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Written Testimonies & Filings The signatories of this letter, active or emeritus professors employed at public or private universities in the United States, come from across the political spectrum, and have a wide variety of views on regulation, environmental and consumer protection, and free enterprise as a general matter, but find common ground on the important issue of automotive direct sales.
We, the signatories of this letter, are active or emeritus professors employed at public or private universities in the United States. We specialize in economics, competition policy, market regulation, industrial organization, or other disciplines bearing on the questions presented in this letter. We come from across the political spectrum, and have a wide variety of views on regulation, environmental and consumer protection, and free enterprise as a general matter, but find common ground on the important issue of automotive direct sales.
TOTM Ajit Pai has been, in my view, the most successful, impactful minority commissioner in the history of the modern regulatory state. And it is that success that has led him to become the most successful and impactful chairman, too.
Much of this symposium celebrates Ajit’s contributions as chairman of the Federal Communications Commission and his accomplishments and leadership in that role. And rightly so. But Commissioner Pai, not just Chairman Pai, should also be recognized.
Read the full piece here.
Amicus Brief ICLE President Geoffrey A. Manne and amici, scholars of economics and antitrust, submitted this brief to address the broad consensus in the academic literature disfavoring the theory underlying plaintiff’s case—so-called “unilateral refusal to deal” doctrine.
Amici, scholars of economics and antitrust, submit this brief to address the broad consensus in the academic literature disfavoring the theory underlying plaintiff’s case—so-called “unilateral refusal to deal” doctrine. In antitrust parlance, a unilateral refusal to deal describes an allegation that a monopolist refuses to enter into a business relationship with a rival. Plaintiff Viamedia alleges that Comcast refused to allow it to access, on reasonable terms, an important input (Comcast’s Interconnect) for competition in advertising representation services.
Mainstream economists and competition law scholars are skeptical of imposing liability on a monopolist based solely on its choice of business partners. Because the free choice of business dealings is both a fundamental tenet of a free market economy and the mechanism by which markets produce the greatest welfare gains, cases compelling business dealings—even if one of the parties to the deal is a monopolist—should be confined to particularly delineated circumstances. The Seventh Circuit’s analysis, which embraces Viamedia’s theory of liability at face value, is thus out of step with the generally accepted academic view of efficient antitrust enforcement.
In Part A below, amici describe why it is generally inefficient for courts to compel economic actors to deal with one another against their will. Such “solutions” are generally unsound in theory and unworkable in practice, in that they ask judges to operate as public utility regulators over the defendant’s business. Courts should be guarded about taking on such a role.
In Part B, amici describe how scholars have roundly criticized Aspen Skiing, this Court’s most prominent precedent permitting liability for a monopolist’s unilateral refusal to deal. This Court has backed away from Aspen Skiing’s core theory, calling it “at or near the outer boundary of § 2 liability.” The Seventh Circuit erred in failing to take this Court’s cues and confine Aspen Skiing to its unusual facts.
In Part C, amici make clear that, even if delimited situations might warrant antitrust scrutiny of a monopolist’s refusal to deal with a competitor, this case is not one of them. A unilateral refusal to deal should trigger antitrust liability only where a monopolist turns down more profitable dealings with a competitor in an effort to drive a competitor’s exit or to disable its ability to compete, thereby allowing the monopolist to recoup its losses by increasing prices. But Viamedia’s allegations come nowhere near that scenario.
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.
Scholarship This Article makes the case in support of the current consumer welfare standard and against a sweeping set of unsupported populist antitrust reforms.
Populist antitrust notions suddenly are fashionable again. At their core is the view that antitrust law is responsible for a myriad of purported socio-political problems plaguing society today, including but not limited to rising income inequality, declining wages, and increasing economic and political concentration. Seizing on Americans’ fears about changes to the modern US economy, proponents of populist antitrust policies assert the need to fundamentally reshape how we apply our nation’s competition laws in order to implement a variety of prescriptions necessary to remedy these perceived social ills. The proposals are varied and expansive but have the unifying theme of returning antitrust to the “big-is-bad” enforcement era prevalent in the first half of the twentieth century.
But the criticisms populist antitrust proponents raise are generally unsupported and often dramatized, and the resulting policy proposals are, accordingly, fatally flawed. There is sparse evidence today suggesting that the underlying trends these critics purportedly identify are real or in any way linked to lax antitrust enforcement. Ironically, populist antitrust proponents ignore that antitrust law debated over 50 years ago the same proposals that they are raising anew today. At that time, leading jurists, economists, enforcers, and practitioners from across the political spectrum rejected the use of liability standards that seek to evaluate a variety of vague and often contradictory socio-political goals or that condemn conduct based simply on the size of a company. They recognized that these tests led to incoherent and paradoxical results that often did more to hinder than to promote competition by undermining the rule of law and fostering corporate welfare. Instead, antitrust evolved the elegant “consumer welfare standard” that simplified the core issue of what constitutes harm to competition into a straightforward question: does the conduct at issue harm consumers?
