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Author: Murat C. Mungan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
A reform movement is underway in antitrust. Citing prior enforcement failures, deviations from the original intent of the antitrust laws, and overall rising levels of sector concentration, some are seeking to fundamentally alter or altogether replace the current consumer welfare standard, which has guided courts over the past 50 years. This policy push has sparked an intense debate on the best approach to antitrust law enforcement. In this Article, we examine a previously unexplored potential social cost from moving away from the consumer welfare standard: a loss in the information value to the public from a finding of liability. A virtue of the current standard is the knowledge that firms who violate the antitrust laws have harmed consumers. This simple reality is a direct, easy-to-interpret signal to market participants and investors. In contrast, a broader and more nebulous standard, such as a “public interest” approach--which has been proposed by some academics and agency officials--could conceivably water down the information value of a finding of liability. In essence, the greater license that regulators and courts have to condemn a business practice beyond a finding of harm to consumers, then the noisier the signal to the public about what the verdict actually means. We can call this phenomenon “the stigma dilution effect.” To that end, we develop a formal model to gain insight into the role of reputation in the enforcement and deterrence effects of antitrust laws. The model reveals broadening the welfare standard is likely to weaken the reputational impact of antitrust violations. This dilution can, in turn, have implications which go against what the proponents of abolishing the consumer welfare standard desire. Namely, a new standard could increase, rather than decrease, the frequency of conduct they seek to deter. Thus, our analysis suggests that there may be important and underappreciated costs associated with departures from the consumer welfare standard. In fact, the presence of reputational considerations suggests that these departures can produce effects contrary to the stated goals of their proponents.
Author: Murat C. Mungan
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
A reform movement is underway in antitrust. Citing prior enforcement failures, deviations from the original intent of the antitrust laws, and overall rising levels of sector concentration, some are seeking to fundamentally alter or altogether replace the current consumer welfare standard, which has guided courts over the past 50 years. This policy push has sparked an intense debate on the best approach to antitrust law enforcement. In this Article, we examine a previously unexplored potential social cost from moving away from the consumer welfare standard: a loss in the information value to the public from a finding of liability. A virtue of the current standard is the knowledge that firms who violate the antitrust laws have harmed consumers. This simple reality is a direct, easy-to-interpret signal to market participants and investors. In contrast, a broader and more nebulous standard, such as a “public interest” approach--which has been proposed by some academics and agency officials--could conceivably water down the information value of a finding of liability. In essence, the greater license that regulators and courts have to condemn a business practice beyond a finding of harm to consumers, then the noisier the signal to the public about what the verdict actually means. We can call this phenomenon “the stigma dilution effect.” To that end, we develop a formal model to gain insight into the role of reputation in the enforcement and deterrence effects of antitrust laws. The model reveals broadening the welfare standard is likely to weaken the reputational impact of antitrust violations. This dilution can, in turn, have implications which go against what the proponents of abolishing the consumer welfare standard desire. Namely, a new standard could increase, rather than decrease, the frequency of conduct they seek to deter. Thus, our analysis suggests that there may be important and underappreciated costs associated with departures from the consumer welfare standard. In fact, the presence of reputational considerations suggests that these departures can produce effects contrary to the stated goals of their proponents.
Author: Elyse Dorsey
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Part I of this Chapter examines the history of antitrust law to contextualize the current debate regarding the consumer welfare standard. It addresses the numerous legislative history arguments and examines the courts' experience enforcing the antitrust laws over the last 130 years, tracing the reasoning behind antitrust law's developments and its adoption of the consumer welfare standard. Part II describes what the consumer welfare standard is and how it operates today, demonstrating its robustness and articulating its many benefits--to the courts, to enforcers, to firms, and to the public at large. Part III turns to the current debate, analyzing the validity and identifying the shortcomings of the arguments neo-Brandeisians proffer in support of abandoning the consumer welfare standard. Part IV concludes.This Chapter does not necessarily reflect the views of the Department of Justice. I would like to thank Judge Douglas H. Ginsburg and Josh Wright for valuable comments and discussion.
Author: Fabrizio Esposito
Publisher: Edward Elgar Publishing
ISBN: 180037965X
Category : Law
Languages : en
Pages : 231
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Book Description
The Consumer Welfare Hypothesis in Law and Economics is a compelling account of market relations with firm roots in economic theory and legal practice. This incisive book challenges the mainstream view that allocative efficiency is about total welfare maximisation. Instead, it argues for the consumer welfare hypothesis, in which allocating resources efficiently means maximising consumer welfare, and demonstrates that legal structures such as antitrust and consumer law are in reality designed and practised with this goal in mind.
Author: Tim Wu
Publisher:
ISBN:
Category :
Languages : en
Pages : 12
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Book Description
The consumer welfare standard in antitrust has been heavily criticized. But would, in fact, abandoning the “consumer welfare” standard make the antitrust law too unworkable and indeterminate? I argue that there is such a thing as a post-consumer welfare antitrust that is practicable and arguably as predictable as the consumer welfare standard. In practice, the consumer welfare standard has not set a high bar. The leading alternative standard, the “protection of competition” is at least as predictable, and arguably more determinate than the exceeding abstract abstract consumer welfare test, while being much truer the legislative intent underlying the antitrust laws. More concretely, we should return to asking, in most antitrust cases, the following question: Given a suspect conduct (or merger): Is this merely part of the competitive process, or is it meant to “suppress or even destroy competition?” This standard actually already forms a part of antitrust doctrine. What changes is eliminating “consumer welfare” as a final or necessary consideration in every case.
