Progressives can tackle the harm corporate consolidation is doing to our economy

There is no exaggerating the role of power in the 21^st century economy. From skyrocketing drug costs to the disparities we see today, including the digital divide and a banking sector that excludes entire communities, it’s clear that our nation’s market power problem has created an economic system that is not working for most Americans.

Lax antitrust law and enforcement have left trends such as corporate consolidation — as seen across the economy, from tech giants like Amazon to chicken farmers in the Midwest — unchallenged. In permitting outsized corporate power and the resulting absence of healthy competition, negligent antitrust is holding workers, consumers, and communities back and further embedding an acutely skewed economy. The Department of Justice recently gave CVS and Aetna preliminary permission to merge, consolidating the health care industry among an even smaller number of corporate giants.

{mosads}The increasingly concentrated power that employers use to shape the broader labor market to their own advantage—known as labor market monopsony — is one major problem that regulators have failed to address. The Federal Trade Commission (FTC) and Department of Justice (DOJ) have focused so squarely on how anticompetitive behavior affects consumers, that they have overlooked how it drives lower wages, limited worker mobility and less entrepreneurship.

Progressives led the way in exposing today’s market power crisis. The next step is to put forward big, creative ideas to address it and mend the imbalance of power. Doing just that, the Great Democracy Initiative (GDI) and the Roosevelt Institute have established a legislative blueprint for a bold antitrust agenda.

First, GDI Co-Founder and Director of Policy Ganesh Sitaraman argues for taking antitrust policymaking out of the courts and empowering antitrust enforcers to act more effectively and transparently. Unlike other government agencies, the FTC has largely abandoned its role, as authorized by Congress, of setting the regulations by which antitrust law is interpreted and enforced. This failing has left the responsibility of defining the substance of antitrust law to the Supreme Court. Given that judges are beyond the scope of legislative oversight and are not experts in antitrust, this outsized judicial influence is problematic. “Normally, the courts provide a check on regulatory agencies, which utilize their expertise and have a transparent process for making regulations,” writes Sitaraman. “In antitrust, because the courts have no expertise, they rely on the parties in the case and academics to teach them about markets and competition through an ad-hoc process of allowing amicus briefs during litigation.”

Building on Sitaraman’s structural analysis, Roosevelt Fellow and Research Director Marshall Steinbaum and Maurice E. Stucke, Professor of Law at the University of Tennessee, offer an alternative to the outdated consumer welfare standard, along with policy solutions to increase competition and protect workers and consumers. The “effective competition standard” would restore the primary aim of antitrust laws, namely to protect and preserve competition. As defined by Steinbaum and Stucke, under the new standard:

“Agencies and courts shall use the preservation of competitive market structures that protect individuals, purchasers, consumers, and producers; preserve opportunities for competitors; promote individual autonomy and well-being; and disperse private power as the principal objective of the federal antitrust laws.”

The effective competition standard would require essential constitutional amendments, to Section 7 of the Clayton Act and Section 2 of the Sherman Act, for instance, including a tougher merger review process. Currently, the plaintiffs (i.e., enforcers) in a merger case must demonstrate that the combining firms will likely weaken competition. Section 7 of the Clayton Act could be rewritten to shift the burden of proof away from plaintiffs and require the merging parties to show that the proposed acquisition would not lessen competition, produce a monopoly (or monopsony), or reinforce market power.

Together, these papers provide an essential structural analysis of America’s failing antitrust system and provide a robust response to fix it — showing that progressives are not only sounding the alarm on the many challenges in today’s economy and society, we are also staking our claim in building much-needed solutions.

The link between monopoly power and our high-profit, low-wage economy is increasingly clear. As Roosevelt Chief Economist Joseph E. Stiglitz explains, “Today, the powerful are more concentrated and have far greater influence over the rules… As was true at the beginning of the Progressive era, so too today: Much is at stake — not just the efficiency of our market economy, but the very nature of our democratic society.”

At a time when we are living in what some are calling the second Gilded Age, it’s not enough to declare that we need to rectify and revive antitrust law and enforcement. This moment, though deeply troubling, provides a critical opportunity to do better, by implementing progressive policies that meaningfully address the market power crisis. In the words of law professor Frank Pasquale, “if antitrust has a future, this is it.”

Kendra Bozarth is Deputy Director of Editorial and Digital Strategy at the Roosevelt Institute.