The Schumpeter Project’s Dynamic Antitrust Series: Discussions on the Future of Competition and Innovation
In a time of rapid technological progress, with digital innovations disrupting previously unassailable market leaders in all sectors of the economy, policymakers, civil society, and the voting public have become increasingly concerned with competition and antitrust issues. How do we ensure that competition on the merits serves the common good by spurring innovation and producing consumer benefits? Antitrust enforcement and reforms need to integrate market dynamics into antitrust enforcement to encourage innovation, not stifle it. Innovation-based antitrust would not only emphasize the importance of innovation as a source of competition but also encourage a dynamic approach to antitrust enforcement—or “dynamic antitrust”—in which regulators weigh factors such as firms’ dynamic capabilities instead of the traditional approach of static market analysis. In this conversation series, ITIF’s Schumpeter Project on Competition Policy hosts leading scholars and antitrust enforcers in Washington, Brussels, and elsewhere to discuss the path forward in making antitrust a foundation of innovation.
Discussion #17: “A Conversation With FTC Commissioner Noah Phillips”
Federal Trade Commissioner Noah Phillips informed President Biden on August 8 that he intends to resign his post in the fall. Phillips had recently sat down with Aurelien Portuese, director of ITIF’s Schumpeter Project on Competition Policy, to discuss Phillips’ experiences at the FTC.
Their conversation, which was pre-recorded as part of the Schumpeter Project’s discussion series on “Dynamic Antitrust,” covered Phillips’ views on free enterprise, liberty, and the process of creative destruction; what the life of a federal trade commissioner is like; his personal background—and what his future might hold.
Commissioner Phillips has contributed invaluably to the FTC as a sound and rational voice for the institution. He has also been highly accessible and humble, always keen to engage in intellectual debates and work across ideological lines to improve U.S. institutions while remaining committed to the fundamental principles of liberty, free enterprise, and well-functioning markets.
Watch the discussion with Commissioner Phillips.
Discussion #16: “Chief Economists’ Perspectives on Horizontal Merger Guidelines”
Earlier this year, the Federal Trade Commission and the Justice Department’s Antitrust Division announced plans to revise the guidelines regulators use to review horizontal mergers. The agencies’ request for public comment suggests the guidelines may not be adequate to “equip enforcers to identify and proscribe unlawful, anticompetitive transactions.” But is that really the case, or is the consumer welfare standard still an appropriate guide for assessing the potential harm proposed mergers may do to competition? And what about non-price harms from mergers, such as harm to innovation or quality?
Julie Carlson sat down with former chief economists from the DOJ and FTC to discuss their views on the planned revisions to the guidelines.
Watch “Horizontal Merger Guidelines”
Discussion #15: “The Regulatory Revolution Against Mergers”
The Federal Trade Commission and the Justice Department’s Antitrust Division have issued a public request for information that kicks off a process to “modernize enforcement of the antitrust laws regarding mergers.” Coming in the wake of an FTC vote last fall to rescind vertical merger guidelines that the FTC and DOJ issued jointly in 2020, the new review process signals regulators’ clear intent to completely overhaul the standards they follow to review proposed mergers and acquisitions. The underlying premise for this is the Neo-Brandeisian conviction that market consolidation has gotten out of control, giving rise to an era of monopoly. Meanwhile, considerations such as market efficiency and innovation are given little attention. What should we expect from this rewrite of merger-review guidelines, and what will the ramifications be for innovation and competition?
Watch “Revolution Against Mergers.”
Discussion #14: “FTC Rulemaking”
The Federal Trade Commission has outlined in its regulatory priorities for 2022 the desire to engage in rulemaking not only for consumer protection matters but, most controversially, for antitrust matters. The purported shift from ex post judicial enforcement to ex ante regulatory rules of competition leaves many questions unanswered, especially regarding the legality and economic desirability of such change.
Aurelien moderated a discussion with former FTC chairs Timothy Muris and Maureen Ohlhausen, and former FTC Competition Bureau director Bruce Hoffman.
Discussion #13: “Concentration”
In recent years, antimonopoly advocates and many in the media have advanced a narrative that there has been a dangerous increase in market concentration across the U.S. economy. This alleged increase in concentration is blamed for numerous economic woes, including slower productivity growth, stagnant wages, less business dynamism, and, most recently, higher inflation. Proponents of this narrative cite lax antitrust enforcement as the cause for increased concentration and call for radical changes to antitrust enforcement. What is the basis for the narrative of increased concentration? Has there really been a significant increase in market concentration?
