Ioannis Liannos ‘The Poverty of Antitrust’ CLES Research Paper Series 2/2018 [UPDATED]

This working paper, which can be found here, starts from the author’s (openly acknowledged) view that competition law should have a role in tackling economic inequality and poverty, and seeks to provide a coherent theoretical framework for competition law’s role in this regard. [ADDENDUM] Since this was a working paper, I sent the author some comments which were more detailed than the overview below. Following this, the author and I had a conversation about the paper. We concluded that I had misunderstood the paper, and he was kind enough to prepare a clarification. I would like to thank him for this. You can find the clarification below in the comments. [End of addendum] The paper is structured as follows: Part I explores the various roles of competition law and its evolution over time. In the US, antitrust was originally a tool of social regulation, which sought to ensure that smaller firms had a fair chance to participate in the economic expansion generated by…

Ariel Ezrachi and Maurice Stucke ‘The fight over antitrust’s soul’ (2017) Journal of European Competition Law & Practice 9(1) 1

The piece – which can be found here – begins by describing recent trends in academic discussions in antitrust, which I think this blog has followed in some detail over the past two years. On the one hand, we have the ‘hipster antitrust/New Brandeis’ school, with its criticism of Chicago school-based enforcement and its calls for greater intervention. On the other hand, we have the reactions to this antitrust movement which: ‘warn about enforcement chilling pro-competitive behaviour, and undermining the market’s ability to self-correct […] is unconcerned about the trend toward concentration, and reject fairness or distribution concerns as part of competition policy.’ The authors trace this debate to a number of factors. While they identify a number of them, from my perspective the debate ultimately stems from different understandings about how the economy works in practice. Some differences could ultimately be settled by reference to empirical data – for example, the debate between those who believe markets necessarily self-correct…

Frank Pasquale “When Antitrust Becomes Pro-Trust: The Digital Deformation of US Competition Policy” CPI ANTITRUST CHRON. (May 2017).

This paper – which can be found here – argue that “in digital industries in particular — such as search engines and social networks — U.S. merger review has been lax”. According to the author: “Massive digital platforms have exacerbated an old problem in American antitrust law — the tension between the efficiencies that mergers achieve in theory, and the pressure they inevitably create for firms in, or adjacent to, the industry of the merged firms, to themselves combine in order to better compete.” Problems are said to arise from adherence by antitrust enforcers to three myths that rationalize market power online: The Myth of Easy Platform Switching – This theory holds that consumers can and will easily shift from Google to Yahoo, or from Amazon to Barnes & Noble, or from Uber to Lyft. In reality, however, a long history of personalisation of results (through machine learning algorithms), network effects and lock-in make it hard to switch providers. The Myth of the…

Tim Wu ‘Blind Spot: The Attention Economy and the Law’ (2017) Concurrences

This paper – which can be found here – seeks to address an imbalance: while it “has become commonplace, especially in the media and technology industries, to speak of an “attention economy” and of competition in “attention markets” (…)the study of “attention markets” has only very recently become of interest to legal scholars, and only in connection with specific cases (…)”. This paper is “an effort to close that gap, and show why a better understanding of attentional markets will be critical to addressing pressing legal issues, such as antitrust’s treatment of the high technology industry and emerging public policy questions surrounding the “theft” of attention from captive audiences.” The fulcrum of the analysis is the “attention broker” – someone who “attracts attention by offering something to the public and then reselling that attention to advertisers for cash”, such as Google, Facebook or, more prosaically, TV channels and free subway newspapers. The author contends that the concept of “Attention Brokers”…

William Kovacic and Marianela Lopez-Galdos ‘The Lifecycles of Competition Systems : Explaining Variation in the Implementation of New Regimes’ (2016) 79 Law and Contemporary Problems 85

Starting from the observation that, over the last 30 years, antitrust / competition law has had a rate of adoption across the world almost without parallel in the history of economic regulation, this article – which can be found here – examines one particular aspect of the global adoption of  competition law systems: what jurisdictions must do to build the institutions needed for effective competition law implementation, and in particular, to develop programs that improve economic performance. The underlying assumption is that “improvements in institutional arrangements [i.e. institutional design and policy implementation] tend to yield superior policy outcomes.” The article is structured as follows: Part II sets out the major assumptions that underpin the theory outlined in the article. These assumptions are based on “a large and growing body of literature on the development of new competition law systems”, on “a benchmarking project undertaken by the George Washington [which] has collected information about ten major institutional characteristics for the world’s 130 competition…

