New CEI Paper Outlines Key Reforms to Aim State Antitrust Efforts Toward Consumer Welfare

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In his 1978 book The Antitrust Paradox, Judge Robert Bork argued that the only benefit of antitrust law was to improve “consumer welfare.” Rarely has a single book had such a sweeping impact. In just a few years, Bork’s take became the consensus among federal antitrust enforcers.

In the last few years, policymakers and advocates on both the left and the right have argued the time has come to redefine the aims of antitrust policy, chiefly around preventing companies from becoming too big and promoting competition between companies in the same market. Senator Elizabeth Warren (D-MA) recently voiced enthusiasm for breaking up grocery chains, singling out industry leader Kroger and saying, “We need to strengthen our antitrust laws to break up giant corporations and lower prices.”

In a new paper for the Competitive Enterprise Institute (CEI), senior fellow Mario Loyola writes that unlike their federal counterparts, antitrust enforcers at the state level often use antitrust law to shield powerful local constituents from competition. In The State Antitrust Paradox, Loyola argues that state-level policymakers would benefit from absorbing the key insights of Bork’s book. He makes four concrete recommendations that would help ensure consumer welfare is at the center of state-level antitrust enforcement.

Loyola recommends the following concrete steps to reorient state level antitrust enforcement around consumer welfare:

  • Congress should repeal the Hart-Scott-Rodino Act and preempt states’ ability to bring parens patriae (parent of the country) suits.
  • Congress should work to eliminate overlapping areas of federal and state antitrust jurisdiction, by preemption if necessary.
  • States should, as a matter of policy, avoid involvement in cases that federal antitrust enforcers are investigating.
  • States should use antitrust laws to challenge other states’ use of state action to protect their constituents from competition.

“Instead of using antitrust laws to protect local interests from out-of-state competitors, states should use the antitrust laws to challenge the state-created cartels and monopolies of other states,” said Loyola. “As a general principle, federal agencies should not concern themselves with purely local matters, and the states should only concern themselves with purely local matters.”

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