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Antitrust Policy in the 21st Century: Is There a Need for Reform? – Session 2

 |  September 17, 2020

Below we have provided the full text transcript from the second panel of our recent roundtable discussions, Antitrust Policy in the 21st Century: Is There a Need for Reform?, from July 17.

Randall Picker Speaker

Randal PICKER:

Hey, my name is Randy Picker, and this is really just an experiment. As you may know if you’re watching this, the house has been doing an investigation of digital marketplaces. They asked for a bunch of statements to be filed, and it seemed … When I filed my statement I said on Twitter and LinkedIn, “We should do some workshops on these,” and our CPI reached out to me and so we put this together based upon that.

And what we’ve been doing is we’re just going to pair a couple people, sort of do a few weeks of this, and just see how it feels. And the idea behind recording them, which is what we’re doing is, is to try to do two things simultaneously, have a great small conversation. Here we’ve got nine people today, a really nice Hollywood Squares look.

I feel like I should call on Josh Wright to block, that’s what they used to do in the old days, since Josh is at least on my screen in the Paul Lynde Square, none of that means anything to any of you. So that’s what we’re going to do. So we’re going to have a fixed order today to facilitate this recording, we hope, and then we’ll break into a conversation.

So we’re going to identify any possible conflicts we have, I don’t think I have any. I am mainly a consumer of these products, and I love Google and Amazon and Apple, very mixed feelings about Facebook, if the truth be known, but that’s a different conversation. So with that, we’re going to start with Josh Wright. Josh, you’re up.

Joshua Wright Speaker

Joshua D. WRIGHT:

Thanks, Randy, and it’s great to be here with all of you. And anytime I am paired with my friend and co-author, Jon Baker it’s a good day, so we’ll find some things to disagree about I’m sure, but that will be fun. So I’m on one of these submissions to the house with a group of 17 or so academics, and like any group of 17, I agree with most of the stuff in there and not all of it, and I think that’s the same for the other submission.

So I’ll be talking in some places about my own views, but also will give a sense of what the submission says and where it comes from more generally too. And I’ll try to remember to disagree with myself where the submission has something in it that I don’t fully support.

But really what got my attention, watching these submissions to the house, always been doing these hearings for a while, was I had read at some point all of the individual submissions that had gone in, and I’m on a narrower submission with just my colleague, John Yun and James Cooper.

But the scope of the inquiry for the house is sort of remarkable, sort of everything under the sun and all of antitrust. Some of it framed as being applied to big tech, but many of the proposals kind of touching everything. So you read some of the proposals that had been made in the joint submission, and I’ll let Jon describe it, but some of them got my attention.

The submission I’m going to be talking about was really in a way a response, but it is everything from abandoning the consumer welfare standard, not just for tech firms, abandoning the consumer welfare standard, overturning Twombly and Trinko and Amex and some other stuff too, right? Sort of overturning broad swaths of Supreme Court precedent, adopting bright line rules for the evaluation of horizontal mergers, sort of walking away from a sort of standard 2010 guidelines approach and doing …

One of the proposals is the 1968 Horizontal Merger Guidelines, so 10% shares or something along those lines. Flip inverting burdens of proof, sort of guilty until proven innocent, at least for some subset of conduct, creating a brand new regulatory agency. And here I thought life was hard enough in antitrust front with two fighting over clearance for the same case and so forth, right?

And so general prohibitions on vertical mergers for platforms too. And so the premise of the program of some of those proposals, and I think of the hearings in some places is, something’s going wrong in digital markets generally in the economy, sort of more broadly. Like I said, a lot of these proposals aren’t just targeted at platforms, they’re for all of the markets, they’re fixes of all of the antitrust institutions for what ails the economy generally, or at least sort of that’s the claim.

So the group of academics that signed on to our letter, and I think you’ve got it posted, so I won’t go through reading all of the names of all of my esteemed colleagues or blaming them for mistakes in the letter or anything like that. So that group makes a couple of points, and I’ll summarize them briefly so we can sort of move into discussion. But the basic idea I think was to provide a dissenting view of the idea that the economy in general and in digital platforms specifically is not working.

So it does fight the premise a little bit that things are broken. So one of the sort of big evidentiary points offered oftentimes to start these discussions is, “Look, the economy is getting more concentrated generally, and that is a bad thing.”

And so part of the letter goes through what I think the evidence is and isn’t with respect to rising concentration, tries to be careful about distinguishing between concentration at sort of big, broad sectoral levels that I don’t think anybody in this group would think or actually counting rivalry and what we would think about as antitrust to defined product markets.

It’s not the sale of office supplies through office superstores, it’s at the level of like stuff made with metal, and so not counting rivalry. And I think there’s plenty of good studies that say at the industry level or sort of really broad levels concentration is going up.

My own read of the evidence, and we can talk about the papers later so I’ll just sort of placehold now. My own read of the evidence is the stylized facts appear to be something like rising industry level concentration and loss of product markets falling concentration, productivity and output going up in across a lot of these sectors where you’re observing the increase in concentration.

Anybody who’s been through the antitrust battles or read about the antitrust battles of the ’60s and ’70s and ’80s will recognize that fact pattern. It’s the fact pattern that got antitrust out of its a sort of formulaic approach to concentration and price. It got us to walk away from relying on the shares and for competitive effects in the 2010 guidelines.

And I think it’s largely, that data is still sort of moving along, but it’s largely consistent with those data. Look, I’m a big fan of doing merger retrospectives, I’m a big fan of more empirical work in this area. I don’t want to suggest by any means that the data, the sort of empirical question on concentration and competitive performance that these markets has done, I don’t think it is, but my read of the data as it is surely is not suggestive that we’ve got a sort of big problem of systemic spread of monopoly power across sectors, in particular in the tech sector.

A couple of other brief points that are in the letter because that really goes to most of the policy proposals about horizontal merger policy, right? Whether it’s flipping the burdens or getting away with an efficiency’s defense or presuming unlawful to greater set of mergers or using market share triggers, that whole set of proposals I think is based on a premise about concentration price data that I don’t think the premise holds that sort of the punchline.

In other areas, same kind of deal, right? In other areas there are proposals to flat out ban vertical mergers in some areas. Same the letter there, the letter I signed, sort of rest its case against presumptions in the vertical merger area on an empirical case. I’m the author of a survey of the empirical evidence in vertical mergers.

And I think Jon and I have had the debate on this empirical literature in at least 12 different settings, and we’ll reperform it today if you want. But I don’t think anybody reads that literature suggesting that vertical mergers are more likely than not to harm competition. We may disagree on the characterization between rare and like … I don’t know. What’s a little bit more frequent than rare? Sometimes?

We may disagree on the margins about that characterization, but inverting burdens of proof I think in our system where the rule of law comes first is a big kind of revolutionary approach to using the power of the government to prevent voluntary transactions, and it gives me concern that we would do that without, at least, by my take and the take of the folks on this letter what the evidence warrants in terms of identifying a competitive problem.

