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Welcome to The Corner. In this issue, we introduce our white paper on The Role of Monopoly in America’s Prescription Drug Crisis. We also introduce our white paper on The Role of Hospitals in America’s Health Care Crisis.

To read previous editions of The Corner, click here.

White Paper: The Role of Monopoly in America’s Prescription Drug Crisis

Bipartisan reform efforts to combat high drug prices often fail to recognize how pharmaceutical corporations suppress fair market competition through various forms of monopoly. In a newly published white paper by the Open Markets Institute, The Role of Monopoly in America’s Prescription Drug Crisis, we detail how increasing corporate concentration in the pharmaceutical industry, and the monopoly markets for individual drugs created by a deeply flawed and increasingly abused patent and regulatory system, are the root causes of the problem.

Drug manufacturers engage in a variety of anti-competitive practices, such as abusing the patent system, various FDA regulations, filing sham citizen petitions with the FDA, and tactics to eliminate competition. These practices are used to extend and protect monopolies and to stifle competition—and they wind up needlessly costing consumers millions of dollars each year.

These practices ultimately drive up drug prices, decrease innovation, and cause shortages and disruptions of the supply of many key drugs. They also imperil drug safety.

Brand drug manufacturers also stifle competition and gain monopoly profits by offering substantial rebates or discounts to large-scale buyers—but only if the purchasers refuse to buy a competing generic drug that might erode the brand drug’s market dominance.

Many of these problems can be solved or ameliorated through better competition policy, which can involve the application and enforcement of our antitrust laws. Other policy solutions include the forced licensing of patents, cash prizes for innovation, or price regulation, among other recommendations.

In each instance, we are looking for public policies that will reset the terms of competition and the balances of power in drug markets so that they serve the public good. Read our entire report here.

White Paper: The Role of Hospitals in America’s Health Care Crisis

Last week, the Open Markets Institute released a white paper titled The Role of Hospitals in America’s Health Care Crisis. Our paper explains how market concentration in the hospital industry results in higher prices for medical services, the weaknesses of our current polices to roll back harmful mergers, and the paper presents several policy options for remedying these issues.

Policy Director Phillip Longman explained that "hospital consolidation can lead in some instances to economies of scale and better-integrated care. Yet in the absence of coherent policies for managing competition, the real-world results of corporate concentration in health care have been hospital closures, increased prices, and loss of choice for health care consumers." Ultimately, we argue that hospital consolidation should be a standard part of health policy discussion, particularly if proposals to move to a single-payer system gain steam. Read the full report here.

🔊 ANTI-MONOPOLY RISING:

Athena, a grassroots alliance of more than 40 organizations united in opposition to Amazon’s growing monopoly power, was launched late last month. Co-founded by the Open Markets Institute and others, the launch of Athena is a watershed moment in the larger anti-monopoly movement of our time. This diverse coalition of workers, consumers, small-business people and advocates stand united in the fight for a just economy and a fair democracy in the shadow of Amazon’s immense influence.

In the words of our larger coalition: “We are joining together to stop Amazon’s growing, powerful grip over our society and economy. We’re going to write new rules so that our economy puts people first, our public officials ensure that no corporation is above the law or too big to govern — and that our democracy, finally, represents all of us.”

"AOC Celebrates That 'Amazon is Coming to NYC Anyway' Without Tax Incentives" (Slate, Daniel Politi): Rep. Alexandria Ocasio-Cortez is “waiting on the haters to apologize” after Amazon said it would open up corporate offices in New York City to house more than 1,500 employees. The announcement from the internet giant came less than a year after it abruptly dropped plans to build a second headquarters in the city, following backlash to some $3 billion in financial incentives that the government had offered to woo the company. Ocasio-Cortez quickly celebrated the announcement in a series of tweets. “Won’t you look at that: Amazon is coming to NYC anyway - *without* requiring the public to finance shady deals, helipad handouts for Jeff Bezos, & corporate giveaways,” Ocasio-Cortez tweeted. “May be the Trump admin should focus more on cutting public assistance to billionaires instead of poor families.”
"Warren Takes Aim at Bank Mergers, a Sign of Her Presidential Intentions" (New York Times, Jeanna Smialek): Sen. Elizabeth Warren plans to introduce a bill in the coming weeks that would intensify the scrutiny of bank mergers. This isn’t so much a signal of legislative action to come, but rather a signal of her intentions for the finance industry if she is elected president. The bill, a companion of which will be introduced on Wednesday in the House by Democrat Rep. Jesús “Chuy” García of Illinois, will almost certainly go nowhere in the Republican-controlled Senate. But its argument that the “review process for bank mergers is fundamentally broken” indicates that Warren still has the financial industry in her sights.
"France Plans a Revolution to Rein in the Kings of Big Tech" (Wired, Tom Simonite): During a joint press conference in London with President Emmanuel Macron of France this week, President Donald Trump threatened to impose tariffs on French goods, including champagne, in retaliation for a new tax on large tech companies. As he spoke, Macron’s digital affairs minister, Cédric O, was in Washington trying to build support for even stronger actions against Google and other tech giants. “Tech platforms have a footprint in our economies and our democracies that is a huge challenge for public power,” O said during a visit to WIRED’s offices in San Francisco, one stop on a weeklong, cross-country trip that involved meeting lawmakers, regulators, and academics to discuss antitrust tactics.
"Telecoms Chiefs Back Overhaul of EU Competition Policy" (Financial Times, Nic Fildes): The telecoms sector has thrown its weight behind the European Commission’s new plan to create industrial champions and overhaul its approach to competition policy. A letter signed by the chief executives of some of Europe’s largest telecoms companies states that they would support the move to provide Europe with an “industrial policy for digital leadership,” which could provide a boost for the struggling sector in its battle with giant U.S. technology companies.
"FTC Faces Push to Study Ads Targeting Children" (Wall Street Journal, Ryan Tracy): Pediatricians and consumer advocates are calling on the Federal Trade Commission to investigate practices for collecting online data about children, amid concerns that advertisers might be manipulating children with targeted ads. “Advertisingto children is a lucrative, booming business, and not enough is understood about these new methods of surveilling and monetizing children, or the impact that it has on their privacy and well-being,” according to a letter to the FTC from Thursday.
"EU Regulators to Review Rules Defining Companies' Market Power" (Reuters, Foo Yun Chee): EU regulators will review two-decade-old rules that determine whether companies have the market power to throttle rivals or control prices, to take into account globalization and digitalization, Europe’s antitrust chief Margrethe Vestager said on Monday. “Changes like globalization and digitization mean that many markets work rather differently from the way they did 22 years ago,” Vestager told a Chillin Competition conference. “So the time has come to review the Market Definition Notice.”

Open Markets Employment Opportunities

The Open Markets Institute is hiring for two positions: a Director of the Center for Liberty and Journalism and a Director of Entrepreneurship and Independent Business.

Open Markets is looking for a Director of the Center for Liberty and Journalism who will help ensure that the news media is fully independent and funded in the 21st century’s digital economy. The Center will conduct cutting-edge research into news media market structures, engage with policymakers and support efforts to design smart policy solutions, and reshapethe national narrative around the market structures that threaten the independence and financial stability of America’s news media.

Open Markets is also looking for a Director of Entrepreneurship and Independent Business who will help develop Open Markets’ effort to educate the public and other stakeholders on the importance of competition policy to entrepreneurship and strong independent businesses. This Director would track and work on policy developments, educate policymakers and reporters, and organize public or private action.

You can find the full job listings here.

