Biden’s antitrust approach will hurt small businesses and raise prices at the point of sale

From day one, the Biden administration has pursued an aggressive antitrust agenda, wrongly arguing that the concentration of market power is inherently harmful to consumers and the economy as a whole. This flawed approach will ultimately hurt small businesses and burden consumers with higher prices.

From social media to grocery stores, airlines, virtual reality and robot vacuum cleaners, Biden’s antitrust agenda has cast a wide net. A key feature of this administration’s approach is its willingness to embrace new theories of harm and to depart from long-held principles.

For example, in 2021, the Federal Trade Commission rejected the consumer welfare standard, which essentially stated that FTC actions should prioritize the general welfare of the consumer over all other criteria. Although this is a fairly intuitive principle, FTC Chairwoman Lina Khan and other Democratic commissioners have called the standard “too restrictive.”

Ironically, the consequences of this new approach will place a greater burden on those the Biden administration claims to protect: small businesses and consumers.

For example, between the regulatory changes and the FTC’s lawsuit against the Meta-Within acquisition, the Biden administration has sent a message that mergers and acquisitions will be subject to additional antitrust scrutiny in the future. Ultimately, this will deprive companies that choose to innovate and target niche or risky markets of a valuable exit option. Indeed, in the wake of the Meta-Within case, it wouldn’t be shocking if venture capitalists avoided investing in virtual reality development studios altogether, since an acquisition by a larger company would likely be subject to antitrust scrutiny.

The Biden administration’s antitrust agenda has also affected more traditional and established markets. For example, the Justice Department’s decision to block the merger between Spirit and JetBlue threatens to upend the travel industry. Spirit Airlines sought the merger to address debt problems, and its fallout could reduce the supply of low-cost alternatives as all of Spirit’s flight capacity disappears. And as anyone who’s taken Econ 101 knows, a sudden drop in supply amid static demand would inevitably lead to skyrocketing prices.

Antitrust regulators justify their hostility to M&A with the myth of a “death zone,” where large companies acquire rivals to maintain their dominant position, especially in the technology industry. But that approach often ignores the fact that M&A is a valuable lifeline for small companies and a key driver of innovation in the economy. As with Spirit or iRobot, M&A can help companies shed significant debt, give them cheaper access to capital to expand production, or consolidate resources to deliver higher-quality products.

For other small businesses, mergers allow them to operate with a longer-term perspective, since they are no longer constrained by the pressure to make short-term profits. They also encourage higher capitalization through venture capitalists, who are more willing to fund risky ventures when they can cash in on short-term success by selling them to larger companies.

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These are just a few examples of how the Biden administration’s antitrust agenda will ultimately hurt consumers and small businesses. While some of the program’s shortcomings could be easily fixed with a change in administration or personnel, some of these enacted policies could leave structural damage with long-term consequences. For example, the rejection of the consumer welfare standard will likely change antitrust enforcement for years to come.

Curbing the whims of unchecked bureaucrats should be a priority for the next Congress. Codifying a consumer welfare standard in law would be a welcome first step toward repairing the damage that has been done.

Juan Londoño is a senior policy analyst at the Taxpayers Protection Alliance.