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Written Testimonies & Filings FTC Hearings on Competition & Consumer Protection in the 21st Century. Comments of the International Center for Law & Economics: The Rise of Neo-Brandeisian Competition Policy: Populism and Political Power and the Threat to Economically Grounded, Evidence-Based. Competition Law and Consumer Protection Regulation. Submitted August 20, 2018.
In 1995, then-FTC-Chairman Pitofsky convened a set of hearings — the Global Competition and Innovation hearings (“Pitofsky Hearings”) — aimed at investigating the implications for antitrust law, economics, and policy of “increasing globalization and rapid innovation.”2 As the Pitofsky Hearings report noted:
These changes create new possibilities and raise new problems for consumers, businesses, and government agencies. It is in everyone’s interest that government understand these developments in order to make sure that the marketplace continues to work competitively for businesses and consumers.
Two decades later — a near eternity in Internet time — the same changes are proceeding apace, and the need for greater understanding remains; arguably, it is even more acute today.
By the 1990s, the global marketplace had already grown dramatically, and technology startups were beginning to test new regulatory and legal fault lines. Today we face an even-more-tightly integrated world market, along with the intensification of international tariff disputes, the creative imposition of non-tariff trade barriers (including antitrust enforcement), and the increased brazenness of politicized industrial policy implementation that expanded global competition brings.
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. In particular, there remains much about the welfare implications of competition policy decisions surrounding innovation that we still don’t understand.
Yet, while some of the business, economic, and legal specifics are novel, important, and worthy of investigation, the core policy issues we face today are nothing new, and they weren’t new even in the 1990s. The innovation that drives economic growth, while generally beneficial, nonetheless inevitably causes adverse effects for some businesses and/or the interests of some social commentators, and this has resulted in attempts to politicize antitrust in order to protect those businesses and/or social interests. What is troubling is how little we seem to remember of what we do know, even as slightly different versions of the same antitrust 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 it is insufficient to point to even well-supported empirical claims regarding aggregated market effects or specific case outcomes as the basis for (often-dramatic) policy prescriptions. Rather, decisions regarding competition and consumer protection policy must 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.
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TOTM The Federal Trade Commission will soon hold hearings on Competition and Consumer Protection in the 21st Century. The topics to be considered include...
The Federal Trade Commission will soon hold hearings on Competition and Consumer Protection in the 21st Century. The topics to be considered include…
Read the full piece here.
TOTM One of the hottest topics in antitrust these days is institutional investors’ common ownership of the stock of competing firms. Large investment companies like BlackRock, Vanguard, State . . .
One of the hottest topics in antitrust these days is institutional investors’ common ownership of the stock of competing firms. Large investment companies like BlackRock, Vanguard, State Street, and Fidelity offer index and actively managed mutual funds that are invested in thousands of companies. In many concentrated industries, these institutional investors are “intra-industry diversified,” meaning that they hold stakes in all the significant competitors within the industry.
TOTM Last week, I objected to Senator Warner relying on the flawed AOL/Time Warner merger conditions as a template for tech regulatory policy, but there is a much deeper problem contained in his proposals.
Last week, I objected to Senator Warner relying on the flawed AOL/Time Warner merger conditions as a template for tech regulatory policy, but there is a much deeper problem contained in his proposals. Although he does not explicitly say “big is bad” when discussing competition issues, the thrust of much of what he recommends would serve to erode the power of larger firms in favor of smaller firms without offering a justification for why this would result in a superior state of affairs. And he makes these recommendations without respect to whether those firms actually engage in conduct that is harmful to consumers.
Written Testimonies & Filings Comments on the Draft Control of Tobacco and Electronic Delivery Systems Bill 2018. Submitted by Julian Morris, Executive Director, International Center for Law and Economics. Senior Fellow, Reason Foundation. 9 August 2018.
Comments on the Draft Control of Tobacco and Electronic Delivery Systems Bill 2018. Submitted by Julian Morris, Executive Director, International Center for Law and Economics. Senior Fellow, Reason Foundation. 9 August 2018.
TOTM The Economist takes on “sin taxes” in a recent article, “‘Sin’ taxes—eg, on tobacco—are less efficient than they look.” The article has several lessons for policy makers eyeing taxes on e-cigarettes and other vapor products. Historically, taxes had the key purpose of raising revenues. The “best” taxes would be on goods with few substitutes (i.e., inelastic demand) and on goods deemed to be luxuries.
The Economist takes on “sin taxes” in a recent article, “‘Sin’ taxes—eg, on tobacco—are less efficient than they look.” The article has several lessons for policy makers eyeing taxes on e-cigarettes and other vapor products.
Popular Media With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.
With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.
TOTM Senator Mark Warner has proposed 20 policy prescriptions for bringing “big tech” to heel. The proposals — which run the gamut from policing foreign advertising on social networks to regulating feared competitive harms — provide much interesting material for Congress to consider.
Senator Mark Warner has proposed 20 policy prescriptions for bringing “big tech” to heel. The proposals — which run the gamut from policing foreign advertising on social networks to regulating feared competitive harms — provide much interesting material for Congress to consider.
TOTM What to make of the decision by the European Commission alleging that Google has engaged in anticompetitive behavior? In this post, Julian Morris contrasts the European Commission’s (EC) approach to competition policy with US antitrust, briefly explores the history of smartphones and discusses the ruling.
What to make of Wednesday’s decision by the European Commission alleging that Google has engaged in anticompetitive behavior? In this post, I contrast the European Commission’s (EC) approach to competition policy with US antitrust, briefly explore the history of smartphones and then discuss the ruling.
