Chairman Cicilline’s Opening Statement at Antitrust Subcommittee Hearing on Corporate Profiteering

WASHINGTON, DC – Congressman David N. Cicilline (RI-01), Chairman of the Subcommittee on Antitrust, Commercial and Administrative Law, delivered the following opening statement at today’s hearing, “Reviving Competition, Part 6: Rebuilding America’s Economic Leadership and Combatting Corporate Profiteering.”

 A transcript of the Congressman’s remarks is below.
 

Statement of the Honorable David N. Cicilline, Chairman,Subcommittee on Antitrust, Commercial and Administrative Law
 Hearing on “Reviving Competition, Part 6: Rebuilding America’s Economic Leadership and Combatting Corporate Profiteering”
 Tuesday, May 17, 2022 at 1:00 p.m.Room 2141 of the Rayburn House Office Building

 As a country, we are all fed up with crisis after crisis caused by giant corporations lining their pockets while the rest of America struggles to make ends meet.
 The latest crisis is the crippling shortage of baby formula. Over 40 percent of the most popular baby formula products are out of stock. Parents of infants with allergies are desperate to find the specialty formulas that their children need to survive. And when parents can find formula in stores, the price is up almost 20 percent over what it was a year ago.
 This is completely unacceptable. And we know why it’s happening. Just two companies control 80 percent of baby formula production in the United States. When something goes wrong with one of them, the entire country feels the consequences.
 We’re seeing this today. The largest U.S. formula producer, Abbott, shut down one of its plants in February due to bacterial contamination. Because of the loss of one plant of one company, formula shelves are empty. We do not have the diversity of other, smaller companies capable of picking up the slack. Our supply chain is not resilient or nimble enough.
 We understand how grave a problem this is. The baby formula shortage is a case study of the market concentration problems plaguing the U.S. economy. When we allow corporations to concentrate their control, we allow them to concentrate all production capacity—and that concentrates risk.
 It is a system designed to maximize short-term profits at the expense of safety and resiliency. And we are now suffering because of it.
 But while hardworking Americans are feeling the pinch, big corporations are not. Gas prices provide the perfect example. They have hit record highs—over $4 a gallon in nearly every state. But here is what is telling: Big Oil’s profits are also at record highs. Last year, major oil companies posted their highest profits in nearly a decade. And this year, Chevron’s first-quarter profits quadrupled over last year’s; ExxonMobil and BP at least doubled their first-quarter profits; and Shell’s profits hit a new record high.
 American families are hurting. Workers have been furloughed due to supply chain disruptions. Paychecks are stretched, and consumers are paying more and getting less. Meanwhile, corporate executives are doing better than ever.
 According to The Wall Street Journal, the total compensation for most executives rose by 12 percent, while the median pay for CEOs of the biggest U.S. companies reached $15 million last year, a record for the sixth consecutive year.
 Certainly, part of what has caused high consumer prices includes crises that are largely beyond our control, such as the COVID-19 pandemic and Putin’s war in Ukraine. But these events also laid bare the deeper and more systemic diseases that have been plaguing our country for decades now. American economic leadership has been undermined by years of consolidation, underinvestment, and focus on short-term profits at the expense of everything else.
 As Professor Reich has written, “there’s a deeper structural reason for inflation, one that appears to be growing worse: the economic concentration of the American economy in the hands of a relatively few corporate giants with the power to raise prices.”
 As my colleague and friend, Senator Amy Klobuchar has said, “America’s market power problem cuts across our entire economy . . . We see it in everything from cat food to caskets.”
 Because of corporate consolidation, wages have stagnated, and consumer prices across the board are climbing higher and higher.
 All the while, corporations are reporting windfall profit margins in one sector after another. They are taking advantage of the current crises to raise prices even higher. As the Economic Policy Institute recently reported, since the onset of the pandemic, nearly 54 percent of the spike in the costs of goods and services is attributable to higher profit margins by corporations.
 Over the past several decades, the largest corporations have chronically underinvested in research and development and their workforce. In fact, instead of investing in more resilient supply chains, innovation, new facilities, or workers—the firms in the S&P 500 spent 91 percent of their income on share buybacks or dividends between 2009 and 2018. Meanwhile, they have shipped jobs and manufacturing overseas and become strategic partners with America’s adversaries.
 While this system is working great for wealthy CEOs and Wall Street, it is a disaster for working Americans who are struggling with high prices, empty shelves, and few competitive alternatives in the marketplace. And it is unsustainable in the long term because it threatens our economic prosperity and our national security.  
 Americans are angry. They are fed up with CEOs boasting that record profits are being fueled by the pain being inflicted on working families. Americans are overwhelmingly demanding that Congress end the corporate greed and runaway consolidation that are at the heart of this crisis.
 Today’s hearing is an opportunity for us to explore the root causes of these concerns and hear about solutions. I thank our panel of esteemed witnesses for appearing before us.
 

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