The Trust-Busters Are Back

Florian Ederer thought a skiing trip would offer a break from his day job monitoring the dangers of concentrated corporate power.

Even the slopes, it turns out, have become fertile ground for duplicitous duopoly.

So Ederer discovered when he tried to book a free ​“Epic” pass for his 5‑year-old daughter. That used to be easy; he could buy passes online along with paid tickets. Now he had to schlep to a ticket window.

It didn’t used to be that way before Vail Resorts bought up local ski resorts like Okemo Mountain, where the Ederer family was headed. Controlling the market, Vail faced little pressure to care about customer service, to make any not-for-immediate-profit transaction easy.

The ski industry has undergone ​“a massive consolidation,” Ederer noted. ​“We’re moving to a duopoly situation.”

Ederer knows about such situations. The Yale School of Management economist spends his days researching, teaching, and writing about them. He’s been focusing on that subject for over a decade. 

That used to make Ederer someone to avoid at cocktail parties. Who cared about antitrust?

Then some people started talking about hospitals buying up other hospitals and doctor practices. Even more people began railing against big tech companies abusing their power, snapping up or shutting out competitors and preying on consumers’ privacy and e‑wallets. Politicians from right to left were calling for action.

Then came the November Taylor Swift debacle: Live Nation / Ticketmaster stranded fans online for hours, crashing a website and bungling refunds when concert tix went on sale. National outrage led to calls for the undoing of a merger that created concert-broker colossus; U.S. senators like Connecticut’s Richard Blumenthal called for hauling Live Nation execs before the cameras at a Capitol hearing. (“Let them come to the United States Congress to blame Taylor Swift. I’d like to see that,” Blumenthal remarked.)

As Ederer’s ski non-break illustrated, the impact of corporate consolidation can be seen practically everywhere. After decades on the run, the trust-busters are back. And Ederer has become not just a welcome cocktail party conversation partner, but a pundit as well.

He’s encouraged to see the country revive interest in tackling antitrust. The need is pressing, he noted — but applying 132-year-old legal principles to a modern framework can also sometimes prove as slippery a slope as a Vail-controlled snow-covered mountain.

“The antitrust revolution is well underway,” Ederer said during an interview on WNHH FM’s ​“Dateline New Haven” program.

Much public attention has focused on Big Tech-rein-in legislation proposed by U.S. senators ranging from Josh Hawley on the right to Amy Klobuchar on the left.

Those proposals haven’t yet advanced to final votes. They might not ever get there.

The more significant action is taking place elsewhere: In private lawsuits filed by smaller companies against tech titans like Apple seeking the ability to compete on a level competitive field. And in regulatory reviews and court actions taken by the Biden Administration’s Federal Trade Commission (FTC) and Department of Justice (DOJ), which successfully blocked Penguin/Random House’s purchase of Simon & Schuster and currently seek to block companies like Meta and Microsoft from purchasing potential competitors and consolidate industry control. President Biden has issued an executive order requiring federal agencies to work to increase competition. In just the past two days, news headlines have reported an FTC move to bar labor noncompete agreements and consideration by the Defense Department about whether to take action to stem the industrial consolidation believed to have weakened the nation’s ability to move quickly in supporting Ukraine in its war with Russia.

In some ways, the issues are the same as when antitrust law got started in 1890 with the passage of the Sherman Antitrust Act, Ederer said: Too few companies controlling a marketplace enables them to harm consumers and limit innovation by strangling competition in what is designed to be a free marketplace.

In other ways, the questions once applied to corporations like Standard Oil or Carnegie Steel become more complicated when applied to, say, software companies or social media platforms. Preventing the same company from owning both print newspapers and TV stations in a local market once seemed necessary to allow other voices to be heard; modern technology has dropped barriers to entry and allowed continual new models and ​“disrupters” to compete.

So while he roots for trust-busters to rein in excesses, Ederer is most excited about seeing these important nuances hashed out.

Take the Biden FTC’s effort to block Microsoft’s proposed merger with the Activision gaming company.

Historically, the clearest antitrust route to stop such a merger is proving that the deal would stifle ​“existing” competition — that it will become harder for inventors of new video games to enter the market, forcing consumers to pay more for fewer options.

“I’m not sure there’s huge consumer harm about Microsoft buying Activision” in the immediate term, Ederer said.

“But what you think about: What is the next big thing in gaming? Probably cloud gaming where you can game directly from your phone. You don’t need a desktop computer. Once you have cloud gaming, you need content to have it all there. How do you populate it? Ideally with content games from a studio like Activision.”

So the focus in such suits will move more toward harm to potential rather than existing competition, he said: That’s harder to prove, but still important.

So is the issue of collusion. 

Take a current lawsuit filed by renters charging that the country’s largest property managers are colluding as a price-fixing cartel that artificially raises rents through use of software sold by Texas-based RealPage rather than allowing the free market to respond to supply and demand. (Click here to read a ProPublica exposé that first brought the matter to public attention.) 

Section 1 of the Sherman Act banned explicit collusion. Corporate leaders can go to prison for overtly agreed to jack up prices through private agreements.

Once again, the question here is subtler, while still consequential, Ederer said: The case will more probably depend on whether plaintiffs can prove ​“tacit collusion” among the parties and then prove that that has had a negative impact. Success wouldn’t land people in prison, but would lead to the government requiring changes that benefit the public.

He called the RealPage suit a ​“very interesting” test case about implicit collusion.

“This is not explicit collusion. This is not you and I agreeing to not lower prices. Rather it is algorithm-assisted. … It’s not a super clear violation. …

“There are aspects of this that look like tacit collusion that’s harmful to consumers. On the other hand, it seems to be part of the software the corrects biases that rental agencies have … It turns out what rental agencies really don’t like is vacancies. They used to get rid of those vacancies by renting lower. The software told them to increase the prices.”

However the grey questions get settled, the nation needs this antitrust reckoning — and can get it as long as regulatory authorities have the money they need to force it.

“There is going to be pushback along the way. It will take some time. It will take some judicial education also. Judges are not trained necessarily to do antitrust cases,” Ederer said. He said that attorneys and economists on both the left and right agree that funding is needed; it’s less clear that purse string-controlling politicians funded by corporate interests will agree. 

Meanwhile, in seeking a response about his daughter’s free skiing pass, Ederer discovered one tool everyday citizens have to penetrate corporate consumer bureaucracies: Tweeting. Sometimes someone does answer, even in the age of duopoly.

Click on the video above to watch the full conversation with Florian Ederer on WNHH FM’s ​“Dateline New Haven.”

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