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“The decision by the FCC to restore the telecommunications classification in the 2023 proposed rule, puts BIAS in its rightful place as the premier communications service of the digital information age,” said Dr. Mark Cooper, senior fellow at CFA and author of the comments, as well as all supporting documents. 

“A telecommunications classification of BIAS (as a Title II service) not only enables the FCC to restore the principle of  ‘innovation without permission’ at the edge of the network, which drove the virtuous cycle of innovation and investment for half a century,” Cooper added, “it enables the commission to tackle three of the most important duties that the FCC is charged with in Title I of the Act – national security, public safety and universal service.”

The 100-page comments argue that the FCC needs the authority to oversee BIAS, which has become an even more essential communications service in recent years because of several changes in circumstances:

• the remarkable growth of BIAS and its penetration into all aspect of daily life,
• the resulting increase in the need for universal service, which is more important than ever,
• the national security challenges posed by international developments, and
• the increasing importance of the role BIAS plays in public safety as a result of the Covid-19 pandemic.

The CFA comments identify and agree with 79 issues that the FCC concluded argue for a telecommunications classification.  When the FCC Flip-Flopped after the 2015 Open Internet Order and tried to abandon oversight over broadband, the Court (in a case brought by Mozilla) pointed out numerous flaws in the Order and remanded several important issues that the FCC ignored.  The Court concluded that there was no point in remanding the entire order, since the Supreme Court would grant deference to agency discretion in classifying broadband (Chevron deference).  These comments, the FCC through discussion of issues and the Mozilla ruling, completely undercut the “Flip Flop Order.”   The flaws in the “Flip-Flop Order,” fall into seven broad categories of mistakes the FCC made:

• Erroneous Economic Framework v. Internet Reality,
• Analytic Weaknesses,
• Key Unsupported Public Functions,
• Undermining the Virtuous Cycle of the Internet Economy,
• The Role of Edge Demand and the fact that Transparency is not enough to prevent abused by dominant network owners,
• Clear Legal Authorities for the FCC to exercise oversight of BIAS,
• Evolution of Open Internet Rules

“It never made sense for the FCC to abandon oversight over BIAS and turn its back on over 50 years of successful oversight of the Internet,” Cooper concluded.  “It is clear the ‘Flip-Flop Order’ was wrong on the facts, wrong on the technologies and wrong on the  law, so the ‘2023 Open Internet Order’ can easily be upheld by Chevron deference, but it would be even more relevant and important, if the court returned to the compelling case for the telecommunications classification based on the underlying reality of the Internet, as the Court did less than a decade ago upholding the ‘2015 Open Internet Order.’”

The comments are available at: https://consumerfed.org/wp-content/uploads/2023/12/FCC-Coment-12-14.pdf

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“This is a vitally important piece of legislation,” said Rachel Weintraub, CFA’s Legislative Director and General Counsel, “that addresses the most important competitive problem in the digital communications sector, the abuse of market power by Big Data Platforms, which are precisely defined as “covered entities.”

“This bill seeks to reduce or eliminate abuses of market power in digital services that are widely used by consumers but have become riddled with anticompetitive practices that raise consumer costs, lower quality, deny them effective choice to meet their needs, and slow innovation,” Weintraub added. “But, it takes a balanced and cautious approach, which ensures that the platforms will continue to be able to innovate and deliver services if they can effectively compete on the merits with independent developers of applications.”

The Issue Brief is entitled Rebooting and Recalibrating Competition Policy: S. 2992, American Innovation and Choice Online Act, an Important First Step to Apply Brandeis’ Antitrust Principles to Rebuild the Uniquely Successful American Economic Model. It evaluates the legislation from the perspective of four lengthy analyses prepared by CFA of the challenges facing competition policy in the 21^st-century economy, as well as CFA’s previous testimony and Hill communications on related issues.

CFA’s analysis identifies six features of S. 2992 that embody the values expressed in over a century of competition policy in America. The 1) long history of competition policy, 2) the legislative intent of antitrust is critical to ensuring that policymakers and the public know where reformers are coming from, 3) the nature of the political economy for which reformers advocate, 4) the empirical record of the performance of the political economy is important because it shows policymakers and the public where the reformers want to go, 5) rebooting, and 6)  recalibrating competition policy (antitrust and regulation) are both important so that policymakers and the public understand what it takes to achieve the reforms that are the goal.

