Competition Corner by Alden Abbott - Guided Out of Line
It’s the end of July, and US antitrust enforcers are fixated on the past. I don’t mean July 14, 1789, although that French revolutionary moment may be an inspiration to neo-Brandeisians. I mean the 1960s- the Beatles, bell bottoms, flower power, Brown Shoe (1962) and Philadelphia National Bank (1963). Yes, the FTC-DOJ Draft Merger Guidelines were finally released, on July 19, and they have a distinct “oldie but baddy” quality. Perhaps, like Meursault, the relentless July sun drove the Guidelines’ authors to “murder” sound reasoning found in earlier guidelines and modern court decisions. The Guidelines are currently amidst a sixty-day comment period. However, I suspect that “the cake is baked” and though the frosting might be tinkered with, it’s unlikely that substantial changes will be made.
Before focusing on the Guidelines, I am pleased to highlight a positive development. I was honored to be selected as one of the Commissioners on the new UK Growth Commission, formed at the suggestion of former UK Prime Minister Liz Truss. I attended the July 12 formal Commission launch in London. The Commission will study macroeconomic and microeconomic factors that have dramatically slowed the growth of per capita GDP in major developed countries. The micro analysis, spearheaded by Commission Co-Chairman Shanker Singham (a longtime coauthor and friend of mine), will center on constraints to growth arising out of overregulation and competitive distortions. This newsletter will keep you apprised of future Commission-related developments.
The Merger Guidelines
Now, back to the Guidelines. They are terrible. They ignore modern antitrust economics; rely primarily on old cases whose shelf date is long past (and mischaracterize a number of holdings to boot); reject efficiencies; and ignore the major differences between vertical and horizontal mergers.
The Guidelines are unlikely to have any significant traction in federal court, but they may dissuade some firms from proposing economically sound deals that would have enhanced consumer welfare. Indeed, “scaring away” as many deals as possible, efficient or not, may be the real point for our philosophically anti-merger FTC and DOJ enforcers. That goal, however, would be in tension with the rule of law, and indeed with the 2010 Merger Guidelines statement that “[a] primary goal of . . . [merger] guidelines is to help the agencies identify and challenge competitively harmful mergers while avoiding unnecessary interference with mergers that either are competitively beneficial or likely will have no competitive impact on the marketplace. (Emphasis added.)
A lot of ink has already been spilled on the draft guidelines. Much of it first class. I heartily recommend (of course) my summary analysis of the draft Guidelines at Truth on the Market (“The New Merger Guideline Commandments: Thirteen is an Unlucky Number”).
My Truth on the Market colleagues have also wasted no time posting a variety of fine commentaries explicating the Guidelines’ deficiencies, linked to Dan Gilman’s latest clever essay on the FTC (see here). Brian Albrecht has also written a brilliant economic critique of the Guidelines. Read these pieces and gnash your teeth.
On a somewhat more hopeful note, at IPWatchdog I praised proposed IP reform legislation aimed at doing away with unwarranted constraints on patent eligibility, while pointing out one aspect of the legislation that should be fixed (“Patent Eligibility Restoration Act: A Good Though Imperfect Reform Measure”).
My Mercatus colleague Satya Marar has also been busy at Truth on the Market, posting a thoughtful analysis that briefly reviews the FTC’s “war on efficiency,” embodied in its recent merger losses, its talk about reviving Robinson-Patman Act enforcement, and its potential challenge to efficient vertical integration by Amazon. (“Note to the FTC: Punishing Efficiency Means Destroying Competition”).
Speaking of Amazon, I explained in a short Truth on the Market post why the FTC, if it sues Amazon for monopolization, should not call for the divestiture of Amazon’s logistics service, should the Commission. (“The FTC Shouldn’t Try to Make Amazon Divest Its Logistics Service”).
That’s it for now. But rest assured, Satya Marar and I are busy seeking out new issues to tackle in antitrust land. Artificial intelligence and banking will be among the topics we analyze. In the meantime, if you are looking for a general primer on artificial intelligence that’s chock full of good insights, then I heartily recommend “Artificial Intelligence: An Introduction for Policymakers,” by my Mercatus colleague and AI expert, Matt Mittelsteadt.