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.

President Joe Biden has made broadband build-out part of his Build Back Better plan, arguing that it constitutes essential infrastructure, much like electricity and water. The plan calls for $100 billion in subsidies for “future-proof” broadband—that is, connection modes that are expected to meet, or can be readily upgraded to meet, future connectivity needs—with a particular focus on municipal broadband and other nonprofit Internet service providers (ISPs). Congress also has taken up the question of broadband subsidies as part of its ongoing debate over infrastructure spending. But while it is important to get subsidies right, the most expedient public-policy change to ensure greater deployment and adoption of broadband would be to reform policies that needlessly impede the construction and efficient operation of broadband services.

Broadband connectivity continues to be a top priority for the Federal Communications Commission (FCC) and for state and local governments. But to build out wireline broadband, ISPs need access to poles, many of which are owned by electric cooperatives, utilities, and municipal governments. Unfortunately, these entities can charge exorbitant prices to access the necessary inputs. Moreover, the cost to replace, repair, and improve these poles is frequently offloaded onto ISPs and other attachers. These practices drive up the cost to deploy broadband, leading to slower deployment and higher prices for consumers.

The more expensive deployment becomes, the more difficult it is for providers to realize sustainable profits on those investments. This dynamic invariably leads to more selective use of scarce resources, to the detriment of costlier, less-profitable rural deployment. The challenge confronting policymakers and industry alike is how best to equitably and cost-effectively allocate the expenses associated with pole attachments.

The FCC has authority under Section 224 of the Communications Act to review the rates charged for pole attachments to ensure that they are “just and reasonable.” Pursuant to that authority, the FCC recently found that “utilities throughout the country have disparate and inconsistent practices with regard to cost responsibility for pole replacements.” The FCC also declared it unreasonable for utilities to “impose the entire cost of a pole replacement on a requesting attacher when the attacher is not the sole cause of the pole replacement.”

In order to facilitate greater broadband deployment, the FCC should consider rulemaking governing how to allocate pole-replacement costs more equitably. States should also reform how the costs of upgrades are distributed when municipal governments and electric cooperatives own the poles.

Read the full issue brief here.

Earlier this year, the International Center for Law & Economics (ICLE) hosted a conference with the Oxford Union on the themes of innovation, competition, and economic growth with some of our favorite scholars. Though attendance at the event itself was reserved for Oxford Union members, videos from that day are now available for everyone to watch.

Charles Goodhart and Manoj Pradhan on demographics and growth

Charles Goodhart, of Goodhart’s Law fame, and Manoj Pradhan discussed the relationship between demographics and growth, and argued that an aging global population could mean higher inflation and interest rates sooner than many imagine.

Catherine Tucker on privacy and innovation — is there a trade-off?

Catherine Tucker of the Massachusetts Institute of Technology discussed the costs and benefits of privacy regulation with ICLE’s Sam Bowman, and considered whether we face a trade-off between privacy and innovation online and in the fight against COVID-19.

Don Rosenberg on the political and economic challenges facing a global tech company in 2021

Qualcomm’s General Counsel Don Rosenberg, formerly of Apple and IBM, discussed the political and economic challenges facing a global tech company in 2021, as well as dealing with China while working in one of the most strategically vital industries in the world.

David Teece on the dynamic capabilities framework

David Teece explained the dynamic capabilities framework, a way of understanding business strategy and behavior in an uncertain world.

Vernon Smith in conversation with Shruti Rajagopalan on what we still have to learn from Adam Smith

Nobel laureate Vernon Smith discussed the enduring insights of Adam Smith with the Mercatus Center’s Shruti Rajagopalan.

Samantha Hoffman, Robert Atkinson and Jennifer Huddleston on American and Chinese approaches to tech policy in the 2020s

The final panel, with the Information Technology and Innovation Foundation’s President Robert Atkinson, the Australian Strategic Policy Institute’s Samantha Hoffman, and the American Action Forum’s Jennifer Huddleston, discussed the role that tech policy in the U.S. and China plays in the geopolitics of the 2020s.

With a compromise infrastructure bill now on the table in the Senate, it is more than just merely possible that Congress will invest $65 billion in broadband over the next eight years. Despite the size of this potential investment, on an annualized basis it is smaller than the existing Federal Communications Commission Universal Service program. The pending infrastructure bill would invest $8.125 billion per year in an effort to close the digital divide, while the FCC’s Universal Service program has spent just under $8.3 billion per year for each of the past three years.

Read the full piece here.

The Biden Administration’s July 9 Executive Order on Promoting Competition in the American Economy is very much a mixed bag—some positive aspects, but many negative ones.

Read the full piece here.

Advocates of legislative action to “reform” antitrust law have already pointed to the U.S. District Court for the District of Columbia’s dismissal of the state attorneys general’s case and the “conditional” dismissal of the Federal Trade Commission’s case against Facebook as evidence that federal antitrust case law is lax and demands correction. In fact, the court’s decisions support the opposite implication.

Read the full piece here.

