Monopoly

  • Jarsulic, Marc, Ethan Gurwitz, Kate Bahn, and Andy Green. Reviving Antitrust: Why Our Economy Needs a Progressive Competition Policy. Center for American Progress, 2016.
    • “financial market practitioners recognize the ability of market concentration to raise returns. Take for example a 2014 Goldman Sachs report that analyzed what was termed the 'path to consolidation' of six industries that ranged from beer to containerboard. For nearly all of the cases reviewed, the report found that stock market performance and overall profitability tracked with increased market concentration.”
    • “For much of the period between 1977 and 2012, the rate of entry of new firms in the economy exceeded the rate of exit. But the difference in rates narrowed measurably over that period, and now the two rates are more or less equal.”
    • Kwoka study of past consolidation suggests 2/3 resulted in price increases, and there were often reductions in R&D
    • Cases where mergers resulted in reduced wages through greater market power
    • An influencing government: “When firms succeed in restricting competition and earning supra-competitive returns, they have extra resources and incentive to defend and expand their position by influencing political and regulatory decisions”
  • Khan, Lina and Sandeep Vaheesan. “Market Power and Inequality: The Antitrust Counterrevolution and its Discontents.” Harvard Law & Policy Review 235 (2017).
    • Looks at monopoly and oligopoly power as a mechanism of wealth inequality, “a powerful mechanism for transferring wealth from the many among the working and middle classes to the few belonging to the 1% and 0.1% at the top of the income and wealth distribution”
    • “our argument is not that antitrust should embrace redistribution as an explicit goal, or that enforcers should harness antitrust in order to promote progressive redistribution. Instead we hold that the failure of antitrust to preserve competitive markets contributes to regressive wealth and income distribution and—similarly—restoring antitrust is likely to have progressive distributive effects”
    • Impact of market power on inequality is understudied, but it appears to correlate market power concentration to regressive distribution
    • Narrative of Chicago School and weakening of antitrust law
    • Detailed analysis of several sectors: medicine and pharma, groceries, telecom, airlines, electricity
    • Section on connection between market power and government influence
    • A variety of proposed reforms, including simplified legal tests, presumptions of illegality under certain conditions of clear excess, further tools for challenging existing market power, transparency of merger review process
  • Stiglitz, Joseph E. “America Has a Monopoly Problem—and It’s Huge.” The Nation. October 23, 2017.
  • Too much of a good thing.” The Economist. March 26, 2016.
    • “Profits have risen in most rich countries over the past ten years but the increase has been biggest for American firms. Coupled with an increasing concentration of ownership, this means the fruits of economic growth are being hoarded.”
    • First chart shows drastic increase of corporate return on capital in recent years
    • “Unlike earlier acquisitions aimed at building global empires, these mergers were largely aimed at consolidating in America, allowing the merged companies to increase their market shares and cut their costs. The companies in question usually make no pretence of planning to pass the savings they make this way on to their customers”
    • “The Economist has divided the economy into 900-odd sectors covered by America’s five-yearly economic census. Two-thirds of them became more concentrated between 1997 and 2012”
    • “the rate of small-company creation in America is close to its lowest mark since the 1970s (although an index of startups run by the Kauffman Foundation has shown flickers of life recently).”
    • “Another factor that may have made profits stickier is the growing clout of giant institutional shareholders such as BlackRock, State Street and Capital Group. Together they own 10-20% of most American companies, including ones that compete with each other. … they may well set the tone, for example by demanding that chief executives remain disciplined about pricing and restraining investment in new capacity.”
    • “America’s antitrust apparatus has gone through periods of leniency (1915-35) and stridency (1936-72). By the 1980s the Chicago school of free-market thought was ascendant. Its insistence that the efficiency benefits of big mergers should not be dismissed had a big influence on the courts.”

