Fill me in:
Antitrust laws, also known as competition laws, ensure competition in a free and open market economy, which is the foundation of any vibrant economy. Healthy competition among sellers in an open marketplace gives consumers the benefits of lower prices, higher quality products and services, more choices, and greater innovation.
In recent years, some politicians and activists have gone from calling for stricter enforcement of existing laws to favoring more radical moves to overhaul antitrust laws and their reliance on economic analysis. 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.
However, American antitrust enforcement is not intended to punish success. Antitrust supports market-based competition, allowing consumers to determine winners and losers in the market. Antitrust only steps in if a proposed merger or the conduct of a firm attempts to find short-cuts to achieving success at the expense of consumers.
Can you give me an example?
For example, a merger that causes prices to rise without any corresponding consumer benefit from increased quality or innovation is likely to raise a red flag. Similarly, a company that prohibits another firm from doing business with a competitor as a condition of doing business with them, without any consumer-oriented justification for such conduct, will likewise draw antitrust scrutiny.
Why does it matter?
Proposals to change antitrust laws—resulting in greater government oversight of business—presents a scenario where antitrust enforcers would wield massive control over our economy. It would turn antitrust into a super regulatory power that could dictate specific outcomes in each sector of the economy.
Such an approach would compromise our free enterprise system and remove incentives to compete and invest, ultimately damaging the most prosperous, innovative, and resilient economy the world has ever known.
Number to know:
THREE: Current antitrust laws stem from three main pieces of legislation: the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the Federal Trade Commission Act of 1914.
As the first piece of antitrust legislation, the Sherman Antitrust Act prohibits both formal cartels and attempts to monopolize any part of commerce in the United States.
The Clayton Antitrust Act of 1914 and the Federal Trade Commission Act of 1914 addresses specific practices that the Sherman Act does not clearly prohibit. The Clayton Antitrust Act offers additional methods of regulating businesses, including rules around mergers and price-gouging. The Federal Trade Commission Act bars “unfair methods of competition” linking to activity barred by the Sherman Antitrust Act.
These laws have been time tested and proven capable of evolving as economic understandings of market force and behavior have advanced. The result has been an antitrust system, when properly enforced by the courts, that vigilantly safeguards consumers against anti-competitive harm that arises from problematic mergers, abuse of dominance, bid rigging, price fixing, and market allocation schemes.
The Chamber supports vigorous enforcement of our antitrust laws. When properly enforced, antitrust laws uphold that which we deeply value about our free enterprise system—freedom for individuals to choose businesses, ability to success based on merit not government intervention, and consumer sovereignty. Our system of antitrust is not regulation, as it doesn’t blanket the market dictating a specific behavior for all competitors to follow. Rather, antitrust only intervenes against those firms whose actions undermine consumer benefits that can only be enjoyed once that behavior is corrected. Regulation has its place in the economy, but the role of antitrust is separate and distinct. It is important that our antitrust laws not be turned into economic regulation.
Antitrust—these days often addressed through the lens of “breaking up big tech”—is becoming a focal point in the election debate and will likely remain a focus throughout the election cycle and into the next Congress.
Later this month, CEOs from Amazon, Google, Apple, and Facebook are slated to appear together in front of the House Judiciary Committee as part of the House Antitrust Subcommittee antitrust investigation. Associated with the hearing, the committee is expected to issue a report that summarizes its investigation. The hearing and the report will likely influence the next chapter of antitrust policy by laying the groundwork to argue for change to antitrust laws.
Outside of the U.S., this issue has long garnered significant attention and scrutiny, as the European Union has, for more than a decade, targeted leading American firms under their unique and arguably flawed antitrust standard. Other jurisdictions around the world are increasingly interested in following Europe’s lead.