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Antitrust Enforcement Past and Present: Times Have Changed, But the Need for Strong Antitrust Hasn’t
This year has seen a flurry of merger and acquisition activity, with a record $2.5 trillion dollars of mergers announced in the first half of 2018 alone. Disney’s successful bid for 21st Century Fox, Sinclair’s unsuccessful merger with Tribune, regulatory review of T-Mobile’s plan to buy Sprint, and the ongoing challenge to the AT&T/Time Warner merger have grabbed headlines. Meanwhile, these corporate dramas have played out against the backdrop of a broader policy debate over the role of antitrust law in the age of “big tech.”
Public Knowledge believes that antitrust continues to be a critical tool in the regulatory toolkit that, when used properly, can yield policy results that benefit consumers and the public interest. Starting with a call to break up the old Bell telephone monopoly, PK and its allies in the consumer community have consistently challenged dangerous vertical and horizontal acquisitions and an array of anticompetitive practices that interfere with competition, innovation, and diversity in the telecommunications, media, and technology space. Although the conversation has recently shifted focus onto how to handle the dominant tech platforms, Public Knowledge has not changed its approach and will continue to pursue aggressive antitrust enforcement of anticompetitive practices in the digital age.
The following will take a look back at the history of the consumer community’s leadership in antitrust enforcement and quick look ahead at the challenges that antitrust faces in the era of dominant digital platforms.
A History of Vigorous Antitrust Advocacy
For over twenty years, consumer advocacy organizations, including Public Knowledge, have pushed for aggressive antitrust enforcement to combat monopolistic practices and both horizontal and vertical mergers. Prior to PK’s founding in 2001, consumer groups like Consumer Federation of America, Consumer’s Union, and others fought against the “Baby Bells” recombining after the 1982 breakup of AT&T’s Bell System. During the Bell Atlantic/NYNEX and SBC/Ameritech mergers, for example, the acquiring company argued that it could only be powerful enough to create competition by combining with the acquired company. Consumer groups challenged this argument, noting that the mergers would both remove a potential competitor – i.e. the acquired firm – and make it harder for other companies to enter the market. These claims proved prescient, as Bell Atlantic and NYNEX and SBC and Ameritech’s new companies further consolidated into what are now Verizon and AT&T respectively. During this period, consumer groups likewise challenged problematic cable deals such as the Time Warner/Turner merger and the AOL/Time Warner merger by calling for the Federal Trade Commission and Federal Communications Commission to prevent discrimination and open the cable and dial-up internet markets to potential competitors and diverse media voices.
The rise of the internet at the turn of the 21st century fundamentally reshaped the media and telecommunications landscape. Public Knowledge took a leadership role in calling for vigorous challenges to anticompetitive practices and mergers during this pivotal era. In 2011, PK called for aggressive application of antitrust law to stop the vertical merger between Comcast and NBCUniversal. This included pushing the Department of Justice (DOJ) to go beyond merely asking the parties to promise that as a combined company they would not leverage their downstream or upstream assets to raise rivals’ costs or shift to an anticompetitive bargaining position.
Public Knowledge also challenged a number of horizontal mergers during this time. This included a major victory for the consumer community in 2011 when AT&T abandoned its proposed bid for T-Mobile following the DOJ’s lawsuit to block the deal. PK challenged Universal Music Group’s acquisition of EMI in 2012, arguing that it created a new tax on innovation among digital music services. Two years later, we opposed AT&T’s bid for LeapWireless to ensure that Cricket’s clients, many of whom were from low-income and minority communities, maintained competitive access to value-oriented wireless services.
New Challenges, Same Approach
The tech giants – Apple, Google, Amazon, Facebook, and others – have now exceeded the market value of the legacy telecommunications and media companies. In response, big telecom and media companies are forcefully challenging tech’s dominance. Part of this strategy involves further efforts to horizontally and vertically integrate. Public Knowledge has called for aggressive antitrust enforcement of any mergers that would lead to competitive harms. This includes helping to win a victory for consumers in 2015 when Comcast’s merger with Time Warner was abandoned, partnering with the Consumer Federation of America to support DOJ’s case against AT&T’s vertical merger with Time Warner, challenging AT&T’s merger with DirecTV and Charter’s merger with Time Warner Cable, and testifying before Congress in opposition to Sprint’s ongoing efforts to merge with T-Mobile.
This corporate maneuvering is taking place contemporaneously with calls by some policymakers and media outlets to “break up big tech.” Certain platforms have grown to a position of dominance and can use that power in ways that adversely affect consumer welfare. PK believes that antitrust can play an important role in ensuring that dominant platforms promote public interest values, but antitrust has its limits. Depending on the policy objective, it may be more appropriate to apply other legal tools such as non-discrimination obligations, privacy protections, or due process requirements. To the extent that dominant platforms engage in anticompetitive behavior that is best addressed using antitrust law, Public Knowledge will oppose such behavior and call on law enforcement to apply all of the tools in the antitrust toolkit to ensure that consumers are protected and can participate in a competitive and well-functioning market.
Public Knowledge has actively fought for strict antitrust enforcement to protect consumers from all types of competitive harm. We believe that the current antitrust law can, if applied stringently, prevent and protect against those harms. A long-term view of market harms is more important than promises of unsubstantiated lower prices in the near term. Not only are such promises often unkept, the long-term harms significantly outweigh any short-term benefits.
Strict antitrust enforcement leads to lower prices, higher quality goods and services, competition for labor, and increased innovation in both products and infrastructure. If these principles are followed when addressing the dominance of powerful tech platforms, we believe that law enforcers will be able to protect competition and promote innovation. At the same time, just like communications and media required a sector-specific regulator to promote new competition and public interest values, the tech sector will likely need more than antitrust enforcement to prevent abuses and expand competitive opportunities for diverse players and voices in the digital economy.