The European Union (EU) Commission proposes to ‘green up’ its enforcement of Article 101(3) TFEU to allow producers to collectively overcome so-called first mover disadvantages that would result from inefficient market regulation. The Commission's reboot focuses on the last three exemption conditions. First, the consumer benefit condition is customized to use collective consumer benefits to determine whether consumers receive a ‘fair share’ of the benefits established under the efficiency condition. Here, the Commission bypasses the Dutch proposition to also take account of non-consumer benefits when investigating whether consumers are compensated for anticompetitive harm. Second, the indispensability condition is tasked to filter out greenwashing. Third, the residual competition condition is trusted to allow private collective action insofar it does not eliminate competition on price and/or innovation. Discussing both EU and Dutch proposals, this article finds that greening up Article 101(3) brings competition policy outside the limiting principles that define objective and effective competition enforcement in terms of voluntary exchange.
Tuesday, May 30, 2023
A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers
A Theory of Monopolistic Competition with Horizontally Heterogeneous Consumers
By: |
Sergey Kokovin; Alina Ozhegova; Shamil Sharapudinov; Alexander Tarasov; Philip Ushchev; Sergey G. Kokovin |
Abstract: |
Our novel approach to modeling monopolistic competition with heterogeneous firms and consumers involves spatial product differentiation. Space can be interpreted either as a geographical space or as a space of characteristics of a differentiated good. In addition to price setting, each firm also chooses its optimal location in this space. We formulate conditions for positive sorting: more productive firms serve larger market segments and face tougher competition; and for the existence and uniqueness of the equilibrium. To quantify the role of the sorting mechanism, we calibrate the model using cross-sectional haircut market data and perform counterfactual analysis. We find that inequality in the distribution of the gains among consumers caused by positive market shocks can be substantial: the gains of consumers from more populated locations are 3-4 times higher. |
URL: |
May 30, 2023 | Permalink | Comments (0)
Monday, May 29, 2023
EU antitrust in support of the Green Deal. Why better is not good enough
May 29, 2023 | Permalink | Comments (0)
Thursday, May 25, 2023
Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition
Clearing the Way to Renminbi Domination: CIPS, Antitrust, and Currency Competition
Abstract
China watchers have decried the emergence of the Cross-Border Interbank Payment System (“CIPS”) as a turning point in the move to dethrone the U.S. dollar. This Article situates CIPS, which clears and settles Chinese renminbi transactions, with other financial market infrastructures, drawing lessons from how those entities have thrived or failed.
In recent conversations, CIPS has been conflated with other infrastructures (e.g., the SWIFT payment messaging system) and currency trends (e.g., de-dollarization and sanctions evasion). However, a currency clearinghouse is very different than most financial institutions. For CIPS, the market-maker in the adjacent trading market is the Chinese government, a sovereign state that wields a monopoly over the renminbi. Although the global currency trading market exhibits competition, monetary sovereignty complicates the analysis of monopolization.
This Article’s primary contribution is to present a coherent theoretical framework for CIPS by synthesizing the treatment of currency clearinghouses across law, finance, and economics. The Article concludes that CIPS cannot, by itself, guarantee widespread acceptance of the renminbi.
May 25, 2023 | Permalink | Comments (0)
Wednesday, May 24, 2023
The Effects of Personal Data Management on Competition and Welfare
The Effects of Personal Data Management on Competition and Welfare
This study examines how consumers' personal data management affects firms' competition in the data collection and data application markets and welfare outcomes. Consumers purchase products from differentiated firms in two markets. Firms compete to collect consumer data first to predict their preferences in the data application market, where each firm offers personalized prices to its targeted consumers and a uniform price to untargeted consumers. Before firms offer prices, their targeted consumers can erase data to become untargeted for a fixed cost. We show that consumers' privacy management mitigates price competition, reduces firms' profits, and harms consumer surplus and social welfare in the data application market; privacy management intensifies competition and improves consumer surplus in the data collection market. Across these two markets, profits and social welfare decline. The change in consumers' two-market surplus depends on their foresight regarding the outcomes in the data application market, with only forward-looking consumers having a higher surplus. We extend the model in several directions, including data-enabled product personalization, privacy costs, data portability, and data ownership, and discuss the implications for privacy laws.
