Anti-Merger Guidelines Would Stop Corporate Concentration, Revive Local Economies

Building Local Power

On this episode of Building Local Power, host Jess Del Fiacco is joined by John Farrell and Stacy Mitchell, Co-directors of ILSR, and Ron Knox, a Senior Researcher on our Independent Business team. The group discusses the Department of Justice and the Federal Trade Commission’s plan to overhaul their merger guidelines.

Highlights include:

• The history of anti-merger laws in the United States.
• How the lack of merger regulation has impacted workers, consumers, and our democracy.
• ILSR’s recommendations that detail how we can change merger guidelines.
• How new merger policy could revitalize local economies.

“The Great Depression was in large part, and the stock market crash, driven by the merger and concentration of electric utility holding companies.” – John Farrell

“So you allow these mergers to happen and it’s like when Spider-Man shoots a whole spider web at a villain. These mergers shoot a whole spider web at the economy, every part of it, and really tamp down the ability for folks to earn a living, start a business, do all these kinds of things.” – Ron Knox

“I think our chief recommendation was instead of calling them the merger guidelines, we should call them the anti-merger guidelines in keeping with Congress’ intent and being clear about the new direction and policy that at least we’re hoping to see.” – Stacy Mitchell

Related Resources

Transcript

Jess Del Fiacco:	Hello and welcome to Building Local Power, a podcast dedicated to thought-provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving equitable communities where power, wealth, and accountability remain in local hands.
Jess Del Fiacco:	And hello everybody. Today we are going to talk about merger policy. If you’re thinking, “I am not an economic policy wonk. I don’t want to hear about merger policy,” don’t turn the episode off because it is going to be a great conversation. And I promise it’ll be interesting for everybody. Joining me to talk about this are my colleagues, John Farrell and Stacy Mitchell, who are co-directors of the Institute for Local Self-Reliance, as well as Ron Knox, who is a senior researcher with our independent business team. Welcome to the show everybody.
Ron Knox:	Hey, Jess. Thank you.
Stacy Mitchell:	… be here.
Jess Del Fiacco:	So I can just give a little bit of a background, I think, before we dive into questions, although I’m sure I won’t do as good of a job as everybody else will on this call, but I will do my best. So the Department of Justice and the Federal Trade Commission recently announced that they’re going to overhaul their guidelines around mergers. And ILSR has submitted comments, which detail basically how these guidelines should change in order to stop corporate concentration and support a more decentralized economy. So with that kind of context, I think I’m actually going to start with asking Ron and Stacy to talk a little bit about the history of anti-merger legislation in the US and how this enforcement has changed pretty dramatically over the course of the 20th century.
Ron Knox:	Yeah Jess. Thanks. So there is a lot of history, of course, behind the reason that we look at mergers in this country, the reason we prohibit mergers that would be bad for the economy, for workers, for small business, and for communities, but I think it’s important to understand what the result is when we don’t do that very well, when we don’t stop those mergers. Like I think about beer a lot, not just because I enjoy beer. I do. But I also think about it because it’s a great example of how corporate concentration has really gotten out of control in this country and why. So for a long time, we’ve had two really dominant brewers, right? We have Budweiser, we have Miller Coors who are the same company now. And that’s always been the case, but for a good solid decade, over the last 20 years, we had this explosion in craft brewers. All this amazing choice.
Ron Knox:	And then what happens? Then you have the big brewers suddenly start to buy up some of these really nice, small, independent brands. You push them out to stores, push them out to their distributors, who of course get the beer to shelves and into bar taps. And suddenly you end up with not real choice, but this illusion of choice and real small, independent craft brewers get pushed out of the market. They can’t find the shelf space and they can’t get to their customers. And that’s all because of mergers that largely went unchecked and uncriticized by our anti-trust agencies. And that’s just one example. There examples in everything else that affects our lives. We think about the meat we buy in the grocery stores. We think about the cell phones we use to talk to one another and to get our information and so on.