📝 WHAT WE'VE BEEN UP TO:

Matt Stoller spoke with Business Insider about the growing movement to fight economic inequality and corporate power. Stoller said that an alliance between the left and the right on this issue was not only necessary but very promising. Business Insider also named Matt Stoller's book, Goliath, one of the best books of 2019 on how to rethink capitalism and improve our economy.
Open Markets Institute was featured in Jacobin as a leader in the effort to democratize the internet and confront corporate power. "At least in the United States, the cutting edge of the platform regulation conversation is dominated by liberal antitrust advocates, perhaps best represented by the Open Markets Institute."
Matt Stoller spoke with Fast Company in an interview that covered a wide range of antitrust issues, including big tech, free markets, and the future of our democracy. When asked about taking on big tech with our current antitrust laws, Stoller said, "There are laws that exist that people can use. They just don’t."
Matt Stoller told Fortune about the dangers of Disney's monopoly power in the entertainment industry." The new Disney is more a private equity group than studio, collecting brands and using them to bargain aggressively with partners, suppliers and consumers … It is not a corporation that pushes the bounds of artistic and technological possibility, but a corporation that pushes the bounds of legal possibility.”

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📈 VITAL STAT:

3,800

The number of bank mergers since 2011 that the Federal Reserve has not challenged, according to a memorandum issued by the House Financial Services Committee.

📚 WHAT WE'RE READING:

“We Asked Public Universities for Their Professors’ Conflicts of Interest — and Got the Runaround” (ProPublica, Annie Waldman and David Armstrong): How it is difficult, if not impossible, to obtain conflict of interest disclosures from university professors to determine whether the opinions they assert are biased.
"Economists: Bright Stars of Antitrust Analysis or Well-Paid Advocates Who Spin a Good Yarn?" (mlex, Curtis Eichelberger): Detailing the arguments for and against—as well as the consequences of—incorporating economists into antitrust litigation.
“The Case for Growth Centers: How to Spread Tech Innovation Across America” (Brookings Institution, Robert D. Atkinson, Mark Muro, and Jacob Whilton): How 90% of U.S. job growth in the “innovation sector” since 2005 was confined to only five of America’s largest cities: Boston, the San Francisco Bay Area, San Jose, Seattle, and San Diego.
"Save the .ORG Domain and All It Symbolizes” (The Hill, Marc Rotenberg): How the sale of the company managing the .ORG domain to a private equity firm endangers the current public interest ideals symbolized by the domain.

Goliath: The 100-Year War Between Monopoly Power and Populism

Open Markets Fellow Matt Stoller’s new book, Goliath, reveals how we once defeated monopolies and authoritarianism but then allowed these forces to return and deliver us our current chaotic political moment. Learn how our forebears reclaimed our democracy, so that we might as well. Available in bookstores. Order online here.

🔎 TIPS? COMMENTS? SUGGESTIONS?

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Booker Bill Would Phase Out Factory Farms and Revive the Packers and Stockyards Act

Presidential candidate Sen. Cory Booker introduced a bill on Monday to radically reform an animal agriculture system that currently puts independent producers, rural communities, and consumers at risk.

The Farm System Reform Act would halt construction of new concentrated animal feeding operations (CAFOs) and phase out all large CAFOs by 2040, while also holding corporate meatpackers more accountable for environmental degradation and farmer exploitation.

“Our independent family farmers and ranchers are continuing to be squeezed by large, multinational corporations that, because of their buying power and size, run roughshod over the marketplace,” said Booker in a press release. “We need to fix the broken system – that means protecting family farmers and ranchers and holding corporate integrators responsible for the harm they are causing.”

While the vast majority of meat in the U.S. today comes from large-scale animal farms, this wasn’t always the case. Antitrust enforcement during the past four decades enabled meatpackers to corner livestock markets, while broader agricultural policies both directly and indirectly subsidized critical operation costs for industrial livestock operations, namely feed and manure management. Shifts to highly consolidated and contract agriculture drove 70 percent of hog farms out of business between 1992 and 2007 and doubled the number of dairy cows on factory farms between 1997 and 2012, among other changes.

These large farms introduce high concentrations of manure that pollute ground and surface water, diminish air quality, and release greenhouse gases. Many rural communities have organized to oppose new CAFO construction, and nearly two-thirds of Iowa voters support greater oversight of industrial animal agriculture, according to a new national poll by the Johns Hopkins Center for a Livable Future. About 43 percent of respondents support a ban on new CAFOs.

Booker’s Farm System Reform Act of 2019 would end large-scale animal agriculture as we know it, placing a moratorium on new or expanded CAFOs and phasing out all large CAFOs by 2040 (defined in the bill as farms with more than 700 dairy cattle, 2,500 hogs, or 82,000 laying hens). Any such farm that exists after January 2040 would pay up to $10,000 per day in fines. The bill dedicates $10 billion over 10 years to cancel CAFO operators’ debts and help them transition to “alternative agriculture activities,” such as pasture-based livestock production. It would also hold both CAFOs and corporate meatpackers more liable for violating environmental regulations.

In addition to banning CAFOs, the bill revises the Packers and Stockyards Act to check anticompetitive and predatory tactics meatpackers use to intimidate producers and to hold down prices for livestock. This includes eliminating the tournament payment system in poultry farming, which gives opaque bonuses to some producers at the expense of others. The bill requires packers to justify and explain how they calculate farmers’ pay, and it bans packers from retaliating, terminating contracts without basis, or presenting misleading information about growing contracts. It also allows plaintiffs to pursue a Packers and Stockyards violation without the burden of proving that an action by a meatpacker caused harm to industry-wide competition.

Finally, it aims to revive key price-discovery or spot markets by ensuring there’s a “reasonable competitive bidding opportunity” in cash market auctions and forward contracts. This reform could address concerns raised by cattle ranchers, who claim large meatpackers rig these spot markets to depress the price of cattle at auction and in contracts.

Beyond the Packers and Stockyards Act, the bill would also reinstate mandatory country-of-origin labeling on beef and pork, and the bill adds similar labeling requirements for dairy products. A bipartisan, rancher-led campaign has recently lobbied the president on this issue, arguing that ranchers face threats from imported beef and that consumers who want to buy domestically do not have the transparency to do so.

"I have seen firsthand how hard it is to challenge the multinational corporations who control the meat industry,” said Kansas rancher Mike Callicrate in Booker’s press release. “Things like country of origin labeling on meat, updates to the Packers and Stockyards Act, and resources to get folks out of a system that is bankrupting them will make a big difference."

The bill has little chance of passing a Republican-controlled Senate, but its proposals could influence policy debates leading up to the Iowa caucuses in February. Candidates Julian Castro, Sen. Bernie Sanders, and Sen. Elizabeth Warren all support a factory farm moratorium, and Sanders has set aside $41 billion to transition large CAFOs to “ecologically regenerative practices” in his Green New Deal. Many other candidates have lined up behind reforming the Packers and Stockyards Act and increasing antitrust enforcement in the agricultural sector.

Find and share this story originally published on Food & Power

What We're Reading

Rosa DeLauro and Sen. Kirsten Gillibrand introduced a bill that would allow the Food and Drug Administration to more directly investigate CAFOs’ role in major food-safety outbreaks. (Press Release)

Two USDA inspectors filed whistleblower disclosure forms over concerns about a recent FSIS rule that lifted limits on line speeds and reduced the number of USDA inspectors in pork processing. (NBC)

Nebraska Farm Bureau delegates voted to endorse a right to repair platform that indirectly repudiates so-called “half measures” that equipment-manufacturer trade groups have pitched to other farming groups, such as the California Farm Bureau. (U.S. PIRG and Wired)

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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Welcome to The Corner. In this issue, we discuss FTC. v. Impax Laboratories and our latest amicus brief that we submitted in support of the FTC. We hope that all our readers have a happy and safe holiday. The Corner will return on January 9.

