FTC Begins Hearings on Antitrust Policy Review
September 19, 2018
The Federal Trade Commission (FTC) held its first of a series of hearings last week to review U.S. competition policy and whether antitrust enforcement needs to be revamped because of increased industry concentration, especially with the dominance of technology giants, such as Apple, Google and Facebook.
Behind the FTC review is mounting evidence from economists that industries have grown steadily more concentrated, allowing large companies to dominate markets, leading to low investment by companies, weak productivity growth, higher profits and lower wages for workers as a result of the consolidations. At the same time, as merger and acquisition activity has increased, antitrust enforcement by the FTC and Department of Justice has not picked up.
One of the key questions from the FTC for its hearings is whether evidence of industry concentration and market power stems from the government not blocking enough mergers and bringing a monopoly case or whether some companies dominate markets by producing better products and services consumers and businesses want.
Two themes emerged from this hearing. First, there was a lack of consensus from the witnesses on the nature of antitrust today and the FTC’s role in enforcement. The debate largely involves the proper standard for an antitrust action with some witnesses questioning the prevailing “consumer welfare standard” that focuses on the surplus gains for consumers while disregarding producers’ efficiency gains. Critics of the standard said it fails to take account policy goals beyond consumer welfare, such as inequality, labor issues, and excessive political power.
Second, there was debate over the FTC’s duty to consumers with respect to privacy. Because of the difference between U.S. and European Union approaches, some witnesses questioned the FTC’s efforts to balance industry standards and self-regulation with consumers’ privacy needs.