Ron Knox:	These are all really great and once very vibrant industries that have been concentrated down to massive corporate power through mergers. It’s the kind of thing that we used to stop. We used to prevent in this country and we have a vibrant history of doing so. And that’s kind of fallen by the wayside over the last four decades or so. Stacy, do you want to talk a little bit about the history of kind of where we were and where we are today?
Stacy Mitchell:	Yeah. Absolutely. I mean, in some ways it’s like almost helpful to like just state how we think about mergers today, right? So there’s this idea that companies, they want to merge and the federal anti-trust agencies and the courts, they say like, “Is this merger going to be good for consumers? Like we assume it’s going to be good for consumers because like bigger is better and scale is good. And only if we can really find like clear cut, very detailed evidence that it’s somehow going to be bad for consumers, are we going to say no, otherwise we’re going to say yes,” right? Like this is the framework. If you follow the news a little bit, sea mergers talked about like this is the framework that has been the case for decades now. And for most Americans, it’s the only framework that we’re familiar with, which is like a big yes to mergers.
Stacy Mitchell:	And that idea that mergers are a good idea is like actually baked into the current policy and guidelines that the agencies use. If you read those current guidelines, it basically says, “Hey, there are lots of benefits to mergers.” And so that’s the world that we all live in and that few Americans remember a time before. But if you go back, it’s really striking. Ron and I just did this deep looking back at the history around policy on mergers and it’s just a completely different world. So Congress passed, in 1890 and in 1914, laws that govern monopoly issues, including mergers. Those laws sort of limited mergers in some ways, but it wasn’t until 1950 that Congress passed this very strong anti-merger law. And the reason that they did it was that in the aftermath of World War II, there was growing numbers of mergers.
Stacy Mitchell:	And the way that the Supreme Court had interpreted those earlier laws, Congress felt like was not what they intended and it was leaving too much room for companies to be able to merge and not giving regulators enough tools to say no. And so in the late 1940s over a couple of years, Congress looked very closely at this issue of mergers, had a lot of debate and discussion and hearings and so on. And in 1950 passed the Celler-Kefauver Anti-merger Act. And what that law was designed to do is right there in the title, it is an anti-merger law. And it’s so striking to go back and read it because it’s very clear. We don’t want to see more consolidation. We actually want to block additional concentration and we want to create the conditions in which industries could actually become de-concentrated and the reason we want to do that is we think it’s critical for communities and for democracy.
Stacy Mitchell:	And so that was what was on the books. That’s how the agencies and the courts interpreted merger law for decades. And then in 1982, we have a coup. Reagan comes in, a new bunch of thinking, and they basically overturn, through agency issued guidelines, overturn the law effectively by issuing new guidelines that take a totally different perspective on mergers.
Jess Del Fiacco:	I want to talk more about the ties between this anti-merger policy and our democracy and our strong communities. But first, I do want to throw it to John to get his perspective on what this looks like, specifically in the energy sector.
John Farrell:	Yeah. The story of mergers and concentration, electricity business actually has very strong ties with our kind of overall economic health as a country. The Great Depression was in large part, and the stock market crash, driven by the merger and concentration of electric utility holding companies. So you had these very stable monopoly businesses that went out and bought all sorts of other businesses that were unrelated. And much like the mortgage crisis that happened more recently, people bought the stocks of utilities thinking they were very safe investments and these holding companies collapsed under their own weight, basically inflating the value of all these subsidiaries and sort of hiding them behind the captive customers that they had as monopoly utility companies because they were given these designated customer areas by state legislatures.
John Farrell:	So Congress passed, in 1935, the Public Utility Holding Company Act, which was meant to basically prevent this kind of behavior from happening in the future to say, “Utilities, you just need to act as utilities. You can’t mix and match with all sorts of other industries to confuse customers. We need you just to be sort of straight laced and narrow.” And in 2005, not too long after we lifted a lot of other restrictions on mergers and finance for example, we also had the Energy Policy Act that overturned the Public Utilities Holding Company Act and has enabled a wave of mergers in the utility industry where you now have utility companies that have tens of millions of customers in many unrelated parts of the country and you have a lot of problems with the way that utilities are essentially privatizing the wealth of these publicly granted monopolies through these merger deals that they make with one another.
