Symposium | The Middle-Out Moment Is Here

Seeds of an Antitrust Revival

By Sandeep Vaheesan

Tagged AntitrustBiden Administration

The Biden Administration has made root-and-branch reconstruction of antitrust law and competition policy a centerpiece of its economic agenda. This moment was overdue. For decades, big business-friendly lawyers and economists have dominated antitrust and remade the law to reflect their own policy preferences. They targeted trade restraints between competitors, no matter how small, when the restraints were likely to raise consumer prices and reduce output in the near term—what they called the “consumer welfare” approach—and otherwise generally respected the prerogatives of corporations, no matter how big, to do what they wanted. Federal antitrust officials and judges jettisoned traditional concerns about the concentration of economic and political power and the threat of such power to consumers, workers, entrepreneurs, and citizens. Further, they promoted policies anchored in the belief that most business practices, including mergers and acquisitions, are generally beneficial to consumers. Figures such as Judge Robert Bork and Justice Stephen Breyer advocated for a narrower antitrust law as scholars and directly changed the law as jurists. As these two names indicate, this was a bipartisan project.

President Biden pledged to break with this neoliberal antitrust and competition policy program. He appointed reformer Lina Khan to chair the Federal Trade Commission (FTC) and veteran attorney Jonathan Kanter to lead the Department of Justice (DOJ) Antitrust Division. In July 2021, he issued an executive order on “promoting competition in the American economy,” and gave 72 policy directives and recommendations to Cabinet departments and independent agencies. Biden promised more and better enforcement of antitrust and other competition laws. Singling out Bork and his “misguided philosophy” on antitrust, Biden declared: “I believe the experiment failed. We have to get back to an economy that grows from the bottom up and the middle out.”

More than three-quarters of the way through the President’s term is a good time to take stock, with a special focus on the work of the DOJ and the FTC, the two principal federal enforcers of antitrust law. Examining their record from three perspectives reveals an overall mixed performance. Judged by the number of lawsuits filed and cases won, the two agencies are in line with their predecessors and arguably underperforming them in court. But enforcement quality matters as much as quantity. Here, the DOJ and the FTC have instigated important changes, specifically by targeting employer power and taking a more aggressive posture on corporate consolidation. Moreover, Biden promised not just tweaks to antitrust policy and practice, but a rethinking of the basic philosophy. On this front, the DOJ and the FTC have opposed the narrow ideology of consumer welfare and identified fairness and democracy as the animating purposes of the antitrust laws enacted by Congress. But they are still in the early stages of translating these lofty ideals into policies and rules. A great deal of work remains to be done in a second Biden, or other future Democratic, administration.

Enforcement Numbers Suggest Continuity

A purely quantitative examination of the DOJ and FTC’s litigation record thus far reveals continuity with past administrations. Biden vowed “full and aggressive enforcement of our antitrust laws” in the summer of 2021, but the enforcement numbers do not reflect such an approach. While leaders at the DOJ and the FTC claim their institutions are firing on all cylinders, the cases and results so far suggest their engines need far more horsepower. (The agencies themselves are, at most, only partly responsible: Congress needs to appropriate more funds so that they can hire enough staff to carry out their missions.)

The overall enforcement level is broadly consistent with what preceded this Administration. In fiscal years 2021 and 2022 (fiscal years begin on October 1 of the previous calendar year), the FTC brought six cases (four in 2021 and two in 2022) challenging collusion and unfair competition, compared to nine, three, two, and two in the four years Donald Trump was President.

What about mergers? There, too, the DOJ and the FTC are approximately in line with past administrations as measured by enforcement actions (defined as lawsuits filed, settlements, and mergers abandoned following agency pressure). In fiscal years 2021 and 2022, the agencies received notifications for 3,520 and 3,152 mergers and acquisitions, respectively—compared to 1,637 in 2020. In FY 2021, the DOJ and the FTC challenged a total of 32 mergers versus 43 in FY 2020. What the agencies have released for FY 2022 and 2023 indicates enforcement levels in line with previous years, with 50 merger actions in the merger-heavy FY 2022. And in FY 2021 and 2022, despite the significant increase in merger activity, the number of deep investigations by the DOJ and the FTC into proposed consolidations was in line with figures in previous years.

In court, the agencies’ performance has been discouraging, if not disappointing. The DOJ has a poor win-loss record in its enforcement campaign against employer collusion, such as agreements among firms to fix wages and refrain from hiring each other’s workers, and it lost a series of trials challenging these practices. The record on mergers is not much better. The DOJ did not succeed in blocking UnitedHealth from acquiring the health IT firm Change Healthcare, or in stopping a merger between two of the biggest refined sugar producers in the southeastern United States. The FTC failed to prevent Meta from acquiring virtual reality app maker Within and Microsoft from buying game developer Activision Blizzard. (The latter challenge is now on appeal.) At the end of 2023, the FTC did block a merger between two firms in the highly concentrated health care advertising market. This win, and the DOJ stopping Big Five publisher Penguin Random House from acquiring fellow Big Fiver Simon & Schuster, stand out for being among the handful of unqualified and final antitrust wins in court for the Administration.

