Competition Corner by Alden Abbott - What's Old Is New Again

Issue #17

In an absolutely unsurprising turn of events, bureaucratic state agencies and populist politicians continue to lay into long-held foundations of antitrust and economic competition with blunt force both here and overseas. Whether it’s through maintaining price controls in the UK, dictating royalty rates for patent holders in the European Union, or shoring up inefficient competitors at the expense of consumers and violating the freedom to contract here in the United States. Needless to say, we’ve got something to say about these developments and what they mean for you here at the Mercatus Center.

Policy Briefs

The Robinson-Patman Act: A Statute at Odds with Competition and Economic Welfare

Satya Marar & Alden Abbott, 6 June 2023
The FTC is threatening to enforce the Robinson-Patman Act (RPA), a 1930s-era statute that was intended to shield smaller and less efficient firms from competition from bigger players who are capable of negotiating exclusive discounts. In this policy brief, my colleague Satya Marar and I analyze the history of the RPA and the implications of the FTC’s renewed push to enforce it in a range of economic sectors, including beverages, pharmaceuticals and retail. Ultimately, it’s consumers who stand to lose the most through higher prices for the same goods. For a quick summary of our conclusions, see the commentary that I authored for Truth on the Market.

Privacy Policy and the Future of the Online Economy

Tracy Miller, 30 May 2023
In this brief, my colleague Tracy Miller canvasses recent attempts by regulators and politicians to safeguard consumer privacy in the online market by restricting the amount and kinds of data that websites and apps can collect. Though generally well-intentioned, these laws could make it a lot harder for businesses to reach their customers through targeted advertising that benefits both buyers and sellers. Conversely, entrepreneurs may be able to devise creative ways to combine greater transparency and more options for consumers to enhance their privacy with little or no harm to the online ecosystem that is based on exchanging data for services.

Articles

NLRB Targeting of Noncompetes Lacks a Sound Legal Foundation | Truth on the Market

Satya Marar, 14 June 2023
The National Labor Relations Bureau (NLRB) general counsel recently released a memo claiming that most non-compete clauses in labor contracts violate federal employment law, thereby signaling a crackdown on noncompetes by that agency in the wake of similar actions by the FTC. However, the memo is based on tenuous legal reasoning that is unlikely to survive an inevitable court challenge. My colleague, Satya Marar, explains.

The Unnecessary Revival of Price Controls Should Worry Us All | The Hill

Alden Abbott & Shanker Singham, 2 June 2023
Governments here and abroad have long resorted to price caps as a knee-jerk reaction to inflation and cost of living pressures, despite indisputable economic evidence that they harm consumers by creating shortages. Shanker Singham and I consider US legislators’ recent push for price caps for drugs, and argue that policymakers should instead target the root causes of inflation, including their own excessive spending and manipulation of the money supply.

Proposed European SEP Regulation Would Undermine Efficiency, Innovation and Economic Growth | IPWatchdog

Alden Abbott, 29 May 2023
Last month, my colleagues Satya Marar, Christine McDaniel and I co-authored comments to the European Commission on their proposal to give bureaucrats more power to recommend royalty rates for Standard Essential Patents (SEPs). Rather than making novel technologies more accessible, the new rules are likely to undermine innovation and incentives to innovate, while increasing costs and uncertainty around patent royalty negotiations and furthering the geopolitical and economic objectives of rival jurisdictions where property rights aren’t as well respected- including China.