To read previous editions of The Corner, click here.

Amicus Brief: FTC v. Impax Laboratories

Open Markets Institute filed an amicus brief on Monday in support of the Federal Trade Commission in its case against Impax Laboratories. In the case, the commission unanimously held that Impax engaged in an illegal pay-for-delay agreement, in which Endo Pharmaceuticals paid Impax to abandon its patent challenge and delay market entry of its generic version of the drug Opana ER for 2 1/2 years.

In our brief, we argue that pay-for-delay agreements are a form of per se illegal, horizontal market allocation agreements that seek to prohibit market entry and thus harm market competition. In market allocation agreements, rivals agree not to compete in the same product line, geographic area, or for the same set of customers. Pay-for-delay agreements have the same effect. Thus, similar to the Supreme Court’s 80-year-old holding that market allocation agreements are per se illegal, pay for delay agreements should be per se illegal.

Our brief also argues that the anti-competitive effects of pay-for-delay agreements outweigh any marginal competitive benefit that they may have. One harmful effect includes prolonging a drug patent monopoly, which deprives consumers of a competing drug that could lower prices for consumers, as a 2010 FTC reportdescribed.

Other harms, such as corporations allocating competition or depriving the drug market of a lower-cost competitor, provide more justification why pay-for-delay agreements should be illegal.

Importantly, we argue that the pay-for-delay agreement detailed in this case should be illegal, even under a comprehensive rule-of-reason analysis.

In its holding, the FTC found, citing the Supreme Court’s Actavisdecision, that the agreement between Impax and Endo “provide[s] strong evidence that the patentee seeks to induce the generic challenger to abandon its claim.” The commission further elaborated that a pay-for-delay scheme “would be an irrational act unless the patentee believed that generic production would cut into its profits.” However, the Supreme Court has not ruled that all pay-for-delay agreements illegal. Nevertheless, the commission found that Endo’s market power and the risk of eliminated competition from the agreement were sufficient for Impax to incur liability, too.

The commission justified its holding based on having “ample evidence” of a “real threat” to competition. The commission’s opinion noted that “the relevant anti-competitive harm [with pay-for-delay agreements] occurs when the branded manufacturer and its generic competitor replace the possibility of competition with the certainty of none.”

We strongly urge the Fifth Circuit Court of Appeals to uphold the FTC’s findings, so as to increase competition and to provide the public with cheaper prescription drugs.

You can read our full brief here.

🔊 ANTI-MONOPOLY RISING:

The UK government will create a technology regulator next year to police corporations such as Facebook and Google, according to several people involved in the process. The regulator will be given powers to implement an enforceable code of conduct for the biggest corporations, and greater data accessibility for consumers. Andrea Leadsom, secretary of state for the Department for Business, Energy and Industrial Strategy, has pledged to bring out new legislation to reform competition rules in the first quarter of next year, as well as details of a new “digital markets unit.” (Financial Times)
Federal regulators probing Facebook for violations of antitrust law have considered moving to block the tech giant’s plans to integrate its social-networking app with the other services it owns. The legal move would prevent Facebook from merging operations of its core platform with those of photo-sharing app Instagram and the messaging service WhatsApp, which Facebook acquired in 2012 and 2014, respectively. (The Washington Post)
The California Consumer Protection Act will take effect on January 1. The CCPA (full text here) will be the strictest digital privacy law in the United States and the first law in the country that gives adults some rights over the collection of their data. (Vox Recode)
The New York Times and the Financial Times both named Christopher Leonard’s blockbuster new book Kochland: The Secret History of Koch Industries and Corporate Power in America one of the best books of 2019. Leonard tells the riveting and disquieting story of the rise of Koch Industries, how its infamous owners built their company into the dominant global behemoth it is today, and what the rise of Koch Industries can tell us about the dismal state of economic opportunity and democracy today.

Open Markets Employment Opportunities

Open Markets is looking for a Director of the Center for Liberty and Journalism who will help ensure that the news media is fully independent and funded in the 21st century’s digital economy. The Center will conduct cutting-edge research into news media market structures, engage with policymakers and support efforts to design smart policy solutions, and reshape the national narrative around the market structures that threaten the independence and financial stability of America’s news media.

You can find the full job listings here.

📝 WHAT WE'VE BEEN UP TO:

Matt Buck's Washington Monthly article was featured in The New York Times as a story "you shouldn't miss." The Times wrote, "Speaking of tech giants, an article in Washington Monthly argued that Amazon, Apple and Google should stay out of health care. The piece, by Matthew Buck of the Open Markets Institute, said the tech companies’ drive to maximize corporate revenues could skew the development of health technology away from the best interests of patients and toward overtreatment."
Barry Lynn and Open Markets Institute were featured in a Yahoo Finance article about the growing movement behind corporate concentration and antitrust. The piece highlights major voices in the space and quoted Bill Kovacic, a George Washington University law professor, who said that “in five years, Barry and his group have changed the debate. They’ve gone from being a largely unnoticed fringe body of commentary to being at the very center of the debate.”
Michael Bluhm's white paper on drug monopolies was listed in Politico's "Document Drawer" as part of their widely read newsletter Prescription Pulse, which examines the latest pharmaceutical news and policy.
Barry Lynn spoke at a Charles River Associates conference in Brussels about market power and economic democracy. In discussing the dangers of Google, Facebook, and Amazon, Lynn said, "Two things make these corporations so dangerous. First is their control of the gate to the market. If you want to sell something or say something or see something or learn something, you really can't do it without riding their rails. Second is their license to discriminate — to treat each and every buyer and seller differently."
Sally Hubbard spoke with The Washington Post about possible legal action to stop Facebook from integrating WhatsApp and Instagram with the Facebook platform. “At a time when Facebook is under scrutiny for its monopoly power and its abuses of its power, to say it’s going to integrate these three platforms is just another monopoly grab,” she said.

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DONATE

📈 VITAL STAT:

1,992

The total number of reported merger transactions in 2017 – a 12% increase over last year and the highest number of reported transactions in the past 10 years.

📚 WHAT WE'RE READING:

“Insulin Should Be Free. Yes, Free.” (Democracy Journal, Merrill Goozner): How concentrated insulin markets result in high prices for consumers and why this lifesaving drug should be free.
“How to Take Back Control From the Big Tech Barons” (Financial Times, Rana Foroohar): How the modern technology robber barons, like those of the past, use their financial wealth to extract influence from government, but their ability to influence the public by utilizing behavioral advertising makes them more of a threat to our democracy.
“How McKinsey Infiltrated the World of Global Public Health” (Vox, Julia Belluz and Marine Buissonniere): How members of McKinsey and other consulting companies have infiltrated global organizations to purchase their services.

Goliath: The 100-Year War Between Monopoly Power and Populism

Open Markets Fellow Matt Stoller’s new book, Goliath, reveals how we once defeated monopolies and authoritarianism but then allowed these forces to return and deliver us our current chaotic political moment. Learn how our forebears reclaimed our democracy, so that we might as well. Available in bookstores. Order online here.

🔎 TIPS? COMMENTS? SUGGESTIONS?

We would love to hear from you—just reply to this e-mail and drop us a line. Give us your feedback, alert us to competition policy news, or let us know your favorite story from this issue.

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Trump’s USDA Sides With Corporate Meatpackers Over Farmers, in Latest GIPSA Proposal

On Monday, the USDA thwarted a decade of efforts to help farmers seek justice for discrimination, retaliation, and unfair treatment by meatpackers. Trump’s USDA introduced new criteria to determine whether a meatpacker violated the Packers and Stockyards Act, after withdrawing an Obama-era proposal two years ago. This latest proposal omits several critical farmer protections from the previous rule and introduces new language that could codify abusive industry practices.

