The policies of conservative antitrust laid out by the new antitrust enforcers suggest a continued focus on the welfare of consumers and workers. This suggests a continued role for economics in shaping and advancing antitrust policy. However, Aviv Nevo writes, it is not clear from the actual actions taken by the antitrust agencies that economics, rather than political considerations, will be guiding antitrust policy.
This article is part of a symposium that explores the meaning and future of a conservative antitrust based on the writings and policies of the antitrust enforcers in the second Trump administration. You can read the contributions from Rebecca Haw Allensworth, Thomas Lambert, Gus Hurwitz, Christopher Sagers, and Aviv Nevo as they are published here.
On the first day in one of my classes as an undergraduate, the professor walked into the classroom and announced that what he says and what he means are two separate things (and therefore we can never catch him in a mistake). This was a very odd statement for various reasons, but it is one that has stayed with me (not sure I recall much else from that class) and has proven valuable as a life lesson. Sometimes the best way to understand what people intend is by focusing on what they do and not necessarily what they say. This thought came to mind when I was asked to comment on what conservative antitrust is, based on the speeches of Federal Trade Commission (FTC) Chairman Andrew Ferguson, Department of Justice Assistant Attorney General Gail Slater, and FTC Commissioner Mark Meador, where they outlined their visions for conservative antitrust. Even though a few months have passed since these speeches were given, we still have little to go on in terms of actions. In this article, I will use the evidence we do have to try to assess the likely role of economics at the antitrust agencies in the current administration.
There was a time when the role of economics in antitrust was well accepted. Over twenty years ago, Tim Muris, at the time chairman of the FTC, stated:
Policy discourse no longer focuses on whether economics should guide antitrust policy. That debate was settled long ago. The pressing question today is how. Which theories from the vast, diverse body of industrial organization economics should courts and enforcement agencies use to address antitrust problems? What hypotheses best explain business behavior in an increasingly complex and fast-changing business environment? How are economic ideas to be translated into operational rules?
To me, and probably to most economists, these words seem as true and as self-evident today as they were when Muris made his comments. This, however, does not seem to be the point of view of the current administration. On the plus side, the current administration seems to continue to accept the view that antitrust policy should be guided by the welfare of consumers (and workers). However, it is not clear that economics, rather than political considerations, will be guiding antitrust policy. It is likely that the agencies will support the use of economics if economic analysis can be tailored to support political goals. However, if economics contradicts the priorities of the agencies, then it is not clear that economists will have an impact. It seems like economics, and by default, economists, will serve as a tool in the service of goals dictated by politics. Economics no longer seems to be the fundamental lens through which to understand the goals of antitrust or a necessary justification for antitrust policy.
The good
One might expect that the attitude of the new administration toward the role of antitrust would be very different from past administrations, and especially different from the Biden administration’s approach. From the statements made so far, and despite claims to break from the past, the actual goals seem to be surprisingly similar. The focus, at least in the statements, seems to be on the protection of “real consumers” from “tyranny of monopoly” and from “both economic and political power,” with a particular focus on Big Tech. Some of the statements on the goals of antitrust could have easily been made, and similar statements were made, by the previous administration. Indeed, in some ways, the statements made by the antitrust leadership in the current administration go even further than anything said in the previous administration. For example, the previous administration was often accused of equating “big” and “bad,” but I am unaware of any speech that states that “[b]ig is bad” as clearly and simply as Commissioner Meador does on page two in his speech.
Of course, the similarity in speech does not necessarily imply a similarity in intentions, interpretation, or in the way that policy is implemented. However, in several areas, the current administration is continuing the efforts undertaken by the previous administration. For example, the FTC’s $2.5 billion settlement with Amazon, the challenge of medical device manufacturer GTCR’s acquisition of Surmodics—in which a second request was issued under the previous administration—the continued focus on noncompete agreements, and the ongoing enforcement efforts against interlocking directorates directly build on the previous administration’s initiatives. Similarly telling is the continued litigation of the Robinson-Patman Act against wine and spirits distributor Southern Glazer for discriminating against small retailers—despite both Chairman Ferguson and Commissioner Melissa Holyoak initially voting against the case during the Biden administration—after a motion to dismiss was denied.
