 Under any circumstances, we'd be an honor to introduce our keynote speaker today. But given Senator Warren's topic today, America's monopoly problem and what should the next president do about it, it's truly a privilege for all of us who have voiced concern about concentration of economic power these last many years. Many of you are in this room today. As you all know, Elizabeth Warren is a former law professor. But Elizabeth Warren is not any law professor. She's a law professor who knows how to fight. She picks the right fights and she sets out to win the fights that she picks. Senator Warren won on consumer finance. It looks like Senator Warren will win on too big to fail. In many respects, Senator Warren's focus on corporate monopoly is a natural outgrowth of her work on banking and finance. It's a natural next step. Power in the financial realm and power in the corporate realm are inextricably intertwined. On this immensely important issue of combating monopoly, which is so vital to the health of our democracy as well as our economy, Senator Warren, I believe, is gonna find some allies already in place. As we've heard recently, Senator Frank in a market have won pioneering victories in telecommunications. At least some of these allies will likely be in the Republican Party, as we saw last year when Senator McCain joined with Senator Warren in the effort to bring back Glass-Steagall. As those of you who follow our work at the Open Markets program know, we are very close students of the writings of the great Supreme Court Justice Lewis Brandeis. More than any other person, it was Justice Brandeis who extended the principles of traditional American Democratic Republicanism, traditional American anti-monopolism into the industrial age of the 20th century. As we look ahead to updating these same principles for America's 21st century, our digital economy, Senator Elizabeth Warren is one of the very few people alive today who truly merits comparison with Justice Brandeis. So, ladies and gentlemen, the honorable Senator Elizabeth Warren. Thank you. That was a really generous introduction and I very much appreciated it. I'm gonna have a hard time, I think, living up to a standard like that. But I really do appreciate this chance to come in and visit with all of you. As Barry mentioned, before I was a Senator, I was a law professor. But what he didn't explicitly say is that I taught contracts, secured transaction, commercial law, bankruptcy. All of the courses related to functioning competitive markets. So let me say it now, I love markets, I do. Strong, healthy markets are the key to a strong, healthy America. And that is the reason I wanted to be here today because anyone who loves markets knows that for markets to work, there must be competition. But today in America, competition is dying. Consolidation and concentration are on the rise in sector after sector. Concentration threatens our markets, it threatens our economy, and it threatens our democracy. Evidence of the problem is everywhere. You know, just look at banking. That's where I usually start this one. For years, banks have been in a feeding frenzy, swallowing up smaller competitors to become more powerful and eventually to become too big to fail. The combination of their size, their risky practices, and the hands-off policies of their regulators created the perfect storm. We know that excessive size and interconnectedness brought four of the biggest banks, brought the biggest banks to the brink of financial disaster. And yet today, eight years after that financial crisis, three out of four of the biggest banks in this country are larger than they were before the crisis. And we also know that two months ago, five of the biggest banks in the country were designated by both the Fed and the FDIC as too big to fail. But the concentration problem and the idea of too big to fail in the financial sector, it gets a lot of attention. But the problem isn't unique to the financial sector. It is hiding in plain sight all across the American economy. In the last decade, the number of major U.S. airlines has dropped from nine to four. And the four that are left standing, American Delta, United and Southwest, control over 80% of all domestic airline seats in the country. And man, are they hitting the jackpot right now. Last year, those four big airlines raked in a record $22 billion in profits. 22 billion, now listen to this, 18 billion alone came from fees for baggage, leg room, and paid toilets. Okay, the last one was a joke, you were supposed to laugh on that. But you see, the fact that you went along with me and thought maybe that had happened, you're thinking, oh geez, I wonder how many million they got out of the paid toilets. Okay, but think about it, what have passengers received in return for those higher costs? Fewer flights and worse services. Airline complaints rose 30% just from 2014 to 2015. And the list goes on. A handful of health insurance giants, including Anthem, Blue Cross and Blue Shield, UnitedHealthcare, Etna, Cigna, control over 83% of the country's health insurance market. Three drug stores, CVS Walgreens and Rite Aid, control 99% of all drug stores in America. Four companies control nearly 85% of the US beef market. Three produce almost half of all chickens in America. Some people argue now that concentration can be good because big profits encourage competitors to get into the game. You know, this is the perfect stand on your head and the world looks level argument. It says there's no competition today, but that's a good thing because maybe it means there will be competition someday. Look, the truth is pretty basic here. Markets need competition now. So I want to talk about five reasons to be concerned about the decline in competition. First problem is that less competition means less consumer choice. When consumers can purchase similar products from multiple competitors, they force market players to constantly seek out new ways to reduce prices and to increase the quality of goods and services so they can attract more of the business. But when companies consume their rivals instead of competing with them, consumers can get stuck with few or no alternatives. Prices go up, quality suffers. Consider Comcast, the nation's largest cable and internet service provider. Comcast has consolidated its position by buying up rivals. So today, over half of all cable and internet