New Study from AAI Explores Troubling Falloff in Federal Antitrust Enforcement in Face of Declining Competition

American Antitrust Institute Issues Trump Administration “Report Card,” Says States and Private Enforcers Play Critical Role in Taking Up the Slack

The cumulative effects of decades of lax antitrust enforcement, coupled with a significant step-down in enforcement under the Trump administration, pose a significant political-economic dilemma for the United States, according to a report released today by the American Antitrust Institute.

The report, The State of Antitrust Enforcement and Competition Policy in the U.S., highlights these and other problematic trends in federal antitrust enforcement and competition policy, while identifying specific ways in which the states and private enforcers can intervene to rein in anticompetitive mergers and conduct.

The AAI report emphasizes that a free and open, market-based economy is fundamental to U.S. economic growth, consumer and entrepreneurial freedom, and democratic values. The first part of the report evaluates the Trump administration’s enforcement record in light of major drivers of declining competition. These include sweeping consolidation in key sectors; the proliferation of domestic and international cartels; and unchecked exclusionary behavior by dominant firms. Despite the anti-concentration rhetoric of the Trump campaign in the 2016 election, the administration’s record reveals a troubling falloff in federal enforcement in all three areas of antitrust law.

The report also assesses troubling qualitative developments in federal antitrust enforcement, highlighting a decrease in important Federal Trade Commission advocacy before the courts, states, and federal agencies. It also flags the U.S. Department of Justice’s unprecedented level of interventions in private antitrust cases, which have sometimes staked out positions that are potentially harmful to competition, consumers and workers.

“The Trump antitrust agencies have not recalibrated antitrust enforcement to address systemic concerns over declining competition,” AAI President Diana Moss said. “And they have no apparent plan for doing so.”

As a result, the AAI report outlines how Trump agencies are failing to protect competition at a time when markets are highly concentrated and evidence of competitive abuse surfaces with increasing regularity – and such federal enforcement inaction has weakened the U.S. antitrust laws over time.

“In markets where there are only a few remaining players, merger control is now limited to blocking only the most egregiously anticompetitive deals,” Moss said.

Approaching high market concentration with the anti-cartel and anti-monopoly laws is not a solution, the AAI report finds. “Conservative influence in the courts has created significant limitations on those areas of antitrust law as well,” AAI Vice President for Legal Advocacy Randy Stutz said.

The AAI report also looks beyond antitrust enforcement to evaluate the Trump administration’s competition policy, as reflected in several deregulatory initiatives. It finds that federal sector regulators have taken steps to remove important regulations that address market failures and promote a level, competitive playing field in key industries such as agriculture, telecommunications, and energy. This broad deregulatory agenda has been implemented, as the report states, “without regard for potential anticompetitive effects.”

The second part of the AAI report assesses responses to federal enforcement inaction, finding that private and state enforcers are stepping into the void and seeking compensation and deterrence for antitrust violations that harm consumers and workers. Enforcement by state attorneys general and private plaintiffs have secured significant recoveries. State activity is on the rise, including initiatives to open investigations and block illegal mergers. Both private and state antitrust enforcement can take up some slack from federal inaction, shape case law, and generate useful public debate.

The report explains that declining competition has given rise to a chaotic response, including various calls for breakups, economic regulation, and some legislative proposals that target only specific industries and narrow antitrust issues. AAI argues that declining competition is a public policy issue that requires comprehensive policy tools that bootstrap and support antitrust enforcement.

“Declining competition is a public policy problem that requires comprehensive solutions that draw on antitrust and other important policy tools,” Moss said. “It is too early to determine whether simply strengthening and clarifying the antitrust laws, versus overhauling them entirely, will be necessary. But complementary competition policy tools will be necessary to support and bootstrap antitrust moving forward.”

The entire report may be downloaded here.

Nicole Houston