Abstract

Dynamic competition defines an improvement path for antitrust law. Interested in competitive realities more than political activities, the growing body of scholarship studying dynamic competition wants to make antitrust diagnosis and analysis more accurate without sacrificing administrability. At a high level, the dynamic competition approach appears to some as a twenty-first-century equivalent of the Chicago School of antitrust. This article shows that the analogy is only partially correct. Unlike the Chicago School of antitrust law, the dynamic competition scholarship is innovation oriented, empirical, enforcement friendly, and interdisciplinary. More generally, dynamic competition is the natural evolution for all systems of antitrust law that reassess doctrine in light of the progression of economic and technical understanding of competition.

Read at SSRN.

In a previous article, we refuted four common critiques of the consumer welfare standard (CWS). In this article, we argue that the CWS has key benefits which opponents overlook. Understood as a method rather than a set of goals, the CWS allows enforcers and courts to overcome fact-finding ambiguities inherent in competitive processes. Without the benefit of a consumer welfare standard as a yardstick, alternative frameworks such as “the protection of the competitive process” lack depth, are self-referential and, ultimately, arbitrary.

Read the full piece here.

The consumer welfare standard has been the subject of a very effective contestation in modern antitrust law and policy literature. This contestation targets mostly United States law but, as we know, ideas travel fast. In spite of differences in law, policy, and institutions, contestations of consumer welfare frameworks have also emerged in slightly different terms in the European Union .

In this article, we lay bare the fundamental flaws of the modern critique of the consumer welfare standard. We show that critics misrepresent the meaning of the consumer welfare standard, distort the U.S. case law, and ignore important facts that do not align with their normative preferences. We conclude with the assertion that many criticisms of the consumer welfare standard among U.S. antitrust scholars reflect a critique of the U.S. judiciary’s attitude toward uncertainty and hard evidence rather than a critique of the consumer welfare standard itself.

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Abstract

The Federal Trade Commission and the U.S. Department of Justice published a draft update of their merger guidelines in July 2023. This paper reviews the Draft Merger Guidelines from a dynamic competition perspective. We base our findings and recommendations on recent economic literature dealing with innovation.

Video from the International Center for Law & Economics’ (ICLE) March 24, 2023 event “Exploring the Outer Boundaries of Antitrust: Democracy, Sustainability, & Industrial Policy” in Madrid, Spain. This session features a debate, moderated by ICLE Academic Affiliate Thibault Schrepel of Vrije Universiteit, between Giorgio Monti, professor of competition law at Tilburg Law School, and Nicolas Petit, joint chair in competition law at the European University Institute’s Department of Law and at the Robert Schuman Centre for Advanced Studies, on the topic “Should Antitrust Pursue Broader Social Goals?” The full video is embedded below.

Abstract

Complexity science permeates the policy spectrum but not antitrust. This is unfortunate. Complexity science provides a high-resolution screen on the empirical realities of markets. And it enables a rich understanding of competition, beyond the reductionist descriptions of markets and firms proposed by neoclassical models and their contemporary neo-Brandeisian critique. New insights arise from the key teachings of complexity science, like feedback loops and the role of uncertainty. The present article lays down the building blocks of a complexity-minded antitrust method.

As former judges and government officials, legal academics and economists who are experts in antitrust and intellectual property law, we write to express our support for the Avanci business review letter issued by the Antitrust Division of the U.S. Department of Justice on July 28, 2020 (the “2020 business review letter”). The 2020 business review letter represented a legally sound and evidence-based approach in applying antitrust law to innovative commercial institutions like the Avanci patent pool that facilitate the efficient commercialization of new standardized technologies in the fast-growing mobile telecommunications sector to the benefit of innovators, implementers, and consumers alike.

Read the full letter here.