Author: Dirk Auer
Publisher:
ISBN:
Category :
Languages : en
Pages : 26
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Book Description
Since the original Pitofsky hearings, much has fundamentally changed in the way the firms do businesses. Yet, despite these rapid and fundamental shifts in technology and behavior, we still face many of the same policy challenges as existed twenty years ago (and more). Innovation always yields both costs and benefits, meaning that some firms will face adverse effects as the environment in which they developed their business changes. Unfortunately, some antitrust observers use this reality as an opportunity to advocate for problematic changes in the underlying law.These comments argue in favor or maintaining and strengthening the existing consumer welfare standard. It is a standard rooted in testable, empirical realities, and is designed to lead to reproducible outcomes that redound to the benefit of consumers. We argue that, to date, no better alternative has been proposed, and that enforcement agencies should tread lightly when considering alterations that would undermine the solid foundations of antitrust law. The unfortunate outcome of many calls to reform would be to return antitrust law to an era of politicized enforcement, lower consumer welfare, and greater uncertainty for firms operating in the economy.
Author: Elyse Dorsey
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
Hipster Antitrust calls for the outright rejection of the consumer welfare standard as the lodestar of antitrust law in favor of a vague “public interest” test that requires courts and agencies to consider a variety of social and political goals. It also advocates for focusing antitrust primarily upon simplistic and, in some cases, long-rejected, proxies of market performance such as market structure and firm size rather than on assessing actual anticompetitive effects. In short, Hipster Antitrust seeks to dismantle the well-defined, objective, and economics-based approach to antitrust developed through case law for decades, to eliminate the rule of law associated with that approach, and to send antitrust jurisprudence careening back to its Stone Age. It does so while attacking corporate America generally and with rhetorical flourish that nostalgically yearns for a return to the trustbusting days of antitrust's infancy. A primary theme of Hipster Antitrust is concern with regulatory capture and oversized corporate influence on regulation and market outcomes. We share those concerns. Yet, ironically, by expanding antitrust enforcers' discretion dramatically and removing institutional safeguards ensuring accountability, Hipster Antitrust would usher in a new era of rent-seeking by corporations hoping to misuse the antitrust laws to gain advantages over competitors. In doing so, Hipster Antitrust regrettably ignores the important lessons of public choice theory and trades the current antitrust regime, which promotes consumer welfare, for one that invariably benefits businesses and maximizes corporate welfare.
Author: Russell Pittman
Publisher: BiblioGov
ISBN: 9781289008505
Category :
Languages : en
Pages : 22
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Book Description
In antitrust enforcement as in cost-benefit analysis, neoclassical economics may be interpreted as arguing for the use of a "total welfare" standard whose implementation treats transfers as welfare-neutral. Several recent papers call for antitrust agencies to move in the direction of this version of a total welfare standard for enforcement. However, as Williamson (1968) noted, horizontal mergers typically result in transfers that may greatly exceed in magnitude any deadweight loss or efficiency gain, so that a decision to ignore transfers may be quite important. I argue that such transfers are likely overall to be quite regressive, and thus that a consumer surplus standard rather than a total welfare standard may be appropriate for antitrust. Two common arguments against this standard a " that most mergers are in markets for intermediate goods, and that a consumer welfare standard implies a tolerance for monopsony a " are examined and found wanting. I argue in addition that, even if a total welfare standard is used, both the finance literature on merger outcomes and the structure of the U.S. enforcement agencies suggest that the use of a consumer surplus standard by the agencies is more likely to achieve that goal.
Author: Robert Bork
Publisher:
ISBN: 9781736089712
Category :
Languages : en
Pages : 536
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Book Description
The most important book on antitrust ever written. It shows how antitrust suits adversely affect the consumer by encouraging a costly form of protection for inefficient and uncompetitive small businesses.
Author: Steven C. Salop
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This short article, which was submitted to the Antitrust Modernization Commission, explains why the consumer welfare standard is used by courts and is more appropriate for evaluating antitrust issues.
Author: Richard Bunworth
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
The modern consumer welfare standard in competition law is based on encouraging the most efficient market ordering in pursuit of lower prices for consumers. The prominence of efficiency and its success as a metric in competition law is based on the perception of it being an objective yardstick. Further, its relative simplicity has resulted in it being favoured over a more complex standard that would include broader considerations.However, despite its prominence, the consumer welfare standard has faced increased criticism, particularly as a result of rapidly concentrating markets and the inability of competition law to address this. In particular, critics have pointed to the perceived fixation on price within the standard, to the exclusion of other factors deemed important by consumers when making purchasing decisions.This paper seeks to set out an alternative standard to be applied in competition law. It attempts to extract the common values of citizens across the EU from the Treaties in order to establish those factors which the Commission should be obliged to take into account when considering competition law matters. This has led the author to develop the socially conscious consumer standard, as described in the paper. Further, there is a brief exploration of the evidence that would be required under the new standard in order to demonstrate its potential operability in practice.
