California Dreamin’ or an Antitrust Nightmare?
California is about to run a live-fire experiment in antitrust—and the working hypothesis appears to be that decades of case law and economic learning were optional.
In January, I published a short post—“Rewriting Antitrust, California Style”—that touched on the inner workings (machinations?) of the California Law Review Commission (CLRC). I flagged concerns about the staff’s recommendations on single-firm conduct. I was hardly alone. The International Center for Law & Economics (ICLE) submitted comments, as did Bilal Sayyed and Tech Freedom; Joe Coniglio and the Information Technology & Innovation Foundation; Daniel Francis of New York University School of Law; and Herbert Hovenkamp, who offered a characteristically concise note on cross-market effects.
My own comments were unusually (for me) brief. I raised a high-level concern about efforts to distance California from federal antitrust law and promised more as the CLRC process unfolded. Time flies. In the interim, two—count ’em, two—antitrust bills have landed before the California Legislature.
The first is California Assembly Bill 1776, laboriously titled in search of an acronym: the Competition and Opportunity in Markets for a Prosperous, Equitable and Transparent Economy (COMPETE) Act. It is a direct descendant of the CLRC recommendations. The Assembly Judiciary Committee advanced the bill April 7 on a strict party-line vote and re-referred it to the Appropriations Committee. Jonathan Nuechterlein—a former Federal Trade Commission (FTC) general counsel—recently analyzed the bill, its prospects, and its defects.
The second is California Senate Bill 1074, the Blocking Anticompetitive Self-Preferencing by Entrenched Dominant Platforms—the “BASED” Act. The acronym tries a bit too hard—and lands a bit obscure. State Sen. Scott Wiener (D-San Francisco) introduced the bill, reportedly with enthusiastic backing (if not drafting) from Y Combinator and Economic Security California—a misnomer, but never mind.
Both bills appear to be based on faith in unconstrained judicial intervention and a general rejection of established antitrust principles–or, at least, a rejection of U.S. antitrust. The BASED Act in particular seems to embody a “neo-Brandeisian” animus towards large tech firms and a rejection of consumer welfare. Neither the facts of federal enforcement experience nor decades of economic learning seem to have made much of an impact.
Spoiler alert for the impatient reader who, on the one hand, reads my posts here at Truth on the Market but, on the other, cannot quite predict my reaction: I do not care for either bill. Taken together, they look like a recipe for disaster.