Public Comments of the Open Markets Institute Submitted to the Antitrust Division Roundtable Examining the "Consumer Costs of Anticompetitive Regulations"

The following is an excerpt from public comments that the Open Markets Institute submitted to the Department of Justice's Antitrust Division's Roundtable on Anticompetitive Regulations held on May 31, 2018.

"...Markets are shaped through law and regulation. Although public regulations are often depicted encumbering or interfering with competition, it is a mistake to classify them this way. On the contrary, public regulations are often fundamental to creating constructive competition within open markets. Other public regulations - following legitimate mandates from federal, state, or local authorities - promote non-competition values, such as public health and safety, worker protections, diversity, and local controls.

In select instances, it may be appropriate for the Antitrust Division to identify those public regulations that serve private interests at the expense of both competition and the public interest. But our view is that the Antitrust Division should focus its efforts and resources on antitrust enforcement, and that devoting resources to critiquing the work of public regulators should generally not be a component of the Division’s work.

We believe this for three reasons. First, the US political economy is currently seeing historically high levels of merger activity alongside signs of persistent and prevalent market power.1 This means that the Antitrust Division’s tools and resources are critically needed to block anticompetitive mergers and to investigate, remedy, and deter anticompetitive conduct. The Division’s focus should be on identifying exercises of private power that violate the law rather than exercises of public power whose policy judgments the Antitrust Division may question.

Second, the Antitrust Division’s institutional mandate is to enforce the antitrust laws. As far as we can tell, none of the antitrust statutes require or even invite the Division to examine the effects of “anticompetitive” public regulations, an exercise that assesses regulation through the lens of a single goal (competition) while ignoring the other values that lawmakers may have sought to promote. Indeed, playing competition advocate risks putting the Antitrust Division in the position of making policy judgments more suited for a legislature than a law enforcer—a hazard that Assistant Attorney General Delrahim has cautioned against in other contexts. The Division’s commitment to regulatory humility should make it equally humble in matters that fall outside its purview and expertise.

Third, concern about the costs of public regulation may also serve to distract both the Antitrust Division and the public from the costs of private regulation. Dominant actors with market power are often able to set the terms within a specific marketplace, thereby dictating outcomes for other businesses. Such unilateral exercise of private power is also very much a form of regulation. As Robert Hale wrote, “There is government whenever one person or group can tell others what they must do and when those others have to obey or suffer a penalty.” Especially in digital technology markets, certain dominant firms now exert regulatory control over the terms on which others can sell goods and services. The private regulations established by these “functional sovereigns” and the costs they impose on different sets of customers invite close attention from the Antitrust Division, as they suggest both maintenance and potential abuse of market power..."

Read the full public comments here.

Read Open Markets' public comments from DOJ second roundtable discussion of antitrust consent decrees here, and Open Markets' public comments from DOJ's first roundtable on exemptions and immunities here.