Barak Obama speaks on antitrust:
Regrettably, the current administration has what may be the weakest record of antitrust enforcement of any administration in the last half century. Between 1996 and 2000, the FTC and DOJ together challenged on average more than 70 mergers per year on the grounds that they would harm consumer welfare. In contrast, between 2001 and 2006, the FTC and DOJ on average only challenged 33. And in seven years, the Bush Justice Department has not brought a single monopolization case.
The consequences of lax enforcement for consumers are clear. Take health care, for example. There have been over 400 health care mergers in the last 10 years. The American Medical Association reports that 95% of insurance markets in the United States are now highly concentrated and the number of insurers has fallen by just under 20% since 2000. These changes were supposed to make the industry more efficient, but instead premiums have skyrocketed, increasing over 87 percent over the past six years. As president, I will direct my administration to reinvigorate antitrust enforcement. It will step up review of merger activity and take effective action to stop or restructure those mergers that are likely to harm consumer welfare, while quickly clearing those that do not.
Some talking points:
1. It’s not true that the current administration hasn’t brought any monopolization cases. Just today I filed an amicus brief in an FTC monopolization case. Obama seems disappointed that the DOJ and FTC have not brought a Microsoft-style blockbuster monopolization case, but there have been plenty of smaller monopolization cases.
2. The primary reason for the decline in the number of merger challenges post-2001 is that Congress raised the threshold for mandatory pre-merger filings. This means fewer mergers are subject to the type of advance review that lead to antitrust challenges.
3. Obama’s real beef isn’t with lax enforcers, but attentive judges. Since the FTC stopped the Staples/Office Depot merger during the Clinton era, there have been a series of merger review setbacks for the FTC and DOJ, most recently the Whole Foods-Wild Oats debacle. Courts are no longer turning a blind eye to the government’s nonsensical economic theories about market power.
4. I fail to see why Obama’s so upset about the lack of antitrust scrutiny of health insurance mergers, given that he’s promised to impose a slew of new government mandates on the insurance industry. If you’re going to establish a government-run health insurance cartel, there’s little to be gained by expanding antitrust enforcement.
5. How does Obama’s vow to “take effective action to stop or restructure those mergers that are likely to harm consumer welfare, while quickly clearing those that do not,” differ from existing policy? The DOJ and FTC permit most mergers and challenge a handful. Will Obama impose a mandatory minimum for merger challenges?
Obama’s remarks were in response to inquiries from a militant pro-antitrust group, so his statements are nothing more than a promise to expand the government welfare program known as antitrust. It seems merger review is the new ethanol.