Antitrust Experts Explain Why Proposals To Overturn Antitrust Doctrine Are “Misguided” & “Unnecessary”
In response to recent proposals to rewrite antitrust law, a group of 23 antitrust economists, legal scholars, and practitioners penned a letter to the House Judiciary Committee explaining how the proposed rule changes are misguided and unnecessary. The authors state the proposals are “counterproductive to promoting competition and consumer welfare,” would undermine the rule of law, require agencies to pick winners and losers, and politicize the antitrust process. Highlights of the letter are below.
1. The American economy—including the digital sector—is competitive, innovative, and serves consumers well.
2. Antitrust enforcement has been, and continues to be, active and robust.
3. Existing antitrust laws effectively protect competition and consumer welfare.
4. Antitrust agencies should not be guided by politics and forced into picking winners and losers.
The American economy—including the digital sector—is competitive, innovative, and serves consumers well.
Claims that increased concentration automatically leads to decreased competition are unfounded. “Debate about whether the antitrust laws should be fundamentally re-written originated from a concern that markets have recently become more concentrated and that competition had decreased as a result. The popular narrative, that increases in concentration have caused harm to competition throughout the economy, does not withstand close scrutiny. In reality, most markets in the American economy—including digital markets—are competitive, and thriving, and create huge benefits for consumers.”
When looking at digital markets in particular, the national-level trend has been towards more competition. “The most recent studies suggest that the observed changes in national-level concentration are brought about by the expansion of more productive large firms into local markets leading to, in these economists’ own words, ‘more, rather than less, competitive markets.'”
— “Further, despite occasional claims to the contrary, the literature has not uncovered systematic competition problems in digital markets. The best interpretation of existing evidence is that the deployment of new technology by traditional industries has increased economies of scale and scope and enhanced local competition. None of the economic evidence supports claims about generally enhanced market power in markets inhabited by the companies that develop such technological tools.”
Antitrust enforcement has been, and continues to be, active and robust.
Antitrust agencies are actively enforcing the law. “There is little evidence to support the view that anemic antitrust enforcement has led to a systematic rise in market power in the American economy. The evidence is especially weak as it relates to digital markets.”
Antitrust enforcement in merger transactions has not declined in recent years. “Research indicates that merger enforcement has increased relative to merger volume in the past several decades, and there is no evidence that anticompetitive mergers are more likely to pass muster today than in decades past. The claim that antitrust enforcement has been lax, or that anticompetitive mergers have been on the increase, is just not borne out by the evidence.”
High-tech markets are often the subject of antitrust agencies’ scrutiny, indicating that enforcement in digital markets is robust. “Among others, the agencies have brought—and won—monopolization claims in Microsoft, McWane, Dentsply, and Qualcomm, and the FTC settled monopolization allegations against Intel in the microprocessor market.”
Existing antitrust laws effectively protect competition and consumer welfare.
The established antitrust framework is strong and applicable to the markets of today’s information age. “Antitrust law has developed incrementally through the common law approach. A strength of antitrust law is that it can incorporate learning about new business practices and economics to protect competition in an evolving economy. The existing antitrust laws and enforcement framework, when correctly applied, are more than adequate to deter anticompetitive conduct today, including in new and growing digital markets.”
Using the standardized yardstick measure of consumer welfare, antitrust can be applied to a variety of modern market factors. “The consumer welfare standard also has the benefit of tethering antitrust outcomes to modern economics. Implementation of the consumer welfare standard by courts and enforcers took the vague concept of ‘protecting competition’ embodied in the antitrust laws and for the first time breathed meaning into it through the common language of economics. This allows for robust scrutiny of a variety of market factors including price, quality, and innovation.”
Antitrust agencies should not be guided by politics and forced into picking winners and losers.
A factual and economic grounding is necessary for proper antitrust enforcement. “Many of the radical reforms being proposed today seek to return antitrust to what it was in the 1960s. But antitrust during that time was based primarily on per se rules that prohibited economic analysis and fact-based defenses. This created a body of law, fundamentally marred by internal contradiction, that frequently protected individual competitors over consumers and did not focus on the central goal of protecting competition. Congress has considered and rejected radical proposals to overhaul antitrust in the past and should do so again.”
Some of proposals would abandon the consumer welfare standard and revert antitrust to older eras of vague and incoherent enforcement rules. “These alternatives have been tried and they have failed. They were rejected in favor of an evidence-based approach, grounded in modern economics, that focuses on maximizing the welfare of American consumers and through well-functioning competition. They should be rejected again.”