Interest of Amici Curiae

Amici curiae are seventeen law professors, economists, and former government officials with expertise in antitrust, patent law, and law and economics. Their work has appeared in the American Economic Review, the Journal of Law and Economics, the Yale Law Journal, and the Harvard Law Review, among others, and collectively has been cited more than 16,000 times. As scholars and former public servants, they have an interest in promoting the coherence and development of legal doctrines consonant with sound economic principles and in ensuring that both consumers and the general public benefit from new inventions and technologies. They have no stake in any party nor in the outcome of this proceeding. Amici write to serve the Commission and the public interest by elaborating the legal and economic principles that frame this dispute. The amici and their affiliations are listed in the Appendix.

Introduction

This case presents a complex set of transactions whereby Illumina, Inc. (“Illumina”) created GRAIL, Inc. (“GRAIL”), spun it off while retaining a minority interest, and now has reacquired it. Complaint Counsel seeks to unwind this recent reacquisition. But as Chief Administrative Law Judge D. Michael Chappell’s Initial Decision (“ID”) recognized, vertical mergers are structurally distinct from horizontal mergers. Horizontal mergers carry inherent risks of anti-competitive effect; vertical mergers, by contrast, often offer procompetitive benefits. (See ID 169.) Unwinding this transaction would set a dangerous precedent by deterring innovative companies like Illumina from developing and commercializing new products or, at a minimum, restricting consumers’ access to those products. Antitrust enforcers should be held to a higher burden before risking such market disruptions.

An overbroad presumption against vertical mergers—of the type Complaint Counsel advocates here—is particularly inappropriate in the complicated institutional landscape of biopharmaceutical markets, especially those still in their infancy. Here, for example, it is difficult to predict how the market for Multi-Cancer Early Detection Tests (“MCEDs”) will operate, particularly when true alternatives to GRAIL’s products from other producers are still years away. (See ID 143.) Given the singular importance of capital investment in developing, testing, and commercializing MCEDs, the risks to consumers of blocking such investment are particularly high. Accordingly, courts have refused to enjoin vertical mergers without compelling, concrete evidence that a vertical merger is likely to harm competition to a substantial degree. See, e.g., United States v. AT&T, Inc., 916 F.3d 1029, 1032 (D.C. Cir. 2019). Scholars and courts alike have recognized that the efficiency gains from vertical mergers make it impossible to treat this class of transactions as presumptively anticompetitive. As Judge Chappell acknowledged, challenges to vertical mergers require a more fact-intensive inquiry. (ID 168-69.)

Nor should a company’s self-imposed restraints, such as Illumina’s Open Offer, be discounted in the way that Complaint Counsel advocates. (See Complaint Counsel Br. (“CC Br.”) 35.) The Open Offer is a market fact, not a legal remedy, and implicates Complaint Counsel’s prima facie case. Market participants should be encouraged to structure their operations ex ante to avoid potential anticompetitive effects. When markets are new and incentives are speculative, the Commission should not presume that a company in a vertical merger would breach its contractual obligations, especially when there are clear performance metrics that are easily monitored and enforced by the relevant parties.

The potential costs of preventing vertical mergers are high, as experience in emerging-technology markets amply demonstrates. Given the ultimate benefits to consumers, the Commission should be wary about importing the strong presumptions from horizontal-merger law and upsetting a model of spin-off and reacquisition that offers significant procompetitive benefits to consumers.

Read the full brief here.

A lot of water has gone under the bridge since my book was published last year. To close this symposium, I thought I would discuss the new phase of antirust statutorification taking place before our eyes. In the United States, Congress is working on five antitrust bills that propose to subject platforms to stringent obligations, including a ban on mergers and acquisitions, required data portability and interoperability, and line-of-business restrictions. In the European Union (EU), lawmakers are examining the proposed Digital Markets Act (“DMA”) that sets out a complicated regulatory system for digital “gatekeepers,” with per se behavioral limitations of their freedom over contractual terms, technological design, monetization, and ecosystem leadership.

Read the full piece here.