Neo-Brandeis and Antitrust: an Olive Branch for Consensus

The predominant wave of criticism of the unilateral domination of consumer welfare as the sole antitrust goal since the late 1980s has triggered a reconsideration of pluralistic antitrust values. For example, challenges have been directed at the notions that industrial freedom and economic liberty are indispensable for a democratic capitalist society. Instead, there have been proposals to move beyond the corporate domination of a few[1] wealthy members of wider society and instead to nurture individual innovative entrepreneurs; otherwise, corporate monopolizations could also capture¹ –if they have not already been successful in doing so– antitrust agencies,² governments,³ and other vital political institutions through intense lobbying⁴ and special groups of interest. Advocates for consumer welfare are confused by references to such antitrust values of individual freedom and liberty,⁵ autonomy, and privacy,⁶ serving both businesses and consumers to the point that they reject them as antitrust goals. Nonetheless, antitrust values are not the antitrust goals. Recently, Nobel Prize winner in economics, Professor Stiglitz, advanced a novel understanding of freedom related to an economic and political system that delivers “not only on efficiency, equity, and sustainability but also on moral values.”⁷ For this to happen, economic freedom under antitrust law becomes an aspiration for social justice and well-being to insulate us from exploitative competition and market failure.

Revisiting the broken link between antitrust law and constitutionalism, another discrepancy permeates the dualistic function of antitrust law and policy, which not only seeks to correct market imperfections caused by inefficient⁸ industrial organizations or incompetent management but also safeguards fundamental constitutional values such as democracy.⁹ Individual freedom and industrial liberty¹⁰ are preserved, which is essential for an open market-based capitalistic system to operate, in which businesses flourish and deliver to consumers. However, such a constitutional reading of antitrust policy does not change the operational goals of US antitrust laws. Coincidentally spanning the same period since the late 1970s, the prevailing view of the EU courts has never unambiguously endorsed consumer welfare as their supreme antitrust goal, unlike the US Supreme Court.¹¹ However, more recently, the General Court made a sweeping endorsement by reference to the preservation of “plurality in a democratic society” in Google Android,¹² highlighting the crucial importance of consumer choice for the benefit of consumers. The Court of Justice also empowered consumer choice¹³ against the corporate interests of Meta, when the Court held that its personalized sensitive data-driven services cannot be objectively justified in the public interest.¹⁴

With the risk of oversimplifying the constitutional dimension of antitrust law for preserving the democratic form of government with individual civil liberties and the disambiguation of citizen-consumer rights, such recognition from the European Union also reinforces the consumer welfare paradigm in the context of digital markets. Applied to “Digital Empires,”¹⁵ the erosion of democracy towards a digital system of monopolistic tyranny¹⁶ in the age of fake news, widespread lack of transparency over data sharing, and algorithmic discrimination have challenged the limits of the traditional antitrust consumer welfare paradigm in the context of elections or for entertainment pursuits on social media and beyond. While antitrust law has yet to find a suitable legal avenue to address such recriminations against digital corporations,¹⁷ especially for the exploitation¹⁸ and algorithmic manipulation of consumer privacy under unfair competition, without causing a massive disruption¹⁹ to the traditional antitrust consensus,²⁰ antitrust boundaries must be reassessed to address contemporary challenges. Specifically, it is necessary to identify a common set of antitrust priorities and antitrust urgencies and, finally, agree on what amounts to an absolute antitrust emergency.

While the goal of stable consumer welfare is achievable, this does not mean that its consistency, coherence,²¹ and predictability²² cannot be reoriented towards pragmatic priorities, modified to ensure greater consumer privacy and choice, or even disrupted by a climate change emergency. However, accommodating socioeconomic needs²³ should not change the core substance of antitrust law: antitrust should not be a closed economic system like mathematics, but antitrust law should also not become devoid of economics or the delegated²⁴ forum for constitutionalism, IP, healthcare, taxation, privacy, or environmental²⁵ concerns. However, we also accept that antitrust intervention²⁶ in every sector of the economy makes antitrust the theory of everything and puts us on a collision course with established areas of law, as mentioned above. Therefore, even if this makes us uncomfortable, antitrust markets are subject to endless special regulations. Both sides of the law must be considered if there is a conflict of laws, such as a greenwashing conspiracy,²⁷ erosion of economic privacy, unfair terms in life insurance, private pension²⁸ policy, or even broken housing²⁹ or rental markets. While antitrust laws can simplify economic reasoning for greater accessibility and transparency, it is difficult to imagine an antitrust case without a proper economic analysis.³⁰ The tendency of the European Commission’s decisions has been to conduct economic and factual analyses to the detriment of legal interpretation. This debate demonstrates that there is a mismatch between economic assessment and legal interpretation, whereas some regard antitrust as the exclusive language of economics, which fails to distinguish between the broader values of antitrust, its inherent conflicts, and its relationships with other areas of law.