May 24, 2023 | Permalink | Comments (0)
Tuesday, May 23, 2023
Priority Setting: The Neglected Cornerstone of Effective EU Competition Law Enforcement
Priority Setting: The Neglected Cornerstone of Effective EU Competition Law Enforcement
In our study, ‘Policy Report: Priority setting in EU and national competition law enforcement’ (“Report”), we conducted a systematic and comprehensive mapping of the procedural and substantive rules and practices that define the way competition authorities of 27 EU Member States, the United Kingdom, and the EU Commission set their priorities. We defined priority setting broadly, as the legal competence and de facto ability of competition authorities to choose which cases to pursue and which to disregard. The data was collected by combining desk research of the publicly available legislation and policy documents in each jurisdiction with a written questionnaire completed by officials of the competition authorities and semi-structured interviews with those officials. The Report presents a new typology of priority setting and evaluates the priority setting practices against a set of administrative law principles of good governance.
This paper summarises our main arguments by discussing the influence of Regulation 1/2003 on the setting of enforcement priorities in terms of the removal of the notification obligation (Section 2); effectiveness (Section 3); and uniformity (Section 4).
May 23, 2023 | Permalink | Comments (0)
Monday, May 22, 2023
Collusion and Coercion with Naive Rivals
Collusion and Coercion with Naive Rivals
Abstract
Standard models of collusion require that all firms are forward-looking and strategic. When one firm displays naive behavior—i.e., when it is myopic, memoryless, or non-strategic—typical collusive strategies cannot be supported in equilibrium. Motivated by the increasing adoption of high-speed pricing algorithms that monitor rivals' prices, we consider instead a model in which a single firm can update prices faster than its rivals. We show that this expands the set of strategies that yield prices above the competitive equilibrium. With sufficiently fast pricing, a firm can unilaterally sustain price levels that maximize joint profits even when all of its rivals are naive. We also characterize a coercive equilibrium that maximizes the profits of the faster firm. Overall, faster pricing provides a single firm with the ability to induce market outcomes that yield higher profits and lower consumer surplus.
May 22, 2023 | Permalink | Comments (0)
Sunday, May 21, 2023
Learning, Sophistication, and the Returns to Advertising: Implications for Differences in Firm Performance
Why do establishments exhibit wide variation in their productivity and profitability? Can variation in returns to advertising help answer this question? We present results from a large field experiment on Facebook and Instagram that documents variance in advertisers’ ability to generate returns to advertising. We focus on campaigns aimed at boosting sales and tie advertising expenses to revenues for each advertiser. We find that spending on advertising led to significant increases in revenues, number of purchases, number of purchasers, and number of conversions. The heterogeneity in these results by expenditure, age, and engagement documents patterns consistent with learning by doing and variance in how sophisticated advertisers are. Advertisers who engage in more learning activities and more sophisticated data collection exhibit the highest returns and are more likely to continue their activities over time, suggesting that differences in advertising effectiveness may account for some of the variance in productivity across firms.
May 21, 2023 | Permalink | Comments (0)
Friday, May 19, 2023
GUPPI In Supermarket Mergers: the UK’s Asda/sainsbury Case
GUPPI In Supermarket Mergers: the UK’s Asda/sainsbury Case
The UK supermarket industry has a high profile because of its large share of household budgets. In 2003 the UK competition authorities blocked all potential mergers between the top-three firms and the fourth. After this, there was an apparent consensus that mergers between the largest four supermarkets would be unsuccessful with competition authorities. In 2018, Asda and Sainsbury two of the largest four firms, decided to challenge the consensus with a proposal to merge. Their bid failed. This chapter discusses the case. We discuss two changes in the 15 years between 2003 and 2018: (i) changes to the industry including the rise of new low-price firms and (ii) changes to the way mergers are assessed by competition authorities, particularly the use of a new indicator of competitive harm, namely, the Gross Upward Pricing Pressure Index (GUPPI).
