The recent actions and rhetoric from some lawmakers have illustrated just how critical it is to protect the consumer welfare standard, and with it, even-handed antitrust enforcement. Antitrust laws grant those in Washington with awesome power to intervene in the free market or, in extreme cases, even break up American companies. This power is intended to prevent a few companies from unscrupulously dominating the market, raising prices on consumers, and stifling competition. However, as the past few months have shown, this power can also be used for perverse purposes that can undermine the fundamental aim of antitrust laws.
It’s becoming increasingly common for lawmakers to look at antitrust laws as a Swiss Army knife to address a myriad of issues. This is a dangerous line of thinking that threatens to create unpredictability in the market, as companies must act in a manner that avoids the wrath of lawmakers on Capitol Hill. Sparring between lawmakers and private companies is not a new or even necessarily bad thing, but when those jabs turn into legislative proposals aimed at exacting revenge on private American companies, it becomes a major issue.
Senator Josh Hawley (R-MO) introduced legislation taking aim at so-called “Big Tech” which would place significant anti-competitive restrictions on mergers and acquisitions as well as increase the penalties that could be levied against companies who violate antitrust laws. Senator Hawley chose an arbitrary $100 billion market cap to ban mergers and acquisitions to target the companies he wants to punish, but if this standard was adopted, it would disincentivize investment in smaller companies and could lead to less innovation. In a similar vein, Senator Elizabeth Warren (D-MA) tweeted at Amazon saying “Big Tech”must be broken up so they’re “not powerful enough to heckle senators.” It should go without saying, but policymakers breaking up successful American companies because they tweet at them is bad policy.
After Major League Baseball (MLB) decided to move the All-Star game from Georgia to Colorado in response to Georgia’s new election laws, there was near immediate backlash. It is understandably frustrating for Georgians who were looking forward to an economic boon. The rhetorical backlash from prominent conservatives is not problematic on its own; however, following the change in venue, the call from some on the right to remove antitrust exemptions for MLB is wrong. Good-faith arguments can be made on antitrust reform, but legislation designed to coerce private companies into complying with politicians’ goals is not in the best interest of taxpayers.
The consumer welfare standard has been the North Star of antitrust enforcement for decades because of this exact reason. Using consumer harm and competition (not providing marketplace advantages for certain competitors) as the basis for understanding whether companies are violating antitrust laws ensures a light-touch approach to government intervention. The free market cannot function properly if a wrecking ball can come in at any moment a politician feels slighted.
Content moderation, privacy, and other business decisions can be frustrating, but using antitrust as both a carrot and stick to keep private companies in line with lawmakers’ beliefs is not the role of policymakers. It’s also head scratching why some on the right would push for more partisan antitrust enforcement when they do not control the Legislative or Executive Branch. While technology companies might be a source of bipartisan anger now, departing from the consumer welfare standard could open the door for the majority party to subjectively punish companies who do not comply with their worldview. That is not just bad for the private sector, but for consumers as well.