ITIF’s Julie Carlson discussed the interaction between antitrust and concentration with ITIF President Robert D. Atkinson, Nicholas Trachter of the Federal Reserve of Richmond, and former DOJ official Gregory Werden.
Discussion #12: “Innovation”
Antitrust interventions aim to redress market failures and punish anti-competitive behaviors. However, antitrust enforcers excessively focus on static efficiency to justify these interventions, thus reduction of market power becomes the goal. Consequently, antitrust interventions can hinder a companies ability to survive long term competition in order to force short-term competition. To what extent and when does antitrust harm innovation?
For the 12th in a series of discussions on “dynamic antitrust,” Aurelien spoke with Professor Thomas Lambert and ITIF’s Julie Carlson.
Discussion #11: “FTC Rulemaking Authority”
U.S. antitrust laws are under fire—reforms appear inevitable in light of the techlash and the antitrust concerns in digital markets. Equally, EU competition law undergoes a significant overhaul with notably the Digital Markets Act. Do U.S. antitrust laws and EU competition laws eventually converge? Does Neo-Brandeisianism, now prevailing in the U.S., reinforce European ordoliberalism? How to further improve the cooperation between European antitrust enforcers and American antitrust enforcers in today’s fast-changing markets?
For the 11th in a series of discussions on “dynamic antitrust,” Aurelien sat down with Daniel Crane and Andrew Gavil.
Watch “FTC Rulemaking Authority.”
Discussion #10: “Self-Preferencing”
Should the government prohibit companies from favoring their products? However common this practice may sound, “self-preferencing” has recently become the source of concern from agencies around the world, including the Federal Trade Commission (FTC) and the European Commission. But self-preferencing often has pro-competitive and pro-innovative consequences that generate consumer benefits and foster innovation. The Schumpeter Project on Competition Policy has recently released a report on self-preferencing, concluding that proposed bans may do more harm than good.
For the 10th in a series of discussions on “dynamic antitrust,” Aurelien spoke to Herb Hovenkamp.
Discussion #9: “Biden’s Executive Order”
U.S. antitrust laws are under fire—reforms appear inevitable in light of the techlash and the antitrust concerns in digital markets. Equally, EU competition law undergoes a significant overhaul with notably the Digital Markets Act. Do U.S. antitrust laws and EU competition laws eventually converge? Does Neo-Brandeisianism, now prevailing in the U.S., reinforce European ordoliberalism? How to further improve the cooperation between European antitrust enforcers and American antitrust enforcers in today’s fast-changing markets?
For the ninth in a series of discussions on “dynamic antitrust,” Aurelien spoke to Carl Shapiro and Barak Orbach.
Watch “Biden’s Executive Order on Competition.”
Discussion #8: “Transatlantic Antitrust”
U.S. antitrust laws are under fire—reforms appear inevitable in light of the techlash and the antitrust concerns in digital markets. Equally, EU competition law undergoes a significant overhaul with notably the Digital Markets Act. Do U.S. antitrust laws and EU competition laws eventually converge? Does Neo-Brandeisianism, now prevailing in the U.S., reinforce European ordoliberalism? How to further improve the cooperation between European antitrust enforcers and American antitrust enforcers in today’s fast-changing markets?
For the eighth in a series of discussions on “dynamic antitrust,” Aurelien spoke to Eleanor Fox and Maria Coppola.
Watch “Transatlantic Antitrust.”
Discussion #7: “Dynamic Competition”
Market competition is frequently perceived from a static perspective by antitrust enforcers. The reduction of the number of firms, the degradation of the market structure, and the increase in the size of some companies are causes for antitrust concerns, and subsequently, for antitrust interventions. How relevant the model of “perfect competition” is for antitrust enforcers? What would a dynamic perspective of antitrust entail about the relationship between innovation and competition? If competition is a source of innovation, innovation is often a source of competition. This causal relationship is often overlooked. What would an innovation-based antitrust suggest for today’s antitrust debates?
For the seventh in a series of discussions on “dynamic antitrust,” Aurelien spoke to David Teece, John Yun, and Ioana Marinescu.
