Opinion

Congress Is Finally Putting the Cartels in Their Place

In a resounding victory for competition and American energy independence, the U.S. House of Representatives’ Judiciary Committee took action to prevent the Organization of the Petroleum Exporting Countries’ price fixing that has put foreign countries rather than American consumers first.  

By voice vote, the committee approved a bill cleverly titled the “No Oil Producing and Exporting Cartels Act,” amending the Sherman Antitrust Act so that this anti-competitive institution, based off collusion from oil-producing countries with vested financial interests, can finally face serious penalties for raising prices by intentionally working together to limit crude oil production.  

As a former assistant attorney general for the state of Iowa and a longtime staffer for the chairman of the Committee on Energy and Natural Resources, I have been calling for similar policy action for years. OPEC’s member companies successfully robbed the American people blind for decades because of Congress’ disinterest in updating the antitrust laws put on the books in 1914.

Who would have thought that the House would finally get the job done in 2019, under a divided power structure where hostility among the two parties has arguably reached an all-time high? Certainly not me. Washington is always full of surprises but usually not ones that are for the better.

It is true, though, that monopolies have never been popular with either Republicans or Democrats. The difference is that, today, Congress’ desire to do something about them is the highest it has been since the “robber barron” era.

The House and Senate Judiciary committees, chaired by Rep. Jerrold Nadler (D-N.Y.) and Sen. Lindsey Graham (R-S.C.), should seize on this bipartisan victory and make helping the Justice Department better police out-of-control cartels a hallmark of the 116th Congress. Based on the DOJ’s current agenda, next on the list should be the cartels in the movie and music industries that, like OPEC, have colluded together to raise prices higher than the market should bear on the American people.  

Antitrust remedies called consent decrees, federal agreements that set ground rules on behavior, were already signed to stop the entertainment industry’s abuses in the 1940s. To be clear, they have worked tremendously well, and aside from perhaps upping noncompliance penalties, no further Justice Department action is needed. However, given that Assistant Attorney General Makan Delrahim’s Antitrust Division is currently examining all the nation’s legacy consent decrees and that the Hollywood agreements appear to be at the top of its review list, it is essential that Nadler’s and Graham’s committees prove the value of these important agreements.

The last thing we should want is OPEC’s anti-competitiveness to trickle into Hollywood, but without these consent decrees in place, that’s exactly what will happen.  

In their absence, the major motion picture companies would almost certainly band together again to fix prices and stampede on independent competitors. In fact, even with the decrees in place, just last summer, AMC was accused of violating its consent decree by colluding with Disney, Sony and Universal to muscle a small theater out of the marketplace.

Getting rid of the music consent decrees for the American Society of Composers, Authors and Publishers and Broadcast Music Inc. would be even worse because of how closely the music copyright industry’s structure and intent seem to mirror OPEC’s. Ninety percent of music’s public performance licenses are in the hands of these two groups. They amassed this power because, like the oil-producing members of OPEC, music publishers decided to work together rather than compete against one another, seemingly so they would have free rein to raise prices by charging whatever they desire for playing rights.  

Just a few years ago, the Justice Department filed a civil contempt with ASCAP for violating its terms a few years back, resulting in a seven-figure settlement, so there is no need to guess on what will occur if the DOJ axes the consent decrees that mandate a set rate for the use of their entire repertoires. It’s already written on the song sheet for all to see.  

Leaving monopolies alone in industries where free markets don’t exist is never the answer. For over half a century, Washington learned this the hard way when it let OPEC turn ripping off American consumers into a sport. Congress finally indicated that inaction is action and that American consumers deserve better.

While short-term memory loss is not unheard of in our nation’s capital, I’m confident that moving forward, the House and Senate Judiciary committees will apply these same principles when reviewing the current happenings of the entertainment industry and every other sector on the antitrust traffic cops’ radar to ensure that consumer protections get better, not worse. After all, it’s one of the only things most of us can agree on as a nation today.

 

Denison Smith is a former assistant attorney general for the state of Idaho, staffer for Sen. James McClure (R-Idaho), and trustee of the Reason Foundation.

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