Washington, D.C. — With the Senate taking up the most pressing competition policy issues in the digital sector, the Consumer Federation of America (CFA) published an Issue Brief today that outlines the principles that should guide all efforts to reboot and recalibrate competition policy.
“CFA believes that the bill strikes the right balance in the effort to restore decentralized, competitive markets in the digital sector and throughout the economy,” Dr. Mark Cooper, CFA’s director of research, and author of the Issue Brief, said. “The dynamic economy that the uniquely American commitment to guardrails and guidance provided by antitrust and regulation requires aggressive, but disciplined action to reverse the mistakes of the past four decades.”
“A great deal of “unsound” precedent must be overcome, and that is where legislation may be necessary to recalibrate the practice of competition policy,” Cooper added, “but the practitioners of competition policy (federal and state antitrust and regulatory agencies, and private actors) have moved swiftly to challenge those erroneous precedents.
“Above all,” Cooper said, “it is possible to rebalance competition policy without abandoning the fundamental principles that served the U.S. economy well.” The rebalancing that enjoys widespread support among the analyses reviewed includes:
- shifting burdens of proof,
- adopting narrow definitions of relevant markets,
- adopting broad definitions of harm,
- focusing on competition and inequality,
- resurrecting structural solutions,
- putting efficiency and consumer welfare in its proper, long-term place by including quality, consumer choice, and innovation, and
- directing courts to place competition at the center of antitrust policy,
- to stop giving dominant firms the “benefit of the doubt,” and
- to treat anticompetitive conduct as the serious threat to consumer interests that it is.
The Issue Brief builds on five background analyses published in 2020, as well as a dozen and half peer-reviewed articles published from 2000 to 2016.
The forthcoming analyses summarized in the Issue Brief begins with the work of Louis Brandeis and concludes with Amy Klobuchar’s book Antitrust. In between the series looks at the Neo-Brandeisians, updates before broadband, the Golden Age of Capitalism, the challenges of digital technology, contemporary federal antitrust practice, other antitrust practitioners (state attorneys general and private antitrust activities), and legislative proposals for recalibrating competition policy.
- The analysis identifies 20 specific concerns about lax enforcement or the recent near total neglect of competition policy, organized in five broad categories (I. Lax Enforcement, II. Traditional Challenges, III. Long Standing Issues, IV. Magnified Old Abuses, V. New Challenges).
- It then outlines over two dozen proposed responses, organized in seven categories ( Purpose & Need for Reform, VII. Recalibration, VIII. Regulation, IX, Measuring Value, X. Rebooting, XI. Political Action: Collective, XII. Political Action: Individual).
The key principles to guide reform that appear in a straight line from Brandeis to Klobuchar, and almost all the analysts in between, include the following elements.
- Regulated competition (Brandeis’ term) is very much a capitalist undertaking with the goal of restoring and promoting a decentralized market economy.
- Efficiency is important (as Brandeis emphasized in his support for scientific management), because it yields economic progress for all involved in the production process.
- But, only if economic market power is not abused and political power does not multiply the advantage of dominant firms, their owners and highly skilled labor (as argued by Shepherd).
- Competition is the disciplining force, but it is not likely to occur or endure on its own. The capitalist solution strikes a balance between innovation and entrepreneurship, on the one hand, and the guardrails and guidance of antitrust and regulation, on the other.
- The key constraints require checks and balances to prevent barriers to entry and abuse of economic and political power, horizontally (across the branches of government), vertically (across the levels of government, i.e., federalism), and internally (through industrial democracy within productive enterprises).
“The big digital platforms are rightly the central focus at present because they have become so important and because they have been allowed to get away with so much consumer harm,” Cooper concluded, “but ultimately the entire economy is afflicted by a market power problem that should be addressed.”
Contact: Mark Cooper, 301-384-2204