Washington, DC

6th Bill Kovacic Antitrust Salon: Where is Antitrust Policy Going?

Annual Concurrences & George Washington University conference, with the support of Axinn, CRA, Compass Lexecon, Cornerstone Research, Orrick, Qualcomm, White & Case and MLex.

Opening Keynote Speech: William Kovacic

William Kovacic opened his remarks by pointing out that universities, like George Washington University, provide the natural place to foster discussion and new ideas in antitrust. Over the last 40 years, the two predominant schools of thought have been the Chicago school, and the Harvard school, both featuring a strong focus on consumer welfare, and adoption of policies that favor less scrutiny of dominant firms. As a result, the modern antitrust world became a lot more favorable to dominant firms than it used to be. This has inspired changing the framework of the debate in the other direction.

Mr. Kovacic put the current question of where antitrust policy is going into the historical context of the last 40 years, using the example of FTC’s egalitarianism being replaced by Chicago and Harvard’s consumer welfare standard.

Kovacic explained that during his time at the FTC in the 1970s, then Chairman Michael Pertschuck outlined his competition policy, which included a strongly articulated egalitarian enforcement vision. Pertschuck noted there was a need to redefine what antitrust is about, and to develop competition policy in the “broadest sense”, which meant that no responsive competition policy can neglect the social and environmental harms produced as unwelcome byproducts of the marketplace, e.g. resource depletion, energy waste, and worker alienation. Pertschuck concluded that FTC would conduct a large scale investigation of the impact of macro concentration on our lives, and offered very broad examples of what might be unfair methods of competition, including: hiring illegal aliens, evading taxes, and placing environmentalists on boards of repeat polluters. This set of ideas sent a tremor through the entire field.

Kovacic then explained that unlike public enforcement, the leading academic schools of thought, Chicago, and Harvard, went the opposite direction. Robert Bork of the Chicago School penned manuscripts which propose leaving egalitarianism and focusing on consumer welfare. He wanted no rule at all for predatory pricing (because it had too complicated analysis, and questionable standards and conclusions). His view of public enforcement was dismal; he thought public agencies increased their influence without increasing public benefit, and that they made companies put out fires without a clear direction forward. Similarly, the Harvard School thought that competition law should leave egalitarianism, and focus on fundamentally economic orientation. Main members include Philip Areeda, architect of the school and author of famous work «Antitrust Law»; Donald Turner, and Carl Kaysen. Their influence is undeniable – Supreme Court Justice Stephen Breyer, majority author in Trinko, and Twombly cites all three authors in the decisions. Areeda thought law should exhibit «administrability» (his invented word), which was the idea that rules have to be subject to effective implementation. He considered the egalitarian goal of «fairness» a vague claim. Together, the Chicago and Harvard Schools thought that antitrust enforcement over-deters companies – from the national style of property rights to the prospect of treble damages – so they proposed solutions – like tougher screens for damage claims, and more demanding liability standards – that would make antitrust friendlier towards large companies. They essentially formed a coalition to change antitrust enforcement. Bork took the center and center-right. Areeda took the center and centerleft. With any major political change, they could shift antitrust enforcement towards this new ideological direction.

In the end, Kovacic concludes, that’s exactly what happened. The 1970s ended with a massive Congressional backlash, and multiple funding lapses to FTC. On top of that, politicians started making promises contrary to FTC mission in exchange for votes, e.g. that if they are elected, they would make sure the FTC does not break up Kellogg, which was a concern at the time. By the end of 1980s, Michael Pertschuk’s vision was no longer FTC’s agenda. And the Chicago and Harvard Schools have defined antitrust enforcement ever since.

Kovacic finished by positing that in order to restructure antitrust now, new proposals will need to deal with this strong tradition. The proposals will need to take on Areeda and Turner’s “administrability” argument if they want to take along those enforcers shaped by Areeda and Turner’s works. They will still need a different approach for those shaped by Bork. And finally, they will need to match commitments with capability. Who will do it? At what cost? Over which timeline? How will it end? Only then will the new proposals be able to make antitrust policy go in a new direction.