subscribers in America are Comcast customers. And last year was Comcast's best year in a decade. But while big telecom giants have been consuming each other, consumers have just been left out in the cold, facing little or no choice in service providers and paying through the nose for cable and internet services. Over a third of Americans who theoretically have access to high-speed internet don't actually subscribe because the price is just too high. And the data are clear. Americans pay much more for cable and internet than their counterparts in other advanced countries. And in return, we get worse service. The second reason for the decline in competition that it should cause concern is that big guys can lock out smaller guys and newer guys. You know, take a look at the technology sector, specifically the battle between large platforms and small tech companies. Google, Apple, and Amazon provide platforms that lots of companies depend on for survival. But Google, Apple, and Amazon also, in many cases, compete with those small companies so that platform can become a tool to snuff out competition. Look at some examples. In 2012, FTC staff concluded that Google was using its dominant search engine to harm its rivals of its Google Plus user review feature. Now, among other things, the staff produced evidence showing that Google promoted its own Google-branded content over its rivals, even though the rivals would otherwise have had top billing through an organic search algorithm. The FTC commissioners ultimately sided against the conclusion of their staff, but the European Commission has moved forward with formal charges on similar allegations, and Europeans may soon enjoy better protections than U.S. customers. Apple has received attention over similar kinds of issues. The latest example is its treatment of rival music streaming companies. Now, while Apple Music is readily accessible on everyone's iPhone, Apple has placed conditions on its rivals that make it difficult for them to offer competing streaming services. The FTC is investigating those issues and deciding whether to sue Apple for antitrust violations. And Amazon has faced similar charges. Last year, groups representing thousands of authors claim that Amazon uses its position as the dominant bookseller to steer consumers to books published by Amazon to the detriment of other publishers and that it extracts a larger share of book profits from publishers. And you know, this has another effect. It discourages publishing houses from publishing riskier books or books written by lesser known authors. There it is. Google, Apple, Amazon have created disruptive technologies that change the world and every day they deliver enormous value. They deserve to be highly profitable and highly successful, but the opportunity to compete must remain open for new entrants and smaller competitors who want their chance to change the world. Third problem created by less competition is that when competition declines, small businesses can just be wiped out and our whole economy suffers from that. Look at what is often referred to as the Walmart effect. Walmart is big and it is powerful. It delivers anywhere from 30 to 50% of the products that Americans consume and it controls over half of the groceries sold in some major cities. Now Walmart's gigantic size gives it a competitive advantage over smaller businesses and often when Walmart moves into town, small businesses collapse because they can't compete with the price leverage that Walmart has built with its suppliers. Walmart is also notorious for the low wages and poor working conditions it offers and the Walmart effect has a similar impact on suppliers as well, often forcing them to cut their workers' wages and benefits to keep Walmart's businesses. But think about what that means. Workers who cannot survive on those wages turn to public assistance, including housing, healthcare and food stamps, public assistance that is subsidized by other taxpayers. Walmart workers alone are estimated to collect about $6 billion a year in federal taxpayer subsidies just to survive. That means those low, low prices that Walmart advertises are paid for in part by high, high tax subsidies that every other American pays for. And in the meantime, Walmart's investors pocket high, high profits. The fourth problem that concentrated markets create is a political problem. The larger and more economically powerful these companies get, the more resources they can bring to bear on lobbying government and lobbying government to do what? To change the rules to benefit exactly the companies that are doing the lobbying. Over time, this means a closed, self-perpetuating rigged system, a playing field that lavishes favors on the big guys, hammers the small guys and creates even more market concentration. This is a big one. And it should terrify every conservative who hates government intervention. Competitive markets generate so many benefits on their own that the government's only role in those markets should be simple and structural, prevent cheating, protect taxpayers, maintain competition. Concentrated markets that are dominated by a handful of powerful players on the other hand, they don't produce those consumer benefits that flow from robust competition. Instead, the benefits get sucked up by a handful of executives and large investors. And their lobbying remains focused on protecting those giant corporations. Government intervention and concentrated markets inevitably becomes more and more complex and technocratic as it attempts to impose complicated regulations in an effort to recreate the benefits of competitive markets. It is costly, it is inefficient, and it plays right into the hands of the big guys because they can afford to throw armies of lawyers at the regulatory process. Small players end up having to shoulder regulatory compliance costs that make it even harder for them to compete while big players use their resources and their political clout to get carve-outs, loopholes, and rollbacks that favor themselves and make it even harder for new competitors or small competitors to survive. Over time, the result is a trifecta, more intrusive government, more concentration, and less competition. Finally, concentration has contributed to the decline of what was once a strong, robust middle class in this country. As corporations get bigger and bigger and bigger, a handful of