The Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing on March 11 to address the need for antitrust law reform entitled “Competition Policy for the Twenty-First Century: The Case for Antitrust Reform.”
The hearing featured five antitrust experts: George Slover, Senior Policy Counsel at Consumer Reports; Ashley Baker, Director Of Public Policy at The Committee for Justice; Barry Lynn, Executive Director for Open Markets Institute; Jan Rybnicek, Counsel at Freshfields Bruckhaus Deringer LLP; and Nancy Rose, the Charles P. Kindleberger Professor Of Applied Economics at Massachusetts Institute of Technology.
The hearing began with a statement from Sen. Amy Klobuchar (D-MN), the subcommittee’s chair, on the immense powers that the big tech companies wield.
“If you have big monopolies, that buy up all that potential innovation, that buy up those small companies, you lose the ability to get at those major challenges overtime. If left unchecked big companies dominate markets, exclude their rivals, and buy out their competitors, even small competitors,” said Sen. Klobuchar.
Sen. Mike Lee (R-UT), who recently handed over the chair position to Klobuchar, commented on the bureaucratic inefficiencies of the current system driving the need for legislative reform.
“The FCC’s application of the public interest standard has been yet another example of government distorting competition as it has become the go-to venue for rent-seeking by competitors and special interest groups. The costs imposed by FCC overreach are ultimately passed on to consumers, consumers who have no say in the process,” said Sen. Lee.
Sen. Lee also called out members of Congress who wanted to abandon the consumer welfare standard and address other politically salient issues using antitrust policy.
“Several calls to reform the antitrust laws seek to abandon the consumer welfare standard and to instead address non-economic issues like social justice and climate change or simply punish bigness. It’s one thing to support such goals as a matter of personal preference or political popularity, it’s entirely another thing to inform families under strained budgets that they will have to choose between the food on their table or the roof over their head because an unelected judge somewhere prefers shopping in local boutiques to the efficiencies that make modern life affordable for the majority of their fellow Americans,” explained Sen. Lee.
George Slover’s opening statements focused on the significant impact that monopolies have on consumer choices in the marketplace.
“Our antitrust laws are not working as they should. Sensible clarifications are needed. Competition helps the marketplace work for consumers by empowering them with choice, the ability to go elsewhere for a better deal. That makes businesses responsive, offering better choices at more affordable prices and spurring innovation. But there is a profound imbalance of power in the marketplace. Increasing concentration is leaving consumers with fewer choices and less leverage. Consumer spending drives the economy, yet they are being denied a fair voice. This power imbalance is starkly evident in the online marketplace where a handful of dominant digital platforms are calling the shots as gatekeepers,” said Slover.
Sen. Dick Durbin’s (D-IL) asked Barry Lynn if he believed antitrust law was so complicated that disputes are likely to be settled out of court.
“When you have a corporation that is extremely complicated, that is extremely far-reaching, those engaged in many businesses all at once, say Google, it becomes impossible for anybody, I mean not even just a juror, there’s no government agency that could ever understand what’s going on inside of Google, and then you don’t want to build a government that’s big enough to understand what’s going on inside the Google. That’s why traditionally, the United States, we focused on bright-line rules, bright-line separations,” responded Barry Lynn.
“The FTC has an internal court, and so we can compare the records, and the agency has a certain win rate, and then those cases are appealed to the Federal Court of Appeals, and more often the federal Court of Appeals overturns the FTC’s internal decisions more often than it does the district courts decisions. I think that is informative,” added Rybnicek.
Sen. Josh Hawley (R-MO) brought the conversation to Google’s reach in various areas. Hawley listed off a laundry list of businesses controlled by Alphabet, Google’s parent company, and got Lynn to quickly agree that Alphabet’s reach across different industries displays phenomenal market power.
Sen. Hawley also touched on Amazon’s third-party marketplace and how it sells its own goods in competition with these third parties.
“What about companies, for instance like Amazon, should they be able to operate a retail marketplace where you have third party competitors selling their goods and then Amazon itself simultaneously operate that marketplace and sell its own goods competitively on its own platform using potentially the data that is gathered from the other third parties who are supposedly using the open platform is that something you think is a pro-competition policy,” asked Sen. Hawley.
“It’s an anti-competition, pro-monopoly policy. There should never be competition between the provider of services and the customer those services because we know that the providers of services, if they are integrated into that business, will favor their own goods it’s a conflict of interest it’s one of the most fundamental problems and competition policy, and traditionally we have always prohibited this. We can trace it back in US Federal law to the banking policy in the 1860s,” responded Lynn.
Sen. Richard Blumenthal’s (D-CT) asked the panelists if they would support interoperability and data portability requirements to bolster competition and innovation in the marketplace that would benefit consumers.
“I think this is potentially a very pro-consumer option. Firstly, I think we need to separate you know what is portability versus interoperability because the kind of concerns and considerations there are different. But it comes down to implementation, how broad the mandate is, how well it fits with that technology, and also security. I think that’s a really big consideration too. This is something that has to be implemented very smartly, especially when it comes to portability because that could come with some security risks, so I think it’s definitely worth exploring but needs to know the Devils are in the details sometimes,” responded Baker.
