July 12, 2021

Biden Signs EO

“President Joe Biden signed an executive order [last] Friday targeting what he labeled anticompetitive practices in tech, health care and other parts of the economy… The order includes calls for banning or limiting noncompete agreements to help boost wages, allowing rule changes that would pave the way for hearing aids to be sold over the counter at drugstores and banning excessive early termination fees by internet companies.” AP News

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From the Left

The left is supportive of additional antitrust enforcement, arguing that it will benefit both workers and consumers.

“For Presidents Franklin Roosevelt and Lyndon Johnson, flawed but vitally important leaders, the Democratic Party stood for workers and the people who produced things, and against the middlemen who sought to steal value and control industry. They understood that anti-monopoly laws were partly about keeping prices down—but also about preserving equality and dignity, and making sure that everyone who contributed to the production of goods and services got a fair cut…

“In the 1980s and ’90s, the Democratic Party got highjacked by golf-buddy Democrats, who promoted monopolization and offshoring in the name of consumer welfare and efficiency… They talked about lifting all boats, but their policies led to yachts for the wealthy and stagnation on low wages and humiliating working conditions for others. The prosperity of the few was not shared with the American warehouse worker, driver, nurse, and small business owners… Biden’s executive order is a 180-degree turn.”
Zephyr Teachout, The Nation

“Why should a minimum wage retail worker be restricted from working for a competitor where she could earn a higher wage? The Federal Trade Commission should adopt a rule banning these ridiculous non-compete clauses that inhibit worker mobility. Why can’t we stimulate airline fare competition by providing low-cost foreign and domestic airlines better access to U.S. markets? The Transportation Department has the authority to do just that — and much more, such as requiring full disclosure of hidden baggage and cancellation fees when we book a flight…

“Why do those of us living in rural or small-town America have only one costly option for Internet service?… How is it that so many railroads face no competition on their routes?… Why, until just this last May, were the hard of hearing not allowed to buy hearing aids online or at a pharmacy without a prescription?… The list goes on.”
Bill Baer, Washington Post

“In recent years, big companies like Microsoft, Apple, John Deere, and others have shored up their own monopoly position with ‘repair monopolies,’ which prohibit the purchasers of their products from going to independent repair shops or fixing things themselves, often via the use of software locks or proprietary parts sold at huge markups…

“The executive action is especially important not only for its pathbreaking nature. It’s a politically useful move for Democrats in parts of the country where they struggle electorally. Big agricultural monopolies have wrung massive profits out of farmers via these sorts of provisions, and antitrust proposals could prove extremely popular in rural areas. What’s good for farmers is also good for geeks, who may have little interest in tractors but plenty of enthusiasm for unlocked iPhones.”
Alexander Sammon, American Prospect

“A significant percentage of the order’s provisions are merely recommendations directed at commissions that boast legal independence from the White House…

“And even if every federal agency abides by Biden’s dictates, a conservative-dominated judiciary could still strike down many of his reforms. This said, the broad popularity of most of Biden’s proposals could mitigate judicial opposition. Republicans do not like paying baggage fees for late luggage any more than Democrats do. Older GOP voters would surely like paying less for hearing aids and prescription drugs. And after Donald Trump’s eviction from major social-media platforms, Big Tech might be more anathema to the right than to the left.”
Eric Levitz, New York Magazine

“Big Tech companies insist that they aren’t standing in the way of competition but instead giving consumers what they want. And granted, that scale and power has some public benefits…

“The issue for policymakers and the courts, though, is whether the public is losing something by not having more competition to provide the services Big Tech platforms provide and not seeing more turnover at the top. It’s why lawmakers should pursue efforts to help rival tech companies interoperate with the platforms, make it easier for people to switch to other platforms, let consumers control their own data and toughen the rules against unfair practices by platform operators… The network effects of the internet encourage the development of monopoly power, and it’s up to the courts and Congress to make sure that power isn’t abused.”
Editorial Board, Los Angeles Times

From the Right

The right is critical of additional antitrust enforcement, arguing that it will harm both businesses and consumers.

The right is critical of additional antitrust enforcement, arguing that it will harm both businesses and consumers.