The perception of US under-enforcement³¹ of antitrust law, which has been the root cause of a wave of defensive reactions, must be balanced against the widespread monopolization of markets in the wake of contemporary challenges, namely, rapidly increasing monopolistic concentration caused by a sustained process of industry consolidation. Relaxed waves of approvals of mergers and acquisitions have contributed to social and economic inequality.³² Globally, the corporate giantism of freemium digital services has disrupted the data-sharing economy, including search, advertising, artificial intelligence, consumer communications, and, foremost, online shopping. This has involved eroding the economic privacy of online consumers in the form of their virtual and physical locations³³ as well as the willingness to pay, alongside sustainable efficiency for greening antitrust law.

However, a more nuanced view should be adopted to alleviate public perceptions of under-enforcement. As mentioned above, there has been a fundamental fear of enforcement errors³⁴ caused by intervening too early to correct the perceptions of market imperfections against new challenges. If there have been hardly any new monopolization cases since the adoption of the singular antitrust goal of consumer welfare, a pledge for more inclusive antitrust before the US Courts would suffice, coupled with remedial digital regulatory enactments.³⁵ This would offer much-needed certainty to businesses, especially regarding data combinations³⁶. While advocates of regulatory adaptation to address novel algorithmic challenges³⁷ are correct, given how the European Commission has dealt with abuses of digital dominance under the traditional antitrust paradigm, there is nothing to fear, as any new regulation of digital markets will have narrower applicability alongside the US Sherman Act and potentially expand the remit to capture unfair competition scenarios.

If the regulatory procedure for approving M&As is too permissive, the FTC could raise additional hurdles to capture hidden motives and implement more intrusive remedies. However, regulatory enactment seldom eradicates these monopolies. For instance, when Queen Elizabeth I was shown the truth about Crown monopolies, it took decades for anti-monopoly regulations to be enacted in 1624³⁸ to preserve individual liberty and freedom, which hardly eradicated monopolies in practice. Antitrust history teaches us that the propensity of enforcement success depends on good faith, and after a while, if future generations of antitrust enforcement struggle with the original mission due to fatigue or simply bad faith, then the range of antitrust goals needs to be reassessed to reach a renewed consensus and provide a proper sense of direction towards better and swifter antitrust enforcement.

Advancing a pluralistic antitrust paradigm changes the consumer welfare paradigm towards the public interest³⁹ in competition law, considering the manifold institutional mandate of the US FTC to oversee antitrust markets, consumer law, privacy, and unfair competition laws. In 1948, the U.K. Monopolies and Restrictive Practices (Inquiry and Control) Act did not make notable enforcement progress due to a perception of vague “public interest criteria”⁴⁰ despite being informed by economic thinking, such as productive and distribution efficiency, entrepreneurship, and technical improvements. Across the Atlantic, the EU Courts have never embraced Bork’s narrow or minimalist⁴¹ consumer welfare paradigm, opting instead for the “public interest⁴² to protect against market distortions of competition, as reinforced in Servizio Electtrico and European Superleague more recently, by discarding the singular “interests of competitors or of consumers.”⁴³

Despite the inclusive paradigm of citizens’ “well-being” as consumers since Telia Sonera to Servizio Elettrico, the EU courts have rarely handed down judgments that amount to discretionary antitrust goals, such as greening or social antitrust pursuits. In contrast, the US approach to antitrust goals, predating the consumer welfare paradigm, led to judicial discretion.⁴⁴ Therefore, when courts retain judicial discretion to balance divergent goals on a collision course, this does not necessarily mean that balancing happens unless there are extraordinary circumstances in the public interest. The latest pronouncement for business “equality of opportunity”⁴⁵ in European Superleague⁴⁶ demonstrates the EU Courts’ commitment to fairness, which is essential to safeguard the traditional system of “undistorted” competition⁴⁷. In addition, public interest considerations can be considered in the EU and UK merger control for security, defense, media plurality, and so on. However, the US view⁴⁸ remains skeptical that social considerations, such as job cuts, reduced wages, and health and environmental considerations, permeate US merger control. Furthermore, the statistics of overwhelming merger approvals do not confirm such fears. In contrast, there are hardly any political decisions based on labor and environmental considerations of public interest that can be detected in the vast wave of merger approvals. The current light-touch approach to merger control⁴⁹ based on economic considerations alone cannot justify the costs of running merger reviews and acts against the Robin Hood indirect welfare redistribution model. There are very few cases of blocked mergers; therefore, conditionally approved mergers cannot justify the enormous burden in terms of agency costs.

