US FTC’s Slaughter seeks to examine impact of antitrust enforcement on systemic racism

15 Sep 2020 8:10 am by Max Fillion

FTC building

US Federal Trade Commission member Rebecca Slaughter wants to start a conversation about how antitrust enforcement can reckon with systemic racism.

In a Twitter thread last week, the Democratic commissioner marked her return from maternity leave by tweeting, "YES! #Antitrust can and should be antiracist.”

“I’m not talking about inventing new rules out of whole cloth, or new statutes out of whole cloth,” Slaughter said in an interview with MLex. “I’m saying use the statutes and authority that we have, but we don’t have to use it exactly the way it always has been used."

Slaughter is skeptical of the “consumer welfare standard” — the customary measure of antitrust harm that focuses on damage to consumers via price increases and other economic factors, such as choice and innovation.

She believes a new approach should be considered.

"[A]s long as we are doing what we think is right under the law and good for the consumers that we represent," she said, "then I feel good about it — even if at the end of the day a hostile judiciary says Congress needs to go back to the drawing board on it.”

Progressive academics and advocates — known as the "New Brandeisians" after Louis Brandeis, a progressive justice who served on the US Supreme Court in the early part of the 20th century — are seeking to adjust and expand antitrust analysis, arguing that antitrust enforcers should give more weight to factors such as the impact of corporate consolidation on labor markets or on economic inequality.

Slaughter has expressed concerns about the consumer-welfare standard, and told MLex the doctrine may reinforce systemic racism.

“I think antitrust tries very hard to be value-neutral in a way that other law enforcement doesn’t,” Slaughter said. “And while I understand that goal aspirationally, it is to me a little bit like trying to be race-blind, which is to say it doesn’t work. At the end of the day, being neutral or being blind ends up creating and reinforcing existing problems and I think you have to be open-eyed in order to address them.”

— Starting with data —

Slaughter said she doesn’t yet have a fully formed plan, but she would like to start by engaging with experts such as agency staff, civil society advocates and academics to get their ideas on the role of antitrust analysis in fighting systemic racism.

She also sees a need to gather data so the FTC can better understand who is on the other side of its enforcement actions and how they might be affected. For example, in anticipating whether a merger could raise costs, Slaughter said the FTC could examine to what extent the victims from lack of competition are minority-owned businesses or people of color.

“The idea that we get data in the context of mergers and conduct investigations is not new,” Slaughter said. “We get lots of data, including data about the victims, or the alleged victims of anticompetitive action, the customers of the parties that are merging, the suppliers of the parties that are merging. ... Whether and how we get additional data is an open question to me.”

Slaughter said price increases hit lower-income consumers harder, and to the extent that lower-income consumers are disproportionately people of color, they experience greater losses from competitive harm.

Slaughter said it's possible that a rule-of-reason analysis — weighing the advantages of a merger against its disadvantages — could more closely examine who benefits and who is hurt.

“If you’re benefiting, you know, for example, rich white consumers at the expense of poor minority consumers, that seems at least like there is at least an argument to be made that that’s not a valid pro-competitive benefit under the rule of reason.”

— Enforcement prioritization —

Slaughter reflected on how her agency could address systemic racism. She said that an analysis of industries would probably make more sense than looking at different geographic areas within the United States — but she also acknowledged that she was “shooting from the hip” and would like to see additional data.

“[M]y gut is that types of businesses might be a more fruitful mine than geographic considerations because obviously we have people spread out all over the country,” Slaughter said. “We don’t have geographic pockets exclusively of black and brown people, although certainly there’s plenty of de facto segregation in how our communities work. But I think lines of businesses might be more fruitful.”

Slaughter cited franchises and healthcare as areas ripe for analysis.

People of color often have poorer health outcomes, she said. When the FTC’s healthcare division conducts an antitrust analysis, it considers price, innovation and quality. When the quality of care being delivered to people of color is lower, that merits consideration from a competition perspective, Slaughter said.

Likewise, she said, franchises are disproportionately owned by people of color, and said franchisors can wield power over franchisees that is potentially anticompetitive.

— Rulemaking —

In her Twitter thread, Slaughter said that the FTC could engage in a rulemaking process to craft regulations that address racist practices. Slaughter has also said the FTC should restrict non-compete clauses in employee contracts.

The "most problematic [non-competes] are the ones that limit worker mobility in fields that are also disproportionately populated by workers of color,” Slaughter told MLex. “Going after non-compete clauses and how they’re being used anticompetitively can be a way to help that worker population in a way that’s valuable.”

— Next steps —

The FTC held a hearing on the efficacy of the consumer-welfare standard in November 2018, but the agency has largely left the doctrine alone.

Slaughter said she hasn't engaged her fellow commissioners on her new effort, as she just returned from maternity leave last week. Also, when working from home during the coronavirus pandemic, “it’s a lot harder to have the kinds of conversations that you can have when you work down from the hall from somebody and can stop by and chat.”

But her ideas could pick up steam if New Brandeisians gain traction, and they have made progress, as recently seen when the US House investigated Big Tech companies. A potential left-leaning shift in ideology looms with the possibility of a change in presidential administrations. Democratic presidential candidate Joe Biden could give the progressives more influence, and the time could become ripe for new legal theories.

Slaughter said that any policy changes will necessarily result from input from a number of constituencies.

“I think it requires collective contribution and discussions, so I’m [offering] my best thoughts and best ideas, but that’s just to start,” Slaughter said. “I really want to hear from other people about their ideas and help me refine and improve my thinking.”

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