managers get richer and richer and richer. And God bless, in America, we celebrate success. But what about everybody else? What about small business owners and community bankers? People who used to be able to hold their own with the big guys, but now find it harder and harder to keep up with the armies of corporate lawyers and lobbyists determined to rig the economy against them. What about the employees at Walmart who scrape by on help from the food pantry and Medicaid, but who never have an opportunity to build any security? What about them? They're just stuck. Concentration is not the only reason for rising economic security, but it sure as heck is one of them. Concentrated industries result in concentrated profits. It is the ultimate price squeeze. When markets are not competitive, big businesses are able to extract monopoly profits by setting prices that are higher and higher. In 2014, the top 500 largest firms pocketed 45% of the global profits of all American businesses. And the vast majority of those profits went to the wealthiest of the wealthy. As of 2013, the wealthiest 1% of Americans held nearly half of all the stock and mutual funds held by all of America. And who gets a shot at their own dream? When big businesses can shut out competition, entrepreneurs and small businesses are denied their shot at building something new and exciting. Left unchecked, concentration will destroy innovation. Left unchecked, concentration will destroy small companies and startups. Left unchecked, concentration will suck the last vestiges of economic security out of our middle class. And left unchecked, concentration will pervert our democracy into one more rigged game. But the good news, and there is good news here, is that this isn't the first time that America has faced this threat. We have been here before and we know the way out. More than a century ago, America was in the midst of a transformation from a nation of small shopkeepers and craftsmen and farmers to a country of giant corporations. As greater and greater economic and political power concentrated in a smaller and smaller number of firms, America decided we needed some new policies, simple structural rules to level the playing field. Congress created antitrust laws to address the concentration of wealth and power in the hands of a few. Passing the Sherman Antitrust Act and the Clayton Antitrust Act, progressive era reformers like Teddy Roosevelt, William Howard Taft, and Woodrow Wilson, were trustbusters, people who fought the power that monopolies wield in the economy and in politics. The original purpose of these laws was to fight concentrated economic and political power. 100 years ago, Congress understood that these two factors were forever intertwined. Arguing for the passage of the Sherman Act in 1889, Senator John Sherman famously declared, if we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life. A generation later, Supreme Court Justice Louis Brandeis, who we were talking about earlier, worried that the concentration of economic power was so great that corporations are sometimes able to dominate the state. The corporate system was becoming a ken, he said, to the feudal system. That would mean the rule of plutocracy. Brandeis declared that without vigilance, our government would be controlled by the very rich and the very powerful. Under Franklin Roosevelt, antitrust enforcement really took off. With Thurman Arnold at the helm, the Justice Department's antitrust division grew from 18 lawyers to 500 lawyers, and they ramped up their litigation. In Arnold's five years running the division, those lawyers brought almost as many cases as there had been in the previous 35 years. Antitrust law became real. And American corporations knew it. But starting in the 1970s, the story starts to change. In the late 1970s, Robert Bork wrote an influential book rejecting the idea of competition as the driving rationale for antitrust law. Bork argued that the government should weigh the costs of less competition against the claims of greater economic efficiency that consolidation could create. In his view, if a monopoly persisted, it was because the monopolist was quote, more efficient, close quote, than its competitors. If not, the market would correct itself and the former monopolist would be driven out. No need for government in his make-believe world. Bork proudly ignored all of the harms caused by concentrated political power or economic power that had motivated Congress in the first place to pass those strong antitrust laws. Now, Bork's framework limits antitrust thinking even today. When coupled with the deregulatory ideology of the Reagan era, the Bork approached antitrust law, meant that government largely stepped out of the way and just let companies grow larger and larger and larger. Now this country needs more competition and more competitors in order to accelerate growth. We need more competition to promote innovation, more competition to reduce the ability of giant corporations to use their money and power to bend government to benefit themselves. So how do we get more competition? How do we do it without new legislation that would require co-operation from a Congress that is already awash in campaign contributions and influence peddling? Because that's how we've gotta think about this problem. Well, I'll tell you, we can start with the president and an executive branch willing to once again enforce our laws the way Congress originally intended them to be enforced. We have the tools right now to reinvigorate antitrust law. And here are three ways that we can do it. First, hold the line on anti-competitive mergers. The DOJ and the FTC are on the front lines in the battle over mergers. These two agencies already have the authority to stop harmful mergers in their tracks. Too often though, they just don't use that authority. Now look, there is no question that antitrust enforcement has picked up since the Reagan administration. And the largest increases in merger challenges were during the Clinton and Obama years. And the Obama administration has challenged a higher percentage of mergers than any administration since before Reagan's. But mergers are outrunning enforcement. While the DOJ and FTC have opposed some huge mergers recently, many others have slipped through with very little pushback. In fact, 2015 was the biggest year for mergers in US history, both in terms of