The losses in court are partly a function of judges who have been socialized, in law school and beyond, to defer to big business and be skeptical of public regulation. Big business interests have spent millions of dollars to “educate” judges on antitrust, economics, and regulatory policy and have measurably influenced their thinking. The DOJ and the FTC often face skeptical decision-makers in the federal judiciary, including jurists appointed by Democratic presidents.

Yet, the agencies are not faultless either. In addition to the FTC and DOJ victories against the health care advertising companies and book publishers, some suits filed by the Trump FTC bore fruit under this Administration. For instance, monopolization cases against “pharma bro” Martin Shkreli and his company and e-prescription company Surescripts were successful, as was a lawsuit to stop a hospital merger in New Jersey. These victories indicate that the defeats were by no means inevitable, and they call for critical self-examination by the agencies of their strategies and tactics in court.

Merger activity did decline significantly from 2022 to 2023. Was this a result of DOJ and FTC activity? A total of 1,884 mergers were reported to the DOJ and the FTC in FY 2023, which is around 1,400 fewer than in FY 2022 and comparable to the number of proposed consolidations back in FY 2016. While some Wall Street bankers have attributed this decline to antitrust policy, connecting the drop-off principally to the Biden Administration’s rather average anti-merger enforcement program requires a leap of faith.

Evidence from the past 40 years suggests that macroeconomic conditions and factors are the main drivers of merger activity and that the posture of the trustbusters is only a secondary influence—an indication of neoliberal antitrust law’s weakness as a tool for controlling corporate power. By way of example, merger activity in the final two years of the Clinton Administration—at the end of a boom in the tech industry and broader economy—was far higher than in any year of the Reagan Administration, which took an extremely hands-off approach to anti-merger enforcement. Notably, the recession year of 2009 was the slowest for major mergers and acquisitions in this century, with just 716 mergers reported to the DOJ and FTC in FY 2009.

The recent decline in merger activity appears to be mainly a function of macroeconomic conditions, coinciding with the Federal Reserve Board aggressively raising interest rates to control inflation. The Fed raised the short-term federal funds rate from almost zero percent in early 2022 to more than 5 percent in the summer of 2023, which increased the cost of all types of credit. Because mergers are often funded with debt, higher interest rates make mergers and acquisitions (M&A) less attractive generally, and in some cases impossible. More expensive and less liberal financing is likely the chief contributor to the decline in M&A. The DOJ and the FTC shouldn’t be blamed for the high level of merger activity in 2021 and 2022, when interest rates were low, nor do they deserve primary credit for the decline in M&A since then. Federal Reserve Board Chair Jerome Powell seems to be the most influential actor here. But why would promoters of corporate consolidation admit to not being able to secure funding for their deals when they can blame federal antitrust enforcers instead?

A Reorientation of Priorities

A sole focus on the raw number of cases filed and won does not do full justice to the DOJ and the FTC. Quality matters as much as quantity. And here the agencies’ litigation and policymaking do reflect an encouraging reorientation of antitrust priorities. Looking only at enforcement numbers masks the difference between the FTC prosecuting an association of music teachers in 2013 for restraining competition among members and suing major pesticide manufacturers in 2022 for blocking generic rivals from entering the market. The former was effectively union-busting, while the latter is the type of trustbusting Congress envisioned when it enacted the antitrust laws more than a century ago. While the agencies’ performance in court has been underwhelming, they deserve credit for improving enforcement priorities. Two areas merit highlighting, although they are not the only ones.

First, the DOJ and the FTC have made employer power a target of their enforcement and policymaking. In a series of criminal prosecutions, the DOJ targeted conspiracies among employers to cap wages or agree not to recruit each other’s workers. While generally faring poorly before judges and juries in these cases, the DOJ obtained a guilty plea from one employer for using so-called “no-poach” agreements, and substantial civil settlements with poultry processors over sharing of wage information with competitors. Further, when the DOJ successfully stopped Penguin Random House and Simon & Schuster from merging, it was on the grounds that the consolidation would result in smaller advances and lower royalties for best-selling authors.

Complementing the DOJ’s work, the FTC proposed to ban noncompete clauses for all workers, irrespective of income or line of work. (The Open Markets Institute, where I work, led a coalition that petitioned for this rule in March 2019.) The proposal, expected to be finalized in April, would free tens of millions of workers from these coercive contracts that prevent them from leaving for greener employment pastures or starting their own businesses. In addition, the FTC coaxed a handful of employers to stop using noncompete clauses with their workers. In a similar vein, the DOJ reached a settlement with a poultry processor that terminated its noncompete-like clauses in contracts with chicken farmers and prohibited their use for seven years.