Panel 1: "Populist" antitrust: A Deviant Mutation or an Overdue Correction?

John BRIGGS (Partner, Axinn) moderated the first panel. He started by pointing out how it seems reasonably clear that we could be at an inflection point in antitrust. For the past few decades, the field has been increasingly technocratic, the consumer welfare standard has been seen as “the gold standard,” and even though antitrust has deep roots in concerns about concentration, monopoly and monopsony, concentration in many industries, and apparent monopoly and monopsony, have been increasing. Today, there are many voices asking for antitrust to address topics such as monopsony in labor markets, increased concentration and market power, individual and regional wealth inequality and other economic conditions. In recent New York Times articles, both members of the Federal Reserve Board and the European Central Bank expressed concern about the impact of corporate size and market concentration on wage growth and inflation. Recently, there have been many ideas developing beyond classic antitrust. John BRIGGS offered a personal story from 25 years ago when, along with the then Assistant Attorney General in charge of Antitrust, he was discussing the Justice Department’s case against Microsoft on Washington’s NPR radio station. It was a call-in show. On the radio show, the AAG and BRIGGS were asked about the pros and cons of the Department of Justice’s thenpending case against Microsoft relating to browsers and Microsoft’s decision to integrate its own browser into its operating system. They did so. The phone lines were dead. They discussed the case further. No calls. Briggs was then asked to comment on some local transactional matter of possible antitrust interest. He mentioned the CVS acquisition of the largest drug store chain in Washington, which brought about great change to his neighborhood. CVS purchased the building that housed the MacArthur Theatre, closed to the theater, and turned it into a large CVS drug store. Not only did the neighborhood lose the theater, but within a matter of a few weeks, the small familyowned pharmacy that had served the neighborhood for 60 or 70 years failed and went out of business. Suddenly, the telephone lines became overcrowded for the rest of the hourlong program. Callers wanted the Assistant Attorney General to explain what he was going to do about all manner of local disruptions, many of them having some slight connection with large national firms moving into local neighborhoods. CVS’s moves that displaced a movie theater and a small pharmacy might not look like a classic antitrust concern, but the callers thought that it was, and today such matters are again being brought to the fore as one object of the bounty of antitrust laws. BRIGGS noted this is where the panel starts the discussion, and what a better person to start it, than the man most active in this direction, Barry LYNN.

Barry LYNN (Executive Director, Open Markets Institute) opened by establishing that his presence on the panel is a testament to the antitrust community’s dedication to open debate, as he considers himself the populist on the panel. He continued by pointing out that he completely agrees with Will Kovacic on the Harvard and Chicago schools’ influences on antitrust. In this coalition though, Lynn sees all that’s wrong with antimonopoly today. He thinks that the progressives of the 1970s fell under the sway of a set of ideas that are deeply antithetical to American political tradition. In his view, the fundamental purpose of antimonopoly is to promote and protect the original goals of the American Revolution – namely, the liberty for the citizen to think and live as the citizen wishes, to participate fully in all political decisions, and to own one’s own self in all economic life. In Lynn’s opinion, this has not been the case for most of the 20th century, and he points to a few examples. Teddy Roosevelt, whom many consider a trust buster, Lynn considers a corporatist and statist. John Kenneth Galbraith, Lynn says, wanted complete overthrow of the regime. Lynn’s position is that old fashion statism and corporatism by Galbraith and Roosevelt influenced the progressives throughout the century, including the Harvard school. His conclusion is that antitrust colleagues might call him and his ideological supporters different names – populists, hipsters, or even deviant mutations – but what stands in front of them is the goal of the American Revolution; that the people rule in all parts of their own life. He finishes by contending that this is true conservatism; the repeal against the chokehold of the East India Company, the descendants of which Company he considers to be Google, Facebook, and Amazon. He asks the panel and audience to recognize who put their ideas in their heads, and to understand the full implication of their arguments – which is, if current arguments are left to run on their present course, in his view, the overthrow of the American democracy and liberty.

