WASHINGTON ― Sen. Elizabeth Warren (D-Mass.) detailed a comprehensive program that the federal bureaucracy could undertake immediately to reduce corporate power over the economy and politics in a speech before an antitrust conference on Wednesday.
Antitrust enforcement is the key to government efforts to tackle corporate power, according to Warren. Over the past four decades, government regulators and lawyers have embraced weaker interpretations of antitrust laws and principles, allowing massive companies to gobble up competitors and expand their reach across sectors. Warren’s approach is to reverse this lax enforcement trend and reinvigorate the antitrust laws already on the books.
“To rebuild an economy that works for everyone, not just the big guys, it is critical to reduce concentrated power in our markets,” Warren said at the Washington conference hosted by the nonprofit Open Markets Institute, which favors vigorous antitrust enforcement. “The federal government has the tools to do it. Congress handed antitrust enforcers those tools over a century ago. But those tools have been sitting on the shelf for decades, gathering dust.”
In many ways, Warren’s proposed program shows what a future president ― perhaps, the senator herself after 2020 ― could do to tackle corporate power quickly upon taking office. She outlined three key steps.
First, she said the Department of Justice and the Federal Trade Commission need to block any mergers that “choke off competition” and take to court any large company that is impeding competition and innovation. This requires the right leadership at DOJ’s antitrust division and the FTC. Warren specifically pointed to a decision by the FTC commissioners named by President Barack Obama to overrule a recommendation by the agency’s own lawyers to punish Google for using its monopoly position in online search to harm competitors.
“We need enforcers with steel spines who will stand up to companies with the best-dressed lobbyists, the craftiest lawyers and the highest-paid economists,” Warren said. “Enforcers who will turn down papier-mâché settlement agreements and actually take cases to court.”
This effort should not be focused solely on mergers between direct competitors, Warren said, but should also look hard at vertical mergers ― those between companies at different stages of an industry’s chain of production.
One clear case of a problematic vertical merger is AT&T’s proposed purchase of Time Warner. AT&T is one of the nation’s three largest telecommunications firms with investments in telephony, wireless communications, high-speed internet and satellite television. Time Warner is one of the largest entertainment companies with ownership over dozens of cable stations, including HBO, and the Warner Bros. film studio.
Warren praised the Trump administration for bringing a lawsuit to stop the proposed merger on anti-competitive grounds. At the same time, she said, “The president’s attacks on our free press have cast a cloud of suspicion over the decision to block the merger.” Time Warner owns CNN, a frequent target of President Donald Trump’s attacks on the media.
“It’s essential that the courts and the public approach this case as they would any other ― based on the law and the facts, and not on President Trump’s repeated efforts to punish his enemies,” she added.
Warren’s second step is for the federal antitrust agencies to crack down on anti-competitive behavior beyond mergers. For instance, she said the federal government should go after the use of anti-poaching agreements among companies and franchises that prevent employees from obtaining jobs that could increase their pay.
The late founder of Apple, Steve Jobs, orchestrated a massive anti-poaching agreement with Google, Intel and Adobe whereby the four companies would not recruit each others’ workers. This was an illegal pact among CEOs that reduced the power of their employees. In 2015, the companies involved were forced to pay out $415 million to workers in a mass settlement.
And it’s not just Silicon Valley tech giants that seek to restrict their employees’ options. Franchise companies like Jimmy John’s, Jiffy Lube, Burger King and Baskin Robbins have all been caught using non-compete agreements to prevent their low-wage workers from leaving one franchise for another in search of better pay or less abusive bosses.
DOJ needs to make it clear that these non-compete clauses are illegal, Warren said, by bringing lawsuits against firms using them.
Step three in Warren’s attack on corporate power is likely the most important one: requiring that every federal agency work to increase competition and reduce monopoly power where they have the power to do so.
That means the Federal Communications Commission should enforce strong net neutrality rules, not undo them as Trump’s FCC plans to do. The Food and Drug Administration could reel in pharmaceutical monopolies through its control over which drugs come to market and when and at what cost. The Federal Reserve and the Federal Deposit Insurance Corporation could make sure that banks are really not too big to fail. The Department of Defense, the largest end purchaser of goods in the country, could inject much greater competition into its contracting process by limiting the power of the small number of massive defense contractors.
“The way I see it, the fight for stronger competition is similar to the fights over health care or tax reform or the other big issues that are at stake,” Warren said. “At their core, these fights are about what kind of country we’re building: one that works only for the wealthy and powerful, or one that works for all of us.”