Cooperative law

  • Agricultural Cooperatives and the Antitrust Laws.” Indiana Law Journal 36, no. 4 (summer 1961).
  • Associated Press v. United States US Supreme Court. 1945.
    • “The fact that AP's activities are cooperative does not render the Sherman Act inapplicable”
    • “The result here does not involve an application of the “public utility” concept to the newspaper business”
    • “Arrangements or combinations designed to stifle competition can not be immunized through a membership device which would accomplish that purpose”
  • Barnes, Donald M. and Christopher E. Ondeck. “The Capper-Volstead Act: Opportunity Today and Tomorrow.” presented at the National Council of Farmer Cooperatives' National Institute on Cooperative Education, Annual Conference, Pittsburgh, PA. August 5, 1997.
    • “The legal protection from prosecution under the antitrust laws provided by the Act has allowed agricultural cooperatives to grow and prosper -without such protection a wide range of cooperative activities would be hampered or prohibited outright.”
    • “Senator Capper stated that the purpose of the bill “is to give to the farmer the same right to bargain collectively that is already enjoyed by corporations.””
  • Cooperatives and the Antitrust Laws.” Indiana Law Journal 27, no.3 (spring 1952).
  • Douglas, Leah. “How Rural America Got Milked.” Washington Monthly. March 2018.
    • “The Sherman Act's framers thought they were crafting a statute against abusive concentrations of economic power. An interpretation that penalizes individually practicing doctors, small farmers, small franchisees, or other small players would have been unacceptable to the drafters. Yet that is how the Act's jurisprudence has evolved.”
    • “Unless the small firms can establish an efficiency defense,' collective action will be subject to the per se rule governing horizontal combinations.” - “But there is no general collective action defense in antitrust law, even for small players confronting a dominant upstream or downstream player that dictates the terms of sale for goods or services.”
    • “There are obvious risks to permitting small players' collective action. If small buyers can cartelize to offset the power of a powerful seller, the buyers' collective power may be exercised against all sellers, not simply the market leader.”
    • Proposes a series of “safe harbor” rules that would permit small-player collaboration up to certain market caps, as well as an “exclusive relationship” safe harbor, which would apply to franchises and co-ops
    • Proposes this as a regulatory rule, not new legislation
  • Hanna, John. “Antitrust Immunities of Cooperative Associations.” Law and Contemporary Problems 13 (Summer 1948), 488-504.
  • Lemon, L. Gene. “The Capper-Volstead Act: Will It Ever Grow Up?.” Administrative Law Review 22, no. 3 (April 1970).
  • Saker, Victoria A. Benevolent Monopoly: The Legal Transformation of Agricultural Cooperation, 1890–1943. University of California, Berkeley dissertation. 1990.
  • Tobriner, Matthew O. “The Constitutionality of Cooperative Marketing Statues.” California Law Review 17, no. 1 (November 1928).
  • Varney, Christine A. “The Capper-Volstead Act, agricultural cooperatives, and antitrust immunity.” The Antitrust Source (December 2010).
    • 1914 Clayton Act provided initial antitrust immunity
  • Youde, James G. and Peter G. Helmberger. “Marketing Cooperatives in the U.S.: Membership Policies, Market Power, and Antitrust Policy.” Journal of Farm Economics 48, no. 3 (August 1966).

