[Congressional Record Volume 164, Number 85 (Wednesday, May 23, 2018)]
[Senate]
[Pages S2854-S2856]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                         Antitrust Enforcement

  Ms. KLOBUCHAR. Madam President, I come to the Senate floor today to 
discuss what I consider an often overlooked issue that is of central 
importance to the well-being of American consumers and our Nation's 
economic strength, and that is antitrust enforcement.
  Before I was a Senator, I was a prosecutor for 8 years, and before 
that, I was a lawyer in private practice. Early in my legal career, my 
main client when I was a brandnew lawyer was MCI. At the time, MCI was 
a young, innovative telecom company that was determined to disrupt the 
telecom industry by competing with first long-distance carriers and 
then local monopoly carriers. It was exciting for me to represent a 
company like that. They had a lot of scrappy lawyers who viewed 
themselves as fighting for consumers to give them some alternatives and 
lower prices.
  I remember that at one of my regulatory hearings, I actually quoted 
the first words Alexander Graham Bell said over the telephone: ``Come 
here, Watson, I need you.'' But in the Wild West world of MCI, when 
they were getting ready to relay the first-ever communication between 
St. Louis and Chicago--which seems odd to the younger pages here--at 
the time, Bell companies dominated all telecoms, and we only had those 
old-style telephones and only one company in an area that offered 
service. So MCI came in to compete by building their own line between 
St. Louis and Chicago. One of their investors, Irwin Hirsh, 
memorialized this great moment, and instead of saying ``Come here, 
Watson, I need you,'' he said, ``I'll be damned. It actually works.''
  But make no mistake--without antitrust law, MCI would never have 
worked. We would have had no competitors. We would have been stuck in 
the old Bell operating company world. MCI took on Bell operating 
company and AT&T and ultimately broke up that monopoly. This breakup 
lowered long-distance prices for consumers across the country and 
ushered in an era of amazing innovation and revolutionized the telecom 
industry and, yes, brought down those long-distance prices.
  Antitrust may not always make front-page headlines these days, but 
antitrust enforcement is as important now as it has ever been. It 
remains vital to the welfare of our country, and we ignore it at our 
own peril.
  People often ask me, what does antitrust law have to do with our 
economy? The answer I always give is, everything. Let me repeat that. 
Antitrust has everything to do with our broader economy. That is 
becoming clearer to the American public. People intuitively understand 
that there is too much industry consolidation in this country. They 
understand that is not necessarily good for them whether they are a 
Democrat or a Republican or an Independent. They understand that the 
benefits of big corporate mergers go largely to the merged companies 
and their investors and not to the public.
  This highlights the fact that antitrust is not just a subject for 
competition policy circles or law school classroom discussion or the 
business section of the newspaper; antitrust policy touches people 
across our country, and they are beginning to see how important it is 
to their lives.
  Two-thirds of Americans have come to believe that the economy 
unfairly favors powerful interests. Even as our economy stabilizes and 
grows stronger, it is easy to see why people feel that way.
  Every year, I go to all 87 counties in my State. Everywhere I go, 
people tell me that while the job situation has improved since the 
downturn over the last decade--and, in fact, we need workers for a lot 
of the jobs that are open in our economy--they are still struggling 
with the cost of living.
  In my State, we are fortunate to have a strong economy, but the cost 
of living is by no means low, and that is true all over the United 
States. For some, it is rent payments. For others, it is mortgages. For 
others, it is prescription drugs--and that is actually for almost 
everyone--and mobile phone service. To many people who dream of 
starting their own business, that is hard to do when those costs are so 
high.
  Anticompetitive mergers and excessive concentration can increase 
these cost burdens. They may lead these cost burdens, whether it is in 
the agriculture industry or the cable industry or certainly the 
pharmaceutical industry, where we see monopoly power over certain kinds 
of drugs, where we see pharmaceuticals basically, in the words of the 
President of the United States while he was campaigning, ``able to get 
away with murder.'' Yet, what are we doing about it? Well, the people 
would like us to do something about it. They are increasingly realizing 
that antitrust has everything to do with the prices they pay for goods 
and services and with the health of our global economy.