May 19, 2023 | Permalink | Comments (0)
SEPs, FRAND, and the Power of Section 5
SEPs, FRAND, and the Power of Section 5
Abstract
In the modern Internet of Things, our cars, our televisions, and even our door locks and home thermostats rely on internet connectivity standards. As a result, our interconnected world is ever more reliant on standard-essential patents (SEPs), the key patented technologies that underpin critical connectivity standards. That has put some implementers in a bind, as they face patent royalty claims that they feel far exceed a reasonable royalty – and feel compelled by lock-in to pay those royalties.
The Federal Trade Commission has long been a leader in enforcement and advocacy in this space, a role that it proudly continues. Its involvement started with the Commission’s seminal decision in 1996 to bring an enforcement action against Dell for seeking to collect royalties on a standardized patent in a manner that the Commission found harmful to competition. Other enforcement actions followed, as well as major reports addressing competition in high-tech and often-standardized industries. FTC Commissioners also have issued statements on the topic, both together and individually, and the Commission has submitted comments to the International Trade Commission to explain how the analysis for exclusion orders should change when the infringement of a standardized patent is at issue. Notably, the FTC hasn’t invoked only the Sherman Act in its work here. Instead, it has long taken the position that Section 5’s so-called “standalone” provision gives it the power to act in this space where others – including private parties – cannot.
In light of this history of enforcement and advocacy, we believe the FTC may continue to see itself as the steward of this area of the law. To illustrate our point, we look at a recent patent pool price hike and extrapolate a based-on-a-true-story hypothetical: Suppose an SEP holder burdened with obligations to charge only a reasonable royalty for its patents suddenly and without explanation raised the royalty significantly and threatened to seek injunctions against those who do not pay the new rate. We ask whether the FTC may conclude that this would violate the FTC’s standalone Section 5 provision. Based on precedents like the FTC’s N-Data case from 2008, we think it very well could.
May 19, 2023 | Permalink | Comments (0)
Thursday, May 18, 2023
Corporations and the Privilege against Self-Incrimination
Corporations and the Privilege against Self-Incrimination
Stijn Lamberigts
Book Abstract
This book asks whether the well-established privilege against self-incrimination applies to corporations, whether it should, and if so, to what extent. Those questions have an increasingly important EU criminal law dimension. To answer them, this study draws on comparative insights from Belgium, England and Wales, and the US; as well as case law of the ECtHR and EU Law. It covers the established CJEU case law in competition cases, the recent CJEU ruling in DB v Consob and addresses Directive (EU) 2016/343. It will appeal to scholars of EU criminal law, but also to white-collar and competition practitioners.
