Gettin' Busy!: Competition Corner by Alden Abbott
Issue #24
Greetings, everyone. As the Mercatus Center welcomes a New Year, we at the Competition Corner have remained very busy.
Greg Werden and Alden Abbott: A Podcast Conversation on Antitrust
On January 30, the Mercatus Center posted my recent podcast conversation[AA1] with Mercatus Visiting Scholar Dr. Gregory Werden, the outstanding former DOJ economist who helped prepare numerous enforcement guidelines and over a hundred briefs filed in the appellate courts or the Supreme Court. Greg and I discussed the relative merits of two alternative antitrust enforcement standards, the consumer welfare standard and the protection of the competitive process standard.
Chatham House Conference on FTC Reform
On the events front, Mercatus hosted a Chatham House Rules one-day conference on FTC policy on Janaury 18th. The participants included top notch former antitrust agency officials, plus leading antitrust practitioners and scholars. We are studying the transcript of the proceedings, which included fascinating exchanges on the merits of merger guidelines, unfair methods of competition, FTC regulations, and possible FTC reforms. We hope to prepare and release a paper assessing what we learned from the conference – stay tuned! Given the nature of Chatham House rules, the identities of participants will not be revealed.
FTC and DOJ Antitrust Enforcement: 2023 Year in Review
On January 17 Mercatus released Antitrust Enforcement in 2023: Year in Review for the Federal Trade Commission and the Department of Justice, coauthored by Satya Marar and I. We concluded:
The FTC and DOJ continued to advance an extremely aggressive approach to antitrust enforcement and (in the case of the FTC) regulation during 2023. Nevertheless, their unimpressive enforcement record failed to match their rhetoric. The outlook for clear-cut agency litigation victories in 2024 appears to be poor. The longer-term impact of Biden administration antitrust policy may turn on the results of the 2024 election.
Quantum Antitrust: The New Merger Guidelines and Schrödinger’s Cat
In a January 25 Mercatus Center policy brief, Greg Werden explains why the problematic new DOJ-FTC Merger Guidelines resemble Schrödinger's Cat of quantum physics lore:
The heads of the federal antitrust enforcement Agencies most likely believe that the new MGs “faithfully track the statutory text, legislative history, and established case law around merger enforcement.” But the new MGs abandon the most fundamental principle of merger antitrust law—the reasonable probability standard, which flows directly from the statutory text and was clearly articulated in the legislative history and established case law. Rather than identify what is most likely to happen, the federal antitrust enforcement Agencies treat a proposed merger like Schrödinger’s cat—at the same time both substantially lessening competition and not substantially lessening competition.
The Final Merger Guidelines: Pig on a Lipstick that Still Oinks
I posted my equally unenthusiastic review of the final Merger Guidelines at Truth on the Market on January 10, in which I conclude:
The courts should . . . recognize that the 2023 Guidelines are, in essence, little more than an extended discussion of theories of anticompetitive behavior that provide no true guidance as to what mergers will not be challenged. As such, the guidelines do not guide, they pontificate. They should be withdrawn as soon as possible.
Another Bureaucratic Blow to Beneficial High Tech Merger Acquisitions: Amazon-iRobot Acquisition Falls
On January 29 the trade press announced that Amazon and iRobot to drop their deal by which Amazon would acquire the robotics manufacturer. This decision followed in the wake of reports that the European Commission planned to challenge the merger – an economically harmful anti-innovation decision, as I explained in a January 22 Truth on the Market commentary:
Amazon’s acquisition of iRobot would likely promote efficiencies, raise welfare, and enhance competition. There is no sound justification for preventing this merger. Attempting to do so would not only harmfully undermine innovation in a highly competitive market, but would have broader ramifications, as well. It would dissuade large companies from contemplating welfare-creating complementary acquisitions, to the detriment of innovative welfare enhancement in a large number of markets. It would, once again, single out without justification a highly successful American digital platform, which, with its fellow U.S. platforms, has generated enormous welfare gains for consumers (see here).
The Chinese government and its large firms (which, by the way, are not listed DMA gatekeepers) must be laughing at the wounds the “sophisticated” Western world competition authorities continue unnecessarily to inflict on Western (and, in particular, American) technological giants—wounds that harm consumers and the Western economies.
FTC v. Illumina-Grail: The Sad Ending to a Misbegotten FTC Merger Crusade
Illumina decided on December 7 to divest itself of its recently reacquired Grail cancer blood-testing subsidiary. The abandonment of this merger was a sad end to a seriously harmful FTC merger challenge, as I explained in a January 16 Truth on the Market commentary (hyperlinks deleted):
As law & economics experts have pointed out (see, for example, here and here), the FTC’s Illumina/Grail case has been a travesty from start to finish, focusing on possible theoretical harms in future markets while ignoring real harm in existing markets. It may even cost future lives (see here). Let us hope that this supposed FTC “win” is not misinterpreted as a victory for sound merger-enforcement policy. It should properly be viewed as a misguided welfare-inimical antitrust crusade of the sort that should be avoided.
IP Reform Dreams for 2024
Finally, on January 1 I posted at IPWatchDog my “wildest dreams” for market-oriented intellectual property law reforms in 2024. Go here to see what they are.
Closing Thoughts
I hope to see all of you (and the many friends and colleagues to whom you will refer my blog) next month. Until then, as Bugs Bunny used to say, “that’s all, folks!”