It was just weeks ago that Democratic presidential candidate Hillary Clinton laid out an ambitious new agenda to combat corporate concentration with antitrust policies. Now a giant new merger looks like it will provide a test for her vision if she assumes the White House.
Over the weekend, AT&T announced a deal to buy Time Warner, which would make it the country’s largest entertainment company, leapfrogging over both Comcast and Walt Disney Co.
Consumer advocates have already warned that the deal could have negative consequences. AT&T could raise fees on competitors who want to access Time Warner’s content, such as CNN and HBO, or make it difficult for them to get it, thus driving consumers to its own offerings. It could also have some of the new subsidiaries like DirecTV refuse to carry programming from its rivals.
The Clinton team is already signaling that it could step in on the proposed deal. Spokesman Brian Fallon said on Sunday that it has “a number of questions and concerns” about it and that “certainly [Clinton] thinks regulators should scrutinize it closely.” Vice presidential candidate Tim Kaine echoed that sentiment on NBC’s “Meet the Press,” saying, “I share those concerns and questions… Less concentration, I think, is generally helpful, especially in the media.”
Clinton has previewed what that might look like. In early October, she laid out an aggressive antitrust agenda that she said would “take on abuses of market power” and to prevent harm to consumers and exploitation of workers.
One major plank of that agenda is “robustly” enforcing existing antitrust laws, she said, drawing a contrast with the more permissive approach that has reigned for the last few decades. She promised to take steps so that laws are “aggressively” enforced to ensure that mergers and acquisitions don’t overly concentrate market power in a few hands, raise prices for consumers and suppliers, and reduce consumers’ choices.
The recent approach to antitrust enforcement, by contrast, has largely allowed deals to go forward unless there is a clear danger of raising prices or reducing productivity. When dangers arise, many deals are still successful but include concessions, rather than getting blocked outright, as in the case of the recent mega media deal between Comcast and NBC.
A comprehensive review of the research on what this kind of approach to antitrust policy has wrought found that most mergers have resulted in higher prices and other outcomes that harm competition, as well as other negative side effects unrelated to prices. The author found that of 46 mergers, 38 resulted in higher prices, with an average increase of 7.29 percent. Another report found that big deals have allowed companies to up their prices and pad profits while stifling innovation and harming workers and suppliers. A new paper published Monday found that mergers increase prices without boosting productivity.
Clinton agrees with these assessments. In a speech in Toledo, Ohio in which she outlined her antitrust agenda, she said, “Large corporations are amassing so much power in our economy… With less competition, corporations can use their power to raise prices, limit choice for consumers, cut wages for workers, crowd out start-ups and small businesses.”
There are some specific steps Clinton would take toward her goal of reducing market concentration. One would be appointing officials at the Department of Justice and the Federal Trade Commission (FTC) — both of which review potential mergers — who “have demonstrated a willingness to take on anti-competitive behavior.” Two of the FTC’s five leadership roles currently sit vacant. She would also give those agencies more staff and resources so that they can research and review deals.
That could all take some time to get off the ground if she were to assume the presidency. But if she can’t get agencies staffed up before the AT&T deal comes before them, there are other ways she might make life difficult for the proposed mega merger. She promised to give antitrust agencies the power and authority to monitor and review mergers after they happen on a regular basis to make sure they aren’t unfairly impacting prices, competition, and other factors.
She also called for “building jurisprudence” to back up aggressive enforcement, signaling a willingness to challenge concentration through the courts.
Clinton’s not the only person who could impede the progress of AT&T’s acquisition. Republican rival Donald Trump promised flat out that he would block it “because it’s too much concentration of power in the hands of too few.” It also came under fire from Sens. Mike Lee (R-UT) and Amy Klobuchar (D-MN), chairman and ranking member of the Senate Judiciary Subcommittee on Antitrust, Competition Policy, and Consumer Rights, who said the deal “would potentially raise significant antitrust issues” and that the committee would hold a hearing on it.