Institutional change, on any fundamental level, will have those that seek to defend the status quo up in arms. But in order to effectively curb illegal mergers and monopolies, the FTC must stop paying attention to the antitrust religion of consumer welfare.

Earlier this week, Professors Sokol and Wickelgren published a post warning of issues at the Federal Trade Commission. This piece responds to their concerns.  

The FTC should play an essential role in curbing illegal mergers and monopolies. Increasing its enforcement would be welcome. But to do so effectively, the FTC must stop paying attention to the antitrust religion of consumer welfare—the legal doctrine that directs enforcers to only pursue anticompetitive conduct that harms consumers, and the dominant paradigm in antirust enforcement for the past 40 years—that perpetuates a regime that makes law firms and economists rich, markets more concentrated, and the world worse off.

The Religion of Consumer Welfare

Proponents of consumer welfare theory purport it to be science, having borrowed the notion from physics. It is beyond the scope of this piece, but an example from my article should suffice.  Efficiency in physics measures how much energy is preserved by a system. The greater the preservation of energy, the greater the efficiency of the system. However, most physical processes cannot be reversed, especially those that involve things such as electrical generation or heat. Most energy processes are not fully efficient.

Consumer welfare theory is essentially the bastardization of physics into economic theory. As Robert Bork stated in The Antitrust Paradox: “Consumer welfare is greatest when society’s economic resources are allocated so that consumers are able to satisfy their wants as fully as technological constraints permit.”

However, the welfare of the economic system as it changes in relationship to, say, a merger, is not what is examined. Instead, what is examined is change in a “relevant market,” which was initially scrutinized to determine injury to consumers within that market. Thus, the merger creates changes in the relevant market only, and only those changes that remain in the market are considered positive or negative. Every other change is beyond the scope of examination. As an example, one type of efficiency for a merger in a relevant market might be massive layoffs. The effect of those layoffs falls beyond the scope of antitrust but may well count as positive for the purpose of antitrust analysis.  

If other areas of the law followed similar polestars, the problem would be obvious. Consider a policy in which a polluter lowered costs by dumping pollution into a river is hailed as a consumer-welfare enhancing hero while people die because their water is poisoned: “Let someone else figure out why people are dying. That’s not our beat.”

This is what I mean by the religion of consumer welfare: A belief that those issues will be addressed elsewhere, and the maximization of consumer welfare over everything else is a “good.” It is an ethical consideration.  

Followers of a New Religion Enter the Scene

The Biden Administration has laced the FTC and other key positions with the “Neo-Brandeisians”—or “populists,” as Sokol and Wickelgren describe them. There is little that unites the Neo-Brandeisians into a school of thought, except perhaps the belief that the religion of consumer welfare is wrong. As for what religion should be in its stead, there has not been much consistency. It is a school of thought that has not quite established its ethical underpinnings.  

But the attack on consumer welfare and the misapplication of the antitrust laws is nothing new. For more than 30 years, many scholars have criticized the application of antitrust laws, many based on theories that conflict with consumer welfare theory. The thing that unites these scholars with the Neo-Brandeisians—who mostly ignore them—is they seek to make antitrust great again. The intellectual underpinnings of the future of antitrust might already be right there before them. Consumer welfare has been definitively attacked for its intellectual poverty, and will continue to be so. 

Sokol and Wickelgren argue that FTC Chair Lina Khan is currently ignoring “stakeholders” in the antitrust system, presumably including FTC staff, defense counsel, and merging parties. The “stakeholders” the authors seemingly seek to protect will fight vigorously for the consumer welfare religion they have adopted. Every movement of antitrust since the 1970s has been in furtherance of the consumer welfare religion. 

It’s also only natural for folks to strongly defend the status quo with shots such as this one from Sokol and Wickelgren: “The Biden administration is following the Trump Administration’s approach of prioritizing loyalty and ideology over expertise and experience among staff.” The difference between expertise and loyalty is merely one of label. Check out the history of the revolving door of antitrust enforcers. Are they appointed due to loyalty or due to their “expertise”? Hard to say, and it sounds like more of an ad hominem. Real change is difficult.

