(Bloomberg) -- Former Treasury Secretary Lawrence Summers said he’s concerned about a populist tilt among US antitrust regulators, including comments this week that disparaged private equity, warning that the trend could prove harmful to the economy.
“It’s very important that we have antitrust policy based on facts, based on economic science, based on consumers -- not on a kind of generalized feeling of hostility and outrage towards business,” Summers told Bloomberg Television’s “Wall Street Week” with David Westin. “I’m frankly worried about that.”
Assistant Attorney General Jonathan Kanter said in a speech in New York on Wednesday that “corporate power has grown to levels that leave our fellow citizens concerned and confused. On a daily basis, I am asked how the laws meant to protect competition went astray, and what we can do to reinvigorate antitrust enforcement.”
Kanter also said that “the consumer welfare standard has a blind spot to workers, farmers, and the many other intended benefits and beneficiaries of a competitive economy.”
Summers warned that expanding the government’s antitrust mission could be hazardous.
“What is badly misguided and potentially dangerous to our economic future is the set of doctrines that people jokingly refer to as ‘hipster antitrust,’” added Summers, a Harvard University professor and paid contributor to Bloomberg Television. “That’s a theory that says antitrust shouldn’t be about maximizing benefits to consumers” but about other, abstract objectives, he said. “That tilts very easily into a kind of dangerous populism.”
In an interview with the Financial Times, Kanter said private equity firms sometimes pursue deals “designed to hollow out or roll up an industry and essentially cash out.” Such a business model is “very much at odds with the competition we’re trying to protect,” Kanter told the newspaper.
If Kanter, the head of the Justice Department’s antitrust division, sees mergers that threaten to create a monopoly, he should block them, Summers said. Similarly, he should prosecute companies he believes are engaging in “inappropriate, exclusionary business practices,” Summers said.
“But I don’t understand what his argument is that whether a firm is owned by public shareholders or private equity shareholders should” determine the outcome, he said.
Summers said that some of Kanter’s comments “frankly sounded like some of the populist rhetoric that the FTC commissioner, Lina Khan, has engaged in.” Khan has pushed for progressive policies intended to limit the power of big corporations and increasing regulations on company data policies.
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