What’s Next, Antitrust 2014 and Beyond?
Original published in the Global Competition Review in early 2014.
A growing consensus is coalescing; it is time to rethink the framework of the American economy to best meet our modern challenges. Rewritten antitrust laws interwoven with the concerns of our new economy — privacy, consumer protection, intellectual property, and telecommunications — should be a centerpiece of that work.
A once vibrant but now increasingly obscure piece of the law, antitrust simultaneously bears a heavy responsibility for the best and worst of the American economy today and offers the surest way forward towards greater prosperity. Competition is the core value of a market economy, but, like all other principles and laws, it must adapt and actually be enforced to survive.
Born of the industrial revolution, antitrust matured through the post-war, trade-surplus-fueled expansion of the American century. First it broke trusts and monopolies through populism, but then it was turned on its head to enable them through innovative creative destruction permitted by extreme under-enforcement.
Today as the American economy is faced with the challenges of the rise of a technical revolution through innovation and middle income economies through globalization, the simple framework built in the Victorian era and constricted by the Reagan era needs to be redone.
Modern scholars have shown today’s antitrust framework is fundamentally broken. Doug Ginsburg and Josh Wright demonstrate that American, judicially-led antitrust can never be as dynamic as the economy — that is a problem. Harry First and Spence Waller highlight that American antitrust is technocratic and lacking democratic oversight — that too is a problem. Justice Scalia famously wrote, “The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system.” That is simply frightening. And given that the Courts and too often the DOJ have seen fit to throw more than half of the Sherman act out the window altogether, Section 2 and anti-monopoly law generally, the little that is left from 1890 is long in the tooth.
Laws must fit the needs of those governed. American antitrust needs to be concerned about small business and small l labor because antitrust shunts efficiency’s externalities onto the labor side of the productivity equation. We see antitrust addressing this in the DOJ’s case against the Google and Apple anti-poaching agreement, but the framework for this is too weak for broad application. Workers and SMEs in America can no longer withstand being ignored in a service-centric economy where independent contractors and small businesses are proliferating. Just because antitrust law sees consumers and workers as separate does not change the reality that these are the same people who wear only one hat.
American antitrust should also be concerned about the next legacy monopolies that are building the infrastructure of the next century — online platform services (like Google and Amazon), major terrestrial and mobile ISPs, wholesale goods and services providers, and consolidated retail chains. Antitrust made the US stronger by dealing with trains and telephones, leading to economic fairness and expansion. Now it must be involved in dealing with the next major thoroughfares of our economy: spectrum, interconnection, privacy regimes, and new capital flows. Core antitrust has too much to offer to these critical debates to relegate its role to the sidelines, or worse, the dustbin.
When antitrust is not represented at the table, other industries and regulators forget that competition matters. It is a strangely fragile idea, easily tossed aside for short term interests as happened when DOJ Antitrust was effectively foreclosed from banking in the 1990s. This lead to the too big to fail crisis being painfully beyond the reach of the antitrust laws today.
America may have the longest antitrust history, but that doesn’t mean that we should stay stuck in it. Rather we should learn from it. As business theory demonstrates, silos in management develop expertise but lack vision. Our regulatory system is too deep in its silos, with antitrust too often left out in the cold away from regulated industries. The regulatory system needs to be shaken up, much the way that antitrust shook up sclerotic industries through deconcentration or deregulation in decades past. This time the question is no longer whether or not to regulate, but how.
It is the Federal Trade Commission’s hundredth birthday this year. It needs a better toolkit, a wider remit, more sunshine instead of consent decrees, and a well-considered reset to intelligently capitalize on what we can learn from the laboratories of other competition regimes around the globe. A revitalized antitrust would serve everyone by conforming with some basic rule of law principles: better enforcement for the public interest and clearer rules for business.
This birthday is an auspicious time to redo antitrust instead of once more repeating that Sherman’s law is elegant or debating what Sherman really, actually meant. It doesn’t matter whether Sherman and his co-authors thought about consumer welfare versus total welfare. And it doesn’t matter what Robert Bork thought Sherman thought about that either.
We can write new laws, and it seems we must. Congress is struggling these days, so the antitrust community should offer its expertise. This community is good at analyzing the dynamics of obscure operations; we should apply those skills to our own operation.
There are new major considerations and old problems that have come home to roost. Telecommunications consolidation in the US and globally, proliferating oligopolies, the still reeling patent and copyright systems, the structural problem of too big to fail banks and too big to fail industries like autos, a ballooning need for evermore consumer protection, a lack of consensus on how or whether to protect privacy, and far too few jobs.
Brilliant theorists, lawyers, and economists work in antitrust, in telecom, in privacy, in consumer protection, and in IP. Experts in these fields can’t wait for Congress to ask for help. Instead antitrust leaders should start to collaborate with their counterparts in other brands of regulation to sunset the legal and regulatory silos and offer a comprehensive new framework that we can only hope will last us for the better part of the next 100 years.
