Exploring the cons of ‘antiracist antitrust’ policies

15 May 2023 00:00 by Kathleen Murphy

FTC

Commissioner Rebecca Kelly Slaughter tweeted about the Federal Trade Commission’s role and “how we can be antiracist” in 2020. Such policies could have unintended effects, says the outgoing president of the Federalist Society at Yale Law School.

Robert Capodilupo, graduating from Yale Law School this spring, published a paper, “#AntiracistAntitrust: The Impending Social Agenda of the Federal Trade Commission,” in response to Slaughter. His critique contends Slaughter’s proposal would classify one race over another.

Capodilupo told FTCWatch a problem that arises in Slaughter’s proposal “is for the promulgation of rules to specifically vary based on racial classifications, that certain considerations will be given to market actors. So, one race and not given to another. I think that should give one pause.”

Capodilupo, who is embarking on a federal clerkship in Miami, wrote in the paper “the implementation of an antiracist antitrust regime would yield a fundamental shift in the ways in which the FTC enforces antimonopoly and competition laws.”

“This 20-page paper, obviously, is not definitive evidence that the policies are categorically harmful. Again, the takeaway, I think, should be that the literature hasn’t really looked at the other side of the coin,” Capodilupo said in the interview.

Slaughter said she was unable to offer a comment because she hasn’t read the research paper.

In 2020, Slaughter said there should be more discussion about whether antitrust laws can play a role in racial equity. “I think the answer is YES!” she tweeted.

Some academics and policy wonks are studying whether antiracism could apply to antitrust:

An Antitrust Bulletin 2021 Symposium on Antitrust and Race featured University of Miami Law Professor John Mark Newman’s paper “Racist Antitrust, Antiracist Antitrust.” It said antitrust can and should help to address structural inequality within certain limits.

Joshua Davis, then-professor at the University of San Francisco Law School, with colleagues at Berger & Montague, wrote a 2021 paper saying antitrust may be able to fill gaps left by antidiscrimination law. Authors participated in a Rutgers Institute for Information Policy and Law panel, “Antitrust as Antiracism.”

An American Bar Association report on diverse consumers issued this year said merger analysis could be reoriented to capture harms and assess whether there’s an outsized impact on the economically or racially disadvantaged.

“In a lot of these instances, where race is considered a factor, and whether or not a merger should be approved, it leads to a high amount of uncertainty in the market and stands in the way of economic efficiency,” Capodilupo said in the interview. “I think also, it’s fairly interesting that in the experience of South Africa, it seemed to be that these policies did not have a broader effect on improving the economic conditions of Black South Africans overall.”

Slaughter had tweeted that South Africa offers a precedent for using antitrust to combat racism, because that country considers racial equity in antitrust analysis. Slaughter cited New York University School of Law Professor Eleanor Fox’s article which said “In South Africa, the question is not whether to incorporate ‘equality’ into the competition law, but how.”

Capodilupo said he’s skeptical of government being “in the business of picking winners and losers” but acknowledged a role for government. He cited the landmark case, Vietnamese Fisherman’s Association v. Knights of the Ku Klux Klan, saying it leveled the playing field for competition in the Texas fishing industry.

In that case, the KKK tried to destroy Vietnamese-Americans’ fishing businesses by burning their boats and threatening their lives, and the Vietnamese fishermen alleged violations under the Sherman Act and Clayton Act.

“Certainly, there is a role for the government and for antitrust policy to protect against those instances of racial discrimination. I don’t think any reasonable person would really argue with that,” Capodilupo said.

Capodilupo noted the scholarly literature has begun to embrace the principles of antiracism and apply them to matters of economic competition and market power.

“While thus far confined to the annals of scholarly discourse, such ideas may soon be reified into policy, given the recent ideological shift of the FTC board,” Capodilupo wrote.

But just chatter exists, with no concrete sign of bridging principles of antiracism with the reality of economic competition and market power.

My proposal is simple

Slaughter repeatedly has pointed out that harms of concentrated markets do not affect all people equally, so a facially neutral approach to competition isn’t fair or equitable.

In her 14-tweet thread from 2020, Slaughter said the US could create a more equitable and antiracist economy. She called for using existing tools, such as competition rulemaking and antitrust enforcement, to “address mergers and conduct that contribute to the systematic disadvantages facing Black consumers and Black-owned businesses.”

“As long as Black-owned businesses & Black consumers are systematically underrepresented and disadvantaged, we know our markets are not fair. We need to fix these inequities,” she said.

Slaughter proposed addressing “racial inequities affecting Black communities — some examples include predatory lending and sales practices,” and she highlighted discrimination in auto financing and consumer protection issues concerning artificial intelligence.

In November 2020 remarks to a forum on Women in Antitrust, Slaughter said “my proposal is simple: antitrust can and should be deployed in the fight against racism.”

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