Reviving Antitrust: Why Our Economy Needs a Progressive Competition Policy

• Published in: Policy File 2016
• Main Authors: Jarsulic, Marc, Gurwitz, Ethan, Bahn, Kate, Green, Andy
• Format: Report
• Language: English
• Subjects: Center for American Progress; Civil law; Economic policy; Government

As this report highlights, there is systematic evidence---ranging from the disconnect of corporate profits and corporate investment to evidence of persistent supra-normal profitability---that points to an increase in rent extraction in the U.S. economy. And while large rent extraction is a primary outcome of unchallenged market power, there are additional and equally undesirable results. For example, the entry of new firms in the market can be blocked; innovation can be stifled; product quality can be degraded; the prices paid to workers and suppliers can be reduced; and influence with government officials can be increased. Fortunately, there are policy tools---created by statutes such as the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act---that can be used by enforcement agencies to reverse these developments. For instance, enforcement agencies and courts can block mergers that are likely to result in significant price increases and challenge conduct that would increase the clout of a firm that already has considerable market power. However, these enforcement tools have not been deployed vigorously enough over the past few decades. Concentration-increasing mergers, many of which have gone unchallenged by antitrust authorities, have too often been followed by increased prices. Moreover, there have been few challenges to unilateral actions to expand or preserve market power by those who have it. This report outlines a series of reforms designed to revitalize the use of antitrust authority. Doing so would be a step in the direction of restoring competition and opportunity in important parts of the economy.