Getty Images | Alex Wong
Senate and House Democratic leaders today proposed new antitrust laws that could prevent many of the biggest mergers and break up monopolies in broadband and other industries.
“Right now our antitrust laws are designed to allow huge corporations to merge, padding the pockets of investors but sending costs skyrocketing for everything from cable bills and airline tickets to food and health care,” US Senate Minority Leader Chuck Schumer (D-NY) wrote in a New York Times opinion piece. “We are going to fight to allow regulators to break up big companies if they’re hurting consumers and to make it harder for companies to merge if it reduces competition.”
The “Better Deal” unveiled by Schumer and House Democratic Leader Nancy Pelosi (D-Calif.) was described in several documents that can be found in an Axios story. The plan for “cracking down on corporate monopolies” lists five industries that Democrats say are in particular need of change, specifically airlines, cable and telecom, the beer industry, food, and eyeglasses. The Democrats’ plan for lowering the cost of prescription drugs is detailed in a separate document.
No meaningful broadband choice
In broadband, the market “is so concentrated that consumers rarely have any meaningful choice of provider, and prices are high enough to be prohibitive for many,” the Democrats’ plan says. “In over 50 million households, Americans have no choice at all for Internet provider[s offering broadband speeds]; they are forced to pay the exorbitant price their single carrier requires, if they get service at all… And the largest companies rank the lowest on customer satisfaction rankings—they don’t need to improve their service because there is no competition.”
The biggest home Internet providers in the US are Comcast, Charter, AT&T, and Verizon. The Democrats didn’t mention any Internet providers that they want broken up, but said they want to stop AT&T’s proposed $85.4 billion purchase of programmer Time Warner. Democrats wrote:
Consolidation in the telecommunications is not just between cable or phone providers; increasingly, large firms are trying to buy up content providers. Currently, AT&T is trying to buy Time Warner. If AT&T succeeds in this deal, it will have more power to restrict the content access of its 135 million wireless and 25.5 million pay-TV subscribers. This will only enable the resulting behemoths to promote their own programming, unfairly discriminate against other distributors and their ability to offer highly desired content, and further restrict small businesses from successfully competing in the market.
Although President Trump pledged to block the AT&T/Time Warner deal when he campaigned for president, AT&T is now in “early talks” with US antitrust officials regarding “possible conditions that could secure approval” of the merger, according to Bloomberg.
Shift burden of proof to merging firms
Today, US antitrust regulators and other federal agencies “can only consider the narrow, short-term effects of a merger on price and output, and have the burden of proving that consolidation would be anticompetitive,” the Democrats’ plan said.
Democrats said they are proposing “new merger standards that require a broader, longer-term view and strong presumptions that market concentration can result in anticompetitive conduct.” Regulators would have to determine whether mergers “reduce wages, cut jobs, lower product quality, limit access to services, stifle innovation, or hinder the ability of small businesses and entrepreneurs to compete.”
Companies seeking permission to complete the biggest mergers would face a stricter test. The proposed standards would automatically presume that the largest mergers are anticompetitive and should be blocked unless the merging companies can “establish the benefits of the deal.”
That’s somewhat similar to how the Federal Communications Commission reviews mergers. The FCC uses a public interest standard that forces merging companies to prove that deals benefit the public. But the FCC only reviews mergers when FCC licenses are transferred. In the case of AT&T, the Republican-controlled FCC allowed Time Warner to sell its licenses in advance so the companies can avoid a full review of their merger. AT&T thus just needs approval from the Department of Justice, which could sue to block the AT&T/Time Warner merger on antitrust grounds.
Democrats also proposed tougher post-merger review standards. There would be “frequent, independent reviews” of mergers after they are completed and more resources for regulators to ensure that companies meet any conditions imposed on the mergers. The proposed post-merger reviews would also examine whether changing “economic circumstances” have affected a merger’s impact on competition.
“Regulators would be empowered and required to take corrective measures if they find abusive monopolistic conditions where previously approved measures fail to make good on their intended outcomes,” the plan says.
The Democrats also want a new “consumer competition advocate” who would research markets and consumer complaints, and recommend competition investigations to the Federal Trade Commission and Departure of Justice.
“The advocate will consider the full range of potentially anticompetitive behavior, from traditional areas like price fixing to newer challenges like the role that online platforms play in keeping our markets fair and open,” the proposal says. Regulators would have to publicly justify any decision not to pursue an investigation recommended by the competition advocate.
Democrats remain minority party
The Democrats’ plan likely stands little chance of being enacted as long as Republicans control the House, Senate, and White House. But Democrats are trying to tell voters how things might change if they do well in next year’s midterm elections.
Schumer acknowledged that in the past two elections, Democrats “failed to articulate a strong, bold economic program for the middle class and those working hard to get there.” Democrats will seek support of Republicans in Congress, “but more important, we must start rallying the American people to support our ideas,” he wrote.
Beyond mergers and telecom, Democrats said they want “tough new enforcement” to prevent price gouging in prescription drugs, with a new government agency dedicated to stopping unfair pricing. “The enforcer will be charged with investigating drug manufacturers and protecting patients and taxpayers from egregious prescription drug price increases,” Democrats wrote. “The agency will identify drugs that have unconscionable price increases and impose fines on the manufacturer that are proportional to the size of the price hike, reinvesting the money from the fines into new cures research and development at the National Institutes of Health.”
Democrats also proposed new job creation and training policies.
“The past six months have exposed the toxic special-interest priorities at the core of the Republican agenda,” Pelosi wrote in The Washington Post. “The American people deserve better.”
from Ars Technica http://ift.tt/2v0INi2
via IFTTT