“This rule does not go far enough to safeguard farmers from unfair treatment, nor does it address many of the other difficulties farmers have been suffering at the hands of powerful corporations,” said Roger Johnson, president of the National Farmers Union.

Contract growing models and market consolidation give meatpackers inordinate power to squeeze farmers and determine their success. Farmers face retaliation by packers, such as canceling growing contracts, for organizing or speaking out about poor treatment.

“Corporate bullying, intimidation, and a mafia-like mentality has taken control over this industry,” said former poultry farmer Anthony Grigsby at a news conference earlier this year. Grigsby says he lost his farm when his poultry company withheld chicken feed after he raised concerns about receiving sick chickens or incorrect feed.

The Packers and Stockyards Act outlawed this type of mistreatment by meatpackers and established fair terms of trade for farmers. But during the past four decades, poor court rulings have gutted farmers’ ability to bring cases under the act, even though meatpacking is more consolidated today than it was when the law was passed.

Most critically, courts have claimed that a packer’s action against an individual farmer can only violate the law if the action causes “competitive harm” to the entire industry. In response to this precedent and other troubling legal ambiguities, Congress mandated in 2008 that the USDA clarify aspects of the Packers and Stockyards Act, launching a legal battle that continues to this day.

After a series of hearings where farmers shared stories of mistreatment by meatpackers, often at great risk of retaliation, the Obama administration proposed in 2010 a slate of promising reforms to the Packers and Stockyards Act that were subsequently blocked, watered down, and posted in the final days of the administration. The Trump administration promptly withdrew these rules and dissolved the independent Grain Inspection Packers and Stockyards Administration that oversaw them, relegating its duties to the Agricultural Marketing Services.

The Trump administration finally released on Monday new rules to fulfill the 2008 congressional mandate, but they raise major concerns for farmer advocates. “It’s at best a bare minimum,” says policy advisor for the Organization for Competitive Markets, Joe Maxwell. At worst, new vague language “could actually be more harmful than helpful,” Maxwell argues.

The Trump administration’s rules drop several sections from Obama-era proposals and only focus on defining an “undue or unreasonable” preference by a packer (such as giving white farmers more lenient growing requirements than those given to black farmers). The proposed rules say any differences in farmer treatment that can be justified as a “cost savings” or a “reasonable business decision that would be customary in the industry” would not violate the law, leaving room for corporate packers to carry on with business as usual.

“Practices that are customary and commonplace within the industry are abusive themselves,” says Tyler Whitley, manager of the Contract Agriculture Reform Program at the Rural Advancement Foundation International-USA. “To include criteria that could justify decisions based on what is customary within the industry only codifies abusive practices in law.”

Obama-era proposed rules also included more specific definitions of actions that constitute unfair or undue preference, such as retaliation for speaking out or organizing and discrimination on the basis of race, national origin, sexual orientation, political beliefs, religion, age, or disability.

Finally, the latest rule does not lift the need to prove industry-wide harm in order to pursue a violation, leaving the law largely unenforceable. The USDA has previously said it supports an interpretation of the Packers and Stockyards Act that allows farmers to challenge meatpackers for individual harms, but the latest ruling does not take steps to codify this.

“Even if you put in place these definitions, it doesn’t really matter, if they can’t bring a claim,” notes Angela Huffman, executive director of the Organization for Competitive Markets.

The public will have 60 days to comment on the proposed rule.

Find and share this story originally published on Food & Power

What We're Reading

Walmart opened a meatpacking plant in Georgia, vertically integrating their supply of Black Angus beef. Executives say they hope to reduce their reliance on consolidated beef packers. (New Food Economy)

Rep. Dina Titus of Nevada introduced a bill to reform checkoff programs by prohibiting lobbying groups from receiving checkoff funds and requiring audits. The bill is a companion to the OFF Act, sponsored by Sens. Mike Lee, Cory Booker, Rand Paul, and Elizabeth Warren. (FERN’s Ag Insider via Successful Farming)

A second major dairy processor, Borden, filed for bankruptcy earlier this month. While standard fluid milk struggles, Coca-Cola furthered their investment in the ultra-filtered milk market by taking full ownership of Fairlife. Coca-Cola and the Select Milk Producers co-op received federal milk checkoff funds to develop and market the Fairlife brand. (The New York Times, Food Drive, and the Milwaukee Journal Sentinel)
Farmers are increasingly seeking out older tractors, saying they’re easier to fix than current models, which come with embedded software and repair restrictions. (Minneapolis Star Tribune)

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

Follow F&P on Twitter | Subscribe to this Newsletter | F&P Website | Contact Us

Welcome to The Corner. In this issue, we talk about our plan for a health care reform that would lower health care prices without raising taxes or forcing people to change health plans.

To read previous editions of The Corner, click here.

Open Markets Promotes Health Care Reform to Lower Prices Without Raising Taxes or Ending Private Insurance

By Phil Longman

Open Markets Policy Director Phil Longman presented a groundbreaking plan to reform health care prices, in the cover story for the current issue of the Washington Monthly.

Longman proposed a system that we’re calling Medicare Prices for All. The basic idea is simple: Have the federal government mandate that the prices Medicare pays for health care apply to all health care plans.

This plan is also relatively simple to enact. Congress would pass a law requiring that all health care providers offer prices based on what Medicare pays. Americans get to keep their insurance if they want, but everyone gets the same lower price.

This plan would accomplish the major goals of lowering health care costs and thereby making it affordable for more Americans, without requiring anyone to change plans or pay more taxes. By contrast, support for single-payer health insurance, often referred to as Medicare for All, drops substantially when citizens find out how much it costs and that it would probably mean giving up their current private health care plans.

Medicare Prices for All would also end the broad price discrimination that permeates health care today. Patients who live in places with many competing hospitals would be charged the same prices as people who live in places monopolized by one hospital. The plan would eliminate differences among large and small health care plans, as well as among doctors who are “preferred providers” or “out of network.” All providers would get the same prices for treatments given to patients with same conditions, just as they do under Medicare. Competition would shift from who can gain the most market power over prices to who can provide the highest-quality medicine.

Importantly, the plan would eliminate much of the incentive for hospitals to merge in the first place, by removing the opportunity to use their power over the market to increase prices for basic services.

Longman crafted the reform so that the cost savings would go mostly to people with commercial health care plans. Medicare Prices for All legislation would require employers and insurance companies to share the savings with employees. This could also be done through changes in the laws governing private health care plans.

The financial benefit to ordinary, working-aged Americans would be substantial. Typical middle-class heads of household receive about $14,500 in employer contributions to an employer-provided health plan and pay about $6,000 in premiums themselves. Under Medicare Prices for All, that household would see wages increase by about $6,800 to $8,200, according to calculations by Paul Hewitt, a former deputy commissioner for policy at the Social Security Administration.

In 2015, Longman was named by Sen. Bernie Sanders to a federal panel charged with planning the future of Veterans Affairs health care. Longman recommended opening the VA to more veterans and their families.

