Free Market

Antitrust Law: Politicizing Not the Answer

Tomorrow, Senator Mike Lee will host a hearing of the U.S. Senate subcommittee on Antitrust, Competition Policy & Consumer Rights. The purpose of the meeting is “Stacking the Tech: Has Google Harmed Competition in Online Advertising?”, aiming to take a look at whether Google has in fact been anticompetitive in the online advertising industry.

The concept of antitrust was cemented in legal statute with the passage of the Sherman Antitrust Act in 1890. The bill served as the first written text of establishing the standards of what could be deemed anti-competitive behavior. This was further reinforced when the Clayton Act was passed in 1914 as a method of preventing mergers from occurring that could potentially stifle competition. This was coupled with the formation of the Federal Trade Commission, which would serve as the administrative body that had the legal authority to investigate mergers and prevent potentially unfair practices and mergers from happening. 

Antitrust law was originally focused on a standard called “the rule of reason”. The rule of reason standard was used for most of antitrust regulation’s history. Under this standard, judge’s heavily use their discretion—whatever they think is reasonable is the rule. This led to focuses on firm size or market share, a bias that does not necessarily convey antitrust concerns properly. The standard also suffers from a lack of clarity, as the evidence threshold is unclear, leaving defendants against such suits in a compromised position.

In 1979, the courts shifted away from the rule of reason standard to what has been used to this day, the consumer welfare standard. This standard focuses on whether or not consumer harm. Big was no longer necessarily bad. As a result, more companies were able to flourish, and consumers were the beneficiaries of the new goods and services they were exposed to. The last major antitrust lawsuit came just over twenty years ago against Microsoft, which ultimately ended in a draw between the company and the FTC.

The consumer welfare standard for antitrust laws in the United States is one of the important reasons why so many firms want to open their doors here. Antitrust should never be used to achieve political goals and the government should not be in the business of picking winners and losers through antitrust. Enforcement rather than the radical transformation of the antitrust laws demanded by some politicians is key to ensuring that our antitrust laws remain intact.

Senator Mike Lee understands antitrust laws and how they should be applied. While he is mindful of the concerns over potential liberal bias that might exist in journalism and social media companies, he correctly recognizes that those issues are separate from questions surrounding antitrust and anti-competitive behavior by firms. Many of the issues being raised by other conservatives surround Section 230 of the Communications Decency Act, which is a separate issue, one that Senator Lee correctly identifies is not covered by his subcommittee.

The nation’s antitrust current laws: the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, are incapable of regulating political bias that may exist in technology or media companies. In order to truly protect Americans’ fundamental rights to free speech from those who would seek to silence them, it is imperative to be fully informed about where the dangers to those rights are coming from, and what potential steps could be taken to mitigate those risks. 

We thank Senator Lee for being a strong and consistent leader on this issue. Providing an opportunity for a serious discussion will allow for an honest conversation to be had.  We hope to see him continue to stand and support the consumer welfare standard of antitrust, and be a strong opponent of allowing such a critical institution to become politicized and used as a weapon against companies, simply because certain political figures may not like the company in question.