The Daily Dish
September 22, 2023
Competition Policy (Again)
And the hits just keep on coming. The latest competition policy misstep is the Strengthening Antitrust Enforcement for Meatpacking Act (SAEMA), which would ostensibly support better competition in the meatpacking industry. As laid out in Fred Ashton’s latest piece, the bill would amend the Packers and Stockyards Act of 1921 and echoes the Biden Administration’s concerns that the industry is overly concentrated.
The bill is a step in the wrong direction for two reasons. First, the bill would embed in statute the use of the Herfindahl-Hirschman Index (HHI) as the measure of market concentration and also dictates that “post-merger or acquisition threshold of 1,800 or an increase in the HHI of more than 100 in any relevant market” is illegal. Now, as it turns out, those two thresholds – 1,800 and 100 – are exactly the ones in use by the Federal Trade Commission (FTC) and Department of Justice (DOJ) in their draft merger guidelines to identify a violation of the antitrust laws.
Eakinomics complains a lot about the regulatory state, executive rulemaking, and the like. But one reason that statutory language leaves specifics like HHI thresholds to the executive branch is that it makes more sense to accommodate advances in the economic science by updating a rule rather than to having to amend a statute. SAEMA is simply a step in the wrong direction as its passage would put Congress precisely in that position.
The second problem is the exclusive reliance on the concentration measures. As noted by Ashton, “Several former antitrust agency chief economists concluded that ‘it is unhelpful (and may be actively misleading) to simply measure the relationship between HHI and price in an industry and use that relationship to try to predict future price effects, in merger analysis in particular,’ and that ‘most economists today agree that more concentrated markets are not always less competitive than less concentrated markets.’ They add that ‘in some markets, competitors are more efficient at higher levels of scale, meaning that competition among a small number of large firms may be more vigorous than competition among a large number of smaller businesses.’”
Seemingly, everyone wants to get in on the antitrust action. But until FTC and DOJ do a U-turn and head in the right direction, there is no need for more momentum!
Fact of the Day
Since January 1, the federal government has published rules that imposed $522.4 billion in total net costs and 180.9 million hours of net annual paperwork burden increases.