Remarks as Prepared for Delivery: Keynote Address by Secretary Pete Buttigieg at the Anti-Monopoly Summit
Thank you, Morgan, for that introduction, and thank you for the invitation to address this timely Anti-Monopoly Summit. I want to recognize everyone here for your commitment to an American economy that works for everyone, not just for a few. Or, as President Biden would say, an economy that grows from the bottom up and the middle out, not the top down.
The lessons of experience, both distant and recent, remind us of the costs of waning competition and mounting concentration in any industry. Prices go up, worker pay suffers, and every part of a person’s life can get worse—from everyday basics like home internet service and grocery shopping to the life-altering domains of health care options and career pathways.
Today you’ve heard from a number of my colleagues on issues from junk credit card fees, to over-the-counter hearing aids, to unfair non-compete contracts—and I appreciate the chance to help round out the day with some comments on how the problem of concentration is affecting the transportation sector, and what we are doing about it.
As President Biden so often says, and as I know you’ve heard many times today, capitalism without competition is exploitation. Any market society, any capitalist system, depends on good government to ensure the conditions that make it competitive, not exploitative.
When we get that right, the result is a private sector doing what it does best: efficiently providing goods and services on competitive terms that empower consumers and workers. But only if we get it right. For the system to work, the public role must work. In fact, several public roles: There is a public role addressing market gaps in areas like basic research. There is a public role in regulating and enforcing safety requirements. There is a public role in providing public goods like our Air Traffic Control system. And yes, there is certainly a vital public role in ensuring adequate competition – as important in transportation as in any other sector, and in some ways even more so.
But for as long as I’ve been alive, in almost every mode of transportation, the tendency has been toward less competition and more concentration.
A little over a decade ago, the three leading ocean shipping alliances accounted for a little over 30% of global container shipping. Today, they control 80%. 45 years ago, there were 55 major freight railroads. Today, there are 6, of which four account for as much as 90% of the market. At the time of airline deregulation, many respected voices confidently predicted a future in which there would be dozens of more-or-less evenly matched airlines in the U.S. domestic market. Today, of course, the reality is that four dominant carriers account for two-thirds of market share.
That kind of concentration means the biggest companies don’t have to compete as hard for workers or customers, while smaller players get crowded out, and new entrants find it difficult to penetrate at all. Even leaving aside economic theory and just leaning on common sense, it seems unlikely that today’s exceptionally high levels of frustration and dissatisfaction among passengers and workers would somehow be completely unrelated to the exceptionally high levels of market concentration that has taken place. Nor is it reassuring, in the context of this dissatisfaction, to see how many firms in these industries seem to have invested less in the resilience of their own systems and people than in stock buybacks, dividends, and bonuses for executives.
For workers and customers alike, there is much in the transportation sector that needs to change. Just ask anyone in a rural area where there’s no real competition for an airline route, paying outrageous ticket prices if they can find service at all. Ask an American small business owner who needed to order something from across the Pacific Ocean during the pandemic, and faced sticker shock as the global alliances that control international shipping raised their rates by 1,000%.
Ask anyone who relies on an Amtrak route that’s on-time less than half the time—not because Amtrak did anything wrong, but because the freight railroad that hosts them got in the way—despite that freight railroad being required by law to prioritize passenger trains. Or ask someone who wound up stranded in an airport for their Christmas vacation because an airline ignored years of warnings from its own workers that failing to invest in better IT systems would lead to a logistical disaster.
In short: we shouldn’t be surprised to see the rise of monopolies and duopolies and oligopolies correlate with widespread frustration among the consumers and workers who deal with them.
So what are we doing about this in the transportation sector? We’re acting on two levels—dealing with the symptoms, as we have long been doing, and also paying more attention to the causes.
The symptoms (of markets that aren’t functioning properly and competitively) manifest across every mode of transportation, so this Administration is taking action on every front. The President signed the Ocean Shipping Reform Act, giving American companies leverage against these international cartels. We’re glad to see Pacific shipping rates have fallen by 80% from their extreme peak, but there remain major concerns in this sector, so it’s a good thing that this law gives government new tools to promote competition and strengthen our supply chain.
We’re taking action on trucking. (In the spirit of intellectual honesty, let me say that trucking is one of the few transportation sectors that is fragmented rather than concentrated – but for different reasons, it too is far from being a textbook healthy competitive market, and we are addressing problems and abuses in the sector.) We’ve ramped-up enforcement against moving company scams with Operation Protect Your Move, a nationwide sweep against fraudsters that hold people’s possessions for ransom. And we worked to improve wages and working conditions for drivers, to ensure new truckers and owner-operators aren’t put at an unfair disadvantage or trapped in a predatory leasing arrangement.
On rail, we supported Amtrak, stepped up safety audits and enforcement actions and rulemakings, before and after the Norfolk Southern disaster in East Palestine, and right now we are fighting for the Railway Safety Act, which I just learned is set to go before the Senate Commerce Committee next week, and which would empower us to go much further to strengthen safety practices and accountability.
I'll give you one example of what that legislation could do for safety and accountability. Today, by law the maximum fine we’re allowed to impose—even for a violation causing a crash that involves hazardous materials or claims lives—is about $225,000. That’s not enough to change the behavior of a company with an operating income near $5 billion. That legislation would significantly increase the maximum fine, to act as a genuine disincentive.
