ICYMI: Delrahim Argues Critics Have Failed To Make Evidence-Based Case For New Antitrust Approach
Yesterday, in his keynote speech for the Stigler Center’s Antitrust And Competition Conference, Assistant Attorney General of the Antitrust Division Makan Delrahim said, “Based on my collective experiences over the past 25 years, I believe the antitrust consensus approach is flexible to new business models in digital markets, and that there is no persuasive evidence that antitrust itself has ‘failed.'”
He emphasized that traditional ‘Chicago School’ theories of antitrust can adapt to digital markets, a voice of reason at a gathering of tech critics.
Delrahim called for an evidence-based approach to antitrust enforcement and said, “If there is clear evidence of harm to competition in digital platforms, enforcers must take vigorous action and seek remedies that protects American consumers, so that free markets or consumers they don’t instead bear the risk of failure.”
He added, “”As enforcers who bear the burden of proof, we must demand hard evidence of anticompetitive harm before rushing to condemn as unlawful business practices that fuel innovation and thus dynamic competition. An agency or court considering a Section 2 claim under the Sherman Act must be careful not to kill the golden goose of innovation.”
Below are five takeaways from his speech and select highlights.
1. Delrahim also argued antitrust should not be called upon to cure our economic woes, but instead focus on competition and consumers
“I view the narrow focus on competition and consumers as a feature, not a bug. The burden of curing our economic woes rests on the shoulders of policymakers and agencies with the institutional capacity and statutory mandate to tackle other complex issues. Shifting this responsibility to antitrust enforcers would require us to make trade-offs between competition and non-competition goals on a case-by-case basis. I view this as dangerous. It would threaten to disrupt the bipartisan economic consensus that has emerged by making antitrust a political tool that changes significantly depending on the party in power.”
2. Delrahim believes antitrust law is flexible and responsive to new products and markets
“Over the past several decades, antitrust law has responded to new and innovative products and markets to protect against novel threats to the competitive process. Enforcement agencies have developed a strong expertise as new types of assets emerge and consumer preferences shift, and have brought successful antitrust challenges to dismantle barriers to competition.”
3. Delrahim argued critics have not made an evidence-based case to revisit antitrust standards in digital markets
“More importantly, critics of purportedly increasing concentration have not made an affirmative, evidence-based case that revising existing antitrust standards would be an effective remedy. Nor have they demonstrated that a concentration-focused overhaul of the antitrust laws would benefit competition and consumers. Tempting as it is to hope for a lower standard of proof for proving antitrust violations, existing evidentiary standards serve a purpose—they ensure that impartial courts serve as a check on government power.”
“In the context of digital platforms, an evidence-based approach is critical to protecting innovation. Disruptive competition and new business models are healthy, and should be encouraged. It is rational, pro-competitive, and pro-consumer for new entrants to charge low prices.”
4. Delrahim argued common citations of rising industry concentration are relying on an overly broad data set and pushed back against the “guilt by correlation” or “big is bad” argument from critics
“Antitrust enforcement requires the antitrust consensus to be subject to constant re-evaluation and scrutiny to maintain its foothold. But a ‘guilt by correlation’ approach implying a causal connection between enforcement standards and specious concentration measures does not advance the conversation. Enforcers need to be more vigilant, but they also need to be humble.”
“[A]ntitrust economists understand that monopolies often can be fragile, and they give rise to new entrants. Indeed, it is the prospect of gaining lawful monopoly power that provides incentives to innovate and create products consumers want.”
5. Delrahim sees companies competing to protect user privacy and questioned the role of antitrust enforcement
“For example, some argue that U.S. or international agencies should simply to declare that data is the new digital currency, that online platforms have been exploiting data without consent, that loss of informational control is anti-competitive, and then impose eye-popping penalties by multiplying some measure of data value by the size of the customer base. I wouldn’t call that an antitrust remedy stemming from an evidence-based analysis. Such an approach ignores the economic nuance of revealed preference—that is, not every customer values their data, or their privacy, the same way. Money has face value, but privacy cannot yet be measured in nominal terms, and varies according to the type and utility of the data used.”
“A more effective approach grounded in evidence would be to ensure that there are sufficient incentives for new competitive entry in markets for platforms with network effects, while ensuring that customers who prefer established business models still have access to the product or service they want.”