Tucked away in a fact sheet released on the Clinton campaign website Monday is a little-noticed set of bullet points that signals something important about how Hillary Clinton would govern. The campaign outlined an aggressive plan for beefing up the nation’s antitrust laws in order to “address excessive concentration” among major industries and end the “abuse of economic power” by corporations.
The proposals are significant because they don’t require passing legislation in Congress. Simply by choosing officials devoted to more vigorous enforcement of antitrust laws, Clinton can bring about a big shift in the way the nation’s antitrust laws are enforced.
The Obama administration has already taken a stronger stance on antitrust issues than President George W. Bush did. The antitrust principles outlined in Clinton’s fact sheet suggest she could beef up antitrust enforcement even further. The big question is how ambitious she’ll be about it.
Democrats are traditionally tougher than Republicans on antitrust
Barack Obama came into the White House vowing to be tougher than George W. Bush. Bush was widely seen as weakening antitrust enforcement compared with the vigorous policies of President Bill Clinton. The Clinton administration, in turn, was generally seen as more active in antitrust enforcement than the Reagan and first Bush administrations.
These partisan divisions were best illustrated by the Microsoft antitrust case of the 1990s. The Clinton Justice Department concluded that Microsoft had violated antitrust laws by integrating its web browser, Internet Explorer, with the Windows operating system. It launched an epic legal battle that ultimately led to a victory in court for the government in 1999 and an order to break Microsoft up in 2000.
But the case dragged on into the George W. Bush administration, which decided to settle the case quickly and on terms relatively favorable to Microsoft. Microsoft never faced a punishment anywhere near as drastic as being split in two.
Big antitrust changes take decades
Yet it’s easy to overstate the degree of difference between recent Democratic and Republican administrations. Antitrust policy is a technocratic enterprise, and antitrust technocrats in both parties largely share a common intellectual framework. Democrats have been a bit more aggressive than Republicans about blocking mergers and suing companies for anticompetitive conduct. But as a 2002 article put it, antitrust officials “seem to play the game between the 45 yard lines.”
To find the last big change in antitrust policy, you have to go back to the 1970s — a period of much greater skepticism of concentrated economic power. Back then, antitrust officials were suspicious of large companies in general, whether or not they were engaged in anticompetitive behavior. They were particularly skeptical of national chains, fearing that their concentrated power could drive mom-and-pop stores out of business.
Then economists centered at the University of Chicago launched a sustained critique of this framework. They pointed out that up to a certain point, more concentration can actually be good for consumers. A big chain like Walmart, for example, can use economies of scale and superior supply chain technology to deliver much lower prices than mom-and-pop stores.
The courts started to accept these arguments in the 1970s. And they were embraced with gusto by antitrust officials in the Reagan administration. Under Reagan, federal regulators became much more sympathetic to arguments that mergers would benefit consumers by increasing efficiency and thereby lowering prices.
Republican administrations have embraced this shift most enthusiastically, but Democratic officials were tugged along by the same intellectual currents. The Clinton administration enforced antitrust laws more vigorously than the Reagan administration had done, but they weren’t as reflexively suspicious of mergers as pre-Reagan antitrust officials had been.
The story has been similar for the Obama administration, which has been somewhat more aggressive than the George W. Bush administration but still approved controversial mergers like Comcast’s acquisition of NBC Universal. (NBC Universal is an investor in Vox.com’s parent company, Vox Media.)
Elizabeth Warren wants much tougher antitrust enforcement
So one possibility is that Clinton will follow in the footsteps of her husband and President Obama, closely scrutinizing mergers but still operating within the relatively merger-friendly intellectual framework that has guided antitrust thinking since the 1980s.
The other possibility is that she’ll push further than Obama has gone, developing new rationales for blocking mergers that go beyond Chicago School thinking. If she did choose this option, she’d have some enthusiastic allies among her fellow Democrats.
Leading the charge is Sen. Elizabeth Warren, who has been beating the drum for stricter antitrust scrutiny all year.
One big theme of Warren’s thinking is the need to think more about factors beyond prices as the main criteria in determining whether a merger or company practice is good for consumers.
Warren has trained her fire on tech giants like Google, Apple, and Amazon, arguing that these technology behemoths have acquired too much power and are at risk of squelching competition. Traditional antitrust analysis might focus on the fact that Amazon has among the lowest prices in the retail industry and Google gives away most of its products for free. But Warren argues that’s the wrong way to think about it — the larger issue is that these companies’ dominance of key technological platforms could allow them to shut out smaller firms with innovative ideas.
You can make a similar point about one of the Obama administration’s most famous antitrust decisions. In 2011, the Obama administration rejected AT&T’s bid to acquire T-Mobile, which would have left the nation with just three wireless carriers.
If that merger had been approved, it might have led to higher prices for cellular service. But it also would have deprived the world of T-Mobile CEO John Legere’s “uncarrier” strategy, in which he’s blown up widely disliked wireless provider policies like two-year contracts and early termination fees and experimented with offerings like unlimited music and video streaming.
Similarly, critics of Comcast’s proposed merger with Time Warner — which was rejected in 2015 — weren’t so much worried about higher prices, since Comcast and Time Warner didn’t compete directly, but rather that the combined firm would use its power to stifle innovation in online services and diversity in television content.
If Clinton embraces Warren’s thinking — and appoints antitrust officials who share it — it could lead to reopening questions that have been considered closed for more than 30 years.
It’s far from obvious where this new thinking would lead. Even if antitrust officials conclude that big tech companies’ size is a danger to competition, it’s not obvious how they can best rein them in. But antitrust officials do have a lot of discretion. So if they take office determined to change how we think about antitrust, it could have a big impact on the economy.