“[Biden’s] everything-but-the-kitchen-sink directive is simply a compendium of longtime Democratic dreams, banning companies — and workers — from acting in ways that keep them competitive… Biden says he’ll ban or limit employers’ use of non-compete agreements, which he says ‘are done for one reason: to keep wages low,’ citing how they keep McDonald’s workers from accepting better-paid jobs at Burger King… [but] Mickey D’s has no such thing…

“In fact, non-competes are typically something high-end workers sign to increase their salaries, offering employers security in exchange for more cash…

“Biden said he’s ordered the Food and Drug Administration ‘to help expedite imports of prescription drugs from Canada’ because ‘high prices are in part the result of lack of competition among drug manufacturers.’ No, drugs are cheaper in Canada because of price controls. Americans pay more to subsidize the high cost of R&D that other countries shirk. The race to develop COVID vaccines in record time showed how competitive drugmakers really are.”
Editorial Board, New York Post

“Mr. Biden’s order includes 72 directives that mostly aim to shackle businesses. Consider railroads. Government regulation of railroad rates was among the great failures of the 20th century. It reduced private investment and service and drove many carriers into bankruptcy. Congress abandoned it in 1980, but Mr. Biden wants to revive it. His order summary says there are only seven Class I freight railroads compared to 33 four decades ago. Yet freight prices have dropped 44% since 1981. Mr. Biden wants to force railroads to hand over freight traffic to competitors, which would reduce private investment and shipping efficiencies…

“He also instructs the Federal Communications Commission to restore the Obama -era ‘net neutrality’ rules that regulated broadband providers like railroads. Investment fell after the FCC imposed net neutrality, then surged after the Trump FCC liberated carriers. Broadband last year cost 20.2% less and was 15.7% faster than in 2015…

“One reason is fierce competition. Democrats opposed the T-Mobile-Sprint merger in 2018, but it has boosted wireless competition and investment. The tie-up shows how business consolidation can improve consumer welfare. Economies of scale can reduce prices. Size also gives businesses more leverage to negotiate lower prices with suppliers.”
Editorial Board, Wall Street Journal

“Economist Jay Ritter argues that in a more global, tech-driven economy, bigger firms are the only ones able to compete. They need to scale up quickly since the market is now global for both customers and competitors, requiring more resources. Technology and ecommerce have made consumers more aware of price and quality. Size has advantages: bigger firms can be more productive. In a market where goods and services are less sensitive to space and borders, the firm that offers the best, cheapest product first—like, say, Facebook—takes it all…

“Clamping down on big companies in the U.S. won’t change a global economy that rewards superstars, and it won’t help small firms. It may succeed only in putting big American firms at a disadvantage in the global market.”
Allison Schrager, City Journal

“[Antitrust authorities] should recognize that firms’ size can be an important factor in their ability to innovate. Rather than rely on market share as the alarm bell that signals the need for antitrust enforcement, regulators should focus more on firms’ conduct, and they should look first to behavioral remedies, not structural ones. Antitrust analysis should also consider that tech companies compete globally, not nationally, so cutting them down to size usually has significant economic consequences…

“The Federal Communications Commission has provided a model for the behavioral approach by conducting a series of inquiries starting in 1970 to investigate the convergence of telephone and computing services and establish rules enabling competition among established and upstart players across sectors that are increasingly intertwined…

“U.S. courts also provided a model in judgments against Microsoft, which compelled it to let other companies more easily integrate their software into Windows. As policy makers now consider competition issues related to today’s large technology firms, they would be well advised to learn from this history.”
Robert D. Atkinson, Wall Street Journal

A libertarian's take

“A new White House antitrust order exemplifies one of the worst presidential trends: a proclivity for unilateral executive action, even when Congress is on the cusp of considering the same thing. Both the U.S. Senate and House of Representatives have been considering a slew of changes to American antitrust policy. There are a lot of reasons to be wary of these measures, but at least—should they pass—they'll have been the subject of deliberation and voting by elected officials. In contrast, President Joe Biden's new ‘Executive Order on Promoting Competition in the American Economy’ simply tells federal agencies to make a slew of changes in line with the president's values.”
Elizabeth Nolan Brown, Reason

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