'New Brandeisians' look to articulate antitrust philosophy

29 October 2019 00:00

Last week, a variety of attorneys and scholars crowded into a meeting hall at the University of Utah in Salt Lake City to discuss the future of antitrust enforcement.

Hosted by the university's economics department, the conference focused on the "New Brandeis" school of antitrust that aims to expand the purview of antitrust enforcement.

Yet as some speakers — including Columbia University law professors Lina Khan and Tim Wu, Open Markets Institute's Sandeep Vaheesan, and Facebook critic Dina Srinivasan — opined on a half-century of perceived lackluster antitrust enforcement, they also faced criticism for lacking a defined ideology.

Khan is currently a staffer on the House Judiciary Committee's antitrust subcommittee, which is in the midst of a digital markets investigation involving broad information requests to Amazon, Apple, Facebook, Google and their competitors. Khan didn't discuss the probe at the conference.

Named after Louis Brandeis, a US Supreme Court justice in the first half the 20th century, the New Brandeisian philosophy of Khan, Wu and others aims to expand the analysis of possible antitrust violations beyond the consumer welfare test, which aims to measure the harm to consumers from anticompetitive conduct.

Wu articulated "eight leading areas where I think there is a clear New Brandeisian view on what is going on here." Those include an increased focus on labor markets, the possibility that dominant companies have a "duty to deal" with their competitors, favoring structural remedies in merger settlements, and monopolization analysis for a company's "pattern of mergers."

For the last point, Wu mentioned Facebook's acquisitions of Instagram and WhatsApp, which are currently under investigation by the US Federal Trade Commission and state attorneys general.

"We're not there yet, I won't deny the fact that some of our panelists can't seem to think that we've figured out what we think is a problem," Wu said. "This is what is crucial to the success of this, is having our kind of eight or 10 areas we believe."

For University of Michigan law professor Dan Crane, that wasn't enough. Crane — who said he is not a New Brandeisian — said this conversation is important and challenged his colleagues to better articulate their goals.

"Can you come up with the 'Utah statement' on what are the goals of New Brandeisians?" Crane asked his fellow panelists. "And I don’t mean the laundry list of things Tim's talking about, which are the policy implementations of those goals. I'm talking about something elegant and operationalizable, like 'consumer welfare'."

Speaking to Wu, Khan and Vaheesan, Crane said, "If you three can't agree on all that, then I don’t really know where we are."

One area where everyone should be able to agree is the need for empirical analysis, Crane said.

Khan, though, pushed back: "It really is quite ambitious to expect that empirics and welfare economics in particular will be able to measure all the things that we think antitrust should care about, let alone all the things that we care about even if we don’t think that antitrust should encompass them. Part of this question is what should the role of economics and empirics be and what do we do when there are very clear limits of that?"

Khan questioned whether judges in the US are "really the best arbiters of what economics should be decisive."

Later in the conference, a federal judge may have offered some encouragement to the New Brandeisians. US District Judge Clark Waddoups of Utah, who before taking the bench litigated a number of prominent antitrust cases for defendants, said he has become "skeptical" about whether consumer welfare is the proper standard for antitrust cases.

Among the clients Waddoups defended  in private practice were the National Football League, Visa and IBM. Those and other cases "drove the law to the point of saying, 'Well, we just look at consumer welfare.' If this [conduct] is good for the consumer, then we're very reluctant to change it," Waddoups said.

Yet, "after 45 years, having watched what's happened, I've become very skeptical as to whether that's the right [theory]. Because it seems to me the underlying promise of the antitrust laws is that competition is what produces good results for the consumer," Waddoups said. "I have a complete shift in terms of my thinking about the role of antitrust."

Still, legal precedent for more expansive antitrust theories is scarce, and cases will be challenging, Waddoups said.

On the panel with Waddoups was Dina Srinivasan, who wrote a paper this year outlining a potential antitrust case against Facebook under the theory that the company has used its monopoly in social networking to induce its users to accept ever-decreasing privacy protections while turning over more data to the platform.

Waddoups called Srinivasan's paper a "great piece of work," but he said "looking to the courts to solve this is going to present some significant hurdles to get across."

"You're facing a case in which there is no precedent, you have no pricing. … You can't look at the normal factors that you look at in a normal case and say, 'Now this, this is relevant expert testimony,' " Waddoups said.

Waddoups told Srinivasan, "I was convinced by your paper that the case should be heard. I just think it’s a difficult job."

Wu and others took these comments to heart. On the sidelines of the conference Friday, he and Khan began drafting their Utah statement.

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