Congress Signals the Start of a New Trust-Busting Era
Newsletter 54: If, that is, the country survives long enough to see it happen
The Vice Presidential Debate was more muted but, frankly, it was no less substantively horrifying than last week’s tumultuous affair. While Pence adopted a markedly different style -- more coherence and a relatively subtle disregard for debate rules -- none of that was able to mask the fact that he was reading from the same script. He echoed Trump’s fear mongering on mail-in voting, his distrust of science, particularly climate science, and his improbable defense of the administration’s coronavirus response.
Harris didn’t pass up the opportunity to skewer Pence on that last point. The Vice President, who leads the administration’s coronavirus task force, can’t duck responsibility for an incompetent response that has, as Harris emphasized, led to unnecessary loss. We only wish that Harris had challenged Pence more directly on a few of his most ridiculous claims. Our jaws genuinely hit the floor when we heard Pence brag about the administration’s successes on testing. As anyone who regularly reads this weekly screed can attest, we spent the better part of the pandemic’s early months chronicling testing failure after failure. Even now, testing availability is uneven and wait times for results can stretch on for over a week.
We were similarly shocked to hear about Pence’s supposed success delivering much-needed PPE to those who needed it. Have we already forgotten about how states desperate for supplies had to compete against each other, driving up prices for all? Or about the clandestine operations that were undertaken to ensure delivery of essential materials? Or, indeed, about how the Defense Department took money meant to build up medical supplies and spent it on jet engine parts and body armor? We would hope not, but it truly never hurts to revisit and rebroadcast this administration’s litany of failures at every opportunity.
Kamala Harris modeled good behavior for House Democrats, and we hope they follow in her footsteps. October, November, and December are great times to come to terms with how Trump broke the federal government and what is needed to “Build it Back Better.”
Anti Monopoly
On Tuesday, the House Judiciary subcommittee on antitrust’s final report on Big Tech came out, and seems to have largely met the high hopes of anti-monopolists. The report reveals the subcommittee’s findings on Amazon, Apple, Google and Facebook’s anticompetitive conduct, and crucially provides a roadmap to reckon with each platform’s unrivaled power.
While many others will be breaking down the report’s topline discoveries and recommendations (we recommend Matt Stoller’s post), the Revolving Door Project has been focused on the failures of the antitrust enforcement agencies to stop Big Tech and other industry giants from further consolidating power by way of relentless mergers and acquisitions. Thus, here are our takeaways from the report on strengthening antitrust enforcement:
The report establishes that the antitrust enforcement agencies completely fell asleep on the job. The investigation found that “the antitrust agencies failed, at key occasions, to stop monopolists from rolling up their competitors and failed to protect the American people from abuses of monopoly power. Forceful agency action is critical.” (p. 7)
The report recommends increasing the budget of the FTC and Antitrust Division. More funding would allow the FTC to survey economic concentration and competition across industries and conduct retrospectives on past decisions (p. 401-402). See our article in Washington Monthly on how increasing the antitrust enforcement agencies’ budgets would also help combat the deep pockets of BigLaw and merger-driven corporations.
Additional funding would also allow the agencies to “publish written explanations for all enforcement decisions,” expanding the now-underwhelming Early Termination Notices that announce transactions approved by the agencies without conditions. In other words, if the agencies had more resources, they wouldn’t be able to get away with just waving through mega-mergers without a word.
The impact of the revolving door got a small but impactful nod. The report recommends Congress codify “stricter prohibitions on the revolving door between the agencies and the companies that they investigate, especially with regards to senior officials.”(p. 402) See our report on the revolving door culture at the FTC that undermines the mission of antitrust enforcement.
Big Tech’s corrosive influence on think tanks and academia is also mentioned— the report notes the dominant platforms’ funding of these worlds, as well as direct lobbying, expands “their sphere of influence, further shaping how they are governed and regulated.” (p. 19)
The scope of the FTC and DOJ’s failure to challenge Big Tech mergers is incredible. The report notes the four firms under investigation purchased over 500 companies since 1998, and yet “the antitrust agencies did not block a single acquisition.” (p. 393)
The report also found direct evidence that Amazon (p. 262) and Facebook (p. 151) saw companies as competitive threats before acquiring them. Facebook faced only one acquisition probe out of almost 100 acquisitions, namely the FTC’s investigation of Facebook-Instagram, which the agency approved in 2012.
And, despite the many ongoing investigations by the antitrust enforcement agencies, Big Tech is still making new deals to acquire rivals. The committee thus recommends that Congress shift “presumptions for future acquisitions by the dominant platforms,” which would presume any new acquisitions to be anticompetitive. (p. 387)
The subcommittee expressed skepticism of Amazon’s responses, owing to the company making “possibly criminally false or perjurious” statements during the investigation (p.253-254). We wrote on those statements, and the former antitrust official who made them, back in April. Our lingering question: does Congress plan on doing anything about Amazon’s potential lies? Or will companies be allowed to evidently obfuscate congressional investigations?
