When congressional Democrats unveiled their “Better Deal” midterm election blueprint this week, there was one particularly exciting and overlooked item: one piece of the party’s new antitrust policy. The platform contains the most interesting idea in antitrust policy in decades, a plan that—if it is designed well—could finally bring real life to merger law, the most important but probably most failed component of American competition policy.
While thin on overall detail, the Better Deal’s antitrust proposals contain this extremely promising idea: Under its plank for “Cracking Down on Corporate Monopolies and the Abuse of Economic and Political Power,” the platform proposes a plan for “tough post-merger review.” After mergers are approved and consummated, the Democrats would require “frequent, independent reviews” of the merged firms’ performance, ensure resources are available for such reviews, and demand “corrective measures” if regulators “find abusive monopolistic conditions where previously approved measures fail to make good on their intended outcomes.”
This is music.
The plan also proposes to create a “consumer competition advocate,” which they would style as the 21st-Century Trustbuster. As currently described, that official would just be an ombudsperson, without independent enforcement power, but there is potential there too.
The reason this could matter so much is that the political problem at the heart of antitrust law is a failure of public support. Antitrust law needs commitment from courts, the professionals who administer it, and the public.
What could finally convince the courts that corporate consolidation is dangerous and needs government control, and put the enforcement agencies’ feet to the fire, is the hard, empirical proof that would pour forth from an appropriately designed post-merger review authority. Namely, we would learn that mergers, and especially horizontal ones, produce serious harms at much lower levels of concentration than most currently believe, and that they don’t deliver any systematic, significant offsetting benefits. That evidence has recently begun to emerge from academic economists, but well-designed government merger reviewer could do so much more.
Crucially, the law should ensure that “review” is the right kind of “review,” that data and resources are available to the reviewer (and can’t just be revoked any time other government officials are unhappy with the reviewer’s work), and that the reviewer is independent of the political leadership of the antitrust agencies. For this to be more than window dressing, the officials responsible for post-merger review must be able to perform rigorous econometric review—such as difference-in-difference studies—to determine whether specific mergers have caused consumer injury or other harms. They must be able to do it with access to the same confidential information to which the antitrust agencies have access during the current review process administered under the Hart-Scott-Rodino Act. And they must be free to do it without interference from the enforcement officials whose work they will be judging.
Of course, making even this one key plank happen will be heavy legislative lifting. Meaningful antitrust legislation, of any sort that could be described as “progressive” or “pro-enforcement,” has essentially never succeeded since at least 1980, even though many bills are introduced during every Congress. Meanwhile, the federal enforcement agencies themselves will bitterly oppose any such new process, and the business community would oppose it vigorously.
Interestingly, much of the antitrust agitation of the past few years was driven, very quietly, by a small group of think-tank advocates and academics. Their political successes are most remarkable, evinced especially by the influence they’ve apparently had in drafting the antitrust planks of the Better Deal. That they’ve made their mark is shown by the dust-up this week when former federal trade commissioner and law professor Josh Wright—a Republican who led President Trump’s antitrust transition team—attempted to brand these policies as #hipsterantitrust. It seemed pretty plainly that he meant to dismiss and mock these folks with that hashtag but that he acknowledged their place at the table is only the latest sign of their concrete successes.
Still, neither the congressional minority nor their outside advisers who helped guide this policy seem to recognize the potential pitfalls for even this very perceptive, exciting post-merger review initiative. If the agencies have their way, for example, the mandatory reviews will be about as useful as the many, many self-congratulatory and typically uninformative reports the agencies already produce and have done for decades. The 21st-Century Trustbuster, too, could be a key component of truly independent review, or it could be one more instance in the law’s long history of ombudspersons with power to gather information who did no good at all. Finally, the platform has one other plank, which would amend the statutory language of our basic merger law to create a presumption of enforcement against the largest mergers. But we’ve had written, explicit language favoring error on the side of overenforcement, in both the statutory text and legislative history, for the entire 103 years of our statutory merger law. During that time there’s only been one period of about 10 years of aggressive enforcement, which happened decades ago.
Ultimately, the Better Deal’s antitrust planks have the potential either to finally begin delivering on antitrust law’s real and full potential, or to disappoint as tellingly as dozens of other proposed reforms. I hope the Democrats use this opportunity to ensure it would do the former.