John Farrell:	So transferring that wealth from the public from the government and transferring it to private shareholders. So without getting too much more in the weeds, I’ll just say, there’s a lot of parallels to the merger problems we’re seeing broadly in the economy and what we’re seeing in the energy business as well, which is a huge sector for the economy and of course power is much of what we’re able to do in the rest of the economy.
Ron Knox:	Yeah. I want to jump back in because I think, look, we described a little bit about how we got to this point, but to get back to kind of what I was originally like saying, I think it’s impossible to overstate the effect that this like four decade long wave of corporate mergers has had on the economy, on us as citizens, as workers, as entrepreneur, small business owners. I mean, it just had this unbelievable effect. We think about monopoly power all the time. We talk about monopoly power, but this is how we get to this point. This is how monopoly power comes to exist. It comes to be in lots of different ways, but mergers is like the freeway. It’s like the expressway from a diversified democratic economy to real monopoly power. And so what happens?
Ron Knox:	So you allow these mergers to happen and it’s like when Spider-Man like shoots a whole spider web at a villain. These mergers like shoot a whole spider web at the economy, every part of it, and really tamp down the ability for folks to earn a living, start a business, do all these kinds of things. So I talked about meat before. So you look at meat packing. What happens when you end up with all of these mergers in meat? Like a staple of the American diet and a staple of the economy, especially in kind of far flung, rural parts of the country. So what happens? So at the moment, three or four massive meat processors control every kind of slice of the meat industry, whether it’s beef or pork or chicken or whatever. They got that way because of mergers and when those mergers happen, you end up with these massive companies that have what we call buyer power.
Ron Knox:	They control the price that’s paid for, in economics talk, it’s like inputs, but what are we talking about? We’re talking about the price you pay for cattle, the price you pay for pork that’s coming from farmers. So you have all these family farmers out there who are already scraping by, trying to make a living, struggling in what is a very difficult industry. And then suddenly, the only place that these farmers and ranchers can sell their livestock is essentially one company or maybe two companies. And they can absolutely dictate the price that’s paid for these products. And so what happens? So you have family farmers go out of business, you have family farmers sell their farms to these massive farming conglomerates, which is the only way that they can turn a profit, and you end up with an absolutely fractured rural economy and farmers who are hurting. Right?
Ron Knox:	Then you go to supermarkets. Okay. So what happens? So you have all of these mergers in the supermarket sector and these supermarkets end up with this massive buyer power. They have suppliers that sell into the supermarkets, just small businesses or whatever. Folks that sell produce or sell refined goods or whatever. And you have these supermarkets who could absolutely dictate the price, not only the price that they pay for these things, but they can dictate the winners and losers in an entire economy. And it’s the same for workers. Workers are just an input. If you’re a worker who works in a farming community and you want to work in a meat processing plant, you probably really only have one option for that.
Ron Knox:	And so that plant and that company can dictate your wages, what your working conditions are like, all of those kinds of things and you end up with these exploited communities of workers out there who have no other option, but to go to work every day for low wages in really dangerous conditions, places where they’re massive COVID outbreaks, all these kinds of things. It just has a snowballing effect across the economy when you let these mergers happen. And that’s what we’ve seen for the last 40 years or so. And that’s what changing these guidelines is really intended to help.
John Farrell:	I love that you touched on sort of all of the different components from like how you as a worker can get screwed by this, how as a consumer you’re going to pay more for food, how as a producer you’re going to have trouble getting your products to market. There’s one other thing I think from the energy sector that is sort of a useful lesson here is like we also lose access to our like political leaders. That utility companies, for example, are among the biggest donors to state legislatures and state legislative campaigns. And they undercut then the ability of our regulators to actually control and manage the size of these companies. They sort of become too big to be properly accountable. So I think there’s a cost across the entire economy when companies get too big and the merger guidelines are at the heart of that.