And so for all these other proposals, and I feel a little bit weird because I’m playing defense on the set of proposals that Jon’s going to then propose. Changing the law or changing guidelines to impose presumptions requires identification, I think, and pretty serious identification of a problem to solve, and a problem that we can solve in a way better than doing case by case analysis, which certainly everybody in the letter that I signed believes in …

And I’ll close on this point because I know I’m running out of time, Randy, but I think everybody who signed the letter starts with the proposition that we believe in the enforcement of the antitrust laws, and we believe that the case by case approach laid out under the consumer welfare standard. What we do now in horizontal merger cases, the government’s winning a lot more than they lose on that front.

But everybody on that letter believes that case by case approach where we identify in a competitive conduct, we are capable of doing it, we can go into Federal Court and win cases, we being the agencies in that context, and should continue to do so.

There’s some other proposals at the back of the letter; more funding for the agencies, greater role for economist in decision making for the agencies, says an economist who worked at the agency, and greater transparency of agency decision-making, things like closing statements, things like statements wherever the agencies can get away with them to identify their thought process, sort of do a way with some of the black box that goes around agency decision making on merger challenges or decisions to close. So I’ll stop there. It’s a lot to get in eight minutes, but I hope I got it.


Yeah. No, that’s fine. Okay, good. So I know what I think I heard there. So I think what I heard there is, starting with what we think the facts are in concentration, how that then translates into policy or not changing policy, a sense that we ought to go case by case within the consumer welfare standard.


The piece makes clear that you’ve got a fairly expansive sense of the consumer welfare standard that picks up employees and the like, but a fairly robust defense of the current structure. Jon, it sounds like you’re going to agree with Josh and so then we’ll move on. Is that what’s going to happen here, Jon? You’re on mute.

Jonathan Baker Speaker

Jonathan B. BAKER:

Actually, I think you picked the right guy to be the center square to try to block, but it didn’t work for me. I wrote a submission, and I will list my colleagues; Joe Farrell, Andy Gavil, Marty Gaynor, Michael Kades, Michael Katz, Gene Kimmelman, Doug Melamed, Nancy Rose, Steve Salop, Fiona Scott Morton and Carl Shapiro.

And we, as with Josh, we as a group share an overall perspective that’s pretty different from with Josh’s is, or I guess that’s not the part that’s as with Josh. But as with Josh, we don’t necessarily individually endorse every specific statement, assertion in our state. So we start from a very different place than Josh did, we start by recognizing that the economic evidence demonstrates that there is substantial growing market power in the United States economy.

And so just to give you a taste of evidence, studies find that price cost margins have been rising since at least the early 1990s, growing market power is a leading candidate to explain the reduced dynamism in the economy as a whole, there are lots of aspects of that, reduced business investment, declining labor, shared GDP, a lower rate of startups, a lesser rate of expansion when firms become more productive.

And then there are these sophisticated empirical studies that have identified substantial market power in a number of major industries, like airlines and brewing and hospitals. And this is not primarily about concentration, that’s how Josh wanted to frame it, but that’s not how …

I mean, there are some aspects of these industries that are growing more concentrated, but a lot of the evidence is about other things. And we emphasize we think that overly lenient antitrust rules are part of the problem about why we’re getting this growing substantial market power.

We’ve not been well served by the rules that were put into place from the late 1970s to the early 1990s under the influence of the Chicago school commentators, and we’ve learned they reflect a skewed error cost balance. And you can see what’s wrong in, think about mergers in the three major industries I mentioned before; airlines, brewing and hospitals, there are lots of horizontal mergers in those industries that were not challenged and concentrations increased in many markets in those industries.

And based on empirical evidence using modern econometric approaches independent of concentration, we find that these mergers facilitate the exercise of market power. And with respect to the exclusionary conduct by dominant firms, including the large online platforms with winner take all or winner take most markets that were of concern to the Judiciary Committee, it’s rare to see challenges to exclusion or the acquisition of actual rivals, or even more rare to see challenges to excluding or acquiring nascent or potential rivals.

And yet that conduct impairs what’s often the most important economic force that creates a competitive pressure in those markets. And so then our submission after establishing the problem goes on to identify a number of inappropriate legal hurdles that impede good cases that would challenge anti-competitive mergers and the exclusionary conduct in the areas of interest to the committee, and I’ll mention some of the problems that we point out.

On exclusion, courts have nearly eliminated challenges to unilateral refusals to deal in predatory pricing claims. There’s a gap between Sections 1 and 2 of the Sherman Act that insulate anti-competitive single form exclusionary conduct from condemnation unless market shares have very high.

The Supreme Court has been too willing to presume monopolies promote innovation without recognizing that, for example, a monopoly that’s gained or maintained through exclusionary conduct pushes other innovators out of the market, so it’s likely to diminish overall innovation. And the competition in general, spurs innovation and productivity.

The Amex decision placed unnecessary demands on plaintiffs that are challenging the exclusionary conduct of the transaction platforms to prove that vertical restraint harms competition. In that context, plaintiffs can’t use direct evidence, they have to show harm in a market encompassing both sides of the platform, and the court didn’t clearly specify the limits of transaction platforms.

And the same decision also suggested proof of anti-competitive affects the price, proof of an output reduction, even though it might be easier to show harm in other ways, a higher quality adjusted price, and that even though an outlet reduction isn’t necessary for conduct that harm competition among platforms.

Courts have treated exclusionary vertical conduct as presumptively pro-competitive with the practical effect of raising the plaintiff’s burden, even in the kind of oligopoly or dominant from markets where it’s well established vertical restraints can harm competition. Some courts have declined to contend the exclusionary conduct that harms competition on balance if the conduct benefits competition in any way, where plausible it could do so.

On mergers, the structural presumptions has been eroded by the courts and that effectively insulates horizontal mergers from challenging markets with more than a handful of rivals, and the courts have insulated acquisitions of potential rivals by dominant firms, by limiting those kinds of cases to acquisitions of firms that the most really plan to enter within a relatively short period of time.

There’s the way the District Court in Sabre interpreted the market definition rules governing the analysis of vertical restraints by transaction platforms in Amex as borrowing a challenge to a transactions platform acquisition of a non-platform rival. And courts have also expanded their ability to grant defendant’s immunity from the antitrust laws.

And it’s no answer to point to stories about plaintiffs succeeding in court, because wherever the courts draw the line, you would expect the litigated cases to be relatively close calls and under that standard, so even when the line is excessively lenient, the way it is now, some plaintiffs should still succeed, and for those that do would be expected to have very strong cases.

I guess I’m looking at the time and I would talk more specifically later about the platforms and what the committee was interested in. Let me just get quickly to some of what we suggest Congress can do. One thing is increase federal enforcement resources substantially, but another is to correct the error cost balance with new legislation.

It could correct a lot of those flawed judicial rules that I talked about before and could enhance deterrence more generally, maybe by allowing plaintiffs to prevail and exclusionary conduct cases by showing an increased risk of competitive harm rather than the likelihood of harm, or specify various presumptions of competitive harm that might, for example, apply to evaluate a dominant firm’s exclusionary conduct or its acquisitions.

The general point is that we need to take big steps to deal with our serious market power problem and the competitive problems that are distinctive to the markets with dominant platforms. And we suggested to the committee that it ought to take that to heart and work on how to do that, and improve the deterrence in a competitive conduct.