These actions represent a significant change from longstanding antitrust practice that focused almost exclusively on the effects of corporate behavior on consumers. Even in the pre-neoliberal era, antitrust enforcers did not give due importance to employer power and other buyer power. They looked at corporations’ power as sellers but neglected their power as purchasers of goods and services. Until the DOJ’s successful suit against the publishers’ merger, the DOJ and the FTC had never stopped a merger on labor market grounds in the 130-year history of national antitrust law.

Second, the agencies have taken a more aggressive posture toward mergers and acquisitions. When they determine mergers violate the law, they are more likely now than in the past to sue to stop them in court, instead of accepting remedies that attempt to fix them with surgical tweaks. (For a sense of the change, the combined number of DOJ and FTC lawsuits seeking to block a merger was 12 lawsuits in FY 2022, eight in FY 2021, and eight in FY 2020.) This shift toward litigation does not show up in the headline enforcement numbers because they do not distinguish between remedied mergers and challenged mergers.

The FTC has also expanded the scope of merger enforcement. It has sued to stop mergers not only among competitors (horizontal mergers) but among firms in buyer-seller relationships (vertical mergers) and in unrelated markets (conglomerate mergers). The agency filed suit to block, as noted above, Microsoft’s acquisition of Activision Blizzard and Meta’s purchase of Within, among other non-horizontal consolidations. By filing complaints, the FTC secured the abandonment of defense contractor Lockheed Martin’s purchase of component manufacturer Aerojet Rocketdyne and chipmaker Nvidia’s acquisition of technology developer Arm, and ensured gene-sequencing company Illumina’s eventual divestment of cancer test maker Grail.

To institute a stronger anti-merger policy, the DOJ and the FTC published new guidelines for mergers in December 2023. Among other changes, the agencies, per the draft guidelines, would rely more on bright-line market share tests, in which the DOJ and the FTC will decide whether to sue based on how much of a market the merging firms together control, and less on attempting to predict the price and other effects of mergers on a case-by-case basis in court. One union dubbed the latter approach “judicial fortune-telling.”

This discussion so far leaves out the elephants in the room: Where do the suits against Big Tech corporations fit in the Biden Administration’s program and in relation to past practice? Although they could be transformative, the ongoing cases build on what the Trump Administration and state attorneys general did. The Trump Administration filed antitrust lawsuits against Google and Facebook in late 2020. Biden’s antitrust enforcers have continued and built on those initial complaints. The allegations and theories in FTC v. Amazon, in which the online commerce giant is accused of forcing sellers not to discount their goods on rival sites and not to use non-Amazon logistics services, followed similar suits filed by the attorneys general of the District of Columbia and California against Amazon in 2021 and 2022, respectively.

If Not Consumer Welfare, Then What?

The Administration’s promise was not just better enforcement priorities but a fundamental rethinking of competition policy. Here, the DOJ and the FTC have started sketching out their own positive vision for antitrust law. Robert Bork recognized the fundamental importance of such work when he wrote that “Antitrust policy cannot be made rational until we are able to give a firm answer to one question: What is the point of the law—what are its goals? Everything else follows from the answer we give.” Agency leadership at the DOJ and the FTC has offered a glimpse of an alternative to the answer Bork gave (consumer welfare) with a new emphasis on fairness and democracy—or concretely transferring power in the marketplace from Wall Street financiers and the executives and controlling shareholders of Fortune 500 companies to workers, farmers, business proprietors, and ordinary people in general. At an event co-hosted by the Open Markets Institute in September 2022, FTC Commissioner Alvaro Bedoya stressed that the theme of fairness is in the text of the Federal Trade Commission Act and that it motivated congressional passage of the Sherman Act in 1890 and the FTC and Clayton Acts in 1914.

The public doesn’t know the contours and details of what the DOJ and the FTC want to do to translate the values of fairness and democracy into policy. I offer three ideas on how this Administration in a second term, or a future Democratic administration, can turn the norms of fairness and democracy into rules of the marketplace—or, to use Biden’s ungainly phrase, how to make antitrust a program for a “bottom-up and middle-out” economy.

One: Enact new fair competition rules. Competition is touted as the stuff of antitrust law: the more the better. But this is wrong. Firms compete in many ways, not all good. Take deceptive advertising: It is a form of competition by which firms can capture sales and market share through false claims about their own products or those of rivals. Congress was aware of the distinction between good and bad competition when it charged the FTC with stopping “unfair methods of competition.”

