An unlikely coalition of senators is backing a bill by Sen. Amy Klobuchar, D-Minn., to drastically overhaul the nation’s antitrust laws. They may want to give her proposal another read, because there are things about it that might not be what they seem.
Klobuchar wants to be president and is counting on this legislation, Senate Bill 2992, the “American Innovation and Choice Online Act,” to establish the progressive bona fides she needs to leap to the front of the pack running for president the next time the Democratic presidential nomination is up for grabs.
If she expects her effort to excite the people whose spines once tingled at the thought of President Bernie Sanders, she’s off base.
The Republicans who signed onto her bill generally did so in the belief it gives the government the power to ensure “Big Tech” plays fair with conservatives. It doesn’t, and letting federal bureaucrats determine what to censor online would be worse.
The legislation would also make life more difficult for social media companies the Democrats have allied with in pursuit of election victories. The framework her legislation would erect would take a big bite out of the hand that feeds her.
The impact on Big Tech isn’t the only reason politicians should be concerned. Those issues are largely political. The way some businesses are treated is not — and has given rise to complaints favorable treatment is being extended to some kinds of firms because of what it doesn’t address.
What kind of crony capitalism may we be seeing? The Klobuchar bill overlooks — because it’s not included in the list of discriminatory conduct by “covered platform” — the use of pharmacy benefit managers, also known as PBMs, that negotiate with pharmaceutical manufacturers and health insurers to set the price of prescription drugs.
Proponents say these companies produce lower prices for consumers. Critics say the opposite, arguing they are too open to inducements from manufacturers to set prices higher than they need be in exchange for some kind of remuneration.
Their involvement in the health-care system is, for the moment, a political hot potato second only perhaps to continuing quest by House Speaker Nancy Pelosi, D-Calif., to impose a regulatory scheme to impose price controls on drugs.
According to Health Industries Research Companies, CVS has the biggest share at 34% of total 2021 adjusted claims. Express Scripts is second at 25% and OptumRx has 21%.
Now 80% control doesn’t corner the market exactly, but progressives like Klobuchar used to argue it comes uncomfortably close.
Critics were disappointed when members of the Federal Trade Commission voted along party lines back in February not to investigate allegations of anti-competitive behavior by these pharmacy benefit managers. Nonetheless, they keep trying to call on the heavy hand of government regulation to swipe them into line.
Klobuchar cannot be unaware of this ,yet for some reason, her bill (which also has the support of Rep. David Cicilline, D-R.I., chairman of the House Antitrust, Commercial and Administrative Law Subcommittee of the House Judiciary Committee, doesn’t mandate or include a mechanism triggering their scrutiny under the proposed new track taken by the proposed legislation. Has cronyism crept into the process?
Some say yes, pointing to the fact UnitedHealth OptumRx, the No. 3 company, has its headquarters in Klobuchar’s Minnesota. CVS, which has the largest single share of the market, is based in Rhode Island, just like Cicilline,
UnitedHealth has given $154,820 in campaign contributions to Klobuchar while CVS gave $50,085 in political money to Cicilline, who also backed the company’s proposed $69 billion merger with Aetna, one of the largest of the nation’s health insurers.
That’s just the kind of business deal the legislation looks to stop because Klobuchar and friends believe mega-mergers are bad for consumers.
Coincidence? Probably. Still, the taint of corruption touches so much of what Washington does these days it’s hard to be sure.
What is clear is that big is not necessarily bad and that the consumer welfare standard, which has been the prevailing justification for most antitrust actions taken for nearly five decades, is a sound enough approach to dealing with legitimate antitrust issues when they arrive.
Klobuchar’s bill should be allowed to go no further.
By Red State•
Will the Trump administration ensure Hollywood remains driven by market principles?
Past harsh, critical comments from both President Trump and William Barr, his attorney general, demonstrate that the White House accepts the entertainment industry for what it is: a leftist, anti-capitalist blob that seeks not only to distort the culture war and remove Republicans from office, but also to rig the competitive market system to artificially increase its power and influence.
However, the question becomes how does the White House address its abuse in a free market way?
It’s a delicate balancing act, to be sure. While Hollywood often acts anti-competitively for personal gain – see: Steven Spielberg’s attempt to kill Netflix films’ ability to compete for Oscars – like every other industry, it also suffers from big-government edicts that unfairly harm their businesses. And, for all of the donating to Hillary Clinton they just made a few years ago, the movie and music industries have sounded alarm bells with the administration that the latter is a major concern to them.
Despite all the flack that the current White House gets for being rash and careless, the Trump administration is working tirelessly to ensure it treats its Hollywood detractors fairly and in line with the conservative principles it preaches.
Through a sweeping antitrust consent decree review, the Department of Justice is trying to successfully achieve this balance. Since April of last year, it has been examining the antitrust judgements that have been on DoJ’s books for generations. Its objective is to determine which are still needed to protect consumers against anti-competitive behavior, and which, at this point, act more as pointless red tape than anything else.
