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monopolies
Kamala Harris Should Embrace—and Build Upon—Biden’s Antitrust Legacy
Harris should reject the smear campaign against Khan’s FTC and commit to reappointing her as chair of the commission, signalling that under her administration, corporate lawbreakers would face the full force of the law.
Sep 06, 2024
U.S. Vice President Kamala Harris’ ascension to the top of the Democratic ticket hasn’t just shifted the 2024 electoral calculus—it’s also reignited the battle for the party’s ideological soul. Just as progressives have outlined their hopes for a Harris administration, so too have bad faith actors looking to turn back the clock on the most significant progressive achievement of the Biden era: the reinvigoration of antitrust enforcement.
The revival of anti-monopoly politics has been met with predictable ire from corporate interests that have got off scot-free for decades. This has been largely directed at Lina Khan, the Federal Trade Commission (FTC) chair who has taken on some of America’s most entrenched monopolies. Rather than accede to the demands of Silicon Valley and Wall Street billionaires, Harris should embrace—and entrench—the Biden administration’s antitrust efforts.
It goes without saying that progressives have the right to be disappointed with the legacy of the Biden administration in many respects. Whether one lays the blame on the White House or congressional math, many of the most promising initiatives pushed in 2021 never made it to law. However, the early Biden administration’s focus on reinvigorating antitrust enforcement is one that has paid dividends in the years that followed. The Reagan-era defanging of antitrust helped pave the way for the present-day monopoly crisis, which has left its mark on everything from the tech sector to the rental market to grocery shopping.
The FTC under Khan has taken aim at price gouging in, among others, the energy industry and grocery sector, which compliments Harris’ stated plan to crack down on price gouging if elected.
The Biden administration deserves credit for breaking with his predecessors’ hands-off approach to taking on corporate monopolies. Both Khan at the FTC and Jonathan Kanter, the assistant attorney general for the Antitrust Division at the Department of Justice (DOJ), have taken a tough line against anti-competitive behavior. Khan and Kanter’s efforts to block illegal mergers have been met with rage from corporate America’s worst offenders. This has resulted in frivolous demands for their recusals from key antitrust cases, as well as broader efforts to kneecap antitrust regulation itself. With a “changing of the guard” on the Democratic ticket, these same actors have taken to demanding Harris abandon Biden-era antitrust efforts, complete with a change in personnel.
Harris should reject these demands, and instead look to Khan and Kanter’s successes as a road map for enacting change in Washington. Time and time again, Khan and Kanter have delivered victories for consumers in the face of a hostile press and a right-wing judicial landscape. In August, the DOJ emerged victorious in its historic U.S. v. Google antitrust lawsuit, one that Kanter fittingly says belongs on the “Mount Rushmore of antitrust cases.” In the years following House Democrats’ 2020 report on monopoly power in the tech sector, Biden administration enforcers have filed antitrust suits against Amazon and Apple, along with a separate Google suit set to go to trial this month.
If successful, these lawsuits stand to rein in some of the tech sector’s worst abuses. But make no mistake: The FTC and DOJ’s antitrust efforts target far more than just the abuses of the “Big Tech” giants. This year, the DOJ launched a blockbuster antitrust suit against Ticketmaster, which was largely given a pass for its abuses in previous administrations. The DOJ Antitrust Division has stood with tenants by filing an antitrust lawsuit against RealPage over the company’s role in enabling rental price gouging. The FTC under Khan has taken aim at price gouging in, among others, the energy industry and grocery sector, which compliments Harris’ stated plan to crack down on price gouging if elected.
Antitrust enforcement is both crucial to building a fairer economy and broadly popular with the general public. For this reason, Harris should firmly reject the smear campaign against Khan’s FTC and commit to reappointing her as chair of the commission. Doing so would send a strong signal that under a Harris administration, corporate lawbreakers would face the full force of the law.
Instead of turning back the clock on antitrust, a Harris administration should build upon the progress of the last three years by launching other needed antitrust initiatives. This could include, among others, taking on YouTube-related competition issues, which advocates have sounded the alarm on. More broadly, the DOJ and FTC under a Harris administration should continue to probe would-be monopolists in the artificial intelligence (AI) sector. Given the scope of monopolistic behavior in today’s economy, regulators under a Harris Administration must take a vigilant approach to anti-competitive practices across sectors.Keep ReadingShow Less
'Corporate Greed at Its Absolute Worst': FTC Challenges Kroger Merger
"As grocery store 'price gouging' reaches the top of the political ticket, the FTC is intervening to protect consumers and workers from further harm."
Aug 26, 2024
As grocery giants Kroger and Albertsons faced the U.S. Federal Trade Commission in a federal court Monday, economic justice advocates said Americans should be wary of the corporate media's reporting on the FTC's lawsuit, which aims to block the companies' proposed $24.6 billion merger.