May 18, 2023 | Permalink | Comments (0)
Wednesday, May 17, 2023
Digital Hermits
By: |
Jeanine Miklós-Thal; Avi Goldfarb; Avery M. Haviv; Catherine Tucker |
Abstract: |
When a user shares multi-dimensional data about themselves with a firm, the firm learns about the correlations of different dimensions of user data. We incorporate this type of learning into a model of a data market in which a firm acquires data from users with privacy concerns. User data is multi-dimensional, and each user can share no data, only non-sensitive data, or their full data with the firm. As the firm collects more data and becomes better at drawing inferences about a user’s privacy-sensitive data from their non-sensitive data, the share of new users who share no data (“digital hermits”) grows. At the same time, the share of new users who share their full data also grows. The model therefore predicts a polarization of users’ data sharing choices away from non-sensitive data sharing to no sharing and full sharing. |
URL: |
May 17, 2023 | Permalink | Comments (0)
Tuesday, May 16, 2023
Product Differentiation and Oligopoly: A Network Approach
Product Differentiation and Oligopoly: A Network Approach
By: |
|
Abstract: |
This paper develops a theory of oligopoly and markups in general equilibrium. Firms compete in a network of product market rivalries that emerges endogenously out of the characteristics of the products and services they supply. My model embeds a novel, highly tractable and scalable demand system (GHL) that can be estimated for the universe of public corporations in the USA, using publicly-available data. Using the model, I compute firm-level markups and decompose them into: 1) a new measure of firm productivity that accounts for product quality; 2) a metric of network centrality, which captures the extent of competition from substitute products. I estimate that, in 2019, public corporations produced consumer surplus in excess of 10 US$ trillions (against $3 trillions of profits). Oligopoly lowers total surplus by 11.5% and depresses consumer surplus by 31%. My analysis also suggests that both numbers were significantly lower in the mid-90s (7.9% and 21.5%, respectively). These results should be interpreted with care due to data limitations. |
URL: |
May 16, 2023 | Permalink | Comments (0)
Tying as an Instrument of Vertical Integration: Epic Games v. Apple
Tying as an Instrument of Vertical Integration: Epic Games v. Apple
YONG CHAO, University of Louisville - College of Business - Department of Economics
BABU NAHATA, University of Louisville - College of Business - Department of Economics
This paper examines the relationship between tying and vertical integration when an input monopolist can require its downstream buyer to purchase a competitively supplied input from it, or integrate forward in the downstream market. We show tying is an imperfect substitute for vertical integration, and provide the necessary and sufficient condition when the two practices are equivalent. When they are not equivalent, the total welfare under tying is higher than that under vertical integration. This raises the question whether a harsher treatment of tying than vertical integration in our current antitrust enforcement is economically sound. More interestingly, compared with the non-tying case, tying can be Pareto improving: Both the input monopolist and consumers are strictly better off when no other firms are worse off. Further, we offer the necessary and sufficient condition for Pareto improvement. Finally, we argue that, considering the welfare effects of tying, more cautions need to be taken in treating Apple's payment restriction in the ongoing antitrust case Epic Games v. Apple.
May 15, 2023 | Permalink | Comments (0)
Sunday, May 14, 2023
Recap of Rome Antitrust Forum, sixth edition (April 28 2023)
Rome Antitrust Forum, sixth edition
On April 28 2023, at the sixth meeting of the Rome Antitrust Forum (organized
by Alberto Heimler, National School of Administration, Rome and Nicolas
Petit, European University Institute, Florence), the discussion centered around
two important themes that bear on the effective and efficient application of
antitrust law in the EU: (A) The Digital Markets Act: enforcement problems and
the role left to national competition authorities in digital markets; (B)
Assessment of the Guidance Paper on exclusionary abuses: Which way
forward?
The discussion was very lively and led to a number of suggestions/
recommendations.
(A) The Digital Markets Act: enforcement problems and the role left to national
competition authorities in digital markets
1) The DMA is an EU harmonization regulation that aims at achieving three
objectives: ensure contestability of digital markets, fairness of the
business-to-business relationship between the platforms and their
customers and suppliers and strengthen the internal market by providing
harmonised rules across the EU. The DMA aims at achieving these
objectives with specific prohibitions and prescriptions based on
categories and concepts which are different and distinct from those used
in antitrust. The main difference with antitrust is that the DMA is
enforced against designated gatekeepers that are not necessarily dominant
companies.
2) These designated gatekeepers are quite diverse, both in terms of the way
they are funded and the consumers needs that they are meant to satisfy,
a. As a result the Forum recommends that the specific prohibitions
and prescriptions of the DMA be adapted to the specific
characteristic of the gatekeeper and of the ecosystem that was
created around it and not enforced in a mechanical/formalistic way.
3) There are some indications that indeed this is what is going to happen.
Enforcing the DMA is not a confrontational, but a cooperative exercise.
a. The Forum welcomes this cooperative approach.