Regardless of how wide⁵⁰ or narrow the remit on consumer welfare will be, it will be decided⁵¹ by the US Supreme Court in the coming years. But the final decision to broaden the horizon of antitrust law will have to consider that none of the representatives of the Brandeis movement are “hipsters”⁵² and that this is a serious debate, not a battle of the egos. Finally, it was Justice Brandeis⁵³ who was appointed to the US Supreme Court under the influence of neo-classical Marshallian economics, which informed the view that monopolies would inevitably need to be broken up⁵⁴ to “promote the interests of consumers”⁵⁵ beyond greedy monopolistic pursuits. For Justice Brandeis, all economic activity was a “social process.”⁵⁶ Bork followed an economic approach to antitrust law,⁵⁷ which has also been heavily contested for excluding producers instead of social or total welfare,⁵⁸ to articulate the consumer welfare paradigm⁵⁹ in a populist fashion to resonate with widely defined consumers. However, in 1978, Bork did not have to fight climate change among the antitrust generation.⁶⁰ Therefore, Bork cannot be blamed for the subsequent contemporary twist in antitrust pledges; most certainly, Bork would have joined the prevailing public sentiment to advance a proper antitrust goal by finding ways to reflect consumers’ current needs.

Although antitrust rules have not been enacted⁶¹ to reduce inequalities⁶² of socio-economic conditions, before the enactment of the Sherman Act, there were socio-economic inequalities of opportunity and wealth that antitrust law as a modern Robin Hood was still indirectly able to reduce successfully. This has especially applied to corporate oligopolistic or monopolistic welfare, via the route of vigorous enforcement of antitrust law by levying substantial fines that redistributed funds to the public budget. However, the Robin Hood function of antitrust law does not work well for citizen consumers if there is under-enforcement, which explains the widespread criticism of increased inequality. If the ratio of successful monopolization cases fails to materialize an indirect redistribution of wealth, antitrust enforcement has a public trust problem and faces tougher public scrutiny. Rejecting an antitrust fairness pledge for smaller businesses, such as agrarian populism⁶³ for farmers and grocers, cannot do justice for consumers because individual farmers have inferior bargaining power compared to large oligopolistic supermarkets. To reconcile this position, issues of unequal⁶⁴ bargaining positions could be addressed under the remission of unfair competition laws.

Only vigorous antitrust enforcement can indirectly curb welfare inequality, but this does not make antitrust enforcement pursue a populist⁶⁵ agenda. Antitrust must deal with the root cause of inequality, namely, any unlawful means to achieve unparalleled wealth,⁶⁶ such as anticompetitive behaviors, a relaxed merger procedure, and even acquisitions. In addition, commentators⁶⁷ raised the duplication of efforts between the FTC and the DOJ as contributing to antitrust under-enforcement, especially in the appointment process to the DOJ.

The historical method of interpretation based on the legislative intent⁶⁸ of the US Congress found no supportive mention of efficiency as an antitrust goal. However, in the EU, its social market-based⁶⁹ system of capitalistic competition⁷⁰ must efficiently allocate available resources.⁷¹ When antitrust project efficiency is the goal of industrial organizations⁷² and businesses, additional connotations of sustainable efficiency⁷³ emerge in environmental economics.⁷⁴ However, this latest development does not substantially change the consumer welfare paradigm if we ask businesses to deliver at the lowest possible price⁷⁵ while maintaining high-quality sustainable products and services to consumers. Otherwise, consumer harm through a reduction in such standards would lead to inefficiency and impact the overall well-being⁷⁶ of consumers. Fierce or toxic competition, in which there is overall market saturation,⁷⁷ could also negatively impact businesses at a higher risk of unfair competition from powerful rivals. The value of fair competition is also used to calibrate the intensity of competition to an acceptable level for all businesses, regardless of their size.

Finally, although in Binon⁷⁸ and van der Woude,⁷⁹ the Advocate General of the CJEU reminded us of the “importance of a free and autonomous press in a democracy” and “a system of industrial democracy” protecting the collective rights of workers, antitrust law cannot substitute collective trade unions’ action to protect wages, equal pay, and boost bargaining⁸⁰ power. However, economic dependencies and unequal bargaining power can be considered monopolistic and unfair terms. However, this does not mean that antitrust can take on every case where there is unequal bargaining power outside oligopolistic and monopolistic positions. Such issues could again arise under the remit of unfair competition. This is not to say that there is no merit in intervening against monopolistic corporations that pay extremely low wages. The novel consumer welfare paradigm that incorporates sustainability could set much higher sustainable efficiency standards for businesses by choosing not to purchase products or services if they are delivered to consumers while compromising quality, the environment, and the exploitation of human labor as a workforce, including not paying decent wages, using child labor, and undermining collective bargaining.

The Neo-Brandeis movement captures the core tenets of sustainable efficiency for happy consumers and their well-being.⁸¹ It is a noble, not a populist,⁸² goal and deserves attention as the US Supreme Court would need to adjust the traditional consumer welfare paradigm to be more inclusive. As Nobel Prize winner in economics, Professor Stiglitz⁸³ argued:

The thorny issue of implementing more drastic remedies⁸⁴ beyond behavioral ones should not be rejected. Even one single successful antitrust case could successfully restore competition.