ICYMI: DOJ Antitrust Division AAG Makan Delrahim – “Protect Competition, Not Competitors”
On the heels of 60 Minutes’ one-sided segment on competition in the tech sector, DOJ Antitrust Division leader Makan Delrahim noted, “The goal of the antitrust laws is to protect competition, not competitors.” A few highlights from his speech:
“I don’t endorse that view,” said Delrahim on critics’ assertions that antitrust is unequipped to address competition issues in the digital arena. “As you are all aware, some critics assert that the antitrust consensus is not equipped to address competitive threats posed by new developments in technology—digital markets and platforms in particular. I don’t endorse that view. Indeed, last month at the University of Chicago Booth School of Business, I emphasized that the bipartisan antitrust consensus is flexible to challenges posed by digital platform markets because it can incorporate the latest economic wisdom in determining whether business practices or transactions are harmful to competition and consumers.”
Delrahim advocates for an evidence-based approach to antitrust – built on credible evidence that a practice harms competition and the American consumer. AAG Delrahim focused “on one prong of the antitrust consensus—what I, and others, refer to as an ‘evidence-based’ approach to antitrust law enforcement. That approach requires enforcement built on credible evidence that a practice harms competition and the American consumer, or in the case of merger enforcement, that it creates an unacceptable risk of doing so.”
The consumer welfare standard “is flexible to new business models.” Delrahim also focused “on the other prong of the antitrust consensus—the ‘consumer welfare standard’—and how that standard is flexible to new business models generally and digital media markets, in particular.” While some critics of the consumer welfare standard have wrongly claimed it focuses only on price, AAG Delrahim stressed other relevant factors it uses to assess market competitiveness:
—Innovation: The standard assesses whether there has been harm to innovation. “In a free market economy, new businesses emerge by offering consumers something new, rather than simply more of the same. For that reason, innovation is inherently disruptive, making it a target of entrenched business models that see existential threats from new entrants. Competition policy should encourage these threats to incumbents, not restrict them. The cycle of dynamic competition almost invariably accrues to the benefit of consumers.”
—Consumer Choice: The standard also analyzes whether consumer choice exists. “Of course, we must be careful not to condemn the elimination of choice as inherently suspect—particularly in the context of merger review. After all, the goal of the antitrust laws is to protect competition, not competitors. A substantial number of mergers result in fewer choices in the marketplace, yet they nevertheless pose no serious concerns to competition, or indeed may be clearly procompetitive.”
—Product Quality: The state of product quality is also relevant. “Courts recognize that a reduction in competition can result in less innovation, and less of a need to provide a high quality product. The notion of ‘quality’ is not limited—it incorporates more than simply the shininess of the new product or the box it arrives in. Particularly for media and technology companies, quality is best captured as the entire customer experience.”