4) However, the objectives pursued by the DMA, contestability and fairness,
do not provide exact indications of what will have to be the specific
constraints imposed on gatekeepers. While contestability and fairness are
defined in the DMA in the abstract, there is no reference to the desired
degree of contestability to be achieved, nor when the “disproportionate
advantages” of the gatekeepers in relation with their business users will
become fair.
a. The Forum recommends that the EU makes an effort to provide a
more precise definition on how it interprets these objectives while
enforcing the DMA.
5) This cooperative approach is going to be extended to all stakeholders,
including national competition authorities. Information will be shared
with national authorities on possible anticompetitive mergers the EU may
have become aware via the notification obligations of article 12 of the
DMA. This is a very welcome possibility.
6) Although antitrust authorities will be able to identify antitrust offenses
that go beyond what is envisaged in the DMA, violations of the remedies
accepted by the EU in relation to the DMA will be dealt under the DMA
provisions and in principle could not become antitrust violations on their
own merit. Is this true? Furthermore, for practices regulated by the DMA
antitrust authorities will not be able to impose harsher remedies than
those envisaged under the DMA. However, if harsher remedies are
offered by a dominant gatekeeper within an antitrust proceeding, would
the national authority be able to accept them?
a. The Forum recommends that on these issues a more formal
clarification be issued by the EU.
7) In this context, the Forum acknowledges that the DMA, being a
harmonization directive, does not provide for an efficiency defence. After
the adoption of the DMA, this is no longer the time to discuss whether
this choice has been appropriate. However, the Forum believes that the
possibility of a market power test, like it is contained in the new UK
Digital Markets Competition and Consumer Bill, would have made the
DMA more effective and fair.
8) The Forum discussed extensively how the Act will be enforced in the
presence of extensive innovations and changes that may well affect in
coming years the market position of designated gatekeepers.
a. Although an efficiency defence is not available in the Act, the
Forum recommends that changes in market conditions be
acknowledged by the EU and as a result the obligations imposed on
gatekeepers be readily changed or relaxed if new and different
information on market conditions becomes available.
9) Finally, the effectiveness of the DMA should be periodically analyzed,
measured and assessed.
a. The Forum recommends that such an ex-post evaluation of the
DMA be based on actual results achieved in terms of market
contestability and fairness rather than in terms of the number of
designated gatekeepers and list of measures imposed.
(B) Assessment of the Guidance Paper on exclusionary abuses: Which way
forward?
1) The RAF welcomes the ongoing policy discussion on possible
ameliorations to the effects-based approach that has informed
enforcement of Article 102 of the Treaty on the Functioning of the
European Union (“TFEU”) since 2006.
a. The Forum underscores the significance of reviewing past
decisions and judicial statements.
2) The European courts have chosen the As Efficient Competitor ("AEC")
framework as a prevailing principle to assess anticompetitive behavior
pursuant to Article 102 TFEU, though they have not yet formulated
specific guidelines regarding its implementation. In addition, the analysis
of rebates under the method proposed in the Guidance Paper appears
sometimes unpractical.
a. The Forum believes that a revision of the Guidance Paper on
exclusionary abuses under Article 102 TFEU and the proposed
adoption of Guidelines should be an occasion to think about the
possibility of using more than one test to operationalize the AEC
framework, in both pricing and non-pricing abuse cases.
3) The proper method of fighting abuse of market power is indirect.
Competition law attempts to deter anticompetitive exclusionary conduct.
By contrast, competition cases against exploitative conduct are, and will
likely, remain marginal. Most, but not all, the participants advised caution
against the development of competition policy against unfair conduct.
a. Unless strong guardrails are in place, fighting unfairness through
Article 102 TFEU risks generating a profusion of revenue dispute
cases before agencies and courts, leading to enormous enforcement
costs.
4) While much discussion about Article 102 TFEU revolves around abuse,
much less thinking has been devoted to dominance in the contemporary
policy conversation. Of course, market definition is a hotly debated issue,
and the reaction of the Forum participants confirmed that there is little
consensus on whether we should carry on with our current practice of
market definition or discount its analytical importance in abuse of
dominance cases.