Sokol and Wickelgren also have specific concerns worthy of addressing in turn.

“Fewer Judicial Checks on bureaucratic power.” I’m not sure why Sokol and Wickelgren think that the FTC is less subject to judicial review now than it was before. If anything, there is real concern about whether independent agencies might survive the current Supreme Court. Several Justices have expressed skepticism as to whether Congress can delegate its legislative powers to independent agencies (a principle administrative law types call the “non-delegation doctrine”). In an era in which several Supreme Court justices may revive those non-delegation concerns, it seems that nearly everything is potentially subject to judicial review.

Moreover, there’s no evidence to support concerns of an FTC gone wild. To the extent the FTC seeks to redefine the boundaries of Section 5, isn’t that a legitimate use of agency authority? Is that not what other independent administrative agencies do?

Sokol and Wickelgren lament a lack of judicial oversight. I agree with them, perhaps more broadly than they wish. During the past 17 years, the DC Circuit has pretty much precluded any court within its jurisdiction from interfering in a consent decree, an agreement between merging parties and the Department of Justice’s antitrust division. Such agreements require the court to find the decree in the public interest, according to the Tunney Act. In fact, the standard established by the DC Circuit all but precludes judicial review. I did not hear the cries from anyone, (except perhaps myself) about the complete abdication of judicial responsibility under the Tunney Act.


Internal Decision Making. Sokol and Wickelgren argue, “Studies across fields show the importance of diverse viewpoints in creating more effective outcomes. Yet the FTC, said Wilson, has erected walls between majority Democratic and minority Republican Commissioners—they no longer share drafts of decisions, which is unprecedented in modern antitrust history.”  

I agree with them as to the minor point: drafts ought to be shared. But to me, they have just made a very good argument for the elimination of the Department of Justice’s antitrust division, an executive branch agency run by members of only one political party at a time. And there have been times, such as when President George W. Bush’s team took over from the Clinton Administration, that diverse viewpoints were not heard. For example, during the remedy negotiations ordered by Judge Kollar-Kotelly in the DOJ’s litigation against Microsoft, trial staff was ignored and belittled. To the extent that there is great concern about the politicization of antitrust, it would seem that it is the DOJ side that is most concerning. 

Rejection of Expertise. Sokol and Wickelgren argue that “the current FTC leadership criticizes reliance on economic analysis, caricaturing academic literature to justify dropping the agency’s guidance to companies about which vertical mergers may be challenged.”    

I agree that staff ought to have been consulted, but this is by no means the first time this has happened. Staff are frequently left out of decisions, both in regard to policy and to cases under their control. But if we’re worried about keeping talented staff, the authors forget how often staff has been ignored, abused, insulted, and demoralized by political appointees of both parties. I already mentioned the Bush administration’s outright hostility to trial staff in Microsoft. Or how about the frustrations of staff at the DOJ for what happened after the suit was brought to stop the American Airlines-US Airways merger? If we are going to lament the politization of antitrust during and after the Trump Administration, best to check prior administrations, too. 

Yes, a larger policy issue is at stake, so I understand the frustration as to reasons given for the withdrawal of the Vertical Merger Guidelines. But this is a battle of religion. At its core, it is a debate about what is valued and what isn’t. 

Undermining Accountability. Sokol and Wickelgren lament that the FTC’s expanded goals are not susceptible to the democratic process. This is odd, given that “stakeholders” have not complained about the constriction of the FTC Act to already existing antitrust laws. Others have

The accountability that Sokol and Wickelgren seek continues as it always has. What Congress gave, Congress can take away. While it is true that independent administrative agencies like the FTC, as a whole, are not directly susceptible to the democratic process, there sure seems to be a lot of influence via budgets, legislation, and nominations. 

There is also judicial scrutiny that could limit the FTC’s authority. According to the Supreme Court, administrative agencies have broad discretion to interpret their own statutes in instances in which a statutory provision is ambiguous as to the issue in question or where Congress has explicitly left a gap for the agency to fill. The FTC has not been given as much “Chevron” deference as it deserves in terms of interpretation of its own statute. Maybe it’s time.

