How 'Competition Crusaders' Are Trying Undermine Free Enterprise

Sean Heather
Senior Vice President, International Regulatory Affairs & Antitrust, U.S. Chamber of Commerce

Published

February 09, 2024

Having failed to enact aggressive antitrust bills in Congress, progressives looking to grow the power of government are trying to persuade states to rewrite their antitrust laws. Every state should reject these “abuse of dominance” proposals, as they would not only raise prices for consumers but also damage state business climates and expose small businesses to a parade of frivolous lawsuits.

Healthy market competition benefits consumers through lower prices, higher quality products and services, more choices, and greater innovation. Antitrust law, in turn, relies on competitive forces to police the market for the benefit of consumers — not target specific companies or impose sweeping regulations across an industry.

The Merits of America’s Antitrust Laws

Antitrust law does not and should not allow the government to pick winners and losers in the market, dictate the number of companies that should compete in a market, or punish successful companies, large or small, for their achievements. For four decades, the federal government, all 50 states, and U.S. courts have adopted the fact-based and economically grounded consumer welfare standard as the touchstone of antitrust law across the economy.

The rejection of a “government-knows-best approach” to antitrust is what has made the U.S. economy the envy of the world. However, "competition crusaders" are trying to undermine this.

Abuse of Dominance Proposals Emerge

“Abuse of dominance” proposals would turn these hallmarks of the American free enterprise system on their head. This standard would punish firms that achieve a certain degree of success by placing upon them special burdens that limit their ability to compete merely because they have attracted too many consumers to their doorstep.

Instead of helping consumers, antitrust law would become a tool for competitors to stop trying to win over consumers and instead use litigation to achieve more favorable terms for themselves. Competition in our economy would no longer be decided on merit.

Understanding the Impact of These Proposals on Consumers and the Economy

These abuse of dominance proposals would result in higher prices for consumers and a less innovative and competitive economy. A company could easily be slapped with a label as being “dominant” and charged with doing things that are “unfair” to their competitors, all without ever identifying harm to consumers. In fact, many of these state bills explicitly refuse to allow a company to defend itself by pointing to consumer benefits.

Moreover, these proposals don’t just target large companies. They hurt small- and medium-sized businesses as they, too, can be defined as “dominant” under these laws because they are a local supplier or are the backbone employers in small towns. As one small business owner noted:

“In Maine, which is a very rural state, there are countless businesses such as ours that, practically speaking, are among the few that provide important products or services in their local communities. These examples are nearly endless and include local convenience stores, grocers, plumbers, hair stylists, insurance providers, masons, gas stations, and craft breweries," the owner said."

“Yet, if [Maine’s abuse of dominance bill] becomes law, my business and many others could be deemed to have a ‘dominant position’ in the local labor market, and therefore, we can be sued by the government or any person in the state claiming direct or indirect damages.”

Small- and medium-sized businesses would also be subjected to onerous rules and burdensome litigation from anyone — competitor, worker, or government agency — that disapproves of some aspect of that business’s operations, regardless of the impact on consumers.

Further, there is an important symbiotic relationship between larger and smaller businesses that is a result of businesses of varying sizes working together. For example, by restricting integrated services, many antitrust proposals would raise costs for small businesses and potentially limit their sales. Surveys found that nine of ten small businesses oppose antitrust legislation because such bills could harm their ability to interact with their customers.

The Outlook for These Proposals

Abuse of dominance proposals will also damage a state’s overall business climate. To date, no state has adopted an abuse of dominance bill or broken from the general consumer-focused principles enshrined in federal antitrust law. Any state would immediately become a national outlier by adopting such a proposal, to the detriment of the state’s economy.

A state’s legal and regulatory climate influences a company’s investment and location decisions. If a state exposes companies to novel, undefined, but potentially costly antitrust risks, it could scare away businesses that might want to invest in startups and new businesses.

Existing antitrust laws allow the state to combat practices that harm consumers and reduce competition, such as price fixing, collusion, and merger to monopoly. If legislators have a particular concern, they should consider narrow legislation to address that specific issue, not rewrite decades of antitrust law and practice.

The United States has the most dynamic economy in the world, partly because our antitrust laws encourage vigorous competition. With high prices, economic uncertainty, and intense international competition, now is assuredly not the time for undue political interference from states that would reverse decades of antitrust law and economic policy, and jeopardize American free enterprise.