“Repairing our anti-merger regime and the economy-wide monopoly power that has resulted from unchecked mergers requires action at all three levels of our enforcement structure,” Ron Knox writes in the February edition of Competition Policy International’s Antitrust Chronicle.
In the article, Ron details how, for the past half-century, judges, policymakers, and the public have been convinced by corporate interests that bigger is better for our economy. This misguided ideology has led our antitrust agencies to permit wave after wave of corporate mergers in every sector of our economy.
Because of a series of unchallenged mergers, we’ve gone from 10 nationwide airlines in 2000 to just four today – and only three with a significant number of international routes. Mergers have allowed AT&T to reclaim the companies it spun off when its monopoly was broken up in the 1980s and is now an even larger communications conglomerate. Supermarkets have gone through multiple waves of mergers; in 2019, just four companies accounted for an estimated two-thirds of all grocery sales.
Today, it’s clear that we must take every opportunity to enforce and strengthen our anti-merger policy and ideology. The Celler-Kevauver Act of 1950 was designed to check anticompetitive mergers in their incipiency, before mergers could lead to monopoly. During this period, the Supreme Court was committed to upholding Congress’ intent by blocking mergers of all types, including big horizontal ones, smaller buyouts, vertical deals, and conglomerate mergers, to preserve competition and prevent concentrated markets. The court was able to see merger cases not as having isolated results, but as producing a cascade effect that would lead to a series of unwanted economic and political consequences.
All this changed in the 1970s and early 1980s.
Legal scholars and others aligned with corporate power forcefully shifted federal merger policy against the democratic will of Congress in passing the anti-merger laws by convincing policy makers, including President Ronald Reagan, that antitrust enforcement should only be used against the very largest horizontal mergers.
This ideological shift in the late 1970s has led judges and policymakers to stray from Congress’ intent in passing the anti-merger laws. But today, the tide is changing. In 2023, the Federal Trade Commission and the Department of Justice will issue new guidelines that will govern their approach to analyzing and challenging corporate mergers. Ron suggests that the guidelines should “introduce a host of policies that, in total, serve to foster decentralized markets, including bright line prohibitions on some mergers and significant limitations on other dealmaking based on industry structure and trends toward consolidation.” In addition, Congress should take actions that support the agencies and promote anti-merger enforcement that makes the intent of the law clear for courts, companies, and enforcers. Lastly, Ron argues that educating federal judges on the history of the law and related important Supreme Court cases would help restore the intent and efficacy of the nations anti-monopoly laws.
Ron concludes, “none of these measures are far-fetched; many are already in progress, or have been credibly proposed by lawmakers or agency officials. What is needed, then, is action.”
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