Refocus the well-being of workers in the debates on disruption

Scholar shows how current antitrust remedies ignore the effects on workers.

To address the alleged monopolization of big tech companies, a bipartisan choir has voiced a common message: break them.

But when courts order large companies to “go out of business” for violating antitrust law, what happens to workers?

Antitrust law enforcement officials do not sufficiently consider the effects of antitrust law enforcement on workers, argues Hiba Hafiz of Boston College Law School. But Hafiz urges than they should, because break-ups affect workers significantly.

The current “debates” on the rupture are not new. Historically, antitrust regulators and academics have oscillated between favoring structural remedies—restructuring a big business in a smaller one – and behavioral remedies –requiring companies to engage in pro-competitive conduct. Today, the first approach has become more and more popular as commentators call for the sale of large technology companies. However, the courts have not yet to follow commentators.

In the current conversation, supporters of business disruptions overlook the welfare of workers, Hafiz supports. The agencies are concentrated on how structural changes will help consumers and small businesses competing in the product market, while ignoring workers in the labor market.

Consideration of labor market effects has not always been absent from antitrust law enforcement. Hafiz shows that during the New Deal era, antitrust regulation coincided with industry-wide wage regulation. But antitrust law enforcement officials and their lawyers do not analyze the labor market when it offers remedies, says Hafiz.

Instead, advocates of structural remedies presume that dismantling a large company will help workers because the existence of more companies will increase competition for wages and benefits. Hafiz challenges this hypothesis, explaining that the ruptures can lead to a restriction of the movements of the workers and a reduction of union power, which harms the workers.

To illustrate, Hafiz looks the court-ordered divestiture of Bell System, a business network organized under the umbrella of the American Telephone and Telegraph Company (AT&T). In the late 1930s, AT&T telecommunications workers unionized and obtained wage increases through collective bargaining. They finally form an industry-wide union that spanned the country. Thanks to a strong union structure and direct government intervention, workers in the Bell system established uniform salary policies, fluid work flows and centralized demands with AT&T management.

Hafiz shows how the breakup of AT&T disrupted many of the union’s efforts. In 1974, the US Department of Justice deposit antitrust action against AT&T and other companies, claiming that these companies had illegally monopolized the telecommunications services market. Antitrust enforcers thought that a structural remedy was the only way to prevent a monopoly, especially in a regulated sector, from engaging in exclusionary behavior. According to Hafiz, the court approved the assignment, but failed engage in any analysis of how the remedy might impact the job market.

For the workers of the Bell system, the rupture caused considerable damage. Hafiz Explain this divestiture weakened union members and its bargaining power, led to lower incomes, weakened labor-management relations and reduced internal employee mobility.

Hafiz urges that antitrust agencies and courts assess labor market realities before imposing structural remedies. Economic approaches such as game theory and trading leverage models can help identify how antitrust actions can impact a particular industry, argues Hafiz.

Hafiz too encourages regulators and courts to use a broader analytical framework, which includes economic sociology and industrial relations.

Hafiz Explain that, when properly analyzed, it becomes clear that assignments can help or harm workers. A structural remedy can benefit to workers whether it preserves continuous employment, prevents information asymmetries between employers and employees about wages and working conditions, or maintains workers’ bargaining power.

On the other hand, a structural remedy can prejudice workers if it subjects workers to layoffs, disrupts established unions or increases the costs of worker mobility across the industry.

In addition to advocating a nuanced economic analysis, Hafiz offers policy reforms for agencies and courts. She said that antitrust agencies should consider the welfare of workers in any appraisal of remedies. For example, if an assessment concludes that a structural remedy would end up harming workers, antitrust agencies should to modify appeal or seek union approval.

Hafiz too urges courts to use their authority to gather evidence and seek expert opinion on labor market effects. Federal law requires courts at to consider public interest when assessing antitrust consent decrees. In making such decisions, the courts could consult economists and even the workers themselves, Hafiz suggests.

Finally, Hafiz argues that antitrust regulators should collaborate with other agencies linked to federal labor policy. She recommended that, in conjunction with the Office of Information and Regulatory Affairs, antitrust and labor agencies work together to examine structural remedies and their effects on the labor market. For example, the Department of Justice, the Federal Trade Commission, the National Labor Relations Board, and the Department of Labor could form an inter-agency office responsible for labor market analysis.

Hafiz concludes that government agencies and courts need to broaden their expertise to understand how antitrust enforcement decisions affect workers.

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