Author Topic: Anti-trust law and related issues  (Read 64 times)

Crafty_Dog

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Anti-trust law and related issues
« on: July 05, 2021, 02:15:45 PM »
Obviously this thread will interact heavily with the Goolag thread, but I'm thinking it deserves a thread of its own.

Kicking it off with and editorial from the WSJ-- for the record I'm not sure whether I agree or disagree:

Lina Khan’s Power Grab at the FTC
The new Chair snatches unilateral authority and rescinds bipartisan Obama-era standards.
By The Editorial Board
July 5, 2021 4:43 pm ET


Independent federal agencies have power over American life that the Founders never imagined, and that reign is about to expand with a vengeance in the Biden era. Witness the unprecedented power grab engineered last week at the Federal Trade Commission by the new chair, Lina Khan.

The events didn’t get much attention because the press cares more about politics than governance. But on a series of 3-2 votes, the Democratic commissioners turned agency tradition upside down and gave themselves vast new powers to harass business.

***
The agency eliminated the long-standing role of the agency’s chief administrative law judge in presiding over fact-finding and rule-making. Now Ms. Khan, or someone of her choosing, will preside. The Democrats also killed the requirement that the FTC staff get a majority vote of the commission to start an investigation. Now only a single commissioner can sign off. Subpoenas can also fly at Ms. Khan’s discretion.

The commissioners rescinded the bipartisan Obama-era FTC statement, adopted in 2015, that the agency follow antitrust law as it has evolved in the courts. This is a sure signal that the three Democrats are planning to dump the consumer-welfare standard for antitrust that has prevailed for decades. Instead the agency will replace it with some new standard it hasn’t specified. Also on the chopping block is the “rule of reason” the Supreme Court has applied to antitrust law for more than a century.

This is the handiwork of Ms. Khan and Rohit Chopra, who is still a commissioner but has been nominated by Mr. Biden to run the Consumer Financial Protection Bureau. Ms. Khan is a 32-year-old academic who has no experience running anything. She helped write the October 2020 House Antitrust Subcommittee report on Big Tech and has called for breaking up large firms. Now she’s teeing up the FTC to stretch its powers in a way it hasn’t done since the 1970s and 1980s before it was rebuked by Congress and the courts.


Ms. Khan and her academic ally Tim Wu, who now works in the White House, claim they are merely restoring proper antitrust law from the intellectual detour pioneered by the late, great Robert Bork. But they ignore that modern antitrust law, with its focus on economic analysis and consumer benefit, has also been nurtured by many others. They include scholars Phillip Areeda and Herbert Hovenkamp and Supreme Court Justice Stephen Breyer.

Ms. Khan appears to reject all of that. She writes fondly of railroad regulation, of all things, which was repudiated by Congress after demonstrable failure. She wants to apply the Robinson-Patman Act of 1936 to Amazon and other giants. That price discrimination law was long ago diminished by the courts with hardly a word of objection from Congress.

Ms. Khan may feel she has the political wind behind her given the anti-Big Tech mood on Capitol Hill. Twenty-one GOP Senators voted to confirm her, including some upset with Big Tech for censoring conservative speech. But they voted to make her a commissioner before President Biden made her Chair—a decision he announced only after her confirmation. That was a clear break with tradition that a nominee for Chair be identified before a Senate vote.

These Republicans may be under the illusion that Ms. Khan has only Big Tech in her sights. But the new powers she is claiming will give her authority to shoot at business in all directions. The FTC is supposed to be mainly an enforcement agency that polices bad practices, but Ms. Khan and her fellow Democratic commissioners want to expand its regulatory powers as well. Watch out for rules on privacy and data-collection for starters that will affect hundreds if not thousands of companies.

The U.S. Chamber of Commerce awoke to criticize the FTC votes last week. But Republicans in Congress are still asleep.

Wide awake is Amazon, which last week filed a petition with the FTC seeking Ms. Khan’s recusal from actions concerning the giant retailer. The petition includes a declaration from Thomas Morgan, one of the country’s foremost experts on legal ethics who was retained by a firm working for Amazon. Mr. Morgan recounts Ms. Khan’s extensive record of hostility to Amazon and thus her inability to fairly judge the facts of an antitrust case.