Seemingly as a result of multiple advocacy pushes, the clear focus of this effort quickly became those governing the entertainment industry. Namely, the Paramount consent decrees, which restrain the movie industry, and the ASCAP/BMI decrees, which created guidelines for the Big Music monopolies to follow.
On Nov. 18, the DoJ came to terms with its first major decision, announcing that it will ask the court to phase out the Paramount movie consent decrees. They prohibit the big five movie studios of the 1940s from harming small theaters by making exclusive deals with regional theaters (“circuit dealing”) and mandating that small theaters purchase their films in bundles (“block booking”).
DoJ made the right move. While at the time these decrees were necessary, modern-day innovation has made them obsolete and harmful to market competition.
Today, the Big Five studios from the 1940s are still far from angels, but there are plenty of new distributors that have taken their power away. Just look at Netflix, which plans to release over 50 films this year – more than Paramount, Disney, and Warner Bros. combined. Unlike in the 1940s, there are plenty of other studios with which theaters can do business should MGM, Warner Bros., RKO, Paramount, and 20th Century Fox – the five companies restrained by the decrees – provide terms to small theaters that are not agreeable. In fact, only two of those companies are still even in the Top 5 for market share.
If the DoJ let the decrees continue to restrict these studios while leaving their major competitors that have risen over the last 70 years unchecked, it would distort the marketplace by picking winners and losers. That would work to the detriment of, not the benefit to, consumer choice.
While the DOJ’s decision on Paramount was the right one for the free market, Barr’s department needs to be extra cautious on its next entertainment industry review – the ASCAP/BMI music consent decrees.
ASCAP and BMI – monopolies that control the rights to music licenses for public performance – are pushing for the DoJ to terminate or modify these antitrust guardrails. In an open letter to DOJ, they claimed that doing so would open the free market, which “would create a more productive, efficient and level playing field for everyone involved.” However, a dozen free market groups, including Frontiers of Freedom, have cautioned the DoJ that, contrary to what those monopolies are saying, doing so would run the free marketplace in the music industry to the ground.
The reason the ASCAP and BMI decrees went into place in the first place was to prevent ASCAP and BMI from enacting predatory pricing on small businesses. After all, the two monopolies’ very existence is emblematic of everything that Washington created antitrust law to prevent.
Both ASCAP and BMI are comprised of otherwise competing songwriters and publishers that banded together into these two groups to set prices for a joint product at a joint price. Both institutions were created with the explicit purpose of working together to increase prices. Put simply, there is nothing competitive or free market about them.
For the relaxation or removal of its decrees, ASCAP and BMI would have to prove that price-fixing is no longer a fundamental concern. As alluded to already, that is going to be hard to do when considering that the whole reason for their creation was to price-fix. It is going to be especially be hard to prove when considering how, unlike in the movie industry, their combined market share has barely moved at all since the 1940s – remaining at 90-percent of all performing rights. The fact that ASCAP had to settle a civil contempt charge with the DoJ for violating its decree just three years ago for nearly $2 million shouldn’t help its case either.
By giving everyone – including its political opponents, like the major entertainment industry conglomerates – the benefit of the doubt and the courtesy of a thorough review of present-day regulations, the Trump administration is yet again proving how serious it is about its deregulatory agenda. It is not governing on partisan or electoral grounds, but rather out of a desire to see fairness and accountability restored for everyone – even its enemies.
The White House is off to a good start, but for the sake of the free market and the consumers who depend on the fair playing field it creates, here’s hoping that it finishes strong.
This month, Federal District Judge Denise Cote ruled that Apple Inc. was guilty of collusion and of fixing the price of e-books.
The gist of the case is this: At the time Apple entered the e-book market, Amazon held a 90% share of the market and sold e-books for $9.99. After Apple entered the e-book market, Amazon’s market share fell, as did prices of e-books. If you are perplexed in trying to understand how Apple fell afoul of the antitrust brigades for lowering prices to consumers, the key point to grasp is that the federal government is not the friend and defender of the consumer, as popular mythology would have it. The Apple case is not an aberration. Uncle Sam has been a chronic thorn in the consumer’s side, intervening to raise consumer prices in a variety of ways. Continue reading
Most people do not know that the National Football League is treated as a tax-exempt nonprofit organization, nor do they realize that the NFL receives a special broadcast antitrust exemption. None of that makes sense. But on top of it all, the NFL and its commissioner, Roger Goodell, are corrupt and lawless which is one more reason not to give the NFL special tax and legal treatment.
First, the NFL is clearly a for-profit business and should be treated as such. Giving the NFL, a big business with billions in revenues every year non-profit status is absurd. Sports is a big business, not a nonprofit foundation. Continue reading