FTC Hearing Highlights: Big Is Not Bad, Disruptive Competition In Tech, And The Strength Of Current Antitrust Laws
In today’s Senate Committee on Commerce, Science, and Transportation FTC nomination hearing, Mr. Joseph Simons argued, “Big is not necessarily bad. I also believe big is not necessarily good.” He added, “Oftentimes companies get big because they are successful with the consumer. They offer good service at low price and that’s a good thing and we don’t want to interfere with that.” He made clear that his FTC will focus on harms to consumers and competitive effects due to market power, rather than condemning companies due to their size.
Beyond highlighting the level of competition in and due to the industry, Ms. Christine S. Wilson affirmed, “that the antitrust laws as written today are broad and flexible and are capable of adapting to evolving technology.” She echoed Simons by noting the importance of “sound economic analysis” in the FTC’s enforcement work.
These view echoed that of American Action Forum’s President Doug Holtz-Eakin who wrote this morning, “However, focusing on size per se is a fundamental attack on the core principles of antitrust policy that have served the United States well. Since the 1970s, antitrust has been guided by the ‘consumer welfare standard’ — the notion that antitrust policy should maximize the consumer surplus generated in market activity. This single standard generates a desirable consistency in decision-making that is not possible in a system with multiple criteria.”
Lastly, Mr. Rohit Chopra noted that America’s leading technology companies compete with each other and other sectors, making it difficult to predict market outcomes.
Federal Trade Commissioner Nominee, Joseph Simons, Argues “Big Is Not Necessarily Bad,” And Enforcement Should Not Interfere With Successful Companies’ Growth Through Serving Consumers. “Big is not necessarily bad. I also believe big is not necessarily good. Sometimes big is good. Sometimes big is bad. And sometimes it’s both at the same time. Oftentimes companies get big because they are successful with the consumer. They offer good service at low price and that’s a good thing and we don’t want to interfere with that. On the other hand, companies that already big and influential can sometimes use inappropriate means, anticompetitive means, to get big, or to stay big. If that’s the case, then we should be vigorously enforcing the antitrust laws and attacking that conduct and prohibiting it.” (Joseph Simons, “Nomination Hearing,” Senate Committee On Commerce, Science, And Transportation, 2/14/18)
Federal Trade Commissioner Nominee, Christine Wilson, Says America’s Antitrust Laws Are “Broad And Flexible and Are Capable of Adapting to Evolving Technology.” “I know there have been questions about whether the antitrust laws as currently crafted are sufficient to address these issues. I would like to affirm my view today that, in fact, that the antitrust laws as written today are broad and flexible and are capable of adapting to evolving technology.” (Christine Wilson, “Nomination Hearing,” Senate Committee On Commerce, Science, And Transportation, 2/14/18)
Federal Trade Commissioner Nominee, Rohit Chopra, Notes America’s Leading Technology Services Compete With Other Sectors Of The Economy, In Addition To Competing With Each Other. “I want to offer a few observationes. One is that unlike most sectors of the economy, large technology firms don’t just compete with each other, they’re competing with several other market verticals and sectors of the economy. They’re competing with healthcare companies. They’re competing with retail and so many other major sectors. This has been a real challenge for equity and debt analysts seeking to predict how industries will evolve, how profitability and market dynamics will occur, and I think that it implores us at the Commission to make sure we have the adequate talent, analytical capabilities, and to engage in constant learning.” (Rohit Chopra, “Nomination Hearing,” Senate Committee On Commerce, Science, And Transportation, 2/14/18)
AAF’s Doug Holtz Eakin Says The Consumer Welfare Standard Generates A Desirable Consistency In Decision-Making That Is Not Possible In A System With Multiple Criteria. “Focusing on size per se is a fundamental attack on the core principles of antitrust policy that have served the United States well. Since the 1970s, antitrust has been guided by the ‘consumer welfare standard’ — the notion that antitrust policy should maximize the consumer surplus generated in market activity. This single standard generates a desirable consistency in decision-making that is not possible in a system with multiple criteria.” (Doug Holtz Eakin, “New Standards For Antitrust?,” American Action Forum, 2/14/18)
AAF’s Daily Dish Argues “It Could Be the Case That a Merger Increases Market Competition, And As A Result Raises Consumer Welfare.” “For example, if the standard were ‘consumer welfare and capping the size of the largest firm,’ then some mergers that would raise consumer welfare would be disallowed because the resulting firms would be too large. But the current standard ensures that mergers are allowed when they benefit consumers. It could be the case that a merger increases market competition, and as a result raises consumer welfare. If so, the merger should pass muster. But if increased concentration is detrimental to the well-being of consumers, the current standard gives a clear answer: no. There is simply no reason to change the standards for antitrust policy.” (Doug Holtz Eakin, “New Standards For Antitrust?,” American Action Forum, 2/14/18)