Morgan’s Monopoly Digest – December 2023
By Morgan Harper & Lilly Solomon
Reining in Big Tech
- META ATTACKS FTC CONSTITUTIONALITY. This spring, the FTC proposed a blanket ban on Meta monetizing youth data after alleging they violated a 2020 privacy order for children’s safety issues. Meta asked the D.C. federal court to take over the matter, and last week they declined, affirming the FTC’s authority to update settlements. In response, Meta sued the FTC challenging its constitutionality to prevent the blanket ban from going into effect. The DOJ is representing the FTC as they defend their congressionally granted authority to enforce and adjudicate. Meta’s lawsuit received immediate backlash from multiple members of Congress, including Rep. Pallone (D-NJ). In a separate lawsuit brought by state AGs, newly unsealed documents reveal Meta CEO Mark Zuckerberg knowingly made product design choices that would harm teens.
- GOOGLE LEGAL WOES CONTINUE. DOJ’s trial to determine liability against Google for monopoly of internet search has adjourned after revealing the detrimental impact Google’s default agreements with other Big Tech companies have on competition. The parties will submit post-trial briefs and closing arguments are scheduled for May 1, 2024, with a decision from the judge to follow. The jury in the Epic Games’s case against Google for monopolizing the Play Store is expected to reach a verdict in December, if the parties don’t reach a settlement. The judge in that case has vowed to investigate Google’s “frontal assault on the fair administration of justice” by intentionally destroying evidence.
- JETBLUE/SPIRIT WRAPS, ALASKA/HAWAIIAN ON DECK. The JetBlue/Spirit trial has ended, and the judge will issue a ruling in the coming months. In closing arguments, DOJ lawyers again refuted JetBlue’s argument that they need to get bigger to compete with the Big 4. Former White House’s Competition Council lead, Tim Wu, noted in the New York Times that JetBlue and the biggest airlines share investors and an incentive to raise prices, not benefit consumers. Florida state Rep. Eskamani also spoke out about how losing ultra low-cost carrier (ULCC) Spirit Airlines routes will likely harm her Orlando district with higher prices. Separately, Alaska Airlines and Hawaiian Airlines have agreed to a $1.9 billion merger, which awaits shareholder and regulatory approval. Though neither airline is an ULCC, the merger presents several anti-competitive harms for the Pacific Rim region and beyond.
Building Worker Power
- NCAA FORCED TO CHANGE. In 2021, SCOTUS decided unanimously that the NCAA’s restrictions on student-athletes’ income violated antitrust law. Shortly after, the NCAA voted to allow name, image, and likeness (NIL) compensation, a system athletes are challenging in court, and began a lobbying blitz in Congress for an antitrust exemption. Within the Administration, NLRB General Counsel Jennifer Abruzzo has clarified college athletes are employees, and last month the President hosted former athletes to show support. Amidst mounting pressure, the NCAA announced a new proposed policy this week that would allow Division 1 schools to pay their athletes at least $30k, but with no cap. Read Economic Liberties’ Senior Legal Counsel Katherine Van Dyck’s brief for more background.
- KOCH POULTRY PAYS UP. Koch Foods is the fifth-largest poultry processor in the U.S., employing 13,000 people across Alabama, Georgia, Mississippi, Tennessee, Ohio, and Illinois. The DOJ sued Koch for violating the Sherman Act by forcing workers to pay a termination fee to switch to a rival employer and threatening to sue a dozen family farmers who tried to change processors. Koch has agreed to a proposed consent decree, which, among other stipulations, would require them to reimburse all termination fees. The court can make the proposed decree final after a 60-day public comment period. In other poultry news, the Washington AG just secured $40 million for customers who were victims of chicken producer price-fixing.
Improving Health Care
- FTC TAKES ON REGIONAL HOSPITAL MERGER. Hospital consolidation can lead to higher prices for patients and reduced location access. According to a complaint filed by the FTC and the CA Attorney General, John Muir Health’s proposed $142.5 million buyout of San Ramon Regional Medical Center (SRRMC) poses such consolidation risks for the Bay Area general acute care market. The transaction is on hold until resolution of the FTC’s administrative proceeding.
- VERTICALLY INTEGRATED HEALTHCARE GONE WILD. Combining healthcare insurers, pharmacy benefit managers (PBMs), and retail pharmacies over the last several years has led to a range of harms, and healthcare workers are fighting back. Doctors are forming unions and last month, CVS and Walgreens pharmacists staged a nationwide walkout to protest sub-standard working conditions endangering patients. Cigna and Humana, however, seek to continue the consolidation spree with a rumored merger that would create a PBM controlling a third of the market. Sen. Blumenthal (D-CT) has already called for DOJ to investigate. Separately, Sen. Warren and Sen. Braun are urging HHS to examine how healthcare giants like CVS Aetna are raising drug prices to cheat Medicare. Listen to Economic Liberties’ Healthcare Analyst Sara Sirota on WBUR to learn more about healthcare consolidation’s perils for workers and patients.