Okay, good. Thank you. So we just lost Dan Crane, I assume he’ll pop back in. I heard a couple of things, I guess. So a disagreement with Josh on sort of the core facts associated with the American economy. There’s Dan. So how to characterize that. A sense that the era cost framework, and I don’t know if that goes back to Frank Easterbrook or where you want to specify that, that, that’s getting that wrong.

And then a series of things that you think should be changed to respond to what you see as a pattern of inadequate antitrust enforcement. Okay, good. That’s great. Thank you so much for that. All right. So we’re going to work our way through the panel and then we’ll work our way back to Josh and Jon. So we’re going to go to Koren and then Eleanor. So Koren, you’re up.

Koren Wong-Ervin Speaker


Great, thank you. So I’ll start by saying that I represent Google. Most of what I’m going to say today is taken from prior writings, including when I was at the FTC and in academia. So I talked last week as part of this, and I talked quite a bit about pushing back on the idea that we have a monopoly or a competition problem, and the problems with the studies or using margins.

So today I think I’m going to talk a little bit about in the statement that Jon Baker signed, there’s this idea that in platform markets we have these unique or these, sort of they can be insurmountable barriers to entry in terms of things like network effects, data, and then I’ll talk a little bit about some popular acquisitions.

So I think it’s important to just go back to some basic economics. There’s a lot of talk about, Jon mentioned winner take all, tipping, but it’s important to remember that network effects cut both ways, right? They can lead to concentration due to feedback loops and tipping, but they can also really hasten the demise of an existing platform.

So it’s obvious more users can attract more users and so on, but that same principle, and we’ve seen this in practice in the market is that if some consumers start to leave, they induce others to start to leave and so on. David Evans calls this a naive view of indirect network effects, the idea that successful communication platforms would be immune or protected from competition because users won’t want to even try and much less switch to another platform where most of their social network isn’t.

But one of the fundamental flaws in this is that consumers can multi-home, and we’ve seen through lots of studies that they do in fact frequently multi-home. And so this allows for that sort of people trying and other people in their friends and family joining, and like I said, we’ve seen this in the marketplace, right, with AOL, MSN Messenger, Friendster, Myspace, et cetera, all growing very quickly and then rapidly declining as others come about.

The other thing is that quantity alone is not telling us about the strength of an indirect network effect. It’s about getting the right users, not about just getting more platforms. They create value when they match consumers, and then there’s an actual exchange, and so density is going to triumph scale for most platforms in part because most users are just not good matches for each other.

So let’s move on to data and the idea that it’s creating this insurmountable barrier to entry. So certainly I agree that data can be very important input into the production of a firm’s output, but as many have said, Josh Wright, and G. A. I. have written about this and others, it’s how you use.

In order to unlock the value of data, you have to combine it with other inputs, and it’s about your skill and ability to do that, which firms differ in that ability and skill. There’s some nice studies about how volume alone is not necessarily key, there’s one by Joe N. Tucker.

And the other thing is that we do have lots of examples, it’s not just this theoretical possibility that firms can enter first with a great new idea and then collect data, and that they don’t necessarily need to collect the same exact database or data as the incumbents, but rather they can enter and collect highly relevant data or even specialize, enter in a niche market. That’s what Amazon did, right? With books, and then they grew and expanded.

And lots of examples of players, I mean, very successful ones today; Google, Facebook, Amazon, eBay, Twitter, entering first and then collecting data. The last thing I’ll just talk on briefly is the so-called killer acquisitions, or I like to call them acquisitions of nascent or potential competitors.

I think the proposals that Josh mentioned to ban them outright or to create presumptions of illegality, make a lot of assumptions without any evidence. So we need evidence before we can conclude that the success of an acquired product means that it would have been successful without the merger.

Acquiring firms provide, as we all know, significant resources and know-how and synergies that can make that acquired product a success, and that can really benefit consumers in the form of having products and services they might not otherwise have had. Long time FTC economist, now professor at George Mason, John Yun, had some really nice hill testimony on this topic that I commend people to read.

And one of the things he said, he looks at the Facebook Instagram acquisition and says, a lot of people point to this as an anti-competitive acquisition, and he says, “Hmm, the success and the exponential output expansion seems a little perverse to call that evidence of an anti-competitive acquisition since what we want is lower prices, more output, more innovation, et cetera.”

And he asks if that’s anti-competitive, what would pro-competitive look like? And he gives the example, suppose that after Facebook acquired Instagram, it terminated it after a year, so would we say, “Oh, wow, that was a poor product. The merger was benign,” or would we say, “Wow, Facebook engaged in a killer acquisition.”

Suppose that Facebook didn’t cut off Instagram, but then it fell way below projections, so again, would we say, “Average product benign,” or would we say, “Well, Facebook just didn’t invest enough.” And so as Jon says, which I completely agree with, if we don’t know what we’re looking for, we can not conclude that agencies are systematically making errors. In other words, like Josh said that there’s a problem in need of a so-called, and I’d say, drastic radical solution. So in the interest of time, I’ll stop there for now.


Okay, good. So I heard network effects can go both ways, data sometimes depends on how unique the data is, and then are we getting killer acquisitions all right. Love the shout outs to Friendster and Myspace. We could talk AltaVista and Lycos, and we could say Blackberry and Symbian. So there are situations where we’ve seen turnovers in these markets. All right, we’re going to Eleanor next and then Pinar. So Eleanor, you’re up.

Eleanor Fox Speaker

Eleanor M. FOX:

Okay. Thank you, and thanks to all of these great colleagues on the call. I submitted a paper with Harry First, and I’m going to mention some of the aspects that Harry and I proposed. Some of this will engage with Josh and Jon and Koren, and some of it will be, let’s say, new.

Harry and I had focused on big tech, big data. So we weren’t looking to consider everything wrong with the antitrust laws, what we say is there is a problem and there’s a big problem, and it doesn’t depend on the debate about the statistics on growing economic concentration.

I’ll tell you in a minute what we see as a big problem, and it’s a world problem, and that US ought to be taking some action. We see the United States and the law in the United States as being very narrow, picking up some of what Jon Baker said today, especially Section 2 of the Sherman Act, it’s not only within a confined box, but it’s within a shrinking box.

And United States was once very respected in the world for its competition law, and now it’s actually marginalized because it doesn’t recognize power where power exists, it makes huge assumptions about the market will work, the free market will work, and most of the rest of the world doesn’t agree. So I want to make a statement about big tech and the world.

I mean, this is not the whole world, but I mean European union, some European countries, Australia. What some other countries are thinking about is there a big tech problem, what is it and how to solve it? And then I want to say something specific about our proposal as to what Congress should do.

Taking, let’s say, European Union and Germany and UK, and now Benelux countries, and Australia, there have been a huge number of very lengthy and area studies and reports, all of them I believe coming to the conclusion that the big tech firms, and there are some dominant ones, and they’re usually noted as four or five GAFA or GAFAM.

