FTC Hearings on Competition & Consumer Protection in the 21st Century, FTC Docket No. FTC-2018-0091, Comments of the International Center for Law & Economics on the Consumer Welfare Standard (Hearing No. 5)

Abstract

The CWS has been the subject of much discussion lately, largely driven by a seeming uptick in criticism of the standard. This criticism falls generally into two camps. On the one hand, the CWS is understood to be the broadly correct, if imperfect, touchstone for antitrust enforcement. Proponents of this view support the consumer- focused approach to antitrust but nevertheless often recognize the inherent shortcomings of the CWS (endemic to any general legal principle applied in complex and evolving economic circumstances), and particular areas where its operationalization can and should be improved (e.g. accounting for innovation harms or properly defining who counts as a “consumer”).

On the other hand, the CWS is objected to per se as an improper or incurably deficient guiding principle for antitrust enforcement. Proponents of this view see the CWS as inconsistent with the proper goals of antitrust, which should, they contend, focus on control of threats to the “process of competition” (as opposed to the welfare of consumers). Many of the adherents to this perspective also contend that antitrust should address private-sector economic threats to the democratic process more broadly. In both cases a key component of the antipathy to the CWS is that it has allowed for the sustained presence of large corporations in the polity — a presence that is alleged to threaten, simply by its existence, both competitive and democratic welfare.

In this comment we address the continued viability of the consumer welfare standard (“CWS”), its flexibility to include presumptions, as well as the relative weakness of proffered alternatives to the CWS.

Keywords: Antitrust, Consumer Welfare Standard, FTC, FTC Reform