“We find that S. 2992 is a balanced and careful approach to an area of immense consumer activity that has not been overseen effectively since its inception by handling eight policy issues in a reasonable manner,” said Mark Cooper, Senior Fellow at CFA, and author of the underlying documents.

The report identifies the key elements of effective “recalibration,” that are needed, and which S. 2992 supplies:

• The broad agenda for legislative changes that remains within the antitrust tradition that led the economy to great heights in the “Golden Age of Capitalism.”
• Recapturing the goals of competition policy to prevent excessive concentration, which has the benefit of controlling the potential for abuse of political power and influence.
• Thresholds for review and scrutiny that are lowered and address key challenges confronted by those charged with executing competition policy.
• Allowing defendants to show that they merit an exception subject to very stringent conditions.
• Conflicts of interest and self-preferencing, which are central to the abuse of market power must be controlled. This can be accomplished without undermining the incentive of platforms to innovate and offer higher quality services to the public.
• Enhance agency oversight by providing the tools and resources necessary to effectively oversee competition and undertake new responsibilities.
• Restore effective consumer sovereignty by requiring transparency and ex ante conditions for true consumer choice.
• Dual Jurisdiction including antitrust and regulation has been successfully applied to the communications network for over a century.

“While there are other issues that need to be addressed, like privacy, data abuses and resources,” Weintraub added, “S. 2992 is an ideal starting point because it takes exactly the approach that legislating (recalibrating) competition policy should take. And, it reinforces the other “rebooting” activities being undertaken by the executive branch, independent agencies, state Attorneys General, and even private parties.”

“S. 2992 is the right approach to an important part of the problem,” Weintraub concluded. “It deserves a vote and passage in the Senate, so that the House can vote on and pass the legislation later this month.”

Contacts:
Mark Cooper, 301-384-2204
Rachel Weintraub, 202-904-4953

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Earlier, we called on Congress to take steps to end practices that block entry by independent application developers, lower consumer prices, increase consumer choice, and stimulate innovation.[1]  We based this call on an extensive analysis of the terrain of competition policy that we described in four lengthy historical papers.[2]

Based on that broad, general research, this analysis examines S. 2992, The American Innovation and Choice Online Act.  We conclude that it is a vital step toward promoting competition in the digital communications sector.  We see it as an important, cautious law to revitalize competition policy in general and antitrust in particular, after a long period of lax enforcement that put the nation’s competition laws into a “deep freeze.”

Overview of the Analysis

This analysis focuses on six lessons that are extremely important for the current debate.

• The history of the moment, and
• legislative intent of antitrust are critical to ensuring that policymakers and the public know where reformers are coming from.
• The nature of the political economy for which reformers advocate, and
• the empirical record of the performance of the political economy is important because it shows policymakers and the public where the reformers want to go.
• Rebooting, and
• recalibrating competition policy (antitrust and regulation) are both important so that policymakers and the public understand what it takes to achieve the reforms that are the goal.

The earlier analysis draws a direct link between Louis Brandeis, a leading and highly influential advocate in the formative years of pragmatic, progressive capitalism, and Joseph Stiglitz, a contemporary advocate of that approach to political economy.  It argues that the remarkably successful, uniquely American approach should be the model for the future.  The struggle to implement this model in the four decades before the Depression (1890-1930) is linked to the success of the economy during the “Golden Age of Capitalism” (1948-1972).  The Neo-Brandeisian approach to antitrust plays a key role and is very much the approach needed to revitalize competition policy at present.  Our analysis turned to the challenges of the digital economy by reviewing a number of academic studies and the ongoing activities of antitrust practitioners.  Table 1 summarizes the findings of that earlier analysis.

Actions to Revitalize Competition Policy in the 21^st Century Economy

Here we apply the general framework we developed to analyze S.2992, which should be voted on as soon as possible in the Senate.  In order to appreciate the important role that S.2992, which recalibrates the antitrust laws, can play, it is important to be cognizant of the ongoing efforts to revitalize antitrust practice.

The “rebooting” of competition policy is well underway with the Executive Order entitled “Promoting Competition in the American Economy.” The Biden Administration signaled its intention to revitalize competition policy by listing 72 specific steps that can be taken by Federal agencies to “reboot” competition policy after a long period of lax enforcement that has put antitrust into a “deep freeze.”

