The antitrust books you should’ve read in 2020 [part 1]

One year ago, I wrote The Antitrust Books You Should’ve Read in 2019. In the conclusion, I looked ahead to books to be published in 2020. Given the many books that were already announced, I remarked that ‘the question will be where to find the time to read them all.’ The past year gave us the answer: stuck at home, in between Zoom meetings.

While the context was not ideal, the past year was another very productive one when it comes to competition law publishing. Compared to 2019, fewer editions of authoritative textbooks appeared. However, at least as many—if not more—antitrust books aimed at a wider audience were released. While I noted last year that ‘the great majority of these books come from the US, where an antitrust revival [is] ongoing’, Europe has also seen a number of releases last year, which makes for a more balanced picture.

I am therefore happy to present this second edition of Antitrust Books You Should’ve Read Last Year, which follows the first edition’s format. Picking just five or six books was not easy, given that quite a number of competition law books published over the last year merit every antitrust aficionado’s attention. In this first instalment, I have included three books, namely Monopolized, Competition Overdose and Competition is Killing Us. The first shows that, despite last year’s many books on monopoly, the story was still not fully told. And while competition is generally prescribed as the remedy for problems of monopoly, the latter two demonstrate that there can be too much of a good thing.

‘Monopolized: Life in the Age of Corporate Power’ by David Dayen

In short: With Monopolized, David Dayen has taken it upon him to make the monopoly problem personal. And he has succeeded: the book is guaranteed to get your blood boiling through the many accounts of how monopoly affects people in their daily lives. Dayen surveys an amazing number of—often hidden—monopolies, in industries ranging from plastic hangers to baby formula (note that he uses the term ‘monopoly’ liberally, also catching oligopolies). As he acknowledges, ‘[t]he current media fascination with monopoly is incredibly focused on Big Tech’ (p. 3), but—refreshingly—Dayen focuses on other, perhaps less exciting but equally important sectors. Every chapter in the book is dedicated to a monopolized sector.

Dayen writes not only with passion, but with deep knowledge of the subject. He is particularly strong in his assessments of the political levers of monopoly, including the lobbying and regulatory capture required to build and maintain it. The book goes far beyond antitrust law, covering also public procurement, industrial policy and sector-specific (e.g. financial) regulation. Dayen also points to the pernicious ‘concentration creep’, i.e. how concentration in one segment breeds concentration in other segments (so that firms do not have to deal with counterparts with superior bargaining power). Moreover, just like the monopolies themselves, their effects are sometimes hidden but no less harmful. By the end of the book, Dayen has certainly fulfilled his mission of exposing how monopoly ‘steals wages’, ‘weakens economies’, ‘degrades quality’, ‘supercharges inequality’ and ‘hollows out communities’. (pp. 8–12)

Favourite chapter: The title of each chapter is designed to spark outrage and action. The first chapter, for example, is titled Monopolies Are Why People Keep Contracting Deep Vein Thrombosis on Long-Haul Flights, while chapter 11 is titled Monopolies Are Why a Family Has Seen Only the Top of Their Loved One’s Head for the Past Two Years (about the monopolies of the prison system and in particular GTL, the dominant (video) communications provider). My favourite chapter, though, is number seven: Monopolies Are Why America Can’t Build or Run a Single Weapons System Without Assistance from China. The chapter describes in detail how defence contractors gouge the government while outsourcing the manufacturing of critical components to China, all of which is possible through dirty business tactics and poor public oversight.

Quotable: ‘Laws already on the books can stop everything you will read in this book. Indifferent enforcers of those laws cannot.’ (p. 12) In other words, Dayen is hopeful as to the cure for monopoly: we already have it and just need to administer it. In order to do so, however, we need to stop ‘transfer[ring] authority from elected democratic representatives to corporate boardrooms and investors’, because ‘a democracy run by plutocrats, for plutocrats, bears no resemblance to democracy at all.’

Further reading: As Dayen acknowledges, his work fits within a broader body of literature on monopoly (see p. 8). The Curse of Bigness and Goliath put the fight against monopoly in its historical context, The Myth of Capitalism surveyed monopolies across industries and The Great Reversal added a comparative perspective. Now that Monopolized made the monopoly problem personal, it is high time to actually start solving it. However, while competition is generally prescribed as the cure, two other books—Competition Overdose and Competition is Killing Us—warn that competition is not always the answer.

‘Competition Overdose: How Free Market Mythology Transformed Us from Citizen Kings to Market Servants’ by Maurice Stucke & Ariel Ezrachi

In short: In the wrong dosage, anything is toxic. In Competition Overdose, Maurice Stucke and Ariel Ezrachi show that this also applies to competition. However, this is certainly not a book against competition; rather, it is a book against unregulated competition—or against competition itself as the sole form of regulation, which has proven ineffective. Relying only on competition can lead to various ‘overdoses’, which the authors examine with a case study approach. Toxic competition leads to a race to the bottom (e.g. in education); it damages quality, the environment, workers, and ultimately consumers (as illustrated by the European horsemeat scandal); it spurs businesses to exploit human weaknesses (via drip pricing); and it creates a detrimental overload of choice (be it in e-commerce or online dating). Stucke and Ezrachi also research the drivers of toxic competition, finding four main culprits: the competition ideologues, the lobbyists, the privatizers, and the ‘gamemakers’ (e.g. tech companies that rig the game to come out on top). Finally, they propose a detox, namely ‘noble competition’, which is akin to what we teach our children: to compete, while ‘emphasiz[ing] that values such as friendship, honesty, fairness and responsibility should shape the way they compete.’ (pp. 258–59).

