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TL;DR Returning to a pre-Consumer Welfare Standard 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.
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.
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.
Read the full explainer here.
Popular Media Critiques of big tech are ten a penny, but it’s not often that you hear a politician, let alone a Conservative one, saying we should . . .
Critiques of big tech are ten a penny, but it’s not often that you hear a politician, let alone a Conservative one, saying we should shut down tech companies altogether. So it was a surprise to see Tory MP Tobias Ellwood arguing in the Mail on Sunday that we would be better off if the likes of Google, Facebook, Amazon and Twitter did not exist at all.
Read the full piece here.
Presentations & Interviews ICLE Director of Law & Economics Programs Gus Hurwitz joined Steptoe & Johnson’s The Cyberlaw Podcast on an episode titled “Well, Have You Ever Seen . . .
ICLE Director of Law & Economics Programs Gus Hurwitz joined Steptoe & Johnson’s The Cyberlaw Podcast on an episode titled “Well, Have You Ever Seen Dr. Octopus and Sen. Klobuchar Together?” The full episode can be played below.
Regulatory Comments ICLE comments filed Feb. 1, 2021, to the U.S. Federal Trade Commission in response to the FTC's Advance Notice of Public Rulemaking concerning future amendments to the premerger notification rules under the Hart-Scott-Rodino Antitrust Improvements Act.
We thank the Commission for the opportunity to comment on its Advance Notice of Proposed Rulemaking (“ANPRM”) concerning future amendments to the premerger notification rules under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR’’).
The International Center for Law and Economics (ICLE) is a nonprofit, nonpartisan research center whose work promotes the use of law & economics methodologies to inform public policy debates. We believe that intellectually rigorous, data-driven analysis will lead to efficient policy solutions that promote consumer welfare and global economic growth.
ICLE’s scholars have written extensively on competition and consumer protection policy. Some of our writings are included as references in the comment below. Additional materials may be found at our website: www.laweconcenter.org.
Our comment argues that the FTC’s rulemaking initiatives should be informed by the error-cost framework. As we explain, the framework offers several key insights that authorities should carefully consider when reviewing existing merger rules and guidance.
Among other things, it demonstrates that the societal costs stemming from false negatives (i.e. anticompetitive mergers that evade antitrust enforcement) are inextricably linked to those that originate from false positives (efficient mergers that are prohibited or deterred) and administrative costs (the social costs that are created by the operation of a given regulatory regime). As a result, any attempt to reduce one of these costs necessary entails a tradeoff as far as the others are concerned. All three costs should thus be considered together.
In short, we urge the FTC to take a holistic view when updating HSR rules and interpretations of those rules. In particular, it is important to consider the overall welfare costs of new rules, and not just their ability to plug existing enforcement gaps.
Read the full comments here.
TL;DR The European Union has unveiled draft legislation that seeks to tame so-called “gatekeeper” Big Tech firms. If passed into law, this Digital Markets Act (“DMA”) would create a list of “dos and don’ts” by which the platforms must abide, such as allowing interoperability with third parties and sharing data with rivals.
The European Union has unveiled draft legislation that seeks to tame so-called “gatekeeper” Big Tech firms. If passed into law, this Digital Markets Act (“DMA”) would create a list of “dos and don’ts” by which the platforms must abide, such as allowing interoperability with third parties and sharing data with rivals. In short, the DMA would give the European Commission significant powers to tell tech companies how to run their businesses.
The DMA essentially shifts competition enforcement against gatekeeper platforms away from an “effects” analysis that weighs costs and benefits to a “blacklist” approach that proscribes all listed practices as harmful. This will constrain platforms’ ability to experiment with new products and make changes to existing ones, limiting their ability to innovate and compete.
TL;DR The European Commission has released its draft Digital Services Act (“DSA”), which seeks to make the internet safer for European citizens. If passed into law, this regulation will shape digital markets in the European Union for years to come.
The European Commission has released its draft Digital Services Act (“DSA”), which seeks to make the internet safer for European citizens. If passed into law, this regulation will shape digital markets in the European Union for years to come.
While some provisions of the draft DSA could bring needed changes to the regulation of online markets, the law will on balance make it more costly for online firms to do business in Europe. This is particularly true for smaller platforms with less capacity to shoulder significant compliance costs. Like many other regulations, the DSA also might further entrench incumbents.
TOTM The technical and business challenges of connecting rural America are different. Rural America needs different things out of its infrastructure than urban America. And the attitudes of both users and those providing service are different here than they are in urban America. Aji Pai gets this.
I was having a conversation recently with a fellow denizen of rural America, discussing how to create opportunities for academics studying the digital divide to get on-the-ground experience with the realities of rural telecommunications. He recounted a story from a telecom policy event in Washington, D.C., from not long ago. The story featured a couple of well-known participants in federal telecom policy as they were talking about how to close the rural digital divide. The punchline of the story was loud speculation from someone in attendance that neither of these bloviating telecom experts had likely ever set foot in a rural town.
Popular Media It has been a brutal few days for Parler, the now-infamous Twitter alternative favored by President Donald Trump’s most die-hard supporters. Both Google and Apple removed the app from their . . .
It has been a brutal few days for Parler, the now-infamous Twitter alternative favored by President Donald Trump’s most die-hard supporters. Both Google and Apple removed the app from their online stores, and the site went offline altogether after Amazon Web Services (AWS) suspended its webhosting account with little notice.
Parler responded to this deplatforming by filing an antitrust suit against Amazon, which is certain to fail and may not even survive a motion to dismiss. The crux of Parler’s antitrust case is that Amazon conspired with Twitter to eliminate its service. But the company’s filing contains not a single allegation of reduced competition relevant to antitrust law, let alone evidence to back up such claims.
TOTM Admirers of the late Supreme Court Justice Louis Brandeis and other antitrust populists often trace the history of American anti-monopoly sentiments from the Founding Era . . .
Admirers of the late Supreme Court Justice Louis Brandeis and other antitrust populists often trace the history of American anti-monopoly sentiments from the Founding Era through the Progressive Era’s passage of laws to fight the scourge of 19th century monopolists. For example, Matt Stoller of the American Economic Liberties Project, both in his book Goliath and in other writings, frames the story of America essentially as a battle between monopolists and anti-monopolists.
