[Congressional Record Volume 163, Number 132 (Thursday, August 3, 2017)]
[Senate]
[Pages S4802-S4804]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MODERN ANTITRUST LAW
Mr. HATCH. Mr. President, I rise today to speak on a policy matter
that has been generating substantial attention recently, and that is
modern antitrust law. This issue is critical. In the perennial debate
over the proper role of government in economic affairs, it will grow
all the more critical in the years to come.
New technologies, creating markets not even imaginable only a decade
ago, are spurring fundamental shifts in the economic landscape. In the
national news, mergers between corporate giants or new fines imposed by
foreign regulators are becoming an acceptable thing almost every day.
In the Senate, we increasingly see antitrust law dragged into larger
economic arguments that are heavier in inflammatory rhetoric than in
careful deliberation. Allow me, then, to offer a few thoughts on the
matter, and to directly address the rising controversy.
America has always been--and, I haven't a doubt, will remain--the
economic and technological marvel of the world. Cradled in the best
traditions of the West and animated by a culture equal parts
industrious, creative, and restless, our system has produced the most
prosperous people in human history. It has shown its shortcomings, to
be sure. But on the whole, the American economy is unrivaled by any
other. Indeed, at times its blessings are so bountiful, its provisions
for the creation of wealth so effective, that we tend to take it for
granted in this country. We tend, at times, to forget what got us here.
A big part of what got us here is American antitrust law. You see,
all throughout history, societies and governments have tended toward
the central planning of economic activity.
America, however, chose a different path. We refused to yield to the
false comforts of collectivism. We opted, instead, for an economy that
was vibrant, tumultuous, competitive, and free. It is fortunate that we
did, for we have found that in the impossible complexity and unsettling
chaos of the market--wherein millions of consumers and producers make
millions of individual and uncoordinated decisions each and every day--
a spontaneous order arises that serves all of us far better than any
central authority ever could. Of course, our markets work toward those
ends only when they are genuinely free, fair, and competitive. That is
where antitrust comes in.
In a very real sense, antitrust is the capitalist's answer to the
siren song of the central planner. When antitrust doctrine is referred
to as the Magna Carta of the free enterprise system, I suspect this is
what we mean.
Let me be clear: Antitrust doctrine in this country has not always
gotten it right. As we all know, early antitrust policy tended to
confuse protection of market participants for protection of the market
itself; it was quick to micromanage particular industries, to choose ad
hoc intervention over predictable systems of incentives, and to cast
suspicion on any market too concentrated or business too big.
Fortunately, antitrust doctrine grows and adapts. It develops in the
same wonderful tradition and manner as the common law. Just as the
common law historically gave us property, contract, and commercial
rights, so too upon their basis does antitrust seek, year by year, to
give us markets that are competitive and free. Thus, the modern era of
antitrust has produced a fundamental improvement in our competitive
doctrine.
We have steadily adopted the consumer welfare standard, which judges
the conduct of firms and the arrangement of markets by what will
maximize efficiency and therein serve consumers most completely.
There will always be market failures to account for and noneconomic
concerns to keep in mind. But when it comes to the core, basic
functioning of the market--how to deliver the most
[[Page S4803]]
goods to the most people at the highest quality and lowest cost--
consumer welfare still works best.
In most industries, most of the time, we ought to think a little less
about how best to regulate the market and a little more about how best
to set the market upon regulating itself. The disciplining effects of
competition and the limitless store of American ingenuity do far more
for consumers than the well-intentioned intervention of government
authorities.
The consumer welfare standard has, consistently over the years,
proved an absolute boon to our economy and our society. Of course, a
legal standard means little unless handled with care.
We have chosen the right standard; now we must keep choosing the
right officials to implement it. You see, under the consumer welfare
standard, good antitrust enforcement is a lot like good sports
officiating. It harnesses, rather than stems, the flow of the action.
It lays out limited, predictable, and reliably enforced rules. It gets
the most out of the players and the competition itself, regardless of
which team is in the lead. Most importantly, as any sports fan could
tell you, when officiating is done right, we hardly notice the refs at
all.
With the right antitrust officials cognizant of their role, we can
expect a spirited contest in which American entrepreneurs keep putting
points on the board and American consumers keep reaping the reward.
Federal judges, naturally, are critical. In disputes of consequence,
they provide the ultimate backstop.
