrust looks like, Teachout is certainly right in that even with the restoration of antitrust enforcement in the United States, the economy is not going to change overnight.\u00a0 The New Brandeis Movement has made a splash in academic circles and inroads in Washington, but it hasn\u2019t won yet \u2013 it\u2019s only made the marketplace of ideas more competitive.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Antitrust laws regulate the concentration of economic power, the core of which was passed under the Sherman Act in 1890 and remain central to antitrust today.\u00a0 However, the laws are not applied today the way they were in their heyday of antitrust regulation \u2013 in the 1970s and 1980s, the Chicago School of Economics took hold over the courts\u2019 antitrust jurisprudence, and since then the courts have been far more amiable to market concentration.\u00a0 The Chicago School\u2019s economic analysis of law argued that big firms were not a threat to growth and prosperity and have successfully argued for a hands-off approach to monopolies and mergers outside of a narrow focus on consumer welfare.\u00a0<\/p>\n","protected":false},"author":65,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[193,389,1036,1125,1205,1690],"class_list":["post-3926","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-antitrust","tag-chicago-school-of-economics","tag-hipster-antitrust","tag-index-funds","tag-journal-of-regulatory-compliance","tag-regulation"],"_links":{"self":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/3926","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/users\/65"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3926"}],"version-history":[{"count":0,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=\/wp\/v2\/posts\/3926\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3926"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3926"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.luc.edu\/compliance\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3926"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}