Platform economy antitrust

  • Alexandrov, Alexei, George Deltas, and Daniel F. Spulber. “Antitrust and Competition in Two-Sided Markets.” Journal of Competition Law & Economics 7, no. 4 (December 2011).
    • “The analysis shows that equilibrium in a two-sided market can be characterized as a one-sided market in which transaction demand depends on the bid-ask spread of the central market maker. This allows for a straightforward extension of critical demand elasticity and critical loss analysis from one-sided markets to two-sided markets, with antitrust tests based on the hypothetical monopolist's bid-ask spread. Antitrust analysis of a one-sided market also carries over to a two-sided market with a matchmaker where antitrust tests are based on the sum of participation fees.”
  • Duhigg, Charles. “The Case Against Google.” The New York Times Magazine. February 20, 2018.
    • Extended exploration of the antitrust case for Google, as well as an argument that even the largely foiled antitrust suits against IBM and Microsoft in the past ended up significantly reshaping their industries for the better.
  • Foer, Albert A. and Sandeep Vaheesan. “Google: The Unique Case of the Monopolistic Search Engine.” Journal of European Competition Law & Practice 4, no. 3 (June 2013).
    • A brief editorial comment on the January 2013 FTC decision that cleared Google of wrongdoing in its search results
    • Gestures toward such suggestions as: disaggregating Google services across multiple firms; using government power to require default adoption of a competitor such as Bing
    • “The case of Google requires us to consider all alternatives, including the deliberate use of public resources to maintain effective choice in information sources on the Internet.”
  • Freedom from Facebook - a campaign to “Break up Facebook's Monopoly”, led by Demand Progress and others
  • Haucap, Justus and Ulrich Heimeshoff. “Google, Facebook, Amazon, eBay: Is the Internet driving competition or market monopolization?.” International Economics and Economic Policy 11, no 1-2 (February 2014).
    • “we use our theoretical insights to examine whether (a) leading Internet platforms have non-temporary market power and, based on this analysis, (b) whether any specific market regulation beyond general competition law rules is warranted”
    • Concludes an interventionist approach is not warranted on the grounds that the market dominance of each platform is precarious
  • Hubbard, Sally. “Why Fake News Is An Antitrust Problem.” Forbes. January 10, 2017.
  • Illing, Sean. “Why 'fake news' is an antitrust problem.” Vox. September 23, 2017.
    • Interview with Sally Hubbard, senior editor of tech antitrust enforcement at the Capitol Forum
    • She points to precedents such as the Microsoft case and the original intent of the antitrust laws to argue that there as already been antitrust action against tech firms for behavior that involves no price increases, just anticompetitive behavior.
    • Argues for restricting mergers more than regulating tech, allowing competition to furnish the effects of regulation
  • Khan, Lina. “How to reboot the FTC.” Politico. April 13, 2016.
    • “the FTC is an agency adrift, squandering resources on trivial cases while failing to address the structural lack of competition that afflicts our economy.”
    • Transition from original mission: “In the 1970s and 1980s, however, a group of legal and economic scholars associated chiefly with the University of Chicago upended the traditional approach. Driven by Robert Bork, this revolution declared that the only legitimate goal of antitrust is economic efficiency, and promoted the adoption of defendant-friendly legal standards to enshrine this view.”
    • “Consolidation also appears to be driving a dramatic decline in entrepreneurship, closing off opportunity and suppressing growth.”
    • “Reforming the FTC to meet current challenges does not require any act of Congress. But it does require a bold leadership willing to use the full breadth of its expansive authority and keen to apply a more sophisticated understanding of how firms acquire and abuse market power.”
    • “First, the agency should commit to blocking anticompetitive mergers outright”
    • “Second, the FTC should take seriously the threats to competition posed by online platform monopolies. Firms like Amazon, Facebook, Google and Uber have emerged as the railroads of the Internet economy, connecting buyers and sellers in a central marketplace.”—“Unlike railroads, however, today’s online platforms also collect reams of information that help them entrench their existing dominance and gain advantage in new lines of business. But the FTC has yet to address directly the fact that concentrated control over data has deep implications for competition.”
    • “Third, the FTC should focus closely on the potential harms of vertical integration.”
    • “As mergers reach record highs and Internet platforms amass greater unchecked power over our political economy, the FTC’s competition mandate has never been more vital.”
  • Khan, Lina. “New Tools to Promote Competition.” Democracy, no. 42 (fall 2016).
    • Opens with the toughening of antitrust enforcement during FDR's administration
    • “Dominant firms that occupy gatekeeper roles—Google, for example, or Amazon—hold sufficient power to direct the fate of other companies, deciding who floats or sinks. / Restoring anti-monopoly law could be one of the most significant policy acts of the next administration.”
    • Essential concern is for growth: “a host of studies now shows that business formation in the country has declined drastically over recent decades” and “excessive consolidation may also have the effect of suppressing personal income and benefits”
    • “Given the network effects at play, a few companies have emerged as de facto rulers, serving as the railroads and roadways of the Internet economy. Flush with capital, dominant platforms routinely buy out companies that might threaten their empires.”
    • “America’s monopoly problem today largely results from a successful campaign in the late 1970s and early 1980s to change the framework of antimonopoly law. Anti-monopoly laws were originally passed not as technical economic regulation but as political law, to preserve self-governing communities and individual sovereignty” - “In the 1970s and ’80s a group of legal and economic scholars associated chiefly with the University of Chicago upended the traditional approach. Driven largely by Robert Bork, this revolution declared that the only legitimate goal of antitrust is economic efficiency, measured in the form of 'consumer welfare.'”
    • “Reviving antitrust will require, foremost, restoring a key original purpose: the diffusion of economic and political power.”
    • “Some industrial activities, for example, can easily be organized into open markets; others require us to accept network monopolies and regulate their power instead.”
    • Recommendations: increased merger oversight and enforcement; use the unique investigative powers of monopolization investigations to interrogate anticompetitive behavior; turn the burden of proof more against the monopolists“
    • “Although antitrust has been ignored by policy elites for decades, there are signs that a reform movement is quickly emerging.”
  • Khan, Lina. ”Amazon's Antitrust Paradox.“ Yale Law Journal 126 (2017).
  • Khan, Lina. ”The Supreme Court Case That Could Give Tech Giants More Power.“ The New York Times. March 2, 2018.
  • Luckerson, Victor. ”‘Crush Them’: An Oral History of the Lawsuit That Upended Silicon Valley.“ The Ringer. May 18, 2018.
  • Manne, Geoffrey A. and Joshua D. Wright. ”Google and the Limits of Antitrust: The Case Against the Case Against Google.“ Harvard Journal of Law & Public Policy 34, no. 1 (Winter 2011).
    • Emphasizes that the risk of antitrust intervention outweighs the degree of certainty that Google's behavior is anticompetitive
  • Manne, Geoffrey A. and William Rinehart. ”The Market Realities that Undermined the FTC's Antitrust Case Against Google.“ Harvard Journal of Law & Technology Occasional Paper Series (July 2013).
    • Explains and supports the FTC's conclusion that market realities did not support the antitrust case against Google.
  • Morozov, Evgeny. ”Data populists must seize our information – for the benefit of us all.“ The Guardian. December 3, 2016.
  • Taplin, Jonathan. ”Forget AT&T. The Real Monopolies Are Google and Facebook.The New York Times. December 13, 2016.
  • Trujillo, Marco. ”Warren targets Amazon, Apple, Google in anti-monopoly speech.“ The Hill. June 29, 2016.
    • ”'Google, Apple and Amazon provide platforms that lots of companies depend on for survival,' she said during a speech in the Capitol. 'But Google, Apple and Amazon also in many cases compete with those small companies so that platform can become a tool to snuff out competition.'“
    • “Warren said that 'strong executive leadership' is necessary to revive anti-trust enforcement in the U.S.” / ”'Too often though they just don't use that authority,' she said.“
  • Schneider, Nathan. ”Disaster Cooperativism.“ The Internet of Ownership. June 29, 2016.
  • Smith, Eve. ”The techlash against Amazon, Facebook and Google—and what they can do.“ The Economist. January 20, 2018.
  • Srnicek, Nick. ”We need to nationalise Google, Facebook and Amazon. Here’s why.“ The Guardian. August 30, 2017.
    • Closely follows Khan's arguments

