RECENT DEVELOPMENTS

Building Worker Power

• GIG WORKER UNIONS?  57.3 million gig workers in the U.S. currently can’t unionize because, as independent contractors, they don’t qualify for a labor exemption under federal antitrust law. But recently, FTC commissioner Alvaro Bedoya in his individual capacity suggested alignment with a U.S. Court of Appeals for the First Circuit ruling that found the “labor exemption to antitrust laws protects independent contractors.” His statement and the FTC’s policy statement on gig workers last year suggest the agency continues to explore how it might use its authority to protect gig workers.                                                                 
• WHOLE-OF-GOVERNMENT BLOCKING NONCOMPETES. 30 million Americans are subject to noncompete agreements, restricting their ability to change jobs. The FTC has proposed to ban noncompetes entirely in markets where they have jurisdiction, and bipartisan House and Senate members are following its lead. Now, the National Labor Relations Board General Counsel Jennifer Abruzzo has stepped up to say noncompete contracts violate the National Labor Relations Act, paving the way for enforcement actions. Advocacy organizations also sent a letter to the White House Competition Council urging them to direct federal agencies to ban noncompetes for markets the FTC can’t cover. Read more in the Huffington Post.

Airlines

• AIRLINES PAY UP FOR CANCELLATIONS. Over the last two years, 40% of flight cancellations were due to “Airline Issues,” and consumers received no compensation from the airlines for such travel delays. That’s changing. President Biden and Transportation Secretary Pete Buttigieg announced plans to issue proposed requirements that would oblige airlines to compensate for the costs accrued during significant and “controllable airline cancellations” or delays, including meals, hotels, taxis, rideshares, and rebooking fees. The Administration intends to release a proposed rule by the end of the year.

Reining in Big Tech 

• FTC BLOCKING META FROM CHILDREN‘S DATA. 40% of children under the age of 13 and 84% of teenagers use Meta products like Instagram. Research has shown that social media worsens youth mental health and increases the risk of harassment. The Federal Trade Commission is proposing a blanket ban on Meta‘s monetization of data from children under 18, alleging the company violated orders from its 2020 privacy settlement. Meta is challenging the proposed modification. The FTC’s action comes as Congress also pushes to protect child privacy online.

• BIG TECH TRIES TO HIJACK TRADE. The Indo-Pacific Economic Framework for Prosperity (IPEF) will create binding commercial rules regarding everything from supply chains to clean energy. It is the most significant U.S. economic engagement in the region since President Trump withdrew from the Trans-Pacific Partnership in 2017. Recently, Senator Warren released a report showing how Amazon and Google have been meeting with the Administration as they advance a “digital trade” agenda to block domestic regulation through IPEF. Republican and Democratic lawmakers, along with 16 businesses, wrote letters to U.S. trade officials urging them to block Big Tech from weaponizing IPEF negotiations, which could wrap up by the end of the year.  Read more on the digital trade debate from our ReThink Trade team here.

• WASHINGTON HONES IN ON A.I. The growth of Artificial Intelligence (A.I.) risks disrupting jobs and enriching tech giants, and the government is starting to take note. The CFPB joined DOJ‘s Civil Rights Division, the U.S. Equal Employment Opportunity Commission, and the FTC in committing to enforce laws against A.I. platforms. Similarly, the White House released a Blueprint for an A.I. Bill of Rights focused on the protection of civil rights. Senator Schumer launched a legislative effort to address A.I.. The FTC’s Chair Khan also released a NYT op-ed calling for the regulation of A.I. to protect fair competition and consumers. 

Improving Health Care

• MINNESOTA BANS HOSPITAL MERGERS. As detailed in a recent Economic Liberties report, hospital mergers harm patients and workers.  One state realized the consequences and is fighting back. Minnesota Governor Tim Walz signed a bill into law that will ban anti-competitive healthcare mergers, which would block Fairview Health Services and Sanford Health from combining. The bill also bolsters the Attorney General‘s oversight of merging hospitals with annual revenues beyond $80 million and bans out-of-state entities from owning, in part or in whole, the University of Minnesota healthcare facilities.

• PBMS UNDER SUSTAINED FIRE. Prescription drugs cost 2.5 times more in the U.S. compared to other Western countries, and bipartisan momentum to address PBM’s role in driving up costs is growing. Following up on its 6(b) PBM study, the FTC issued a new order requesting data from two Group Purchasing Organizations (GPOs) that negotiate rebates on behalf of PBMs and contribute to drug shortages. The Senate HELP Committee advanced a package of bills aiming to limit the power of PBMs, which will have to be reconciled with bills from Senators Cantwell and Grassley passed out of committee earlier this year.