- MOBILE PHONE CUSTOMERS TAKING MATTERS INTO THEIR OWN HANDS. As of 2023, three cell service providers control more than 90% of the market and prices for mobile service plans have almost doubled since 2013. Millions of AT&T and Verizon customers are now suing, claiming that the 2020 merger between T-Mobile/Sprint have caused some of these cost increases. T-Mobile attempted to dismiss the case, but a federal Judge in Illinois denied the motion. If successful, the case could unwind the T-Mobile/Sprint merger and recover increased phone charges for customers.
- PE’S FAST-FOOD MONOPOLY? As of 2021, private equity firm Roark Capital owned 90 consumer fast-food franchise brands across 63,000 locations, and generated $54 billion in revenue. Its latest attempt to purchase Subway’s nearly 40,000 U.S. locations (almost 3x the size of McDonalds) has triggered an FTC investigation. The FTC’s move is perhaps not a surprise given their increased focus on private equity, including in the draft merger guidelines.
- FCC TAKES ON CABLE FEES. The Federal Communications Commission (FCC) has entered the fight against junk fees. Chairwoman Jessica Rosenworcel proposed rules that would ban cable and satellite providers from charging early termination fees, which can run as high as $400, and prorate prices for canceling service mid-billing cycle. This latest effort follows the FCC’s rule to require a standardized presentation of broadband facts and fees, which will begin for larger providers on April 10, 2024. Recent polling indicates a majority of the American public is concerned about price-gouging like junk fees.
- CREDIT CARD RISKS VS. REWARDS. Swipe fees, the cost processors like Visa and Mastercard charge merchants for credit card transactions, cost consumers $1,000 per year and are often the second largest expense for small businesses. The Credit Card Competition Act (CCCA) would lower these costs by forcing large credit card issuers to use more than one processor. Despite misconceptions that the bill would hurt consumers by endangering reward programs, a NYTimes report found that American consumers pay more in swipe fees than they earn in rewards. In response to a $51 million lobbying campaign against the CCCA, Economic Liberties and a coalition of consumers, workers, and small businesses, including the Teamsters and SEIU, launched www.lowercreditcardfees.com to set the record straight on why Visa and Mastercard’s swipe fee duopoly must end.
- DOJ STANDS UP FOR RENTERS AND AGAINST ALGORITHMS. RealPage and fourteen of DC’s largest landlords want to dismiss a case from the D.C. AG alleging that they coordinated to manipulate vacancy data and inflate rental prices. According to the complaint, about 60% of D.C.’s multifamily buildings use RealPage’s software to set prices. RealPage’s tactics are part of an alarming trend of companies using algorithms to price fix in markets ranging from housing to agriculture. The DOJ submitted a Statement of Interest to the court to deny the motion to dismiss and will participate in the December 11th hearing on the motion. On December 13th, the Senate Judiciary Subcommittee on Competition, Antitrust, and Consumer Rights will hold a hearing on algorithmic price-fixing.
- Fight Corporate Monopolies released a new ad urging NY Gov. Hochul to sign a noncompetes ban into law.
- USDA finalized rules to create fairer markets for small and mid-sized farmers.
- A judge denied John Deere’s motion to dismiss a right to repair case brought by 17 farmers.
- Rep. Deluzio argued that tackling monopolies is key to lowering prices in his latest op-ed.
- A jury awarded over $50 million in damages to food manufacturers for egg supplier price-fixing in the early 2000s.
- Rep. Jayapal and 10 other representatives wrote to the new White House Counsel urging the inclusion of competition policy criteria when vetting judicial nominees.
- A judge denied IQVIA’s attempts to advance constitutionality arguments against the FTC.
- Senate Majority Leader Schumer expressed support for the FTC’s investigation into Exxon’s proposed Pioneer acquisition.
- Rethink Trade’s Program Associate Katie Hettinga details how free trade agreements led the U.S. to become a net food importer.
BRIEFINGS & EVENTS
- Economic Liberties hosted a virtual rally with a coalition of UFCW locals where experts and employees detailed the harms of the Kroger-Albertsons merger, alongside a newly released a policy brief that exposes the harms of grocer consolidation. Kroger has since certified “substantial compliance” to trigger a 30-day timeline for the FTC to sue or accept the deal.