Competition Policy and Consumer Choice Advance in the Senate with the American Innovation and Choice Online Act

Statement of Mark Cooper, Director of Research

The American Innovation and Choice Act does not use the word “antitrust” until after the illegal conduct has been identified, the entities to which it applies defined, and the penalties that can be imposed for a violation outlined.  There is a good reason for this approach. While antitrust authorities will certainly play a role in enforcing the new law, it is about something much more fundamental than antitrust; it is about competition, consumer choice, and consumer protection in the increasingly essential communications sector of the digital economy.[1]

In addition to taking a broad view of competition and consumer protection, the Consumer Federation of America (CFA) believes the bill strikes the right balance.  It will significantly benefit consumers by restoring competition on big data platforms because it addresses one of the critical problems that has emerged in the digital sector, anticompetitive conflicts of interest, but it will not stifle innovation by being overly prescriptive.

Everyone, except the big data platforms, seems to agree that the Klobuchar/Grassley bill is a good start on defining competition policy in a manner that reforms antitrust practice.  The Consumer Federation of America believes it is more than that.  It is a roadmap to effective competition policy in the digital economy.

First and foremost, it will restore and ensure that competition from products that use the platform to reach consumers will be decided on the merits and no longer be victimized by the self-preferencing behavior of dominant platform providers.  Choice and innovation will be unleashed so that consumers are restored to a position of sovereignty and can choose the combination of services and suppliers that best meets their needs. This bill does enough to make a big difference.

Second, and of great importance, it does so within the framework of the competition policy of traditional antitrust law.  The recent economic theory that put competition policy into a “deep freeze” was a radical narrowing and misinterpretation of the principles of that guided the political economy to a remarkably successful, pragmatic, progressive, decentralized competitive market in the 20th century. This bill changes that in a manner that is faithful to the long tradition of competition policy.

Third, it adopts a lower standard of proof, a preponderance of evidence that gives both sides an opportunity to make their case on a level playing field (i.e., where precedent is not a barrier to enforcement). This bill provides essential relief in a new and challenging area by going back to what worked, not trying to invent a new theory of competitive market and antitrust.

Fourth, while it focuses on the traditional antitrust approach of dealing with anticompetitive conduct under the antitrust laws after the abuse has occurred (ex post), it contains elements of “before-the-fact” (ex ante) rulemaking by defining a violation of the law as a potentially “unfair method of competition.”  The bill makes any such conduct a violation (rather than demanding a case-by-case demonstration of abuse), for this kind of conduct in this sector.

Fifth, the bill identifies and addresses the structural problem (the market power of large dominant platforms) that give rise to the significant avenues of abuse of power (leverage, grounded in vertical integration, foreclosure and exclusion, grounded in gatekeeping, and undermining potential competition, grounded in the exploitation and abuse of data).

Finally, as a practical matter, the bicameral, bipartisan support for this legislation that defines competition policy actually has a good chance of passing.  Because it is solid on policy grounds and feasible on political grounds, it is a clear signal of how to reform competition policy and antitrust in the digital age.

It would be possible to tweak this bill to make it stronger and remain within the parameter of the above principles, and other legislation may be necessary to address competition problems more broadly (above all increasing the resources of those with responsibility for enforcing competition policy, e.g., Competition and Antitrust Law Enforcement Reform Act.  However, it also seems clear that vigorous enforcement of the new authority and power in this bill will address the key problem in the digital communications sector in an effective and balanced manner.

For this reason, we view this bill as more than a first step. It is an important template. Those who want to do less to reboot competition policy are likely to fail to meet the new challenges to competition.  Those who wish to alter the underlying nature of competition policy (expressed in antitrust law) may be seeking unnecessary changes that could do more harm than good and may fail to garner the necessary support in Congress.  Thus, those who want to do too little or too much are likely to leave consumers and the economy much worse off.

Contact: Mark Cooper, 301-384-2204

[1] CFA took this view over two decades ago in the Microsoft case and reiterated it last year in the case of big data platforms: Mark Cooper, Monopoly Power, Anticompetitive Business Practices and Consumer Harm in the Microsoft Case (Consumer Federation of America), December 1999, Mark Cooper, “Antitrust as Consumer Protection In The New Economy: Lessons From The Microsoft Case, Hastings Law Journal, 52: 4, April 2001, first presented at Conference On Antitrust Law In The 21st Century Hasting Law School, February 10, 2000; Mark Cooper, Amina Abdu, Big Data Platforms, A New Chokepoint in the Digital Communications Sector Meeting New Challenges with Successful Progressive Principles, Working Papers on Pragmatic, Progressive Capitalism, WP # 4, September 2020. Senator Amy Klobuchar, Chair of the United States Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, argues for this view of policy in Antitrust: Taking on Monopoly Power from the Guilded Age to the Digital Age (Alfred A. Knopf, 2012),Top 25 policies,  #24, pp. 347-348.