Minnesota House is working to put an end to state monopolies

4 April 2022

The most significant antimonopoly reforms offered up a couple of weeks ago by a Minnesotan did not come from Sen. Amy Klobuchar, but rather the Minnesota House.

The legislation would overhaul Minnesota’s antimonopoly laws and provide new tools for reclaiming economic power from massive corporations. During the Gilded Age, the Minnesota Legislature lead the way in taking on the railroad and grain monopolists; now policymakers have a chance to lead the fight against Big Tech and others in our new “Gilded Age.”

The effort to curb monopoly power is often viewed as one reserved for the federal government. It is true that enforcers at the Federal Trade Commission and the Department of Justice, among others, have significant authority to reduce corporate concentration. However, the effectiveness of those agencies is highly dependent on who occupies the White House, and even more vigorous enforcement is not enough to overcome four decades of bad judicial precedent that has eroded our nation’s protections from economic concentration. We need reform and while Congress is gridlocked, our state legislators have an opportunity to play a meaningful role; and Minnesotans need them to.

Families across the state are suffering under the weight of record inflation that has caused wages to fall back to their pre-pandemic levels. Profiteering from corporate giants like 3M and Cargill is to blame as pricing power is estimated to account for as much as 70 percent of the past year’s price hikes. Consumers are not the only ones feeling the squeeze from monopoly power, Minnesota workers and small businesses are also being crushed, with Amazon offering a particularly powerful example.

The Center for Rural Policy and Development, in a study on Amazon’s impact in rural communities, found the number of retail firms in rural Minnesota has declined by nearly 23 percent since 2000. Meanwhile the fees Amazon charges many sellers on its platform have risen to 34 percent. For workers, a report from the National Employment Law Project and the Awood Center found the rate of injury at Amazon’s Shakopee warehouse was higher than any other industry in Minnesota and five times higher than the statewide rate for private-sector workers. Amazon has also dragged down monthly average wages for the entire warehousing sector – from $4,362 to $3,956 – since 2015.

It could not be clearer how important it is for policymakers to challenge monopoly power in Minnesota. Three bills from DFL Reps. Steve Elkins and Zack Stephenson would do exactly that. Collectively the legislation would update Minnesota’s antitrust laws with key definitions, create a new abuse of dominance standard that would return our antitrust laws to their original intent, and enshrine the Robinson-Patman Act into state law, a key protection for local retailers.

Currently Minnesota’s antitrust laws do not include a definition of monopoly, nor does it include any mention of monopsony, which is a buy side monopoly. HF4143 would fix that and would also increase the civil and criminal penalties for violating the state’s antitrust laws. The inclusion of monopsony will help address the rise of corporate power over labor markets. The U.S. Treasury Department recently completed an extensive analysis of the impact concentration has on workers and concluded wages are at least 20 percent lower nationwide than they would be if labor markets were more competitive.

While these definitional upgrades are impactful, the core failure of antitrust law to protect Minnesotans from monopoly power has been the courts adoption of the consumer welfare standard in recent decades. This doctrine is a warped interpretation of antitrust law that relies on a narrow focus on prices that strips away how powerful corporations harm small businesses and workers. HF4144 would reinvigorate Minnesota’s antitrust laws by creating new guidelines focused on powerful firms. The legislation would establish what constitutes a dominant firm and prohibit such companies from using their dominant power to engage in abusive and anticompetitive tactics such as creating barriers to entry or by forcing workers to accept restrictive contracts.

Justin Stofferahn

Beefing up antitrust law will not be complete, however, without addressing predatory pricing. Monopsony power does not just harm workers, powerful buyers like Walmart have squeezed suppliers into offshoring production while destroying local retailers with artificially low prices. HF4142 would combat this by putting the federal Robinson-Patman Act into state law. The act, which has not been enforced in recent decades, prohibits discriminatory pricing. Strong enforcement in the 1960s helped create a vibrant and dynamic retail sector along with a strong industrial base.

With increasing inequality, stagnant wages, declines in entrepreneurship, rising inflation and the hollowing out of communities, it is clear that monopolists are eroding economic opportunity. Minnesota, for a second time, has a chance to lead the battle against concentrated power. We must seize that chance.

Justin Stofferahn lives in White Bear Township and is a public affairs professional who has worked on a variety of tax and economic development issues and is a member of the Minnesota Main Street Alliance leadership team.

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