🔊 ANTI-MONOPOLY RISING:

The Technology 202: Pelosi's Facebook Slam Reflects Rising Tensions Between the Social Media Giant and Democrats. “Nancy Pelosi’s attacks on Facebook highlight how furious Democrats have become with the social network. The most powerful Democrat in the House accused the company with an office in her home district of cozying up to President Trump during a news conference yesterday. ‘All they want are their tax cuts and no antitrust action against them,’ Pelosi said when asked whether Facebook was too powerful. ‘And they schmooze this administration in that regard because so far that’s what they have received.’” (The Washington Post)
PopSockets, Tile and Other Companies Will Ask Congress to Help Stop Big Tech Bullying. “The founder and chief executive of PopSockets, a local company that makes a widely popular kickstand of sorts for smartphones, says he isn’t even an ‘expert on antitrust laws’ in Washington. But (PopSockets founder Dvid) Barnett discovered firsthand the rare power and influence of Amazon in 2018, after clashing with the e-commerce giant over policies that made it hard to sell his products on his preferred terms and prices. PopSockets soon terminated its ties with Amazon, which helped lead to sizable losses later as a result.” (The Washington Post)
India Orders Antitrust Probe of Amazon, Walmart's Flipkart. “India ordered an investigation of Amazon.com Inc and Walmart’s Flipkart on Monday over alleged violations of competition law in the latest setback for US e-commerce giants operating in the country. The Competition Commission of India (CCI) said it was ordering a wider probe following a review of allegations that Amazon and Flipkart were promoting some ‘preferred sellers’ and in turn hurting business for other, smaller sellers.” (The Wire)
U.S. Targets Drug Pricing, No-Poach Deals for Antitrust Action in 2020. “The Justice Department’s antitrust division is preparing to tackle competition issues in several important markets, including alleged price-fixing in the generic-drug industry, rules for music licensing and purported employer collusion that limits options for sought-after workers.” (TheWall Street Journal)
Why Are Drug Prices So High? Investigating the Outdated U.S. Patent System. “Between 2006 and 2016, the number of drug patents granted in the United States doubled -- but not because there was an explosion in invention or innovation. Drug companies have learned how to game the system, accumulating patents not for new medicines but for small changes to existing ones, which allows them to build monopolies, block competition and drive prices up.” (Healthjustice lawyer Priti Krishtel in a recent TED talk)

📝 WHAT WE'VE BEEN UP TO:

Sally Hubbard spoke to The Washington Post about how important it is for CEOs from the biggest tech firms to testify before Congress in the House Antitrust Subcommittee’s Big Tech probe. "I think it's important for the CEOs to appear in a public hearing to make clear they are accountable to our democratically elected representatives and to the American public," Hubbard said.
Sally Hubbard also spoke to The Washington Post about why smaller technology companies have not been more outspoken regarding the anti-competitive practices of larger technology companies, ahead of a House Antitrust Subcommittee field hearing. The hearing, called Competitors in the Digital Economy, took place in Colorado and gave the leaders of smaller tech firms an opportunity to testify. “We don’t often hear from those entrepreneurs because they can't afford to speak out, we haven’t had a look under the hood of these companies,” Hubbard said.
Sandeep Vaheesan spoke with Co-op News on the importance of using antitrust measures to help platform co-ops and small- and medium-sized businesses to compete against much larger technology companies. Vaheesan emphasized the need to make sure these same antitrust measures are not also used against these smaller firms and co-ops, adding that antitrust legislation is “a charter of economic liberty for ordinary people” and it must not be “a tool for the Chamber of Commerce and Jeff Bezos to crush the workers and small suppliers on whom their businesses depend.”
Phil Longman commented to the Miami Herald on hospital chains and insurers in South Florida and whether growing consolidation is good for patients. “Sometimes, through consolidation, you get real economies of scale: better coordination, integration of care,” Longman said. “But experience has shown that whatever cost savings result are generally not shared with consumers.”
Sally Hubbard had an interview with the Associated Press about antitrust doctrine and the anti-competitive practices of large technology companies. “Antitrust doctrine has been weakened in the last 30 years. The case law that’s come out has been heavily influenced by what’s called the Chicago School of Economics. It took antitrust law and made it all about corporate efficiency and low prices instead of what it was supposed to be about: competition,” Hubbard told the AP.
Sally Hubbard spoke with The American Prospect about the relocation strategies of large technology companies, such asAmazon, as a part of a political gambit to win lawmakers’ favor and limit risks. Amazon recently announced that it would open a new corporate office in New York City, placing thousands of workers in a congressional district served by Rep.Jerome Nadler (D-NY), chairman of the House Judiciary Committee, who will have significant say in the antitrust investigation of Amazon and other big tech companies. “Whether it works or not is an open question; there’s less unpredictability about Big Tech’s strategy. It’s very concerning,” Hubbard said.
Beth Baltzan co-authored a piece with Jeffrey Kucik in Foreign Policy titled “NAFTA’s Replacement Gives Labor Some Shelter From Globalization’s Storms.” In the article, Baltzan discusses the passage of the United States-Mexico-Canada Agreement (USMCA) last week and what it means for U.S. and Mexican workers. Baltzan and Kucik note that although this trade deal will improve parity between U.S. and Mexican labor standards, workers in both countries will face competitive pressures from lower labor standards globally. “USMCA’s political momentum in Congress is due largely to labor rights provisions crafted by Senate and House Democrats,” the authors said.
Open Markets Institute’s petition to the Federal Trade Commission (FTC) to ban non-competes was cited by Lexologyin a report on an FTC workshop on employee non-competes. The report details how some lawmakers in Congress have been frustrated in their efforts to reform non-competes: “… these lawmakers, joined by a group of state attorneys general and the advocacy group the Open Markets Institute, petitioned the FTC to take action. Shortly thereafter, the FTC announced Thursday’s workshop.”

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📈 VITAL STAT:

$1 billion

The amount of additional public incentives Amazon sought to obtain in order to build its second headquarters.

📚 WHAT WE'RE READING:

“A Skeptical View of Information Fiduciaries” (Harvard Law Review, David Pozen and Lina Khan): Describing the debate surrounding whether dominant technology platforms should be classified as information fiduciaries.
“Trump Administration Steps Up Push to Sway Antitrust Cases” (Financial Times, Kadhim Shubber): Details how the Department of Justice’s Antitrust chief Makan Delrahim has led an “amicus programme” strategy intended to influence the ruling of judges in district and appeals courts.
“Amazon Publishes Books by Top Authors, and Rivals Fret” (The Wall Street Journal, Jeffrey A. Trachtenberg): Describing Amazon’s strategy to poach top-selling authors to write exclusively for Amazon’s book publishing division.
"T-Mobile/Sprint Urge Court for Deal Approval, States Warn of Price Hikes” (Reuters, Arriana McLymore and Sheila Dang): Analyzing the arguments of multiple U.S. states against the merger between telecom giants T-Mobile and Sprint.

Open Markets Employment Opportunities

You can find the full job listings here.

🔎 TIPS? COMMENTS? SUGGESTIONS?

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Welcome to The Corner. In this issue, we announce the addition of Open Markets’ new advisory board and detail a conversation between Demos’ President Sabeel Rahman and Open Markets’ Researcher Udit Thakur.

To read previous editions of The Corner, click here.

Open Markets Announces New Advisory Board to Help Guide Fight Against Monopoly

The Open Markets Institute this week announced a new, 12-member academic advisory board to help guide and advise Open Markets’ research and policy work. These lawyers, economists, and advocates have all played leading roles in reshaping public debates on America’s monopoly crisis. The board includes some of the world’s top experts in digital monopolies, communications law, labor and employment law, and intellectual property law. We expect the board will work closely with other members of the Open Markets team, including OMI’s legal team of Sandeep Vaheesan and Sally Hubbard, and advisory board members. The full list of our new advisory board members can seen here.

Q&A with Demos President Sabeel Rahman

K. Sabeel Rahman is the president of Demos, a dynamic think-and-do tank that powers the movement for a just, inclusive, multiracial democracy. Rahman is also an associate professor of law at Brooklyn Law School, where he teaches constitutional law, administrative law, and courses on law and inequality. He is the author of Democracy Against Domination (Oxford University Press, 2017), which won the Dahl Prize for scholarship on the subject of democracy, as well as a new book Civic Power (co-authored with Hollie Russon Gilman, Cambridge University Press 2019), about strategies for building and institutionalizing bottom-up democratic power.

