Washington, D.C.— Today, the House Small Business Committee under Chairwoman Nydia M. Velázquez (D-NY) held a hearing surveying antitrust laws and their potential to root out anticompetitive practices that harm small businesses. The hearing gathered experts and former government officials to testify on the state of antitrust enforcement and the current competitive environment for small firms.
“The ability of entrepreneurs to start and grow a business is predicated on the existence of a level playing field between large corporations and their small peers. Competition is the precondition that allows small businesses to thrive,” said Chairwoman Velázquez. “Unfortunately, longstanding trends indicate that our economy is becoming less competitive. From high-tech startups to family farms, small firms across nearly every industry are struggling under the weight of outsized corporate power.”
Today, in over 75% of industries, fewer large companies control more business than they did 20 years ago. This consolidation has the potential to make it harder for small firms to compete on a level playing field with big business while also potentially raising prices for consumers. In addition, as markets have concentrated, small business formation has also suffered. In 1982, new firms constituted 38 percent of all businesses, but that fell to only 29 percent in 2018.
Since the 1800s, the federal government has created rules and regulations to police anticompetitive behaviors that harm consumers and small businesses. One of the primary means of protecting competition is by enforcing antitrust laws. During the hearing, witnesses provided an overview of antitrust laws and ways they can be enforced to protect small businesses.
“The shift in shares of GDP accounted for by small business versus large business signals potentially troubling trends that should be considered in the context of microeconomic and macroeconomic research on concentration and market power,” said Dr. Diana L. Moss, President of the American Antitrust Institute. “Lawmakers, policymakers, and antitrust enforcers might therefore ask, as the House Committee is doing here today, why this is happening and what the contours of a responsive policy approach should look like.”
“The economic evidence shows that much of the growing share of economic activity accounted for by large businesses likely results from highly efficient “superstar” firms growing at the expense of other firms,” said Dr. Carl Shapiro, Distinguished Professor of the Graduate School at the University of California at Berkeley. “That competitive process has been fueled by massive advances in information technology, the growing importance of intangible assets, and globalization. Consistent with this, increases in concentration at the national level have in many cases been associated with decreases in concentration in more local geographies and at the level of relevant antitrust product markets.”
“Between 1982 and 2017, the number of small retailers fell by half, while their share of overall retail business fell even further,” said Mr. Barry Lynn, Executive Director of the Open Markets Institute. “This is true for just about every category of shop. The number of independent pharmacies in America, for instance, declined by half since 1980, even while the U.S. population was growing by almost half. We can see the effects of this concentration of power over commerce in the concentration of wealth in the hands of a few.”
###
