Normally, when the Fed starts loosening policy it does so amid clear-cut signs of economic weakness.Economyread more
Wall Street economists are anxiously awaiting Wednesday's FOMC meeting.Marketsread more
More and more American firms are calling for the Trump administration to resolve its conflict with China.World Economyread more
All trains traveling in and out of New York Penn Station have been halted because of an Amtrak overhead wire issue, New Jersey Transit said Wednesday.Transportationread more
This just might be Fed Chair Jerome Powell's toughest meeting yet because whatever the outcome, odds are high that it will disappoint a large group.Market Insiderread more
American Airlines is ordering Airbus' new A321XLR, according to a source familiar with details of the agreement.Paris Air Showread more
Tesla shares are nearing Morgan Stanley's price target but the firm isn't sure how to tell investors to value Elon Musk's company.Investingread more
Companies are increasingly willing to pay for employees to go to the doctor. Uber is partnering with Grand Rounds, a start-up that sells into the employer channel, to make it...Technologyread more
But it's still unclear when the currently stalled trade negotiations between the two economic superpowers will restart, Lighthizer said.Politicsread more
Apple's iOS 13 update, which will be available in the fall for iPhones, will let Siri read your text messages to you through your AirPods. Here's how to set it up.Technologyread more
Target CEO Brian Cornell apologized to customers for a disappointing weekend after the company experienced outages that shut down its cash registers and credit-card processors...Retailread more
Antitrust regulation and economic concentration are suddenly everywhere in progressive thinking about economic policy.
The storm actually started to build last year with a keynote speech from Elizabeth Warren at a think tank event, a policy brief from the Obama administration's Council of Economic Advisers, a Center for American Progress policy brief arguing for reinvigorated antitrust enforcement, an October Hillary Clinton speech promising to deliver tougher enforcement if she became president, and a flurry of Senatorial denunciations of the proposed merger between AT&T and Time Warner.
This flurry of activity, little noticed at the time, broke into the mainstream when an enhanced focus on competition policy — completely with a call for a rethinking of one of the intellectual underpinnings of the past generation of antitrust enforcement — found its way to the center of congressional Democrats' proposed "Better Deal" for the American economy. Democrats hope this plan, which they announced in July, will be a guiding document as they take on Republicans in midterms and beyond.
More from Vox:
All the relief money in the world won't rebuild Houston. Undocumented workers will.
Irma could leave Puerto Rico without electricity for months
Watch: pro-DACA activists sneaked into Trump International Hotel for a surprise protest
Then came the falling out between Barry Lynn, a key intellectual driver of this movement, and his bosses at the New America Foundation — the dispute centered on Google's financial support for New America's programs and Lynn's forceful criticisms of the technology giant.
Democrats are both united in their newfound interest in antitrust measures and also divided on exactly what a reinvigoration entails. That's in part because at least five different ideas are floating around that often get mushed together under the same broad heading. These are both conceptually distinct notions with different economic implications and, critically, different paths to implementation.
Here's a guide that should help clarify.
Under current antitrust doctrine, the Justice Department and the Federal Trade Commission scrutinize so-called "horizontal" mergers — mergers where the two merging companies basically do the same thing — to see if the merger will result in higher prices or reduced choices for consumers. Sometimes they block proposed mergers (as the Obama administration did when AT&T tried to buy T-Mobile) and other times they let them sail through (when InBev bought Anheuser-Busch) or they settle for forcing to merging companies to divest of a few assets rather than blocking the merger (as when US Airways bought American Airlines).
Relative to that basic mission, the government will inevitably end up either erring somewhat on the side of being too strict or erring on the side of being too lax. And one point of view is simply that politics has drifted in the direction of too much laxness.
This is a little bit conceptually boring, but it also has a straightforward remedy. If you appoint FTC and DOJ leadership who are inclined toward stricter enforcement, back leadership up politically if they come under attack, and enhance agency budgets so more work can be done, then you will end up with more enforcement actions. You'll end up losing in court sometimes, but a paucity of court losses can itself be seen as a sign that your enforcement efforts aren't very aggressive. And of course over time a president inclined in this direction can change the composition of the judiciary.
Under the guidelines the Justice Department has used since the early 1980s, there is a fairly strong presumption that a merger that isn't horizontal — like AT&T's proposed takeover of Time Warner — should be allowed. This often seems intuitively wrong to people who view octopus-like conglomerates who have their fingers in many related pies as especially menacing. The written guidelines on this subject haven't been updated since 1984 and express an extremely lenient view of vertical mergers.
Actual enforcement practice since at least the Clinton administration has been somewhat stricter than the stated standard, with concerns frequently raised about the prospect of "foreclosure." AT&T might, for example, deny its direct competitors in the pay television market access to Time Warner programming.
In practice, however, these concerns are often addressed by having the merging company promise not to do it rather than by blocking the merger.