Also critical are our executive officials. Makan Delrahim, for
instance, has been nominated to lead the Antitrust Division at the
Department of Justice. He is eminently qualified, enjoys broad,
bipartisan support, and is at the ready to start as soon as he receives
our consent. I will urge my colleagues in the Senate, once again, to
take up his nomination and confirm him to this important post. He has
both Democrat and Republican support. He is well known. He ran the
Judiciary Committee under my jurisdiction.
On the other side of the enforcement equation, we are still waiting
on nominations to the Federal Trade Commission. The FTC is an important
agency that will play a central role in the years ahead. Whoever is put
in charge will face the monumental task of setting the agency on the
right track. I have supreme confidence that the President will make the
right choice on this one, and I look forward to supporting his
nominees.
As these vacancies linger, however, uncertainty lingers as well.
Critical merger and acquisition activity remains sidelined as
innovation is chilled and expansions are put on hold. All of this comes
at an unnecessary cost to our businesses and consumers.
I want this whole body to hear me clearly: There is no need for the
same old partisan food fight over our antitrust officials. Let's get
Makan Delrahim to work. FTC nominations will likely include two
Republicans and a Democrat. There is no reason they can't be swiftly
confirmed as a package. If delay on these important confirmations
persists, I will be back on the floor to make sure everyone--from
consumers to industry--knows it.
As I mentioned earlier, antitrust has been increasingly drawn into
the broader public debate on economic and innovation policy, and not
for the better. With each passing day, it seems the consumer welfare
standard finds itself besieged from the left. Their rhetoric may not
yet have made its way into traditional precedent, but it certainly has
made itself known.
Some in academia insist that recent market concentration and
technological progress compel a return to bold, persistent
experimentation. Many in the media call for antitrust to pursue
everything from industrial democracy to campaign finance reform to
material leveling. Above all else, we hear again the old, lazy mantras
that big is bad, disruption is suspect, and public utility designation
is welcome.
Professor and former FTC Commissioner Joshua Wright has referred to
this particular set of proposals as ``hipster antitrust.'' Well, as you
might imagine, nobody would mistake me for a hipster. So for my part,
and for ease, I will go ahead and call it the progressive standard.
Truth be told, as a proposed replacement for the consumer welfare
standard, the progressive standard leaves me deeply impressed. From
what I can tell, it amounts to little more than pseudoeconomic
demagoguery and anti-corporate paranoia. Nevertheless, it must not be
dismissed out of hand.
Over the last 8 years, policymakers laid the groundwork for it by
routinely disregarding some of the most basic elements of the consumer
welfare standard. Now we see the same stirrings of this radical
approach in many speeches on the other side of the aisle, as well as in
the recently released platform curiously titled ``A Better Deal.''
As such, I believe a response is in order. In defense of the consumer
welfare standard, we could, of course, run through the more technical
deficiencies of the progressive standard. We can mention that as
doctrine, it lacks manageable standards, dispensing with intellectual
rigor and inviting political mischief. We can mention that as theory,
it accounts for neither tradeoffs nor scarcity. We can mention that as
aspiration, it subordinates the productive incentives of the
entrepreneur to the fanciful designs of the bureaucrat.
Truth be told, the real trouble for the progressive standard is, it
fails to grasp the bigger picture of our history, economy, and national
character. It fails to appreciate that our time is not so distinct from
times past and that our momentary insights are not so superior to the
lessons learned over generations prior.
Of course, anyone can see that changes are afoot. As chairman of the
Senate Republican High-Tech Task Force, I have seen it firsthand. The
new technological age, having dawned in the late 20th century,
continues to ripen into the 21st.
New innovation is relentlessly spurring transformation across the
economy, and many markets are concentrating as a result. Yet supporters
of the progressive standard seem to think this presents historically
unique problems. They rely, as academics are wont to do, on sleek, new
jargon to argue that today's antitrust challenges are not only tangibly
but conceptually distinct of those of the past. They argue, in other
words, that things really are different this time around. At the end of
the day, terms like ``platform economics'' and ``network effects''--
commonly used to attack the consumer welfare standard--do less to
define new economic concepts than to explain how old economic concepts
are manifesting themselves in modern markets.
