Strengthening Antitrust Enforcement Within the Consumer Welfare Rubric
CPI Antitrust Chronicle, Nov. 2019
8 Pages Posted: 15 Oct 2019 Last revised: 13 Jul 2020
Date Written: October 8, 2019
There is a chasm among the many who agree that antitrust law is underenforced. Some see the “consumer welfare” standard, which underpins contemporary antitrust, as so flawed that it should be abandoned. While I share their concerns about the market power problem, particularly in the digital platform markets, I believe that a complete shift in paradigm is neither necessary to reinvigorate antitrust enforcement, nor wise.
A common critique of consumer welfare is that it supposedly focuses exclusively on consumers and on short-term price effects, ignoring non-consumers and nonprice effects. Other more “populist” critiques fault the standard for not addressing the social and political harms of market power. With respect to the first set of perceived limitations, I disagree that the standard is so limited and argue that it is capable of a broader reach if used to its full scope. Records of antitrust enforcement and court decisions show that it can take into account the harmful effects, caused by disruptions to competition, on non-consumer purchasers and even on sellers (including workers, who are sellers of labor). I argue that it is capable of reaching even harmful effects on competitors, despite the mantra that antitrust protects competition, not competitors.
While antitrust enforcement has fallen short, I argue that it is due, not to legal deficiencies in the consumer welfare standard, but to other factors, including the inability of antitrust enforcers to fully keep up with the new markets, the difficulty of applying nonprice metrics in analysis, burdensome evidentiary standards, and the Court’s restrictive interpretation of a few important relevant antitrust doctrines. Finding practical solutions to these problems, which I believe is possible, should strengthen antitrust enforcement within the consumer welfare rubric, and would be less disruptive than abandoning a paradigm that is conceptually sound if not always applied well. The key to addressing the competitive challenges in today’s digital markets is not to change the consumer welfare paradigm but to make intelligent changes within it.
With respect to the charge that consumer welfare does not address a panoply of social and political ills associated with concentration and the digital platforms, I agree that is true. However, I argue that antitrust law cannot be burdened with performing tasks for which it was not designed, and that doing so risks unintended and undesirable consequences. The more effective approach to tackling the serious but non-competition related problems of political power, economic inequality, privacy intrusions, data security breaches, “fake news,” and so forth is to do so directly, using other existing or new laws designed specifically for those purposes.
Keywords: consumer welfare, antitrust law, antitrust enforcement, New Brandeis, digital markets, digital platforms
JEL Classification: D42, D43, D60, K21, L12, L13, L41, O30, O38, P10
Suggested Citation: Suggested Citation