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TL;DR Concentration is a poor measure of competition, because large businesses can be better for consumers than small ones. And concentration isn’t even rising in the ways that would matter.
Concentration is a poor measure of competition, because large businesses can be better for consumers than small ones. And concentration isn’t even rising in the ways that would matter.
Concentration measures the size and number of businesses competing in a market, and is sometimes used as a barometer of competition. Measures of concentration nationally show that in many markets it has been rising, which some point to this as evidence of falling competition.
Concentration has generally been falling in local markets, and inferring anticompetitive effects from market structure can be misleading. Large businesses with economies of scale can offer cheaper products and spread new technology more rapidly, for the benefit of consumers.
Download the tl;dr explainer PDF here
TL;DR Data doesn’t create a barrier to entry, but privacy regulations might.
Data doesn’t create a barrier to entry, but privacy regulations might.
Some fear that incumbents’ access to user data gives them the ability to improve and target their products in ways that new entrants cannot replicate, creating a barrier to entry that holds back competition in ways that are harmful to consumers.
While access to data may confer some advantages on incumbents, they are not insurmountable by others, and they are akin to other benefits like reputation that are not considered to be barriers to entry.
TOTM In the face of an unprecedented surge of demand for bandwidth as Americans responded to COVID-19, the nation’s Internet infrastructure delivered for urban and rural users alike. In . . .
In the face of an unprecedented surge of demand for bandwidth as Americans responded to COVID-19, the nation’s Internet infrastructure delivered for urban and rural users alike. In fact, since the crisis began in March, there has been no appreciable degradation in either the quality or availability of service. That success story is as much about the network’s robust technical capabilities as it is about the competitive environment that made the enormous private infrastructure investments to build the network possible.
Read the full piece here.
Scholarship Geoffrey A. Manne, Kristian Stout, Eric Fruits, "The Fatal Economic Flaws of the Contemporary Campaign Against Vertical Integration", Kansas Law Review, Kansas Law Review Inc. 2019 vol. 68(5)
This paper proceeds as follows. First, we examine the academic calls for stronger presumptions against vertical mergers based on, among other things, the alleged substitutability of contract for merger as a means of vertical integration, and the alleged equivalence of harms that arise from vertical and horizontal mergers. We analyze these claims on their own terms before proceeding in the next part to survey the economic literature that undermines the foundation of these arguments. We then proceed to analyze the critical differences between horizontal and vertical mergers that makes conflation of these two distinct methods of business combination impossible to truly treat as analytically equivalent. Next, we discuss the mistake of substituting static analysis for a more thorough dynamic analysis, particularly in industries marked by fluid product cycles and flexible business models.
Amicus Brief ICLE supports the petition for certiorari filed by the National Association of Broadcasters (“NAB”), et al. seeking this Court’s review of the order issued by the U.S. Court of Appeals for the Third Circuit in Prometheus Radio Project v. FCC.
This proceeding is fast becoming the Jarndyce v. Jarndyce of administrative law. For nearly two decades, a three-judge panel in the Third Circuit has blocked the FCC’s efforts to comply with its statutory obligation under the 1996 Act to review its media ownership rules periodically and repeal or modify any rules that are no longer necessary because of increased competition in local media markets.
The order in Prometheus IV is the most recent and extreme example of the Third Circuit panel’s improper interference with the FCC’s efforts to comply with this statutory obligation. In it, the panel vacated an FCC order that would have repealed or modified media ownership regulations that even the panel did not dispute are no longer needed to achieve their original purpose of promoting competition, localism, and diversity of viewpoints. See Prometheus IV, 939 F.3d at 584-588 (disputing the FCC’s analysis and conclusions as to female and minority ownership diversity, but not as to promotion of competition, localism or diversity of viewpoints).
The Third Circuit panel instead vacated the FCC’s order because two judges on the panel believed those regulations might serve another, altogether different objective—promoting minority and female ownership—that is nowhere mentioned in either the Communications Act of 1934, 47 U.S.C. § 151 et seq., or the 1996 Act. See Prometheus IV, 939 F.3d at 584- 588. In so doing, the panel exceeded the limits of judicial review authorized by the Administrative Procedure Act, 5 U.S.C. § 551 et seq., by substituting its judgment for that of the agency to which Congress had expressly delegated authority to determine whether these media ownership regulations were still both necessary and in the public interest, and by placing burdens on the agency beyond those established by Congress.
In overstepping these limits, the Third Circuit panel will further delay the elimination of regulations that are not only no longer necessary, but that are also limiting the ability of local newspapers and broadcasters to compete with increasingly important digital media platforms. These outdated regulations have already contributed to an “extinction-level crisis” in the newspaper industry, and the spread of that crisis to local broadcasters in smaller markets is imminent. Consequently, the panel’s order will cause serious and immediate injury to the public’s First Amendment interest in preserving a strong local free press. See Associated Press v. United States, 326 U.S. 1, 28 (1945) (a “free press is indispensable to the workings of our democratic society”) (Frankfurter, J., concurring).
TOTM The COVID-19 crisis has recast virtually every contemporary policy debate in the context of public health, and digital privacy is no exception. Conversations that once . . .
The COVID-19 crisis has recast virtually every contemporary policy debate in the context of public health, and digital privacy is no exception. Conversations that once focused on the value and manner of tracking to enable behavioral advertising have shifted. Congress, on the heels of years of false-starts and failed efforts to introduce nationwide standards, is now lurching toward framing privacy policy through the lens of proposed responses to the virus.
