President Trump’s antitrust team of Federal Trade Commission (FTC) Chair Andrew Ferguson and Justice Department Antitrust Division head Gail Slater have an approach to antitrust that resembles that of Biden-era FTC Chair Lina Khan and Deputy Attorney General for Antitrust Jonathan Kanter. Like their predecessors, Ferguson and Slater reject the consumer welfare standard that dominated antitrust policy from the Reagan years until the Biden Administration. In its place, Biden and Trump’s antitrust enforcers embrace a more aggressive approach that looks at other factors—like how a merger or acquisition will allegedly affect consumers, workers, and communities.
Ferguson and Slater also share Khan and Kanter’s belief that a more aggressive approach to antitrust is needed to counter the threat “big tech” poses to to competitive markets and our Constitution. However, Ferguson and Slater are more restrained than their predecessors in their use of their power to challenge mergers and acquisitions. They do not share the view that “big is de facto bad.” Rather, they appear to be focusing on using their power to punish businesses that advance “anti-MAGA” political or social agendas.
This does not mean that Khan-Kanter style antitrust is dead. Unfortunately, it is alive at the state level. Rhode Island Lieutenant Governor Sabina Matos is using antitrust policy to fight “food deserts.” Food deserts are areas, usually in inner cities, where residents do not have convenient access to grocery stores. According to Mantos, deserts are caused by large chains like Walmart, and large suppliers bullying smaller stores into charging higher prices than their customers can really afford, thus driving the small retailers out of business. Mantos has proposed that the Rhode Island legislature pass a bill closing loopholes in the federal Robinson-Patman Act to give Rhode Island officials more power to sue large stores and suppliers for violating the Act.
Robinson-Patman is a New Deal era law forbidding “price discrimination.” This is where a supplier offers a good to a retailer at a lower price than they offer other retailers. The law ignores that fact that the reason suppliers offer their products at a lower price to Walmart or Costco than they would to a small independent store is that the large national chain can take advantage of economics of scale to sell more products at lower prices—increasing profits for both the store and the makers of the products while lowering costs for consumers. Government laws and regulations forbidding price discrimination, whether imposed at the state or federal level, make it impossible for businesses to take full advantage of the economics of scale. This is especially hard on those in the lower income classes whom do-gooders like Matos think will benefit from their interferences in the market.
Instead of increasing government interference in the market, those wishing to end food deserts should work to remove obstacles that discourage grocery—and other types of stores—from opening in those areas. One way to do this is with enterprise zones, which provide bushinesses starting in low income and/or high unemployment areas tax and regulatory relief. Government officials should also increase efforts to reduce crime, which drives businesses away from inner cities. The free market can meet demand for affordable fresh food if government gets out of the way.
Another state official looking to advance Lina Khan-style antitrust at the state level is Minnesota Attorney General Keith Ellison, who has made fighting monopolies a focus of his efforts. Blue state legislatures have also been working to advance “neo-Brandeisian” antitrust policy. In New York, legislation has been introduced that would require businesses operating in the state to obtain approval for any proposed merger or acquisition from the Governor, create a private right of action against companies allegedly violating antitrust laws, and create an “abuse of dominance ” standard allowing the New York Attorney General to bring lawsuits against any company that uses its “dominant” position to harm its smaller competitors. This could be used to force big tech companies like Amazon that want to operate in New York to comply with regulations dictating how they must treat smaller businesses wishing to use their platforms.
California may also pass legislation expanding oversight of mergers, as well as the use of pricing algorithms. Given New York and California’s prominence in the national economy, adoption of these measures would set a de facto nationwide standard—as businesses would tailor their conduct to comply with California and/or New York law. In other words: Khanifornication via economic Californication.