So I’m talking about this set of GAFA companies, that they have market power, that there is a new form of power or a new manifestation of power in the high tech industries with high network effects, high barriers, winner take at least most, and that these companies are playing around with our lives in lots of ways, many nontransparent, and some of this not relating essentially to antitrust, but to a range of problems that one has to see holistically combined with antitrust consumer protection and deception problems and data protection problems.

I believe that most of the rest of the world that’s engaging with the issue is engaging with a holistic problem. They see a problem, they see it holistically, they’re trying to get on top of it, they’re not confined by silos. They’ve had deep studies and they’re moving to areas of proposals and comment period.

And the European Union, for example, right now is inviting comment on proposals on digital markets. They have a separate directorate general for the single digital market, as well as of course a separate director general for competition, and the same commissioner is in charge of both. They’re coordinating the issues within digital market.

They’re asking for consultation right now, the CMA in the UK is asking for consultation. Both the CMA and the EU are considering that there may need to be some ex ante rules that control conduct of the big tech firms. And they’re open to the conversation, they’re inviting the world in the conversation.

I think the US is not part of this conversation, I think the US is mostly retreating into the silos of, “Well, what does Section 2 say? And can we fit this problem into how the Supreme Court has defined the elements of Section 2?” And I think therefore we’re marginalized that we’re not US, we’re not going to be an influencer and a leader in thinking about, “Is their problem, and is there a solution?”

So of course if you think there’s no problem, that’s a hard box. I understand that. So for Josh and Koren, I mean, if that’s what you think that there should be nothing done, that is one thing you should be in the international conversation and fighting for that position.

But if you think there’s a problem that can be solved, then there has to be a route to joining the international conversation and becoming one of the influencers. So here, let me just give you a major proposal that Harry and I made.

We realize that Section 2 of the Sherman Act has been very narrowly construed and that a number of what seem to be abuse problems or unilateral conduct problems, we believe the Federal Trade Commission and Section 5 of the Federal Trade Commission, and the Federal Trade Commission sitting on top of consumer protection, as well as competition and as well as responsibilities in data protection and privacy is very well situated to think globally and holistically about the problems and to write some rules.

So of the abuses, we see the dominant platforms are doing many things, sabotaging rivals on the platform. I would say Facebook and what it did to Vine when Vine got very good, and was simply wanting to give a product to its users who could push a button to the friends and Zuckerberg said, “Cut off the data.” I call that a sabotage.

That’s what the platforms can do unless they’re reigned in self-preferencing. If you’re on a narrow consumer welfare standard, you don’t think it’s a violation. Many people think it’s bad for markets because it puts down people on the platform who are great rivals, who have great ideas and can never get to the top.

The platform is trying to limit interoperability so consumers can switch easily, and trying to limit portability. Those are a few abuses. I think there are business identified by the rest of the world, and some of the world is … I guess that’s an overstatement, let me just back down and say, EU, CMA for UK and a number of other jurisdictions saying that’s an abuse, it ought to be controlled, and it can be controlled without relitigating every day, whether Facebook has market power.

This proposition is Facebook does have market power, we shouldn’t have to relitigate it, there should be certain abuses that can just be stopped. So if the FTC is going to take action, we think Congress also has to take action. There is a question about antitrust rulemaking.

The FTC can take a position that they have authorization for antitrust rulemaking. There will be pushback. We think Congress ought to authorize antitrust rulemaking, we think Congress ought to authorize antitrust fines. And we think that Congress ought to make clear that it wishes the FTC to use the flexibility of Section 5 beyond Sherman Act Section 2 limits. Thanks.


Okay, good. Thank you. I think I understood that. So a broader conversation occurring around the world that is occurring in the United States, not necessarily just situated in antitrust, but situated in broader ideas.

A focus in your report with Harry on big tech, a sense that the tool for addressing that perhaps in the United States is, I don’t know if I’m going to call it a revitalized Section 5, maybe a vitalized Section 5, and some sort of a rulemaking in that context. Great, thank you. So Pinar is next, and then we’re going to go to John Newman. So Pinar, thanks, you’re up.

Pinar Akman Speaker

Pinar AKMAN:

Thank you, Randy. I’m delighted to be here. So I have either the blessing or the curse I think of being the only person on this call who’s not an expert in US antitrust law. So I thought that perhaps I could bring the outside or the outsider’s perspective on the issue, speaking as an expert in EU competition law, which has been mentioned several times. It’s really interesting to follow the debate taking place in the US regarding potentially forums to antitrust laws.

So we also have a debate taking place in Europe and elsewhere in the world, but I think that debate is more about, “What should we do when we intervene in technology markets? What should it look like? Should it be regulation? Do we need new tools and so on?” whereas the debate in the US I think seems to be more about, for a start, whether there is a need for intervention or not in the markets.

But what I find particularly interesting observing the debate taking place in the US is that from a European perspective, actually, in some ways, some of the proposed changes to US antitrust law, if implemented, would make US antitrust law look more like European competition law. And there’s several examples of this. I think it’s fair to say, looking at it historically, EU competition has been more intervention as for example in cases of abuse of dominance.

But it’s also worth noting that, that very same EU competition law has been criticized over the years by many US scholars and enforcers for being too formalistic and being hung up on the form of practices rather than the effects of certain practices, and it’s also being criticized on many occasions rightly for protecting competitors rather than competition.

And I think many of these criticisms were correct, and we can probably actually do a parallels. Again, if we take a historic approach between EU competition law as it was until recently, and perhaps how the US antitrust law was enforced in the ’60s. And that sort of brings me to a point of concern, perhaps a selfish one, because I’m not looking at it with the perspective of EU competition law.

And in some ways, perhaps in the US, the pendulum has swung too far in the direction of being maybe, or adopting an approach that’s too driven by economics and not driven enough by other factors, but in the EU the reform that started, which was partly driven by the criticisms coming from US scholars and enforces and others, has actually never been fully realized.

So the commission and general for competition in the EU to combat those criticisms and started reforming EU competition law to make it essentially more effects based and less formalistic, and that’s reform to part mostly in areas of vertical restraints and mergers after some big court defeats in the EU, and in some ways the abuse of dominance was the last pillar of EU competition law by that reform towards a more economic approach was supposed to take place.

And what sort of happened in the recent years is that DG Competition published a guidance paper in which it proposed a more economic approach to abuse of dominance in 2009, but since then, what we have seen is that the commission has almost lost interest, particularly the legal service of the commission has lost interest in the more economic approach.

What we’re seeing now, the EU court is taking more of an interest in that more economic approach and moving towards a less form based and more economic effects-based approach. So in some ways I fear that the debate taking place in the US might push actually the enforcement of EU competition law back to how it was before this reform towards a more economic effects-based approach started, and that’s why this is sort of in a way selfish concern, because I think that if that were to happen in the EU, for EU competition, that would be more in the wrong direction.

Because what we have seen before this reform in the EU was that there was little distinction perhaps between unfair competition law and competition law, which you call antitrust law in the US. And if the union gives up on the sort of more effects-based economic approach, perhaps because in some ways there was still disagreement within Europe, whether this was the right approach to go with, or whether we should have perhaps a more formalistic and more deliberate approach, if the debate taking place in the US might now had the collateral effect of pushing the EU back to where it was before these reforms, I think that would be a move in the wrong direction.

