Big business is not a bad business
For over 100 years, federal antitrust laws have been guided by the standard of consumer welfare. This doctrine, which was first established under the Sherman Antitrust Act in 1890 and reiterated in the Clayton Act in 1914, has encouraged competition and innovation, both of which benefit consumers.
But over the past decade, some members of Congress have attempted to steer antitrust law enforcement in a new direction by attacking companies based on their size rather than how their products and services benefit consumers. Big Tech companies like Amazon, Facebook and Google have been the main targets, but if the consumer welfare standard is dropped for them, no business in the country would be immune to interference and harm. government enforcement.
Antitrust proposals being considered in the House and Senate include ideas that were included in an October 2020 report by the House Judiciary Committee subcommittee on Majority Personnel in Antitrust, Commercial and Administrative Law. At the time, a Citizens Against Government Waste blog, “House Judiciary Committee Antitrust Report Is Anti-Competitive,” stated that “the partisan and ill-informed 449-page treaty, which was a total waste of taxpayer money , has been deleted. on various digital platforms, many of which compete directly with each other. It completely undermines the history and purpose of antitrust laws, which are primarily aimed at protecting consumers. These laws should not be abused to achieve a political goal. While the authors claim to promote the “public good,” if the report’s recommendations were enacted, it would harm the many digital platforms Americans use today and eliminate the opportunity for new companies to enter the market.
The report led to the introduction of four bills in the 117th Congress: HR 3816, the American Choice and Innovation Online Act; HR 3825, The End of Platform Monopolies Act; HR 3826, the Competition and Platform Opportunities Act; and HR 3849, the Act on Increasing Compatibility and Competition by Enabling the Switching of Services (ACCESS). All four bills were ordered and reported by the House Judiciary Committee on June 23, 2021.
HR 3816 would ban 13 forms of “discriminatory conduct,” such as “self-preferences” for the platforms ‘own products over other companies and interfering with the pricing of other companies’ goods and services. An August 13, 2021 Congressional Research Service report on the Big Tech Antitrust bills notes that the authors of the legislation admit the restrictions would only apply to Facebook, Google, Amazon, and Apple.
HR 3825 would give unelected bureaucrats the power to determine conflicts of interest for platforms with more than 50 million users and a market capitalization of $ 600 million and would force companies to pay hefty civil penalties for failing to not have sold these “conflicts of interest” within two years of the passage of the bill. This forced sale abandons the consumer welfare standard and gives the government the unchecked power to dismantle some of the country’s most successful and innovative businesses. If HR 3825 and the other proposed antitrust laws were enacted, the United States would lose its place as a global technology leader and American consumers would lose in future innovation and investment. HR 3826, would require large tech companies to prove that any merger or acquisition over $ 50 million is not contributing or maintaining their dominant market share. HR 3826 abandons the consumer welfare standard and essentially assumes that big tech companies are guilty until proven innocent.
HR 3849 discusses “network effects” and “costs of change” that proponents say give large tech companies tenure benefits and create entry barriers for small businesses.
On November 5, 2021, Sens. Amy Klobuchar (D-Minn.) And Tom Cotton (R-Ark.) Presented their own version of the Platform Competition and Opportunity Act.
Congress is not the only place where the standard of consumer welfare is threatened. As ACGW Vice President for Policy and Government Affairs Deborah Collier noted in a July 9, 2021 blog post, “Federal agencies, state legislators and state attorneys general undermine and actively reverse the consumer welfare standard of the antitrust law. Legislation, regulations and lawsuits are on the rise to address what they perceive to be loopholes in the law that have allowed companies to grow “too big”. standard, the reversed course in a party line vote and without any input from the public dismantled that standard by repealing the 2015 Biparty Statement of Application Principles Regarding “Unfair Competition Methods” under Section 5 of the FTC law.
While some lawmakers argue that big business is bad business and that current antitrust enforcement has been ineffective and even unsuccessful, a complete overhaul of the antitrust landscape will have disastrous effects on the economy. As Alden F. Abbott of the Mercatus Center wrote, “The New Brandish proposals are based on mistaken premises about the state of competition in the US economy. In addition, these proposals, if adopted, would tend to harm rather than benefit the economy and create new uncertainty in the application of antitrust laws. … Maintaining the consensual approach to consumer welfare seems much preferable, from a legal and economic point of view, to a radical change in antitrust laws. “
The consumer welfare standard has served the economy well and helped maintain the United States as the world’s largest economy. Keeping government out of the economy and maintaining free markets while retaining the current method of antitrust enforcement will continue to increase competition and innovation in all sectors of the economy. Unfortunately, it appears that progressive and anti-capitalist members of Congress, as well as new commissioners in various federal agencies, are trying to reverse this progress, which will be detrimental rather than beneficial to consumers.