Sabeel joined Open Markets researcher Udit Thakur this week to talk about the pitfalls of managerialism in policy-making, and what a truly democratic think-tank ecosystem might look like. Below is a transcript of the conversation,edited for clarity.

Udit Thakur - You make a big distinction in your work between laissez faire and managerialism, and their shared antagonism towards democracy. For people who haven’t had a chance to read your book, how would you describe the difference?

Sabeel Rahman - So I think in American politics we’re used to thinking of political and policy debates in a binary, right? Liberals want more government and more regulation, and conservatives want free-markets and less government regulation. But what’s missing on both sides of those equations is the question of democracy.

One of the examples I talk a lot about in the book is the financial crisis. Coming out of the 2008 financial crash, the worst recession since the Great Depression, the fault lines in the policy debate began to emerge along these lines.

On the back foot were the laissez faire types who were still arguing for deregulation, claiming that the reason for the crash was that the government was too involved in the mortgage market and making it too easy for poor people to get loans. There’s some nuance, but that’s basically the argument. Another view was that the problem was new forms of systemic risk and complicated new financial instruments. The mainstream liberal response was to double down on managerial expertise. “Lets give Ben Bernanke and the Federal Reserve more power to make sure the big banks don’t do bad stuff!”

What we didn’t do, what some people argued for but what didn’t carry the day, was ask, “why do we even have so much concentrated financial power in the first place?” And what we didn’t talk about at all in 2010 was, “well who’s on the Fed, actually? Why is the Fed made up of mostly bankers and economists? If the Fed has so much power over our economy, over the lives of so many people, shouldn’t the Fed be democratic?

A lot of people who follow the Fed would be terrified by that prospect.

UT - Safe bet (laughs)

SR - I think that’s when we need to say, well if you actually believe in democracy, then you should think about how to democratize the economy. And if you don’t believe in democracy, fair enough, lots of people in the history of the world have not believed in democracy. But you don’t get to claim that you believe in democracy.

UT - I appreciate the candor! So I can’t avoid the opportunity to ask about the world you currently inhabit. What has surprised you the most about the structure and culture of the think-tank ecosystem, and what needs to improve?

SR - These are great questions. A critique of technocracy has stayed with me. We need to base our visions of economic and political change in a moral vision that can motivate people. At Demos we think of ourselves as a think-tank of the movement, and our theory of change and orientation is about bringing the muscles and resources of a think-tank in terms of research and policy into the service of visions of change that come from and empower those most affected themselves.

But to your question about the field, part of what I think is really interesting, and what has me optimistic, is that we’re over a decade removed from the financial crisis. And actually I think that context has been really helpful for the think-tank non-profit landscape. When you look at a lot of organizations; the Roosevelt Institute, Center for Equitable Growth, Community Change, and obviously Open Markets recently, I think the intellectual center of gravity has moved a lot since 08-09.

I would argue that we’re in a moment where the progressive critique of neoliberalism has started to gain a bit of an upper-hand. Most of the conversations I have with partners and organizations is exactly about this. We have a strong critique, we have great ideas, but we need to build the power to actually implement them. Not just over the opposition of the right, but over the opposition of the traditional center.

UT - So how much do experts share the blame with major corporate executives, “monopolists” as we like to say here at OMI, for the present state of our democracy?

SR - I’d say a lot. But it’s also about the ideas infrastructure we’ve set up to determine who counts as an “expert” in the first place. What are the ideas that have the legitimacy of expert “common sense” and why do they win out over other ideas also backed by forms of expertise? What would it look like if you actually had an ideas infrastructure that served the interests of average people?

I believe in viewing expertise in a small ‘d’ democratic way. The promise and faith of democracy is the idea that it is the people themselves who are experts of their own lived reality. The burden on the ideas infrastructure is to do policy in a way that is authentically, genuinely committed to those affected communities and the vision they have for what a good society is.

🔊 ANTI-MONOPOLY RISING:

California attorney general announces Sutter will pay $575 million to settle antitrust suit. Major health system Sutter Health settled with the California Department of Justice to pay out $575 million in damages and have its business operations monitored for 10 years. California Attorney General Xavier Becerra announced that “[w]hen one health care provider can dominate the market, those who shoulder the cost of care — patients, employers, insurers — are the biggest losers. … Today’s settlement will be a game changer for restoring competition in our health care markets.” (TheSacramento Bee)

France slaps Google with $166 million antitrust fine for opaque and inconsistent ad rules. France’s competition authority fined Google €150 million (approximately $166 million) for abusing its dominant position in online advertising markets and instituting “opaque and difficult to understand” rules. (TechCrunch)

EU Legal Opinion on Facebook Case Spells Trouble for Data Transfers. An adviser to the EU’s top court recommended that U.S. technology companies should be prohibited from transferring European users’ data unless they can guarantee the transfer will be in compliance with EU privacy laws. Should the EU Court of Justice adopt the recommendation, Facebook, Google, Amazon, Microsoft, and Apple could face significant legal challenges. (The Wall Street Journal)

Chile seeks up to $70 million combined price-fixing fine from feed giants after Cargill blows whistle. Chile's main antitrust authority fined three major fish feed companies as much as $70 million for conspiring to fix prices between 2003 and 2015. A fourth conspirator, Cargill’s EWOS Group, is seeking an exemption for bringing the case to authorities.(Under Current News)

Open Markets Employment Opportunities

Open Markets is looking for a Director of the Center for Liberty and Journalism who will help ensure that the news media is fully independent and funded in the 21st century’s digital economy. The Center will conduct cutting-edge research into news media market structures, engage with policymakers and support efforts to design smart policy solutions, and reshape the national narrative around the market structures that threaten the independence and financial stability of America’s news media.

You can find the full job listings here.

📝 WHAT WE'VE BEEN UP TO:

Sandeep Vaheesan co-authored a piece in Time titled "Non-Compete Clauses Are Suffocating American Workers.” In the article, Vaheesan details the pervasive implementation of non-compete contracts, which have harmful effects on millions of workers. “Freedom to exit should be a basic right, not a privilege for a subset of workers,” Vaheesan said. The article was mentioned by Sen. Elizabeth Warren on Twitter.
Sandeep Vaheesan published an article in Harvard Law School’s student-run Antitrust Association titled “Two-and-a-Half Cheers for 1960s Merger Policy.” In the article, Vaheesan argues against the shared and unwarranted criticism against U.S. merger policy in the 1960s. “[M]erger law of the period,” Vaheesan writes, ”deserves applause and should be a model for policymakers concerned about corporate power.”
Barry Lynn spoke with The New York Times about the recent changes to antitrust enforcement and the significant interest in increasing enforcement. Lynn said that recent events such as the state investigations into Facebook and Google indicate a “grass-roots rebellion against concentrated power.”
Sally Hubbard spoke with Voice of America about the resurgence in antitrust action against the technology giants. There is “a growing awareness that these companies are causing a wide range of harms, whether it’s harms to our democracy, harms to innovation, [or] harms to entrepreneurship,” Hubbard said.
Sally Hubbard spoke with The New York Times about the fear that small businesses have of suing technology giants, because small businesses depend on these platforms for visibility and revenue. “The fear of retaliation is a real fear. Any of these companies could bury them tomorrow. Google could bury them in their search results. Amazon can bury them in their search results,” Hubbard said.

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📈 VITAL STAT:

25

The percentage of Americans who delay medical treatment for themselves or a family member due to the costs of care.

