An Antitrust Agenda for a Split Congress

The 2022 mid-term elections enabled the Republicans to capture control of the House while Democrats remain in control of the Senate. This split Congress presents a real opportunity for antitrust. Antitrust reforms require bipartisanship to enable lasting changes that truly benefit the economy and consumers.

Yet, anticorporate advocates have called for the adoption of flawed antitrust bills during the lame-duck session: These bills were broken before the election and are still broken now, as they would generate considerable unintended consequences that harm consumers and innovation if passed. Instead of pushing antitrust bills that are detrimental to the economy and are unlikely to pass, the next Congress should focus on antitrust reforms that are pragmatic and good for the economy and consumers.

Here is a positive antitrust agenda for a split congress:

1. Tie together antitrust and competitiveness policies: Antitrust enforcers often want to create “competitive markets” by deconcentrating sectors deemed too concentrated, but when focused on traded sectors, they almost always ignore foreign competitors. In defining markets inappropriately, antitrust enforcers neglect the need to foster U.S. competitiveness through superstar firms that can effectively compete with foreign rivals at home and abroad. For instance, antitrust enforcers should not assess Amazon’s market power while ignoring the existence of Alibaba. They should not assess Apple’s market power while overlooking the presence of Huawei. Similarly, when Elon Musk acquired Twitter to turn it into “the everything app,” he explicitly wanted to compete and challenge WeChat, the super-app highly popular in China. And yet, the antitrust prohibitions of bundling, leveraging, and merging prevent U.S. tech companies from operating and expanding digital ecosystems where users can benefit from complementary products and services. In other words, U.S. antitrust policy should encourage user-centric ecosystems rather than deter them, since they are already present overseas. A U.S. antitrust policy that prevents tech companies from offering integrated digital ecosystems when Chinese tech companies already offer bundled digital services undermines U.S. competitiveness in the tech sector. To foster competitiveness in key industrial sectors, Congress should identify a range of activities and sectors where antitrust enforcers cannot act unless officials at the Department of Commerce (or, when relevant, the Department of Defense) are genuinely consulted. Congress can pass legislation to clarify the inter-departmental coordination requirements to ensure that antitrust policy works in synergy with competitiveness policy.
2. Pass the One Agency Act: Senator Mike Lee (R-UT) introduced the One Agency Act (S.663) on March 9, 2021. The United States is the only country with two antitrust agencies. Internationally, this creates an awkward and inefficient situation with counterparts. Domestically, it creates friction (such as the FTC rescinding the FTC-DOJ Merger Guidelines in 2021, but not the DOJ’s Antitrust Division). Additionally, the Neo-Brandeisian FTC has revealed, if necessary, the costs and risks of an antitrust agency running amok; Congress needs to exert tighter oversight over antitrust, and DOJ’s Antitrust Division needs to be exclusively in charge of the enforcement of antitrust laws. The House should pass a companion bill to the One Agency Act to create momentum for the Senate to pass its own bill. This will end the bizarre situation of having the United States being represented by two antitrust agencies.
3. Prohibit break-ups of consummated mergers: The FTC has considerably increased legal uncertainty around mergers when the new Chair announced that companies could close merging deals at their own peril–meaning the FTC can subsequently unwind consummated mergers whenever it wishes and for whatever theory of harm they may invoke. This massive legal uncertainty chills market actors, deters innovation through vertical integration or horizontal synergies between companies, and ultimately will harm consumers who will be prevented from enjoying the scale and scope economies many mergers provide. A review of past mergers is necessary to inform future merger reviews, but not to harm or unwind past mergers.
4. Require antitrust agencies to consult before adopting new merger guidelines: The new FTC Chair unilaterally rescinded the 2020 Vertical Merger Guidelines without consulting the DOJ’s Antitrust Division with whom those guidelines were adopted. Both antitrust agencies have requested comments that signal that future merger guidelines will creatively rely on new and untested theories of harm to block mergers. Traditionally, merger guidelines are used to “codify” current and past cases. The current antitrust enforcers seem willing to embark on untraveled paths at the expense of consumers and innovation since scale economies of beneficial mergers will no longer be available. Against that background of legal uncertainty, the consultation of stakeholders, civil society, and scholars proves highly necessary before adopting the new guidelines–namely, through agencies and Congressional hearings. If Congress cannot pass a “one agency” bill, at minimum it should pass legislation that would force antitrust agencies to consult more extensively before adopting, altering, and rescinding merger guidelines.
5. Push back on the Digital Markets Act (DMA): The European Union has adopted protectionist regulation that will decrease innovation in the digital economy and target U.S. companies by creating far-reaching obligations for these companies when interacting with European consumers. Given these legitimate concerns about the DMA’s impact on U.S. tech companies and consumers, the Secretary of Commerce had initially pushed back against the DMA. Unfortunately, antitrust advocates pressured the White House to reverse course. Congress has an opportunity to push back against the DMA by ensuring that this regulation is part of the U.S.-EU Competition Dialogue, despite the Europeans’ opposition and that the effects of the DMA are under review by the World Trade Organization (WTO), given its protectionist bias. A split Congress can thus make the U.S.-EU Competition Dialogue meaningful by including the DMA in this dialogue. A split Congress can also activate the WTO about the DMA only if it unequivocally pushes back against the DMA.
6. Repeal the Robinson-Patman Act: The Robinson-Patman Act was passed in 1936 to suppress competition from large chain stores and supermarkets which displaced small retailers. It might protect producers, but it harms consumers and deters innovation. That is why scholars regularly call for its repeal. It is seldom enforced, but neo-Brandeisian advocates have recently called for its revival despite its well-known unintended consequences. Congress could repeal this useless, confusing, and harmful act. By doing so, a split Congress would clarify our body of applicable antitrust laws. It would signify to antitrust enforcers that efficiencies, not inefficiencies, are the goals underpinning the process of competition.