Scholarship "Platform competition is more complicated than simple theories of vertical discrimination would have it, and there is certainly no basis for a presumption of harm."
Over the past several years, a growing number of critics have argued that big tech platforms harm competition by favoring their own content over that of their complementors. Over time, this “vertical discrimination presumption” has become the go-to argument for big tech’s staunchest critics seeking to level novel charges of anticompetitive conduct against these platforms. Indeed, judging by the grandiose claim made by one critic at a recent Senate hearing—“Digital platform self-preferencing threatens the American Dream”—the argument may be the very apotheosis of “populist antitrust.”
According to this line of argument, complementors are “at the mercy” of tech platforms. By discriminating in favor of their own content and against independent “edge providers,” tech platforms cause “the rewards for edge innovation [to be] dampened by runaway appropriation,” leading to “dismal” prospects “for independents in the internet economy—and edge innovation generally.”
The problem, however, is that the claims of presumptive harm from vertical discrimination are based neither on sound economics nor evidence.
Written Testimonies & Filings Pursuant to the House Judiciary Committee’s request for information to aid its inquiry concerning the state of existing antitrust laws, Antitrust Economists, Legal Scholars, and Practitioners offer the following joint submission.
Pursuant to the Committee’s request for information to aid its inquiry concerning the state of existing antitrust laws, we offer the following joint submission:
We are economists, legal scholars, and practitioners—focused on antitrust law, economics, and policy—who believe in maintaining healthy markets and well-functioning antitrust institutions. We value the important role of antitrust as the “Magna Carta of free enterprise,” which sets the rules that govern how firms compete against one another in our modern economy. Many of us have served in antitrust enforcement agencies. Each of us believes it is vital that the antitrust laws promote competitive markets, innovation, and productivity by deterring anticompetitive conduct throughout our economy, including in digital markets.
We write because the modern antitrust debate has become characterized by sustained attacks on the integrity of antitrust institutions and by unsubstantiated dismissals of debate. This atmosphere has led to a variety of proposals for radical changes to the antitrust laws and their enforcement that we believe are unsupported by the evidence, counterproductive to promoting competition and consumer welfare, and offered with an unwarranted degree of certainty.
Vigorous debate and disagreement have long been a hallmark of antitrust scholarship and policy. Competition policy has been formed through an iterative process echoed in the courts’evolving doctrine over more than a century. Today, however, efforts to sidestep the discussion, or to declare it over, and to force hasty and far-reaching changes have come to the fore. These proposals are numerous and include: (1) abandoning the consumer welfare standard; (2) overturning unanimous and supermajority judicial precedents, which are foundational to modern antitrust law; (3) imposing obsolete and arbitrary market share tests to determine the legality of mergers; (4) shifting the burden of proof from plaintiffs to defendants to render large swaths of business behavior presumptively unlawful; (5) creating another federal regulator to oversee competition in digital markets; (6) breaking up major tech companies or their products without evidence of antitrust harm or that the remedy would make consumers better off; and (7) imposing a general prohibition on all mergers either involving specific firms or during the current health crisis.
Such proposals would abandon the legal and political traditions that helped transform antitrust from an unprincipled and incoherent body of law, marred by internal contradictions, into a workable system that contributes positively to American competitiveness and consumer welfare. It should be noted that we use the term “consumer welfare” throughout this letter, consistent with modern parlance about competition policy, to include the benefits of competition to the welfare of workers and other input suppliers, as well as consumers. Thus, the consumer welfare standard is not a narrowly circumscribed objective, but rather a prescription for the general social wellbeing generated by the competitive process. By contrast, many of the current proposals would (1) undermine the rule of law; (2) undo the healthy evolution of antitrust law in the courts over time; (3) require antitrust agencies to micromanage the economy by picking winners and losers; (4) abandon a focus on consumer welfare in favor of vague and politically-oriented goals; and (5) undermine successful American businesses and their competitiveness in the global economy at the worst-imaginable time.
The assertions about the state of antitrust law and policy that purportedly justify these radical changes are not supported by the evidence. A more accurate reading of the evidence supports the following view of the American economy and the role of antitrust law:
We believe open discussion of existing evidence is necessary to advance contemporary debates about the performance of antitrust institutions in the digital economy. We welcome that discussion. We discuss below various dimensions of antitrust law, economics, and institutions that have been the targets of radical reform proposals. The signatories to this letter hold a steadfast belief that antitrust institutions, including the courts, are up to the task of protecting competition, and that the federal antitrust laws as written are effective in accomplishing that goal. While many signatories have offered diverse proposals to improve the functioning of those institutions—a few of which we share in this letter—we hold the common view that the proposed radical reforms would make consumers worse off in the short run and over the long haul by chilling efficient behavior and stymieing innovation.
Read the full submission here.
TOTM As the COVID-19 outbreak led to the shutdown of many stores, e-commerce and brick-and-mortar shops have been stepping up efforts to facilitate online deliveries while . . .
As the COVID-19 outbreak led to the shutdown of many stores, e-commerce and brick-and-mortar shops have been stepping up efforts to facilitate online deliveries while ensuring their workers’ safety. Without online retail, lockdown conditions would have been less tolerable, and confinement measures less sustainable. Yet a recent French court’s ruling on Amazon seems to be a justification for making life more difficult for some of these businesses and more inconvenient for people by limiting consumer choice. But in a context that calls for as much support to economic activity and consumer welfare as possible, that makes little sense. In fact, the court’s decision is symptomatic of how countries use industrial policy to treat certain companies with double standards.