📚 WHAT WE'RE READING:

“The Great Democracy: How to Fix Our Politics, Unrig the Economy, and Unite America” (Ganesh Sitaraman): A newly published book providing an agenda to help democracy flourish and to secure its future in America.
"Do You Pay Too Much for Internet Service? See How Your Bill Compares.” (The Wall Street Journal, Inti Pacheco and Shalini Ramachandran): Detailing how residents of low-income and rural American towns have slower broadband speeds than their wealthier and urbanized counterparts – even though the prices are similar.
“How Facebook's Political Ad System Is Designed to Polarize” (Wired, Gilad Edelman): Facebook’s algorithm differentiates the cost that advertisers pay to obtain user views based on their political alignment, which inhibits the ability to reach voters with diverse political views and could increase political polarization, according to a study conducted by the nonprofit Upturn.

🔎 TIPS? COMMENTS? SUGGESTIONS?

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Personalization or Price Discrimination?

Could you and your neighbor pay different prices for the same jar of peanut butter one day?

More and more grocery industry insiders say yes. Personalized pricing was a popular topic at the National Retail Federation’s annual convention in New York City this month. Grocery stores can leverage a combination of data analytics and customer identification and tracking tools to offer real-time individual pricing and promotions, both online and in-store. While the practice may still be in its infancy, some experts believe that personalized prices will become the standard in food retail and beyond. Individualized prices could make goods more affordable for some, but they also raise legal and ethical concerns about price gouging and discrimination.

Sellers have long offered different prices to different groups of people, whether through senior and student discounts or lower airline fares to people who have Saturday layovers. But until recently, retailers rarely had the means to offer different prices to different individuals based on personal characteristics. This could change with the help of tracking technology, data collection, and machine learning. Economists call this first-degree price discrimination, and, if achieved, it allows sellers to extract the maximum amount that each individual is willing to pay.

Grocery chains collect large swaths of data on customers’ location, past purchases, demographics, and even web-browsing history, to predict customer preferences and behaviors for targeted advertising, promotions, and prices. Target, for instance, assigns customers a Guest ID to track their demographics and interactions with the store. These profiles can predict things such as when a customer is pregnant (down to the rough due date) and analyze past behavior, to determine whether an expecting mother is more likely to buy baby supplies if she receives a coupon via e-mail or printed on her receipt.

Such promotions could become so baked into the shopping experience that Safeway CEO Steve Burd said “there’s going to come a point where our shelf pricing is pretty irrelevant because we can be so personalized in what we offer people.” In fact, stable shelf prices could even cease to exist. In 2014, the U.K. grocery chain B&Q piloted electronic price displays that connected with shoppers’ cellphones to display different prices based on their loyalty program profiles, offering a glimpse of retail’s holy grail: individualized in-store prices.

Despite all the hype, implementing personalized prices has been a technical and logistical challenge for grocery stores, says Bill Bishop, chief architect of Brick Meets Click. “I think we’re still in very early days in personalization and personalized pricing,” he said. However, Bishop did say that “in 10 years, personalized pricing will be the standard, and it will replace in large measure mass pricing in the grocery business.”

As a starting point, some grocers are implementing individualized prices online. In a presentation for the National Retail Federation convention, Brian Crain, head of global business development at Precima, said his firm helps grocery chains offer “individualized pricing per shopper” online based on past shopping habits and potential value. Say a customer is a loyal shopper but rarely buys from a certain category, such as seafood. Precima could work within a retailer’s given budget to offer that shopper lower seafood prices. In an interview, Crain said that he sees more retailers talking about doing personalized pricing online, and while only a few have begun to implement the practice, he thinks this is “the way of the future.” Precima also offers to sell this personalized data to suppliers to help inform their promotions.

Such one-to-one pricing is still controversial. Studies suggest that most consumers think individualized prices are unfair, unless they are able to participate in the pricing process (i.e., to bargain). At the same time, a study by IDC found that 63 percent of shoppers surveyed said “personalization is important” in grocery shopping.

Personalized prices could make goods cheaper and more accessible for those who need them. “Price discrimination can actually help spread out fixed costs … [and] make sure anyone who wants that product gets it,” explains Maurice Stucke, a University of Tennessee law professor and author of Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy.

But retailers may also use data-analytics to squeeze or manipulate consumers in new, sophisticated ways. “Companies can use behavioral biases to profit at our expense,” Stucke says. “Once they compile data about individuals, they can be much more targeted in [getting consumers] to do things that they may not otherwise have wanted and get them to pay at the highest price that they’re willing to pay.”

This could be as benign as coupons for your favorite comfort foods when an algorithm identifies indicators of stress, or, more problematically, gouging consumers who have fewer options. The Wall Street Journal, for instance, reported that Staples charged online shoppers more for goods when shoppers were more than 20 miles from a competing office supply store. These areas with fewer competing stores also tended to be areas with lower median incomes.

Personalized prices may also intentionally or inadvertently discriminate on the basis of race, gender, or other protected classes, which is technically illegal. An investigation by ProPublica found that The Princeton Review charged more for college entry prep in ZIP codes with higher Asian American populations, even in areas with lower median incomes. Overall, ProPublica found that Asians were nearly twice as likely to get a higher price from The Princeton Review than non-Asians.

Both Staples and The Princeton Review claimed that their pricing differences reflected varying costs of running their businesses, but the end results show how relying on personal pricing algorithms can still unintentionally discriminate in racist and potentially illegal ways. Pricing based on factors such as ZIP codes can easily become a proxy for racial discrimination, for instance.

As personalized prices become more commonplace, it will be critical to monitor for unfair or discriminatory outcomes. For now, consumers in competitive markets can take their business elsewhere if they feel slighted or dissatisfied by their personal price offerings. But as the grocery industry consolidates and prices begin to change more frequently, consumers could lose the ability to avoid or even identify price discrimination.

Reporting contributed by Katherine Dill.

Find and share this story originally published on Food & Power

What We're Reading

On Monday, a federal district court in Minnesota held the first hearing in a case to revoke the USDA’s recent lifting of all line-speed limits in pork processing. The United Food and Commercial Workers and Public Citizen brought the case against the USDA. (Politico’s Morning Agriculture)

A study by Take Back the Court details how federal courts have harmed small farmers by “allowing large corporations to achieve monopoly control, and by failing to protect small farmers from unfair trade practices and unfair contracts.” (Take Back the Court)

Antitrust enforcers at the Justice Department are investigating Dairy Farmers of America’s proposed takeover of top U.S. milk processor Dean Foods. (The Wall Street Journal)

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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Welcome to The Corner. In this issue, we present our views on how the courts, the Justice Department, and the FTC are failing to use antitrust law to protect workers from employers who have monopolies in labor markets.

To read previous editions of The Corner, click here.

Antitrust’s Monopsony Problem

Open Markets Legal Director Sandeep Vaheesan and Reporter-Researcher Matt Buck published an article this week revealing how today’s antitrust law fails to protect workers from the concentration of power by employers, as shown in four recent cases alleging employer collusion against workers. Vaheesan and Buck published their article on ProMarket, the blog of the Stigler Center at the University of Chicago Booth School of Business.

They write that more and more workers today are being harmed by monopsony, which refers to a market dominated by a single buyer. Viewed through the lens of working people, a monopsony exists when there are only one or a few potential employers for their particular skills or in the particular place they live. Recent studies show that millions of Americans, especially those living in rural areas, earn significantly lower wages because of monopsony. Dominant retailers, such as Amazon and Walmart, use their size to depress wages throughout their entire supply chains.

All four cases studied by Vaheesan and Buck involve collusion, which antitrust lawyers today consider categorically bad and relatively easy to challenge in court. Collusion is per se unlawful, meaning it is illegal if it happens, regardless of its ultimate effects on workers or consumers. But these four recent antitrust cases alleging collusive wage-fixing by employers suggest that antitrust law is not equipped to protect all workers today.

