For the past several decades, antitrust law has been focused primarily on consumer harm—a given policy is unlikely to be considered anticompetitive if it results in lower prices for consumers.  A student note in a January 2017 edition of the Yale Law Journal titled “Amazon’s Antitrust Paradox,” argues that this focus is too narrow, and that antitrust policy and regulators should be focused on broader measures of competition. Using Amazon as a case study, the author, Lina M. Khan, argues that Amazon should be subject to increasing antitrust scrutiny despite its substantial track record of providing low prices to consumers for a variety of products.

The article’s central argument is that the Chicago School approach to antitrust law that took hold in the 1970s and 1980s—with its focus on efficiency, prices, and consumer welfare—should not have abandoned antitrust law’s earlier concerns with market structure. Khan thinks that we should return to a structure-oriented competition policy:

[T]he undue focus on consumer welfare is misguided. It betrays legislative history, which reveals that Congress passed antitrust laws to promote a host of political economic ends—including our interests as workers, producers, entrepreneurs, and citizens. . . . Antitrust law and competition policy should promote not welfare but competitive markets. By refocusing attention back on process and structure, this approach would be faithful to the legislative history of major antitrust laws. It would also promote actual competition—unlike the present framework, which is overseeing concentrations of power that risk precluding real competition.

Khan further argues that recent studies show that mergers have led to higher prices without any efficiency gains, contrary to the predictions of a Chicago School focused approach.  She also argues that by failing to focus on structure, modern antitrust law ignores the interest of consumers in product quality and variety, which are unlikely to flourish in a highly-concentrated (but perhaps lower-priced) market. Citing legislative history, Khan notes that the Sherman Act was concerned not only with consumers, but also with the concentration of economic power itself, and this concern “promotes a variety of aims, including the preservation of open markets, the protection of producers and consumers from monopoly abuse, and the dispersion of political and economic control.”

Although some detractors have referred to Khan’s argument as “hipster” antitrust (see, e.g., Andrea O’Sullivan, “What is ‘Hipster Antitrust?’”, available at https://www.mercatus.org/bridge/commentary/what-hipster-antitrust; Press Release by Senator Orrin Hatch, “Hatch Speaks Again on ‘Hipster Antitrust,’ Delrahim Confirmation”, available at https://www.hatch.senate.gov/public/index.cfm/2017/9/hatch-speaks-again-on-hipster-antitrust-delrahim-confirmation), others have viewed the article as a welcome call for a renewal of the prior school of antitrust theory. This school of thought is sometimes referred to as the “New Brandeis” or “Neo-Brandeis” movement because it, like Justice Brandeis, is concerned with the downsides of bigness and economic concentration.  See, e.g., David Dayen, “This Budding Movement Wants to Smash Monopolies”, available at https://www.thenation.com/article/this-budding-movement-wants-to-smash-monopolies/; Robert Levine, “Antitrust law never envisioned massive tech companies like Google”, available at https://www.bostonglobe.com/ideas/2018/06/13/google-hugely-powerful-antitrust-law-job/E1eqrlQ01g11DRM8I9FxwO/story.html.

It is premature to assess whether these ideas will gain traction with the courts, but some policymakers and regulators appear to be paying attention. In July 2018, Federal Trade Commissioner Rohit Chopra hired Khan as an advisor. This past September, the FTC began hearings on “Competition and Consumer Protection in the 21st Century.”  Reflecting the seriousness of the challenge posed by the New Brandeis movement to the current antitrust establishment, Tim Muris—chairman of the FTC from 2001 to 2004, and a Chicago School adherent—spent a considerable amount of time in his opening remarks at the first hearing addressing the perceived “populist” agenda of the movement. Attorneys general from twelve states (and the District of Columbia) seemed to echo the sentiments of the New Brandeisians in a comment submitted to the FTC in connection with these hearings, noting that although the FTC Act is a “consumer welfare statute,” with a focus on “price effects that challenged conduct may have on the consumer,” it should also reach “conduct with harmful effects on innovation and quality” and should seek to “protect the competitive process, for the ultimate benefit of consumers.”

At this stage, it is difficult to predict what effects, if any, these arguments may have, but the theory’s concern for market structure and concentration would likely lead to heightened scrutiny of mergers. Khan speaks favorably of the 1968 Horizontal Merger Guidelines and disparagingly of the 1982 Guidelines, which changed the focus of the DOJ’s merger inquiry from market structure to “market power.” The 1982 Guidelines defined market power as the “ability of one or more firms profitably to main prices above competitive levels.” Though the 2010 Guidelines currently in force also consider a merger’s potential impact on innovation when examining market power, the focus is still generally on price effects. A DOJ populated by New Brandeisians may instead emphasize Section 5.3, “Market Concentration,” which prompts analysis of whether a transaction warrants particular scrutiny based on the Herfindahl-Hirschman Index measure of market concentration. We will keep an eye on developments, and continue to provide updates.