By José Miguel de la Calle
Now that questions abound regarding the exponential growth of the giants of the Digital Economy (Google, Facebook, Netflix, Instagram, and others), some voices have reappeared that hope to implant the ideas of the so-called Neo-Brandeisians, whose positions have also been characterized under the catchy term of ‘Hipster Antitrust’ (a call back to American Antitrust’s roots). The term was coined by attorney Kostya Medvedovsky, as shown by his Twitter account byline: “Not a Hipster, despite coining the term ‘Hipster Antitrust.”
The Neo-Brandeisian movement seeks to follow up on the basic position taken by Justice Brandeis, who put forward several problems for competition related to large multinational corporations, simply due to their large size. The starting point for Neo-Brandeisian thinking is the rejection of the consumer welfare standard, which has ruled over the US’ antitrust law regime unanimously over the last several decades, ever since it was proposed by Robert Bork and picked up by the US Supreme Court in 1979, which pointed out that “Congress designated the Sherman Act as a prescription for consumer welfare”. The main reason for rejecting consumer welfare as the essential guidepost for competition policy is that is focuses exclusively on the search for low prices, which at first glance translates into gains for consumers, but pushes aside extra-economic criteria that may be as or more important, aimed at different population groups, and which fall into a more political realm, such as job security, support for SME’s, or social equality.
Those friendly towards Hipster Antitrust have been strongly criticized by the more radical schools in economics, who consider this a populist trend detracting from the credibility of analysis criteria. This apart from the fact, in their opinion, that there is no real evidence to show that corporate size is a bad thing per se and, on the contrary, argue for the undeniable effects brought by the maximization of economic production for the efficiency of markets.
Debate is not limited to the theoretical and academic realms since, in practice, if the Hipster school were to gain some ground competition authorities would be obliged to modify their methods of analysis for corporate mergers, reducing the importance of traditional economic tests and incorporating broader, more subjective criteria.
Despite the criticism, the Hipster call will not die down so long as the trend for increased concentration in markets continues and the global problem of extreme social inequality persists. Therefore, this is an alarm call for policy makers and competition authorities, who should be urged to incorporate new elements for judgement into their analyses, so as to address other State goals.
Thus, for example, we see some competition authorities finding the sense in going down new roads in the analysis of market concentration when dealing with the digital economy, since this sector operates under different principles to others. Indeed, access to information plays an extraordinary role, and the effects of two-sided markets pose new conceptual challenges. (on this, one can see the interview to Andreas Munt, director of the German antitrust authority, published in Competition Policy International’s April 2018 Antitrust Chronicle).
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