STRS: The Consumer Welfare Standard That Drives American Antitrust Policy Is The Gold Standard
Last week former Italian Prime Minister Mario Monti wrote an op-ed in The Washington Post arguing that Europe’s antitrust regime is “stronger” than America’s.
But, as Assistant Attorney General Makan Delrahim recently said, “I don’t measure the antitrust division’s success by the fines or convictions we get or how many cases in litigation we bring. I define US antitrust law’s success as the fact that we have these innovators. We have the Googles and the Facebooks and the Microsofts and the Ubers and the Airbnbs coming out of the United States. How many of those innovative companies are coming out of Europe or Korea or China?”
Monti advances three core arguments that fail to capture the benefits of America’s current approach to competition policy in the tech sector.
Monti argues U.S. competition policy is “full of contradictions” and “has been somewhat slower to adapt to new challenges.” However, the consumer welfare standard is clearly defined, flexible to new business models, and ensures all antitrust actions are grounded in evidence that a company’s practices are actually harming consumers.
—As Delrahim recently argued in Rome, “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 consumer.” He went on to remind his audience that the consumer welfare standard “requires enforcement built on credible evidence that a practice harms competition.”
Monti argues that Europe has mostly found the right balance between industry, consumer, and worker interests. Yet, the United States’ approach to antitrust has yielded enormous benefits for the American tech sector, consumers, and its workers.
—Industry Leaders And Entrepreneurs: The United States accounts for 54 of the top 130 technology companies in the world, and seven of the top 10. A World Economic Forum study found 57 startups reached “Unicorn” status in 2017 — a valuation of at least $1 billion — but only four of those 57 hailed from Europe.
—Workers: The Department of Commerce’s Bureau of Economic Analysis has found employment in the digital economy is growing at more than double the rate of the overall economy, 3.7 percent to 1.7 percent. Workers in the tech sector earned an average annual compensation of $114,275 in 2016, compared to economy-wide average of $66,498.
—Consumers: Economists Erik Brynjolfsson, Felix Eggers, and Avinash Gannamaneni found consumers value leading tech services immensely, and would have to be paid $17,500 to forgo the use of online search engines for a year.
Monti argues that Europe has insulated its antitrust process from politics, but ignores that the consumer welfare standard helps to ensure the impartiality and non-political nature of antitrust enforcement. Broadening its scope to solve other economic and political challenges risks politicizing competition policy.
—As U.S. Senator Mike Lee (R-UT) noted in a Judiciary Committee hearing, “The consumer welfare standard ensures relatively consistent antitrust enforcement and provides certainty to businesses, which can then operate knowing the laws will not drastically change from one administration to the other depending on who’s in power and which political party to which they belong.”
—As CCIA’s Marianela Lopez-Galdos wrote, “factoring other public interest concerns into the antitrust analysis could result in inconsistent application of competition norms and of political intervention in the decision-making process.”