Platforms: utility and natural monopoly

  • Grim, Ryan. ”Steve Bannon Wants Facebook and Google Regulated Like Utilities.“ The Intercept. July 27, 2017.
    • “Tech companies like Facebook and Google that have become essential elements of 21st-century life should be regulated as utilities, top White House adviser Steve Bannon has argued, according to three people who’ve spoken to him about the issue.”
    • Sources say that Bannon believes “there may be something about an online social network or a search engine that lends itself to becoming a natural monopoly, much like a cable company, a water and sewer system, or a railroad”
  • Facebook utterances
    • By 2006, Facebook was referring to itself in mission statements as a “social utility”
    • Locke, Laura. ”The Future of Facebook.“ Time. July 17, 2007.
      • TIME: Why do you describe Facebook as a “social utility” rather than a “social network?”
        Zuckerberg: I think there's confusion around what the point of social networks is. A lot of different companies characterized as social networks have different goals — some serve the function of business networking, some are media portals. What we're trying to do is just make it really efficient for people to communicate, get information and share information. We always try to emphasize the utility component.
  • Jamison, Mark A. ”Should Google Search Be Regulated as a Public Utility?_.“ SSRN. March 17, 2012.
    • “Google search does not fit the traditional frameworks for justifying regulatory control, namely, the public utility concept, common carrier concept, and essential facilities doctrine.”

Regulation

New America crisis

"Public utility" regulation

Bibliography