Because let’s not forget, as Eleanor said, in some ways, particularly in the tech markets, these aren’t just companies in the US, there are other companies in Europe or elsewhere in Europe, we’re looking at global players, global markets, which make global corporation essential. And on that note, I’d like to maybe express some, I don’t know what to call this disappointment or not, but perhaps it’s called disappointment in the economics of the time.

Because as a lawyer, and I would consider myself at least an expert in the legal aspects of these issues, I find it intellectually puzzling how equally eminent economists look at the same data and come to such different conclusions in terms of how to interpret the data, and I think the discussion going around concerning concentration levels is one of them.

And the danger there is that if we as experts cannot agree on some basic premises in terms of whether competition is working as effectively as it should be on these markets, whether conservation levels have gone up to suggest that there are market power issues, I think policy makers will just not engage with experts, and that means that they’re likely to be influenced by other sources than experts.

So just to sort of say a few things about competition policy in digital markets, I think at least looking at it again from a European perspective, and I think this probably goes for the US laws as well, the existing primary laws are so broad that I think they’re flexible enough that they would cover the even new harms that we might identify in any markets and so on. So I don’t think there is a need to change the primary rules in essence.

The main difficulties seem to arise around enforcement, and there are several issues I think that arise in that context. For a start, enforcement moves necessarily a lot more slowly than these markets, and many of the issues that we see on technology markets are all data-driven issues.

And once the introduced data into the equation, you’re no longer just looking at antitrust enforcement, but you’re looking at data protection, you’re looking at data regulations, and the issue in itself just becomes a lot more complex than one that will necessarily be solved by antitrust enforcement.

And the other difficulty of course is the fact that although I think that consumer welfare is probably still the best framework we have at the moment to work with, not least because we don’t have a better alternative to it at the moment, it becomes very difficult to use consumer welfare in a context when the main companies we’re looking at don’t actually charge anything for those services, and then we have all sorts of questions, “Is there a markets if there’s no price?” and so on.

And as I said earlier, the main players are all global companies which require effective collaboration internationally between enforcers, and this collaboration is also supposed to take place against the background of trade wars. So there are so many sorts of complexities and complications, I suppose.

I think the way forward has to involve a lot of creative thinking. And without some creative thinking, I don’t think it we’ll be able to find the right response, but in the face of so much disagreement amongst experts, I’m not really sure where that leaves the policy makers and the regulators.

And perhaps a starting point of agreement, and I know even this is controversial, might be that we do find a principal like consumer welfare, and we do define it broadly, but at least we could use something like that, a framework, that seems to be at least palatable I think internationally to enforcers from which we can then try to derive specific perhaps rules or solutions to specific issues rather than try to solve everything at one go.

And I entirely agree with this proposition earlier that we have to start from the evidence, the policy response has to follow the evidence rather than the other way around. And I’ll leave it at that point.


Okay, good. Thank you. So here’s what I think I heard there, so I heard a story about the evolution of European competition policy law, maybe a little bit of a concern that what’s going on in the US will almost pollute that process. A sense of frustration with economists, and man, there’s a big audience out there for that, I think, so you’re in a good spot there.

And then a kind of defense of the consumer welfare standard as a good framework for thinking through a set of issues which raise more than antitrust issues with trade privacy, data issues and the like. Okay, good. All right, so we’re going to go to John Newman, then we’re going to go to Dan Crane. So John, you’re up.

John Newman Speaker


All right. Well, thank you so much, Randy. I’d like to thank the organizers as well for the opportunity to participate in this, thank our two lead presenters, Josh Wright and Jon Baker. It goes without saying, too intellectual giants in our field.

And I’d like to thank Pinar as well for, I think, kind of setting up a nice segue there at the end. I’m going to resist the urge to talk about any of my own writing or my own submission to the house subcommittee and pick up on what Josh said, which is that the conversation that seemed to be invited by the subcommittee seems broader than just big tech, right?

So I’d like to actually start out with a quote, and the quote is this, that, “Antitrust is, and should be about promoting ‘the general social wellbeing generated by the competitive process.’” And the passage goes on to explain that antitrust is not actually about the relatively narrow economic concept of consumer welfare.

I wouldn’t be at all surprised to see a quote like that and something by anybody from the Open Markets Institute or Tim Wu or anybody like that, but I was really surprised to find that in a paper that was signed by Josh Wright and the rest of the signatories. So again, just to kind of reemphasize this, the quote is that the goal of antitrust is general social wellbeing and the competitive process.

And it’s not that traditional economic concept of consumer welfare with which we’re all familiar. I mean, this really is the Neo-Brandeisian position, that it’s about general social wellbeing and the competitive process. But given that it appears in this paper rather than in an Open Markets white paper, it was just really striking to read it and it kind of caught my interest, so I’m going to try to unpack it and understand it if I can.

Now, elsewhere in the same paper, we get this much more familiar formulation that, “Antitrust is guided by a straightforward question. Is the challenge conduct likely to make consumers better or worse off?” That’s the old traditional narrow economic concept of consumer welfare, and just to be extra clear that, that’s what it is, the paper also says that, “The consumer welfare standard has the benefit of tethering antitrust outcomes to modern economics.”

Right, okay. So what we’ve got going on here, I think, is this kind of … I thought of it as a consumer welfare paradox, right? In the same paper, we’ve got these two very different versions of consumer welfare, one of which basically sounds like what’s been labeled Hipster Antitrust.

So what’s going on? Let me suggest that what’s happening maybe a sort of a shell game, but then of course, that immediately raise the question like why is it being played? Well, I think normatively this submission wants to preserve consumer welfare, right, as a label and kind of hold it up as the best foundation for antitrust, so what is it defending against?

Well, the two primary critiques of consumer welfare are; one, it’s not actually that intellectually coherent, and then two, it’s too narrow and thus yields excessive false negatives and departs from congressional intent.

So this paper, this submission, doesn’t really respond to that first critique which has been leveled by people like Mark Glick and others who point out that even this narrow neoclassical economic of consumer welfare is not intellectually coherent, this has been an internal critique.

So the paper kind of leaves that unaddressed, and instead of addressing that, it just kind of invokes this traditional narrow version of consumer welfare and suggest that it let antitrust climb out of the old quagmire and it’s very coherent, and it helps to prevent ‘arbitrary or politically motivated enforcement decisions.’

Of course, clearly how well it’s been doing that of late. But again, for consumer welfare to even possibly like do any of those things, it would need to be that traditional narrow economic version, right? And of course that is the version that the paper evokes when it’s talking about these things, the coherence, et cetera, of contemporary antitrust.

Now, all that still doesn’t explain why the paper also switches to Hipster consumer welfare or Hipster Antitrust elsewhere. And that brings us, I think, to the other primary critique of consumer welfare, which is that it’s very narrow.

One of the many troubles I think that people have pointed to with the traditional narrow version of consumer welfare is that on its face, it just doesn’t protect workers in labor markets. And I’d actually argue that it can’t, right? Because who consumes labor? Employers, right? Just like they consume electricity and other inputs.