Lisa Khan ‘Amazon’s Antitrust Paradox’

This is a bold paper which argues that competition law, as it stands, is not an apt gauge of competition in the twenty-first century marketplace—especially in the case of online platforms. It was published in the Yale Law Review, and can be found here. The argument is built around a critique of the way antitrust has (failed to) deal with Amazon. In particular, it argues that a close look at Amazon’s business strategy reveals that the current framework of antitrust— especially how it equates competition with “consumer welfare”, and “consumer welfare”  with short-term effects on price and output—fails to capture the architecture of market power in the twenty-first century marketplace. The paper holds that, instead, antitrust should analyse the underlying structure and dynamics of markets. Rather than pegging competition to a narrow set of outcomes, this approach would examine the competitive process itself. Animating this framework is the idea that a company’s power, and the potential anticompetitive nature of that power,…

Lisa Khan ‘The New Brandeis Movement: America’s Antimonopoly Debate’

This paper is a full-blown defence of the New Brandeis movement by one of its most visible proponents. It is to be published in the Journal of European Competition Law & Practice and can be found here: https://academic.oup.com/jeclap/advance-article/doi/10.1093/jeclap/lpy020/4915966 The paper begins by mapping out the emergence of the New Brandeis (or anti-monopoly) movement as a reaction to growing concentration in the American economy. The movement takes its name from Louis Brandeis, who served on the US Supreme Court between 1916 and 1939 and was a strong proponent of America’s Madisonian traditions—which aim at a democratic distribution of power and opportunity in the political economy. The movement is anchored in the following pillars: There are no such things as market ‘forces’. The Chicago School assumes that market structures emerge in large part through ‘natural forces.’ The New Brandeisians, by contrast, believe the political economy is structured through law and policy. The goal of antimonopoly laws is to ensure that citizens are…

Inara Scott ‘Antitrust and Socially Responsible Collaboration: A Chilling Combination?’

This paper, published in the American Business Law Journal and available at https://onlinelibrary.wiley.com/doi/full/10.1111/ablj.12073, argues that efforts by companies to engage in socially beneficial activities (in human rights, environmental issues, labour standards, etc.) may infringe antitrust provisions. Part I sets forth the economic and business justifications for collaborating across businesses, including those between and among competitors, and provides examples of key types of these collaborations. Part II considers the application of antitrust laws and examines the struggle to determine to what extent courts may find the collaborative practices described in Part I acceptable. Based on this analysis, Part III then examines the chilling effect of antitrust law on socially responsible collaborations and considers changes necessary to facilitate these types of transactions. While the article focuses on the Sherman Act, which language is indeed more open than that of subsequent competition acts, the problem the paper discusses is common to most jurisdictions: how is antitrust to respond to these potentially beneficial cooperative efforts,…

Julie Cohen ‘The Regulatory State in the Information Age’

This paper, published in Theoretical Inquiries in Law, and available at eial.tau.ac.il/index.php/til/article/download/1425/1501, is only for the more academically minded and those who are interested in deep theory of regulation and competition law.  It focuses on the challenges that the information society poses to traditional modes of regulation, and provides food for thought and a potential starting point to try to think about challenges to competition law / economic regulation in a wider context. This is despite the repeated use of academic jargon and expressions such as “neoliberal” to mean “unfortunate ideas/developments”. Thus, mariner beware: here be dragons. The arguments made in this paper(which I do not necessarily share) include, among others: (i) that concepts used in classic regulatory schemes (such as market definition and market power for antitrust) were developed for different economic structures and are not very well suited to the information age, which is prone to oligopolistic/undefined markets and platforms markets/infrastructures that are interdependent, create strong path-dependencies and exert…

Steve Salop and Jonathan Baker ‘Antitrust, Competition Policy, and Inequality’

Originally circulated on 4 December 2016 This article, published in the Georgetown Law Review, is one of the first ones I am aware of on how public concerns about inequality may affect antitrust enforcement and competition policy. It argues that, among a number of other (arguably more important) factors, market power and increased concentration have led to increasing inequality. Technological change has created more markets with intellectual property protection or network effects, which allow firms to achieve market power. The adoption of more permissive antitrust rules during the past quarter-century has also likely increased the prevalence of market power. Since the returns of market power accrue to capital, which belongs to a minority of the population –usually the richest segment –, this increases the surplus of producers and, with it, inequality. The article provides a flavour of the times – and includes a useful review of the literature on competition and inequality, and of possible initiatives that agencies/legislators may adopt…