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Welcome to The Corner. In this issue, we explore how the DOJ and FTC can make corporate ESG standards more effective. And Open Markets joins authors and booksellers in calling for antitrust action against Amazon’s dangerous book monopoly.

Please note we will not be running The Corner the last week of August but will be back in September. Have a great summer!

Can Corporations Cooperate to Do Good? The DOJ and FTC Can Help.

Andrew Fitch

In recent decades, nearly 90% of public companies and major investment funds have committed to Environmental, Social, and Governance (ESG) standards for corporate behavior. These allow investors to evaluate firms not only for the profits they send to shareholders, but for actions such as combating climate change, paying livable wages, and preventing problematic executive behavior.

Some progressives have long criticized ESG scoring systems, which are entirely voluntary and largely unaudited, as a poor substitute for laws that apply to all businesses. ESG, such thinking holds, can amount to little more than corporate greenwashing.

But over the past two years, these same ESG systems have come under attack by a coalition of conservative think tanks and policymakers, this time for being too effective. “As [ESG] alliances and other financial sector networks, coalitions and initiatives gained traction,” notes a recent report [[link removed]] by the ESG-endorsing Columbia Center on Sustainable Investment, “pushback from conservative, pro-fossil fuel groups intensified.” The most high-profile attacks center on how ESG commitments that involve multiple companies adopting the same policies violate antitrust law.

Efforts to use the power and rights of investors to force corporations to improve their “social” behavior extend to the early 20th century. Progressive reformers, civil rights activists, and labor unions all launched investment campaigns to punish or reward certain companies or industries for their broader societal impact. By the 1960s, pro-monopolist activists like Milton Friedman countered with the claim that business corporations should be solely devoted to maximizing shareholder interests and should avoid any voluntary actions that might lower profits.

Yet ESG continued to grow in popularity and complexity. With some investors wanting to fund only corporations that avoided certain behaviors, ESG advocates in the 1980s developed scoring systems to track multiple measurements of corporate behavior.

More recently, huge index funds, which systematically invest in hundreds or even thousands of companies across entire markets, also began to adopt ESG systems and related corporate measures. By the close of 2019, the Big Three index investors BlackRock, Vanguard, and State Street each owned at least 5% of almost every S&P 500 firm, and held a combined average of 21.4% of the public stock of these firms. As a result, a social activist today might need to persuade only a few fund managers to exert control over the behavior of many corporations.

The Texas Public Policy Foundation (TPPF), a nationally prominent promoter of fossil fuels, has led the charge against ESG, especially corporate pledges to reduce carbon emissions. TPPF characterizes ESG pledges as a harmful form of market coordination meriting antitrust prosecution. TPPF’s 2021 Corporate Collusion [[link removed]] white paper, for instance, outlines how to craft a classic antitrust allegation of “hub-and-spoke” conspiracy, by which competing firms communicate through some secret conduit, say an ESG ratings agency that monitors and publicizes their compliance record.

Courts have yet to take up such claims, which would need to demonstrate actual anticompetitive effects or intent—beyond a company’s rational decision to incorporate clean energies into its business model. But fellow conservative think tanks are already running with this antitrust rhetoric. The Heritage Foundation, for one, issued a 2024 presidential policy blueprint that questions both ESG investment portfolios and Diversity, Equality, and Inclusion corporate programs. Heritage called on the Federal Trade Commission to investigate whether prioritizing these performance metrics raised consumer prices or reduced market output.

For now, claims of ESG conspiracy echo farthest when focused on fossil fuels, especially by enforcers able to launch intrusive investigations. A 2022 Wall Street Journal editorial by Arizona’s then attorney general Mark Brnovich targeted “coordinated efforts to choke off investment in energy.” Brnovich then sent a letter to BlackRock’s CEO, signed by 18 Republican state AGs, seeking to chill green investment strategies. Former Missouri AG Eric Schmitt (since elected senator) followed with his own 19-state complaint against the Net-Zero Banking alliance’s 100-plus members.

These pro-fossil fuel attacks provide supporters of ESG-based investing an opportunity to refine their tactics. The concentration of power in funds like BlackRock does indeed threaten democratic decision making in many ways. Moreover, all-powerful fund managers are just as likely to demand that the corporations under their sway do bad as do good.

But that does not mean getting rid of ESG. Individuals still have a right to choose where to invest their funds, and to hire investment firms to help them do so. Similarly, corporate managers have the right to embrace smart environmental and management policies and to learn best practices from their competitors.

One way for the FTC and Department of Justice to help protect these rights would be to update their Competitor Collaboration Guidelines. The enforcement agencies could better clarify when the sharing of green technology or compliance data does not violate laws against boycotts, output restrictions, or price-fixing. European and UK competition policy officials recently completed a similar effort, outlining safe-harbor guidelines for certain types of competitor collaboration.

Agency scrutiny of ESG systems could also aim to ensure that sustainability pledges do not enable corporate greenwashing or hand further market-shaping power to giant investors.

