Morgan’s Monopoly Digest – February 2023
By Morgan Harper
- SOTU DECLARES WAR ON JUNK FEES. In the State of the Union, President Biden highlighted how dominant corporations weaponize their power to charge consumers exorbitant fees and extolled Congress to pass the Junk Fees Protection Act. In addition to calling out airline, ticketing, and hotel “resort” fees, he highlighted the Consumer Fin ancial Protection Bureau’s credit card junk fee proposed rule. The rule would cap fees, currently as high as $41, to just $8, saving Americans $12 billion each year. As Sarah Miller noted in The Democracy Journal, this SOTU was a sign that economic populism is now part of the Democratic Party’s policy agenda.
- RISING EGG PRICES AMID PRODUCER COLLUSION. Egg prices jumped 60% last year, with the average price increasing from $1.79 a dozen to $4.79. While large egg producers blame the increase on bird flu, advocates— led by Farm Action — claim profits are exceeding inflation and due to collusion among dominant producers, like Cal-Maine Foods, Rose Acre Farms, Versova Holdings, and Hillandale Farms. They are calling on the DOJ and USDA to coordinate an investigation into the industry’s anti-competitive tactics.
- DOJ OPPOSES RAIL MERGER. The East Palestine, OH derailment has shone a light on the rail industry and its dangers. Seven Class I rail corporations operate nationally, and the four largest control upwards of 80 percent of the industry. In September 2021, two of the largest announced they would combine, when Canadian Pacific Railway offered $31 billion for competitor, Kansas City Southern. Recently, DOJ Antitrust sent a letter to the Surface Transportation Board (STB), which regulates freight rail, opposing the deal. Economic Liberties also wrote the STB explaining the deal’s harms.
Reining in Big Tech
- GOOGLE ADS UNDER FIRE. Google uses its monopoly power over the digital advertising market to manipulate markets and crush competition. Last month, DOJ Antitrust filed a suit against Google for monopolization in digital advertising, specifically asking for a break up of the search giant. DOJ’s suit comes alongside a similar suit from a coalition of state AGs and efforts in Congress to bring fairness to digital ad markets. President Biden’s State of the Union remarks also instructed Congress to check the tech giants. The WaPo editorial board said it might be “the most valuable tech competition case yet.”
- DOJ RAMPING UP APPLE CASE. According to WSJ reporting, the DOJ is staffing up with litigators as the antitrust division prepares for a potential suit against Apple for abuse of its monopoly power. The investigation is likely to focus on Apple’s use of the App Store to preference other products, like the iPhone. In addition to DOJ’s investigation, Apple is still dealing with appeals in a lawsuit brought by Epic Games as well as complying with a new European law seeking to restrict its anti-competitive conduct.
Building Worker Power
- FTC NONCOMPETE HEARING EXPOSES ABUSE. Noncompetes lock roughly 30 million Americans in jobs, which decreases wages and stalls entrepreneurship and innovation. At the FTC’s public hearing on their non-compete rulemaking, a range of workers, from home caretakers to doctors, detailed the impact of these abusive contracts. Anyone can send comments to the FTC here before the March 20th deadline.
Protecting Air Travelers
- USDOT PROBES AND FAA REAUTHORIZATION LOOMS. On the heels of a cancellation crisis that left 2 million passengers stranded over the holidays, the U.S. Department of Transportation announced it is examining the cause of the meltdown. The cancellation debacle is just the latest problem to plague the airline industry. By September of this year, Congress will finalize the FAA Reauthorization, which will be an opportunity to revisit the airline regulatory scheme. Economic Liberties recommends rolling back federal preemption and allowing state AGs to sue. Efforts are also underway by Senator Markey to eliminate family seating charges dominant airlines use to gouge passengers.
- SPIRIT/JETBLUE MERGER UNDER MICROSCOPE? According to reports, the DOJ plans to sue to block the proposed Spirit and JetBlue merger. The merger would create the fifth largest airline in the nation. JetBlue’s CEO has already made it clear they will oppose any attempt to block the merger, potentially setting up another high-stakes court battle for the DOJ. The Transport Workers Union/AFL-CIO have come out against the merger.
Improving Heath Care
- FTC BANS HEALTHCARE DATA SHARING. FTC imposed a $1.5M fine on GoodRx for sharing consumers’ healthcare data with Facebook and Google for ad targeting. GoodRx is a technology company that distributes coupons for prescriptions and connects patients with telehealth appointments. As noted by Gizmodo, this settlement creates a new privacy standard for entities not covered by HIPAA.
- HUMIRA FACES COMPETITION. After more than 20 years, AbbVie has lost its monopoly patent protection of Humira, the highest-grossing drug of all time. Drug patents block generics and biosimilars from entering the market and fuel high drug costs. Starting this year, AbbVie, will face competition from an Amgen-produced biosimilar, among others. New drugs may not lower Humira’s $80,000/year price tag, however, in part because Abbvie can still gouge payers through their agreements with manufacturers and pharmacy benefits managers (PBMs). Read more from Economic Liberties about how PBMs inflate drug prices.
- CVS HEALTHCARE TAKEOVER CONTINUES. The CVS CEO made clear at the end of 2021 that she wants the company to dominate all of healthcare. Their acquisitions have already mortally threatened independent pharmacies and could risk elder patient safety as well. Last year, they announced the acquisition of Signify, a home healthcare provider, and now they are pursuing Oak Street Health, a Medicare Advantage primary care provider operating more than 150 locations, 20% of which have no doctors on staff. Economic Liberties released a statement about the dangers of Big Medicine, recommending the FTC block the deal. If it goes through, CVS will be on the fast-track to become another vertically-integrated, insurer-provider giant like UnitedHealth.
- Last week, FTC Commissioner Christine Wilson announced she would resign. Her departure will leave two Republican seats on the Commission vacant. Senator McConnell selects replacements, but the Senate must confirm his choices.
- The FTC lost their case to block Meta’s acquisition of Within, a VR fitness service, but as noted by Economic Liberties lawyer, Lee Hepner, in The Hollywood Reporter, the judge let stand legal theories that could support future FTC cases trying to prove anti-competitive conduct.
- Following an investigation by DOJ Antitrust, Tenaris, S.A. abandoned its proposed take-over of Benteler Steel & Tube Manufacturing Corp.’s state-of-the-art steel and tube manufacturing facility in Shreveport, LA. DOJ Antitrust raised concerns that the deal could increase prices, lower quality, and decrease innovation. Through investigations and mergers, current FTC and DOJ antitrust enforcers are blocking mergers at a record pace.
- In the U.S. Senate‘s first hearing of the 118th Congress, Democrats and Republicans alike zeroed in on how Live Nation-Ticketmaster exploits its dominance to harm artists, venues, promoters, and consumers. Read a letter from Senators Amy Klobuchar and Mike Lee following up on the hearing, asking DOJ to take action against the live events monopoly. And check out some of the hearing’s most notable quotes here.
- In a new letter, Senator Elizabeth Warren asked the FTC to block L3’s acquisition of the last independent solid fuel maker in the U.S., Aerojet Rocketdyne, on national security grounds. The FTC previously sued to block Lockheed Martin from acquiring Aerojet, which led Lockheed to drop their bid, and this proposed deal is also expected to face regulatory scrutiny.
- Two state legislatures have introduced pro-competition legislation. In Minnesota, a state lawmaker introduced a bill that would give antitrust enforcers power to go after dominant corporations employing abusive tactics against competitors and workers. And in Illinois, the Ho nesty in Economic Development Act would ban NDAs and level the playing field for companies seeking state subsidies.