A focus on the protection of real consumers naturally leads to focusing on consumer welfare. As Commissioner Meador correctly summarizes in his speech, and as others have pointed out, the term “consumer welfare” is often misused and misapplied, mostly by legal professionals and other non-economists. It has been confused with “total welfare,” and sometimes (wrongly) claimed to be only about prices.
To economists, the concept of consumer welfare is well understood. In its simplest form, for a given consumer, the surplus the consumer gets from a purchase of a product or service is the difference between the utility from, or value of, the product and (the shadow value of) the price they pay for the product. If, for example, a merger raises prices for consumers, then, holding the value/utility the consumer receives constant, it lowers consumer surplus. However, if the merger also impacts the value or availability of the product, then price changes do not necessarily tell us the direction of the change in consumer surplus. For example, if the value increases sufficiently, then consumer surplus can increase even if the price increases post-merger. In such a case, economists sometimes look at the quantity purchased to discern if the consumer is better off. By revealed preference, if the consumer purchases more units post-merger, everything else constant, then the surplus from the product has increased (at least relative to the alternative).
The concept of consumer surplus, while clearly an economic concept, might seem simple enough that once established lawyers might be tempted to think that they do not need economists. This is a mistake. Economists can help with both the proper measurement of consumer welfare and conceptually generalizing beyond the simple setup. For example, a change in output has often been proposed as a measure of the change in consumer surplus following a merger, i.e., a merger should be illegal if it reduces output. However, when, for example, the effect of a merger is heterogenous across consumers, the change in total output does not necessarily equate with the change in consumer surplus. Similarly dealing with uncertainty raises questions that economists are better positioned to address.
The previous administration was often accused of moving away from the “consumer welfare standard” based on various statements made by Chair Lina Khan and Assistant Attorney General Jonathan Kanter. Commissioner Meador’s speech provides several such examples and claims based on these statements that the current administration will have a different approach. To better understand the actual positions of the previous administration, it is more informative to focus on concrete actions such as the updated Merger Guidelines issued by the DOJ and FTC in December 2023.
The 2023 Merger Guidelines revised a paragraph that was present in merger guidelines dating back to the 1982 Merger Guidelines. The opening sentence of the paragraph states that “[t]he unifying theme of the Guidelines is that mergers should not be permitted to create or enhance ‘market power’ or to facilitate its exercise.” A somewhat revised version of this paragraph appeared in the 1992 and 2010 guidelines. Editing this paragraph, in the 2023 Merger Guidelines, was viewed as a return to the concepts of the 1968 guidelines and as a step away from the “consumer welfare standard,” As I explained elsewhere, this paragraph was revised because it did not reflect practice and was not particularly helpful by focusing on market power rather than consumer benefits.
In contrast, the 2023 Merger Guidelines directly speak of the benefits of competition to consumers (and workers), which “incentivizes businesses to offer lower prices, improve wages and working conditions, enhance quality and resiliency, innovate, and expand choice, among many other benefits.” The 2023 Guidelines go on to explain that “mergers that substantially lessen competition or tend to create a monopoly increase, extend, or entrench market power and deprive the public of these benefits” [emphasis added]. This is a strong endorsement of merger enforcement that protects competition because of the benefits it creates and therefore supports a (correctly specified) consumer welfare standard.
It is encouraging to see Commissioner Meador endorse this view and call for antitrust policy that focuses on the “net benefits to real consumers.” Commissioner Meador is correct in saying that “what we mean by “consumer” is that class of persons whose business is courted by the alleged monopolist, their trading partners.” Therefore, for example, continuing to endorse the view that workers can be viewed as “consumers” when looking at labor markets. The continued endorsement of a correctly specified consumer welfare, the endorsement of the 2023 Merger Guidelines and the correct view that antitrust laws apply to workers as well as consumers, are welcome. They suggest a continuation of some of the previous administration’s most important economic contributions to antitrust policy, and an important role for economics in this administration’s antitrust policy.
