Amy Klobuchar Becomes a Trustbuster!
To: Sen. Amy Klobuchar
425 Dirksen Senate Office Building Washington, D.C. 20510
Dear Sen. Klobuchar:
As chair of the Subcommittee on Antitrust, you have authored a remarkable book, Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age. My library is full of books written by senators immediately before one of their many elections as a way of burnishing their electoral appeal. Typically, these books profess great policy objectives (ending cancer, preventing war, abolishing poverty) but are devoid of any specifics.
But not your book!
You have written an entire 600-page book devoted to the usually boring topic of antitrust law, with detailed suggestions. In law school, as in law practice, antitrust law is seen as extraordinarily dense. The American Bar Association Section on Antitrust Law only has 10,000 members (the undersigned has been one of them for 50 years). In narrative detail, you begin your treatise by telling the story of a small company that had purchased monopoly rights to a drug that treated heart valve defects and jacked that price up from $78 per treatment to $1,614. There was a competing drug, but the company, Ovation Pharmaceuticals, had purchased that drug also. You cite this experience as your inspiration for writing this book.
The book covers the broad sweep of Americans’ fight against monopolies, including the Boston Tea Party in 1773. Adam Smith’s The Wealth of Nations was published in 1776, the same year the Continental Congress issued the Declaration of Independence. You continue the timeline from this early period of American history through the Gilded Age, the trustbusting of President Teddy Roosevelt, the Progressive Era, and the pivotal role played by farmers and Grangers.
The book captures much of the prairie fire of the early Progressive Era—establishing labor unions and passing landmark legislation like the Sherman Act (1890) and the Clayton Act and Federal Trade Commission Act (both 1914). This is fascinating stuff, compellingly told with a sense of political urgency. If the book ended there, it would be an interesting and well-received addition to our historical literature.
But then you catch fire!
In 300 pages, you lay out in detail the pernicious impact of what has happened to our antitrust laws and the lack of antitrust enforcement on today’s economy: great wealth disparity and lack of innovation. It is no longer possible to blind ourselves to the Croesus-like wealth suddenly accumulated by the five tech companies: Amazon, Apple, Alphabet (Google), Microsoft, and Facebook. These are but totemic examples of the vast and unprecedented wealth gap that now persists and grows wider in our country. Big pharma and the impacts of health care consolidation are experienced by almost everyone reading this column. Let’s summarize some of the proposed solutions.
You would make it harder for large companies to affect competition by acquisition, by changing the current regulatory standard and shifting the burden of proof to the acquiring company. Had your suggestion been the law of the land, it is doubtful that Google would have been able to acquire DoubleClick 13 years ago, thus securing its dominant role in digital ad sales. Likewise, a change in the regulatory standard would have prevented Facebook from acquiring WhatsApp and Instagram. A recent federal court ruling dismissed lawsuits filed by 46 states attempting to reverse those Facebook acquisitions because their lawsuits came too late. Your proposed changes would have prevented that result.
One of the most interesting proposals is to provide a “look back” of five years, where antitrust regulators could review the competitive impact of acquisitions by large companies. A formalized five-year look back provision is a new idea in antitrust enforcement.
Currently, large tech platform companies like Apple, Google, and Amazon are able to favor their own products over competing products, which are forced to advertise on these platforms. This practice has drawn a great deal of scrutiny, particularly in Europe. You propose strict antitrust analysis (and probably prohibition) of these practices.
In the past, regulators and courts have usually gone out of their way to say that antitrust does not outlaw bigness, unless it’s achieved by prohibited means. Your proposal here is to examine companies beyond a certain size to see if size alone exerts an anticompetitive effect.
A unique and provocative proposal is to do an antitrust analysis of the phenomenon of horizontal shareholders. The Clayton Act, passed in 1914, prohibited certain interlocking directorates—the same board of directors running competing companies. Today, you note, three asset management companies (usually through index funds) hold up to 30 percent of the common stock of our largest pharmaceutical and tech companies. This raises the question: Is large common shareholding inhibiting otherwise vigorous competitive behavior by these companies? It is a question that should be raised and fully examined.
A few individuals have accumulated wealth that would make Carnegie, Rockefeller, Hill, and Mellon look like the petty bourgeois. At the same time, the wealth gap in this country has never been greater and continues to grow.
You view this economic landscape as the result of the failure of our antitrust policies. You’re trying to fan the flames of a prairie fire to return this country to its true competitive roots. And, most importantly, you have laid out a detailed set of proposals to accomplish just that.
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Citizens should read this book.