OPINION — Antitrust for much of the last 20 years has been a quiet and sleepy conversation, left largely to practitioners and academics. But not anymore.
Antitrust has taken center stage on Capitol Hill as lawmakers on both sides of the aisle demand greater oversight of the tech industry. But those calling for a crackdown on some of America’s most successful companies ignore the essential nature of antitrust: It is not a political weapon but a tool of law enforcement. Its purpose is to ensure market competition, not to protect competitors, advance partisan aims or usher in sweeping social reforms.
Some have lost sight of what antitrust is for — and so, a reminder is in order.
To understand the proper role of antitrust, we must first understand what it isn’t. It isn’t the role of antitrust to punish success because consumers freely choose to reward companies for offering innovative products and services. If a company succeeds on the merits, all the better. But if a company becomes dominant through anti-competitive mergers or through conduct that artificially props up its position in the market, that’s where antitrust plays a critical role.
Even so, it’s important to remember that “dominance” itself is not an antitrust violation — nor is it something that lasts very long. Indeed, the rise and fall of prominent firms has been a constant narrative in America’s economic history.
Over the last century, many a corporation has ascended to the vaulted position of being the largest company in terms of market capitalization, only to see its star fall later. Kodak, Blackberry, AOL and Yahoo were all once synonymous with entire product categories or service offerings. Similarly, Woolworths, Blockbuster and Sears have all given way to new entrants that took market share away from their once enviable market positions.
All of these companies earned their prominence in the market by winning over consumers to their products and services. All of them also lost their dominance due to market conditions and competition, not antitrust issues.
Dominant firms naturally attract a certain amount of antitrust scrutiny. But it’s critical that such scrutiny be applied through the objective lens of law enforcement — not through the partisan prism of congressional hearings. Keeping antitrust free from politics is necessary to ensure that antitrust enforcement remains focused on facts, anti-competitive behavior and sound economic analysis.
The temptation to use antitrust for political ends seems to be growing on Capitol Hill. Many of the voices calling for greater antitrust scrutiny are interested in achieving broader societal objectives that fall outside the scope of antitrust law — for example, using antitrust tools to address job loss, income inequality or privacy.
The legitimacy of such concerns, however, does not support antitrust action. Antitrust appropriately has a limited focus on maintaining competition that best serves economic objectives. Its purpose is not to advance social objectives — something lawmakers would do well to remember.
Put simply, antitrust is “not” regulation; it’s law enforcement. Antitrust fundamentally believes market forces maximize efficiency in the market to the benefit of the consumer. That’s why we use antitrust to restore market forces when a firm’s conduct prevents the market from functioning efficiently.
By contrast, regulation drives specific market outcomes that extend beyond efficiency. In our democracy, the legislative process is responsible for setting regulatory priorities. For example, Congress is actively considering federal privacy legislation. The privacy debate is important, but privacy is not an antitrust matter to be decided by our antitrust agencies.
Understanding that antitrust is fundamentally a form of law enforcement underscores the need to protect it from politicization. Investigations demand due process, are highly technical in nature and should be conducted by experienced professionals.
Congress has every right to explore antitrust as a matter of policy. It can consider statutory changes to the laws and conduct oversight of antitrust agencies. But Congress also has a responsibility to resist the political temptation to make accusations of antitrust violations, to hold hearings that take on the tenor of an investigation, or to call for the breakup of firms.
None of this is to suggest that antitrust scrutiny should not occur. There are plenty of cases where enforcement actions are valid. But legislators should leave actual investigations to the law enforcement agencies and remember that antitrust should not be used for political ends.
Sean Heather is the senior vice president for international regulatory affairs and is responsible for antitrust policy at the U.S. Chamber of Commerce.