The bad
Yet, the real question is whether the similarity in views on the role of antitrust will be followed by similarity in actions. The evidence is mixed. On one hand, there are claims of political interventions in merger cases. If these claims are correct and the interventions will continue, then almost surely there will be a break in policy and little role for economics. On the other hand, some of the examples above—such as the continued focus on non-compete agreements, albeit using a different legal strategy— suggest that the current administration will continue, at least along some dimensions, to pursue vigorous principled antitrust enforcement and a continued role for solid economic analysis.
If the agencies are serious about using the benefits to consumers as their guiding principle, and aggressively litigating when they see concerns, they will need the help of economists. Economists can help in applying the seemingly simple consumer welfare standard to derive theories of harm in complex situations that the agencies are likely to encounter when investigating, for example, Big Tech. Economists also help with quantification of harm and balancing of harm and benefits. Using a principled and disciplined approach to enforcement will help the antitrust agencies during investigations and litigation. This is just as true now as it was when Muris made his statements over 20 years ago.
Alternatively, if decisions are going to be made based on political considerations in a non-disciplined way, then economists are of little help. Therefore, examining the agencies’ attitude towards economics and economists can give us an indication of where antitrust policy is heading.
Unfortunately, the rhetoric coming out of the current agencies seems critical of economic analysis and economists in general. Maybe this should not be surprising given the administration’s general critical view of science, academic research, and academics. To be clear, part of the scrutiny of the economic profession is our own doing. As I have previously noted, both lack of disclosure of potential conflicts and questionable analysis and testimony have eroded our credibility. The way to fix both is to do better, not to throw out all economic analysis.
Putting the rhetoric aside, the actions (or lack thereof) of the antitrust agencies are quite concerning. The FTC’s Bureau of Economics has been without a bureau director for roughly 10 months. By my informal count (based on public announcements on LinkedIn and elsewhere), the Bureau of Economics has lost over 25% of the workforce relative to the historical high number roughly a year ago, and even more if we focus on antitrust economists. The Expert Analysis Group at the Antitrust Division has fared slightly better: they seem to have lost only 10-15% of the workforce and have a deputy assistant attorney general for economic analysis, who for the first time in decades comes from a consulting firm and not academia. This is compared to the previous administration where the economic groups in both agencies grew, had senior and experienced leadership, and significant interactions with the academic and antitrust economic communities.
I cannot speak on whether economic analysis has any impact on decisions made by the current leadership, the way it impacted decisions made by previous administrations. However, given the economic brain drain, it is hard to imagine that the role of economics is not diminished. This matters for several reasons.
Without the benefit of high quality independent economic analysis, as well as scrutiny of analysis submitted to the agencies, the decision-makers are at a clear disadvantage and risk making erroneous decisions. Economics, when done well, can provide a principled way to combine economic analysis with market realities and the evidence. Effective economic analysis can only be achieved when economists and lawyers work jointly, not as one serving the other, but as partners. The success the agencies have had in court and elsewhere was achieved through such joint work. Smaller economic groups would mean less ability to work jointly with the agency lawyers, more reliance on external analysis, and ultimately higher costs.
If the current administration is serious about the goals it has set of protecting American consumers from corporate tyranny, it will soon realize that the only way it can achieve these goals is by strengthening the role of economists. If the agencies do not realize this is the case, it creates an opportunity for parties to present economic analysis that is less likely to be rebutted or scrutinized.
Author Disclosure: Aviv Nevo served as the director of the Federal Trade Commission’s Bureau of Economics from January 2023 to December 2024, where he helped draft the 2023 Merger Guidelines and was involved in some of the investigations and initiatives discussed in this article. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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