For example, during the Biden administration, the Department of Justice (DOJ) has challenged well over a dozen mergers, with half resulting in divestitures, several withdrawn, and the remainder pending trial.  Some of these involved “cutting edge,” challenges.  DOJ challenged a merger between the number 4 and 5 publishing firms (Penguin Random House’s Acquisition of Rival Publisher Simon & Schuster), since the Merger Guidelines clearly indicate that four is too few.  The challenge is also a pure monopsony/harm theory (never litigated as the sole basis for a merger challenge).  The United Health/Health Change merger is being challenged as an aggregation of data resulting in market power for various health insurance analytics.  The American Airlines/JetBlue merger “agreement to share slots and revenue” is being challenged as a back-door merger— in an effort to prevent more direct and indirect coordination in the airline market.  This is in addition to vigorous enforcement of existing antitrust laws in price-fixing, bid rigging, money laundering, and labor market abuses.

The Federal Trade Commission (FTC) has challenged two dozen mergers, more than half of which resulted in the withdrawal of the proposed acquisitions, in sectors that were a particular public concern, health care, pharmaceuticals, and energy.  It challenged two vertical mergers, one in key digital technologies, and one in aerospace technology.  Such challenges were almost unheard of in the prior 40 years.  Perhaps the most aggressive example is the FTC’s proposal of a series of rulemakings under authority that had been dormant for a long period of time.

State Attorneys General also pursued complaints against Facebook and Google, and many other entities for violations of antitrust laws.

A private antitrust lawsuit, important in earlier antitrust practice, but also chilled by the “deep freeze,” has challenged Apple’s practices in restricting the behavior of application developers.  The Consumer Federation of America filed an amicus brief in that case.

Senator Amy Klobuchar, Chair of the Competition, Policy, Antitrust, and Consumer Rights Subcommittee of the Senate Judiciary Committee has not only shepherded bipartisan legislation through Committee, but has also written a lengthy text that analyzes the history of and lays out an agenda for revitalizing antitrust.  She cites Brandeis a dozen times, more than any other advocate of progressive capitalism, echoing his belief in competitive markets as the key to economic success and political democracy.

Indeed, to maintain a healthy economy, it turns out we need both sensible regulation and antitrust enforcement to protect against abuses of power… It is now crystal clear that the antitrust laws must be updated and made relevant again as part of a reinvigorated American competition policy.  We need to incentivize more competition and more innovation, not less, and need to make sure that American capitalism allows all to compete.  Everyone in America deserves a fair shot – and an honest opportunity – when it comes to realizing the American Dream… [T]here must be – at all times – an appropriate balance between antitrust and regulation.[3]

The American Innovation and Choice Online Act, S. 2992, addresses the key issues in a sector of the digital economy that has not been addressed by competition policy and antitrust law.  It targets Big Data Platforms, which can abuse their market power as gatekeepers and vertically integrated firms, using self-preferencing and data to block competition from independent developers of applications.  Harming competition in this sector can raise consumer prices, restrict consumer choice, and slow innovation.  Our framework shows that the approach taken in S. 2992 is balanced, allowing platforms to develop services, without undermining competition.

1. The broad agenda for legislative changes can remain within the antitrust tradition that led the economy to great heights in the “Golden Age of Capitalism.” Congress needs to set these goals and parameters without drawing too many hard lines in a dynamic economy, which we have had and want.
2. Recapturing the goals of competition policy is also important. 2992 uses a broad economic concept to prevent concentration, which has the benefit of controlling the potential for abuse of political power and influence.  Short-term price effects on consumer welfare remain important, but in the broader long-term evaluation of the living standard of all citizens is as, if not more, important.
3. Thresholds for review and scrutiny should be lowered and address key challenges. These include: defining relevant markets rigorously and narrowly to make the thresholds more effective; defining suspect behaviors broadly to cover the problem of oligopoly and behavioral manipulation and exploitation based on the immense and recent increase in the ability to gather, analyze, and weaponize data: and ensuring competition policy has the old tools (and some new ones) to address abuse of market power.
4. Presumptions should be shifted in favor of competition. Defendants can show that they merit an exception subject to stringent conditions.
5. Conflicts of interest and self-preferencing must be controlled in a networked society dominated by digital technology, where access to the core network is essential. Where conflicts of interest are too profound to be effectively regulated, structural separations or bans are called for.
6. Enhance agency oversight by providing new tools and the resources necessary to effectively oversee competition and undertake new responsibilities.
7. Restore effective consumer sovereignty by requiring transparency and ex ante conditions for true consumer choice. The design of the consumer choice regime must reflect and address the full range of behavioral challenges that have been exploited by dominant Big Data Platforms.
8. Antitrust addresses some, but not all challenges, so structural remedies should be preferred but not required. Where behavioral remedies are necessary, regulatory agencies should take on the task of oversight.  The dual jurisdiction of antitrust and regulation has been successfully applied to the communications network for over a century.  However, the update must make it clear that the regulatory authority has the obligation to promote competition, where it is possible.