Stacy Mitchell:	Fascinating to me going back and reading a lot of the congressional record from that 1950 law, it is almost entirely focused on the political implications of consolidated power. And in the world we live in where we talk very narrowly, not even about economic implication. We talk very narrowly about consumer prices. And so narrowly even that we have mergers that directly harm consumers that get through even we’re so narrow about it, but you go back and look at that legislative history and they touch some on the economic issues, but mainly it’s about political power and this notion that if you want to live in a democracy where people control their own fate, then you have to decentralize economic power. There’s a great quote that we have in our comment letter to the agencies from Senator Estes Kefauver who is the lead co-sponsor of the bill.
Stacy Mitchell:	He says, “Through monopolistic mergers that people are losing power to direct their own economic welfare. Local economic independence cannot be preserved in the face of consolidation, such as we’ve had during the past few years. The control of American business is steadily being transferred from local communities to a few large cities in which central managers decide the policies and the fate of the far flung enterprises they control.” It is really a message of local self-reliance and democracy that’s embedded in that. And it’s amazing to me, looking at that legislative history, to think of like how the hubris of the people who came in the 1980s and we’re just like, “Nope. We’re just going to erase all that, write our own rules, and write a pro monopoly policy in the face of very clear direction from Congress.”
Ron Knox:	And it’s wild to go back and read some of that stuff from the ’80s because literally there are people who were like, “Yes we know what Congress said. Yes we know what they were trying to do, but we don’t care now. We’re just going to do the other thing because we think we’re right and we think this is better.” It’s very like anti-democratic by its very nature. Not only in what it was trying to do, which is overturned the will of Congress, but also in its effect in that it kind of like de-democratized the economy and put a lot of power in very few hands.
Jess Del Fiacco:	Yeah. I feel like we’ve implied this, but I don’t know if we’ve explicitly really stated. I mean, is it correct to say that mergers are just out of control? Like if this is a highway to monopoly power, like I don’t know. There’s no speed limit. I don’t know how to change that imagery to fit this, but like is that correct?
Ron Knox:	Yeah. I mean, that is correct. I wrote an article for the American Prospect late last year really talking about this. So this is not hypothetical. The merger wave that we have experienced for the last four decades is now at its Zenith. It is absolutely the most breakneck pace of corporate mergers America has ever seen. At one point late last year, the federal agencies were having to review 12 mergers a day. That was the number that was coming across their desk. Unbelievable pace of mergers. Why is this happening? In some cases, a lot of really big powerful companies who are sitting on big piles of cash throughout the pandemic and waited for other companies to start struggling and then they’re buying and they’re not buying to just spend the money, they’re buying to acquire market power.
Ron Knox:	And that’s what we’re seeing at the moment. The agencies are really struggling under the weight of all these mergers. And I think these new guidelines, the idea of changing the guidelines, is to not only create some structure around the way that mergers should be reviewed in this country and the way that corporate consolidation should be thought about, but also, as a signal to corporate America, like you have to stop. Some of these cannot happen. And we can start talking about this. I don’t know, Stacy, if you want to start to get into this, but the way that you stop some of these mergers and you blunt the force of this wave of mergers that we’re experiencing is you create structural boundaries where you tell corporate America, “Look, if you’re concentrating an industry beyond this point, forget it. Don’t come to us because we’re going to tell you no and we’re going to sue you and we’re going to go to court and we’re going to win.”
Ron Knox:	That’s really the idea behind the guidelines and that’s some of our, we hope that’s the idea behind the guidelines. I shouldn’t say that. That was the idea behind our recommendations to the agencies about like what they should do to actually stop some of these bad mergers from happening. But Stacy, I don’t know if you want to talk more about that.
Stacy Mitchell:	Yeah. I mean, I think our chief recommendation was instead of calling them the merger guidelines, we should call them the anti-merger guidelines in keeping with Congress’ intent and setting like being clear about the new direction and policy that at least we’re hoping to see out of Washington, but yeah and that’s absolutely right. Like this wave, it’s hard to describe and it’s strange that we’re at this moment of a resurgence of interest in anti-monopoly policy. We are experiencing one of the biggest pushes by corporate America to consolidate power. And I think the reason that rewriting these guidelines, this policy, has been such a top priority at the Department of Justice is anti-trust division and at the Federal Trade Commission is just exactly what Ron was saying. Like we need to try to figure out how to put a halt to this and really slow this down.
