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Homes across the country have embraced Chip and Joanna Gaines. Their Magnolia empire contains everything from the popular show and subsequent spin-offs of “Fixer Upper,” Magnolia line of home décor, a hotel, and even a shopping area known as the Silos. While consumers appear more than happy to buy into all the offerings of the Magnolia lifestyle brand, lawmakers and agencies have set their sights on targeting the very business models that make it all possible.

Successful businesses exist in various market structures with some being limited to one line of commerce while others encompass multiple segments of the economy. Market structures also vary by their impact, with similar structures yielding different results depending on the company and market characteristics. However, the adoption of the 2023 Merger Guidelines suggests that antitrust enforcement will increasingly focus on structure, rather than impact.

This represents a potential loss for consumers, especially as some of the structures that have spurred consumer-favorite brands become the focus of the Federal Trade Commission (FTC).

A recent report from the House Judiciary Committee found that under the leadership of Chair Lina Kahn, the FTC has been particularly interested in certain types of mergers, specifically vertical mergers. Concern over vertical integration is also listed in the merger guidelines as a market structure that may substantially limit competition.

Vertical integration may appear nefarious when applied to Big Tech, which has experienced a drop in public confidence, but vertical integration is also responsible for the success of Chip and Joanna Gaines.

In the popular show “Fixer Upper,” the Gaineses would help their clients remodel typically rundown homes. While this process can often require different companies or professionals to help individuals find and buy a house, conduct the remodel, and design the interior, the Gaineses provided all these different parts of the home remodel process in a one-stop-shop.

Another beloved company following a similar business model is Amazon. Amazon was founded in 1994 as an online bookseller. Four years later it expanded beyond books and in 2005 launched Amazon Prime. Like many industries, Amazon is also vertically integrated and controls many parts of the shopping experience ranging from the acquisition of products to final delivery.

The FTC’s concerns about market structure aren’t limited to vertical integration. In their complaint against Amazon, one of the theories of harm is referred to as a flywheel, where different aspects of a business appear to achieve self-propelling growth. When applied to Amazon, this refers to the mass of existing customers and product reviews, which attract more sellers, which in turn attracts more shoppers and helps grow the different lines of business.

A similar phenomenon happened with the large base of “Fixer Upper” viewers who provided an audience that supported other spin-off businesses. Fans of the Gaineses can watch the duo complete a building makeover, fall in love with a paint color, and then go buy that paint color for their own home.

The idea of different businesses feeding into each other can also be found in Prime membership where consumers have access to a variety of products and entertainment all in one convenient place.

Far from harming consumers, both businesses using various levels of integration have expanded due to massive consumer demand. Magnolia fans flock to Waco, Texas, the home of the brand, in numbers large enough to rival those of The Alamo. Likewise, 82 percent of U.S. households have an Amazon Prime membership. The ability of both these companies to expand was driven by their ability to meet consumer wants and needs.

The consumer-driven success of Magnolia is not a fluke and is indicative of current research on vertical integration, which finds that “vertical relationships are generally procompetitive or neutral.” A review of empirical studies found that “…under most circumstances, profit–maximizing vertical–integration and merger decisions are efficient, not just from the firms’ but also from the consumers’ points of view.” This means that while regulators still have an obligation to look at potentially harmful vertical mergers, the current overemphasis on this type of structure is misplaced.

Rather than protecting consumers, limiting these types of businesses could harm them. This should give everyone pause when regulators take a particular focus on the form of a business rather than the consumer impact. While the FTC sets its sites on specific structures, lawmakers should consider whether the current approach to antitrust needs a “Fixer Upper.”

Tirzah Duren is the Director of Tech Policy with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.

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