Yesterday ICLE filed comments with the Federal Trade Commission in response to its request for comments in its recently announced Hearings On Competition and Consumer Protection in the 21st Century. Our full comments are available here.

In 1995, the FTC’s then-Chairman, Robert Pitofsky, convened a set of hearings — the Global Competition and Innovation hearings — aimed at investigating the implications for antitrust law, economics, and policy of “increasing globalization and rapid innovation.”

Today we face an even-more-tightly integrated world market, accompanied by intensified international tariff disputes, the creative imposition of non-tariff trade barriers (including antitrust enforcement), and the increasingly brazen implementation of industrial policy.

Meanwhile, several of the tech companies that were at most fledglings (if they existed at all) in 1995 have grown to become some of the most highly valued companies in the world. Their success — and the dramatic evolution of the world economy it has brought about — has engendered a new wave of hand wringing over firm size, industry structure, the social consequences of economic and technological change, and the proper role of antitrust and consumer protection law in addressing them.

Chairman Simon and the Commission should be commended for undertaking these hearings. Greater understanding of the antitrust and consumer protection implications of significant economic developments is always welcome.

Yet, while some of the business, economic, and legal specifics are novel, important, and worthy of investigation, the fundamental policy questions we’re confronted with today are nothing new, and they weren’t new even in the 1990s. What is troubling is how little we seem to remember of what we do know, even as slightly different versions of the same debates continue to recur.

Fundamentally, what we know is this:

  • First, unless and until a demonstrably better alternative is offered (and none has been, either today or over the course of antitrust’s 100-year history), the consumer welfare standard — warts and all — is the appropriate touchstone for antitrust enforcement and adjudication. Whether specific firm conduct or enforcement decisions promote consumer welfare is, of course, always up for discussion. But that antitrust law, enforcement decisions, and policy should not intentionally incorporate or be informed by inherently idiosyncratic and inevitably politicized public policy preferences is beyond doubt.
  • Second, competition and consumer protection policy should be economically grounded and evidence-based. Similarly, decisions regarding policy changes should be based on rigorous, economically robust, and constantly tested empirical knowledge. But decisions regarding competition and consumer protection policy must also be undertaken with a robust understanding of the institutional structures and agency processes by which they are implemented.

Arguments abound that we should ratchet up antitrust and consumer protection enforcement in various ways in order to tackle hot-button issues like excessive concentration, insufficient privacy protection, fake-news, wealth inequality, and the like. But few of them rest on solid empirical evidence, and fewer still (if any) seriously address whether or how defects in policy and enforcement decisionmaking processes may have led to the claimed problems and whether or how altering those processes would correct them.

Such arguments should not simply be ignored, but nor should they be taken seriously unless and until they are rigorously supported by economic, empirical, and institutional analysis.

In this comment, we primarily address the first question asked by the Commission (“The state of antitrust and consumer protection law and enforcement, and their development, since the Pitofsky hearings”). We do so in part through the lens of history, in part through the lens of contemporary economic analysis.

Much of our analysis is imbued with discussion of these issues as they relate to communication, information, and media technology networks, many of which are considered “platform businesses.” However, we stress that, while there are issues that are peculiar to certain kinds of businesses, such as platforms, the fundamental principles of good antitrust policy are not dependent on the type of business being analyzed. Rather, good antitrust policy is undergirded by sound economic analysis and solid empirical evidence, regardless of the type of business being analyzed. The same lessons apply to consumer protection policy.

By combining lessons from the history of antitrust policy and contemporary economics, we hope that our analysis helps to elucidate the key issues faced by the Commission as it deliberates on the future of antitrust and consumer protection policy.

Read the full comments here.