Stacy Mitchell:	One of the recommendations that we made and I think was certainly echoed in other comment letters was this idea that we need to have some bright line rules that say, “Look, if a market is highly concentrated or if the companies that want to merge have a lot of market power or they’re very large, any of these sorts of triggers that above those thresholds, the answer is no.” That that is just presumed to be illegal and those mergers are treated as presumptively illegal. And therefore, the agencies don’t have to spend a lot of time analyzing those mergers. They can save those staff resources to address a set of mergers that don’t clear those guidelines.
Speaker 5:	We’ll be right back after a very short break. Thanks for listen to our show. If you’re enjoying this episode, I hope you’ll consider heading over to archive.ilsr.org/donate to help support our work. Your donations not only make this show possible, but you’re also helping support our work across all of our programs to build local power in communities across the country. Head over to archive.ilsr.org/donate to contribute today. Any amount is sincerely appreciated. And even if you can’t donate right now, you can support us in other ways, such as by rating or reviewing the show over at Apple podcasts or wherever you listen to your podcasts. Those reviews make a huge difference in how we can reach a wider audience. Thanks for listening and now back to the show.
Jess Del Fiacco:	I’m curious if you, maybe Ron, what else are we calling for in our recommendations for anti-merger guidelines?
Ron Knox:	Well I’ll just name three things I think really quickly that I think are really important. So one is obviously the structural piece that I talked about before. So we’re calling for the agencies to essentially reinstate some really clear, bright line, structural limits on mergers. And when I say structural limits what I mean is mergers that would concentrate an industry beyond a certain point should be considered illegal. And that if companies bring those kinds of mergers to the agencies, these guidelines are telling the companies the agencies are going to sue to stop it and you’re going to have to go to court and we’re going to fight it out in court. And the hope is that’s usually enough to deter these kinds of mergers from happening. And the reason is because as Congress knew and understood in passing the anti-merger laws and as the agencies correctly noted in the original merger guidelines, which were published in 1968, bad industry structures lead to bad outcomes. They lead to bad behavior.
Ron Knox:	So if you have an industry that’s an oligopoly, that just means there are three, four companies that absolutely dominate, you tend to have bad outcomes throughout the economy that I described. Bad outcomes for workers, bad outcomes for small businesses that have to interact with these companies, bad outcomes for shoppers, bad outcomes for communities, right? High prices, low wages, all the things. So rather than having to go through these mergers one by one at the agency level and say, “Okay. What do we think this merger’s going to do? What do we think? The companies are telling us it’s going to be okay. It’s going to be more efficient. They’re going to save money. What do we think?” Instead of doing all that, which is a waste of time and money and resources and you’re also having to look into a crystal ball and try to figure out what a merger’s going to do, instead and you just say, “No.” You just say, “If there are five massive companies in an industry and this merger’s going to reduce that number by one, you’re going to leave four, forget it. Don’t bring it to us. We’re not going to do it.”
Ron Knox:	So I think that’s one recommendation. A second that I think is really important is a renewed and maybe heightened emphasis on the potential for what we call vertical mergers to harm competition. We say vertical mergers we mean mergers between companies at different points in industry. So one company that makes car parts merging with an automobile manufacturer, for example, but you know what I mean. At the moment, the current guidelines essentially say, “All of these mergers, they’re not only not bad. They’re often good and they lead to all these efficiencies.” I’m not going to get too into efficiencies, but it’s basically corporate speak for we’re going to make more money and it’s fine, to give you a short answer. So these mergers happen. And even when the government tries to challenge these mergers in court, which they have over the last five, six years, they often fail. Largely because the guidelines say, “They’re fine. Don’t believe it. Don’t believe that these things are going to be bad.”