  These are not novel ideas. Think back to trust-busting. Think back to 
Teddy Roosevelt. Think back to this American entrepreneurial spirit of 
small companies and individuals being able to compete against each 
other. That is what our economy is all about in America. When companies 
are allowed to compete and people are allowed to get into a business, 
businesses can offer higher quality goods for the lowest possible 
price.
  The point I want to emphasize is this: Talking about antitrust in a 
narrow way is outdated and oversimplified. Antitrust enforcement 
affects more than price and output. We now have evidence that 
competition fosters small business growth, reduces inequality, and 
increases innovation. In short, tackling concentrations of power is a 
linchpin to a healthy economy and a civil society.
  With respect to business growth, evidence suggests that it is nearly 
impossible for new firms to penetrate highly concentrated markets, so 
ensuring competitive markets is one clear way to help entrepreneurs and 
small businesses succeed. We all know how important small business 
growth is to our economy.

[[Page S2855]]

  Research also suggests that concentration increases income 
inequality. Firms with market power raise prices, which takes money 
from consumers and puts it in the pockets of the few. Concentration 
also blunts incentives to innovate. Why would someone innovate if they 
know they can just keep the product they have, not invest in R&D, not 
invest in innovation, because they have the only product on the market 
because no one is competing with them for something better? When there 
are 8 or 10 competitors, they will try everything to get a leg up on 
their competition by lowering prices and finding new products that 
people want. When there are only one or two firms, there is little 
incentive to make product improvements, develop new products, or 
certainly bring down those prices.
  We have to recognize the broader benefits of antitrust enforcement--
especially today, when we are living in a wave of consolidation across 
industries. Since 2008, American firms have engaged in more than $10 
trillion in acquisitions. The last few years have seen a steady 
increase in mergers reviewed by the Federal Trade Commission and the 
Justice Department's Antitrust Division. But it is not just the number 
of deals. I recall former Assistant Attorney General for Antitrust Bill 
Baer, a lifelong antitrust lawyer, saying that his agency was reviewing 
deals that raised such serious antitrust concerns that they should have 
never made it out of the boardroom.
  As former chair and ranking member of the Antitrust Subcommittee, I 
have raised concerns about several megamerger proposals over the last 
few years.
  Look at the Comcast-Time Warner merger proposal. As I pointed out at 
a hearing in the Judiciary Committee, if the merger had been approved, 
the combined company would have controlled 60 percent of the country's 
high-speed and broadband customers.
  Look at the failed merger between Norfolk Southern Railway and 
Canadian Pacific--something I took on immediately after it was 
announced. Even without the merger, 90 percent of freight traffic is 
still handled by only four railroads. As I pointed out then, this is 
the same number of railroads on the Monopoly board. Four is what we are 
down to after having literally 63 of these major railroads years and 
years ago, then going down to 9, and now we are at only 4.
  When a State has a lot of rural areas like mine has--we are fifth in 
the country for ag, and I think of the Presiding Officer's State--
customers or farmers or small businesses that are at the very end of 
that freight rail line are called captive customers because they are 
only served in reality by one railroad. They see their rates go up, and 
they have no other choices. The more numbers are reduced, the more 
difficult it becomes for people to get good rates so they are able to 
get their goods to market. It is easier when you are in a highly 
concentrated market, but it is very hard when you are not.
  These examples are part of a larger pattern of horizontal 
consolidation and vertical integration. Those are words you hear only 
in law school classes or maybe see in the business section of the 
paper, but that is what is happening.
  We all know about AT&T's bid to buy Time Warner and the Justice 
Department lawsuit to block the deal, but that is not all. Sinclair 
Broadcast Group is trying to buy Tribune Media. Bayer is trying to buy 
Monsanto. CVS is trying to acquire Aetna.
