The Corner Newsletter, April 30, 2020
Open Markets Details A Merger Moratorium Proposed by Lawmakers, a Conference on Building Resilient International Systems Co-Hosted with the OECD, and a Conference on Right to Repair Co-Hosted with U.S. PIRG
Welcome to The Corner. In this issue, we discuss proposals for a merger moratorium for the duration of the COVID-19 crisis, an online conference on building resilient international systems that was co-hosted by the Open Market Instituteand the OECD, as well as the online conference on right to repair that Open Markets co-hosted with U.S. PIRG.
Lawmakers Propose Merger Moratorium for Duration of COVID-19 Crisis
Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (NY-14) proposed legislation on Tuesday to halt mergers by corporations and funds larger than $100 million in revenue or financial firms with market capitalization of more than $100 million, in order to protect the American public from further consolidation and concentration of power and control during a time of crisis.
The legislators’ plan would ban mergers and acquisitions by large corporations until the Federal Trade Commission (FTC)“determines that small businesses, workers, and consumers are no longer under severe financial distress.”
Rep. David Cicilline (RI-1), chairman of the House Antitrust Subcommittee, on April 23 called for a similar merger moratorium at an conference sponsored by the Open Markets Institute.
The proposal by Sen. Warren and Rep. Ocasio-Cortez tracks closely with the outlines of a letter that the Open Markets Institute published in March. In that letter, Open Markets urged Congress, the Trump administration, and federal and state law enforcement agencies to “use their various powers to impose an immediate ban on all mergers and acquisitions by any corporation with more than $100 million in annual revenue, and by any financial institution or equity fund with more than $100 million in capitalization.” Open Markets wrote then that a moratorium on mergers was needed to prevent a wholesale concentration of additional power by corporations that already dominate or largely control their markets, especially in ways that may significantly worsen the crisis that now threatens America’s health care, social, and economic systems.
Without a merger ban, Americans will face even greater concentration and increased economic and political inequality after the pandemic. While most independent businesses are facing hardship, corporations such as Apple have plenty of available cash and are ready to use it immediately for takeovers.
Sen. Warren and Rep. Ocasio-Cortez’s proposal can be read here.
Open Markets’ proposal can be read here.
Open Markets Co-Hosts Online Conference With OECD to Develop Resilient Systems
The Open Markets Institute last Thursday hosted a conference in conjunction with the Organisation for Economic Co-Operation and Development (OECD) on how to rebuild the international production system to ensure its resiliency and to promote more effective cooperation among the peoples of the world. The overwhelming consensus of participants was that concentration of power and capacity deeply threatens the ability of all nations to cope with crises such as COVID-19 and poses grave dangers to U.S. and European security.
Participants in the conference included Nobel Prize-winning economist Paul Romer, Financial Times editor Rana Foroohar, International Trade Union Confederation General Secretary Sharan Burrow, OECD Chief Economist Laurence Boone, former Director-General of the World Trade Organization Pascal Lamy, former Deputy Governor of the Bank of England Paul Tucker, Center for Infectious Disease Research and Policy at the University of Minnesota Director Michael Osterholm, FTC Commissioner Rohit Chopra, and Michael Masters, founder of Masters Capital Management and chair of Better Markets. Congressman David Cicilline (D-RI) gave the keynote speech for the event.
The conversation focused on a variety of dangers, including the extreme concentration of vital medical and pharmaceutical supplies in China, the fragility of complex industrial systems, and the ways in which today’s international supply chains harm millions of workers around the world.
Gabriela Ramos, OECD chief of staff and liaison to the G20, said that it was vital that international leaders address the dangers posed by consolidation of capacity. “There is a tradeoff between resilience and efficiency,” she said.
Angel Gurría, secretary-general of the OECD, concluded the event, telling Open Markets’ Executive Director Barry Lynn that “You give us a vision, and then our mission … becomes clearer. We have a greater sense of purpose. It’s invaluable.”
Martin Wolf wrote in the Financial Times that the conference had asked a “big question … whether the essential systems that keep our societies running are adequately resilient.” Unfortunately, he concludes, the “answer is no.”
The conference was co-hosted by the New Approaches to Economic Challenges initiative (NAEC) at the OECD. The entire conference can be viewed here.
Open Markets Co-Hosts Online Conference on Right to Repair with U.S. PIRG
Open Markets Institute co-hosted a webinar on April 21 with the U.S. Public Interest Research Group on how product manufacturers deprive Americans of the right to repair the products that they have purchased. The conference featured Open Markets policy analyst Daniel Hanley, Food & Power writer Claire Kelloway, and U.S. PIRG’s Campaign Director for the right to repair Nathan Proctor.
The event focused on how dominant manufacturers exploit repair restrictions to create monopoly power in the aftermarkets for product parts, service manuals, and diagnostic software. The conference highlighted the rising number of consumers who say that they should be able to fix what they own.