Ron Knox:	And the result has been increased industry concentration, corporate concentration, more power in the hands of a few very powerful corporations that then have the ability to really close off industries to new companies, outside competition, and so on. So we think they’re quite bad and we think that the new guidelines really need to reflect that. And the third thing is, kind of like I mentioned earlier, we want there to be a spotlight on this idea that mergers can create buyer power, the power for massive corporations to control the price that are paid for everything from labor to raw goods to farm goods to all those kinds of things in the economy. We think that that’s really the kind of power that tends to hurt small, independent businesses and to really drain resources and money out of communities and leave communities more hollow, more reliant on massive out of state corporations and so on. So we think that the agencies should really be focusing a lot of their analysis of mergers on the possibility for those mergers to create really powerful buyers in the economy.
Jess Del Fiacco:	Stacy, did you have anything else you wanted to add about our recommendations?
Stacy Mitchell:	Well I realized that we’re going into a list, which is exactly what you wanted to avoid. The two things that I would say is one of the things we talk about is that the agencies should look at the overall health of a market or an industry. And in doing that, they should look at, are there a diverse mix of businesses of different sizes? Is it easy for new businesses to start in that market? So really we’re kind of bringing back a lot of the original goals that Congress laid out in 1950, which was this idea of decentralized markets with lots of local, small businesses, lots of competition for labor and therefore higher wages, all of those kinds of ideas. And so one of our recommendations to the agencies is not only to look at the two companies that are merging, but to really look closely at like whether the market that they’re in is actually a healthy market.
Stacy Mitchell:	And if not, that’s really a merger that should be scrutinized. And then the other thing I would name is that we’ve said a no remedies policy. And for people who aren’t familiar with this notion of remedies, like the agencies have become very, not only do they not challenge huge numbers of mergers, but even if they feel like one is going to be problematic, what they more often than just saying no or trying to block it is that they impose a remedy and they say, “Oh, okay. Well just don’t behave this way and we’ll monitor you over time just to make sure you don’t behave in that negative way with your market power.” And the evidence is that corporations merge and then they violate all of that stuff and there’s no putting the genie back in the bottle, right? These remedies are not in fact remedies, they don’t fix anything. And so one of the things we’ve really called for is stop doing that. If a merger is bad, you should just block it period. There’s no solution to it.
John Farrell:	That’s actually really interesting because there are parallels in the electric industry. There’s a pretty egregious example where Pepco, which is a fairly large utility that has since been subsumed by another one, but bought a smaller utility in Maryland. The regulators were concerned about sort of the balance of benefits for shareholders and customers. So Pepco said, “Well we’ll give everybody a rate credit of like $50 in the next year off their electric bill.” And then subsequently went in and asked for a rate hike that ate out the entire rate credit, which was approved. And so it’s just a perfect illustration. And there’s routinely in these merger guidelines and Scott [Hamling 00:28:11], who was a guest on Building Local Power last year, talked about this. There’s sort of this like buy off provision essentially where they say, “Okay. We recognize that shareholders are going to get like a billion dollars in benefits from this.”
John Farrell:	“So we want you to give like 10% of that to the customers in these short-term benefits,” and sort of ignoring the fact that those companies can come right back to regulators and often do and ask for a rate hike of the cap. And these are captive customers. They don’t have choices. In the electric industry it’s particularly egregious because you don’t have competition at all. And then these merged companies simply can continue to milk the cow of the captive customers. So it really is incredibly problematic to assume that it will be sufficient to have oversight as a substitute for keeping companies of a manageable size.
Ron Knox:	And I’ll just point out that these short-term benefits that the companies often promise the regulators to let these mergers through, they don’t happen half the time anyway. Particularly when it comes to things that really benefit communities, like we’re going to create jobs, we’re going to do these kinds of things. Once the deal closes and it’s out the door, that’s it. The companies can then do whatever they want and they tend to do that, which is why this no remedies policy that we’re advocating for we think is so important because you can’t go back and undo it. I mean you can, but that’s much harder than just saying no in the first place.
John Farrell:	I just want to say that it’s sort of like problems you have with parenting. It’s like once you give your kid permission to do something, it’s a lot harder to go back and be like, “Actually I don’t want to let you eat candy at five o’clock every day,” than it would’ve been to say no in the first place.