In contrast, other administrative agencies vacillate far more than the FTC. As the DC Circuit itself pointed out in regard to the National Labor Relations Board, “It is a fact of life in NLRB lore that certain substantive provisions of the NLRA invariably fluctuate with the changing compositions of the Board.” So long as the agency’s interpretation is consistent with its statute and does not cause retroactive liability arising from its new interpretation, policy deviations are the norm.

In short, to the extent that Sokol and Wickelgren believe the FTC is currently misbehaving, they can take comfort in the fact it is not the first time an agency has done so, and Congress and the courts are there to protect the democratic process—at least in theory.

As an example, one possible cause for concern could be the use of agency emails to hold votes, with a departing Commissioner’s vote as a tiebreaker. This practice has been dubbed zombie voting.

Due Process. Sokol and Wickelgren suggest due process is lacking because “stakeholders” lack adequate comment. In particular, they lament the limited time the agency afforded stakeholders to respond to the FTC’s plan to “drop” the Vertical Merger Guidelines. But that’s not due process. Due process is a bigger thing in terms of formal adjudication and much less so in informal rulemaking. But we are not even talking about informal rules—we are talking about guidelines. Under the Administrative Procedure Act (APA), there is no requirement for notice and comment. In the rest of administrative law, guidelines are not gospel—otherwise, they would be rules subject to the Administrative Procedure Act’s (APA) rulemaking requirements. Only in antitrust are they considered with such religious regard.

A Way Forward. Sokol and Wickelgren state, “Commissioners should embrace procedural fairness principles of due process, transparency, and genuine openness to input. Such an embrace creates better evidence to shape outcomes.” Issues with transparency and openness to input predate this administration: In many instances, antitrust enforcement agencies have bordered on the snarky. Transparency? They said, no thanks. Lack of transparency makes it easy for agencies to claim that they know better, because outsiders don’t have all the information—a convenient Catch-22.

Sokol and Wickelgren continue: “[T]he FTC should create substantive legitimacy. Deliberation on the substance requires acknowledging both the benefits and costs.” That is not what has happened to date, unless the world only involves consumers, and perhaps not even then. The use of economic analysis has been more partisan than Sokol and Wickelgren believe. As an example, consider how some economic analysis contained in John Kwoka’s excellent book was attacked (even from within the antitrust agencies). 

Sokol and Wickelgren next advise FTC leaders to “use the expertise and experience of the FTC staff.” I agree. But listening does not mean requiring things to stay the same. Any change will always encounter defenders of the status quo; if they are ignored, they might go into private practice. This has all happened before. The revolving door from agency to private practice and back again continues to spin. The only difference this time is that some are trying to change the status quo in very serious ways, and that has all the “stakeholders” very upset.  

While some antitrust practitioners might be upset about these changes, consumers, workers, and anyone else not associated with the antitrust religion of consumer welfare might welcome them. It may be that such changes will improve democracy, as the Supreme Court continues to make sure that corporations have more voice in our government than people. Maybe that’s what needs to change: As defense counsel rotates in and out of agency positions, economists make millions arguing that the mergers are efficient and don’t harm consumers, agencies declare victory with questionable remedies to continue to maintain their budgets; for the “stakeholders,” antirust is working quite well. But it isn’t working out so well for the rest of us.

For the rest of us, antitrust is broken. One could make the argument that the whole endeavor is “inefficient,” if we consider the money spent on lawyers, economists, and agency budgets compared with how little the antitrust agencies have done to stop mergers while completely ignoring monopolization. This failure is largely driven by hubris, stakeholder interests, and misguided faith in the religion of consumer welfare. 

Maybe it’s the “stakeholders” who need to listen, for a change.  

Disclosure: Darren Bush is a law professor and economist specializing in antitrust at the University of Houston Law Center. He has no cases before any antitrust agency. He served as a Trial Attorney at the DOJ’s Antitrust Division from 1998-2001. His views do not purport to represent the University of Houston.

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