Opinion Benjamin Appelbaum: Break Up Big Chicken

By Binyamin Appelbaum

President Biden wants to lead a revival of antitrust enforcement, a campaign aimed most obviously at curbing the behavior of feral tech companies.

But Mr. Biden can’t achieve his goal of expanding fair competition in the United States solely by wrangling with Big Tech. To succeed, he’ll need to confront Big Chicken, too.

Most chicken that Americans eat is processed by a handful of big companies because, in recent decades, the government gave its blessing to the consolidation of poultry processing, along with a wide range of other industries. The unsurprising result: In recent years, the surviving companies took advantage of their market power to prop up the price of chicken, overcharging Americans by as much as 30 percent.

Evidence of the industry’s misconduct became so blatant — thanks in part to lawsuits filed by wholesale poultry buyers — that regulators were roused from complacency. Beginning in 2019, the government has filed a series of charges against the companies and their executives.

The belated crackdown crimped the chicken co-op, at least for now. But concentrations of corporate power are now the norm in the United States. A 2018 study found that concentration has increased in three-quarters of domestic industries in recent decades, giving companies greater power to raise prices, squeeze suppliers and suppress wages — and to exert outsize influence on regulators and politicians.

Under both Democratic and Republican administrations, regulators embraced a minimalist antitrust philosophy, insisting the government should intervene only when there was clear evidence that conduct would result in higher prices. Nor did the regulators look very hard for evidence as corporations ran together like so many drops of mercury until there were just four big airlines, three big cellphone providers and two companies making 80 percent of the nation’s coffins.

Even when the government has acted, it hasn’t done enough. Poultry workers filed suit in 2019 charging that the same companies that conspired to prop up prices also conspired to suppress wages, holding annual meetings in Florida to set pay rates for the low-wage workers who turn chickens into chicken. The government, which backed claims that the companies were fixing prices, hasn’t shown similar interest in wage fixing.

As the legal scholar Eric Posner writes in a forthcoming book, “How Antitrust Failed Workers,” the federal government has almost never acted against companies that use market power to suppress wages. He shows one embarrassing reason for this negligence is the mistaken assumption that wage suppression can be good for consumers. In fact, it tends to result in higher prices. But that shouldn’t matter. The law doesn’t say that companies can collude against workers as long as consumers benefit.

The most important change that Mr. Biden has made is installing antitrust regulators who want to enforce the nation’s antitrust laws. As the crusty police officer played by Sean Connery says in “The Untouchables,” “Everybody knows where the booze is. The problem isn’t finding it. The problem is who wants to cross Capone.”

Lina Khan, the new chairwoman of the Federal Trade Commission, is a standout among a new generation of scholars who are pushing to reverse decades of antitrust atrophy. Her breakout moment came with a 2017 article in The Yale Law Journal, arguing that Amazon was engaged in anticompetitive behavior even though its conduct hadn’t resulted in higher prices, yet.

Mr. Biden nominated Jonathan Kanter, a lawyer who has represented a series of clients in antitrust cases against Google, to head the Justice Department’s antitrust division, which shares authority with the F.T.C. At the White House, Mr. Biden’s advisers on antitrust policy include Tim Wu, on leave from his regular gig as a law professor at Columbia, who has long argued for stronger enforcement in these pages.

The new regulators have started jousting with Silicon Valley. But the administration is rightly maintaining a broader focus. The economy is bigger than Big Tech, and harmful concentrations of corporate power are most often found in older and less glamorous industries.

In the Biden administration’s first big antitrust action, the Justice Department filed suit in June to block a $30 billion merger of the insurance brokers Aon and Willis Towers Watson. It said the deal would “leave American customers with fewer choices, higher prices and lower quality services.” It was a striking decision because the European Union, generally tougher on antitrust, had indicated its likely approval. Last month, citing the opposition of the U.S. government, the companies said they would remain competitors.

When Mr. Biden signed an executive order listing specific targets for antitrust action last month, he put the dangers posed by Google, Facebook and other tech giants on a par with the dangers posed by companies in very different sectors. Among other things, the administration wants to allow over-the-counter sales of hearing aids, to provide farmers with model contracts that can help to protect their interests in dealing with agribusiness companies, to help microbreweries get their beer into retail stores and to make it easier to move bank accounts to another bank.

These and dozens of other proposed interventions address well-known violations of the basic principles of open competition. The persistence of these abuses is an indictment of the indifference of previous administrations. It has benefited the wealthy minority that holds shares in corporations at the expense of everyone else.

Mr. Biden seems to grasp the problem. “Rather than competing for consumers, they are consuming their competitors,” he said when he signed the executive order. “Rather than competing for workers, they’re finding ways to gain the upper hand on labor. And too often, the government has actually made it harder for new companies to break in and compete.”

That’s the right diagnosis. Now comes the hard part.

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