Einer ELHAUGE (Professor, Harvard Law School) offered four main points. First, antitrust populism is right in the fundamental charge that there has been under-enforcement. Studies suggest that price fixing is now a profitable model – the profits from price fixing can exceed expected damages from being fined in a price fixing case. Also, a number of mergers that have been cleared have later resulted in an increase in prices. There is more and more data, both from tech firms, and at general factory level, showing that increases in concentrations increase prices and decrease wages. Finally, exclusionary conduct cases in particular are rarely brought at all, and even more rarely successful, even though it is hard to believe there is almost zero of these cases out there. His second point is that antitrust populism is wrong in the diagnosis that what’s to blame is the consumer welfare standard. His third point is that the culprit is instead applying the welfare analysis badly, using an open ended case by case standard that makes antitrust incomprehensible to the average judge and jury rather than using more understandable general rules and presumptions. His fourth point is a recommendation that enforcement needs more rules and presumptions, which would be chosen by the following federal metric: whether they enhance consumer welfare or not. Elhauge concludes by reiterating that antitrust needs more general rules and standards to make it understandable again.

Alex OKULIAR (Partner, Orrick) thought antitrust enforcement in the US is actually pretty good. He referenced data that shows higher increases in profits in the EU than in the US, despite enforcement being arguably stricter in EU. He also pointed out that different data also show decreasing levels of concentrations in certain industries in the US In his opinion, there are two sets of goals that antitrust enforcement should have: first, economic goals (e.g. protecting competition, market dynamism, consumer welfare, innovation, etc.), and second, jurisprudential goals (which the panel talked about less today) – and Okuliar thinks that enforcement needs a stable, nuanced, and rich body of law in order to promote predictability, transparency, and indeed «administrability ». He went further to say that if promoting the latter was desired, then enforcement should avoid adopting administrative, ex-ante rules like the ones adopted in EU, if for no other reason, then because administrative rules may change as administrations change. In response to increasing concentration levels in certain industries, he thinks it’s been shown time and time again that higher economies of scale can reduce prices, promote innovation, etc. So big isn’t necessarily bad. Okuliar concluded with his recommendation, which is to tweaks the current enforcement around the margins. In his view, the FTC is already doing an excellent job. There may be space for some harmonization between the two agencies in the US [FTC and DOJ], especially in areas like merger jurisdiction, common standards for mergers, and clarification around the consumer welfare standard, as there are multiple definitions currently floating around.

Cristina CAFFARRA (Vice President, CRA) contributed to this US-centric discussion by providing the EU perspective and update. First, she pointed out that the question of consumer welfare standard is different in the EU, but that the EU is watching the US discussion. In EU, consumer welfare is also established as a goal, but broader than in the US Europe still sometimes has a softer approach to antitrust, with fairness playing a role, although in a more pragmatic way, because in EU fairness is tied to achieving a higher consumer welfare. This approach stems from the fact that Europe had a German school which predated and was taken over by the Anglo-Saxon approach, and with it, by the consumer welfare standard. Second, she pointed out that there is a disconnection between the American and the European interpretation of EU enforcement. Ironically, the same American voices that complain about the application of competition law in merger cases being too narrow then cry foul when the European Commission seeks to develop a more in-depth analysis of competition innovation. Also, while Americans have a perception that the EU is more interventionist, in the EU there is a fear that it is underenforcing, especially when it comes to mergers, where most cases are approved in Phase I. Where things are actually problematic in Caffarra’s experience, is the revenue space, e.g. when the Commission issues a cease and desist, and then the company is left wondering how to move forward. Finally, in her third point she addressed the recent EU cases against US tech companies. She explained that what the public is seeing is European competition agencies stepping in because they fear the national governments will step in if they don’t. For example, Caffarra cites German Chairman Andreas Mundt as saying that if the German agency didn’t step in, the Bundestag (German Parliament) would have been much worse. Compared to the current tech cases, Caffarra considers that the classic Microsoft case was a successful case in defining a theory of harm pertaining to tying, but that since then, there’s been a lot of trying to fit all new cases into the same tying and bundling framework. She attributes this to lamppost mentality – people shine a light on something they already know how to measure, instead of developing a new system for a new situation. Thus, breaking this lamppost mentality is a needed step in bringing about change in antitrust enforcement.