Discussion #6: “Antitrust Paradigm Shift”
Antitrust reformers are advocating for a paradigm shift in which antitrust enforcement would no longer focus only on rectifying harm but also seek to prevent harm from occurring in the first place. But what would this paradigm shift entail for companies, efficiency, and innovation? How would it integrate dynamic competition concerns? Professor Jonathan Baker’s book The Antitrust Paradigm: Restoring a Competitive Economy (Harvard University Press, 2019) critiques the current antitrust paradigm in which enforcement only occurs ex post facto and proposes how it should be changed.
For the sixth in a series of discussions on “dynamic antitrust,” Aurelien spoke to Professor Jonathan Baker about recommendations built on extensive experience in antitrust laws and their economic assessment.
Watch “Antitrust Paradigm Shift.”
Discussion #5: “Killer Acquisitions”
Is it true that markets are becoming too concentrated? More specifically, is it true that large companies are using mergers as a tool thwart competition and stifle innovation by killing off upstart rivals? These questions depend on how you define relevant markets for antitrust purposes. Legislative proposals in the United States and European Union would attempt to end so-called “killer acquisitions” by preventing companies with large market capitalizations from buying small firms. But would that also preclude “enabler acquisitions” that foster competition rather than stifle innovation?
For the fifth in a series of discussions on “dynamic antitrust,” Aurelien sat down with John Mayo, Douglas Melamed, Maureen Ohlhausen, and Daniel Sokol to discuss whether or not preventing mergers would promote competition or hamper innovation.
Discussion #4: “Big Tech and the Digital Economy”
What is the importance of technological disruption for economic prosperity and for the competitive environment? How should we organize policies to ensure greater innovation? Joseph Schumpeter pioneered the analysis of innovation with his intuitions that an endless process of creative destruction was taking place. In The Power of Creative Destruction, Philippe Aghion and his co-authors provide a refreshing and intellectually stimulating depiction of the Schumpeterian insights applied to our present day’s disruptive innovations.
For the fourth discussion in this series on “dynamic antitrust,” Aurelien and Philippe Aghion delved into how legislators and antitrust enforcers should manage the social disruption that innovation creates.
Watch “Big Tech and the Digital Economy.”
Discussion #3: “House Report on Big Tech”
The House Report on Competition in the Digital Markets issued last October constitutes the groundwork for the antitrust reforms expected this year. The report focuses on a handful of tech giants to draw policy recommendations about antitrust enforcement. One of the most dramatic policy recommendations of the report is the structural separation of digital platforms—namely, the break-up of tech giants such as Google, Facebook, Amazon, and Apple. What are the justifications for such a proposal and what are the possibilities for these break-ups to be part of foreseeable legislative changes?
For the third discussion in this series on “dynamic antitrust,” Aurelien welcomed FTC Commissioner Christine Wilson to discuss the report and the future of tech giants in the United States.
Watch “House Report on Big Tech.”
Discussion #2: “Innovation Matters”
Competition policy and antitrust enforcement have traditionally focused on prices rather than innovation. That is because economic theory shows the ways that price competition benefits consumers, and courts, antitrust agencies—and economists have developed quantitative tools for evaluating price impacts. But in his recent book Innovation Matters: Competition Policy for the High-Technology Economy, economist Richard J. Gilbert argues antitrust enforcement should shift from a price-centric competition policy to an innovation-centric one in order to protect incentives for innovation rather than static competition. In a high-technology economy, Gilbert argues, innovation matters.
For the second discussion in this series on “dynamic antitrust,” Aurelien and Richard Gilbert delved into the details of innovation-centric antitrust policy.
Discussion #1: “Biden Antitrust”
What will President Biden’s competition policy be? He faces immediate antitrust issues, from ongoing lawsuits against market-leading Internet platforms to calls for legislative overhauls of foundational laws like Section 230 of the Communications Decency Act. After the Trump administration, a tumultuous four years in which antitrust was characterized by regular and dramatic changes of attitudes toward tech companies, will Biden now resist the temptation of antitrust populism? Will he embed antitrust enforcement and reforms in an innovation perspective?
For the first discussion in this series on “dynamic antitrust,” Aurelien’s guests included former FTC Chairman William Kovacic and FTC Commissioner Noah Joshua Philips. They considered the policy prospects and institutional possibilities for antitrust in the Biden presidency.