  Most recently, T-Mobile signed an agreement to buy Sprint, which 
would combine two of only four major cell phone carriers in the United 
States. Again, I note that number of four--the number on the Monopoly 
board--which would go down further to three. In fact, T-Mobile has been 
playing a major disrupting role--I mean disruption that is good in 
terms of bringing down prices. We have all seen the ads with what they 
are offering. This merger would merge two of those phone companies, and 
we would be down to only three. More than three-quarters of American 
adults now own smartphones, including many who depend on these devices 
for their primary connection to the internet. Many of them don't even 
have local phone service. Now we will bring their choices for major 
carriers down to three if this deal goes through.
  Last October, in anticipation of this transaction, and weeks ago, 
after it was announced, I sent letters with a number of my colleagues 
raising antitrust concerns and urging the Justice Department and the 
Federal Communications Commission to investigate this potential 
transaction. Today, Senator Lee and I are announcing that we are going 
to hold a hearing to look at these issues very carefully and very 
seriously in a bipartisan way in the Antitrust Subcommittee next month.
  Often, in connection with large mergers, the merging parties and the 
investment community promise millions, sometimes billions of dollars in 
efficiencies and cost savings. But after closing, do consumers actually 
see the promised lower prices or the improved quality? I think the 
American people deserve an answer to that question. To address these 
issues, we need aggressive antitrust enforcement.
  Let's talk about that. Unfortunately, current levels of Federal 
antitrust enforcement activity are not where they need to be. I take my 
responsibilities on the Antitrust Subcommittee seriously, and Chairman 
Lee and I have done a lot of important work together on the 
subcommittee over the past few years. Also, we are both committed to 
the professionalism and the independence of the Federal Trade 
Commission and the Antitrust Division.
  Antitrust and competition are not Republican or Democratic issues; 
they are consumer issues. We can all agree that robust competition is 
essential to our free market economy. In light of this consensus, the 
enormous economic consequences of lax antitrust enforcement, and the 
current merger wave, these issues require our urgent attention.

  Let me explain.
  Our economy, in terms of nominal GDP, has increased by 30 percent 
between 2010 and 2017, and annual merger filings have almost doubled 
during that time. At the same time, our antitrust agencies' budgets 
have been held flat. As a result, agencies are only able to litigate 
cases involving the most highly concentrated markets. This limits the 
attention they pay to closer or more difficult cases.
  Despite these constraints, agencies are doing what they can, but we 
need to do more. Giving agencies the resources to pursue the harder 
cases will pay real dividends to our economy. When I say resources, I 
also mean the legal tools necessary to protect competition.
  When it comes to mergers, the protections in the Clayton Act--that is 
the antitrust law--have slowly been eroded. Over time, we have seen a 
systemic underenforcement of our competition laws. The result has been 
even larger mergers and more concentrated industries, and American 
consumers are taking notice. We need to give our agencies the legal 
tools to push back.
  That is why I have introduced two major antitrust bills over the last 
year. The first will give our antitrust agencies the resources they 
need to protect competition. Now, this is not coming off the backs of 
taxpayers because, as I have already explained, they are already having 
to foot the bill for a lot of these mergers in terms of higher prices. 
This bill would, in fact, update merger filing fees for the first time 
since 2001. Think of how many years that is and how the competitive 
landscape and the merger landscape have changed during those 17 years. 
This bill would lower the burden on small and medium-sized businesses 
for their filing fees and ensure that larger deals, where we are seeing 
all of these activities--these billion-dollar deals where they hire so 
many lawyers that there are more lawyers on those deals than there are 
Senators' desks in this room--have fees on businesses that would raise 
enough revenues so taxpayers could foot less of the bill for merger 
review. I am not talking about an across-the-board business tax. I am 
talking about higher fees on those businesses--major businesses, huge 
businesses--that are seeking to merge and reap the benefits. If their 
lawyers can get all kinds of bonuses for getting the deals through, at 
least the taxpayers should be getting the bonus of being able to know 
that someone is looking out for them in reviewing these deals.
