William Kovacic on the United States’ Antitrust Transformation

By TAP Staff Blogger

Posted on February 16, 2022


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“Years from now, students of policy advocacy will study how advocates of transformation challenged a deeply entrenched status quo, inspired a basic re-examination of the proper aims of antitrust policy, and pushed the system toward a bolder program of intervention. This is a striking achievement, accomplished through the creation of a new community of commentators who bypassed the antitrust establishment.”
- William Kovacic, from his article, “The Roots of America’s Competition Revolution”

 

George Washington University Law professor William Kovacic, a recognized expert in the field of antitrust law, provides insights into the transformation of U.S. competition policy. In “Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?,” [subscription required] Professor Kovacic states that “the United States stands at the threshold of a major realignment of its competition policy regime,” and he poses and answers the question, “How did this development, which seemed improbable only five years ago, come to pass?“

 

Professor Kovacic’s expertise in antitrust law and competition policy includes several years working with the Federal Trade Commission (FTC). He was General Counsel at the FTC from 2001 to 2004, was a member of the FTC from 2006 to 2011, and chaired the agency from March 2008 to March 2009. In 2011 he received the FTC’s Miles W. Kirkpatrick Award for Lifetime Achievement.

 

An excerpt of Professor Kovacic’s “Root and Branch Reconstruction…” article was published by ProMarket and titled, “The Roots of America’s Competition Revolution.” This piece outlines the three schools of thought that dominate modern debates about the U.S. antitrust system.

 

Below are a few excerpts from “The Roots of America’s Competition Revolution,” by William Kovacic (ProMarket, September 21, 2021).

 

Traditionalists: Leave It Alone.

 

One group of commentators opposes major changes to (much less, transformation of) US antitrust policy. They are “traditionalists” in the following sense: they generally applaud the intervention skepticism of courts and enforcement agencies and support the application of an efficiency-oriented consumer welfare standard. Traditionalists endorse a federal enforcement agenda that focuses mainly upon cartel agreements, large horizontal mergers, and government policies that impede new entry into markets. Traditionalists entertain some modest extensions of current legal doctrine and contemporary enforcement policy, but they insist that such adjustments rest upon widely accepted and empirically tested economic concepts.

 

Expansionists: Do More with the Existing Tools (and Add New Policy Instruments).

 

A second school, referred to here as “expansionist,” proposes significant extensions in competition policy, but it rejects the restoration of an egalitarian goals framework and broad application of structural remedies to deconcentrate the American economy. Carl Shapiro describes the group’s philosophy as “modern” in the sense that it seeks to expand enforcement based on “what antitrust scholars and practitioners have learned in recent decades and reflecting how the economy has evolved over time.”

 

Expansionists embrace a concept of consumer welfare that encompasses effects on prices, quality, and innovation, and also safeguards the well-being of workers by constraining the exercise of monopsony power by employers. Expansionists contend that learning in industrial organization economics since the late 1970s dictates more activist antitrust policy.

 

Transformation: Root and Branch Reconstruction

 

Transformation advocates endorse various elements of the expansionist agenda as necessary but not sufficient. They would, for example, argue for stronger application of existing enforcement tools, acceptance by enforcement agencies of a greater appetite for litigation risk, and repudiation of confining judicial precedents. Most important, the transformationalists insist upon restoring a citizen welfare goals framework that is true to the egalitarian aims of the original antitrust statutes and is embraced in earlier Supreme Court decisions such as Brown Shoe Co. v. United States.

 

This is the defining characteristic of the transformation cause, the main distinction that separates the transformationalists from the expansionists. The reorientation of goals is the foundation for the transformationalist reform program. It includes intensified enforcement, with more use of structural remedies; curtailment of advocacy and law enforcement efforts that challenge occupational licensure restrictions or attack efforts by low-income service providers to raise their fees; renewed prosecution of Robinson-Patman Act cases; and rulemaking to control large digital platforms. To this end, transformationalists regard a steadfast commitment to the citizen welfare standard to be an indispensable requirement for candidates aspiring to lead the DOJ or the FTC.

 

Read the full piece on ProMarket, “The Roots of America’s Competition Revolution,” by William Kovacic, (September 21, 2021).

 

Root and Branch Reconstruction: How the Transformationalists Ascended

 

In the complete article, “Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?,” Professor Kovacic explores how the transformation movement emerged, and he considers its future impact. A summary paragraph from the article:

 

This Comment considers the ascent of the transformation movement as a force in the US antitrust regime. I situate the transformation movement among competing schools of contemporary antitrust thought before describing how the transformation movement gained influence. The Comment offers tentative thoughts about the transformation movement’s future success in achieving a top-to-bottom overhaul of the US antitrust system.

 

Below are a few excerpts from “Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?” In this section, Professor Kovacic, provides an analysis of the strategy transformationalists used to promote their agenda through the scope of OODA (Observe, Orient, Decide, Act). OODA is a framework created by the military to design and execute a plan against an adversary.

 

Observe – Careful observation of surrounding conditions has informed the development of the transformation strategy.

 

[Competition policy’s] revival awaited the reemergence of conditions that previously had fostered expansive application of egalitarian principles in the U.S. system, notably: sustained relaxation of antitrust enforcement (especially involving existing dominant firms and tight oligopolies); development of a literature that challenged prevailing thought that supported enforcement permissiveness and documented harmful economic, social, and political effects of inadequate antitrust policy; and external economic shocks that discredited existing public policy and spurred demands for stronger government intervention.

 

Orientation – To clear the path toward sweeping reforms, the transformation movement has strived to annihilate the policy status quo. Transformationalists portray the U.S. antitrust system since the late 1970s as a catastrophe.

 

If legislators perceived the status quo to have important redeeming features, they might approve a more cautious remodeling. Abject failure is the only characterization that justifies absolute demolition and reconstruction.

 

Decide: Decentralized Decision-Making – There is no central mechanism that takes decisions on behalf of individuals and institutions who support the transformation movement. … Decentralization gives the movement’s participants flexibility to exercise initiative and respond quickly to developments.

 

Although operating without a central hierarchy, transformationalists have built relationships that provide some degree of coherence by creating a common understanding of objectives and the means to achieve them.

 

Act – Transformation proponents have used various means to execute their program. Most impressive is the mastery of social media.

 

Twitter, in particular, has supplied a formidable distribution network for transformation ideas—to popularize articles, papers, and books; to announce appearances at conferences, podcasts, and webinars; and to shape the interpretation of events. … In a conflict over ideas, the skillful use of Twitter can provide the high level of adaptability and mobility that keeps the user several steps ahead of rivals.”

 

Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?” by William Kovacic (American Bar Association’s Antitrust Magazine, Volume 35, No. 3, Summer 2021) is available to subscribers.

 


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