While their premise—that there can be such a thing as too much competition—is counterintuitive or even alarming, at least to antitrust lawyers, Stucke and Ezrachi substantiate it skilfully. They do not only point to externalities, a well-known ‘side effect’, but delve deeper into the potentially negative consequences of competition. The situations they identify are varied. Sometimes the problem seems to be too much competition in a sector that could use at least some (e.g. food processing); in other sectors, it seems that any competition is too much (e.g. prisons). Sometimes the problem is that antitrust law applies at all (e.g. to college sports); other times, the problem is that only antitrust law applies, while additional tools seem necessary (e.g. to combat drip pricing). Finally, the problems differ across regions, with many of them being US-specific or at least -centred.

Favourite chapter: Chapter 1 describes how competition in education leads to a race to the bottom. Rankings can be particularly pernicious. In primary and secondary schools, they lead to ‘widespread grade inflation and cheating.’ (p. 9) In universities, rankings lead to a misallocation of resources: instead of ‘spending money on improving the product or service, competition instead causes money to be spent on the competition itself.’ (p. 24) In the end, the supposed beneficiaries of competition—i.e. students and their parents—suffer, both financially and emotionally, while schools are no better off either. However, no single school can de-escalate this race to the bottom, and they cannot agree to do so either because of antitrust law. (p 133) While Stucke and Ezrachi’s analysis focuses on the US system, an undiscussed solution may be found on the other side of the Atlantic. Under EU competition law, (higher) education is—under certain circumstances—not considered an ‘economic activity’, which means that schools can actually team up (e.g. against rankings) without having to fear high fines.

Quotable: ‘Fairness does not undermine the goals of competition. Rather it advances them.’ (p. 252) ‘Fairness’ is an important—but at times misunderstood—concept in EU competition law, which has only become more prominent in the last few years. Stucke and Ezrachi write that it ‘is viewed as essential to cultivating trust in markets and crystallizing legitimate expectations of market participants.’

Further reading: Given the originality of the thesis and the many subjects dealt with under the banner ‘toxic competition’, further reading is found in a variety of sources rather than a book explicitly on the same theme. On the arms race triggered by higher education rankings, for example, Cathy O’Neil’s Weapons of Math Destruction (chapter 4) is excellent. There is one book that does relate to the same theme, namely Competition is Killing Us.

‘Competition is Killing Us: How Big Business is Harming Our Society and Planet—and What to Do About It’ by Michelle Meagher

In short: At the start of Competition is Killing Us, Michelle Meagher describes how she noticed that ‘more competitive markets could be harmful; but also, looking closely, it seemed that many, if not most, markets were actually not that competitive.’ (p. xiii). In some markets, there is too much competition; in other markets, not enough. But the problem goes deeper: what are these companies competing for? Current antitrust law and its ‘single-minded focus on lower prices for consumers’ means that companies are free to ‘pursue power and profits in ways that harm society and the planet.’ (p. 3, 6) Those costs are not accounted for. Even worse, ‘[c]reating negative spill-overs is what many companies, programmed to maximize returns for shareholders, are implicitly designed to do.’ (pp. 3–4). Meagher thus brings together two often separate conversations, one about corporate power and monopoly, another about shareholder value and corporate responsibility. Both are rooted in a number of ‘myths of free market competition’ that she spends the first half of the book debunking, which all relate to the idea that free markets naturally respond to the interests of the public.

The solution, according to Meagher, is ‘stakeholder antitrust’—a mix of stakeholder capitalism and New Brandeis antitrust. Stakeholder antitrust takes a broader view of power (including not only corporate but also political power) and of the issues that antitrust can or should solve. These issues include inequality (pp. 23–26) and sustainability (pp. 86–88). Stakeholder capitalism and New Brandeisian antitrust are no strange bedfellows; in fact, the arguments pro and contra are very similar. Speaking for these ideas are the negative externalities that currently go unaddressed. Speaking against them are arguments such as ‘it is impossible to take account of so many values’ and ‘externalities are or should be addressed by other branches of law’, which Meagher addresses thoughtfully (although the last word on them has not been said). There is an even closer connection between the two ideas: before the Sherman Act, companies were controlled by states through the grant (and possible withdrawal) of the right to incorporate (p. 74). Meagher argues it may be worth turning once more to the power to dissolve companies—in other words, ‘to pull the plug’—where stakeholder remedies are ineffective (pp. 146–47).

Favourite chapter: The preface, in which Meagher describes how she changed her mind about the free market (starting with the 2013 Rana Plaza collapse in Bangladesh) sets the scene perfectly. In terms of substance, chapter eight (‘Speaking truth to market power’) is commendable for how it proposes changes to our current antitrust system that are actionable, which is often the most difficult but also most rewarding part to scholarship.

Quotable: For those still unconvinced of the connection between shareholder capitalism and our current conception of antitrust, Meagher quotes Milton Friedman—the ‘father’ of shareholder capitalism—as saying: ‘I have gradually come to the conclusion that antitrust does far more harm than good and that we would be better off if we didn’t have it at all, if we could get rid of it.’ With the 50^th anniversary of Friedman’s seminal essay ‘The Social Responsibility Of Business Is to Increase Its Profits’, now is a good time to review the ideas of him and his Chicago School fellows—both on shareholder capitalism and on antitrust.

Further reading: In Liberty from All Masters, Bary Lynn—who laid the foundations for the New Brandeis School more than ten years ago with his book Cornered—returns with a similar call to focus not only on economic but also political power. And in Monopolies Suck, Sally Hubbard provides an accessible guide to how monopolies ramp up inequality, destroy our planet and threaten democracy, among others.

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See you next month for the second instalment!