This is an ideal moment for Congress to play its important role in reinvigorating competition policy.  Addressing key aspects of Big Data Platforms is a good place to start, since this is an area of new and important economic activity and new challenges that have not been easily tackled by traditional oversight.

The American innovation and Choice Online Act, S. 2992, targets the sector with specificity, while ensuring a balance that invites innovation and practices by the incumbents that are not anticompetitive.  It sweeps in the traditional aspect of antitrust that practitioners have already begun to rebuild.  There are other areas of the digital economy that may also need Congressional action, like privacy, data use and abuse, and resources for responsible agencies.  However, the principle of tailoring the specific oversight to the specific challenges with a balanced approach is consistent with a century-long history of filling gaps in competition policy.  S. 2992 is the right approach to an important part of the problem.  It deserves a vote and passage in the Senate, so that the House can vote on and pass the bill later this month.

[1]  “Issue Brief: Rebooting and Recalibrating Competition Policy” (January 19, 2022); Amicus Brief of Consumer Federation of America, et al., in Epic Games v. Apple (United States District Court Northern District Of California, Oakland Division, 2022),  letter to the House urging an “Overhaul of Antitrust Oversight to Recalibrate Regulations for a Digital Age (June 14, 2021),; Senate Testimony (Testimony of Dr. Mark Cooper, on Antitrust Applied: Examining Competition in App Stores Senate Committee on the Judiciary, Subcommittee on Competition Policy, Antitrust, and Consumer Rights (April 21, 2021).  

[2] Big Data Platforms, a New Chokepoint in the Digital Communications Sector Meeting New Challenges with Successful Progressive Principles, September 14, 2020; Business Data Services: Another Failure of Free Market Fundamentalism to Promote Competition or Prevent Abuse of Market Power, September 3, 2020; Pragmatic, Progressive Capitalism At Its Best: Network Neutrality: How an Entrepreneurial State Used Public Policy to Foster Experimental Entrepreneurialism and Create the Internet, August 26, 2020; Pragmatic, Progressive Capitalism, Roadmap to a Remarkably Successful, Uniquely American Political Economy From Brandeis to Stiglitz & Beyond the 2020 Election, August 13, 2020

[3] Amy Klobuchar, 2021, Antitrust: Taking on Market Power form the Gilded Age to the Digital Age, pp. 353…355

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The FTC’s Funeral Rule, first issued in 1984, requires funeral homes to maintain a detailed price list and to hand it to consumers visiting and discussing services with the funeral home.  The report notes that this price disclosure has reduced deception and fraud but has not facilitated comparison shopping of relatively expensive funeral services purchased by consumers.

“Most consumers, especially those out-of-town or having to deal with a sudden death, cannot practically visit several funeral homes to pick up price lists,” said Joshua Slocum, FCA’s Executive Director and the report’s co-author.  The Ipsos survey found that only 20 percent of 1,146 respondents who had helped plan a funeral said they had visited more than one funeral home to obtain price lists.

Only a small minority of funeral homes allow consumers to view their price lists on their websites and compare prices of more than one funeral home.  In May 2022, FCA and CFA surveyed online disclosures of general price lists (GPLs) at 1,046 funeral homes with websites in 35 state capitals.  Only 191 of these homes (18%), listed in the report’s appendix, posted their prices online.

The refusal of most funeral homes to post prices online also makes it difficult for third party information providers, such as consumer groups and journalists, to collect and compare price information.  “Online price posting would benefit not just those consumers searching for price information, but also all consumers by encouraging price competition and discouraging funeral homes from charging exorbitant prices,” said Stephen Brobeck, a CFA Senior Fellow and the report’s co-author.

There were wide differences in the percentages of those posting prices among the 35 cities.  In Sacramento, because California requires online posting, 70 percent of 45 funeral homes posted prices (30 percent chose to use a loophole in the law to avoid posting).  In Helena (MT), three of four funeral homes posted prices, and in Topeka (KS), six of 14 funeral homes posted prices.  On the other hand, no funeral homes posted prices in Dover (DE), Frankfurt (KY), Bismarck (ND), Pierre, (SD), Cheyenne (WY), Santa Fe (NM), and Jefferson City (MO).

