Proponents of the current transformation in America’s competition policy managed to shape legislative reform proposals, push public antitrust agencies to boost enforcement, and successfully pressure the Biden administration to appoint transformation advocates to high-level competition policy positions, all over a remarkably short period. How did this development, which seemed improbable only five years ago, come to pass? A new paper offers an explanation.

Editor’s note: the following piece is excerpted from “Root and Branch Reconstruction: The Modern Transformation of U.S. Antitrust Law and Policy?”, which first appeared in Antitrust magazine in Summer 2021. 

The United States stands at the threshold of a major realignment of its competition policy regime. How did this development, which seemed improbable only five years ago, come to pass? In a recent paper, I offer an initial explanation. It focuses on the shocks generated by an extraordinary body of recent commentary and related advocacy that depicts US antitrust doctrine and policy since the late 1970s as derelict and demands a transformation of American competition policy.

Transformation proponents have seized the momentum in debates about the US regime. Their advocacy has shaped legislative reform proposals, pushed public antitrust agencies to boost enforcement, and pressured the Biden administration to appoint transformation advocates to high-level competition policy positions. On June 15, 2021, Lina Khan, one of the transformation movement’s leading figures, was sworn in as Chair of the Federal Trade Commission.

Even if they achieved no further success, the transformation proponents have shown how advocates of sweeping policy reform can challenge a well-entrenched framework of ideas and implementing institutions. This Comment considers the ascent of the transformation movement as a force in the US antitrust regime. I situate the transformation movement among competing schools of contemporary antitrust thought before describing how the transformation movement gained influence. The Comment offers tentative thoughts about the transformation movement’s future success in achieving a top-to-bottom overhaul of the US antitrust system.

As a starting point, major implementation obstacles confront any attempt to reconstruct US antitrust policy. In discussing how history can inform government policy, Richard Neustadt and Ernest May posed a simple test for implementation: “Will it stick?” Making reforms stick requires the construction of what Graham Allison called “the path between the preferred solution and the actual performance of government.” Neustadt and May found that misjudgments about public policy “are mostly in the realm of feasibility.”

Forming a consensus to support basic change is a necessary foundation for transformation. The vital next step is to find the often-elusive implementation path that Allison described a half-century ago. Inattention to implementation failures that have crippled earlier antitrust reform campaigns may be the transformation movement’s greatest vulnerability.

Two preliminary observations are in order. The first involves choosing a vocabulary to describe the contestants in today’s policy debate. Some observers refer to transformation advocates as antitrust “hipsters” or “populists.” Transformation proponents at times call themselves “New Brandeisians.” The terms used here try to convey more accurately the policy aims of each group in the modern debate. The term “transformation” expresses the movement’s main ambition: what Sandeep Vaheesan has called a “root and branch reconstruction” that aligns doctrine and policy with an egalitarian vision of citizen welfare and strives to dissolve monopoly power.

The second observation concerns perspective. I am not a neutral observer of the events described here. I was General Counsel at the Federal Trade Commission from 2001 to 2004, served on its board from 2006 to 2011, and chaired the agency from March 2008 to March 2009. These years fall within an era of federal antitrust enforcement that transformation advocates depict as abysmal, a characterization I reject. But my aim here is to explore how the transformation movement emerged and to ponder its future impact, not to assess the merits of its program.

“Years from now, students of policy advocacy will study how advocates of transformation challenged a deeply entrenched status quo, inspired a basic re-examination of the proper aims of antitrust policy, and pushed the system toward a bolder program of intervention.”

The Modern Competition Policy Debate

Three schools of thought dominate modern debates about the US antitrust system. The descriptions here are simplifications. None of the schools is self-contained or single-minded. Indeed, expansionists and transformationalists share some policy preferences—e.g., that government antitrust agencies use their existing powers to police mergers and dominant firm conduct more aggressively. The antagonism between these two groups obscures the considerable extent of their common cause.

Traditionalists: Leave It Alone. One group of commentators opposes major changes to (much less, transformation of ) US antitrust policy. They are “traditionalists” in the following sense: they generally applaud the intervention skepticism of courts and enforcement agencies and support the application of an efficiency-oriented consumer welfare standard. Traditionalists endorse a federal enforcement agenda that focuses mainly upon cartel agreements, large horizontal mergers, and government policies that impede new entry into markets. Traditionalists entertain some modest extensions of current legal doctrine and contemporary enforcement policy, but they insist that such adjustments rest upon widely accepted and empirically tested economic concepts.

Expansionists: Do More with the Existing Tools (and Add New Policy Instruments). A second school, referred to here as “expansionist,” proposes significant extensions in competition policy, but it rejects the restoration of an egalitarian goals framework and broad application of structural remedies to deconcentrate the American economy. Carl Shapiro describes the group’s philosophy as “modern” in the sense that it seeks to expand enforcement based on “what antitrust scholars and practitioners have learned in recent decades and reflecting how the economy has evolved over time.”

