ICYMI From Antitrust Experts: Don’t Fix What’s Not Broken
Earlier this month, the Democractic HJC report introduced an array of misguided recommendations for antitrust reform. In light of these unfounded claims, antitrust experts agree: implementation of the report’s recommendations could harm consumers, innovation, and the broader economy. New commentary from a conference held by the Computer & Communications Industry Association (CCIA) and Competition Policy International reaches a consensus that recommendations from the Democratic HJC report would harm the very nature of the U.S. innovation economy—one that has long bolstered the welfare of tech firms, small businesses, and consumers.
The conference featured a fireside chat between former FTC Chairman Timothy J. Muris and former FTC Acting Chairwoman Maureen K. Ohlhausen. Moderated by Marianela López-Galdos, Global Competition Counsel of CCIA, the panel discussion included Andrew Gavil, Professor at Howard University School of Law; Abbot B. Lipsky, Competition Advocacy Program Director at Global Antitrust Institute; and Daniel Sokol, Professor at the Levin College of Law. Highlights include:
— Consumer welfare is the linchpin of the modern, successful antitrust framework.
— Antitrust policy should encourage—not hinder—innovation.
— Today’s existing antitrust framework is equipped to maximize efficiency and competitiveness.
Consumer welfare is the linchpin of a modern, successful antitrust framework.
Criticizing the technology sector based on its success will eventually harm consumers. Timothy J. Muris, Former FTC Chairman: “I’m not opposed to bringing these cases, but you have to look at them individually within this consumer welfare standard. The House Judiciary Committee appears to be condemning all the big tech companies, which is very strange. It’s doing it on basis, that seems to me, to be criticizing them on the basis of their success, not on the basis, the fact that they harm consumers.”
A failure to recognize antitrust policy’s impact on consumers runs counter to the whole idea of competition on the merits. Maureen K. Ohlhausen, Former FTC Acting Chairman: “One thing that I was struck at the hearing, with the big tech CEOs, was how much of the discussion was not focused on impact on consumers at all… I think the whole idea of competition on the merits, actually, seems to be at issue. Right? We often talk about that in antitrust. That’s what antitrust is supposed to protect. Right? Competition on the merits. Then we’re worried if there’s something, collusive behavior, or some sort of exclusionary conduct that keeps people from being able to compete on the merits. But for pricing, that seems to be just one of the core ways competition on the merits occurs.”
Consumer choice allows the technology sector to deliver widespread benefits to the economy. Andrew Gavil of Howard University School of Law: “It would be a mistake, I think, finally, to pay lip service to the consumer benefits and the consumer value of those companies. It is clear that their growth has been spurred on by consumer choosing their services and I think that one concern I have is the sort of throw the baby out with the bathwater problem, that in all of the criticisms, I’m not sure that the benefits these companies have brought to the economy have been fully aired out.”
The diversity of lines of business in the technology sector ultimately benefits consumers. Daniel Sokol, Professor at the Levin College of Law: “One thing that we tend to not put enough emphasis on with regard to the discussion of the report is, there may in fact be value creation in these platforms… because, in fact, consumers may benefit by entry or potential entry of any number of companies, including some of the same companies that use the information that they may have in one area to potentially enter into another area… And I think that if we believe the report says that we’re concerned about the power that certain companies have, wouldn’t we want to actually have the pro-competitive side basically breaking down the positions of existing companies in those areas, let alone having the opportunity, to a certain extent.”
Antitrust policy should encourage—not hinder—innovation.
The U.S. antitrust framework has long recognized and preserved the major role of innovation in driving economic growth. Abbot P. Lipsky of Global Antitrust Institute: “It’s a matter of near universal consensus among micro economists that innovation is the main source of improvement in economic well-being and even a modicum of attention, the economic history will amply confirm the validity of that view. Antitrust absorbed that recognition a long time ago, and is simply not subject to any credible charge of excessive focus on short-term price effects.”
Overbearing antitrust action could potentially harm the U.S. innovation advantage. Abbot P. Lipsky of Global Antitrust Institute: “It really struck me that an American legislative effort would not very seriously consider the possible adverse ramifications of not only adopting these regulatory solutions with respect to some of the world’s most innovative companies, that happen to be American companies, but also would fail to reflect on how the implementation of similar doctrines by foreign antitrust agencies might be regarded as an adverse impact that our legislature should take up and consider how to deflect.”
Today’s existing antitrust framework is equipped to maximize efficiency and competitiveness.
Antitrust reforms should be approached with caution to ensure that they maximize innovation and competition in the technology sector. Andrew Gavil of Howard University School of Law: “We do need some competition policy reforms, we do need to think about how people access venture capital, how they enter businesses, how they promote innovation in established businesses. Those are all things that we should think about. But we should think carefully about whether a judge, a federal judge, sitting in an antitrust case is really going to be able to trade off and evaluate the interests of small businesses versus shareholders versus the company versus employees versus unions versus consumers.”
A Glass-Steagall for digital platforms is not justified because the technology sector does not have enormous public externalities in risk taking like the finance sector. Abbot P. Lipsky of Global Antitrust Institute: “With regard to banking regulation models, for example, there’s an obvious difference that in a fractional-reserve banking system, there are enormous public externalities from risk taking by depository institutions since adverse consequences from investments in non-banking ventures have to be backstopped with public funds to avoid financial collapse. But these enormous public externalities are simply not present in the digital platform sector. So the rationale between huge firewalls, between platform activities and other activities are simply not evident.”
The Interstate Commerce Commission regulation of railroads is a costly mistake, one that policymakers should not recommit on today’s technology sector. Abbot P. Lipsky of Global Antitrust Institute: “Over its long history, ICC regulation became a kind of poster child for how not to apply public control to important economic sectors. It was subject to political chicanery, industry capture, and the iron triangle politics that stifle innovation, encourage anti-competitive regulation, and impede pro-competitive reform.”