brown wooden smoking pipe on white surface

Who is supposed to be protected by antitrust law and policy? – Disruptive competition project

brown wooden smoking pipe on a white surface

The focus of contemporary competition policy debates goes back to first principles, asking, “What are we trying to do? What is the purpose of antitrust? Law enforcement officials and some lawmakers in the United States suggest moving away from consumers to a completely different approach that focuses on wielding power over specific companies. This shift in approach is also gaining traction in some US states, as several state attorneys general have recently sued tech companies alleging antitrust violations without considering the consumer impact of the actual conduct or proposed solution. California Attorney General (AG) Rob Bonta recently deposit a civil antitrust and unfair competition lawsuit alleging that Amazon’s pricing practices prevent retailers from offering lower prices than they offer in Amazon’s store. The Mirrors of the California Affair the costume that DC AG Karl Racine filed on behalf of the District of Columbia which also alleged that Amazon has too much control over how much outside vendors can charge for their products. However, the judgement issued by the DC Superior Court found not only that DC AG’s office could not substantiate its claims against Amazon, but that the Amazon practices in question actually benefit consumers. These recent cases raise the important question: who is antitrust supposed to protect?

Over the past four decades, law enforcement and the courts have agreed that antitrust law and policy should protect consumer welfare, favoring competition over competitors. It is important to note that the 1970s Consumer Welfare Standard was developed in response to the belief that previous US antitrust policy had become too subjective and aggressive in focusing on company size, regardless of the effect on consumers. With law enforcement and the courts adopting the consumer welfare standard, it has since served as the backbone of US and global antitrust policy, as also reflected in the International competition network (ICN) and the Organisation for Economic Co-operation and Development (OECD). Accordingly, the goal of antitrust law has been to achieve economic efficiency by providing lower prices, promoting innovation and increasing consumer benefits. Over the past few decades, the message has been clear: consumers are the ones who must be protected by antitrust efforts. This approach has led to mind-boggling levels of innovation, and it’s no coincidence that many digital and connected services have been able to provide consumers and businesses with the tremendous benefits they enjoy today.

However, recently, US antitrust authorities and even some lawmakers seem to be moving away from a consumer welfare standard and back to a “big is bad” approach that focuses on company size, instead of protecting and benefit consumers. While Senator Amy Klobuchar recently invoked David and Goliath when discussing his fight to pass antitrust legislation to regulate big tech companies, Jonathan Kanter, assistant attorney general for the Justice Department’s Antitrust Division, declared that “the era of lax enforcement is over and the new era of vigorous and effective antitrust enforcement has begun”. Unlike the Consumer Welfare Standard which provided law enforcement agencies and courts with a high level of flexibility and objectivity, the new proposals, including the concepts of fairness, labor rights and sustainability, raise a host of questions regarding their applicability, clarity and subjectivity. . And the growing number of state antitrust lawsuits shows a complete lack of focus on consumers. In fact, the California and DC cases against Amazon seem contrary to the fundamental goals of competition and consumer protection.

The California AG court case claims that Amazon imposes retail- and wholesale-level agreements that “have prevented effective price competition across a wide range of marketplaces and online stores” since “competing sites do not offer lower prices as they would in a competitive market because Amazon prohibits it in Contract.” However, these claims constitute a misunderstanding of the highly competitive retail industry and do not take into account how Amazon operates. In practice, Amazon store sellers set their own prices for the products they offer, and they are able to match them even when they offer lower prices for the same product elsewhere. When sellers set non-competitive prices, those offers are still available to Amazon store customers; however, they will not appear in Amazon’s “buy box,” which is Amazon’s way of highlighting products that are best suited to consumers. As such, Amazon provides an additional advantage and service to consumers who know that they will find competitive prices in the Amazon store and, in particular, in the “buy box”. The remedy suggested by the California AG lawsuit would force Amazon to offer higher prices to consumers. How is this a consumer-friendly idea? Who would this antitrust remedy protect? Not consumers, who would end up paying higher prices.

The same issue was raised in the DC lawsuit, that the DC AG filed in May on behalf of the District of Columbia alleging that Amazon has too much control over how much outside vendors can charge for their products. However, the judgement issued by District of Columbia Superior Court Judge Hiram Puig-Lugo determined that the DC AG office could not substantiate its claims against Amazon. The Court explained that “based on what the policy says, sellers are free to set prices in the market. . . the only limitation is that they cannot set a price significantly higher than recent prices offered on or off Amazon,” which benefits consumers.

These recent lawsuits appear to run counter to fundamental objectives of antitrust law and policy. Do we want to go back and protect competitors? Or simply prohibit the practice of certain companies without demonstrable harm to competition? Or protect other social or political objectives? And is antitrust the right vehicle to protect them? When we think about these fundamental questions, we should be guided by the United States Supreme Courtwhich stated that “the growth or development resulting from a product of superior quality [or] business acumen is not a violation of antitrust laws. Given the California and Washington lawsuits against Amazon and the recent narrative of antitrust goals shifting from a consumer welfare standard to a “big is bad” approach that focuses on policing particular companies instead of protecting consumers, the question remains: who is antitrust supposed to protect?

#supposed #protected #antitrust #law #policy #Disruptive #competition #project

Leave a Comment

Your email address will not be published. Required fields are marked *