Yesterday the Information Technology and Innovation Foundation (ITIF) hosted its latest virtual event, “Reforming Antitrust Policy for an Era of Global Competitiveness,” with ITIF President Rob Atkinson, Professor Aurelien Portuese of Sain. Mary’s University, and Berkeley Research Group Chairman David Teece. Full video (1:28) is below.
Atkinson set up the discussion with the premise that European Union and United States antitrust policy may need to change—that is, loosen—to accommodate the consolidation of national champion-type firms in China, citing the proposed rail merger between Alstom and Seimens that was blocked by European regulators in February 2019.
The Alstom/Seimens merger was, in part, a reaction to the 2015 merger of two state-owned Chinese rail firms that created a new $26 billion company. If traditional antitrust enforcement prevents U.S. and EU firms from merging, the theory goes, the competitive advantages from new China-based megafirms will leave Western investors and consumers at a strategic disadvantage.
Focusing to this premise of competitive-bigness mergers, Atkinson divided the current state of the antitrust debate into “consolidationist” and “deconsolidationist” camps, with traditional antitrust skeptics like ITIF in the conslidationist camp, believing that larger firms possess beneficial and necessary advantages, while the deconsolidationists are mostly traditional antitrust enthusiasts like Federal Trade Commission member Rohit Chopra and European Commissioner for Competition Margrethe Vestager.
Professor Portuese’s presentation ties the EU’s 2019 rail competition decision to the more frequent complaints we’ve heard about the alleged dominance of big tech firms. In his view, the two big developments for international antitrust recently have been the “techlash,” including billions of euros in fines for Google and Facebook, and the rise of the “big entrants,” large firms that have been not just state-supported but at times state-created.
Both of these big-picture trends suggest to him that current antitrust law has an insufficiently dynamic outlook and is unduly precautionary. For some classic analysis on the perils of the precautionary approach to risk, see Greg Conko’s “Throwing Precaution to the Wind” from September 2000.
Teece’s presentation complemented Portuese’s approach but targeted his own two critiques: Current antitrust approaches in both the U.S. and Europe are excessively static and focused on the short run and are insufficiently integrated with existing trade, industrial, and technology policy.
Teece recommends a modification of the U.S. focus on the consumer welfare standard to a “general economic welfare” or at least a “long-term consumer welfare” standard. This approach would, in theory, put more emphasis on generating innovation in the future rather than focus just on what consumers are paying for today’s technology.
It’s only been a few weeks since organizations like ITIF have pivoted to an all-online events program, so we’re all still working out the kinks. Assembling a live three-person panel with panelists joining from three different continents is an impressive feat of organization, but this particular event did feature some unfortunate audio drop. That created a little confusion, but at least we all won’t be tested on every detail like the college students who have switched over to all-Zoom class sessions.
For more on the Competitive Enterprise Institute’s approach to antitrust policy, see our landing page, the 2019 study by Wayne Crews and Ryan Young, “The Case against Antitrust Law,” and our video “Antitrust, Explained,” below.