In these remarks, hich can be found here, AAG Delrahim defends the ‘broad antitrust consensus that still reigns today’ and considers how it might apply to the digital sphere.
He begins by outlining the two key components of the current antitrust consensus. The first is the consumer welfare standard, which requires that some business practices should be condemned as unlawful only where they harm competition in such a way that consumers suffer. The second component is “evidence-based enforcement”. Outside the realm of naked horizontal restraints such as price fixing, bid rigging, and market allocation, antitrust demands evidence of harm or likely harm to competition, often weighed against efficiencies or procompetitive justifications. Evidence-based enforcement also requires a readiness to adapt our existing antitrust framework and tools to new or emerging threats to competition.
One such threat comes from digital platforms and the increased market concentration they give rise to. AGG Delrahim considers that the antitrust consensus approach is flexible to new business models in digital markets, and that there is no persuasive evidence that antitrust itself has failed.
Over the past several decades, antitrust law has responded to new and innovative products and markets to protect against novel threats to the competitive process. Enforcement agencies have developed a strong expertise as new types of assets emerge and consumer preferences shift, and have brought successful antitrust challenges to dismantle barriers to competition, such as in the Microsoft case.
Whether antitrust enforcement makes sense in this area is therefore an evidence-based question: are consumers who believe that their data is digital currency facing a monopoly seller or monopsony buyer with structural barriers to competition and entry?
Even if economic analysis can adjust to evolving business models, there are still criticisms that existing antitrust tools or doctrines are ill-equipped to handle more nuanced threats to competition that may arise in digital platform markets.
Some scholars have taken aim at the predatory pricing doctrine in particular, which in their view condones below-cost pricing models that sweep away competitors and raise the prospect of future price increases. However, the thresholds for predatory pricing have to be difficult to meet, because lower prices are prima facie a boon for consumers. At the same time, enforcers should be open and receptive to empirical evidence that companies in digital markets may be engaging in predatory pricing or other exclusionary conduct to drive out competition and cause long-run harm to consumers, and to new thinking on the subject. This does not require discarding the antitrust consensus: instead, it calls for a sound body of evidence that dynamic competition will be harmed, such that consumers will suffer in the long-run.
A second potential threat to competition comes from increased concentration. However, claims that industry concentration has dramatically increased, with the antitrust consensus as the primary culprit, lack empirical support. Most of the concentration claims rely on data from the U.S. Census Bureau, yet those data are overly broad aggregations of economic activity. The concentration of an industry is not the same thing as the concentration of an antitrust market.
To be sure, any casual observer or consumer will notice that market concentration is increasing in certain sectors. Yet it takes a tremendous leap of logic to conclude that antitrust law enforcement is the cause of these particular trends. Competition enforcement can do little to alter the natural evolution of industry structure in which some firms thrive and grow while others languish or fail. Critics of purportedly increasing concentration have not made an affirmative, evidence-based case that revising existing antitrust standards would be an effective remedy; nor have they demonstrated that a concentration-focused overhaul of the antitrust laws would benefit competition and consumers.
The remarks end with a discussion of the claims of the New Brandeis school – which criticise the antitrust consensus on the grounds that it has neglected, or even given rise to, rising economic inequality, stagnant wages, unemployment, and a concentration in political power in the hands of private market actors. This has led to calls for antitrust to be used to address these ills.
As a matter of causation, it is hard to conclude that competition policy can be isolated as a contributing cause to any of these wider trends. The narrow focus of antitrust rules on competition and consumers is a feature, not a bug. The burden of curing economic woes rests on the shoulders of policymakers and agencies with the institutional capacity and statutory mandate to tackle other complex issues. Shifting this responsibility to antitrust enforcers would require us to make trade-offs between competition and non-competition goals on a case-by-case basis.
This is not to say that antitrust enforcement is blameless. On the contrary, US agencies have likely made significant mistakes in the past. Enforcers have failed on repeated occasions to address the harm imposed by some anticompetitive mergers, in particular through the imposition of behavioural remedies on horizontal or vertical transactions that, if cleared outright, would substantially lessen competition. Empirical studies demonstrate that behavioural remedies too often fail to constrain the ability of merged companies to act on those incentives, and overestimate the willingness of aggrieved parties to come forward and risk the consequences of an enforcement action.
As a result, the address concludes with the announcement that the Department of Justice will create an Office of Decree Enforcement, with the sole goal to ensure compliance with, and enforcement of, DoJ Antitrust decrees.