"Get ready for more takes like these from corporate media," said the American Economic Liberties Project (AELP), posting on social media a clip from CNBC in which anchor Joe Kernen echoed Kroger and Albertsons' claims that the merger would help them compete with big box stores like Walmart, lower prices for consumers, and benefit workers.
"With a merger this blatantly harmful to consumers, workers, and countless local communities, Wall Street cheerleaders can't help but rely on misleading arguments," said AELP.
The trial, kicking off in a U.S. District Court in Portland, Oregon, centers on a claim by the FTC along with eight states and the District of Colombia that the merger would reduce industry competition—creating "a straight-up monopoly" in small communities like Gunnison, Colorado where 6,000 residents "would have to drive 65 miles to reach a non-Kroger supermarket," according to AELP.
FTC Chair Lina Khan is also opposing the merger because it would weaken unionized workers' bargaining power, particularly in parts of the country where dozens of Kroger and Albertsons stores are located near each other.
With 115 of 159 Albertsons stores located within two miles of a Kroger in Los Angeles County and Orange County, California, the United Food and Commercial Workers International Union (UFCW) has warned that hundreds of unionized workers could see their stores close if the merger is finalized.
As the trial began Monday, The New York Times published an interview with an employee of an Albertsons subsidiary in Woodland Hills, California. Leonard De Monte was represented by the UFCW in 2015 when the grocery store he was working at was sold as part of Albertsons' merger with the store's parent company—a deal that was called "an unmitigated disaster" for workers by AELP senior legal counsel Lee Hepner.
De Monte found another job at the Albertsons subsidiary, but was demoted to minimum wage. Now nine years later, after working his way up to a $27-per-hour union wage, the store De Monte works at is once again at risk of being sold if the merger goes through, and he fears being demoted to minimum wage again and losing his benefits.
"I have great health benefits because I've been with the company so long," he told the Times. "If I lose my health benefits, I would have to pay out of pocket."
Despite the stores' claim that they need to compete with Walmart and Amazon, AELP pointed out in March that Kroger and Albertsons acknowledge one another as their top competition. Without the two stores competing, said the group, "grocery workers will lose bargaining power, both because individually they won't have a competing employer to go work for, and because unions will lose leverage during contract negotiations. As a result, workers will potentially face lower wages, worse working conditions, and layoffs."
According to an analysis by the Economic Policy Institute, the merger would reduce the total annual earnings of grocery store workers in affected metropolitan areas by $334 million.
In court on Monday, the FTC displayed text messages showing that Kroger executives have complained that Albertsons has forced it "to accept more worker compensation."
The progressive think tank Roosevelt Institute said the trial, which is expected to go on for three weeks, shows that Khan and the FTC are "taking the harms of corporate consolidation on workers seriously."
Kroger's arguments and business practices—including using "dynamic pricing" to price gouge and its exorbitant CEO pay—represent "corporate greed at its absolute worst," said former U.S. Labor Secretary Robert Reich.
"The Kroger-Albertsons merger would eliminate head-to-head competition between grocery stores across the country," said Hepner. "As grocery store 'price gouging' reaches the top of the political ticket, the FTC is intervening to protect consumers and workers from further harm."
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The Battle to Stop the Monopolization of Live TV Has Begun
Fubo’s case against the launch of a new Disney, Warner Bros. Discovery, and Fox sports streaming service may determine whether the live television market of the future includes a robust number of distributors, or is controlled entirely by programming giants.
Aug 07, 2024
Since the launch of cable television, bundling has defined the consumer’s experience. Expensive program packages have always offered a mix of broadly desired and niche programming. The opportunity to buy a slender package of channels tailored to our individual interests has always been out of reach. It was impossible to get what you wanted, without getting what you did not. These bundling requirements have long been dictated by the programming giants like Disney, Warner Bros., and Fox, who control several of the key channels that distributors like cable companies need to offer in order to remain viable.
From the late 2000s to the early 2010s, several on-demand internet streaming services like Netflix, Disney+, and HBO Max, many of which are owned by those same programming giants, came about to offer cheaper access to narrower sets of content, though they rarely offered meaningful options for viewing the live programmatic content available on cable. Then, as more and more consumers sought to have their media delivered over the internet, the advent of live programmatic internet streaming services like Fubo and Sling TV helped recreate the experience of traditional cable. While those services initially innovated, offering slender and specialized live viewing experiences, in recent years they have suffered the same bundling issues that defined the cable industry.