“The Majority Staff Report in which Chair Khan played a large part in effect asserts that Amazon is guilty of violating the law,” Mr. Morgan writes. “In my opinion, in any future matter tried before the FTC, Amazon is entitled to decision makers who have a more open mind about those issues than Chair Khan would appear to a reasonable observer to have.”

We have no special brief for Amazon and have criticized its dominance in the e-books market. But the point here is about Ms. Khan’s blinkered zealotry. Don’t expect her to take Mr. Morgan’s recusal advice, but the courts may come to a different conclusion. Meanwhile, American business should get ready. The Khan FTC is coming after you.

Crafty_Dog

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Re: Anti-trust law and related issues
« Reply #1 on: July 08, 2021, 08:08:15 PM »
Warning to the Real-Estate Cartel
The Justice Department will take a new look at those outrageous brokers fees.
By Michael Toth
July 8, 2021 6:37 pm ET


The Justice Department backed out last week of a proposed settlement with the National Association of Realtors to take a fresh look at the notoriously high commissions consumers pay real-estate agents. The move sent shock waves through the housing industry. The government occasionally brings an antitrust case and later decides to dismiss it. But never have federal antitrust authorities agreed to a proposed settlement only to back out after receiving public comment.

The real-estate lobby called the move “an unprecedented breach.” But there’s a much larger concern for legacy brokers than the novelty of the about-face. The signal from Washington is that antitrust enforcers are prepared to dismantle the collusive practices that burden U.S. homeowners with brokerage costs two to three times as high as in the rest of the developed world.

As authorities prepare a fresh inquiry, they should give close scrutiny to the bizarre way Americans pay real-estate agents. Unlike any other business, when a homeowner decides to sell, he must agree to pay two agents—his and the buyer’s. It’s a one-of-a-kind arrangement. The buyer agent is supposedly representing the buyer, yet is compensated by the seller. In other agency businesses, each client pays his own agent. If you want a white-shoe law firm to represent you, you can pay for one. But a local practitioner may do just as well, and clients have that option as well. The result is real price competition.

Real estate, by contrast, has a third-party payment system, which produces predictably inflated prices. Many home buyers would pay a lot less than 2.5% to 3% of the price of the home, the standard rate for buyer agents. Last year, 97% of buyers started their home search online, without the assistance of an agent.


Increasingly, home buyers are finding their next home first, and then contacting an agent second. But buyer agent fees can still be as high as $15,000 on the purchase of a $500,000 home because the buyer doesn’t set the price of his agent. The seller does, and he’s pressured to pay to the hilt.


A training manual from one of the nation’s largest brokers lays it all out. It advises agents representing sellers to tell their clients to offer 2.5% to 3% to buyer agents. After all, “if an agent has 10 different houses, nine of which come with a 3% commission, one of which comes with a 2.5% commission, which one do you think they’re going to show?” YouTube contains dozens more videos of similar training from other brokers and real-estate coaches. It’s the way the industry operates and the principal reason real-estate commissions remain at pre-internet levels while transaction costs have hit the floor across the rest of the service economy.

The industry lobby has two defenses for the mandatory commission rules it established decades ago and continues to enforce. The first is that the arrangement has been around so long. But there’s no easement under federal antitrust law for long-running violations. And unlike other current targets of antitrust scrutiny, holding the real-estate industry accountable requires no departure from the well-established consumer-welfare standard. Industry rules have created the most obvious consumer welfare harm—nosebleed prices.

Fans of the outmoded commission structure also claim there’s solace in the fact that it’s the seller who pays the agent fees because at least the buyer doesn’t have to pay. That defies logic. When a home is sold, it’s the buyer who pays. What industry defenders are really saying is that buyers have the privilege of borrowing more money to pay for homes because the inflated cost of agent services are baked into the sale price.

The pandemic real-estate economy has been tough on aspiring home buyers. But help may be on the way.