Expansionists embrace a concept of consumer welfare that encompasses effects on prices, quality, and innovation, and also safeguards the well-being of workers by constraining the exercise of monopsony power by employers. Expansionists contend that learning in industrial organization economics since the late 1970s dictates more activist antitrust policy.

For expansionists, existing antitrust doctrine, though too permissive, presents important untapped possibilities for useful intervention. Realization of these possibilities would employ creative applications of existing doctrine20 and a recalibration of error cost analysis, which to date has treated the hazards of intervening too much (for example, to control mergers and improper exclusion by dominant firms) as exceeding the costs of intervening too little. In an expansionist program, federal enforcement agencies should change their appetite for risk by bringing more cases in the courts, even if the cases might fail.

Beyond urging antitrust agencies to do more with what they have, expansionists have endorsed legislative proposals to expand funding for the DOJ and the FTC; repudiate certain Supreme Court antitrust decisions; create presumptions of illegality for various mergers and forms of single-firm conduct; and authorize the adoption (perhaps by the FTC) of ex ante rules to control large information services platforms.

Expansionists present their program as occupying a sensible, pro-enforcement middle ground between hyperactive transformationalists (“populists”) and do-nothing (or do-little) traditionalists. In this framing exercise, expansionists scorn a number of stringent rules (e.g., for merger control) that transformation advocates hold dear. Some expansionists also deride transformationalists as “extremists” and naive in their assumptions about the implications of transformation proposals to deconcentrate American industry.

Transformation: Root and Branch Reconstruction

Transformation advocates endorse various elements of the expansionist agenda as necessary but not sufficient. They would, for example, argue for stronger application of existing enforcement tools, acceptance by enforcement agencies of a greater appetite for litigation risk, and repudiation of confining judicial precedents. Most important, the transformationalists insist upon restoring a citizen welfare goals framework that is true to the egalitarian aims of the original antitrust statutes and is embraced in earlier Supreme Court decisions such as Brown Shoe Co. v. United States.

This is the defining characteristic of the transformation cause, the main distinction that separates the transformationalists from the expansionists. The reorientation of goals is the foundation for the transformationalist reform program. It includes intensified enforcement, with more use of structural remedies; curtailment of advocacy and law enforcement efforts that challenge occupational licensure restrictions or attack efforts by low-income service providers to raise their fees; renewed prosecution of Robinson-Patman Act cases; and rulemaking to control large digital platforms.To this end, transformationalists regard a steadfast commitment to the citizen welfare standard to be an indispensable requirement for candidates aspiring to lead the DOJ or the FTC.

“Further study of AMERICA’S COMPETITION POLICY HISTORY arguably is necessary for transformation advocates to see more clearly the obstacles that lie before them and find ways to overcome them.”

Transformation advocates denounce the performance of the federal antitrust agencies since the late 1970s. They argue that the DOJ and the FTC have formed cozy relationships with the business community and its advisors and that some agency leaders have embraced an unduly diminished role for antitrust because they ultimately aspire to lucrative private sector posts.

Transformationalists widely assign blame for the decay of federal enforcement. More than any other target, transformation advocates berate the Obama antitrust agencies for promising a major expansion of enforcement and delivering little. Thus, a reform bonfire is needed to scour the institutions, purge them of timidity, and restore an uncompromising commitment to bold enforcement.

Advocates of the root and branch reconstruction of the US antitrust system have changed the policy debate. Years from now, students of policy advocacy will study how advocates of transformation challenged a deeply entrenched status quo, inspired a basic re-examination of the proper aims of antitrust policy, and pushed the system toward a bolder program of intervention. This is a striking achievement, accomplished through the creation of a new community of commentators who bypassed the antitrust establishment.

The transformation policy agenda promises to anchor discussions about antitrust policy for years to come. Will the transformation movement restore the primacy of egalitarian values and mobilize sustained efforts to deconcentrate American commerce? The transformationalists have relied heavily upon a reinterpretation of America’s competition policy history. To my mind, further study of that history arguably is necessary for transformation advocates to see more clearly the obstacles that lie before them and find ways to overcome them.

Disclosure: William E. Kovacic serves in an unpaid capacity on the international board of advisors for the Global Antitrust Institute (GAI) of the Antonin Scalia Law School of the George Mason University and on the advisory board of CRESSE, a network of academics and professionals affiliated with universities, government agencies, law firms, and economic consultancies. The GAI’s corporate donors for the period from FY 2018/2019 to FY 2020/2021 included Amazon, Facebook, Google, Qualcomm, and Visa. CRESSE’s sponsors for its annual antitrust conference include corporations and economic consultancies. Sponsors for the CRESSE 2021 Annual Conference included Amazon, Brattle, Charles River Associates, Compass Lexecon, ECA Economics, Facebook, and Google.

Editor’s note: The author’s disclosures have been updated after publication.

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