Title: Americans Face the Consequences of Corporate Consolidation as Prices Soar
Subtitle: The United States lags behind Europe in resisting major industry consolidation, resulting in higher costs for essential services.
Date: [current date]
Americans have been living as subjects in a large-scale experiment in letting big companies do as they please, and the consequences are increasingly apparent in daily life. A comparison between the United States and Europe reveals the significant impact of corporate consolidation on vital sectors, from air travel to internet services.
The rising cost of airfares in the United States stands out as a clear example. North American airlines raked in more than double the profits per passenger in 2022 compared to their European counterparts. This disparity has led to American travelers paying significantly higher airfares, burdening their wallets.
The trend extends beyond air travel. Americans also face exorbitant prices for broadband internet and cellular services. Compared to other developed nations, Americans pay more than twice as much for broadband and cellular service on average. These inflated costs can strain household budgets and hinder access to essential communication and information services.
The economist Thomas Philippon’s 2019 book highlighted the decline of competition in the United States and posited that the American economy could have been approximately $1 trillion larger if the level of competition from 2000 had been maintained. This revelation underscores the immense financial ramifications of unchecked corporate consolidation.
Various factors have contributed to this troubling scenario. The effects of corporate concentration have increasingly been recognized, prompting a shift toward stringency in protecting workers and promoting fair competition. Policymakers are now grappling with challenges posed by online business models and the utilization of user data to stifle competition.
Recognizing the need for change, European Union regulators took action against Amazon, which had been accused of using data from third-party sellers to gain an unfair advantage. Amazon’s agreement to cease this practice signals a growing commitment to foster genuine market competition, protecting consumers and smaller businesses.
Reconsidering the role of economics in policymaking has emerged as a crucial aspect of addressing the issue. By treating economic analysis as an informative source rather than the sole determinant, authorities can establish a robust foundation for decision-making. Regrettably, antitrust authorities have failed to fulfill their responsibility to the American people by burdening themselves with the task of identifying potentially harmful mergers instead of proactively preventing corporate concentration.
While some harms resulting from consolidation are challenging to quantify or anticipate, they can accumulate over time, perpetuating an unfair playing field. Assistant Attorney General Jonathan Kanter and Federal Trade Commission Chairwoman Lina Khan assert that these changes are a necessary restoration of the nation’s antitrust laws. These laws limit corporate concentration, even when it is difficult to demonstrate negative economic effects in advance. Kanter emphasizes the importance of enforcing the law to its fullest extent to protect competition, as mandated by Congress.
However, the administration’s efforts to address corporate consolidation face obstacles from federal judges who often adopt a minimalist approach to antitrust enforcement. Regulatory agencies have faced setbacks in cases such as Meta’s acquisition of Within, a virtual reality app maker, and Microsoft’s acquisition of Activision Blizzard, a video game manufacturer.
As the United States grapples with the consequences of letting big companies operate unrestrained, there is a growing recognition of the urgent need to rectify the situation. The government’s commitment to restoring fair competition and protecting consumers through stronger antitrust enforcement serves as a potential remedy. Overcoming judicial skepticism and ensuring comprehensive implementation will be instrumental in safeguarding the American economy and its citizens from the perils of unchecked corporate consolidation.