Today, the consumer welfare standard offers a rigorous, objective, and evidence-based framework for antitrust analysis. It leverages developments in modern economics more reliably to predict when conduct is likely to harm consumers as a result of harm to competition. It offers a tractable test that is broad enough to contemplate a variety of evidence related to consumer welfare but also sufficiently objective and clear to cabin discretion and honor the principle of the rule of law. Perhaps most significantly, it is inherently an economic approach to antitrust that benefits from new economic learning and is capable of evaluating an evolving set of commercial practices and business models. These virtues are precisely the target of the new populist antitrust movement, which seeks to reject economics in favor of mere supposition.
This Article makes the case in support of the current consumer welfare standard and against a sweeping set of unsupported populist antitrust reforms. There is significant room for debate within the consumer welfare model for what types of conduct should face antitrust scrutiny, what evidence is relevant, and where liability standards should be drawn. Such debate is healthy and to the benefit of antitrust enforcement. But it does not require abandoning decades of experience and economic learning that would turn back the hands of time and return us to an era where antitrust enforcement was incoherent and deleterious.
Regulatory Comments In response to the Draft Vertical Merger Guidelines released by DOJ and the FTC on January 10, 2020,1 the International Center for Law & Economics . . .
In response to the Draft Vertical Merger Guidelines released by DOJ and the FTC on January 10, 2020,1 the International Center for Law & Economics convened a blog symposium to discuss the legal and economic implications of the proposed changes. Published on Thursday, February 6, 2020 and Friday, February 7, 2020 on TruthOnTheMarket.com, that symposium included contributions from twenty-six well respected legal academics, economists, and seasoned practitioners. This Comment collects those posts together so that they can form part of the record as DOJ and the FTC consider the final form of the Vertical Merger Guidelines.
Please note, inclusion of the posts in this comment should not be interpreted as indicating that any particular author supports any post that is not his or her own — this was a broad effort that included many different viewpoints.
TOTM After much anticipation, the Department of Justice Antitrust Division and the Federal Trade Commission released a draft of the Vertical Merger Guidelines (VMGs) on January . . .
After much anticipation, the Department of Justice Antitrust Division and the Federal Trade Commission released a draft of the Vertical Merger Guidelines (VMGs) on January 10, 2020. The Global Antitrust Institute (GAI) will be submitting formal comments to the agencies regarding the VMGs and this post summarizes our main points.
Popular Media In a recent article[1] Joe Kattan and Tim Muris (K&M) criticize our article[2] on the predictive power of bargaining models in antitrust, in which we used two recent applications to explore implications for uses of bargaining models in courts and antitrust agencies moving forward.
In a recent article Joe Kattan and Tim Muris (K&M) criticize our article on the predictive power of bargaining models in antitrust, in which we used two recent applications to explore implications for uses of bargaining models in courts and antitrust agencies moving forward. Like other theoretical models used to predict competitive effects, complex bargaining models require courts and agencies rigorously to test their predictions against data from the real world markets and institutions to which they are being applied. Where the “real-world evidence,” as Judge Leon described such data in AT&T/Time Warner, is inconsistent with the predictions of a complex bargaining model, then the tribunal should reject the model rather than reality.
Scholarship On November 14, 2018, the Federal Trade Commission (“Commission”) issued an opinion condemning as an antitrust violation trademark settlement agreements between 1-800 Contacts (“1-800”) and fourteen online sellers of contact lenses.
On November 14, 2018, the Federal Trade Commission (“Commission”) issued an opinion condemning as an antitrust violation trademark settlement agreements between 1-800 Contacts (“1-800”) and fourteen online sellers of contact lenses. The settlement agreements arise from trademark infringement claims brought by 1-800 against these online rivals. FTC Chairman Joseph Simons authored the Commission’s opinion, joined by the two Democratic Commissioners, Rohit Chopra and Rebecca Slaughter. In finding that the settlement agreements violated Section 1 of the Sherman Act, Chairman Simons and the majority commit two critical errors—one legal, the other economic—that render the Commission’s opinion, in our view, highly vulnerable to reversal upon its inevitable appeal. With respect to the legal infirmity, the Commission incorrectly concludes the challenged agreements are “inherently suspect,” and applies a truncated rule of reason analysis to assess whether the agreements harmed competition. As explained in Commissioner Noah Phillips’ dissent, a truncated analysis is not supported in this case either by judicial experience or economic learning, and was thus inappropriately applied. The second error is application of an economic analysis to claim the agreements have caused anticompetitive effects that falls woefully short of evidence of consumer injury. We predict reversal by an appellate court.