And I’ll add that even though it hasn’t gotten as much news coverage as it should, after being very clear about our view that railroads should negotiate with their unions and provide sick leave, we have seen many of them respond and do the right thing over the last few months. Union by union—including TCU, BRC, and IAM—and company by company—including UP, BNSF, CSX, and recently Norfolk Southern—we’re seeing announcements of new sick-leave agreements that will soon mean that a majority of U.S. union rail workers will have sick leave. And of course, we won’t stop until that figure rises from a majority to 100%, and will continue our push economy-wide until every worker in every sector has paid leave.
And when it comes to airlines, we are leaning into our authorities as a regulator to hold companies accountable. We’ve stepped up enforcement, promoted transparency, developed new regulations, added staff capacity, and we have secured enforceable commitments to provide better customer service.
This time last year, hardly any of the ten major airlines guaranteed things like free rebooking, hotels, and meal vouchers when they caused a delay or cancellation. Today, almost all of them do, because of enforceable commitments we secured after making clear to them that we would publicize their willingness or failure to do so with our airline consumer protection dashboard. More recently, we’ve been pushing airlines to guarantee that parents can sit with their kids on flights at no extra cost, because it’s simply and obviously the right thing to do. Some—though not all—have answered this call and started to provide these guarantees (you can check which ones on our dashboard), and we’re working on a common-sense rule to ban these junk fees for good.
Obviously our work is far from done, but I would argue that we have covered an exceptionally large amount of ground in two years, and we will have more to announce soon. My intention is to make sure that by the end of this term, we will be able to say that this administration ushered in the biggest expansion in transportation consumer protection enforcement and passenger rights since the deregulation era began.
But when the structure of an industry itself—whether by design or evolution—brings less consumer choice, worse service, diminished accountability, and disempowered workers, there comes a point where addressing those symptoms is not enough. We have to face root causes. That, of course, is where the anti-monopoly movement comes in. And it’s also where DOT’s competition authorities come in.
Recently some have expressed surprise at finding out DOT had competition authorities at all—but we very much do. Deregulation removed many of the rules governing pricing, service, and business practices, but reaffirmed requirements around competition and fairness at the same time. Observers of our department have long suggested that we should do more to take these tools, pick them up, and use them. I agree.
Wherever the circumstances meet our responsibilities and authorities, we will act to ensure a more competitive transportation sector. And since the law gives us particular responsibilities when it comes to aviation, we will be especially attentive in this sector. That spirit of responsibility is guiding us in our support for the Justice Department’s lawsuit against the proposed JetBlue/Spirit merger, and in our decision to conduct our own investigation.
Some commentators have raised objections to our involvement here, saying that it is a break from years or even decades in which we tended not to pick up these tools. To be clear to those who view this as a change in approach: I know it is. These times call for us to make sure we are doing what both the law and the moment require of us.
If we want to make sure that competition in the airline sector—and in transportation writ large—gets better, not worse, then we need to act accordingly, or else we will always be left chasing symptoms.
One critical tool at our disposal to hold the aviation industry accountable is our authority to enforce against unfair methods of competition. We can use this authority to combat anticompetitive practices that fall outside of antitrust laws, and do so at their incipiency, before the negative impact ripples across the market. Anticompetitive tactics deny consumers, workers, and small businesses the chance to make their own decisions, and skew a market system that is supposed to incentivize honest competition within markets to provide the best service at the best value, not clever manipulation of the market itself. So we are reinvigorating our use of these authorities to curb illegal tactics that undermine the free market and hurt consumers and workers.
And because access is often a barrier to competition, we’re also looking at ways to open up opportunities for new and smaller businesses to compete in the transportation space—which is more important than ever now that we’re in the middle of a generational effort to rebuild our infrastructure. For example, we’re working to build out a national network of electric vehicle chargers. As part of that effort, we put universal standards in place to ensure that the charging network is interoperable between different charging companies, so no firm can unfairly exploit its size or position, or exclude competitors from the opportunities of the future.
I also want to be sure that our own processes and tools don’t become part of the problem. So right now, we’re taking a close look at how some infrastructure gatekeepers may try to use standards setting or the regulatory process to cut off and shut down disruption or competition from smaller and sometimes more innovative companies.
The reality is that as industries become more concentrated, they lose the incentive to treat their employees fairly and deliver the best possible value to their customers. So while we’re working to make our markets more competitive, we’re also making efforts to reward those companies that put consumers and workers first, and impose real consequences for the companies that would rather drag us all into a race to the bottom.
Of course, we’re not doing this alone. We’re working on the Competition Council alongside colleagues like DOJ to address anticompetitive conduct; with the CFPB to get rid of junk fees; with the Federal Maritime Commission improving ocean shipping; and with the Surface Transportation Board to improve railroad conditions.
This is about ensuring that the future is better than the present by learning the lessons of the past. In some ways, it’s a matter of restoring what we already know can work. In other ways, it’s about renewing our regulatory frameworks and practices so they can match the scale of the challenges in front of us as we approach the second quarter of the 21st Century.
Right now we are rebuilding physical infrastructure that has needed work for decades. In doing so, we are acting to update, modernize, add, and in some cases replace the infrastructure we have been relying on. As we rebuild that physical infrastructure that has been eroded by the weight of tires and the passage of time, we also need to restore a competitive landscape that has been corroded by decades of permissive and deregulatory policy, frustrating workers and consumers alike in an era of cost-cutting and consolidation.
Across it all, the most important thing will be to remember that our market system exists in order to serve everyday American life, not the other way around. As workers, as consumers, as business owners, as citizens, every American who encounters any part of our transportation system – as we all do in countless overlapping ways every single day – deserves a government that is ensuring they are served by a fair market as well as looking out for their physical safety. I know that is the expectation of the anti-monopoly community gathering here. It is the expectation of the public, and of the President. And it is what we will continue to work to deliver every day.