Biden Has Cracked Down On Big Business Mergers And Monopolies. Are Americans Better Off Because Of It?

Biden Has Cracked Down On Big Business Mergers And Monopolies. Are Americans Better Off Because Of It?

Will Kessler on February 4, 2024

The Biden administration has pursued a more aggressive antitrust approach than previous administrations, filing numerous lawsuits seeking to break up large companies and block mergers with mixed success.

The administration’s antitrust action through either the Federal Trade Commission (FTC) or the Department of Justice (DOJ) has been aggressive since the president took office in January 2021, targeting tech companies like Google and Microsoft, but also airlines, e-commerce and more. Some conservatives say the crackdown will increase competition and consumer outcomes, while others say that the action will stymie legitimate business operations, reducing operating viability and harming consumer experiences.

“We’ve certainly seemed to have seen a shift in recent antitrust actions away from some of the long-standing presumptions based on the consumer welfare standard that we’ve seen in the past,” Jennifer Huddleston, a technology policy research fellow at the Cato Institute, told the DCNF. “Ideally, the consumer welfare standard should be what is the driving force, and we should really be looking at how any transaction should impact consumers and not how it should impact competitors. You certainly see this in the tech space with some of the creative definitions of market.”

The consumer welfare standard is the legal principle that antitrust action should be focused on promoting the welfare of consumers rather than the impact on competing businesses or competition in general.

Most recently, on Monday, a proposed acquisition by Amazon of iRobot was terminated due to regulatory hurdles put in place by the FTC and European regulators, prompting iRobot to lay off 31% of its workforce.

A federal judge in January blocked JetBlue Airways’ proposed $3.8 billion acquisition of Spirit Airlines in response to an antitrust suit from the DOJ that would have created the 5th largest U.S. airline company out of the 6th and 7th largest, bringing it more into competition with other prominent airlines. The airline industry has been ripe with approved mergers over the past 20 years, which allowed top competitors like United, Southwest and American to grow to their current sizes, with a blocked spirit merger threatening competitiveness with the already larger airlines.

The DOJ, in its suit, argued that Spirit has a broader effect in markets where it is present, bringing down prices across the board despite positioning itself to consumers as an ultra-low-cost carrier, as opposed to other airlines like American or Delta that offer more amenities and higher prices. Following the directive by a federal judge blocking the acquisition, it was reported that Spirit was looking into refinancing options to handle its $1.1 billion in debt, which could threaten to hinder future operations without JetBlue to pick up the tab.

Critics of the administration’s efforts argue that it has been pursing aggressive antitrust actions without concern for the positive benefits to consumers that may result from mergers.

“The Biden administration’s government-wide attack on American businesses has stifled efficiency and innovation,” Jessica Melugin, director of the Center for Technology and Innovation at the Competitive Enterprise Institute, told the DCNF. “Past FTC’s have acknowledged that mergers frequently have pro-competitive effects that also benefit consumers, but the extreme antitrust agenda of current agency leadership has gone far beyond what the Trump administration did in terms of putting ideology ahead of consumer welfare.”

Supporters of the Biden administration’s antitrust efforts point to the monopolistic control that large tech companies have over the information they distribute to consumers, with companies like Google being able to control what users are able to view through its search engine while also governing the vast majority of internet searches. Big Tech, particularly social media sites like Twitter, has also been criticized for censoring users, with some arguing these sites should be treated as public forums instead of private boards.

“Free markets require functioning markets,” Mike Davis, founder and president of the advocacy organization Internet Accountability Project, told the DCNF. “This means enforcement of our century-old antitrust laws to target anti-competitive actors. Trillion-dollar Big Tech monopolists have too much power over information and commerce. We need more than extremely expensive, David-versus-Goliath antitrust lawsuits to hold accountable the trillion-dollar Big Tech monopolists like Google, Apple, Amazon, and Facebook.”

The DOJ under the Trump administration, but furthered by the Biden regulators, has taken aim at Google, claiming that the company holds a monopoly of the search and advertising markets, controlling around 90% of the internet searches. Despite having broad control over the market, Google argues that consumers prefer its search engine and that imposing any antitrust action would hinder consumer experiences.

“Just about the only thing the Biden administration is doing right is bipartisan antitrust law enforcement,” Davis told the DCNF. “At the same time, we can’t let the federal government take control of American industry. Currently, Section 230 and antitrust amnesty protect these Big Tech behemoths. Consumers, conservatives, and small businesses suffer as a result, while Big Tech billionaires profit. We need more bipartisan antitrust actions to keep Big Tech from taking over every facet of American life.”

In less high-profile cases, the FTC has targeted pharmaceutical companies amid President Joe Biden’s push to lower drug prices. In one such case in December, the FTC cut a deal with Amgen Inc. over its proposed acquisition of Horizon Therapeutics, placing limitations on what drugs and therapies can and cannot be bundled.

“The FTC has been on a winning streak, securing several court victories in just a few weeks,” an FTC spokesperson told the DCNF. “All of these wins are directly benefiting consumers, leading to lower health care and prescription drug costs for patients.”

“We’ve seen the FTC particularly trying to kind of come up with these creative definitions of markets that are not exactly what consumers experience and don’t reflect the relevant market,” Huddleston told the DCNF. “The good news is, we have largely seen those more subjective kinds of definitions and definitions that are taking away from the consumer welfare standard rejected in the court so far.”

The FTC filed a suit against Microsoft in January 2022, requesting that a proposed $68.7 billion acquisition by the tech giant of video game company Activision be blocked on the grounds that Microsoft would own too much of the gaming industry. A federal judge denied the motion in July 2023, noting that the acquisition was unlikely to provide a burden for consumers.

The FTC and 17 state attorneys general sued Amazon in September, claiming that it has exhibited a pattern of illegal conduct equating to a monopoly. In the suit, the FTC made the case that it was targeting Amazon not because of the company’s size but because of a number of alleged anti-competitive tactics, including a requirement for sellers to have certain prices in order to be properly marketed.

“One [consequence] that we really won’t know until later is what has been the chilling effect that a much more zealous approach, an approach with much more scrutiny for different acquisitions, is having on consumers and on small businesses as well,” Huddleston told the DCNF. “Are consumers not going to have the benefits that we might have seen from some of these mergers or acquisitions because companies may be more hesitant to undertake certain transactions if they’re going to be subject to increased regulatory scrutiny?”

The DOJ did not respond to a request to comment from the DCNF.