The following comments were submitted to the Federal Trade Commission (FTC) for consideration in the commission’s scheduled July 1 vote on whether to rescind the 2015 Statement of Enforcement Principles Regarding “Unfair Methods of Competition” Under Section 5 of the FTC Act.

In antitrust law, the Consumer Welfare Standard (CWS) directs courts to focus on the effects that challenged business practices have on consumers, rather than on alleged harms to specific competitors. 

Critics of the standard claim this focus on consumer welfare fails to capture a wide variety of harmful conduct. In addition to believing that harm to competitors is itself a valid concern, critics of the CWS believe it leads to harmful concentrations of political and economic power by biasing antitrust enforcement against intervention. Under this view, the CWS contributes to such harms as environmental degradation, income inequality, and bargaining disparities for labor.

But returning to a pre-CWS state of the law would lead antitrust enforcement to become confused, contradictory, and ineffective at promoting competition. The CWS makes antitrust economically coherent and democratically accountable.

The CWS is agnostic about how much antitrust enforcement is necessary. Indeed, many advocates of more vigorous antitrust enforcement are also defenders of the CWS. The standard uses objective economic analysis to identify actual harms and to recommend remedies when those harms are not outweighed by countervailing benefits to consumers. While the issues the CWS critics care about may be important, antitrust law is a bad way to address them.

Competition usually has to hurt competitors. Prioritizing competitor welfare over consumer welfare, as some proposals would, means abandoning competition as the goal of antitrust. Businesses want a quiet life and large profits. If one firm outcompetes another with a better product or a lower price, it disadvantages that competitor by lowering its profits or forcing it to work harder to maintain them. The consumer ultimately wins in this struggle. Basing antitrust liability on conduct that “materially disadvantages” competitors would impose liability for the act of competing itself. 

The old model of antitrust was incoherent and unaccountable. Before the rise of the CWS, antitrust enforcement was incoherent and lacked underlying neutral principles. In the words of Justice Potter Stewart, the only consistency was that “the government always wins.” Competitive practices could be condemned because they hurt the profitability of some businesses. Sometimes, courts would worry that prices were too low and would therefore permit “price floors” to protect small business. This lack of consistency led to a body of law that was contradictory and unpredictable, and that regularly undermined competition. By entrusting enforcement and antitrust policy to the discretion of unelected enforcement officials, competition policy was effectively removed from democratic oversight.

The CWS grounds antitrust in objective economics and tractable evidence. Adherence to the CWS renders antitrust judgments transparent and quantifiable by giving a clear benchmark for economic analysis. Without the CWS, courts might trade reduced competition and consumer welfare for a reduction in, for example, a business’s political influence. While achieving the latter may (or may not) be a worthy goal, there is no objective way to assess trade-offs between the two priorities. The CWS requires testable claims and counterclaims as part of a competition case. It allows antitrust cases to focus on a question that can be answered objectively: “Is the challenged conduct likely to make consumers better or worse off?”

The CWS considers innovation and quality, as well as price. The CWS has always encompassed aspects of competition beyond price, including innovation, quality, and product variety. The CWS is thus fully compatible with markets where products are offered at a zero price to consumers, or where the alleged source of harm is the loss of innovation. United States v. Microsoft, for example, hinged on an innovation theory of harm, as did the U.S. Justice Department’s lawsuit against the Visa/Plaid merger, which led to the merger being abandoned. As in other supply markets, anticompetitive conduct by businesses in the labor market has been ruled illegal under the CWS and both of the federal antitrust agencies have brought cases against this kind of conduct.

Antitrust is not a public policy Swiss Army knife. Antitrust is a bad tool to achieve goals other than increased competition, because it is often impossible to objectively compare the value of different competing ends. Where difficult trade-offs must be made between competing social goals, such as balancing economic growth with the environment or workers’ welfare, the legislative process is a better mechanism to weigh society’s preferences than the judgement of a court. Trying to use antitrust to achieve these ends is often an attempt to bypass the democratic process when that process does not deliver the outcomes that advocates want.

For further information, see ICLE’s submission to the FTC’s Hearings on Competition & Consumer Protection in the 21st Century: https://laweconcenter.org/wp-content/uploads/2019/07/Antitrust-Principles-and-Evidence-Based-Antitrust-Under-the-Consumer-Welfare-Standard-FTC-Hearings-ICLE-Comment-5.pdf 

There is little doubt that Federal Trade Commission (FTC) unfair methods of competition rulemaking proceedings are in the offing. Newly named FTC Chair Lina Khan and Commissioner Rohit Chopra both have extolled the benefits of competition rulemaking in a major law review article. What’s more, in May, Commissioner Rebecca Slaughter (during her stint as acting chair) established a rulemaking unit in the commission’s Office of General Counsel empowered to “explore new rulemakings to prohibit unfair or deceptive practices and unfair methods of competition” (emphasis added).

Read the full piece here.

President Joe Biden named his post-COVID-19 agenda “Build Back Better,” but his proposals to prioritize support for government-run broadband service “with less pressure to turn profits” and to “reduce Internet prices for all Americans” will slow broadband deployment and leave taxpayers with an enormous bill.

Read the full piece here.