Thursday, May 31, 2018
See here for the speech.
In all markets, and especially in innovative markets, we must wield the antitrust laws with thought and care, guided by economics. In a platform market characterized by network effects, for example, competition enforcers may need to take a close look to see whether competition is suffering or competitors are losing out as a result of misdeeds by an incumbent. But especially in fast-moving innovative markets, an incumbent’s monopoly may be fragile, and prone to being toppled by new entrants offering something better and more exciting.
As enforcers, we are careful not to treat consumer welfare as merely a static measure of effects. Instead, it is necessary to analyze both the immediate and future effects that a practice might create. This dynamic approach is consistent with the basic insight of economics that individuals may be willing to trade off an immediate gain for a long run benefit.
Our evidence-based approach requires enforcement to be built on credible evidence that a practice harms competition and consumers, or in the case of merger enforcement, that it creates an unacceptable risk of doing so. Importantly, an evidence-based approach also means being open to persuasion to theories grounded in well-accepted economic principles and evidence that may show harm to competition and consumers. Where such evidence exists, it is the duty of enforcers promptly and vigorously to prosecute the antitrust laws.
I am concerned, however, of any perceptions by the public that antitrust actions are used or, more appropriately termed, “misused,” in an effort to protect a so-called “domestic champion.” If this did occur, these actions not only would harm valid business activities, but also domestic consumers. In international trade discussions, we have long recognized that regulatory protectionism may be a common form of non-tariff barrier that goes counter to efficiency-enhancing free and fair trade. Some economists have observed that existing trade commitments can “tempt political officials to employ regulatory protectionism due to constraints on their ability to use other preferred protectionist instruments.” Such potential regulatory protectionism would wrongly aim to protect local competitors, often at the cost of local consumers.
Discrimination through regulatory protectionism in competition enforcement may be de jure. That is, the preference is on its face discriminatory. It may also be de facto. That is, as applied it has a discriminatory impact on foreign competitors. In the antitrust context, I don’t believe there is any de jure discrimination. I am more concerned, however, about any perception of de facto discrimination, in which competition authorities employ standards that have the practical result of advantaging domestic over foreign competitors.
I don’t want to suggest that any has occurred yet, but we must be vigilant to prevent even its temptations. To avoid the risk that antitrust laws are enforced in an improper manner, each antitrust enforcement agency should redouble its commitment to the core purpose of competition law: that antitrust law favors competition regardless of whether the source of that competition is foreign or domestic. The international network of competition agencies has had significant success in fostering this approach, but we must remain focused on continued progress, especially with new, inexperienced agencies.