Ron Knox:	Yes. Correct.
Jess Del Fiacco:	So we’ve talked a lot about the consequences of bad merger policy, but I’m curious just in attempts to end on an optimistic note here, like say the agencies read these comments from us and they’re like, “Great ideas. We’re going to do all this.” What would that change in different industries or for local economies if we were to have stronger anti-merger laws? And anybody can feel free to jump on that.
John Farrell:	I think one of the things is that electricity is an essential service for all of us. You need it to power your devices, to refrigerate your food, to provide heating and cooling to your home. Utilities turned off the power millions of times during COVID for people who couldn’t pay their bills because they lost their jobs. And we have found, in two examples, a recent study by Center for Biological Diversity and some research by the Institute for Local Self-Reliance, that it’s larger utilities that tend to shut off the power more like on a per customer basis than smaller utilities. So one of the potential significant benefits here, and it has, I want to just emphasize it’s sort of a two phase benefit. One is they’ll stop turning off the power to people who can’t afford it to be off, right?
John Farrell:	Like you can’t be a participant in the modern economy without power. So number one, that benefits broadly everybody, but number two, it’s specifically important for the most marginalized and vulnerable communities. The folks on the margins, the ones who have high energy bills, the ones who have low income, often communities of color, they’re the ones that get their power shut off the most through these really harsh policies. They’re the ones that take the brunt of the pain from these very large utility companies that are like simultaneously cutting off power to people and increasing CEO compensation. That’s the kind of thing that we can stop if we are more effectively managing the size of the corporations, making them more accountable locally to our state officials, to our local communities.
Stacy Mitchell:	I think that’s absolutely right and one of the things that we said in our comment letter is that the agency should measure success by the degree to which the economy actually de-concentrates. So instead of becoming more concentrated, we want to see industries become less and less concentrated and that’s the key to success. And there’s lots of incredible changes that would happen if that comes to pass. We know for example that in regions of the country and in industries where there are more smaller scale businesses that we see higher wage growth, we see a bigger middle class, less extremes of rich and poor. We also, and we talk a lot about this sociological research in our comment letter, but there’s a whole body of research that finds that communities where there’s a degree of local control over economic resources where you’re not just colonized by Walmart and big outside corporations, but you actually have a local economy that’s controlled locally.
Stacy Mitchell:	That in those kinds of communities there, all things being equal, there are like higher levels of civic engagement, people know their neighbors more, they’re more likely to participate in community events, they even vote more often than people who live in communities that the big outside corporation is the dominant part of the economy. So there’s a ton of upside to actually thinking about how do we decentralize? And you think about in this moment when not only do we have all this consolidation, but we haven’t really touched on yet in this conversation, like our economy is like actually failing, like our ability to buy basic goods and services is like coming to a halt in a lot of sectors and there’s some supply chain issues certainly with COVID, but a lot of, when you start to look, what it is is that we’ve so consolidated production and distribution that we’ve actually got like massive market failures where like just the basic infrastructure of our economy is no longer succeeding.
Stacy Mitchell:	It’s become very brittle. It’s lost its resilience. And so you think about the potential of like a rebirth of businesses and economic activity by controlling corporate power and how beneficial that would be and particularly if we do it right, how beneficial it would be for, as John noted, communities that have been so marginalized by what’s happened over the last 50 years, black and brown communities, rural areas. I mean, there’s a lot that could really come from a concerted like decentralization of the economy policy initiative by the federal government.
Ron Knox:	I’ve got nothing to add. That’s exactly it. De-concentrate the economy and everything benefits, everyone benefits, especially communities and preventing big mergers, big concentrations of corporate power is a great place to start in that process.
Stacy Mitchell:	Also, I want to have a choice about airlines. I live in a small city and like if I want to go to any place, there’s only one option really for me. And just stuff like that is just amazing that we have been living with and tolerating that.
