WGA West Calls For “Systemic Changes” To Fix “Broken” Antitrust Practices – Deadline

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Saying that the nation’s antitrust practices are “fundamentally broken,” the WGA West is calling on policymakers to adopt “systemic changes” to antitrust laws and enforcement in order to prioritize “the maintenance of competitive market structures for consumers, competitors and new entrants,” while protecting workers’ wages and jobs.

“Media is the poster child for the failures of antitrust enforcement,” says a guild review of five mega mergers in the media and telecommunications industry. “The past 12 years have seen unprecedented levels of vertical and horizontal consolidation among television distributors and film and television producers, with large mergers alone totaling over $400 billion in deal value.”

The review, titled “Broken Promises: Media Mega Mergers and the Case for Antitrust Reform,” claims that the nation’s antitrust enforcement policies have failed to deliver on promises of lower prices and more choice for customers, and have instead led to “lower wages, higher consumer prices, fewer or worse consumer choices, and less innovation.”

The review says it “provides the evidence of this failure” through an examination of the five largest media and telecommunication mergers of the past decade – Comcast and NBCUniversal (2011); AT&T and DirecTV (2015); AT&T and Time Warner (2018); Charter, Time Warner Cable, and Bright House (2016); and Disney and Fox (2018).

“Over and over, these companies promised lower prices and more choice for customers,” the review says. “However, once regulators cleared the mergers, consumers saw price hikes at AT&T-DirecTV, less diversity of content at Disney-Fox, and fewer streaming choices at AT&T-Time Warner. Less than three years after merger approval, AT&T announced plans to spin off WarnerMedia to reality TV giant Discovery in May 2021, heralding the next wave of media consolidation. Amazon followed a week later with a plan to purchase film and television studio MGM; still more reactive consolidation is guaranteed amid a sudden frenzy of deal speculation.”

“Company after company, in seeking to buy the competition, has promised benefits but delivered harms,” the guild said. “Until structural problems in antitrust law and practice are addressed, these types of media mergers will continue to hurt labor and consumers.”

See the guild’s full review here.

“The time for complacency is over,” the review says. “We are long overdue for systemic changes to the merger review process and enforcement regime in recognition of the harms that years of consolidation have wrought.”

“Waves of vertical and horizontal consolidation in the media industry have left fewer and fewer players controlling content production and distribution,” the report states. “As deregulation and antitrust under-enforcement replaced limits on content ownership and vertical integration, media conglomerates used their market dominance to undermine competition, control terms in labor markets, and decide what content consumers could see.”

“This report shows that the existing system of merger review is broken,” said WGA West president Meredith Stiehm, noting that the guild has raised the alarm when our employers and the companies that distribute our work justify swallowing each other with promises we know they can’t keep. These mergers have made writers and workers in our industry, as well as consumers, worse off.”

“Mainstream economics stresses that the well-being of society requires fair competition and strict limitations on monopoly mergers,” said David Young, the guild’s executive director. “It is never too late to bring antitrust enforcement in the media industry back in line with these basic economic standards.”

WGA West

“Waves of vertical and horizontal consolidation in the media industry have left fewer and fewer players controlling content production and distribution,” the review says. “As deregulation and antitrust under-enforcement replaced limits on content ownership and vertical integration, media conglomerates used their market dominance to undermine competition, control terms in labor markets, and decide what content consumers could see. Disney, AT&T, Comcast, and National Amusements (the parent company of CBS-Viacom) own three of the four major broadcast networks as well as the CW, control nearly two-thirds of basic cable affiliate fees and accounted for close to 70% of domestic box office in recent years. Despite record profits for these media conglomerates, median episodic pay for TV writer-producers is nearly the same as it was in 1995. Meanwhile, screenwriters contend with reduced theatrical output and fewer creative opportunities.”

Looking at the broader picture of mergers and acquisitions across the country, the review says that “Uncontrolled merger activity has caused an accumulation of market power across the U.S. economy. A record $2.4 trillion in merger and acquisition deals occurred in 2015, nearly eight times that of 1985; the record for number of deals was broken two years later. In the last two decades, this rampant merger activity has increased concentration in 75% of U.S. industries, with an average increase of 90%.

“Extreme concentration levels have been documented in markets ranging from meat packing to medical devices and banking to broadband. The buildup of market power has eroded innovation and performance. Rates of entrepreneurship and business startups have declined across industries, wages are stagnant, and workers change jobs at lower rates, business investment has declined, and productivity growth has slowed, yet U.S. industry profits have been abnormally high, with ever-fewer firms accounting for a greater share of those profits.”

Current antitrust practices, the review says, have “allowed previously unthinkable mergers and failed to address harmful conduct. Merging companies promise benefits and downplay harms, but acquisitions repeatedly result in foreseeable anticompetitive outcomes that hurt consumers and workers. The system is fundamentally broken, and damage is evident across myriad industries in addition to media and telecommunications.

“Antitrust reforms must address the structural problems in law and practice in order to prevent more anticompetitive mergers and reinvigorate competition across the American economy.”

The review calls for the scrapping of the so-called “consumer welfare standard” popularized in the 1970s, which “narrowly focused U.S. antitrust enforcement on short-term consumer price increases in defining illegal mergers or behaviors. Courts and enforcers have widely adopted this standard with the result that mergers are often approved on the basis of ‘efficiencies’ that will lower a company’s costs and speculatively deliver lower costs to consumers, even if the merger will significantly decrease competition. It is now widely recognized that the consumer welfare standard has failed to protect competition across many industries and markets.”

In its recommendations, the review calls on policymakers to:
• Codify an alternative to the consumer welfare standard that clearly prioritizes the maintenance of competitive market structures for consumers, competitors, and new entrants.
• Reintroduce structural presumptions and bright-line rules in vertical and horizontal mergers, including a presumption against dominant firms acquiring nascent or potential competitors. Shift the burden of proof onto merging parties, minimize weight given to ‘efficiencies’ arguments, and eliminate the use of behavioral conditions in merger approvals.
• Lower barriers to prove antitrust violations including greater deference to direct evidence of market power or anticompetitive effects, and establish that erroneous non-enforcement is a greater threat to competition than erroneous enforcement.
• Conduct regular merger retrospectives and market investigations. Such investigations must allow for corrective measures up to and including structural separations and unwinding mergers proven anticompetitive after the fact.
• Review effects on workers in every merger and market investigation. Antitrust law and rules should include specific guidance for evaluating labor market effects and monopsony power.
• Enhance enforcement against abuses of dominance such as self-preferencing, discriminatory conduct, tying, and predatory pricing.
• Increase funding for antitrust enforcers and empower them with clear jurisdiction to regulate anti-competitive behavior in concentrated markets. These changes to antitrust policy would protect consumers and labor from the harms of concentrated power, and would create a path back to competitive markets for the economy as a whole.



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