The moderator, John BRIGGS concluded the panel with the following thought: It seems that the consumer welfare standard, while imperfect, is better than if we threw it out the window. So what marginal changes should we propose? Elhauge said the welfare standard should be applied in a more categorical way across cases, rather than case by case. Kovacic said agencies should be more careful in how they choose cases and make decisions, including defining clearer, longer term policy priorities, which is difficult to do with an unstable budget. Lynn said it’s necessary to distinguish antitrust (what the FTC and DOJ do) and antimonopoly (what the remaining government does, including the Fed, FCC, etc.), and that the amount of things categorized under antitrust should be reduced and simplified.

Panel 2: Should the New Titan be Tamed? Lessons for the US, EU, and China

Christopher YOO (Professor, University of Pennsylvania Law School) moderated the second panel. He handed the floor straight to speakers.

Ian CONNER (Deputy Director, Bureau of Competition, US FTC) started by expressing concern that commentators are focusing on the tech titans’ conduct, but have not yet presented theories and concerns rooted in the U.S. antitrust laws or supported by evidence of illegal conduct. He pointed out that the FTC does not have different policies for different sectors, and encouraged everyone aware of any antitrust violations by any company, including those that could be categorized as “tech titans” to contact the FTC. He said that becoming a titan does not, alone, subject a company to Section 2 liability, e.g. in Grinnell the US Supreme Court ruled that monopoly power developed as a result of a superior product, business acumen, or historical accident does not violate Section 2. He went on to acknowledge the current movement to reassess some of the core tenets of the antitrust laws over the past 50 years, including Grinnell, and that this re-examination has been spurred, in part, by the evergrowing role of tech companies in the economy. The FTC is actively participating in this re-examination by holding a series of hearings to better understand the current antitrust thinking and concerns, including if the consumer welfare standard is still to be the main guiding principle, or whether the FTC needs new tools to change the guiding principles that underlie its enforcement. In either case, Conner said that it was important to have clear guiding principles that can be understood and followed by all stakeholders in the economy. Going back to the tech titans, Conner noted that some commentators have reached the conclusion that the enforcers should break up the largest tech companies, although, he noted, the decision standard underlying their advocacy is not well-developed. He reminded everyone that even if FTC wanted to act, it would still need to bring the case to adjudicators, which would in turn require the same well-developed standards in order to find an antitrust violation. He concluded that more time and analysis about the tech industry is needed, or else the FTC risks over-enforcement in this big section of the economy, which could be just as bad as under-enforcement. Some of the sector-specific concerns include the large aggregation of data by tech companies, the use of automatic algorithms and AI, and the mergers in which incumbents acquire start-up companies (like Facebook acquiring Instagram). These are currently being discussed at antitrust fora internationally. Finally, especially in tech, the market can go in directions nobody expected, e.g. MySpace going from a monopoly to a company with no market power. Conner said that he looked forward to the FTC hearings on all these topics and more in the months ahead.