Vaheesan and Buck focus much of their article on an ongoing antitrust suit against the National Collegiate Athletic Association (NCAA). In that case, a district judge ruled last March that the NCAA can continue capping compensation for players because the viewing public purportedly believes that college athletes should not be paid for their hard work and skills.

Vaheesan and Buck argue that such a sacrifice of the players’ interests to cater to viewers’ tastes is indefensible, factually doubtful, and would rightly cause outrage if applied to any other line of work. The court’s decision, in the words of one scholar, “leads to the abhorrent result of allowing purchasers of labor to unlawfully exploit one class of people (in this case, predominantly African American college athletes) for the purpose of benefiting another, presumably a more important class of people (the consumers of college athletics, in particular the viewers of televised men’s football and basketball games).”

In the article, Vaheesan and Buck also look closely at three other cases, including a 2019 case about shepherds employed by Western ranchers, a 2019 FTC case about therapists working for home health agencies, and a well-known 2010 Justice Department settlement with Apple, Google, and four other corporations about collusive agreements not to poach each other’s employees. (Disclosure: The Open Markets Institute filed amicus briefs or comment letters in support of the injured workers in the NCAA, shepherds, and therapists cases.)

The authors argue that the root cause of the failure to protect workers is the prevailing consumer welfare philosophy of antitrust. This narrow interpretation of the law and its history—which holds that the sole objective of the law is to protect consumer welfare—enables enforcers and the courts to overlook the exercise of power over working people.

Open Markets has been a pioneer in exposing the ways in which monopolists harm America’s working people. In 2010, Open Markets Executive Director Barry Lynn and Policy Director Phil Longman wrote the cover story in the Washington Monthly about the devastation of labor markets by corporate concentration. Also in 2012, Lynn published in Harper’s Magazine the first coverage in the mainstream news about the hiring cartel in Silicon Valley. Open Markets Legal Director Sandeep Vaheesan has for years published pioneering articles, amicus briefs in the courts, and comment letters with regulatory agencies to develop the legal arguments against no-poaching agreements among employers and against non-compete clauses in employee contracts.

🔊 ANTI-MONOPOLY RISING:

Facebook Agrees to Pay $550 Million to Settle Privacy Lawsuit, Days After Supreme Court Declined to Hear Case. Facebook reached a settlement of the class action suit alleging that Facebook violated the Illinois Biometric Information Privacy Act. The plaintiffs said that Facebook had not obtained users’ permission before collecting data on scans of users’ faces in photos uploaded to its site. Facebook attempted to bring this case to the Supreme Court, but the justices declined to hear the case. Jay Edelson, a lawyer for the plaintiffs, remarked that “biometric privacy is one of the biggest fights of the day.” (The Washington Post)
FTC and NY Attorney General Charge Pharmaceutical Giant With Anti-Competitive Scheme. The move came after the pharmaceutical giant Vyera used pay-for-delay agreements and other tactics to keep generic manufacturers out of the market, and then increased the price for Daraprim from $17.50 to $750 per tablet. (Federal Trade Commission)
FTC Files Suit to Block Edgewell Personal Care Company’s Acquisition of Harry’s Inc. The Federal Trade Commission’s Bureau of Competition filed a suit against Edgewell’s proposed $1.37-billion acquisition of competitorHarry’s Inc. When Harry’s entered the market, it disrupted the duopoly held by Edgewell and Proctor & Gamble as internet-based direct-to-consumer wet-shave bands. (Federal Trade Commission)
NBCUniversal Fined $16 Million for Illegal Sales Curb in EU. NBCUniversal illegally restricted the sales of merchandise of its films such as “Minions” and “Jurassic World.” The European Union is working to promote cross-border online trade in order to compete with the U.S. and Asia. European Competition Commissioner Margrethe Vestager said that such sales restrictions “undermine the very foundations of the EU single market and cannot be tolerated.”(Reuters)

📝 WHAT WE'VE BEEN UP TO:

Barry Lynn gave the keynote speech at the Wisconsin Farmers Union 89th Annual State Convention in Rothschild, Wisconsin and led a workshop on Monopolization in Agriculture. Lynn spoke about the recent investigations of Google and Facebook by states’ attorneys general, and he urged the farmers to use local and state institutions and laws to attack farming monopolies, rather than waiting for Washington to act.

Sally Hubbard, Sandeep Vaheesan, and Phil Longman participated on panels at the Capitol Forum’s February 5 Conference, Populism and Political Economy: Looking Ahead to 2021. The Capitol Forum partnered with the Open Markets Institute, Americans for Financial Reform, Demand Progress Education Fund, and the Revolving Door Project to host this conference to discuss what a populist Democratic agenda would look like. “What concerns me is the targeted advertising model. Day 1, I’m in favor of banning surveillance-based targeted digital advertising,”Hubbard said.

Sandeep Vaheesan participated in a panel at Yale Law School on Antitrust Policy in the Democratic Primary, sponsored by the Thurman Arnold Project and the Law and Political Economy Group. The panel, moderated by Fiona Scott Morton, also included Stacy Mitchell, co-director of the Institute for Local Self-Reliance, Michael Kades from the Washington Center for Equitable Growth, and Yale Assistant Professor of Economics Michael Sinkinson.

Sally Hubbard spoke to the Washingtonian magazine about Amazon CEO Jeff Bezos’s move to a mansion to Kalorama, an exclusive Washington neighborhood, where he hosted a party with financiers, tech moguls, Republican policymakers, and White House advisers Jared Kushner, Ivanka Trump, and Kellyanne Conway. “I am not happy that Amazon is now schmoozing with all the decision-makers,” Hubbard said. “It was already a problem. It just amplifies the problem.”

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📈 VITAL STAT:

45,000%

The percentage increase in fees that pharmacies have paid to pharmacy benefits managers - increasing the cost of prescription drugs for consumers.

📚 WHAT WE'RE READING:

“Orwell in Five Words” (BBC, Phil Tinline): A podcast that analyzes the current relevance of George Orwell’s work since his death 70 years ago. The podcast frequently discusses Orwell’s insightful work on monopoly and corporate power.
“The Supreme Court Has Undermined Iowa’s Small Farms and Rural Communities” (Take Back the Court, Patty Judge and Aaron Belkin): Details the decline of rural communities and small farms as a result of Supreme Court and lower federal court decisions that favor large agribusiness and corporate consolidation.
“By Any Means Necessary: How Allergan Gamed the System to Raise Drug Prices and Flood the Country with Pills” (Public Citizen, Zain Rizvi): Describes the different tactics that pharmaceutical companies, such as Allergan, use to hike drug prices and increase profits at the expense of the public.

Open Markets Employment Opportunities

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Welcome to The Corner. In this issue, we announce the addition of Open Markets’ new advisory board and detail a conversation between Demos’ President Sabeel Rahman and Open Markets’ Researcher Udit Thakur.

To read previous editions of The Corner, click here.

Open Markets Announces New Advisory Board to Help Guide Fight Against Monopoly

The Open Markets Institute this week announced a new, 12-member academic advisory board to help guide and advise Open Markets’ research and policy work. These lawyers, economists, and advocates have all played leading roles in reshaping public debates on America’s monopoly crisis. The board includes some of the world’s top experts in digital monopolies, communications law, labor and employment law, and intellectual property law. We expect the board will work closely with other members of the Open Markets team, including OMI’s legal team of Sandeep Vaheesan and Sally Hubbard, and advisory board members. The full list of our new advisory board members can seen here.

Q&A with Demos President Sabeel Rahman

*CORRECTION: Due to an editing error, the previous version of this newsletter used a placeholder stock image.