So when employers conspire to fix wages in a labor market, consumer welfare absolutely increases. And sure, maybe consumers of widgets, a different product, are worse off, maybe, but that’s a different product market, and under partial equilibrium consumer welfare analysis, that’s supposed to be irrelevant.

So the actual narrow economic concept of consumer welfare, not only does it protect workers in labor markets, I think it’s actually actively hostile toward them, yet today there’s really broad agreement, including in this paper, that antitrust does and should apply to protect labor markets.

So all of this is at this point, I think, painted the paper into a corner. So in order to concede that contemporary antitrust does and should apply it to protect labor markets and other things, it needs to dump the actual traditional economic consumer welfare standard.

And sure enough, that’s exactly the point in the paper at which it does switch to Hipster Antitrust and says instead antitrust is about general social wellbeing of all market participants generated by the competitive process, which could be straight out of a Tim Wu paper, as I said earlier.

And I think this is exactly the point at which this kind of shell game is kind of revealed as such, because if consumer welfare is actually this general social wellbeing from a competitive process, then it pretty clearly can’t offer any of these supposedly virtues of coherence, rigorousness, apoliticality, neutrality, avoiding the need to pick winners and losers, they are extolled elsewhere.

And the paper doesn’t even really define what general social wellbeing is supposed to mean, or competitive process for that matter, a very contestable contingent term. So it seems to me like at the end of the day the paper kind of wants to have its cake and eat it too, right?

It wants a version of consumer welfare that’s broad enough to escape the critique that it’s overly narrow and overly constructed, and obviously not what Congress intended, but it also wants a version of consumer welfare that’s narrow enough to at least seem or appear coherent, straightforward, rigorous and neutral.

So if I can, I’d like to close quickly with a question. So why does the paper argue so strenuously in favor of preserving the label of consumer welfare? If even some of its staunchest defenders are forced to redefine it, kind of what’s left to defend here?

Put it another way. If consumer welfare is no longer limited to consumers, and is not really related to the old welfare economics, what value does consumer welfare as a label continue to serve?


Okay, good. So that’s interesting. So I heard a lot there. I heard maybe at the very end of today, sort of like the mass singer, there’s going to be a big reveal and Josh will confess that he is a Neo-Brandeisian, that would be really exciting. But we’ll give Josh and Jon a chance to respond, but not yet.

And then I heard a lot about what is the paper itself really focused on, Josh’s paper, and about different conceptions of welfare, consumer welfare and this broader wellbeing notion, so I’m sure Josh will pick all that up. But before we do that, we’re going to go to Dan Crane and then Josh Soven. So Dan, you’re up next.

Daniel Crane Speaker

Daniel CRANE:

Great, thanks Randy, and thanks everyone. Great to be here. In terms of disclosures, I am a counsel with the Paul, Weiss law firm that has many clients that would be affected in many different directions by antitrust reform, but I’m just offering comments purely on my own viewpoint today.

So I want to do two things; one, narrow and reactionary, the second one, broad and perspective. So I also had my own house submission in addition to joining the paper that Josh talked about before.

And here, I want to take issue a little bit with Jon Baker, who I like and respect very much. Hey, Jon. But on the question of Section 2 and whether the law under Section 2 has become overly difficult for plaintiffs to win on.

So yeah, in my paper, I list a long string of over 30 court appeals decisions in the last 20 years that have gone in favor of plaintiffs on Section 2 issues. I agree with Jon that simply counting the number of cases doesn’t prove that the line is properly drawn, but if we’re thinking particularly about digital markets, what’s the leading precedent under Section 2 on digital markets and antitrust?

Well, it’s got to be the unbound decision Microsoft, right? The Supreme Court hasn’t really commented, well, obviously you have cases like Weyerhaeuser and Linkline, but those a very small number of cases. You have an awful lot though of precedent in the lower courts, the court of appeals on Section 2, including digital markets, that I think does not create an impossible burden for players by any stretch.

And I should just say in my own consulting work, I work on both the plaintiff and the defendant side. And when I work for plaintiff on Section 2 questions, and I sort of survey the law, I find a lot that I can work with realistically.

We have cases on predatory pricing, Spirit versus Northwest in the Sixth Circuit, which uphold liability on predatory pricing. We have cases on loyalty discounting or loyalty contract structuring, like ZF Meritor versus Eaton in the Third Circuit upholding liability.

We have cases on predatory product design, like the Second Circuit’s case in New York versus Activist. We have cases on tying like the Six Circuits case in Collins Inkjet. And then Jon mentioned refusal to deal. And lord behold, this very year, the Seventh circuit gave us the Avaya Media versus Comcast case, which again, upheld Section 2 liability on a straight up refusal to deal basis.

So again, like whether the law is correctly drawn or not, it’s certainly not my experience as someone who counsels clients and writes about some of these issues that there isn’t a lot of room, particularly in the shadow of the Microsofts or a super decision for plaintiffs or public enforcers to come in with viable Section 2 theories, and from the perspective of my clients who are on the defense side, like this seems still like a real threat.

So I’ll just say like certainly before Congress would get into the mix of changing Section 2, and by the way, I know there’s a new bill in New York that would, under the New York State Antitrust Laws would sort of create an article 102 abusive dominance provision, it would criminalize unilateral violations to expand class actions.

Before we get into legislation, I want to see a much more robust case that the current Section 2 log in fact is actually failing us in terms of making viable cases not actionable. The other point really, a separate and unrelated point I wanted to make, this is not in my submission to the house, but something I’ve been thinking about recently, particularly of what Facebook has done with the Oversight Board they’ve created, is, “Who is that right set of institutional players to get involved in addressing these problems?”

To mean, the idea of having an additional commission, a digital markets commission, and I think as Josh said, it strikes me as being the worst idea out there institutionally, we don’t need a third antitrust enforcement agency, if anything, we should consolidate into one.

But the prospect of private ordering I think needs to be taken seriously, and honestly, like all contractors private ordering. But I mean, what Facebook has done, I think very, very interestingly with this oversight board, the say, “Look, on the censorship questions, we are going to create an irrevocable trust, a separate organization that has binding power to sort of provide governance to Facebook on questions about what speech is allowed or not on our platform.” Right?

And I’ve had conversations where they might have suggested like you could think about doing some more things like that with respect to some of these antitrust issues. It’s not a foreign concept at all, the idea of private ordering and antitrust. Standard setting organizations all the time come in and say, “We want to solve problems of market power by creating certain kinds of rules about standard essential patents,” that kind of thing.

So if we do think there’s a problem, do we really think that creating more enforcement power in government agencies or more agency in private litigants is going to be the best way to tackle these very complex problems in market power, or are there ways that we can get ahead of the curve already and encourage some of these large entities that know they have problems?

At a minimum, they have public relations problems, they have legal problems, and I think they do have serious problems of market power and dominance, mostly not because of their own fault, mostly because of the economic structure of digital markets, and other sort of creative, sort of private ordering mechanisms that we can all recommend to them that would at least get ahead of some of the problems before we come in with legislative solutions that may not help at all to address those problems. So that’s my view, thanks.