the number of mergers and in the size of mergers. Now, it has become fashionable in recent decades for the DOJ and FTC to allow mergers with serious antitrust implications to go forward if the merging entity agrees to certain conditions. So for example, one or both of the merging companies might need to sell off part of their business or the new entity might need to agree to change some business practices in ways that supposedly would preserve competition despite the increased market competition. These conditional approvals are sold as win-win. There's just one problem. Too often they just don't work. A recent analysis of mergers challenged by the DOJ or FTC between 1999 and 2003 concluded that stopping mergers is the best way for regulators to prevent high price hikes down the road. The study compared product prices before and after mergers and found that when the DOJ and FTC allowed mergers to proceed with conditions attached, dramatic price increases usually followed. By comparison, when regulators opposed the mergers altogether, prices rose at a fraction of that pace. Now, there's another problem with relying on conditions to offset the impact of bad mergers. And that is that the regulators who didn't have the chops to block the deal in the first place are very unlikely to force the companies to break up after the fact, even if the companies blow off the conditions. In other words, enforcement of merger conditions is weak at best. Even when companies meet the conditions, like selling off some of their assets, they sometimes just turn around and buy back the same assets. They originally sold off. I mean that literally, that part is not a joke. It's not like paid toilets. It actually happens. That's what happened after Hertz was permitted to merge with Dollar Thrifty and after Albertsons was allowed to merge with Safeway. In both cases, the divested parts of the businesses then declared bankruptcy and the bigger companies just bought back part of the companies they had been forced to sell off. The lesson is clear. Where a merger raises fundamental antitrust concerns, regulators need to stand tall and say no. Number two, closely scrutinize vertical mergers. Vertical monopolies exist when one company owns multiple parts of its own supply chain. The manufacturing, distribution, production sales, and again, size creates a tremendous advantage. There's no competition anywhere in the chain and other businesses are locked out and often die. The DOJ and FTC should approach vertical mergers with the same skepticism that they use on horizontal mergers. As an aside, by the way, the guidelines that apply to vertical mergers have not been updated since 1984. I could have you raise your hand if you were born after 1984. And the world has changed a lot since then. Revising those guidelines would at least be a good start here. And number three, we're coming to the end. Require all agencies to promote market competition and appoint agency heads who will do so. Too often, the DOJ and FTC are viewed as the only agencies responsible for promoting competition. Promoting competition should be taken seriously across the executive branch. Let me give you a couple of examples on this. The FDIC, the Federal Reserve and the other agencies have a role to play in making sure that financial institutions don't become so large that their smaller competitors don't have a chance to serve the American families and American small businesses. The FCC and FTC both have a role to play in making sure that small innovative tech companies can develop newer and better ways for us to connect with each other without they're being crushed by the big guys. The Agriculture Department has a role to play in making sure that poultry farmers and produce growers aren't held hostage to the whims of giant firms. In April, the White House issued an executive order requiring all government agencies to identify ways that they can play a role in increasing competition. And that is exactly the right place to start. We need strong regulators who will promote competition across all agencies, not just at the DOJ and FTC. We need strong regulators who draw the line on mega mergers and on concentration across the economy. We need strong regulators who believe in competition because personnel is policy. These are just a handful of the steps that the president and federal agencies can take now and defend competition. But there is much more to do at all levels of government and there are a lot of good ideas out there. Earlier this month, the Roosevelt Institute issued a report laying out a number of ways to check corporate, financial and monopoly power. And today, the Center for American Progress released a paper discussing the harmful effects of market power and proposing an extensive set of reforms designed to reinvigorate competition policy. Proposals, including adopting a public interest standard for enforcement actions, placing the burden on merging companies to prove that mergers will not harm competition and requiring agencies to release more information about their enforcement actions. Those are proposals that would make a real difference. Strong executive leadership could revive anti-trust enforcement in this country and begin once again to fight back against dominant market power and overwhelming political power. But we need something else too. And that is the revival of the movement that created anti-trust laws in the first place. For much of our history, Americans organized and protested against the forms of consolidation. As a people, we understood that concentrated power anywhere was a threat to liberty everywhere. It is one of the basic principles founding our nation and it threatens us now. Competition in America is essential to liberty in America but the markets that have given us so much will become corrupt and die if we do not keep the spirit of competition strong. America is a country where everyone should have a chance to succeed. And that happens only when we demand it. Thank you all for your work. Thank you, thank you, thank you. Well, that was pretty good. As I mentioned before, we study a lot of history here and I would actually say that that was probably the best, most important anti-monopoly speech in the United States in a hundred years, in a hundred years, in a hundred years, in a hundred years, in a hundred years, in a hundred years, in a hundred years, in a hundred years.