As one moved from east to west in the sample, more funeral homes posted prices.  In five of 19 cities (26%) east of the Mississippi River, but in seven of ten cities (70%) in Mountain and Pacific states, at least one-fifth of funeral homes posted prices.  However, none of the 102 funeral homes in the sample that are affiliated with Dignity Memorial posted their prices.  Dignity Memorial is owned by Service Corporation International (SCI), which controls about ten percent of approximately 19,000 funeral homes in the U.S.

FCA, CFA, and other consumer groups submitted comments to the FTC in response to the agency’s announcement in 2020 that it was considering updating the Funeral Rule to improve price competition.  The FTC is still considering whether to initiate formal rule-making.

Despite the lack of easy access to price lists, FCA and CFA urge consumers to visit several consumer homes to obtain prices lists before choosing one.  Earlier FCA and CFA surveys, as well as other research, have revealed differences in funeral prices of up to 400 to 500 percent for the same services.

FCA and CFA also urge consumers to consider patronizing funeral homes that post their price lists online.  “Online price posting reveals whether a funeral home wishes to facilitate consumers knowing the price of their funeral services and allowing a comparison of those prices with the services of other funeral providers,” observed FCA’s Slocum.

Contacts

Josh Slocum, FCA, Inc., 802-865-8300  

Stephen Brobeck, CFA, sbrobeck@consumerfed.org 

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• Arizona State Board of Funeral Directors and Embalmers
• California Cemetery and Funeral Bureau
• Kansas State Board of Mortuary Arts
• Minnesota Department of Health Mortuary Science Section
• New York Bureau of Funeral Directing, New York State Department of Health
• Oregon State Mortuary and Cemetery Board
• Virginia Board of Funeral Directors and Embalmers

“State regulatory agencies with good consumer information fulfill their state mandates to serve the interests of the public,” said Joshua Slocum, FCA’s Executive Director.  “Consumer information can make a huge difference in the lives of the bereaved who must often quickly choose among funeral services where costs can range from under $2,000 to more than $20,000, and who sometimes have legitimate complaints about these services,” he added.

Researchers from FCA and CFA graded state regulatory agencies using six criteria that included not only the content of information but also its presentation – most importantly, whether a link to consumer information was prominently featured on the home page of the agency’s website.  The content included a link to the Federal Trade Commission’s (FTC) excellent consumer guide, “Shopping for Funeral Services”

FCA and CFA also make available information to consumers through a pamphlet, “Planning a Funeral: 5 Key Tips”

In part because of the historic failure of many state regulatory agencies to recognize their responsibilities to consumers, the FTC has had to establish standards of conduct for the industry.  The FTC has done this mainly through the issuing and enforcing of its Funeral Rule.  Among other consumer protections, the Funeral Rule requires funeral homes to give consumers a General Price List of services during in-person arrangements conferences. The federal agency is now considering whether to update and modernize the Funeral Rule, including requiring funeral homes to post their price lists on their websites.

“Posted price lists would greatly assist bereaved consumers who now must physically visit funeral homes to obtain the price lists,” noted Stephen Brobeck, a CFA senior fellow.  “An updated Funeral Rule, coupled with improved consumer information from state agencies, would significantly benefit consumers who face costly choices at a time when many must cope emotionally with the death of a loved one,” he added.

States and the District of Columbia regulatory agencies received the following grades for their consumer information.  (Hawaii was excluded because it has no agency.)

Contacts:
Josh Slocum, FCA, Inc., 802-865-8300
Stephen Brobeck, CFA, sbrobeck@consumerfed.org

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“The industry has taken the position that any constraint on its actions will end the digital revolution and dramatically increase costs for consumers. The Consumer Federation of America emphatically disagrees,” said Mark Cooper, CFA’s Director of Research.

“The House Judiciary Committee and Antitrust Subcommittee is doing exactly what Congress should do to reboot needed oversight of the dominant incumbent digital platforms. The Committees have identified general practices that must be reformed, given concrete recommendations, and provided increased resources for implementing these needed actions,” Cooper added.

Finally, said Cooper, “We also support and recognize that the recommendations keep Congress out of the business of trying to pick winners, when they are just as likely to pick losers. Instead, all the remedies on the table empower antitrust and regulatory experts to use their judgement, based on the clear goals defined by Congress, to build adequate consumer protections in the world of big data.”

Contacts:
Mark Cooper, 301-384-2204
Amina Abdu, 202-656-1282

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