The conference was based in large part on a new report by Open Markets, Fixing America: Breaking Manufacturers’ Aftermarket Monopoly and Restoring Consumers’ Right to Repair. The report exposes how a deadly combination of anemic antitrust enforcement and technological development have allowed manufacturers to purposefully adopt exclusionary practices and cut off the tools necessary for repair. Our report makes clear that lawmakers, antitrust enforcers, and regulators have many policy tools that can reopen repair markets, such as bringing antitrust lawsuits for predatory design tactics that restrict the right to repair or for exclusive dealing that restricts where owners can go to repair their products.
The full report can be read here.
The full webinar can be viewed here.
🔊 ANTI-MONOPOLY RISING:
The FTC and Justice Department Issue Joint Statement Warning Against Collusion in Labor Markets. To protect health care workers, the FTC and the Justice Department will use antitrust laws against anyone engaging in anti-competitive practices, the agencies said in a statement issued on April 13. “The Division will use its enforcement authority to ensure that companies and individuals who distort the free market for labor are held to account,” Assistant Attorney General Makan Delrahim said in the statement. (Federal Trade Commission)
Amazon Might Have Lied to Congress. The Wall Street Journal revealed that Amazon exploited its dominant position by exploiting the data on its platform about third-party sellers, so that Amazon would be best able to compete with those sellers by developing private-label Amazon brands. These actions contradict statements made by Amazon lawyer Nate Sutton during a congressional hearing, when he said that the corporation did not use data from individual sellers, but only aggregated data from multiple sellers. (Vox Recode)
📝 WHAT WE'VE BEEN UP TO:
At the request of the House Subcommittee on Antitrust, Commercial, and Administrative Law, Open Markets submitted a letter detailing anti-competitive practices by platform monopolies and laying out potential solutions. Platform monopolies act as dominant gatekeepers to the markets they control and can pick the winners in the marketplace by merely changing their algorithms. In our letter, we recommend reforms aimed at opening the gates of fair competition to new innovators, restoring dynamism to our economy, decreasing market concentration, ensuring basic rule of law for all sellers and buyers, and protecting the security of our nation and our democracy.
Open Markets was featured on Broadband Breakfast in a story on regulating big tech. The article discusses Open Markets’ letter to the House Subcommittee on Antitrust urging Congress and law enforcement agencies to enforce antitrust laws against platform monopolists.
Open Markets authored a letter that called for the rejection of plans for Liberty Media to take operating control of iHeartMedia. Our letter argued that the acquisition would lead to the closure of radio stations, the losses of jobs –particularly among local journalists – and fewer options for listeners. Our document supplemented a letter to the Department of Justice sent by the Artist Rights Alliance and signed by many Open Markets’ allies, including the Institute for Local Self-Reliance and Shape Advocacy.
Open Markets fellow Mya Frazier wrote an article in The Guardian about the struggles faced by workers in the chicken processing industry in the United States during the COVID-19 pandemic. Frazier points out that the industry pays exceptionally low wages for exceptionally hazardous work.
Claire Kelloway was quoted in The Des Moines Register in an article on the impact of Costco’s poultry plant on farmers. Kelloway was quoted as saying that Costco’s business model has "proved to be a financial death trap for farmers."
Daniel Hanley was a guest on a panel event titled “Will the Techlash Be Livestreamed: How Are Big Tech Companies Navigating the Obstacles of the Coronavirus?" on Broadband Breakfast on April 22.
Barry Lynn’s 2018 op-ed in The Guardian was mentioned in GQ Australia. In the piece, Lynn wrote about on the dangers that Google and Facebook pose to news outlets and democracy.
Sally Hubbard was quoted in ProPublica on Amazon’s success during the COVID-19 pandemic and the collapse of the retail sector. “Amazon is able to cut off its competitors’ access to inventory by leveraging its monopoly power,” Hubbard said.
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📈 VITAL STAT: $50
The range in the fluctuation of prices for a bag of rice on Amazon since the COVID-19 pandemic.
📚 WHAT WE'RE READING:
“As Amazon Rises, So Does the Opposition” (The New York Times, David Streitfeld): Profiling Stacy Mitchell, co-director of the Institute for Local Self-Reliance (ILSR) and a driving force in the creation of the Amazon watchdog coalition called Athena, has been working to force Amazon to reform its anti-competitive practices.
“What Role for Antitrust in Regulating Platforms?” (Communications of the ACM, James Grimmelmann): Argues that antitrust law and enforcement are important for blocked anti-competitive contracts and mergers, but not for regulatingplatform design. Instead, platform design requires new rules and regulations.
“Antitrust and Democracy: A Case Study from German Fascism” (University of Michigan Law School, Daniel A. Crane): Examines the relationship between monopoly and Nazism, using the case study of IG Farben chemical cartel, to discuss how economic concentration gives rise to fascism.
Open Markets Employment Opportunities
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