Opinion | Americans Pay a Price for Corporate Consolidation
Americans have been living as subjects in a large-scale experiment in letting big companies do as they please, and the consequences are increasingly apparent in daily life. Compare the United States with Europe, where authorities have more successfully resisted the consolidation of major industries. Airfares in the United States are now significantly more expensive; North American airlines pocketed more than twice as much in profits from each passenger in 2022 as their European counterparts did. The internet costs more, too: Americans pay more than twice as much for broadband, and the cost of cellular service is also, on average, more than twice as high in the United States as the average in other developed nations. The economist Thomas Philippon wrote in a 2019 book about the decline of competition in the United States that the American economy would be roughly $1 trillion larger than it is today if the United States had simply maintained the level of competition that prevailed in 2000.
The turn toward stringency reflects some of what has been learned in recent years about the effects of corporate concentration, for example, in a new emphasis on protecting workers. Economic circumstances also have changed. The rise of online business models in particular has created challenges not fully anticipated by earlier generations of policymakers, such as the ways that user data can be used to limit competition. In December, Amazon settled an antitrust complaint brought by European Union regulators by agreeing to stop using data gathered from third-party sellers on its site to calibrate its own retail business decisions.
The most important change, however, is a reconsideration of the role of economics in making policy. The guidelines treat the economic analysis of corporate concentration as a valuable source of information, rather than the measuring stick by which decisions are made. Antitrust authorities have failed in their responsibility to the American people by assigning to themselves the burden of trying to figure out which mergers may be harmful, rather than taking seriously their marching orders from Congress to prevent concentration.
Some harms are difficult to quantify. Some are difficult to anticipate. And sometimes the damage is cumulative. In separate interviews, Jonathan Kanter, the assistant attorney general who heads the Justice Department’s antitrust division, and Lina Khan, the chairwoman of the Federal Trade Commission, argued that the changes should be seen as a restoration of the plain meaning of the nation’s antitrust laws, which place limits on corporate concentration even when it isn’t possible to show negative economic effects in advance. Mr. Kanter said his department is focused on protecting competition because that is the goal that Congress enshrined in law and he is in the law enforcement business. “We’re going back to enforcing the law to its fullest extent,” he said.
To achieve this goal, the administration will need to overcome the skepticism of federal judges, many of whom are steeped in the minimalist approach to antitrust enforcement. The regulatory agencies have lost several cases in which they sought to enforce antitrust laws more stringently, including decisions allowing the tech giant Meta to buy Within, a maker of virtual reality apps, and to let Microsoft proceed with its acquisition of Activision Blizzard, which makes video games.
