Dr. Aurelien Portuese, Director of ITIF’s Schumpeter Project on Competition Policy, made the following comments to the FTC’s open meeting on November 18, 2021:
(Starting at 31:05)
The FTC seeks public comments on its Draft Strategic Plan. Objective 2.4 of the plan specifies that the FTC would “advance racial equity, and all forms of equity, and support underserved and marginalized communities through the FTC’s competition mission.”
Racial equity is a major issue in the country, and some measures need to be adopted. But antitrust is the wrong means to achieve the legitimate end of racial equity. To incorporate an indefinite number of concerns into antitrust enforcement illustrates the continuous effort to undermine the consumer welfare standard as the most important criterion of antitrust enforcement.
Market competition must ensure economic efficiency. If antitrust enforcement has redistributive objectives, then there is a confusion between the fact that antitrust is about maximizing the economic welfare while other social policies are about sharing this welfare. To make antitrust redistributive rather than efficiency-based would hurt consumers of all colors, races, and religions.
Objectives of racial equity in antitrust open up the Pandora Box of arbitrariness for the sake of “modernizing” antitrust policy. For instance, would anticompetitive and non-efficient practices be exempt from antitrust enforcement only because “underserved communities” perform these violations? In reverse, would efficient and procompetitive practices be prohibited only because they insufficiently bolster the regulators’ conceptions of racial equity?
Racial equity not only is an efficiency-decreasing criterion of antitrust enforcement, but it also is non-administrable: What if a practice hurts Latino-owned businesses but benefits black-owned rival businesses? What if a practice benefits native Americans but hurts Asian Americans? Arbitrariness would undermine the credibility of the FTC since such policy is likely to face a judicial backlash.
Consequently, the strategic plan of the FTC should ensure that the FTC heightens its credibility. This can only be achieved by promoting antitrust enforcement in line with judicial precedents who use the consumer welfare standard as a way to ensure that antitrust remains efficiency-enhancing for shared prosperity.
Thank you for your attention.