Mr. Toth is general counsel of REX, a digital real estate startup based in Austin, Texas, which submitted a public comment recommending that the Justice Department back out of the settlement.

ccp

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Lina khan FTC power grab
« Reply #2 on: July 09, 2021, 04:21:46 AM »
32yo Lina Khan:

https://en.wikipedia.org/wiki/Lina_Khan

Columbia and of course Yale

I never realized how many people who control us are all Harvard Yale.........

Crafty_Dog

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Re: Anti-trust law and related issues
« Reply #3 on: July 09, 2021, 05:29:23 AM »
"In the article, Khan argued that the current American antitrust law framework, which focuses on keeping consumer prices down, cannot account for the anticompetitive effects of platform-based business models such as that of Amazon. She proposed alternative approaches for doing so, including "restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties."[4]"

Do you disagree?

ccp

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Re: Anti-trust law and related issues
« Reply #4 on: July 09, 2021, 09:33:13 AM »
"In the article, Khan argued that the current American antitrust law framework, which focuses on keeping consumer prices down, cannot account for the anticompetitive effects of platform-based business models such as that of Amazon. She proposed alternative approaches for doing so, including "restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties."[4]"

Do you disagree?

well I am not sure
i am not happy about her using bureaucratic power to dictate to Amazon or other tech titans
though I would love to see their power reigned in some how and
preferably legislatively and preferably with Republican dominated control of the legislatures

OTOH waiting 2 yrs or 4 may simply not do
But she is likely democrat partisan and would not trust what she does to be be equal justice to both political parties and to the rest of us .

To me that is the problem
  whenever democrats expand their power it is always in ways that benefit them at our expense.

ccp

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Crafty_Dog

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Re: Anti-trust law and related issues
« Reply #6 on: July 10, 2021, 05:37:49 AM »
"preferably with Republican dominated control of the legislatures"

A danger to be on the look out for is that corporate lap dog Reps/the WSJ Wall Street Reps sabotage things.

---------------

I too caught a piece of the Biden speech on his EO and was surprised at how good it sounded.  Agreed, what is the catch?

Crafty_Dog

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Bork's son
« Reply #7 on: July 13, 2021, 02:26:26 AM »
I am on the fence with this; I post it in furtherance of the conversation.

Joe Biden’s Antitrust Paradox: Where’s the Consumer Welfare?
His new competition policy is a power grab that will hurt economic growth and investment.
By Robert H. Bork Jr.
July 12, 2021 1:20 pm ET
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Judge Robert H. Bork at a confirmation hearing for his nomination to the Supreme Court by President Reagan on Capitol Hill, Sept. 15, 1987.
PHOTO: JOHN DURICKA/ASSOCIATED PRESS

‘Forty years ago, we chose the wrong path,” President Biden told Americans on Friday, “following the misguided philosophy of people like Robert Bork, and pulled back on enforcing laws to promote competition.”

What was that path, exactly? And where have these 40 years in the wilderness led us?

These aren’t academic questions for me. I remember my father in the late 1960s working in his cramped attic study in New Haven, Conn., beginning to develop his theory of antitrust law. He was 40, sitting at a desk my mother made from an old door, scribbling with his Scripto mechanical pencil on yellow legal pads, wreathed by a cloud of smoke from the Kent cigarette hanging from the corner of his mouth.

My father taught himself calculus because he believed a specialist in antitrust should understand the complexities of price theory. The product of this decadelong labor and his rigorous study of antitrust was his 1978 masterpiece, “The Antitrust Paradox: A Policy at War with Itself.” By paradox, he meant that laws designed to protect consumers ended up protecting everyone but consumers.

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Earlier in the century, Justice Louis Brandeis had denounced the “curse of bigness” against “small dealers and worthy men.” He thought the law should protect small firms against the predations of larger, more efficient ones. Justice William O. Douglas took up this cudgel in the 1960s and ’70s, thwacking businesses for being too successful. The conclusion of my father’s work was the profound declaration that antitrust law shouldn’t try to decide who is “worthy” or to defend smaller or less efficient competitors. The sole aim of antitrust law is to protect consumers.

