Big Business: Antitrust Law and its Position Today

The global economy is currently experiencing an increasing concentration of market power, even in advanced economies like the EU, UK and US. This trend has intensified concerns regarding significant market dominance by large corporations, posing notable challenges to antitrust regulatory bodies.

Antitrust populists argue vigorously that such concentrated economic power may cultivate anti-democratic political pressures, pushing smaller businesses out of the market and causing other economic and even political issues.

Robert Pitofsky argued in his landmark article The Political Content of Antitrust, that antitrust law has always had a political content.[1] And in the political context, antitrust law is widely acknowledged as enhancing democracy and free market values.

“But if there is widespread agreement that antitrust law should serve as an instrument of democracy, there is little consensus on what that means or how it should happen”. It is further provided that “society characterized by grossly concentrated economic power will tend away from democracy and toward authoritarianism, autocracy, or oligarchy—perhaps not deterministically, but in combination with other causes.”[2] Hence, antitrust law has a significant role to play in preservations of democracy and enhancement of free market.

In this context Harry First posed a simple but provocative question: “Is antitrust law or is it policy?”[3] It has been further explored “Is antitrust law, is it policy, or is it politics”[4]

Although the political aspect plays an important role in antitrust law and many of the cases in the area clearly prove it, this article examines the fundamental objectives of antitrust as law and its legal enforcement. It explores how antitrust can manage wealth redistribution among market players while also considering economic efficiencies that large businesses often create and what instruments it has to achieve such goals.

Antitrust Goals: Efficiencies Big Business Creates vs Wealth Redistribution

In antitrust contexts, efficiencies typically refer to allocative, productive, and dynamic efficiencies. Productive efficiency implies that each business should operate at the lowest feasible costs, and enterprises unable to sustain profitability should exit the market. Allocative efficiency ensures production matches consumer valuation, implying no participant—neither sellers nor buyers—could be better off without disadvantaging someone else. Dynamic efficiency pertains to effectively introducing innovations.

However, these efficiency types often conflict, explaining why efficiencies, though crucial, are seldom identified as the central goal of antitrust law. Neither Ukrainian, EU, nor US legislations explicitly position efficiencies as primary objectives.

Redistribution is more explicitly central in antitrust policy, referring to the distribution of economic power and wealth among market participants, reallocating income generated through market activities. Historically, the US regarded redistribution as a principal aim, evident from antitrust provisions like the Sherman Act and Clayton Act that restrict monopolistic behaviors and mergers significantly reducing competition. The AT&T-Time Warner Merger challenged by the US Justice Department in 2018 reflects concerns about concentrated market power potentially harming consumer welfare. Eventually though the merger was allowed through court proceedings, but the deal did not last long and resulted in a spin off and new merger of Time Warner and Discovery which reflected changing media landscape and ultimately demonstrated that despite legislative scrutiny, it is the market force itself that ultimately shapes competitive trends.

Similarly, Article 3 of the EU Treaty underscores the importance of a competitive and socially equitable market economy. Article 101 TFEU explicitly ensures fair redistribution of gains from market conduct, reinforcing the necessity for consumers to secure their “fair share” of economic benefits.

Striking A Balance between Redistribution and Efficiency

Increasing concerns about market dominance through monopolies or coordinated actions raises questions about prioritizing redistribution over substantial, long-term scale economies. Pure competition theoretically yields maximum efficiencies; however, such scenarios rarely exist, especially in sectors like energy, telecommunications, or transport. Nonetheless, political apprehensions about market power might negatively impact efficiencies achievable by large firms. Amazon’s EU Antitrust Investigation demonstrates regulatory efforts to balance redistribution of competitive opportunities without undermining Amazon’s efficient market practices.

While redistribution remains vital, authorities today rarely pursue it exclusively. They specifically challenge monopolistic abuses, anti-competitive mergers, and coordination while promoting practices enhancing efficiencies and consumer welfare. The UK CMA Investigation into Google and Meta illustrates contemporary enforcement strategies targeting anti-competitive duopolies while taking into consideration consumer welfare implications.

Effective Remedies for Ensuring Shared Efficiencies

Multiple remedies facilitate the sharing of market-generated efficiencies, categorized into structural and behavioral remedies.

Structural remedies involve breaking up companies or mandating divestments, aiming to introduce competition by reducing market dominance. Microsoft’s acquisition of Activision Blizzard illustrates global regulatory attention demanding structural remedies or divestments to prevent market monopolization. In the UK, Microsoft was initially expected to divest a portion of Activision Blizzard’s business, although this was later modified.

Behavioral remedies impose specific conduct requirements, such as obligations to supply competitors, provide access to essential facilities, maintain price ceilings, or invest in infrastructure. Behavioral solutions, typically negotiated with businesses, offer rapid practical impacts. The Epic Games vs. Apple case underscores the complexities and significance of behavioral remedies focusing on payment and access terms.

Assessing the Efficacy of Antitrust Remedies

Structural interventions are currently relatively infrequent. Drastic restructuring might introduce short-term competition but rarely guarantees sustainable long-term market improvement. The breakup of Standard Oil historically yielded limited long-term impacts. Nonetheless, Singapore’s electricity market restructuring indicates that effective structural intervention accompanied by robust regulation can sustain long-term competition effectively.

Behavioral sector-specific remedies frequently ensure equitable market participation. Less aggressive interventions like behavioral commitments balance large corporations’ power with broader market interests effectively, as seen in Australia’s Food and Grocery Code managing supermarket dominance without structural dismantlement.

Conclusion

Ultimately, antitrust authorities should prioritize balanced redistribution without sacrificing economic efficiencies. Maintaining political neutrality despite external pressures is critical. In most antitrust authorities their key decision-makers are elected rather than appointed, which shall grant such decision-makers more independence. The judicial review of decisions adopted by the antitrust authorities also provides a good test on the fairness of such decisions. Thus, although antitrust law and its enforcement alone cannot guarantee market equity comprehensively, it possesses adequate mechanisms to facilitate equitable wealth distribution and effective market operations.

[1] Robert Pitofsky, The Political Content of Antitrust, 127 U. PA.L. REV.  (1979).

[2] Duke Law Journal Online, VOLUME 72 OCTOBER 2022, ANTITRUST AS AN INSTRUMENT OF DEMOCRACY DANIEL A. CRANE

[3] Harry First, Is Antitrust Law, 10 ANTITRUST 9 (1995)

[4] IS ANTITRUST LAW, POLICY, OR POLITICS? Sean P. Sullivan