‘Hipster Antitrust’ Comes Under Senate Spotlight

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By Alexei Alexis

Former Federal Trade Commission officials cautioned lawmakers Dec. 13 against yielding to advocates’ pressure to revamp the U.S. antitrust paradigm as the antitrust leaders in the Senate are exploring legislation.

Sen. Amy Klobuchar (D-Minn.), ranking Democrat on the Senate Judiciary Committee’s antitrust subcommittee, said at a hearing that she is working on legislation with Sen. Mike Lee (R-Utah).

She has introduced her own legislation (S. 1812) that would require companies to prove their mega-deals are good for competition before they can get government approval. There are no details about the bill she’s working on with Lee.

Antitrust practitioners disagree about whether antitrust law should change, but Klobuchar said everyone should agree that “we absolutely must increase the level of federal antitrust enforcement in this country.”

Tad Lipsky, who left as head of the FTC’s competition bureau in July, told Bloomberg Law ahead of the hearing that a broader approach might leave courts and regulators wandering “through an uncharted wilderness.”

Lipsky was among the witnesses at the hearing. Former Republican FTC Commissioner Joshua Wright, who coined the term “hipster antitrust” to describe the advocacy effort, also testified.

Some public interest groups say the existing antitrust legal approach doesn’t go far enough because it is too focused on prices or access to services and doesn’t take into account other impacts of dominant companies. They want changes to the law that would give regulators more tools to combat mega-mergers such as Amazon.com Inc.'s recent acquisition of Whole Foods Market Inc. The FTC cleared that deal in a month.

Consumer Welfare

At the heart of the debate is the “consumer welfare” standard used by the FTC to go after anticompetitive conduct and mergers. Because it’s focused on price considerations, critics say big tech companies like Amazon and Google Inc. get a free pass from scrutiny of any leverage they may exercise over jobs and wages or consumers’ privacy. They want Congress to consider legislation to remove the consumer welfare standard because they see it as too restrictive.

A leader in the movement is Barry Lynn of the Open Markets Institute, who also testified at the hearing. He told Bloomberg Law in a previous interview that he believes concern about monopolies is “at a tipping point” in the U.S.

“Today, just about every sector of the American political economy is vastly more concentrated than a generation ago,” Lynn said at the hearing. “Citizens perceive monopolization as a loss of control over their own lives, and of being manipulated by powerful corporations.”

American Antitrust Institute President Diana Moss said “lack of vigorous enforcement,” not a poorly written law, has caused industries to become concentrated. “It is not a basis for concluding that the existing law or standard is inadequate,” she said.

Moss’s group advocates rigorous antitrust enforcement, but she has pushed back on the notion that the law needs to be rewritten. “Throwing out the existing framework would throw the courts, the agencies, and private plaintiffs into disarray, and it would hamstring enforcement at a time when we need it the most,” she said.

‘Monumental Shift’

Prominent conservative figures in the antitrust community like former FTC Commissioner Wright also are opposed to changing the law.

“Abandoning the consumer welfare standard, which has been the lodestar of modern antitrust for at least the past 40 years, would be a monumental shift, and a dangerous one, I think,” Wright told Bloomberg Law.

At the hearing, Wright said calls to abandon the consumer welfare standard “abdicate the economic approach to antitrust altogether.”

Wright is now the executive director of the Global Antitrust Institute (GAI) at George Mason’s Antonin Scalia Law School. Lipsky became head of GAI’s competition advocacy program in October. The group promotes “economic-based” antitrust enforcement and is a staunch defender of the consumer welfare standard.

Klobuchar’s bill doesn’t go as far as advocates like Lynn would like. It would study whether the consumer welfare analysis should include a merger’s potential impact on wages, job availability, innovation, and startups.

Lipsky told Bloomberg Law that the public concerns about jobs and wages don’t mesh with antitrust law. “Some criticism of the consumer welfare standard seems to be based on a misunderstanding of how antitrust law is actually construed and enforced,” he said.

At the hearing, he said adding broader social objectives, such as employment or equitable distribution of wealth, to antitrust law “threatens to drag antitrust into a political enforcement arena where accountability will be impossible.”

To contact the reporter on this story: Alexei Alexis in Washington at aalexis@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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