By Project Disco
The focus of contemporary competition policy debates is shifting back to the first principles, asking: “What are we trying to do? What is the objective of antitrust?” Enforcers and some legislators in the U.S. are suggesting a shift away from consumers to a completely different approach that focuses on exerting power over specific companies. This change of approach is also gaining traction in some U.S. states as several state Attorneys General have recently sued technology companies alleging violation of antitrust laws without considering the impact on consumers of the actual conduct or the proposed remedy. California Attorney General (AG) Rob Bonta recently filed a civil antitrust and unfair competition lawsuit claiming that Amazon’s pricing practices prevent retailers from offering lower prices than the ones they offer at Amazon’s store. The California case mirrors the suit that DC AG Karl Racine filed on behalf of the District of Columbia that also alleged that Amazon has too much control over how much outside vendors can charge for their products. However, the judgment issued by the DC Superior Court established not only that the DC AG’s office could not support its allegations against Amazon, but that the Amazon practices in question actually benefit consumers. These recent cases raise the important question: who is antitrust supposed to protect?
For the last four decades, enforcers and courts have agreed that antitrust law and policy should protect consumer welfare, by promoting competition rather than competitors. Importantly, the consumer welfare standard in the 1970s was developed in response to the belief that previous U.S. antitrust policy had become too subjective and overly aggressive by focusing on the size of companies regardless of the effect on consumers. With enforcers and courts embracing the consumer welfare standard, it has served as the backbone of U.S. and global antitrust policy ever since, as also indicated by the International Competition Network (ICN) and the Organisation for Economic Co-operation and Development (OECD). As a result, the purpose of antitrust law has been to ensure economic efficiency delivering lower prices, promoting innovation, and increasing benefits for consumers. For the last decades, the message has been clear – consumers are the ones to be protected by antitrust efforts. This approach has led to astounding levels of innovation, and it is not by coincidence that numerous digital and connected services have been able to provide consumers and businesses the tremendous benefits that they enjoy today.