Overhaul of Antitrust Oversight Needed to Recalibrate Regulations for A Digital Age

The Senate Must Take Crucial Next Step in Rebooting Woefully Lax Antitrust Regulations for the Modern Digital Age

Washington, D.C. – The Consumer Federation of America (CFA) released an Issue Brief today, calling on the Senate to vote on and pass S. 2992, The American Innovation and Choice Online Act. CFA also urges the House to pass the bill.

“This is a vitally important piece of legislation,” said Rachel Weintraub, CFA’s Legislative Director and General Counsel, “that addresses the most important competitive problem in the digital communications sector, the abuse of market power by Big Data Platforms, which are precisely defined as “covered entities.”

“This bill seeks to reduce or eliminate abuses of market power in digital services that are widely used by consumers but have become riddled with anticompetitive practices that raise consumer costs, lower quality, deny them effective choice to meet their needs, and slow innovation,” Weintraub added. “But, it takes a balanced and cautious approach, which ensures that the platforms will continue to be able to innovate and deliver services if they can effectively compete on the merits with independent developers of applications.”

The Issue Brief is entitled Rebooting and Recalibrating Competition Policy: S. 2992, American Innovation and Choice Online Act, an Important First Step to Apply Brandeis’ Antitrust Principles to Rebuild the Uniquely Successful American Economic Model. It evaluates the legislation from the perspective of four lengthy analyses prepared by CFA of the challenges facing competition policy in the 21st-century economy, as well as CFA’s previous testimony and Hill communications on related issues.

CFA’s analysis identifies six features of S. 2992 that embody the values expressed in over a century of competition policy in America. The 1) long history of competition policy, 2) the legislative intent of antitrust is critical to ensuring that policymakers and the public know where reformers are coming from, 3) the nature of the political economy for which reformers advocate, 4) the empirical record of the performance of the political economy is important because it shows policymakers and the public where the reformers want to go, 5) rebooting, and 6)  recalibrating competition policy (antitrust and regulation) are both important so that policymakers and the public understand what it takes to achieve the reforms that are the goal.

“We find that S. 2992 is a balanced and careful approach to an area of immense consumer activity that has not been overseen effectively since its inception by handling eight policy issues in a reasonable manner,” said Mark Cooper, Senior Fellow at CFA, and author of the underlying documents.

The report identifies the key elements of effective “recalibration,” that are needed, and which S. 2992 supplies:

  • The broad agenda for legislative changes that remains within the antitrust tradition that led the economy to great heights in the “Golden Age of Capitalism.”
  • Recapturing the goals of competition policy to prevent excessive concentration, which has the benefit of controlling the potential for abuse of political power and influence.
  • Thresholds for review and scrutiny that are lowered and address key challenges confronted by those charged with executing competition policy.
  • Allowing defendants to show that they merit an exception subject to very stringent conditions.
  • Conflicts of interest and self-preferencing, which are central to the abuse of market power must be controlled. This can be accomplished without undermining the incentive of platforms to innovate and offer higher quality services to the public.
  • Enhance agency oversight by providing the tools and resources necessary to effectively oversee competition and undertake new responsibilities.
  • Restore effective consumer sovereignty by requiring transparency and ex ante conditions for true consumer choice.
  • Dual Jurisdiction including antitrust and regulation has been successfully applied to the communications network for over a century.

“While there are other issues that need to be addressed, like privacy, data abuses and resources,” Weintraub added, “S. 2992 is an ideal starting point because it takes exactly the approach that legislating (recalibrating) competition policy should take. And, it reinforces the other “rebooting” activities being undertaken by the executive branch, independent agencies, state Attorneys General, and even private parties.”

“S. 2992 is the right approach to an important part of the problem,” Weintraub concluded. “It deserves a vote and passage in the Senate, so that the House can vote on and pass the legislation later this month.”

Mark Cooper, 301-384-2204
Rachel Weintraub, 202-904-4953