Great. Good, thanks. So I know what I heard there. So you said we should all go read a bunch of lower court cases, and that you’re seeing plaintiffs doing actually reasonably well in those cases, and that’s at the appellate level. So that’s a helpful way of framing Section 2.

And then this idea at the end, which is you said that Facebook has obviously just recently launched this governance board. Take that idea and expand it to maybe the GAFA and have them do this voluntarily with regard to some of the market power issues they’re facing. Okay, good, understand that. Josh, you’re going to be our last panelists, and then we’re going to go back to Josh and Jon who must have many, many things to say. Josh, you’re up.

Joshua Soven Speaker

Joshua H. SOVEN:

Randy, thanks very much for the opportunity to speak, I really appreciate it. I’m a partner at Wilson Sonsini, I do, do work for Google, but I’d like to speak today primarily based on my experience as a former prosecutor at the Federal Trade Commission and at the Department of Justice, two stints at DOJ and one at the FTC.

So in my view, the starting point for any reform or analysis or assessment of where the antitrust laws are today are the importance and the validity of the consumer welfare standard. It’s important for two reasons; first, I mean the fundamental purpose of the antitrust laws is to protect competition and consumers.

And focusing on consumers in my experience is the best way to make sure that you’re getting it right, that you’re identifying conduct that harms consumers in the form of higher prices and reduced output and less innovation, and you’re prosecuting that activity vigorously, but at the same token, which you’re not doing is you’re not focusing on other conduct where there’s no clear nexus to competitive harm.

And when you veer away from the consumer welfare standard that’s enjoyed bipartisan support over the last 30 years, that’s what tends to happen. If you are focusing on conduct simply based on the form of it, rather than the effects on consumers, you will inevitably make mistakes, not protect competition, but reduce competition and make enforcement decisions that are the antithesis of what the antitrust laws are designed to do.

So as a prosecutor I always knew I had a winner when one of two circumstances were present; first, I could prove usually preferably through a fact witness that the conduct at issue, be it a merger or a non-merger conduct was going to result in higher prices, reduce output and less choices for consumers, and regardless of sort of the law or the judge or the forum, the government almost always wins those cases as they should.

Similarly, the government always, almost always wins cases where it’s pretty clear the conduct is anti-competitive on its face, be it blatantly anti-competitive, or just other evidence where it’s direct and it’s obvious and it’s straightforward, and there is a lack of ambiguity about the effects of the conduct, how it affects consumers and how it affects competition, that’s as it should be.

When the government veers away from those fact patterns, when it does not focus on consumer harm or conduct, which clearly has no pro-competitive purpose, then the government tends to lose those cases.

So for example, the government lost the AT&T Time Warner case. And I’m not really a pining on whether that was right or not, but they lost that because there was no clear evidence of harm to consumers that was presented at trial.

The Amex case, a lot of people quarrel with the doctrine articulated there. I generally agree with the doctrine, I’m not pointing on that. But part of the problem in the Amex case was that the merchants who testified didn’t crisply and unambiguously testify that they were passing on the allegedly higher cost to consumers, so there was no direct evidence of consumer harm.

And while again, most of the focus was on doctrine, I believe that lack of direct evidence, that lack of clear consumer harm, the violation of the consumer welfare standard, that’s what ultimately cost the government’s case, not the doctrinal issues.

The other thing which I think is really relevant, which sometimes often get shortchanged in the analysis and the assessment of what’s a good case, when to bring a case and when the government wins and when the government loses, is the relevance of third parties.

There’s a tendency to focus almost exclusively on evidence from the parties, be it emails, testimony, statements, and the like, but third party evidence is really, really important. If the third party evidence shows that there is not going to be harm to consumers, or that the primary objection or the primary focus is harm to a competitor or a competitor for strategic interest is concerned about particular conduct, but that interest is not tied to consumer harm, then that can also really trip up the government’s case.

Now, no one knows whether it is going to be litigation or not, sort of against some of the large technology companies that the government has said or the focus of investigations, but what’s going to be really fascinating if there is such litigation is the third party discovery, because what the third party discovery does is add a bunch of seats to the chair, oh, excuse me, a bunch of seats to the table.

A lot more evidence will come in about the motivations of third parties, what they’re thinking, whether their motivations and thoughts and strategic interests are designed to protect consumers in the form of lower prices and better services, or whether they’re designed to protect competitors.

Because one thing which has clearly happened in the technology industry is there’s been massive disruption of established interest, changes in business models, changes in fortunes of companies that for a while were very successful, and those companies clearly are concerned about the disruption, and evidence from those companies I expect to be a large part of any litigation should it happen.

So let me briefly conclude with a few thoughts on some of the proposals out there and why I think they are a mistake. And the fundamental reason I think they are a mistake is they’re not really targeted at the consumer welfare standard and concerns about higher prices and conduct, which is reducing competition that affects them.

First, bans on micro-acquisitions. The reason the government doesn’t bring challenges to micro-acquisitions very often, or if at all, is there’s no clear evidence of consumer harm at the time of the transaction. And that’s because to show consumer harm requires 10 different things to happen in sequence, any one of which the outcome or the probability of which is highly uncertain.

It’s not because the government’s making mistakes or it lacks, or is not doing its job, or is any way asleep at the switch, what the government is doing is looking at the evidence that exists on the ground, trying to decide if they can clearly show or show with a reasonable degree of probability harm to consumers.

In virtually all cases they can’t, so they are correctly deciding not to bring the case and to let competition do its part second. Second, there are proposals out there to break up large technology companies. There’s no reason to think that will work, if anything, there’s a reason to think that will produce massive harm to consumers. First, breakups in the past have rarely been successful, and as a result they’ve rarely been proposed by the government, regardless of who’s running the agencies.

Two, that’s taking a sledgehammer approach to what potentially, or just if there are issues to be addressed or micro-issues which can be addressed with respect to issues related to privacy protections and the like, breaking up some of the most successful companies in the American economy that employ millions of tens of thousands of people, that provide massive benefits, that lower prices, none of that will further the interests of the antitrust laws, which is protecting consumers, furthering the consumer welfare standard and protecting competition.

Finally, self-preferencing. I mean, there’s lots of talk about limiting or prohibiting self-preferencing, and not just for a few companies across the board, on balance the evidence I would suggest is overwhelmingly … That self such preferencing is overwhelmingly self-procompetitive in benefits to consumers.

It results in lower prices, it allows companies to come up with new ideas, better options, drop costs, and provide services and products to consumers in a more convenient package. What’s likely to happen if you ban that, prices will go up, you’ll be protecting competitors, or at least a few competitors, not competition. And again, you will be going in the exact opposite direction that the antitrust laws are designed to do with respect to the economy.

So I would sort of end where I began. The government is doing a really good job bringing cases that clearly show consumer harm that otherwise show sort of straightforward reduction in competition, and they’re correctly deciding not to bring cases where the results are ambiguous or where they’d have to sort of enter into areas of product design that the government, I think, most people would say is not really well equipped to do. Thanks very much, and I really appreciate the opportunity to participate.