Through history, we have seen this time and time again. As the saying
goes, the more things change, the more they stay the same. Markets
concentrate and then disperse; dominant firms rise and then fall; with
innovation comes creation in one sector and destruction in another.
Anxiety over this evolution is very real, and the strident calls we
hear to do something about it--whatever that may be--are on some level
understandable, but this lurch toward the progressive standard is not.
Change, sometimes furious change, is a constant in our system. For
all its rancor, for all its chaos and uncertainty, it is, alas, what
propels us forward. We hope, not fear, that each age looks better than
the last.
Now, in anticipation of an objection from my friends across the
aisle, nobody is suggesting that no enforcement is necessary. Genuinely
anti-competitive conduct must be stopped, and mergers prone to abet
such conduct must be heavily scrutinized. That is all a part of keeping
markets fair and free in the best tradition of American capitalism.
Again, as I mentioned earlier, we should aim to regulate markets such
that in their basic core functioning they regulate themselves. Market
discipline imposed by competition and driven by innovation should be
our aim. To that end, nobody doubts that new developments in the market
will require a fresh look at doctrine. Nobody questions that the
consumer welfare standard will have to adapt. For example, categories
of anti-competitive conduct may need to be tweaked, refastened or even
expanded in light of technical advancement and market evolution. Merger
review, never an exact science, will seize upon new econometric tools
for measuring ancient
[[Page S4804]]
economic concepts like quality, preference, and efficiency. The rule of
reason, I am sure, will continue to bedevil judges, practitioners, and
law students alike, but that is just fine.
Antitrust, as I keep saying, is ultimately a common law exercise. I
am here to argue merely that the consumer welfare standard, when
handled prudently, is a far better steward of our economy than the
progressive standard, which is deeply misguided and potentially quite
destructive.
Take, for instance, the proposed Amazon-Whole Foods merger, which has
generated so much interest lately. It would, of course, be
inappropriate for me on the floor of the Senate to pass judgment. I
would caution my colleagues the same. There is an established process
for review, but the question should be asked: Upon what basis should
antitrust authorities evaluate a proposed merger like this? What we
need is the consumer welfare standard. It carefully examines the basic
and critical question of whether such a deal helps consumers or whether
it hurts consumers. It relies on a coherent doctrine to strike a
balance. It is a balance between the merger's pro-competitive effects,
such as integrative efficiencies and innovation, and the antitrust
competitive potential, such as market domination by one firm or
facilitated price coordination by the few that remain. What we
absolutely do not need, on the other hand, is the progressive standard.
Under no doctrinal limitations to cabin discretion, antitrust
officials would gladly follow vague institutions in shifting
intuitions. With a broad mandate to pursue aims far grander than mere
market efficiency, officials would be free to engage in ad hoc
theorizing about whether corporate consolidation, writ large, can be
squared with universal justice, common fairness, and community values,
or of whatever else their creativity recommends. To take another
example, across the Atlantic, our friends in the European Union have
leveled a massive fine against Google for anti-competitive conduct.
Again, it is not for me to say on the floor whether those fines are
justified. I don't think they are, but it is not for me to say.
Once more, what we need is the framework provided by the consumer
welfare standard. We must weigh the pro-competitive aspects of Google's
conduct with its anti-competitive potential. The ultimate inquiry
should be whether consumers are better off as a result of Google's
actions. Under the progressive standard, however, instead of asking
what lowers prices and increases quality--instead of considering actual
proof of harm to consumers--we would be asking what best serves the
social goals in vogue at the moment. The result would be an open
invitation to market intervention that is more politically motivated
than economically sound.
In conclusion, for all the past rhetoric, for all the claims that a
new age requires a new doctrine, the ideas behind the progressive
standard are not new. They are terribly old. They may be adorned with
original terminology or aimed at novel markets, but it is the same old
collectivist impulse it has always been. In that sense, these ideas are
not unique to Americans. Every day we receive concerning reports from
around the world that foreign governments are increasingly turning to
antitrust for industrial policy. Whether domestically or abroad, the
stakes are simply too high, the consequences too grievous for the
consumer welfare standard to be swept away in an instant, merely
because a new breed of central planners--falsely conceiving themselves
different from their predecessors--imagine they know best.
In America, we have always opted for the invisible hand of the free
market over the heavy hand of government intervention. Let's keep it
that way.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.
Mr. ROBERTS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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