  Effective enforcement also depends on feedback. As the size of 
mergers have grown, so have the complexities

[[Page S2856]]

of merger settlements. A question for modern enforcement is whether 
some proposed mergers are simply too big to fix. Agencies can make 
better enforcement decisions if they understand what has worked in the 
past.
  So my bill gives the agencies the tools to assess whether merger 
consent decrees have in fact been successful. Have all those promises 
we hear at the hearings or we see in writing or we read about in the 
business pages really come to fruition?
  In addition, we need a better understanding of the effects of market 
consolidation on our economy. That is why we need to study the effects 
of mergers on wages, employment, innovation, and new business 
formation. We also must give our antitrust agencies and courts the 
legal tools necessary to protect competition.
  That is why my second bill, the Consolidation Prevention and 
Competition Promotion Act, would restore the Clayton Act's original 
purpose of promoting competition by updating our legal standards so our 
legal standards are as sophisticated as the companies that are 
proposing these mergers and the kinds of mergers they are proposing.
  My bill clarifies that we can prevent mergers that reduce choice, 
foreclose competition through vertical consolidation, stifle 
innovation, or create monopsony. OK, that is a great word you would 
hear in law school classrooms, but what does it mean? Well, it means 
where a buyer has the power to reduce wages or prices.
  It also creates a more stringent legal standard to stop harmful 
consolidation and shifts the burden for megamergers so the parties 
involved in the deal have to prove the merger does not harm 
competition. So what we are talking about here is when a big company 
buys another and then has that power to make it so that the other 
competitors aren't really going to be able to compete with the company 
that they bought, because this huge company might have the ability to 
bring down prices or do things temporarily to the point that they get 
other people out of the market or they hurt the others to the extent 
that you then don't have real competition, and that is what they are 
doing.
  Let me be clear. Big by itself is not necessarily bad, and large 
mergers do not always harm consumers. My home State of Minnesota now 
has 19 Fortune 500 companies, and we all benefit from the fact that the 
largest and most successful companies in the world are American 
companies.
  If we want the success to continue, our new businesses must have the 
same opportunities to grow as the businesses that came before them. 
Target, one of my favorite companies based in my State, started as a 
dry goods store in a small pedestrian mall that is now a big one in 
Minnesota, way, way back. That is a true story. And 3M, a big company 
out of my State, started as a sandpaper company. OK, so we have to make 
sure these small companies continue to grow and are able to compete, 
but that is not going to happen if we shove them out.
  Our new businesses must have those same opportunities. Promoting 
competition and preventing excessive industry consolidation is the way 
we encourage this country's next big idea. Take Trader Joe's, JetBlue, 
and Starbucks. These companies started small, but they were able to get 
a foothold in the market and succeed because our antitrust laws 
prevented large, established competitors from limiting their growth. As 
a result, the American people get better products and services.
  These bills will simply ensure that the next American business 
success story is possible. They will allow entrepreneurs and innovators 
to succeed in open, competitive markets.
  We can do this, and we should do this. It doesn't take a miracle. It 
just takes people acknowledging what has made our economy strong in 
America. Antitrust law and policy are not always front and center in 
our debates, but they should be. The proposals in these bills will 
improve the lives of businesses and people across the country.
  Protecting competition speaks to the basic principles of opportunity 
and fairness. It speaks to the simple notion that companies with the 
best ideas and the most innovative products will have a chance to rise 
to the top based on their own merits, and the reality is that these 
principles are at risk. We are currently experiencing a dramatic 
increase in both the number and size of mergers. As our markets and 
technologies evolve, our agencies and courts are less able to address 
this increased concentration and the really big guys like it that way.
  That is why we have to stand up in this Chamber for the American 
people. We cannot wait any longer. We need vigorous antitrust 
enforcement. We need to improve the tools and the resources that those 
who are trying, at least, to put a modicum of enforcement in place are 
able to exercise. Our economy depends on it.
  Madam President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Florida.