Washington, D.C. — With mounting evidence that corporate power is a key contributing factor to record-high inflation, Economic Liberties today released model legislation designed to stop large corporations from illegally colluding to raise prices or keep wages down. “How Policymakers Can Stop Monopoly Price Hikes” describes the legal context that enables corporate profiteering by monopolists, and includes the specific legislative language policymakers at the state and federal levels can use to address tacit and explicit forms of price-fixing collusion. It is authored by Economic Liberties’ Krista Brown and Matt Stoller with contributions from Berger Montague’s Eric Cramer, University of Baltimore’s Robert Lande, and EconOne’s Hal Singer among others.

“Corporate America’s inflation blame game would be easier to believe if it didn’t just have its most profitable year since 1950,” said Krista Brown, Senior Policy Analyst at the American Economic Liberties Project. “The problem is corporate power – and the many ways dominant firms in concentrated markets can collude to keep prices high and wages low. We can put money back in the pockets of working families by reinvigorating the laws meant to take on price-fixing and collusion.”

Research suggests that some of the dramatic price increases seen across the economy today are not legal. Nearly every industry in the United States is controlled by a few dominant firms that can engage in coordinated price hikes and wage suppression without triggering obvious alarm among antitrust enforcers. These cartels are effective at keeping prices high and wages low. Indeed, the best modern scholarship shows that cartels raise prices by an average of 49% while a recent report from the U.S. Treasury Department found concentrated power has suppressed workers’ wages by roughly 20% on average, and by almost 30% for lower wage workers. These dominant firms are rarely held accountable; even very conservative scholars believe that antitrust enforcers catch only 20% to 30% of illegal cartels in the U.S.

“How Policymakers Can Stop Monopoly Price Hikes” takes this problem on directly. The proposed legislation has five parts, including: 

• Section 1, which simplifies the process of proving a price-fixing conspiracy by shifting the burden of proof on defendants who engage in parallel pricing and other conduct consistent with conspiracy to show that they are not, in fact, working to fix prices;
• Section 2, which fill an important gap in the law, namely, where plaintiffs allege circumstantial evidence of collusion, but where such evidence may be consistent with “conscious parallelism”;
• Section 3, which confirms for courts that defendants who violate price-fixing laws may be barred from working in the industries in which they broke the law, either indefinitely or for a period of time;
• Section 4, which prevents plaintiffs from being forced to pursue allegations of violations of the price-fixing laws through arbitration, rather than litigation; and
• Section 5, which broadens a whistleblower program for those who see companies conspiring to violate the antitrust laws.

This legislation complements other efforts to fight rising prices, including recently introduced legislation from Senator Bernie Sanders to tax excess corporate profits and a rulemaking process started by New York Attorney General Tish James to take on price gouging.

Read “How Policymakers Can Stop Monopoly Price Hikes” here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.