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 and those who believe intervention is necessary to safeguard long-term innovation and prevent abuses of market power. But other differences are ideological, in the sense that they are about the relative importance of incommensurable values. These are debates between: ‘those who believe that the rising economic consolidation is yielding significant efficiencies and those warning about the detrimental effects that economic consolidation has on the person, the family, the community, and society; between those who believe that what is easily measurable, largely counts, and those, like economist F.A. Hayek, who dismiss the notion that only what is countable primarily counts (especially when many goods and services today are ostensibly free, and where our data and privacy are the cost).’
As they note: ‘Ultimately the divide is over the soul of antitrust: Is antitrust solely about promoting some form of economic efficiency (or as cynics argue, the interests of the powerful who hide behind a narrow utilitarian approach) or the welfare of the powerless (the majority of citizens who feel increasingly disenfranchised by big government and big business)?’ (…) ‘The reality is that ‘competition law’ has never been, nor will it ever be, pure from normative political, social and economic values. Ultimately, it comes down to the values we want to promote and our belief in how competition works.’
The authors’ position is that while: ‘antitrust cannot cure every ailment (…).competition law cannot be Orwellian—sanctioning anticompetitive agreements, monopolistic abuses, and greater consolidation in already concentrated markets, all for the sake of promoting a vague ‘consumer welfare’ objective.’ Furthermore, antitrust’s objectives and legal standards often reflect trade-offs – e.g. between economic efficiency and the creation of a dynamic market for ideas. ‘Antitrust law does not exist as a Platonic ideal out there for us to find. Rather it is for us to design. As we design, we must return to antitrust’s core values: what do we, as a society, want to promote?’
Ultimately, as they note, ‘What South Africa, the EU, the USA, and other jurisdictions seek to promote may differ at the margins. Calling one country’s antitrust goals impure hardly advances the debate. While differences may exist at the margin, ultimately, competition law worldwide can advance several common political, social and economic goals.’
For those who know Ariel well – I cannot talk about Maurice – this piece is a succinct summary of the basic assumptions underpinning his academic work. It is also a very helpful summation of the ideological cleavages underpinning antitrust enforcement. These cleavages are very often ignored, as if antitrust was a purely technical, value-free endeavour addressed through economic and econometric analysis.
I agree with the authors that antitrust is not a purely technical, value-free endeavour. The transition to the digital economy, the failure of existing regulatory structures to address this transition, and competition law’s role as an economy-wide regulatory backstop have led to competition law becoming a battlefield about how to regulate the new economy – bringing these ideological cleavages back into the spotlight and making antitrust ‘fashionable’ again. Humblebragging, I think my earliest posts foresaw this – but if they did, it is because I studied with Ariel and learned to think about competition law with him. As he tells his classes, competition law is always a form of social policy, and it evolves in the context of wider political developments.
On the other hand, I think the way the authors frame the debate is somewhat disingenuous, because they are implicitly advancing their own views about the values that they think competition law should follow – namely: ‘One would hope that our common optimal goal [for competition law] will be to promote our welfare in an economy that is inclusive (i.e., benefits many citizens, not just the wealthiest 1 per cent), protects the privacy interests of its citizens, promotes overall well-being, and promotes a healthy democracy’. As you may notice, this is not exactly in line with the competition law and policy paradigm that has prevailed over the past few decades.
These goals are very laudable, but the editorial begs the question of how competition law is to pursue them all. Personally, I’m not sure the debate is between those who see antitrust as promoting either some form of economic efficiency or the welfare of the powerless, as the editorial seem to imply (and I doubt that the authors think this either). I agree that competition law is about trade-offs – but I don’t think that competition law’s focus on economic efficiency is solely the result of corporate influences and intellectual dishonesty. Instead, we could do worse than remember that the focus on consumer welfare initially emerged an answer to problems with the implementation of ‘socially-conscious’ forms antitrust and the lack of normative coherence this approach engendered. In fact, I would argue that most mainstream proponents of economic efficiency / consumer welfare as a benchmark are ultimately concerned with the administrability of competition law.
Law always presents itself as normatively neutral – and competition law is no different. One of the reasons for this is to ensure its legitimacy. In effect, a serious risk of politicising competition law is that it may lose its legitimacy. Another risk is that legal certainty may be lost, which will further contribute to an erosion of its legitimacy. I can see the force of counterarguments that ‘orthodox’ antitrust approaches are already perceived as politically illegitimate by some, and that competition law is not exactly an area where legal certainty abounds. My point is merely that this is a dimension that social analyses of law – so typical in US scholarship, and, in my opinion, so valuable – tend to ignore. I think this is a mistake, and that the institutional dimension of these debates must be front and centre.
It is true that competition law does not operate in a normative vacuum – but nor does it operate in a legal vacuum. Instead, competition law is part of wider legal and regulatory systems. I’ve outlined in previous emails my belief in the need for an update of the regulatory frameworks that frame competition law enforcement – and for a refinement of competition law as regards non-price elements of economic assessments. While I understand that, if other reform channels are blocked it is likely that socially-conscious intellectual agents will try to rely on competition law as the best available institutional response to economic and social developments, I still think that regulation is better suited for addressing the problems being raised by the New-Brandeis proponents.
Ultimately, I am concerned about the consequences of inserting non-economic elements for the integrity, coherence and legitimacy of competition law and enforcement. This is not to say that competition law must be only about economic efficiency – but it is to say that those proposing the adoption of other values must couple such proposals with suggestions of how the legal framework that will integrate such new values can do so without endangering the internal structure of the law and its legitimacy.