5) Last, it is important to think conceptually about which of the parties
should bear the consequences of errors under uncertainty in Article 102
TFEU cases, and whether any and every error deserves to be accounted to
the credit of the dominant company.
a. Indeed not all errors may be equal. And an accumulation of minor
errors does not necessarily amount to a major flaw. For example, in
the Intel case, the Court of Justice has been extremely, and perhaps
overly, strict in its review of the European Commission’s economic
estimation mistakes.
May 14, 2023 | Permalink | Comments (0)
Friday, May 12, 2023
Digital Platforms Regulation: An Innovation-Centric View of the EU’s Digital Markets Act
Digital Platforms Regulation: An Innovation-Centric View of the EU’s Digital Markets Act
Carmelo Cennamo, Tobias Kretschmer, Panos Constantinides, Cristina Alaimo, Juan Santaló
The EU’s Digital Markets Act (DMA) is set to become the new standard regulatory framework of the digital economy. It introduces some innovative aspects in ex ante regulation to promote market contestability in a promising direction, like the general objective of counteracting practices that ossify competition and limit contestability of core services in the digital domain. However, the current approach with a scattered list of binding provisions and obligations not properly tailored to the varying types of digital platforms and business models may not deliver on the law’s premises and objectives of a more contestable and fair competitive landscape. ... Specifically, we are concerned that the business model agnostic approach to digital platforms taken in the DMA would miss out on the critical role those digital platforms play for the creation of value. Digital platforms do not just facilitate existing transactions between business users and end-users, they also enable new interactions that would not occur in the absence of the platform. These interactions are linked to the production of novel kinds of data which further contribute to the innovativeness of platform ecosystems.1 Our core thesis rests on the differentiation between creating new interactions through the digital platform that we conceptualise as innovation leading to ‘value creation’, in contrast to facilitating existing interactions or market transactions, which we conceptualise as coordination between business users and end-users leading to ‘value exchange’.
May 12, 2023 | Permalink | Comments (0)
Thursday, May 11, 2023
The Microsoft Litigation's Lessons for United States v. Google
The Microsoft Litigation's Lessons for United States v. Google
The United States Department of Justice (“DOJ”) and three overlapping groups of states have filed federal antitrust cases alleging Google has monopolized internet search, search advertising, internet advertising technologies, and app distribution on Android phones. In this Article, we focus on the DOJ’s claims that Google has used contracts with tech firms that distribute Google’s search services in order to exclude rival search providers and thus to monopolize the markets for search and search advertising— the two sides of Google’s search platform. The primary mechanisms of exclusion, according to the DOJ, are the many contracts Google has used to secure its status as the default search engine at all major search access points. The complaint echoes the DOJ’s claims two decades ago that Microsoft illegally maintained its monopoly in personal computer operating systems by forming exclusionary contracts with distributors of web browsers, and by tying its Internet Explorer browser to Windows. The gist of the case was that Microsoft had used exclusionary tactics to thwart the competitive threat Netscape’s Navigator browser and Sun Microsystems’ Java programming technologies—both forms of “middleware”—posed to the Windows monopoly. In this Article, we argue that the treatment of market definition, exclusionary contracting, causation, and remedies in the D.C. Circuit’s Microsoft decision has important lessons for the Google litigation.
