Thomas Horton on ‘Rediscovering Antitrust’s Lost Values’ (2018) New Hampshire Law Review 16(2) 179

Antitrust is now widely said to be dedicated to maximizing “consumer welfare” through an intense focus on promoting “allocative efficiency”. This article, which can be found here, seeks to provide evidence of how such a limited goal has no support in legislative history by tracing U.S. Congress’s consistent balancing of social, political, moral, and economic values and objectives over the course of more than a century of antitrust legislation. The paper is structured as follows: Part II reviews antitrust statutes throughout the years, and how they blend fundamental political, social, moral, and economic values. This section begins by reviewing scholarship on the legislative history of the US’ antitrust statutes. This review shows that there are differences in how conservative and progressive scholars have interpreted the relevant statutes. Conservatives traditionally identified mainly economic goals in the law, while Progressives extracted a number of other political and social goals from the relevant legislative acts. Differences regarding the goals found to be present…

Paul Nihoul, Freedom of choice: The emergence of a powerful concept in European competition law, September 2012, Concurrences Review N° 3-2012, Art. N° 48102, pp. 55

This chapter – which can be found here – argues that a number of European Commission and European court decisions bring to the forefront a legal test that has so far merited limited attention—the concept of choice, understood as the possibility, and the right, for customers to choose freely both the products/services best suited to their needs, and the economic partners they want to deal with. This legal test is analysed in this essay, which is divided into three parts: Part II examines cases where this new test is said to emerge more clearly. These are mainly Art. 102 TFEU cases – and the most important one is, arguably, a case regarding predatory pricing of internet services by France Telecom. France Telecom argued that recoupment was necessary for pricing below costs to be anticompetitive. The European Court of Justice dismissed this argument. Even if consumers would benefit from lower prices on aggregate, this would not eliminate all competitive harm: inasmuch…

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…

Herbert Hovenkamp ‘Antitrust Policy and Inequality of Wealth’ (2017) CPI Antitrust Chronicle, October, at 1

This paper – which can be accessed here – begins from the observation that antitrust law unquestionably has consequences for the distribution of wealth. Rigorous antitrust enforcement can make price-fixers and monopolists worse off while benefiting their customers (or, sometimes, their competitors). However, the redistributive consequences of competition law are limited. As such, the question is: why would one want to use antitrust as a wealth distribution device when far more explicit statutory tools are available for that purposes, including tax law, minimum wage laws, welfare laws, etc.? Hovenkamp advances a number of possibilities: (i) given its reliance on vague and open standards, antitrust allows one to use the judicial or administrative process without having to obtain legislative permission; (ii) a good deal of literature suggests that competitive markets are conducive to a more even distribution of wealth. To the extent this is true, we might use antitrust to equalize wealth distribution simply by making markets more competitive – but…

Richard Steuer ‘The Horizons of Antitrust’ (2017) St. John’s Law Review 91 Article 5

This article – which can be found here – discusses the goals of antitrust under US law. The paper is structured as follows: (i) it reviews the classic goals of US antitrust (past and present); (ii) it provides an overview of the recent political prominence of antitrust in US political debate, and how this has been leaking into academic discussions on antitrust; (iii) it conducts a short overview of the variety of goals of antitrust as found in multiple jurisdictions across the globe; (iv) it identifies a number of possible goals to be adopted by US antitrust in addition to consumer welfare, including fighting economic concentration, promoting jobs, protecting SMEs, and advancing the national interest; (v) it identifies how these goals may be taken into account within an antitrust framework, particularly in the context of long-term consumer welfare. In the alternative, it discusses how such goals may be implemented through political interventions that override antitrust rules. The paper does not contain…

Ramsi Woodcock ‘The Antitrust Duty to Charge Low Prices’(Forthcoming) Cardozo Law Review

This paper – which can be found here – argues that antitrust, when fostering consumer welfare, should develop a mechanism to address excessive prices. It is held that, while antitrust says its goal is to promote welfare, in reality it has been devoted merely to promoting competition that can increase consumer welfare: “There is a gap, therefore, between antitrust’s means of prohibiting collusion and exclusion, but not high prices, and its end of promoting consumer welfare”. If the goal to foster consumer welfare is to be taken seriously, then forcing companies with market power to adopt lower prices:  “is fully in line with the goal of maximizing welfare in the economic sense that antitrust has embraced starting in the 1970s under the influence of the Chicago School.”  (Yes, I can hear Robert Bork rolling in his grave). The author advances his proposal sequentially. It begins by discussing the gap between antitrust ends and means that opened up when antitrust replaced…

Jeffrey Harrison ‘Some Inconvenient Truths About Antitrust Law and Economics’ University of Florida Levin College of Law Research Paper No. 17-1

This paper – which can be found here – is yet another attack on the current foundations of antitrust and one more call for a more interventionist antitrust. The reason why I circulate it here is that this is not the typical paper of antitrust enforcement practice – which tends to argue that antitrust should go beyond its focus on consumer / total welfare and look at other criteria, such as market structure, competitive process or what have you. Instead, the attack is on the very foundations of consumer welfare or efficiency as suitable standards for antitrust analysis. The paper begins by identifying  three goals– consumer surplus, allocative efficiency, and productive efficiency – which are commonly put forth as being the basis of antitrust. It then proceeds to attack each in turn. Regarding consumer surplus, the main question is whether it – i.e. consumer surplus understood in terms of prices and quantities – bears any relationship to actual welfare. Part of this…

John M. Newman ‘Complex Antitrust Harm in Platform Markets’ Antitrust Chronicle 2017, Spring, Vol. 1(2)

This paper – which can be found here – develops a rather orthodox argument about market leveraging and foreclosure. In short, the argument is that: “Under certain conditions, digital platforms can harness the power of reputation to steer users to favored suppliers. This steering forecloses non-favored suppliers in a related, though distinct, relevant market. Where favored suppliers are able to split the resulting rents with the platform, the strategy s rational. The resulting foreclosure reduces efficiency and consumer welfare.” In short, “Platform markets exhibiting substantial algorithm-driven reputation competition can facilitate a unique type of competitive harm. This article briefly summarizes the marketplace evolutions that have fiercely intensified [algorithm driven] reputation competition. It then describes this novel second-order, out-of-market competitive harm that can arise as a result of certain conduct in such markets.” Given this, it is unsurprising that the paper begins with a discussion of why reputation is relevant to competition. Antitrust doctrine generally treats “consumer choice” as being good. Yet…

A. Douglas Melamed ‘Antitrust Law is Not That Complicated’ (2017) Harvard Law Review 130(2) 163

This paper – which can be found here – is a reaction to Louis Kaplow’s article “On the relevance of market power” which I discussed here. It provides a much better summary of Kaplow’s article than what I managed to write then, and also a very apt critique of that paper. As such, I think it would be useful if I were to provide you with a summary of this piece. While seemingly agreeing with the conceptual framework developed by Kaplow, the author (a professor at Stanford) shares some of my critiques (which makes me feel rather relieved, because it means I understood at least parts of Kaplow’s paper). Like me, he reads Kaplow’s paper as implicitly assuming that competition law is ultimately a broad standard directed at maximising economic welfare on each situation. This standard is applied as follows: conduct that reduces economic welfare is unlawful, and conduct that increases economic welfare is lawful. Hence, market power is not really…

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,…