The research I’ve been doing for my next book–a biography of early 20th-century public power advocate J. D. Ross–has made me keenly interested in United States policies toward monopolies and trusts. One little-known fact I’ve come across is that monopolistic practices by private power companies in the 1920s played a significant role in causing the Great Depression.
Although US anti-monopoly law goes back as far as the 1890 Sherman Anti-Trust Act, a key provision of which “makes illegal all attempts to monopolize any part of trade or commerce in the United States,” corporate tendencies toward industry consolidation and control have only rarely been curbed or even slowed.
As a result, most areas of the US economy are dominated today by corporate entities, against whom small business owners have difficulty competing. While it has always been rare for one company to have a true monopoly (as ALCOA did in the aluminum industry before WWII), it is increasingly common for a handful of corporations to hold near-total dominance in various areas.
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To learn more about monopolies and anti-monopoly efforts today, I recently attended a forum put on by the Institute for Local Self-Reliance (ILSR), an anti-monopoly group whose tagline is “Building local power to fight corporate control.”
The forum–cosponsored by another anti-monopoly group, the Open Markets Institute–took place at Open Book in Minneapolis on September 22, a day I just happened to be passing through the area. The first speaker was US Federal Trade Commissioner Alvaro Bedoya, who was appointed by President Joe Biden and sworn into his position on May 22 of this year.
In Bedoya’s speech, which you can read in its entirety here, he discussed a disturbing narrowing of the definition of “monopoly” over the past 40 years, as US administrations and Supreme Court rulings have focused increasingly on issues of “efficiency” rather than “fairness.”
According to this definition, as long as big businesses create “efficiencies” in the market, including keeping consumer prices generally low, it doesn’t matter if their practices are inherently “fair” or not to smaller competitors or even consumers.
Yet, as Bedoya pointed out, fairness has been part of anti-monopoly legislation since the beginning, while the word “efficiency” doesn’t appear in any anti-monopoly or anti-trust laws.
The result of this narrowing of definition has been a subsequent narrowing of ownership and opportunity, which, as we saw with the meatpacking troubles during the early months of Covid, can lead to drastic and unnecessary problems.
“Picture a set of 39 companies,” Bedoya said to illustrate what’s happening. “Some pharmacies, some PBMs [pharmacy benefit managers], some insurers. Twenty years ago, these were all separate. Today, those 39 companies have merged into just three vertically integrated entities. And so today, when most people fill a prescription, just one of three entities mediates what medicine they get, what they pay for it, and how they will get it – and that corporate entity makes money by making sure that prescription is filled by its own pharmacy.”
Bedoya spent a sizable portion of his speech on the ant-monopoly requirements laid out in 1936’s Robinson-Patman Act, which I encourage you to read about here. The R-P Act is almost entirely focused on preventing predatory pricing agreements that leave smaller competitors at a disadvantage. In other words, its focus is fairness. Yet it has been almost universally ignored in recent years by administrations and the courts.
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Two panel discussions followed Bedoya’s remarks. The first panel featured R. F. Buche, an independent grocery store owner in S. Dakota whose stores are exclusively on Native American reservations. Buche’s frustration with the more-favorable deals offered by large consumer-product corporations to places like Walmart and Dollar General was palpable. (One statistic he cited was that 65% of US grocery sales today come from five companies.)
Another participant on the same panel was independent bookstore owner Angela Schwesnedl, who said that there is only one wholesaler left through which she can buy new books. As a result of the consolidation in her industry, she said, independent bookstores like hers account now for only 4% of the book market.
Stu Lourey of the Minnesota Farmers Union, who was on the second panel, told the audience that a mere four plants control 85% of the meatpacking market. And Minnesota farmer Hannah Bernhardt talked about being forced to travel a ridiculous number of miles just to have her livestock butchered.
This is only a taste of of the many disturbing statistics, trends and practices presented at the forum, mostly by common people struggling to stay afloat as farmers, grocers, and small business owners.
I’ll be writing more about monopolies and trusts in future posts. Meanwhile, I encourage you to learn more about them yourself, starting with these links:
“America Has a Monopoly Problem,” John Mauldin, Forbes
“Monopolies are Killing the American Dream,” Sally Hubbard, CNN
“Biden Launches Assault on Monopolies,” Leah Nylen, Politico
“15 Companies the U. S. Government Tried to Break Up as Monopolies” Frederick Reese, Stacker