The two antitrust agencies should articulate norms and rules for fair competition. The FTC, with its expansive policymaking powers, is especially well suited to lead on this matter. The agency took an important first step by publishing a policy statement concerning unfair methods of competition in November 2022. It now needs to translate the principles in this document into binding rules, which it can do through regulation or case adjudication. It should start by prohibiting exclusive dealing and related practices by dominant firms, which a public interest coalition led by the Open Markets Institute petitioned the agency to do in July 2020. In exclusive dealing arrangements, a powerful corporation bars customers, distributors, or suppliers from doing business with its competitors or penalizes them if they do so. Further, the FTC should restrict practices like below-cost pricing in which firms use their superior financial power to try to best rivals. The FTC should also target lawbreaking as a competitive strategy. Some of the more prominent firms in the United States today succeeded, in part, by violating the letter or spirit of labor, employment, and tax law. By restricting these methods of rivalry, regulators can encourage firms to compete through fair treatment of customers and workers, discounting based on lower costs, investment in new and more efficient manufacturing and distribution methods, and research and development.

Two: Crack down on coercive contracts. The past 40 years have seen the growth of “fissured work” arrangements in which firms push core activities outside corporate boundaries but continue to maintain tight control of nominally independent workers and businesses through contracts. Examples include the franchise system in fast food, Amazon’s delivery service partner program, and the gig sector. Historically, antitrust law restricted firms’ ability to control trading partners through contracts. If they wanted to exercise control, businesses had to assume the duties and responsibilities that came with employment, including paying workers a minimum wage and respecting their right to organize. Control came with responsibility. Now, due to the Supreme Court’s reinterpretation of antitrust law beginning in the late 1970s, firms like Uber can have their cake and eat it too: They can manage independent contractors tightly while depriving them of the rights and protections of employment.

The FTC can challenge such unchecked domination using its unfair methods of competition power. As my colleague Brian Callaci and I wrote in a 2023 law review article, the FTC can restrict or prohibit the use of certain contracts. For instance, resale price maintenance—when a consumer goods manufacturer requires an independent retailer to resell its goods at a stipulated price—and mandatory hours of operation—such as when Subway forces certain franchisees to be open 24 hours a day, seven days a week—could both be prohibited. In partnership with agencies such as the National Labor Relations Board, the FTC can force businesses to choose between asserting control and recognizing autonomy. If they want to exercise control, they should assume the duties and responsibilities of employment and labor law. Otherwise, they should respect their trading partners’ competitive autonomy. The FTC has laid some of the intellectual groundwork for these changes already. In its proposed ban on noncompete clauses and its antitrust suit against Amazon, the agency emphasized the coercive power of employers over workers and of dominant firms over their trading partners, respectively.

Three: Take actions that shift power downward. On top of limiting hierarchical control in the economy, the antitrust agencies should promote more horizontal and democratic forms of market governance. Independent economic actors, whether individual proprietors or large businesses, generally cannot coordinate with their competitors on terms such as price and quality, absent authorization by Congress or the courts. For workers, Congress enacted an exemption that protects their right to organize and build power, but some courts have limited this exemption to workers classified as employees and withheld it from independent contractors. Through amicus briefs and other advocacy, the DOJ and the FTC should advocate for the exemption to cover all workers, regardless of whether they are classified as employees or independent contractors. Officials at both agencies have expressed support for broadening the exemption.

But the agencies should do more than seek to expand the labor exemption. The DOJ and the FTC should ask Congress for legislation allowing other disempowered actors to organize and contest domination. Think of third-party sellers on Amazon or McDonald’s franchisees. At present, they cannot collectively bargain with their powerful partners without violating antitrust law. That should change. A useful precedent already exists: Farmers and ranchers have the right to form cooperatives and build collective power.

The Biden Administration deserves applause for putting competition policy front and center. Recent administrations, Republican and Democrat alike, have neglected antitrust and related areas of competition policy, allowing a group of corporate lawyers and economists to run the show. The President has broken with that approach and appointed leaders from outside the antitrust club.

The concrete results thus far are modest: The agencies are enforcing the law at about the same level as recent administrations and have scored few significant wins in court. Yet, the headline numbers do not tell the full story. Antitrust officials have set in motion positive changes in enforcement priorities and challenged practices that likely would have escaped scrutiny in the past. And even more importantly, they have articulated the principles of fairness and democracy as alternatives to consumer welfare. The next step is to convert these principles into binding rules of the road that will end the 40-year experiment that Bork and Breyer initiated. This ultimate germination will be work for a future administration.

From the Symposium

The Middle-Out Moment Is Here


The IRA's Promises—and Pitfalls

By Jennifer Harris


See All

Read more about AntitrustBiden Administration

Sandeep Vaheesan is the legal director of the Open Markets Institute. He is the author of a forthcoming book entitled Democracy in Power: A History of Electrification in the United States, under contract with the University of Chicago Press, on the history and future of cooperative and public power in the United States.

Also by this author

The IRA Is Still Being Formed

Click to

View Comments

blog comments powered by Disqus