Morgan’s Monopoly Digest – November 2022

November 17, 2022 Anti-Monopoly Policies & Enforcement

RECENT DEVELOPMENTS

Blocking Anticompetitive Mergers

  • BREAK UP TICKETMASTER. Despite vehement protest, DOJ let Live Nation and Ticketmaster merge in 2010. Now they’re charging fans rip-off junk fees up to 75% of a ticket’s value, and cutting off revenue for artists and independent venues. A coalition of antitrust advocates, sports fans, independent musicians—and Swifties”—havesent over 21,000 letters in just four weeks demanding DOJ unwind the merger and Break Up Ticketmaster
  • AGs TAKE ON GROCERY GIANTS.  Five national chains control 60% of grocery sales, giving them power to drive up food prices well beyond inflation. Two of these firms — Kroger and Albertsons — want to merge and pay a $4 billion special dividend to Albertson’s PE shareholders. Advocates, including some locals of Kroger’s employee union are speaking out, and state attorneys general sued to block the dividend in federal and state court. Washington state court granted a temporary restraining order until December 9th.  The FTC has yet to comment, but states are requesting they consider blocking the merger overall. Rev. Jesse Jackson also recently wrote about why the deal is bad for consumers and workers, and, particularly, the Black community.
  • STEPHEN KING TO THE RESCUE. Five companies dominate the book publishing industry, and in 2020, Penguin Random House and Simon & Schuster, announced they would merge. DOJ sued arguing the combined corporation would have too much power over which titles get to market and author compensation. A judge agreed and blocked a merger at the DOJ’s request for the first time in half a decade. During the trial, Stephen King testified, saying that “consolidation is bad for competition…[and] it becomes tougher and tougher for writers to find money to live on.”

DOJ Notching Wins  

  • MONOPOLIES AS CRIMES. Section 2 of the Sherman Act explicitly states that monopolization is a felony, punishable by fines up to $100 million and imprisonment of individuals up to 10 years, but for decades the DOJ has failed to exercise this authority successfully. That has now changed. For the first time in 40 years, DOJ Antitrust secured a criminal case win against the president of a paving and asphalt contractor who pled guilty to monopolizing the highway crack-sealing service market in Montana and Wyoming. The case could have major deterrent effects.
  • INTERLOCKING BOARDS FACE SCRUTINY. Section 8 of the Clayton Act prohibits directors and officers from serving simultaneously on the boards of competitors — also known as interlocking directorates, or “commonownership.  These interlocking directorates breed conflicts of interest and tend to foster anticompetitive behaviors. Following DOJ’s public statements raising Section 8 concerns about these arrangements, seven directors resigned from corporate board positions. More in Reuters.

Building Worker Power 

  • NURSES RECOVER STOLEN WAGES.  For the first time, the DOJ won a “no poaching” case against a healthcare staffing company for conspiring with competitors to steal wages from Nevada nurses treating medically fragile students. Especially given the size of the penalty relative to the company’s size, this was a landmark case. 

Reining in Big Tech

Improving Healthcare

  • REGIONAL HOSPITAL MONOPOLY UNDER FIRE. HCA Healthcare has a monopoly over Western North Carolina’s hospital system, leading to worse care and higher prices. State residents filed a class action lawsuit against HCA for engaging in anticompetitive practices that raise prices for both inpatient and outpatient hospital services. Last week, NC AG Josh Stein filed an amicus brief siding with the class action plaintiffs and urging the court to let the case proceed.

Lowering Prices

  • ADMIN CONTINUES JUNK FEES CRACK DOWN. Monopolistic companies use their market power to impose billions in junk fees, including in the banking, airline, ticketing and hotel industries. President Biden, Chair Khan, and CFPB Director Rohit Chopra called out these fees in a recent press conference. Within weeks, Airbnb announced its platform will display total prices, instead of allowing hidden fees to appear at checkout, and the FTC settled with Vonage for imposing junk fees. The FTC also announced a rulemaking and will accept comment letters until January 9, 2023. 

 

ICYMI … 

  • A new FTC policy statement restores power consistent with Congress’ intent and makes it easier for the agency to bring cases for anticompetitive conduct via Section 5 of the FTC Act.
  • A three-judge panel on the Fifth Circuit ruled that the Consumer Financial Protection Bureau’s funding from the Federal Reserve vs. through appropriations is unconstitutional, which could have implications for other financial regulators. CFPB has appealed to the Supreme Court.