• BABY FORMULA COLLUSION? A widespread shortage of baby formula in 2022 shocked America as people scrambled to feed their infants. The shortage, in some cases a 30% reduction in inventory, also highlighted the role of the Women and Infant Children Program (WIC) in creating these vulnerabilities and increasing costs. The FTC is investigating whether baby formula manufacturers colluded for lucrative state contracts in a highly concentrated market. 

In The Name Of National Security

• DEFENSE CONTRACTOR PRICE GOUGING. In the 1990s, the Clinton Administration subsidized defense contractor mergers, decreasing the number of contractors from 107 to 5 in fewer than 6 years. Thirty years later, as featured on 60 Minutes, the Pentagon is falling victim to price gouging and, is now, struggling to supply weapons while managing its largest budget of $842 million, half of which goes to these defense contractors reaping enormous profits. This all comes on the heels of a Pentagon report detailing how these contractors overcharge the Department of Defense on almost everything. A bipartisan group of Senators sent a letter to the Defense Secretary requesting an investigation into contractor price-gouging. 

Blocking Mergers

• FTC HALTS AMGEN/HORIZON. Big Pharma mergers and antitrust patent abuses drive up drug prices and limit drug access for U.S. consumers. In December, Amgen, one of the largest pharmaceutical companies in the country,  announced its plan to buy Horizon Therapeutics for $28 billion. It was the largest healthcare merger proposed in 2022 and, received immediate scrutiny from Senator Warren. In blocking the deal, FTC is taking a stand against Big Pharma acquisition strategies that rely on buying government-protected “orphan drug” monopolies for specialty drugs, rather than innovation, to increase profits and retain market power. A hearing date is set for September 11, 2023.

• UK ALIGNS WITH FTC ON MICROSOFT / ACTIVISION. Microsoft‘s attempted $69 billion takeover of Activision Blizzard would create the third-largest video game publisher globally. Microsoft controls 60 – 70 percent of the market, and Activision is home to some of the most successful video game brands in the world like Call of Duty. The FTC has already challenged the deal, and a hearing is set for August 2nd.  Now, the U.K. Competition and Markets Authority is following suit in trying to block the deal, with a hearing on July 24th. 

• NORTHEAST ALLIANCE NO MORE. In 2020, two of the most significant airline competitors in the Northeast—JetBlue and American Airlines— formed a partnership for flights in the region. The DOJ successfully sued, claiming the partnership was raising prices and blocking competition in the NYC and Boston markets, its first airline challenge since 2013. American has announced it will appeal the ruling. Decisions like this help set precedent for future airline mergers and could foreshadow a result for the JetBlue/Spirit merger, which Jetblue is trying to secure by divesting Spirit assets.

• BIDEN REGULATORS SPLIT OVER BANK MERGERS. To prevent further damage to the economy, regulators approved mergers in response to recent bank collapses and failed government oversight. In Congressional hearings, Treasury Secretary Janet Yellen and OCC Acting Comptroller Michael Hsu have expressed openness to further bank consolidation. This view runs counter to others in the Administration like CFPB Director Rohit Chopra who recently urged against a rash run to too-big-to-fail firms and emergency mergers and acquisitions. Economic Liberties Analyst Shahid Naeem echoes concerns in a recent Hill piece. 

Lowering Prices

• OVERDRAFT FEES DECLINE. In 2019, banks and credit unions collected $15.5 billion in overdraft fees, which disproportionately burden the working class and can drive people out of the banking system altogether. In 2022, however, the amount consumers paid in overdraft fees dropped to $7.72 billion, suggesting $150 of savings per household facing overdraft fees. The CFPB, which plans to address overdraft fees via rulemaking, has been sounding the alarm about these fees and the lack of competition in overdraft terms among financial institutions consistent with the Administration’s goal of eliminating junk fees across the economy.  

ICYMI…

• Representatives Pramila Jayapal and Victoria Spartz have reintroduced a bipartisan bill to subject non-profit hospitals to FTC oversight.   
• Senator Amy Klobuchar reintroduced the Journalism Competition and Preservation Act of 2023 (JCPA). The bill would allow for broadcast or digital news providers with less than 1,500 employees to collectively negotiate with online platforms on pricing, terms, and conditions by which certain online platforms use the providers’ content.     
• Apple has capitalized on consumer’s financial fear of small and medium-sized banks and wedged its way into banking through a deal with banking giant, Goldman Sachs.             
• Economic Liberties released an analysis documenting the Wall Street Journal‘s relentless attacks on Federal Trade Commission Chair Lina Khan. 

BRIEFINGS & EVENTS

• On May 4th, Economic Liberties hosted our first anti-monopoly summit. The event hosted speakers such as Senator Klobuchar, NEC Director Lael Brainard, and recorded remarks from President Biden. Nearly 10,000 attendees from the business, labor, and advocacy communities attended. You can check out the full recording here.