Finally, the report outlines the “expansive set of tools” neglected by the FTC and DOJ, such as the ability to define what constitutes an “unfair method of competition” and the Robinson-Patman Act which allows the agencies to “limit the power of large chain retailers to extract concessions from independent suppliers.” The report scathingly notes that instead, the agencies “have targeted their enforcement efforts on relatively small players—including ice skating teachers and organists—raising questions about their enforcement priorities.” (p. 401-403) The Revolving Door Project’s soon-to-be-released Merger Tracker, recording the agencies’ 2020 enforcement actions as well as the officials and private-side lawyers who work on those transactions, spotlights such cases. We record the frequent action taken on lower-stakes mergers and acquisitions, along with the many multi-billion dollar deals that are rubber-stamped with few or zero conditions.
2020 (and potentially 2021)
After this past week, even some of Trump’s most stalwart defenders in corporate America seem to be giving up hope that he will pull off a win. They’re now joining the swarm of executives searching for an answer to that all important question: what will business be like under Biden? An army of lawyers, consultants, and lobbyists have been pondering the query for months and seem to think, “not so different, really.”
According to a recent Reuters report, lobbyists and policy experts are projecting that corporate America’s financial regulatory gains are unlikely to go anywhere anytime soon. By this logic, a newly-minted Biden administration will be too busy passing new COVID relief, pushing a climate package, and addressing tax, ethics, and healthcare to focus on revoking Trump-era giveaways to the financial industry.
But there’s no inherent reason that there should be a tradeoff. If Biden wins in November, his team will set to work staffing his administration with thousands of appointees. Some of those people will inevitably focus their efforts on working with Congress to pass major legislation. But that should still leave many, many more to focus on the more bread-and-butter executive branch functions: enforcement and regulation. These officials won’t be able to reverse all of the Trump-era giveaways to banks, but they can get a lot of them.
Of course, whether or not this happens depends heavily on who Biden ultimately chooses to fill these roles. The fact that a Biden administration’s early days will be filled with competing priorities makes these choices all the more important. If Biden hopes to lead his administration to rapid action on multiple fronts, he will need to install appointees who can be trusted to push initiatives forward relatively autonomously. We don’t need to tell you that we don’t think revolving door figures fit the bill.
We have no crystal ball, so we can’t say with any certainty what a Biden administration will look like. But, as our Eleanor Eagan and Max Moran wrote for The American Prospect yesterday, the Biden transition team’s code of ethics does not signal a strong commitment to keeping corporate influence out. And, as our newly revamped Presidential Power Map demonstrates, there has been no shortage of influencers working to get a foot in the door, whether through Biden himself or one of the other Democratic primary candidates-turned-potential executive branch officials (including potential Vice President Kamala Harris and Transition Advisory Board Member Pete Buttigieg).
Governance
Biden’s personnel priorities may still be in flux but, happily, his commitment to re-elevating civil servants’ does not appear to be. This recent article from Government Executive describes Biden as a figure who has always sought civil servants’ expertise and respected their service. This comes across in several of the former Vice President’s policy proposals. He has, for example, promised “to provide agencies with the funding they need, respect the independence and rely on the expertise of career civil servants, and highlight their work as crucial to our government’s functioning.” The funding promise, of course, is ultimately in the hands of Congress, many of whose members are hostile to the very existence of an administrative state. But respect for independence and expertise will be a breath of fresh air after four years of governance-by-tweet
We hope that the transition team and the new administration will take the steps necessary to ensure that these commitments become a reality. That should include a careful assessment of what constitutes the “funding [agencies] need.” As our visiting fellow Yevgeny Shrago argued in The American Prospect, adequate staffing at the EPA would mean nearly doubling the number of agency employees. Following years of cuts and stagnation at EPA and elsewhere, there’s a great deal of catching up to do.
Independent Agencies
Donald Trump and Mitch McConnell’s court packing continues to enjoy much-needed prime-time billing, but their independent agency packing is still receiving too little attention. This week we released another update on that slow-moving crisis. As we approach the election, the partisan imbalance in nominations only grows more severe. While there are 16 nominations for 27 expired or vacant Republican seats, there are only 4 nominations for 24 Democratic ones.
Want more? Check out some of the pieces that we have published or contributed research or thoughts to in the last week:
The Biden Transition’s Ethics Pledge Is a Paper Tiger
September 2020 Update on the State of Independent Federal Agencies
Rick Smith 10/5/20
New Biden ethics document limits lobbyists' influence on transition team
Breakingviews - Could Larry Fink pass the Democratic purity test?