Gail LEVINE (Director, US Competition, Uber) focused her talk on the conference’s subtitle – where antitrust policy is going – and presented a few examples, both in the U.S. and abroad, of where she sees antitrust policy going towards competition advocacy. In the U.S., the first example was in Chicago, where O’Hare airport considered rules that threatened the ability of companies like Uber to pick up passengers. The FTC engaged in competition advocacy and publicly explained the anticompetitive effects of O’Hare’s rules on passenger traffic to and from the airport. Chicago ended up with better rules, that allowed Uber and other transportation network companies to start serving the airport. The second U.S. example was in Seattle, where the city council had passed an ordinance that required independent drivers to collectively bargain on terms, including pricing. The FTC and DOJ’s Antitrust Division both carried out competition advocacy by filing an amicus brief which pointed out that collective bargaining by independent drivers would be price fixing. The Ninth Circuit recently ruled in Uber’s favor on a key threshold issue, and now the case is back in district court. She also discussed other examples of key competition advocacy: a report co-authored by the Brazilian antitrust agency’s chief economist hailing Uber as generating consumer benefits; the Italian Competition Authority’s advocacy on rules restricting cars from picking up in certain areas; the Spanish Competition Authority’s questioning of a two-year ban on trading for-hire vehicle licenses. Levine concluded that not every example of strong competition advocacy ends in a win for competition, but that this kind of competition advocacy is absolutely critical for moving antitrust forward.

Peter DAVIS (Senior Vice President, Cornerstone Research) began with the political context which is driving some of the concerns around the tech titans. He identified two main elements that are driving interest in the political world and affecting antitrust enforcement through politics. The first element is a flattening of productivity growth over the last decade. With regards to this element, the tech sector is perceived by politicians as a potentially great source of future productivity growth. There is real interest in the big opportunities that the growth of the tech sector has and will introduce and a desire to make sure that actions by incumbents don’t get in the way of realizing the potential. The second element is the concern that the process of creative disruption has had and will have very large distributional consequences (and have significant consequences for governments tax policy.) An important question of course is whether the big movements in both the productivity statistics and inequality measures will be affected by antitrust policy generally and movements in the tech sector in particular. This is a big question now and may be even more significant in the future given the likely growth in AI and robotics. He does not believe that the ex-post review studies undertaken so far in either the US or EU have provided convincing evidence of the connections between antitrust policy and either the rise in inequality (in some countries, not others) or the fall in productivity growth (in some countries, not others). But he notes that policy makers are actively studying the area. Examples of such studies include the FTCs study that Ian Conner mentioned, and there is also work underway in Europe; Commissioner Vestager has appointed a number of special advisers to consider future challenges facing competition policy in the tech sector; and in the UK the Chancellor Phillip Hammond has convened a working group chaired by Harvard’s Professor Jason Furman. And of course many people are asking whether merger control is in the right place. So far, he thinks antitrust is far from seeing convincing evidence in Europe that a large change to the merger control regime is required. In addition to the various studies of the sector underway, the EU is now actively intervening and has issued infringement decisions against Google both in relation to Google Shopping, and Google Android. More recently the Commission has also launched a formal investigation into Amazon. Such investigations are likely to increase in number. Indeed, he noted that Commissioner Vestager described in a speech just this morning in Vienna that we “ain’t seen nothing yet.” And while the current focus is on big-tech companies, such concerns may ultimately be expressed in a range of sectors. For example, the UK has a big financial services sector, and the Financial Conduct Authority (FCA) is clearly interested in supporting fintech companies coming into financial services and is watching incumbent’s competitive responses to fintech entry carefully.