Good, thank you. So I was a little nervous there briefly that while this call was going on, we’d gotten a dog at my house which would be a bad thing, but I’m glad to hear that it’s actually in Josh’s house. So I heard a couple of things there. I heard the idea that you prosecuted cases, you know what a winner looks like, you know what a loser looks like, and the reason we’re not seeing these cases is, is they are not straightforwardly going to be winners, and maybe see at AT&T Time Warner on that.

And then a concern that crafting a set of rules to deal with big tech would actually sweep in a much larger set of cases with maybe harmful effects than other markets. All right, we have four minutes. So we got to go back to Josh, we got go back to Jon. Jon Baker is having internet problems, if all goes well, he’ll cut out so Josh can get the last four minutes, but yeah, okay. So Josh a little bit, Jon a little bit, and I think we’re going to be done. Josh, you’re up.


Jon’s having trouble, but he emailed me and said I could have his time and he doesn’t want to talk.




I’m not sure of his internet. Let me go quickly, maybe I sort of think of sort of four big things that I heard and I’ll try to do 30 seconds on each of the things. Sort of is the law broken and how would we know it if it was? If it’s broken, what should we do about it? What should we make at the international trend kind of away from the US consumer welfare standard? Sort of to Eleanor’s point. And then for John, am I a hipster? Right?

So I’ll try to do those in order. The way I think about this, sort of, is the law broken and how would we know if it was, I think you got a couple of places to go, right? You can go to the cases, and part of the submission and part of what I started with, and Dan reads more lower court opinions than I do.

If you go to the cases, I don’t see an antitrust law that’s broken. I see plaintiffs winning Section 2 cases, I see … John mentioned the … I mean, there’s the PNB presumption in horizontal mergers, there is one set of merging parties that’s ever come back from the invocation of PNB with an efficiency’s defense.

You have seven parties in the last year abandon transactions, so we’re not even … John is right, you can’t just look at the litigated cases because you get the close calls. But that does cut both ways, I’ve got seven non-litigated cases where the party is laid down because the agencies said they would file. Right?

I don’t look at those cases and see … Defendants do win sometimes, that happens. But with the FTC and DOJ, I think if you look at the merger record in particular, until Evonik, the FTC hadn’t lost since 2015, I think the last loss was in 2011 before that. The DOJ has lost twice in a decade, and plus you’ve got those abandoned transactions.

So I don’t see the law broken either in Section 2 or Section 7, people don’t like individual cases. I don’t like some individual cases where the government won. We can disagree on the merits of the case, but if we’re looking for systematic evidence in the law where are these gaps? I don’t see them and I don’t see how overturning Trinko or Twombly or some of these super majority decisions is going to help any of that.

The other place we could find evidence of the law being broken, and I’ve sort of heard mixed reviews of whether we need data or don’t need data, or maybe we just know it when we see it. The we know it when we see it, scares me. I would like evidence, if I don’t see evidence that the system is broken in the cases, I’d like to see it in the economics.

And we don’t get in cases, so where do we go? Jon tells me to read the beer and airline and hospital merger cases, that’s a great example, they’re super highly regulated markets. I agree there’s all sorts of competitive problems in those markets. I didn’t see in Jon’s letter getting rid of the three tier system in beer distribution, which sign me up, we could do a joint submission on that, that’d be great.

Hospitals, the FTC has been highly successful. And if you want to say the proposition is not that the law is broken, but that we ought to increase the budget and they can bring more good cases if they get them, great, sign me up. I don’t see that and I don’t see evidence in those studies of problems in digital markets.

And in fact, and that’s what leads me back to the concentration data, in fact, I think the data sort of suggests the opposite of a problem. So in terms of the international trend, I think Eleanor makes a great point, and I don’t disagree, I think that the world …

I spend time with my institutes that are laying around the world and teaching antitrust, and I think that the shift away from the US and towards the European standard is real. And that sort of oversimplifies some of the nuanced positions, but I think that shift is a real thing.

I think the question is, what do you want to do? I mean, I see that mostly as a race to the bottom, to tell you the truth. I see it as a race to the bottom, and I see it in parallel with trends to use antitrust as a trade tool, and including by the US, right?

I think including by the United States, I think that’s increasingly the case, I think that’s a bug, not a feature, and what I would like to see is, I sure would like to see the US more active on that front. I would have them saying different things that Eleanor would have them say for sure, but I would like to see the United States out and defending the consumer welfare standard because I think it’s the right standard.

I certainly think I would like to see the antitrust agencies out and condemning the use of antitrust as an international trade tool, or as a sort of hammer for domestic political beefs. I think both of those things are bad, I’ve said so, and I wish the agencies would too.

So I agree that’s happening, I don’t know that it has clear implications for what we should do about the law, or that suggests that the reason that we’re seeing that shift is because there’s sort of a win in the marketplace for ideas more than the adoption of those tools for objectives that different governments are following, so I see the reasoning a little bit differently.

And let me do a little quick 10 seconds to help John with his, Prof Newman about his confusion about whether I’m a hipster. So John, when the pandemic is over, I’m going to fly you out here, and I think I’ve offered before for workshops and we’re going to have a beer, and I’m going to introduce you to some libertarians. And we’re going to hang out with them and you’re going to listen to the way they talk about competition.

And they say things like, “I believe competitive markets enhance all sorts of things that are outside the consumer welfare standard in the law.” I think competition in markets promote happiness and like dreams about unicorns, but I don’t want those in the legal standard, right?

And I think there’s a pretty coherent view of the rule of law that meshes with how economists think about and how people like me think about markets that can resolve that tension for you pretty quickly without saying the word shell game about somebody’s description of their own views. I don’t think it’s that complicated, and I’d be happy, I think I’m out of time, I’d be happy to talk with-


You are.


… you another time.


Yeah. Okay. So I heard beer invitation, libertarians, Jon Baker and unicorns, which was, I’ve never heard all of those in the same set. Jon Baker, you’re going to get the last set here, so go ahead.


I forgot to make my highly unhelpful disclaimer, which is that I have a consulting client that might conceivably have an interest in the issues that were discussed in my groups submission to the house committee, but if it does have an interest I don’t know what it would say.

And then let me make two substantive points to close, the first is that Dan crane and Josh Wright and I agree that plaintiffs have had some successes in monopolization and exclusion cases and in merger cases under the current rules, where we may disagree is whether the line is drawn in the right place.

And you can’t figure that out by counting cases, you have to look at the rules, and you have to look at how strong the evidence the plaintiffs need to present in order to win. And that leads me to a final comment which is about something that Josh Soven had to say. If a plaintiff can’t win unless the conduct is what Josh called blatantly uncompetitive, well, then we can’t expect to solve the growing and the substantial market power problem in our economy today.

The problem isn’t that the plaintiffs can’t win a handful of more additional cases in court, it’s that we’re not able to deter in a competitive conduct throughout the economy, which is what we need to focus on now. So thank you all.


So I want to thank everybody, that I think wraps us up. That was interesting engaging, what a nice variety of views, and it was nice to take in all of that. As you know, we are posting these on the internet eventually, and we hope to attract a wider audience and participate in a larger conversation on these issues, that is everyone emphasized today is literally occurring across the planet right now. So thank you very much and see you soon, bye-bye.