The Yale Law Journal today published a symposium, “Unlocking Antitrust Enforcement,” based on papers that were presented at an event the Washington Center for Equitable Growth co-hosted with the Program on Law and Government at American University Washington College of Law in October, 2017. Leading scholars and practitioners discussed nine proposals for more vigorous enforcement of existing antitrust laws. Videos of the discussions are available online.
Antitrust, in the words of Senator Amy Klobuchar (D-MN), is now cool to talk about. Last fall, the comedian commentator John Oliver devoted a segment of Last Week Tonight to corporate consolidation. This popular interest mirrors a renewed academic focus on the state of competition and monopoly power in the economy. Recent research explores the relationship between declining competition and declining business investment, declining labor share, and stagnating wages.
The Washington Center for Equitable Growth is documenting these trends through a series of papers on antitrust and competition. “Market Power in the U.S. Economy Today,” by Jonathan Baker, a professor at American University Washington College of Law, reviews the evidence about declining competition in the economy. “U.S. antitrust and competition policy amid the new merger wave,” by John Kwoka, the Neal F. Finnegan Distinguished Professor of Economics at Northeastern University, analyzes both the rise in concentration and one possible explanation: changing merger enforcement policy at the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice. “A Communications Oligopoly on Steroids,” by Gene Kimmelman the President and CEO of Public Knowledge, and Mark Cooper of the Consumer Federation of America, explains why antitrust enforcement and regulatory oversight in digital communications matter to consumers, an issue of particular relevance given major proposed mergers such as AT&T/Time-Warner, Sinclair/Tribune Media, and, most recently, Sprint/T-Mobile. Finally, Washington Equitable Junior Fellow Jacob Robbins has coauthored a paper on how rising market power in the United State may be affecting macroeconomic results and may help explain some of those macroeconomic puzzles.
A healthy, vigorous debate is occurring over the state of competition in the U.S. economy and what solutions, if any, are needed. But, at times, it has devolved into intellectual name-calling and ad hominem attacks. The Yale Law Journal’s symposium takes a very different approach. Each paper represents a serious and thoughtful proposal for a specific problem that antitrust enforcement can tackle:
- With growing concern that some firms may be using low pricing to drive out competitors, “Bringing Reality to the Law of Predation,” by Scott Hemphill and Phillip Weiser, offers a roadmap for bringing and deciding predatory pricing cases under current legal doctrine.
- “Multisided Platforms and Antitrust Enforcement,” by Michael Katz and Jonathan Sallet, addresses a key doctrinal issue that is before the Supreme Court.
- In the face of an increasing wave of vertical mergers (AT&T/Time Warner, Bayer/Monsanto), “Invigorating Vertical Merger Enforcement,” by Steven Salop, provides an up-to-date analytic framework for analyzing deals in in which two companies at different stages of an industry’s supply chain merge.
- Relatedly, “Horizontal Mergers, Market Structure, and Burdens of Proof,” by Herbert Hovenkamp and Carl Shapiro, offers suggestions for strengthening the legal standards for judging horizontal mergers when a company acquires its competitor.
- “Mergers That Harm Sellers,” by Scott Hemphill and Nancy Rose, explains why mergers that create monopsony power are anticompetitive and should be blocked under the antitrust laws. Monopsony power exists when the buyer, rather than the seller, possesses market power. The paper also explains why buyers with monopsony power do not pass their lower costs on to consumers.
- “Platform MFNs and Antitrust Enforcement,” by Jonathan Baker and Fiona Scott Morton, examines Most Favored Nation clauses in the online travel industry, where internet platforms such as online travel agencies require a travel service provider (for example, a hotel) to give the platform the lowest prices, barring the provider from offering a lower price directly to consumers or through different platforms. Such provisions can harm competition by keeping prices high and discouraging entry of new platform rivals.
- “Antitrust and Deregulation,” by Howard Shelanski, argues that in deregulatory eras, such as the current one, antitrust enforcement should become more aggressive.
- “Antitrust and Effective FRAND Commitments,” by Douglas Melamed and Carl Shapiro, addresses patent-right abuses in standard-setting organizations that can increase the prices of products such as computers and cell phones. This paper is an important counterpoint to recent remarks by Assistant Attorney General Makan Delrahim.
- “Horizontal Shareholding and Antitrust Enforcement,” by Herbert Hovenkamp and Fiona Scott Morton, explores whether and when mutual funds’ ownership of competing firms can harm competition.
Each paper sparked a lively debate, and their publication will generate more commentary. The Yale Law Journal’s symposium is certainly not the last word on the role of antitrust enforcement in today’s economy. But the symposium moves the debate toward developing a positive agenda for antitrust enforcement.
The Washington Center for Equitable Growth is glad to have helped support the event where these papers were presented and will continue to be part of this discussion. Next month, we will launch a series of articles by academics, former antitrust enforcers, and competition practitioners on antitrust policy. Until then you can always find Equitable Growth’s growing body of research and analysis on market power and antitrust here.