With prices 20% higher than they were just a few years ago and confidence in the president’s management of the economy waning, the Biden administration and Democratic lawmakers are focusing all their energy on antitrust law ahead of the election.
Democrats are trying hard to shift voters’ frustration with the economy onto the private sector, which has made record profits for many years since the U.S. rolled out fiscal and monetary rescue packages amid the pandemic.
“The Biden administration is very concerned about what voters and consumers perceive as inflation, and they see antitrust as one way to combat that,” Jeremy Hopdahl, an economist at the University of Central Arkansas, told The Hill. “They want to look like they’re fighting price increases.”
The Department of Justice and 30 states filed a massive lawsuit against Live Nation and Ticketmaster in May, alleging “unlawful and anticompetitive conduct” and “monopolistic dominance” over the U.S. live events industry.
Sen. Elizabeth Warren, D-Mass., a financial firebrand, on Tuesday blasted the company’s monopolistic practices, which have been criticized by music industry figures going back decades. Rolling Stone magazine editorial.
“This monopoly power…robs audiences of money,” she writes. “The company imposes what the Department of Justice calls ‘Ticketmaster taxes’ — surcharges on ‘service fees,’ ‘handling fees,’ ‘payment processing fees,’ and ‘facility fees.’ Today, Ticketmaster’s fees amount to nearly one-third of the face value of a ticket.”
The Justice Department filed a similar lawsuit against tech giant Apple in March, alleging that the whack-a-mole-like contract provisions ” [the company] “This is because it extracts higher prices from consumers, charges higher fees to developers and creators, and suppresses competitive alternatives from competing technologies.”
Jonathan Cantor, the Justice Department’s antitrust director, last month touted mergers his department has blocked, from airlines to publishing.
The Federal Trade Commission (FTC), which cited “inflated profits” in the food and beverage sector in March, is also considering a lawsuit against Southern Glazer’s Wine & Spirits, the nation’s largest alcohol distributor, according to a Politico report.
Meanwhile, Democratic senators The alarm was sounded Last week, he briefed Attorney General Merrick Garland on Exxon Mobil’s proposed $60 billion acquisition of Pioneer Natural Resources, a merger that would be the largest oil and gas deal of the century.
Last month, the FTC accused Pioneer founder Scott Sheffield of conspiring with OPEC representatives to cut oil and gas production and raise prices at the pump.
Democrats have opposed the merger, while Republicans have voiced support for Biden’s big business targets.
Thirty-eight Republican senators sent a letter to FTC Chairman Lina Khan in March sharply criticizing the Democratic review of the merger and urging the FTC to follow the letter of the law.
“The oil and gas industry (like other industries) should not be subject to unjust scrutiny and intense antitrust scrutiny for political purposes,” Sens. Ted Cruz (R-Texas), Senate Minority Leader Mitch McConnell (R-Ky.) and more than three dozen other Republican senators wrote.
At a fundraiser in Houston in May, presumptive Republican presidential nominee Donald Trump promised oil executives that they would be treated differently if he were in the White House, The Washington Post reported. Reported last week.
According to a tally by the American Association of Mergers, Acquisitions & Partnerships, the number of mergers in the U.S. economy has been declining in recent years after hitting a record high of more than 25,000 in 2021. The number also declined in 2022 and 2023, to 5,808 this year as of the end of May.
The antitrust debate is heating up after the highest inflation in four decades weighed on voter sentiment and hurt Biden’s approval rating. Inflation and the economy are consistently ranked in polls as top issues for U.S. voters.
Voters’ ratings of the president’s economic performance have fallen consistently throughout his presidency, but Biden’s rating is the lowest of any president since George W. Bush, the report said. A recent Gallup poll.
A Gallup poll conducted in May found that only 38% of Americans said they had “a lot or quite a bit of confidence” that Biden would “do the right thing” on the economy.
Antitrust legislation could have political repercussions in the wake of the highest inflation in decades, but it is unlikely to have as much impact on prices ahead of the election as traditional monetary policy, which has been tightening since the first quarter of 2022.
The personal consumption expenditures price index (PCE), a key inflation gauge for the Federal Reserve, fell to 2.7% in April from a year-over-year increase of 7.1% in June 2022, closer to the Fed’s target range.
“Whatever happens with the current merger of the board, we won’t know how it will affect prices until a few years from now,” Hopedahl said.
Biden’s antitrust push comes at a time when the U.S. economy is more concentrated than ever before, and it’s unclear what effect that will have on prices, investment and economic vitality.
“Indeed, sales have fallen substantially and concentration has increased substantially across most U.S. industries,” researchers Germán Gutierrez and Thomas Philippon concluded in a 2017 paper, drawing a link between lower levels of competition and weaker investment.
Even more worrying results were published in 2019 by Gustavo Grullon of Rice University and his colleagues, who found that more than three-quarters of all industries in the United States have become more concentrated since the 1990s, leading to higher profits.
“We find that firms in industries that have experienced the greatest increase in product-market concentration exhibit higher profit margins and more profitable merger and acquisition deals. At the same time, we find no evidence of significant improvements in operating efficiency,” the researchers wrote.
These arguments were developed further in 2020 by economists Jan de Recker and others, who documented growing market power since around 1980, alongside rising markups and profitability.
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