OMI, Authors Guild, and American Booksellers Urge Crackdown on Amazon’s Book Monopoly

The Open Markets Institute, the Authors Guild, and the American Booksellers Association this week sent a letter [[link removed]] to the Federal Trade Commission (FTC) and the Department of Justice (DOJ) urging these agencies to address Amazon’s abuse of its monopoly power over the market for books and ideas. The three groups sent the letter as the FTC appears on the verge of bringing a major suit against Amazon. “Today the free exchange of ideas is impeded and warped by opaque algorithms and sales practices controlled by Amazon and premised on which publisher and/or author is willing and able to pay the highest extortionary tax to get their books promoted on Amazon’s website,” the letter reads. “The ultimate effects of Amazon’s business model – which is based on manipulating readers – include the unfair promotion and suppression of specific ideas, authors, publishers, and the routine disruption of public debate.” Read the full letter here [[link removed]].

The New York Times [[link removed]] wrote about the letter and interviewed Open Markets Institute executive director Barry Lynn who said, “What we have is a situation in which the power of a single dominant corporation is warping, in the aggregate, the type of books that we’re reading. This kind of power concentrated in a democracy is not acceptable.” The Open Markets Institute and partners have for years warned of how Amazon endangers the free flow ideas through its dominance over America’s books market. The letter also received coverage in The Verge [[link removed]] and Politico’s newsletter.

In related news, Lynn also released a statement [[link removed]] following KKR’s bid to purchase book publisher Simon & Schuster, after the DOJ blocked an effort by Penguin-Random House to take over that same publishers. Lynn said, “Publishers should now turn their attention, money and time to helping the U.S. government prepare a winning case against Amazon’s book business for its disruptive, antidemocratic, and politically dangerous monopolization of America’s market for books.”

📝 WHAT WE'VE BEEN UP TO: Tech Policy Press [[link removed]] published an article by Dr. Courtney Radsch, director of the Center of Journalism & Liberty, on a new study out of Switzerland assessing the value of news to Big Tech outlets and their use of journalistic content. Dr. Radsch wrote, “[The study] suggests that if Google did not have a dominant monopoly position in web search and faced serious competition, fair compensation for the value that media content provides to Google search would amount to about 40% of total revenue, or approximately $176 million per year in Switzerland alone.”

Open Markets’ chief economist Brian Callaci was quoted in Scheerpost [[link removed]] commenting on a new contract won by UPS’s union for its workers, saying, “The UPS contract is a huge win for UPS workers. But its potential significance is even greater: if it causes Amazon, FedEx, and other non-union workers to look at those gains and want that for themselves…Then maybe the union might be able to play that central role in the industry once again.”

Caroline Fredrickson, OMI’s strategic councilor on democracy and power, spoke to Voice of America [[link removed]]about the many legal challenges facing former President Trump, saying in part, “This is completely unprecedented, this is sort of thing that has never happened.” She was also quoted in the Huffington Post [[link removed]] commenting on whether Trump’s co-conspirators indicted in Georgia will cooperate with authorities, saying, “As the rats seek to leave the sinking ship, they may be happy to get their own life raft and leave everybody else behind.”

Executive Director Barry Lynn was quoted in Northeastern Global News [[link removed]]describing Northeastern University’s economics professor John Kwoka as “the rare economist who understands that the purpose of antimonopoly law is to protect our democracy and to make every individual more free, more secure and more prosperous.”

The IZA Institute of Labor Economics [[link removed]] ran a story highlighting a co-authored paper [[link removed]] written for the institute by Open Market Institute chief economist Brian Callaci that investigated the impact of no-poaching restrictions on worker earnings, which they estimated rose up to 6.6% annually following no-poaching restrictions.

🔊 ANTI-MONOPOLY RISING:

Elon Musk’s X (formerly known as Twitter) is being sued by French news agency Agence France-Presse (AFP) over its refusal to enter into news reuse negotiations, as is required by large tech companies under French and EU law. ( TechCrunch [[link removed]])

The European Union’s antitrust authority has launched a probe into Adobe’s $20 billion bid to buy design platform competitor Figma. The proposed acquisition is also under review by U.S. and U.K. antitrust authorities. ( The [[link removed]] Verge [[link removed]])

Amazon is substantially trimming down its portfolio of in-house brands in a concession to ongoing investigations from a number of competition authorities looking into how the platform produces and markets its own products to compete against sellers using its marketplace. The Federal Trade Commission reportedly plans to bring an antitrust case against the corporation. ( The [[link removed]] Wall Street Journal [[link removed]])

The Department of Justice is reviewing healthcare juggernaut UnitedHealth’s proposed $3.3 billion acquisition of home health company Amedisys, which also owns the pharmacy benefit manager Optum. ( Bloomberg [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

DONATE [[link removed]] 📈 VITAL STAT: $13.5 Million

The amount University of Chicago has agreed to pay to settle a lawsuit in which it was accused of engaging in price-fixing to calculate applicants’ financial need in collusion with 16 other top universities. ( The Wall Street Journal [[link removed]])

📚 WHAT WE'RE READING:

“ Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud [[link removed]]” Ben McKenzie and Jacob Silverman dive into the rise and fall of the cryptocurrency craze through interviews with traders, cryptocurrency engineers, and amateur buyers. Their riveting and irreverent account pulls back the curtain on the cynicism and gullibility that define what is potentially the greatest Ponzi scheme in a generation.

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Written and edited by: Barry Lynn, Austin Ahlman, Ezmeralda Makhamreh, and Anita Jain.

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