Ron Knox:	And just to put a cherry on that, it’s because of mergers just to make it clear. It’s because of mergers, because of mergers. 20 years ago there were nearly a dozen different national domestic airlines that flew all over the country and could connect smaller places, smaller cities, with bigger places. People had to go for work or just for travel, whatever. Now we have three. One, two, three real like national domestic carriers and then we have a couple low cost carriers that maybe go here and there. And I realize not everyone flies. I realize that an airline ticket isn’t like buying meat at your grocery store, but it all matters. It all matters and it’s all because of mergers.
John Farrell:	But speaking of grocery stores though, I mean, there are so many different ways in which the concentration does affect availability. So we’ve had this like laser-like focus thanks to the sort of like hijacking of our merger policy on the cost of an item, right? So the cost of airfare, the cost of meat, what have you. And yet the problem is availability. So we’ve done research on pharmacies, for example, in North Dakota and found that a robust, independent, de-concentrated economy of pharmacies means there are actually more pharmacies in more places closer to where you live and it happens to be very competitively priced. Grocery stores, right?
John Farrell:	We have these food deserts where people can’t get fresh food because the merged grocery store businesses don’t want to locate in those places, but they’re so big and dominant that there’s no air, there’s no oxygen in the economy to allow smaller groceries in to flourish and to offer those opportunities. You see that in airfare, you see it in cell phone plans, right? Like you go on the internet and it’s like there’s a million different names for cell phone plans, but they’re basically all rolled up as like subsidiaries of the big three carriers and you’re subject to their terms on all of them and all of them cost more than what we would pay in Europe in a truly competitive like mobile phone plan economy. So we have, I think, really good evidence for when markets are competitive we not only get more choice and options and convenience, but we also pay lower prices as well. All of those things are good as consumers that we can get out of this.
Ron Knox:	That’s such a good point. That is such a good point. And one step kind of further, it’s very true that this like merger wave has made the American economy more fragile, less resilient, less able to actually provide all the things that people need. It has made things harder to get. So it’s created food deserts. It’s created places around the country that were once bright and vibrant and like functional places now be essentially Dollar Store and Walmart deserts and so on. But the real impact of this is that you allow these mergers to happen and what that looks like on the ground, the fragility of our economy looks like on the ground, is that you have places like here in Illinois where there used to be a Maytag factory where people earned a middle class living working union jobs.
Ron Knox:	Maytag and Whirlpool merge and suddenly you don’t need that factory anymore. So now not only is the supply chain disrupted, but 1000 people who used to have real good jobs in a factory in a small town in Illinois are lost and they’re a wash and nothing’s coming in to replace those things. And all you have to do is stop the mergers and those twin problems of both harming the overall economy and crushing these small towns, these factory towns, they both stop. And that’s really what we’re trying to get at.
Stacy Mitchell:	I have one last thing on the hopeful note, which is that the fact that we’re having this conversation about merger policy and the agencies are going to rewrite them and this is like back in the news, back in public debate, back part of what everyday Americans are engaged in thinking about and is a very hopeful sign because not that many years ago, the only thing happening around merger policy was happening behind closed doors, controlled by economists and lawyers, very much out of democratic oversight. So that in and of itself is, I think, a really clear sign of the kind of progress that we’re making right now.
Jess Del Fiacco:	Right. And I just want to remind folks who are listening that if you want to dig into our recommendations around these anti-merger guidelines, you can find them linked on the webpage for this episode. Thank you everybody. Any final comments or notes you want to say before we sign off? I know we could probably talk about this for another hour, but we are running out of time.
Stacy Mitchell:	None for me. Thanks, Jess.
John Farrell:	Yeah. Thank you.
Ron Knox:	Yeah. Thanks Jess.
Jess Del Fiacco:	Thanks everybody.
Jess Del Fiacco:	Thank you for tuning into this episode of the Building Local Power podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website. Finally, we ask that you let us know how we’re doing with a rating or review on Apple podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco, and edited by Drew [Birschbach 00:40:33]. Our theme music is Funk Interlude by Dysfunctional. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco and I hope you’ll join us again in two weeks for the next episode of Building Local Power.

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

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