For Immediate Release: June 28, 2022
Media Contact: Reggie Rucker | [email protected] | 202.827.1210 x255
Forthcoming Revisions to the Merger Guidelines Mark a Pivotal Shift in Antitrust, New ILSR Report Details
The new guidelines will likely make it harder for large corporations to amass power by buying other companies and will over time shape how judges understand and apply the antitrust laws in their rulings.
WASHINGTON, DC – Many department rules changes nibble around the edges of policy and are mere technicalities of minor consequence. But when the Federal Trade Commission and Department of Justice announced plans to revise their merger guidelines earlier this year, it marked a dramatic shift from business as usual. Their announcements set the stage for a new era in antitrust regulation where mergers are not seen as inherent benefits to the market to be encouraged but rather as inherent threats of which to be skeptical.
In “Rolling Back Corporate Concentration: How New Federal Antimerger Guidelines Can Restore Competition and Build Local Power,” the Institute for Local Self-Reliance (ILSR) provides context illuminating why the departments’ new stance on merger activity is both enormously consequential for today’s economy and also entirely consistent with what Congress intended when creating antimerger law in the mid-20th century.
To understand what these new antimerger guidelines could mean in practice, we need to look no further than the host of debilitating problems caused by consolidation in today’s inflation-riddled economy. As authors Stacy Mitchell and Ron Knox highlight in the report:
“Mergers in the food industry, for example, have allowed dominant meatpackers and other processors to slash the incomes of farmers and food workers while raising grocery prices. Mergers among manufacturers of everything from appliances to beer bottles have led to the shuttering of plants, costing communities thousands of jobs. Hospital mergers have sent health care costs soaring, while dozens of rural communities have lost their hospitals altogether, as big hospital chains bought and then closed small facilities. Meanwhile, Amazon, Facebook, and Google have used acquisitions to thwart potential competition and lock in their dominance, to the detriment of small businesses, local newspapers, and others seeking to communicate or sell products online.”
But it is not just the economy that is threatened by the unfettered merger activity in recent decades. Our very democracy is jeopardized, as Mitchell and Knox detail in the four-part report.
In part one, Mitchell and Knox review the text and legislative history of the Celler-Kefauver Antimerger Act, enacted in 1950 with the aim of not only blocking mergers but de-concentrating industries over time. As Mitchell and Knox note, lawmakers were primarily motivated by the fear that monopoly power destabilized democracy, giving rise to fascism in pre-WWII Germany and totalitarianism around the globe.
Part two examines the radical deviation of federal agencies’ guidelines and enforcement practices from the law over the last 40 years and how this has fostered the very concentration that legislators who voted for the Celler-Kefauver Act were guarding against.
Part three documents the consequences of this approach, focusing on how failed merger policies have sapped the economy of its resilience, led to the decline of independent businesses, transferred wealth to the few, undermined community self-determination, and destabilized democracy.
Part four offers ten principles and provisions that should be embodied in the new guidelines, arguing for the long-term success of the new enforcement policy to be measured by the degree to which concentrated markets become more competitive and decentralized over time.
On the new report, ILSR co-director and report co-author Stacy Mitchell said, “New antimerger guidelines will do much more than simply stop America’s monopoly problem from getting worse. Strong merger enforcement will create a fairer playing field for small businesses and open the way for more startups to gain a toehold, leading to the de-concentration of markets over time.”
ILSR senior researcher and report co-author Ron Knox added, “Had this shift in enforcement policy come about years ago, Americans wouldn’t be contending with a host of debilitating problems caused by consolidation. As they’ve consolidated power, dominant corporations have shuttered facilities, cut jobs and wages, and curtailed research and investment. This has left many sectors precarious and vulnerable, and contributed to the recent breakdown in our supply chains.”
View the report here.
About the Institute for Local Self Reliance
The Institute for Local Self-Reliance has a vision of thriving, equitable communities. We are a national research and advocacy organization that partners with allies across the country to build an American economy driven by local priorities and accountable to people and the planet.