Antitrust reform has emerged an an issue of bipartisan concern in Washington as leaders in both parties have expressed dismay over growing industrial concentration, particularly in high technology, but experts say investors should pay less attention to what’s happening in a Congress distracted by debates over COVID relief and impeachment and look to regulatory agencies like the Federal Trade Commission to learn how competition policy may impact the bottom lines of some of America’s largest corporations.
Democratic Sen. Amy Klobuchar of Minnesota released a bold new pro-competition bill in the Senate last week that would increase funding for antitrust enforcers, place the burden of proof that a prospective merger wouldn’t be anticompetitive onto companies themselves and force courts to broaden their definition of anticompetitive outcomes.
Missing from the legislation, however, were any Republican co-sponsors. That “suggests the bill faces long odds of passing in its entirety out of the Senate as long as the filibuster remains,” wrote Steve Pavlick, head of policy at Renaissance Macro Research and a former deputy assistant secretary for legislative affairs in the Trump administration’s Treasury Department, in a note to clients Wednesday.
Republican reluctance to get on board with Klobuchar’s proposal is likely driven in part by the fact that any major changes to the U.S. antitrust apparatus would have implications that go well beyond major tech firms like Facebook Inc. FB, -0.36% Twitter Inc. TWTR, +4.68% and Google parent Alphabet Inc., GOOG, -0.13%, which have become popular targets among conservatives due to perceptions of political bias.
“It’s hard to get 60 votes in the Senate for any piece of legislation, let alone something on a topic like antitrust that has technical legal substance and wide ranging impacts across the country,” Robert Kaminsky, policy analyst at Capital Alpha Partners told MarketWatch.
Nevertheless, there remains a growing bipartisan consensus that the American economy has a monopoly problem. Last fall, Republicans on the House Antitrust Subcommittee endorsed some of the findings of their Democratic colleagues in a review of monopoly power in the tech industry. Republican Rep. Ken Buck said on Twitter last week that “I will be introducing legislation that reins in Big Tech’s anticompetitive behavior,” while Republican Sen. Josh Hawley of Missouri and Sen. Mike Lee of Utah have each backed more robust antitrust enforcement.
Though this rhetoric has not so far led to Republicans taking the plunge into serious legislative action, it could provide the political cover for the Federal Trade Commission to redefine its relationship to competition policy, according to Alex Cynamon of Veda Partners. “There’s a level of bipartisan support that should embolden the Biden administration to pursue enforcement actions and rule making that address competition policy and could even be narrowly focused on the tech sector,” he said.
President Biden has yet to select nominees for the two open positions on the Federal Trade Commission, but reports indicate that he is leaning toward naming Columbia Law professor Lina Kahn, a longtime critic of big tech monopoly power, to fill one of the roles.
Kahn coauthored a paper last year with FTC commissioner Rohit Chopra, whom Biden has nominated to head the Consumer Financial Protection Bureau, that advocates reviving long dormant FTC powers to force behavior changes at America’s largest corporations that it deems to be anticompetitive.
The FTC, for instance, could engage in rule making that bars practices like self referencing, whereby companies like Google and Amazon.com Inc. AMZN, -0.24% allegedly use their platforms to promote their own products over those of competitors or the use of non-compete agreements to suppress wages, as current Acting FTC head Rebecca Kelly Slaughter has endorsed.
Cynamon predicts that while it’s not likely that bipartisan legislation is signed into law during this Congress, it remains the most likely issue high-profile issue that Democrats and Republicans could successfully address, though any new law would probably not be as sweeping as Democrats would like.
But even a bill to simply increase funding for the FTC and the Department of Justice, paired with aggressive leadership, could go a long way in preventing further consolidation in the marketplace, according to William Baer, former assistant attorney general for antitrust under President Obama. Klobuchar and Sen. Chuck Grassley of Iowa, the ranking republican on the Senate Judiciary Committee have already paired up to introduce legislation to do just that.
“Increased funding would make a material difference given the number of matters under investigation at both antitrust agencies,” he told MarketWatch. “This takes people, money and consultants and without those resources, substantive law changes would be limited in their effect.”