Alvaro RAMOS (Senior Director - Head of Global Antitrust, Qualcomm) said the main questions at hand are should antitrust intervene more and what exactly is the problem that needs to be fixed. He thought most problems being brought up are not really problems, but instead simply examples of inherently poor competitive conduct – conduct that results in others having better products and services. He proposed that the main reason the economy has antitrust rules is so consumers could buy better products at lower prices. That’s it. Bringing this back to tech giants, he see nothing more than just a competitive process that is thoroughly robust. Looking at proponents of greater intervention who are worried about tech giants getting bigger, Ramos sees people who just don’t really trust the markets. He shares Ian CONNER’s concern about overenforcement, and goes further asserting that over-enforcement is worse than under-enforcement, because at least with under-enforcement, markets tend to self-correct. So if tech giants’ increase isn’t inherently a problem, then enforcers are just trying to appease the general public, which is not antitrust’ purpose. He looked at examples from Europe compared to the US, including the web browsing market in Europe after Microsoft settlement, the music software player market in Europe after Windows Media Player case, etc. He asked if these markets can be considered more competitive after their respective cases. He thought the answer is «no». Instead, he thought the cases just show Europe is more thorough in considering consumers than it is in considering the companies. Indeed, he argued, it is the tech giants who are not treated right, and not being able to compete as a result of government intervention. He did agree with Gail LEVINE that antitrust agencies generally push antitrust in the productive direction. He finished by recommending Professor YOO’s report on the status of due process in different jurisdictions, comparing China, the US, and Europe. He concluded recommending that the antitrust enforcement should wait until it fully understands the novel issues with tech giants before it starts advocating for regulation that might hurt more than it will help.

Panel 3: A Judge’s View on Antitrust: Mergers, Cartels, Remedies...

Douglas GINSBURG (Judge, US Circuit Court for the District of Columbia) moderated the panel. He opened by saying that the panel will show the audience that you don’t have to be a judge to have judge’s view. He turned the floor straight to the speakers.

Maureen OHLHAUSEN (Commissioner, US FTC) started by acknowledging that the following day would mark her last day at the FTC. She then focused on how antitrust law actually evolves and changes, and that is through litigation, case by case. Her speech focused on cases in 3 areas. First, she examined the Commission’s continuing use of litigation in Federal Court, to develop the law regarding cluster markets. A cluster market includes several different goods or services, rather than just one as in classical analysis. During Ohlhausen’s tenure at the FTC, the Commission brought several cases that expanded the application of cluster markets outside the healthcare industry where they had long primarily been used, successfully challenging acquisitions like Sysco/US Foods in 2015, Staples/ Office Depot in 2016, and Wilhelmsen/Drew Marine in 2018, the last one during Ohlhausen’s chairing of the FTC. So cluster markets are now a useful concept in cases across different markets. Second, she reviewed efforts under her watch to solidify judicial acceptance of bargaining models in merger analysis. Bargaining models estimate the likely outcome of negotiations between a large supplier and a large customer. They are often used in merger analysis to determine whether a transaction would materially change a party’s bargaining power. In 2016 the FTC used bargaining models to define the relevant market in two hospital cases, NorthShore and Penn State/Hershey Pinnacle, and after appeals, the Court of Appeals ultimately created new binding precedent endorsing the use of bargaining models in healthcare mergers. Third, she addressed the district court decision in Viropharma, which raises important questions about the scope of the FTC’s authority under section 13B, to seek ethical remedies in Federal Court. Viropharma had a patent expire for a branded drug, but then when generics manufacturers tried entering the market, Viropharma postponed their entry by 6 years with petitions to the FDA and in the process generated hundreds of millions of dollars in supercompetitive profits. The FTC tried using section 13B to permanently enjoin Viropharma from using similar methods of market exclusion in the future, and to recover the ill-gotten gains. The district court dismissed the complaint on grounds that FTC did not clear the standard for injunctive relief and that past violations are not enough to prove the defendant is imminently about to violate the law again. Ohlhausen hopes the Third Circuit Court overturns the decision, because it’s at odds with the standard applied in many other circuits, and because the defendant’s shown a pattern of this behavior. Commissioner Ohlhausen concluded that she is proud of litigation record during her tenure at the FTC.

