U.S. antitrust enforcers are kicking off a major review of competition policy to explore whether their playbook needs a revamp given rising industry concentration and the dominance of technology giants.
Federal Trade Commission Chairman Joe Simons opened the first of a series of hearings Thursday in Washington to examine whether mergers have made the American economy less competitive and whether the way antitrust officials police corporate takeovers and anti-competitive conduct by big companies is outdated.
Simons said at the start of the hearing that concerns about higher concentration and reduced competition "merit serious consideration."
"We do this with the goal of understanding whether our current enforcement policies are on the right track or the wrong track, and if they're on the wrong track, what should we do to improve them?" he said.
Many economists and lawyers, worried about the threat to competitive markets from consolidated industries, have called for more aggressive enforcement. Some even say the current framework for challenging mergers, which focuses on price effects, has failed and needs to be thrown out entirely to reinvigorate markets.
"Lots of people -- the political class but also people in the street, ordinary citizens -- are wondering have we let Facebook and Google and Apple and Microsoft and Twitter and whoever else get too big and too powerful," said Daniel Crane, who teaches antitrust law at the University of Michigan. "People are asking those questions, and we need to take them seriously and address them."
Looming over the hearings is widening scrutiny in Washington over technology companies, particularly from Republicans who claim social media sites are censoring conservative viewpoints. Earlier this month, lawmakers from both parties grilled top tech executives about whether, and how, they should be reined in after intelligence reports linking popular online sites to election interference.
Attorney General Jeff Sessions is set to meet later this month with a group of state attorneys general who are examining the conduct of the companies. The gathering is intended to help Sessions, who has said the firms may be harming competition, decide if the Justice Department should open an investigation.
President Donald Trump has said Google, Facebook and Amazon.com are in a "very antitrust situation," while Republican Sen. Orrin Hatch of Utah called for the FTC to reopen a closed antitrust investigation into Google.
While the FTC isn't focused solely on technology companies, the agency will hold future sessions to discuss possible anti-competitive conduct by platforms, acquisitions of startups that might reduce competition, data privacy, and the impact of algorithms and artificial intelligence on markets and consumers.
"It is a very ambitious agenda," said William Kovacic, a professor at George Washington University Law School and a former FTC chairman. "There's a real hope here to push the debate forward to say what should be the aims of the entire system."
Behind the debate is mounting evidence that industries have grown steadily more concentrated, allowing large companies to dominate markets from agriculture to health care to airlines to pay TV. Economists have tied rising consolidation to low investment by companies, weak productivity growth, higher profits and lower wages for workers. And as deal activity has increased, antitrust enforcement has remained mostly flat.
That research has helped spur calls for antitrust officials at the FTC and the Justice Department to rethink their strategies and priorities, and to step up enforcement.
One of the key questions for enforcers and policymakers is whether evidence of industry concentration and market power stems from approving too many mergers and not enough cases against monopolies. Or are some companies dominating markets because they're just better at producing products and services people want, which would be less reason to worry?
Tech companies and their allies are pushing back on the criticism that they're a threat to competition, pointing to the contributions they've made to economic growth, job creation and innovation. Giants like Google and Facebook also benefit from winner-take-all markets where their growth is fueled by network effects: the more people use a platform, the more it attracts new users.
Gene Kimmelman, the president of the policy group Public Knowledge, cautioned that antitrust is just one tool for policing the conduct of technology platforms. Regulatory fixes are needed to address other concerns over data privacy and content.
"The FTC is in the hot seat with enormous public expectations of delivering a better marketplace because there is growing concern that markets are consolidating and the tech sector is now dominated by a few players," he said. "The public expectations keep growing, and the agency needs to figure out its path of explaining of what it can and should do."
The unknown is whether the hearings will translate to stepped-up enforcement or just more debate among economists and lawyers. Crane, of the University of Michigan, said he thinks there's a real chance they could influence where Simons takes the agency.
"He is not someone who came to reinforce the status quo and have the commission bring a couple of cursory cases to prove they're doing something," Crane said. "He came in to lead a commission that's going have a positive impact. People will disagree about what a positive impact is and there are directions that the commission could go that will make some people happy and other people not happy."
Business on 09/14/2018