Antitrust: Taking on Monopoly Power From the Gilded Age to the Digital Age - Amy Klobuchar
Monopoly and British History:
In England monopolies are illegal unless granted permission by parliament. Edward Darcy got exclusive rights to import playing cards from Queen Elizabeth. They wanted control over card games to minimize the distraction of servants. The queen's actions led to high prices for playing cards.
Thomas Allen of London Haberdasher was another company that competed with Darcy and undercut his prices. Darcy sued Allen for damages and lost. This led to parliament being the only body in England being capable of issuing monopoly rights. This story shaped British laws and caused the implementation of the Statute of Monopolies (1624)
Monopoly and American History:
In America, the First Bank of the United States was created in 1791 as a private corporation with a 20-year charter. It did have monopolistic privileges, especially in holding federal funds and issuing banknotes, though it wasn't the only bank in the country.
James Madison opposed the First Bank but later, as President, supported the creation of the Second Bank of the United States in 1816, which again operated under a federal charter in partnership with the government.
Andrew Jackson dismantled the Second Bank during his presidency in the 1830s, as part of his populist campaign against what he viewed as a powerful, unaccountable financial monopoly.
He vetoed its recharter and removed federal deposits. The destruction of the Second Bank led to the rise of state-chartered banks and eventually to the U.S. government controlling the issuance of fiat currency through the Federal Reserve, which wasn’t established until 1913.
Relevant American Laws:
The Sherman Antitrust Act was introduced in 1890 as the first law used to combat monopoly power.
Sherman Anti Trust Laws were weaponized to stop the formation of labor unions. This highlights the fact that how the laws are interpreted by the judiciary system, is often more important than the laws themself.
Capper Volstead Act (1922) was a loophole to the antitrust laws which allowed for farmer co-ops to have monopolistic power.
Norris-LaGuardia Act (1932) and Clayton Labor Act (1914) provided antitrust exemption for farmer co-ops and unions.
Robinson-Patman Act (1936) stopped price discrimination and other anti competitive practices. Meaning companies could no longer lower prices to eliminate competitors and then charge extra high prices when they became the only supplier left. It sought to prevent predatory pricing.
Celler- Kefauver Act (1950) amended the Clayton Act and put restrictions on how companies could buy each other's assets as a practice to prevent new entrants from competing. It was used to prevent vertical integration of supply chains and anti-competitive consolidation.
Hart-Scott-Rodino Antitrust Improvements Act (1976) led to more focus on preventing monopolies as opposed to reacting to them.
Regarding monopolies the United States law claims the burden of proof is only on the company when mergers occur. Meaning after a merger, it’s the companies responsibility to prove that they are not a monopoly. They must pay the Hart Scott fee to do this, which is relatively small compared to the size of such deals.
The Department of Justice is meant to enforce antitrust laws against monopolies.
Getting Away With Monopoly Powers:
In 1914 the FTC was given the authority to police and monitor monopoly behavior but due to corruption did not enforce it.
Lobbyists have created a web off exemptions to antitrust laws such as:
Sports broadcasting
Baseball
Electricity providers
Local government entities
Defining broad markets makes antitrust laws harder to enforce. For example if Facebook identified as a social media company, the monopoly is clear, but if they identify as a big tech company (“Meta”) then it is harder to prove evidence of a monopoly.
Citizens United v. Federal Election Commission (2010) gave corporations the right to spend unlimited money on political expenditures. This led to the formation of Super-Pacs and made DC politics the corrupt mess it is today. Due to this decision corporations could legally buy the souls of policy makers.
Forced arbitration clauses are incredibly controversial and often unethical ways to bully/scare people out of whistle blowing. They are often used to suppress accountability and prevent class action lawsuits against monopolies. Using forced arbitration clauses creates a culture of fear and consolidates power without checks and balances.
Non-compete agreements are typically more bark than bite. Meaning they are designed to dissuade people from competing but they are hardly ever enforceable.
Other Golden Nuggets:
Monopsony - Economic term for a market condition where there is only one buyer.
Anti competitive tying occurs when a seller forces one product/service to only be accessible if another product/service is bought alongside it.
The anti-trust conversation needs to be rebranded to “Competition Policy.” Doing so will attract more attention to the conversation from a bi-partisan system.
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