Michael BAYLSON (Judge, US District Court, Eastern District of Pennsylvania, Philadelphia) focused on the role of expert economists in litigation. He started by noting the AT&T/Time Warner case, where the government argued that the judge committed a reversible error in his treatment of the government’s economist. Judge Baylson spent the rest of this speech giving tips on how to minimize such scenarios from occurring. First, economists do not make themselves well-understood, and use a lot of lingo, especially when talking about econometrics. Therefore, lawyers should research how much background a judge has in economics, and prep the economist accordingly. Second, expert testimony is very often the most important piece of evidence in the record. For a judge to decide in favor of it, the opinion has to be sound, it has to survive cross-examination, and most importantly, it has to be based on the facts of the case, which is often not completely true of expert testimonies. Judge Baylson gave the example of his «domestic drywall litigation», in which plaintiffs successfully managed to maintain a class action because their expert economist focused on the facts of the case, while the defense’ economist focused on finding holes in the first economist’s testimony, but didn’t add any substantial opposing points from the case himself. Third, Judge Baylson also offered advice for other judges. When he could not make a decision after hearing both sides’ economists, he instituted a «hot tub», which refers to a novel process of having both sides’ economists sit in the jury box, and answer questions posed by the judge—the attorneys have the opportunity to submit questions. Even after the hot tub, there were still serious disputes; for more certainty he retained an independent economist to serve as a “technical expert” who just reviewed both sides’ expert opinions, and the testimony that had been given in court. His charge was to come up with everyday, plain language English interpretations of what the economists were saying. Judge Baylson found this very helpful in making his class certification decisions.

George PAUL (Partner, White & Case) expanded on the topics of cluster markets and expert economists raised by the previous panel speakers. Starting with cluster markets, Paul warned that cluster markets can be misleading when analyzing competition from bundle products. In those cases, you’re going to have to go into details, and understand the partial law in sales, or adequately constrained full on sales, etc. So he recommended separating bundle markets from cluster markets. He next said that in his understanding, the Staples case wasn’t so much about cluster markets as it was about the closeness of competition. Moving on to the expert economists, Paul gave the example of a case he worked on a few years ago. It was the first international cartel case being tried in Korea. His team negotiated with the staff, and the other side, and they ultimately came to a conclusion that the best way to put on the expert testimony in a cartel case was simply to have the expert talk. So the experts talked, with PowerPoint presentation, which was a requirement in hearing, and they spent 30 minutes walking through conditions in the industry, and testifying as to why a cartel is unlikely to happen. The Commissioner was then able to ask them questions. Paul thought of it being a pretty effective way of dealing with the problem.

Mark ISRAEL (Senior Managing Director, Compass Lexecon) provided a number of suggestions for economists and lawyers to work more successfully in front of judges. His first advice was if you’re putting on an expert economist, don’t put them on at 5:30 after there’s been four straight hours of intense conversation – it’s most effective to put an economist on first thing in the morning when everyone is fresh. Second advice was that lawyers can do a lot to help economists understand where they fit in the legal standard - because, just as there’s judges and lawyers who don’t understand all of economics, there’s economists who, frankly, don’t understand the law all that well. His third advice focused on merger trials, specifically price discrimination cases. He proposed that when economists define groups of customers or products, it should be that those groups are deeply used in the ordinary course of the business. It ought to be that the people in the business are thinking about competition with those groups. He thought that was the strength of the Cisco case that he worked on. If the groups are made up by an economist who’s testifying, the judge ought to be skeptical. His fourth advice was that it’s important to remember that when an economist defines shares for just a subset of customers, they’re throwing away data, effectively, on a bunch of other sales that are being made. He concluded that there ought to be a really high standard to prove that it’s correct to throw away data in that way before we the case goes down that road.

Closing Keynote Speech: Rebbecca Kelly Slaughter

Rebecca Kelly SLAUGHTER (Commissioner, US FTC) brought the discussion back from specific issues (like cluster markets and bargaining power) to the general level. She believes this moment in antitrust is different because of three factors that are driving today’s conversation.

