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== Antitrust == | == Antitrust == | ||
=== <big>Background</big> === | |||
First, an antitrust law overview will illuminate its political divides and application. Antitrust law, codified via the Sherman Act in 1890, was intended to pursue monopolies raising prices and limiting competition. Initial enforcement focused on labor unions and attacked organized labor instead of increasing competition in product markets (Hovenkamp 2022). Congress passed the Clayton Antitrust Act of 1914 to exempt labor, reflecting antitrust’s intention to support labor while limiting corporate power. Although Supreme Court rulings oscillated regarding the scope of the Sherman and Clayton Acts, enforcement trended upward until the 1970’s (Freyer 2006). Mergers would frequently be blocked, and the standard would follow per se illegality; the merger prima facia increases market share and thus increases consumer prices (Kovacic 2021).<ref>https://scholar.umw.edu/cgi/viewcontent.cgi?article=1626&context=student_research</ref> | |||
'''The “consumer welfare standard” reversed enforcement trends by arguing the only relevant consideration is consumer prices''' (Stones 2018). Specifically, the increase in market concentration must be weighed against the new efficiencies and economies of scale produced by a merger. This ideology meshed with the conservative movement of the 1980’s (Adams and Brock 1988), marked by Reagonomics and free market prioritization. The underlying goal is to reduce government intervention and enable markets to achieve the most efficient outcome that optimizes societal welfare. | |||
Robert Bork’s introduction of the consumer welfare standard – prioritizing only prices when evaluating potential anticompetitive conduct – in the 1970’s would create staggering effects over the next few decades; Bork’s ideology increased market concentration (Abdela and Steinbaum 2018). Although a few corporations controlled most marketplaces – technology (Katz 2021), pharmaceuticals (Shepherd 2018), agriculture (MacDonald et al. 2018), telecommunications (Genakos et al. 2018) etc. – the consumer welfare standard’s detesters struggled to galvanize merger enforcement because consumer prices appeared competitive. Policymakers could sense markets went awry, but articulating the rationale was arduous. | |||
'''Arguments for Replacing the Consumer Welfare Standard''' | |||
# '''Broader Scope of Antitrust Enforcement''': | |||
#* '''Market Power and Competition''': Critics argue that the consumer welfare standard, which focuses on price and output effects, is too narrow. They advocate for a broader approach that considers the overall competitive process and market structure. This includes examining how market power affects innovation, quality, and consumer choice | |||
#* '''Labor Markets''': There is a growing concern that the consumer welfare standard neglects the impact of monopolistic practices on labor markets, including wage suppression and reduced job mobility. A broader standard would address these issues | |||
# '''Addressing Power Imbalances''': | |||
#* '''Economic Concentration''': High levels of economic concentration and the dominance of large corporations can undermine democratic processes and political power balance. Replacing the consumer welfare standard could help address these broader social and economic concerns | |||
#* '''Non-Price Harms''': The current standard often overlooks non-price harms such as reduced privacy, lower quality, and diminished consumer choice, which are significant in digital markets dominated by tech giants like Google, Amazon, and Facebook | |||
# '''Historical Context and Flexibility''': | |||
#* '''Original Intent of Antitrust Laws''': Advocates for change argue that the original intent of antitrust laws was broader than consumer welfare. They believe that restoring this broader intent would allow for more effective enforcement against anti-competitive practices | |||
'''Arguments Against Replacing the Consumer Welfare Standard''' | |||
# '''Predictability and Clarity''': | |||
#* '''Legal Certainty''': The consumer welfare standard provides a clear and predictable framework for courts and businesses. Changing the standard could lead to increased uncertainty and litigation, making it harder for businesses to understand compliance requirements | |||
#* '''Economic Efficiency''': Proponents argue that focusing on consumer welfare, primarily through price effects, promotes economic efficiency and benefits consumers directly. They believe that deviating from this focus could harm economic efficiency and lead to higher costs for consumers | |||
# '''Complexity and Implementation''': | |||
#* '''Measurement Challenges''': Expanding the scope of antitrust enforcement to include non-price factors and broader social impacts could be difficult to measure and enforce. The consumer welfare standard, while not perfect, offers a more straightforward and measurable criterion | |||
#* '''Judicial Expertise''': Courts are more experienced and equipped to handle cases based on economic analysis of price and output effects. A broader standard might require expertise in assessing more complex and less quantifiable impacts, complicating judicial proceedings | |||
# '''Incremental Improvements''': | |||
#* '''Improving Existing Framework''': Some argue that instead of replacing the consumer welfare standard, it would be more practical to improve its application. This includes better integration of considerations like innovation and potential harm to competition within the existing framework | |||
=== <big>Timeline Developments</big> === | === <big>Timeline Developments</big> === | ||