The written guidelines almost certainly should be updated, and they could be rewritten to be much more skeptical of vertical integration in general and of these kind of promissory arrangements in general. But the more drastically the guidelines are changed, the more acute the potential problem of needing to actually prevail in court becomes.
Supreme Court decisions from Continental Television v. GTE Sylvania40 years ago to 2007's Leegin Creative Leather Products v. PSKS Inc.are fundamentally friendly to vertical integration. It would take both time and persuasive evidence and analysis to really shift legal doctrine here.
Probably the greatest victory of the "law and economics" movement has been its success at persuading the courts, antitrust regulators, and the antitrust bar more broadly that the high-level goals of American antitrust law can be boiled down to a narrow focus on consumer impacts.
If a merger will result in mass layoffs or a disastrous squeeze on supplier revenues, that's simply not a problem according to prevailing antitrust doctrine. If anything, clear evidence that something like that will happen bolsters the legal case for a merger since it shows the merging companies have a clear motive for merging that doesn't involve hiking prices.
This approach is well-entrenched on both the legal and economics sides of the profession, and among other things serves to make the whole process of merger analysis into something resembling a quantitative technical enterprise. Dislodging it so that merger review would have to consider impacts on suppliers, the labor market, and other stakeholders is an idea with considerable support among outsiders. And in theory it could certainly be done within the confines of the existing statutes.
But fundamentally reshaping how the FTC and the Antitrust Division work would be difficult, and persuading courts to accept a new legal standard would be difficult as well. It's not an insane aspiration — the existing consumer welfare focus was itself a new idea once upon a time — but it's a much bigger task than simply replacing a handful of officials.
The classic midcentury political economy of the United States featured lot of legal restriction on firm size that had little or nothing to do with antitrust law's interest in economic concentration. Strict rules limited the number of different cities in which a given company could own a television station while also constraining joint ownership of TV stations and newspapers. A bank was not allowed to have branches in more than one state, and a bank that engaged in basic borrowing and lending wasn't allowed to be part of the same company that sold insurance or did securities underwriting.
Most of these kind of rules have either been formally repealed or else turned into dead letters by the use of regulators' discretionary authority.
One line of argument holds that we should bring back either the spirit or the substance of those rules, and push for at least some sectors of the economy to remain fragmented and regionalized. A distinguished tradition in American life, frequently associated with former Supreme Court Justice Louis Brandeis, worries that economic domination by massive nationwide conglomerates is unhealthy for democracy — even if three or four or five big players is enough big players to ensure price competition.
Here, though, you end up well outside the domain of what antitrust officials could actually do. The overall health of American democracy might be a good reason to block a merger, but it's definitely not a legally valid one. To address these concerns would take new statutes, a different attitude from the officials at other regulatory agencies, or some combination of the two.
Nobody likes to be undercut on price by a competitor. But it's especially galling to find yourself undercut on price by a competitor that can get away with losing money thanks to its support from deep-pocketed venture capitalists. That's the situation traditional taxi companies competing with Uber and traditional mattress companies competing with a new breed of online retailers find themselves in.
And then, of course, there's Amazon — a giant company with ultra-low profit margins that rather infamously used steep discounts to bully Diapers.com into giving up and selling itself to Amazon.
The government could start regarding a broader range of price behavior as "predatory" and try to ban or curtail this sort of thing. Predatory pricing already exists as a legal category, of course, but the standard set by the Supreme Court (most recently in the 1993 case Brooke Group Ltd v. Brown & Williamson Tobacco Corp.) makes it extremely difficult for predatory pricing claims to prevail. You would need to convince a court that Amazon's cheap diapers are likely to lead to higher long-term diaper prices via the creation of a monopoly that manages to erect significant barriers to entry.
Creating a more aggressive standard might involve new legislation or convincing courts to reconsider the consumer welfare standard in some fashion.
The upshot of all of this is that lurking behind a broad Democratic Party consensus that the government needs to beef up its antitrust efforts, there's plenty of room for disagreement and it's not clear that all the relevant parties have really considered the full implications of some of the things they have said.
Consensus seems very strong around stricter enforcement of existing doctrine (point 1), which the Obama administration essentially endorsed in its Council of Economic Advisers report on the state of competition in America and was also backed up by a Center for American Progress policy document issued in June of 2016. But a lot of the intellectual energy on the left has gone into pressing for more conceptually ambitious changes, including most notably abandoning the consumer welfare standard and returning to a more Brandeisian concern about concentrated economic power.
It's much less clear how much agreement there is on these points, in part because it's not entirely clear what the proposed changes would amount to in practice. Whatever the consumer welfare standard's flaws, has the twin advantages of incumbency and clarity. Displacing it would require hard work, plenty of details, and probably a lot of time and energy well beyond simply appointing a handful of tougher regulators.