The conventional wisdom among antitrust practitioners is that antitrust is largely apolitical – administrations come and go, but the Federal Trade Commission and the Antitrust Division of the Department of Justice mostly stay the same. For decades, the consumer welfare standard has been the core principle underlying U.S. antitrust policy no matter who sits in the White House. The result has been a continuous focus both at the agencies and in the courts on whether consumers – not competitors, small businesses, or employees – will be harmed by a firm’s conduct or a proposed combination of firms. Reflecting this long-standing bipartisan consensus, annual reports summarizing the agencies’ collective enforcement efforts evidence minimal year-to-year variation in how many conduct investigations are launched, how many mergers attract a prolonged investigation, and how many deals are challenged in court. Where there is variation, it does not necessarily track with the broad assumption that Republican administrations will be less enforcement-minded than Democratic ones. While there were and are sometimes differences in approach, these were largely more nuanced – e.g., what types of remedies are acceptable to address potential merger-related harms, or the perceived level of risk posed to consumer welfare from mergers between companies at different levels of the supply chain.
Recently, however, there has been a shift in public discourse around the primary goals of antitrust enforcement and whether current tools are sufficient to address the growing concerns in some circles about the level of concentration in many industries, particularly with respect to tech platforms. Notably, there are increasing calls on the left for revisiting the consumer welfare standard itself. A widely read and cited law review article by Lina Khan in December 2017 crystalized the issue thus: “[a]ntitrust law and competition policy should promote not welfare but competitive markets.”1 Ms. Khan views the consumer welfare standard, in practice, as having been overly-narrowed to focus on short-term impacts on consumer prices and output, with the result that conduct that could have a long-term negative impact on market structure escapes legal scrutiny.2 Her primary criticisms are that “current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive”3 and, perhaps more fundamentally, that in passing the antitrust laws, Congress intended “to promote a host of political economic ends – including our interests as workers, producers, entrepreneurs, and citizens.”4
As Ms. Khan notes in her article, the 2010 Merger Guidelines do take into account non-price impacts on competition, such as lower quality products, reduced product variety, lower service levels, or a decrease in innovation, and roughly one-third of FTC merger challenges brought in the last decade alleged potential harm to innovation as one basis for the complaint.5 Assistant Attorney General Makan Delrahim, head of DOJ’s Antitrust Division, has voiced his support for the consumer welfare standard in part by pointing to the non-price effects regularly considered by the antitrust authorities, and criticizing “the incorrect notion that antitrust policy is only concerned with keeping prices low.”6 Republican FTC Commissioners Phillips and Wilson have also spoken out consistently in favor of the consumer welfare standard.7 While the Republican Commissioners on the FTC have consistently defended the existing framework, the FTC has also provided a forum for the ongoing debate. Over the last year, the FTC held a series of hearings on “Competition and Consumer Protection in the 21st Century,” including a session on the “Role of the Consumer Welfare Standard in U.S. Antitrust Law.” The agenda addressed questions such as whether the consumer welfare standard remains the most appropriate standard for evaluating compliance with the antitrust laws and explored alternative frameworks that could be used to evaluate compliance.
These debates, while seemingly academic, are reverberating in the mainstream business media. While major antitrust investigations and litigations have always received significant coverage, the policy discussion has spilled over onto the pages of Forbes and the Wall Street Journal. There have also been increased calls for more robust antitrust enforcement from members of Congress as well as many Democratic candidates for president. Senator Elizabeth Warren, who gave a high-profile speech in June 2016 criticizing increased levels of concentration among American industries, recently called for the breakup of Facebook, Google, and Amazon. Senator Amy Klobuchar co-sponsored legislation that would flip the burden of proof for some mergers, requiring merging parties to demonstrate that merging would not materially harm competition, rather than requiring the reviewing antitrust agency to establish that it would substantially harm competition. Representative David Cicilline of Rhode Island, the antitrust subcommittee chairman, is investigating concentration in the tech industry, while tech platforms are also the focus of a newly-formed FTC Technology Task Force and, separately, the subject of an investigation by DOJ’s Antitrust Division. While most of the calls for a new approach to antitrust enforcement have come from the Democratic side of the aisle, President Trump has repeatedly criticized the market position held by the largest tech and media companies. His 2016 campaign promised to use the antitrust laws against companies that were “destroying an American democracy that depends on a free flow of information and freedom of thought.”8 Last summer in an interview with Bloomberg, President Trump called out tech giants such as Google and Facebook, noting that they could represent “a very antitrust situation.”9 Since then, technology platforms, the role they play in American society, and whether antitrust law should play a bigger role in governing their actions have continued to be a focus for the administration. Overall, across multiple forums, the core tenets of long-standing antitrust laws and policy are being called into question.