Friday, April 20, 2018
Assistant Attorney General Makan Delrahim Delivers Keynote Address at the University of Chicago's Antitrust and Competition Conference Chicago, IL ~ Thursday, April 19, 2018
Delrahim's comments are here. Below I extract some of the key points:
Outside the realm of naked horizontal restraints such as price fixing, bid rigging, and market allocation, antitrust demands evidence of harm or likely harm to competition, often weighed against efficiencies or procompetitive justifications. As enforcers, we exercise our prosecutorial role every day using this approach to review economic evidence to determine whether a restraint, on its face, violates the antitrust laws.
Taking an evidence-based approach to antitrust law should not be mistaken for an unwillingness to bring enforcement actions. In fact, where there is clear evidence of harm to competition, it is the duty of enforcers to promptly and vigorously prosecute the antitrust laws, and to refuse to settle for ineffective behavioral band-aids that fall short of curing the underlying threat to competition and consumers. Believe me, it is a lot easier to accept some pretty promise, issue a press release congratulating ourselves, and move on to the next matter. Convenience, however, is not in the oath we take to uphold the U.S. antitrust laws.
Evidence-based enforcement also requires a readiness to adapt our existing antitrust framework and tools to new or emerging threats to competition. It is an approach of openness to persuasion, and is adaptable to new business models and emerging technologies that create novel threats to competition and consumer welfare.
I am aware that some in this audience believe that existing antitrust laws are ill-equipped to address competition issues that have arisen in the digital platform economy, and that as a result of the antitrust laws’ supposed lack of adaptability more generally, there have been harmful increases in industry concentration, along with a variety of other social ills.
Some lay the blame for this state of affairs at the feet of the consumer welfare standard itself. Others blame antitrust enforcers for falling short of taking action against companies or transactions that might harm competition. Enforcers do indeed deserve some blame, particularly for their willingness to settle for ineffective behavioral (or regulatory) fixes to mergers rather than challenging them when necessary. Yet, overall, I have reason for optimism.
Based on my collective experiences over the past 25 years, I believe the antitrust consensus approach is flexible to new business models in digital markets, and that there is no persuasive evidence that antitrust itself has “failed.” The antitrust consensus may fall short if enforcement agencies are unwilling to take action, based on credible evidence, or—even worse—if they impose ineffective fixes that transform law enforcement agencies into inefficient regulators, where free markets can do a more effective and more honest job.
Over the past several decades, antitrust law has responded to new and innovative products and markets to protect against novel threats to the competitive process. Enforcement agencies have developed a strong expertise as new types of assets emerge and consumer preferences shift, and have brought successful antitrust challenges to dismantle barriers to competition.
Whether antitrust enforcement makes sense in this area is therefore an evidence-based question: are consumers who believe that their data is digital currency facing a monopoly seller or monopsony buyer with structural barriers to competition and entry?
That is the question enforcers should answer. Admittedly, it is a complex question and we need studies and new and innovative thinking—exactly the kind of thinking that occurs and is fostered at institutions such as the University of Chicago.
The antitrust consensus approach is flexible enough to accommodate new and evolving economic wisdom, so long as it is grounded in empirical evidence. If there is an evidentiary basis for an enforcement action against any platform, and if that enforcement action is built on a sound economic foundation, antitrust agencies should fulfill their duties to the American consumer.
Antitrust enforcement requires the antitrust consensus to be subject to constant re-evaluation and scrutiny to maintain its foothold. But a “guilt by correlation” approach implying a causal connection between enforcement standards and specious concentration measures does not advance the conversation. Enforcers need to be more vigilant, but they also need to be humble.