Enter Mr. Biden and Lina Khan, the “neo-Brandeisian” newly installed as chairman of the Federal Trade Commission. They are executing a campaign to undo the consumer-welfare standard and replace it with a full-on effort to regulate pharmaceuticals, healthcare, agriculture, telecom, technology and manufacturing. Through a “sweeping” executive order signed Friday, Mr. Biden aims to empower the alphabet of federal agencies to use their authority to second-guess and undo business decisions that could “harm competition.” Should these agencies falter, the new White House Competition Council and Ms. Khan will be there to remind them who is boss.


Mr. Biden’s justification for this sweeping campaign is simple: “We are now 40 years into the experiment of letting giant corporations accumulate more and more power. And what have we gotten from it? Less growth, weakened investment and fewer small businesses.”

Mr. Biden and Ms. Khan could do worse than to follow my father’s example and learn a little math themselves. In Joe Biden’s America, “less growth” means the economy almost tripled in size from 1980 to 2020 under the consumer-welfare standard. Over this time, the World Bank reports that Americans’ per capita income has nearly doubled.

In Joe Biden’s America, a 9.99% inflation-adjusted annual rate of return from 1980 to 2020 is “weakened investment,” although it is more than 2 points above returns during the prior 40 years before the consumer welfare standard. If you had invested $1,000 in the S&P 500 in 1980 and reinvested the dividends, by 2020 you would now have $97,885.

What about “fewer small businesses?” The overall trend under the consumer welfare standard has been strong. But in Joe Biden’s America, a 54% increase in small businesses since 1980 amounts to “fewer small businesses.”

If Mr. Biden can steamroll every industry and protect inefficient, rent-seeking competitors over consumers, his executive order will certainly succeed in transforming America if it is ever backed by statutory force. Sen. Amy Klobuchar (D., Minn.) is pushing a sweeping antitrust bill, a companion to the raft of antitrust bills in the House, to “promote economic equity.” Many Senate Republicans are eager to hop on this train, including Sen. Josh Hawley (R., Mo.), who would outlaw any mergers or acquisitions for the more than 80 large U.S. companies valued over $100 billion. Together, Sens. Klobuchar and Hawley would petrify American capitalism.

There may be enough bipartisan support for Mr. Biden to succeed. His speech was certainly a masterpiece of demagoguery masquerading as common sense. He wrapped his proposal in popular items, from reduced costs for prescription drugs and internet services, to access to low-cost over-the-counter hearing aids. He invoked the legacies of both Roosevelts. Joe Biden may appear small in the shadows of these giants, but if he succeeds, he will have pulled off a government power grab that is at least the equal of the New Deal, without its benefits.


Mr. Biden said “our economy isn’t about people working for capitalism; it is about capitalism working for people.” If Congress and the courts roll over, it will be about working for the government.

Mr. Bork is president of the Washington-based Antitrust Education Project.


DougMacG

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Re: Bork's son
« Reply #8 on: July 13, 2021, 09:03:29 AM »
Crafty:
"I am on the fence with this; I post it in furtherance of the conversation."

Joe Biden’s Antitrust Paradox: Where’s the Consumer Welfare?
His new competition policy is a power grab that will hurt economic growth and investment.
By Robert H. Bork Jr.
------------------------

Doug:
I am on the fence with it also.  I see small government, supply side people like Stephen Moore taking the hands off side of it. 

I want Google, Facebook, Twitter, et al knocked down and constrained out of spite, but I want and expect constitutional jurists to use a higher principle to decide these cases.

If these aren't monopolies, nothing ever could be.  It's all a matter of mostly artificial definitions.  Standard Oil was not a monopoly; people could have run their homes and cars off of fire, or solar, wind, nuclear a hundred years ago; just innovate!

We worried about Exxon Mobil when Saudi Aramco and other state owned enterprises in the market where they operated were bigger.

Regarding the Klobuchar Hawley legislation, companies of that size should be looked at very suspiciously and skeptically during mergers and acquisitions.  There is a role for government enforcing a fair playing field. But the test to block a consensual business transaction needs to focus on market behavior and anti-competitive result, not size alone.



Crafty_Dog

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