Antitrust "Reform" Gains Momentum and Finds New Targets | Citizens Against Government Waste

Antitrust "Reform" Gains Momentum and Finds New Targets

The WasteWatcher

Antitrust “reform” is on the move again in Congress.  Members of both parties and chambers have been shepherding their legislation, which has mostly been aimed at “Big Tech,” while others are finding new targets.  The issue has been a hot topic for several years and it does not appear that the antitrust bandwagon is going away anytime soon.

 On Thursday January 20, 2022, the Senate Judiciary Committee held a markup on S. 2992, the American Choice and Innovation Online Act.  The bill was introduced by Sens. Amy Klobuchar (D-Minn.) and Chuck Grassley (R-Iowa) and targets technology companies based on their size, like Amazon, Google and Facebook, that allegedly engage in “self-preferencing” behavior in a manner that supposedly eliminates competition.  The bill would ban companies from selling and promoting a private label product over products from competing companies. The example that proponents of this bill most often cite is Amazon promoting Amazon Basics products and offering free 2-day shipping to Amazon Prime customers. 

Grocery stores, department stores, pharmacies, and other sellers are exempt from this enhanced antitrust standard, even though they all offer their own private label products.  None of these companies manufacture such products.  They are all made by many of the same companies, whether they say Amazon, Safeway, or Walmart on the label.  The only real difference between the exempt companies and the companies covered by the legislation is that large technology companies have become political targets for members of both parties.

S. 2992 not only unfairly targets one group of companies in one industry, but it also abandons the consumer welfare standard that was established under the Sherman and Clayton Antitrust Acts.  This standard requires that antitrust regulators at the Federal Trade Commission (FTC) and Department of Justice (DOJ) should take enforcement action only if companies are engaging in behavior that unreasonably impacts consumer welfare.  As the FTC website notes, “the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up.”  In other words, if consumers are getting high quality products at low prices in an efficient manner, there is no cause of action against a company.   

Wayne Brough of the R Street Institute pointed out that S. 2992 would limit business practices that are economically efficient,  reduce competition and threaten many products that have been beneficial to consumers.  He also noted that it would require a new and more intrusive level of regulatory oversight, with bureaucrats deciding what type of competition is appropriate and which is unfair.  It would also increase the burden on business and consumers, while stifling innovation.

The use of private label products has long provided benefits and lower prices to consumers.  There is nothing wrong that needs to be fixed.  Banning their use for any business, regardless of its size, would be very damaging, especially when prices are already rising due to inflation. 

While the private label issue is only aimed at technology companies, grocery store chains have also been criticized.  On January 5, 2022, Sen. Elizabeth Warren (D-Mass.) called for grocery store chains to be targeted by antitrust regulators for their supposed effects on America’s food supply and prices.  On January 19, 2022, the House Judiciary Committee Subcommittee on Antitrust, Commercial, and Administrative Law held a hearing,  Reviving Competition, Part 5: Addressing the Effects of Economic Concentration on America’s Food Supply.

There is no doubt that consumers are facing higher prices and limited options at grocery stores, but the blame lies with excessive government spending and supply chain problems.  It is no surprise that after a year of unprecedented government spending Americans are starting to feel the pinch in their pocketbooks.  Inflation hit 7 percent in December, the highest in 40 years, and supply chain issues stemming from the pandemic, along with January snowstorms have led to limited access to many goods and services.  Inflation is causing Americans to tighten their belts to save money and it is past time that Democrats in Congress do the same with taxpayer dollars.

Antitrust is a cause celeb on Capitol Hill and it is clear that it will not be going away anytime soon.  Antitrust legislation that is neither based on nor is supportive of the consumer welfare standard must be rejected.  That includes legislation restricting businesses from selling products under their own label.  If the consumer welfare standard is abandoned for one industry, none will be safe.