Should The Competitive Process Test Replace The Consumer Welfare Standard?

By: Einer Elhauge (ProMarket)

The head of the Department of Justice’s Antitrust Division, Jonathan Kanter, made a recent speech adopting the Neo-Brandiesian position that in antitrust cases the consumer welfare standard should be jettisoned and replaced with a “competition and the competitive process” test. I quite agree with him and the Neo-Brandiesians that the way that courts have applied the consumer welfare standard has led to uncertainty and underenforcement. But I think his approach raises serious concerns of legal theory and strategy.

Concerns of Legal Theory

Kanter is right that antitrust law protects “competition and the competitive process”.[1] But the consumer welfare standard was never an alternative to that legal test. It was only a method to resolve deep ambiguities about what “competition and the competitive process” means, and Kanter offers no alternative to resolve them.

To take a simple concrete case, suppose a merger between two firms in a ten-firm market makes the merged firm a more efficient and vigorous competitor. Does that decrease “competition” because it eliminates one competitor or increase it because we now have more vigorous competition among the nine that remain? Nothing in the “competition and the competitive process” test helps provide an answer…

CONTINUE READING…