What You Need To Know About Dangerous Calls For Antitrust Overhauls
Recent calls for antitrust overhauls present challenges not only for implementation, but for the long-term health of the US tech sector. Today’s empirical antitrust framework has proven time and time again that consumers and competition are priority one. As advised by trusted antitrust experts, altering this framework could have a myriad of unintended consequences — including some directly harming consumers, small businesses, and startups.
— Antitrust legislative proposals should align with maintaining a “competitive marketplace.”
— Politicized, overbearing antitrust regulation would have widespread consequences, ultimately harming consumers.
Antitrust legislative proposals should align with maintaining a “competitive marketplace.”
Antitrust laws do not “exist to punish success, but to promote competition,” highlights Rep. Ken Buck (CO-04). “Second, any legislative proposals that emerge from our inquiry should be consistent with maintaining a free and competitive marketplace…. Regulators are often not nimble enough to keep pace with a dynamic marketplace so that the regulatory regime has the effect of entrenching incumbents rather than encouraging competition. Third, big is not necessarily bad. Antitrust laws do not exist to punish success, but to promote competition. Congress should help foster an atmosphere where ideas flourish and startups can innovate fairly, fairly compete, grow and succeed.”
The focus of antitrust is to maximize output, ultimately benefiting consumers and workers, reminds Herbert Hovenkamp of University of Pennsylvania Law School. “Any time a merger or other practice reduces a firm’s costs or improves its products or services, it boosts competition by putting pressure on obsolete or less efficient rivals. But protecting these rivals should not be the purpose of the antitrust laws. Rather, the focus of antitrust laws should be on maximizing output, which benefits both consumers and workers.”
The current antitrust framework is built to prevent anti-competitive harm, ultimately protecting consumers, notes Danny Sokol of the University of Florida Levin College of Law. “Antitrust requires predictable and effective rules that protect consumers and promote innovation and risk taking. The current institutional design of antitrust and the development of antitrust case law promotes such an approach. This institutional design has been long-standing across both Republican and Democratic administrations. Antitrust can and will adjust to particular facts and business realities when there is anti-competitive harm.”
The current antitrust framework is “up to the job” thanks to its objectivity and flexibility, highlights Joshua Wright of George Mason University. “Modern antitrust law, guided by the consumer welfare standard, is, to put it plainly, up to the job… The consumer welfare framework has the flexibility to expand and contract enforcement in response to changes in sound empirical evidence over time. Indeed, it’s done so over time, with changing technology and changing understanding of business behavior.”
Before the establishment of the consumer welfare standard, antitrust enforcement lacked objectivity, resulting in uncertainty for businesses and consumers alike, noted Ryan Young of CEI. “This feeling that size itself should be a prosecutable offense ebbed and flowed over the decades, giving antitrust enforcement a distinct uncertainty and lack of clarity during the rule of reason era. In fact, during the New Deal, President Franklin Roosevelt reversed course almost completely, and wanted the government to actively encourage business cartels. After World War II, the old rule of reason standard resumed.”
Politicized, overbearing antitrust regulation would have widespread consequences, ultimately harming consumers.
Antitrust law should not be stretched politically beyond its intended purposes, reminds Former FTC Commissioner Maureen Ohlhausen . “Antitrust law is not designed for, nor intended to, correct a ‘problem’ in the market wholly divorced from the competitive process. In other words, concerns over fairness, consumer privacy, or the protection of small business should be addressed by regulatory actions or consumer protection laws, not antitrust. Using antitrust law to address non-competition factors, which may reduce competition or conflict with each other, reduces certainty and increases the risk of antitrust being used for industrial policy or political purposes.”
Overregulation could be detrimental to consumers, particularly in the realm of mergers and transactions, notes Assistant Attorney General Makan Delrahim. “I think there’s a lot that can be done short of a merger moratorium. I think by doing that, we might risk actually harming consumers because [there could be] mergers and transactions that could be pro-competitive.”
Calls for antitrust overhauls often do not determine whether they are needed “in the first place,” reminds Geoffrey Manne of the International Center for Law & Economics. “The common flaw with all of these arguments is that they are not grounded in robust empirical or theoretical support. Rather, they are little more than hunches that something must be wrong, conscripted to serve a presumptively interventionist agenda. Because they are merely hypotheses about things that could go wrong, they do not determine—and rarely even ask—if heightened antitrust scrutiny and increased antitrust enforcement are actually called for in the first place.”
Regulatory solutions often “miss the mark,” harming competition and efficiency, warns Rep. Doug Collins (GA-09). “Proposals to construct broad new regulatory regimes should be viewed with caution. Experience shows that regulatory solutions often miss the mark, solve problems less efficiently than free markets and can create new opportunities for anti-competitive companies to suppress competition through rent-seeking.”