First, concentration is increasing across many sectors of the economy and citizens are feeling it. Most evidence shows markets and industry sectors are becoming increasingly concentrated across the economy. According to a new poll by Marketplace and Edison Research, 71% of Americans believe that the economy is rigged against them. These poll numbers may be explained in part by consumers feeling the lack of choice and competition on a daily basis. For example, air travel costs are going up including checked bags fees for all major carriers. Evidence also shows greater concentration in labor markets that may deprive workers of the competitive process for their employment and thus be an explanation for wage stagnation. It may also be why there’s a proliferation of non-compete agreements in employment contracts and anti-poaching provisions in franchise agreements on which state AG’s have been effectively cracking up.

Second, technological innovation is reaching through all sectors and often blurring the lines between competition and consumer protection questions. All industries are becoming increasingly technologically dependent. Technology is no longer simply an industry, it is a part of every industry. As a result, it is relevant in more and more enforcement matters for both competition and consumer protection. On the competition side, FTC is seeing more and more mergers and conduct matters with technology-related issues such as data collection, intellectual property, and network effects. On the consumer protection side, FTC is dealing with privacy and data security, cryptocurrencies, data throttling, online marketing, techsupport- scams, Fin-Tech, and even robocalls. The competition and consumer protection side no longer exist in isolation. For example, a hypothetical merger between two companies that each control substantial consumer data has both competition and consumer protection issues. With its dual mission, the FTC has the capacity to tackle these issues with thoughtful attention to their interplay, while many other jurisdictions have completely separate agencies to address them.

Third and final, the contrast between US law and the laws of other jurisdictions is becoming more acute, leading to an opportunity for useful comparative analysis. The European Commission is pursuing a number of high profile competition cases that involve American companies, and it’s working with an entirely different set of laws with respect to competition, e.g. the abuse of dominance standard, which puts specific burdens on firms that reach a certain market share. Further, the passage and implementation of GDPR across the pond provides an excellent natural experiment to see how longstanding ideas like the right to be forgotten work in practice. On the other hand, the US federal law has also seen many developments, simply through its case law. US courts are generally making competition enforcement in the US harder. For example, in the Supreme Court, American Express may make it harder to bring cases against anticompetitive conduct in two-sided markets. Another example, Leegin, essentially gave the green-light to manufacturers to prohibit retailers from providing discounts to consumers. Commissioner OHLHAUSEN already mentioned the damaging district court decision in ViroPharma, imposing a new imminence standard for our FTC’s 13B cases. Finally, the district court ruling against the OJ in the AT&T/Time Warner merger has generated concerns about the ability to challenge vertical consolidation going forward.

Commissioner Slaughter recognized different concerns around moving US antitrust away from the consumer welfare standard, or having privacy protection laws like GDPR which may make it more difficult for start-ups and small companies to expand and compete. However, she does not believe these concerns necessarily justify the status quo. Just because GDPR has potential negative effects on competition it does not follow that all privacy regulation will necessarily entrench in companies. Also, while she agrees that the goal of the consumer welfare standard has to be administrable, she wonders whether it really is as it is applied today in cases that turn out costly economic inquiry and often boil down to abide with the expert witnesses.

She concluded thanking everyone at the conference for their important contributions, and reminded everyone to also participate in the FTC hearings about reforming antitrust.

Photos © Matt Mendelsohn


  • University of Harvard - Law School (Cambridge)
  • US Federal Trade Commission (FTC) (Washington)
  • CRA International (London)
  • US Department of Justice (Washington)
  • US Federal Trade Commission (FTC) (Washington)
  • British Competition Authority - CMA (London)
  • Axinn Veltrop & Harkrider (Washington)
  • US Federal Trade Commission (FTC)
  • Cornerstone Research (London)
  • Qualcomm (San Diego)
  • Compass Lexecon (Washington)
  • White & Case (Washington)
  • Baker Botts (Washington)
  • U.S. Court of Appeals for the District of Columbia Circuit (Washington DC)
  • U.S. District Court, Eastern District of Pennsylvania (Philadelphia)
  • University of Pennsylvania Law School (Philadelphia)
  • Open Markets Institute (Washington, DC)