May 11, 2023 | Permalink | Comments (0)
Wednesday, May 10, 2023
A 'Probability of a Probability': Understanding the Section 7 Reasonable Probability Standard
A 'Probability of a Probability': Understanding the Section 7 Reasonable Probability Standard
The burden of proof to determine the “reasonable probability” that a merger violates Section 7 is not clear. Using the insightful puzzlement expressed by the court in the recent Bertelsmann merger case as a starting point, this pedagogical article explains the confusion arising from the fact that the evidentiary burden on the plaintiff is to show that it is at least “more likely than not” that a merger “may be” substantially to lessen competition. This amounts to a standard that requires establishing a sufficient probability of exceeding another specific probability, that is, a probability of a probability. Analysis of the legislative history of Section 7, merger case law and the record of recent merger enforcement suggest that false negatives (including under-deterrence) should be seen as raising greater competitive concerns than false positives (including over-deterrence). This analysis thus suggests that the Section 7 “reasonable probability” standard (along with variants such as “appreciable danger” and “reasonable likelihood”) should not require the plaintiff to provide sufficient evidence to satisfy a more-likely-than-not probability standard. The plaintiff should have a lower evidentiary bar, one that is limited to showing by a preponderance of the evidence that the merger “may be” likely to substantially lessen competition. Similarly, the standard of proof for potential entry mergers of “noticeably more than fifty percent” applied by the court in the FTC’s Meta/Within merger case makes no economic sense.
May 10, 2023 | Permalink | Comments (0)
Tuesday, May 9, 2023
An Antitrust Exemption for Workers: And Why Worker Bargaining Power Benefits Consumers, Too
An Antitrust Exemption for Workers: And Why Worker Bargaining Power Benefits Consumers, Too
Abstract
Based on economic analysis that indicates the moderate worker bargaining power when negotiating with employers leads to increases in downstream output and lower prices as well as increases in wages and employment, we propose legislation that establishes an antitrust exemption to permit the formation of voluntary worker associations that enable workers to engage in joint negotiation (i.e., collective bargaining) with employer firms that are likely to have “monopsony bargaining power,” that is, either “classical” monopsony power or a dominant degree of bargaining power. Members of the associations, which we call “joint negotiating entities” or “JNEs”, could include both those workers deemed to be “employees” under employment law and, in some situations, those regarded as independent contractors. For the purposes of the antitrust laws, each JNE would be treated as a single entity that is owned by its worker-members and generally subject to the same antitrust treatment as other single entities. The JNEs would be easier to form than unions, but JNEs would have fewer rights and less power than traditional unions and would thus be unlikely to become monopoly sellers of labor. While the proposed antitrust exemption and related worker protections would be limited, they nonetheless could lead to benefits for both workers and downstream consumers, whose interests would not conflict.
May 9, 2023 | Permalink | Comments (0)
Monday, May 8, 2023
Testing Political Antitrust
Testing Political Antitrust
Abstract
Observers fear that large corporations have amassed too much political power. The central fact that animates this concern is growing economic concentration—the rise in the market share of a small number of top firms. These firms are thought to use their enhanced economic power to capture the government and undermine democracy by lobbying. Many scholars and activists have urged the use of antitrust law to combat this threat, leading a “political antitrust” movement that advocates explicit incorporation of political considerations into antitrust enforcement. Political antitrust has sparked great debate not only in academic circles but also among policymakers.
But the debate has been largely data-free; there is little systematic evidence on whether increased economic concentration leads to democratic harms in established democracies. In this Article, we fill that gap, bringing systematic data analysis to bear on the issue for the first time. We make three contributions. First, we create a comprehensive dataset on lobbying of the U.S. federal government, capturing nearly one million records over the past two decades. Second, we use our dataset to map lobbying patterns, focusing on the connection between economics and politics. Third, we empirically test some postulates of political antitrust.
Our findings do not support the political antitrust movement’s central hypothesis that there is an association between economic concentration and the concentration of lobbying power. We do not find a strong relationship between economic concentration and the concentration of lobbying expenditure at the industry level. Nor do we find a significant difference between top firms’ and other firms’ allocation of additional revenues to lobbying. And we find no evidence that increasing economic concentration has appreciably restricted the ability of smaller players to seek political influence through lobbying. Ultimately, our findings show that the political antitrust movement’s claims do not rest on a solid empirical foundation in the lobbying context. Our findings do not allay all concerns about transformation of economic power into political power, but they show that such transformation is not straightforward, and they counsel caution about reshaping antitrust law in the name of protecting democracy.
May 8, 2023 | Permalink | Comments (0)