The key to understanding the evolution of television markets is sports. Sports is by far the most popular form of live broadcast entertainment. And because well over 90% of televised sporting events are consumed live in real time, and because consumers have demonstrated a much higher willingness to pay premium rates for live sports content over live television programming, sports are broadly understood as the linchpin of linear television markets. And while no love has been lost between traditional cable providers and live programmatic streaming services, their shared ability to leverage sports contents’ unique appeal has allowed both industries to remain viable for now. (Though cable providers continue to lose market share to live programmatic streaming services with each passing year.) This is despite the longstanding costly licensing deals and onerous channel bundling requirements imposed on them by the large programming giants, namely Disney, Warner Bros. Discovery, and Fox.
Local television stations, which largely rely on carriage fees from redistribution through cable providers, stand to face massive hits to their bottom lines—a loss that could have profound consequences for the broadcast journalism that often serves as the only source of news in information deserts around the country.
This status quo, however, is unstable, largely due to the ongoing pressure on programmers to unbundle popular sports. In that light, the announcement of a new partnership between Disney, Warner Bros. Discovery, and Fox on a sports-centric live programmatic streaming service, Venu Sports, may sound like a revelation to the average consumer. But as demonstrated by a case seeking to block the new partnership brought by Fubo—another live programmatic streaming service—the launch of this service may determine whether the live television market of the future includes a robust number of distributors, or is controlled entirely by programming giants Disney, Warner Bros. Discovery, and Fox.
While sports fans may be eager to finally be able to access the narrow product they have long desired, a monopoly over live sports offerings threatens to harm consumers broadly by driving out any potential distribution competitors to the programming giants. These giants, which also control large swaths of other pieces of the media industry (including Disney’s direct ownership of live programmatic service Hulu + Live TV), control the distribution rights of over 80% of national live sports broadcasts, and over 50% of the cumulative national and regional sporting events rights. With that market power, these giants could destroy what remains of the cable television market and stifle competition in the market for live programmatic streaming services before it fully gets off the ground.
Fubo argues as much in their complaint. Fubo, which launched in 2015 as FuboTV, has a particularly strong case to make against why the coercive practices imposed by the programming giants should be cause for grave alarm among antitrust authorities. In their case, they recount their decade-long effort to negotiate such a sports-centric streaming service with the programming giants. While initially successful, the company claims that it quickly faced resistance once its model gained steam.
In a section of the complaint titled “The Empire Strikes Back” (a jab at lead defendant Disney’s vast media empire, which includes the Star Wars franchise) the company claims its rapid early growth was quickly squashed by the programming monopolists, which Fubo claims used more burdensome bundling requirements as well as a series of kickbacks and most-favored-nation clauses with non sports-centric live programming streamers (including Disney’s Hulu + Live TV) to make Fubo’s preferred packages economically inviable. With these onerous requirements still in place and the launch of Venu Sports imminent, the company claims it may soon be forced out of business altogether. That existential concern led Fubo to seek a preliminary injunction stopping the launch of the partnership, which is being heard from August 6 through August 9, with a decision expected within a few weeks’ time.
While Fubo’s story is uniquely galling, it is far from alone in its worries about the ripple effect the launch of the joint venture could have on sports leagues and the entire live television ecosystem. Local television stations, which largely rely on carriage fees from redistribution through cable providers, stand to face massive hits to their bottom lines—a loss that could have profound consequences for the broadcast journalism that often serves as the only source of news in information deserts around the country.
The very sports leagues whose content stands to be distributed by the new joint venture have also expressed alarm at the prospect the three giants may begin bidding for licenses as a unit, which would drastically reduce the number of license buyers in the market and potentially kneecap licensing revenue growth. And satellite television providers Dish Network and DirecTV, which have long sought greater flexibility over their channel offerings, have filed affidavits in the case supporting Fubo’s claims. ACA Connects—a trade group representing hundreds of small and mid-sized broadband, video, and phone providers who often but heads with the satellite giants—also released a scathing statement about the deal.
The Department of Justice and federal lawmakers have heeded those cries, and have promised to scrutinize the terms of any final deals once they are released—though they have expressed frustration over the programming giants’ ongoing refusal to answer basic conflict of interest questions mere months before Venu Sports is expected to launch.
Despite this broad coalition of opponents and skeptics, Fubo’s case for a preliminary injunction remains marred by uncertainty. Even though they present many of the same practical anti-competitive challenges, federal courts have historically been reluctant to police joint ventures with the same force as full-blown mergers. Should the programming giants successfully squash a preliminary injunction, it is uncertain whether federal enforcers and the potential jurors Fubo has asked to decide the case can muster the will to put the cat in the bag, especially if Venu Sports’ competitors suffer the swift devastation they claim is likely. What is certain, though, is that as the hearing over the new service’s launch unfolds this week, the entire live entertainment industry is tuning in.
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