Competition is the bulwark of a market system. It plays the lead role in the U.S. political economy by promoting fair prices and wages, and the choice, quality, and innovation that benefits consumers and workers. As referees on the playing field of markets, antitrust enforcers and the courts call “balls and strikes” on what mergers or business practices are likely to harm competition. This oversight is essential for protecting markets and the democratic principles on which they rest.
Much like other pro-competition administrations, more aggressive merger enforcement is a leg of the Biden administration’s platform. But the Biden strategy is different. It features antitrust agency leadership sourced from the Neo-Brandeisian, anti-monopoly movement that emphasizes concern with bigness. This has spurred debate over assessing the legality of mergers based on “bright-line” tests for bigness versus the existing consumer welfare standard. The latter asks if, and how, the merged firm could wield its greater market power to raise prices, lower wages and benefits, or reduce quality, choice, and innovation.
This Progressive Policy Institute (PPI) report unpacks the Biden merger enforcement record based on data across three decades and five political administrations. The analysis finds that the Biden enforcers have made progress in invigorating merger enforcement in some areas but may be lagging behind in others. PPI’s analysis does not address hard-to-measure indicators of more aggressive enforcement, such as deterring harmful consolidation proposals that, as former Assistant Attorney General Bill Baer noted, “never should have made it out of the boardroom.”
PPI’s analysis reveals three major takeaways from the Biden merger enforcement record so far. One, the Biden enforcers are forcing companies to abandon anticompetitive mergers at the highest rate in 30 years. Two, the rate at which the agencies attempt to block mergers by litigating preliminary injunctions before federal court or administrative judges is also at its highest level. The Biden agencies’ “win” rate in court, however, is below the historical average, reflecting an intense effort that has not yet fully paid off. Third, the Biden enforcers have not been as aggressive as their Obama counterparts in invigorating enforcement in the wake of the Republican administrations they immediately succeeded.
PPI’s findings regarding the Biden administration’s merger control program prompt key policy questions that have wide-ranging implications for enforcement, competition, and consumers. For example, how can success in promoting more aggressive enforcement can be carried forward? What is the impact of the cases lost by the Biden enforcers on legal precedent and will it work against stronger enforcement in the future? What are the implications of the Biden policy of disfavoring merger settlements on advancing policy on stronger, more effective merger remedies?
PPI’s analysis suggests that now is a good time for the Biden administration to take stock of its policy objectives for merger enforcement by performing a mid-course assessment. This will provide a basis for the administration to assess goals and expectations, agency leadership, and resources for a second term. For a deeper dive into this important topic, please continue reading the full report.
