ICYMI: Deputy AAG Roger Alford — Companies Should Not Be Punished For Their Success
Last week, Deputy Assistant Attorney General Roger Alford spoke to the American Chamber of Commerce in Japan on antitrust policy and the history of cooperation between Japan and the United States with regard to competition enforcement. Notably, Deputy AAG Alford pointed out that “if a firm becomes successful by making products or services that consumers want and buy, they should be rewarded, not punished.”
More highlights from the speech can be found below.
As Alford notes, any antitrust action taken by the Department of Justice must take into account potential impacts on innovation. “We must be vigorous when the facts and economics support the action, but be cautious not to take actions that harm innovation.” (Roger Alford, “The History Of Japanese-American Cooperation On Competition Enforcement,” Department Of Justice, 4/24/19)
Antitrust policy must be fact-based and consider all relevant contextual evidence, Alford says. “For antitrust enforcers to strike the right balance on innovation, we must look at the facts and understand the real-world competitive dynamics.” (Roger Alford, “The History Of Japanese-American Cooperation On Competition Enforcement,” Department Of Justice, 4/24/19)
Alford argues companies should not be punished for being successful, and that inefficient competitors exiting the market shows “competition at work.” “Antitrust enforcers must distinguish between hard-fought competition and anticompetitive behavior. Vigorous competition in a free market results in winners and losers. If a firm becomes successful by making a product or services that consumers want and buy, they should be rewarded, not punished. Running an inefficient competitor out of the market by building a better mousetrap is not anticompetitive, rather it is competition at work. In the digital market, as in all other markets, success alone does not merit sanction.” (Roger Alford, “The History Of Japanese-American Cooperation On Competition Enforcement,” Department Of Justice, 4/24/19)
Alford points out that today’s tech companies compete across a variety of verticals, meaning “the heart of the antitrust inquiry should be on the alleged conduct and its competitive effects, not simply the size of the firm.” “There is no one-size-fits all solution for the digital world. Digital companies today often are involved in different products and services. These differences are relevant to our antitrust analysis. A firm with market power in one service, could be a small, disruptive new entrant in another market. Conversely, a seemingly-small player may have tremendous market power with respect to a particular product or set of consumers. The heart of the antitrust inquiry should be on the alleged conduct and its competitive effects, not simply the size of the firm.” (Roger Alford, “The History Of Japanese-American Cooperation On Competition Enforcement,” Department Of Justice, 4/24/19)
Economist David Evans echoes Alford’s point, finding tech leaders compete across 27 different categories. “Online platforms face dynamic competition as a result of: disruptive innovation that provides opportunities for entry; competition from online platforms that have secured a toehold in one area but compete across multiple areas; the fragility of category leadership resulting from the fact that network effects are reversible and entry costs are low; and the prevalence of ad-supported models, which result in seemingly disparate firms competing for consumer attention and advertiser dollars.” (David Evans, “Why The Dynamics Of Competition For Online Platforms Leads To Sleepless Nights, But Not Sleepy Monopolies,” SSRN, 7/23/17)