Unlocking Antitrust: 3 Reasons Why Simplicity is Antitrust’s Greatest Strength

In recent years, politicians and activists have called to both change the antitrust laws and increase enforcement. The push is intended to attack the largest companies in every industry, simply because they are large, and impose specialized regulatory-like burdens through antitrust enforcement.

Some of these changes however would upend antitrust’s simple yet effective approach only to serve to undermine its importance. Here are the three reasons why the simplicity of existing antitrust laws are also the laws' greatest strength:

1. Antitrust laws have near universal application

Antitrust laws apply to all actors in the market regardless of size or sector, only in a handful of instances has Congress written in exemptions. Efforts to move away from such universal application would result in a law that no longer asks all economic actors to compete. And efforts to consider special antitrust rules that would only apply to certain sectors or to certain sized companies would destroy the idea that our antitrust laws should have universal application to all economic actors. Finally, because the laws are universal, proposed changes must be carefully weighed as they will impact the entire economy.

2. Antitrust laws have necessary and important limits

No law or statute is open ended or designed to accomplish varied policy objectives. All laws therefore must have limits. In the case of antitrust laws, not every externality that arises in the market is for antitrust to address. For example, pollution is an externality in the market, hence we have environmental statutes to guard against it. Consumer protection against fraudulent marketing is another example of an externality that is again best addressed by laws other than antitrust.

Similarly, antitrust laws have important and necessary limits to their power as well. The law narrowly examines how conduct in the market impacts price, output, and innovation. All of these are important to the economic well-being of consumers. This is often referred to as the “consumer welfare standard” — a limited approach that focuses on consumer harm in an economic sense and prevents antitrust from drifting into a larger role that is left to regulation.

Today, consumers are empowered to make decisions that shape the market, whereas regulations shape the market based on government-directed outcomes. Unfortunately, plans to void this well-reasoned limiting principle would turn the law into a morass of complaints from competitors alleging unfairness divorced from genuine harm to consumers. Asking enforcers or courts to enforce such an open-ended standard would lead to highly subjective enforcement infused with political bias.

3. Antitrust laws invites all arguments

When it comes to conduct in the market, no conduct is safe from potential antitrust scrutiny. While antitrust cases brought by federal antitrust agencies get the most attention, the overwhelming majority of cases are brought as private legal actions. Anyone has the legal authority to bring forth an antitrust complaint and argue that the law is being violated. No one need wait for the federal agencies to act.

Further, antitrust law doesn’t hold a bias against any claim. Business decisions that impact price in the market, terms embedded in contracts that potentially shape market outcomes, or concerns levied over harm to innovation are all routinely made under the law.

The law welcomes all claims, allowing arguments from all sides. Complaints from competitors are levied against a defense of the conduct, and as is the case in all legal proceeding, the burden is rightfully on the accuser to provide enough evidence to support its case. After the arguments have been heard and the evidence weighed, the better argument prevails. This approach is often referred to as the “rule of reason” — a balanced approach made possible because antitrust hears all arguments, both complaints against conduct and justifications for that conduct.

However, some want to privilege complaints over justifications under the law, upending the level-playing field all arguments enjoy under the law. Upsetting this balance would complicate the law immensely, resulting in companies of all shapes and sizes, and across all sectors, to have to second guess their business decisions – thus chilling economic activity.

As this Congress winds down and a new Congress begins, it is important to ask how legislative proposals will disrupt these three simple yet effective aspects that are core tenants to our antitrust laws. We need the law to remain applicable to all economic actors, focused on consumer welfare as a limiting principle, and open to the rule of reason to hear all arguments and weigh the complaints of harm up against all pro-competitive justifications.

About the authors

Sean Heather

Sean Heather is Senior Vice President for International Regulatory Affairs and Antitrust.

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