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Antitrust law won't help critics of Amazon-Whole Foods merger
American antitrust law is being set up for a fall. Like a city-slicker launched into the wilderness with no map and limited supplies, some would send it on a misbegotten journey it was never intended to take, to solve problems that lie far outside its scope.
The purpose of antitrust laws, as Supreme Court Associate Justice William J. Brennan explained over a half century ago, is to protect consumers, not competitors. And consumers benefit when new models of competition unleash the forces of creative destruction and market revolution.
Thus under traditional antitrust standards, the recent Amazon-Whole Foods merger is an easy case, clearly benefiting consumers by bringing down prices and offering a host of product synergies that will provide new options, choices and services. But a handful of fringe critics now decry the FTC's prompt and efficient clearance of the deal, arguing antitrust enforcers should take new additional policy goals into account - like how the deal will impact less efficient competitors or impact the broader balance of social, cultural and economic power online.
They could not be more wrong.
There is no doubt this deal benefits consumers - the core touchstone for antitrust analysis. On the day the deal closed, Amazon lowered prices on key items as much as 43 percent, and further price cuts are promised thanks to Amazon's crown jewel distribution system and the company's acceptance of lower margins.
Amazon will also be leveraging Whole Foods' physical footprint to give consumers more and quicker ways to receive online purchases and many anticipate new frontiers in the delivery of same day purchases and perishable products.
As traditional antitrust predicts, these benefits are now pushing the entire market to do better. Walmart and Google have announced a deal to allow consumers to access Walmart's vast product base through Google's ubiquitous interface and to accelerate Walmart home delivery to Amazon speed. Other retailers are also rushing to compete.
There is little question consumers benefit from these changes and thus critics of the FTC's prompt resolution are really urging delay for delay's sake - but miring this deal in a bureaucratic quagmire would just be taking money out of consumers' pocketbooks and slowing down the tide of e-commerce innovation it has unleashed.
Critics' real argument is that antitrust should look beyond consumer welfare and allow the executive branch to pursue new policy goals. Unsurprisingly, the precise goals vary and are amorphous.
But consumer welfare has settled as the correct lodestar for antitrust for a reason - it is an anchor giving clear, measurable guidance to regulators. Tying antitrust to more subjective goals is a trip into the political wilderness without a map.
Without the consumer welfare standard, there is no constraining principle that keeps antitrust law from becoming a political tool that does whatever someone wants it to do. What is the appropriate antitrust legal test for preventing robotization from hurting employment - or for evaluating a deal's impact on worker quality of life or job satisfaction? For limiting a corporation's cultural impact or political speech? For avoiding the possibility that a company might one day do something we've read about in dystopian novels?
This debate is not merely academic. Either we follow classic antitrust law that says the government shouldn't use it powers to block a deal that will lower prices and spur new options and innovation, or we launch an ambiguous and complete unpredictable new mission to empower the executive branch to manage major sectors of our economy, pursuing open-ended policy goals with no real limiting principle.
The issues critics worry about - Amazon's impact on author compensation or working conditions at its high-volume warehouses - are serious ones, and they merit real policy discussion.
But antitrust is not the solution - these issues and the others identified by critics have their roots in other areas of government and law, from the First Amendment to employment law.
Critics would style their suggestions for modern antitrust law as spinach, bitter now but good for us in the long run. But let's not forget what happened when the great trust buster Teddy Roosevelt set out on an expedition for the River of Doubt (in the Amazon) poorly equipped and under-prepared. He found the river, but the effort almost killed him. A foolish journey will come to an unfortunate end, no matter how well meaning the reasons.
Those who are saying the Amazon-Whole Foods merger is a competition problem are leading us into the jungle without a compass and no clear objective. Antitrust law should stick to protecting consumers and let the free market work.
David Balto is an antitrust attorney based in Washington,D.C.. He previously served as policy director at the Federal Trade Commission and as an attorney in the Justice Department's Antitrust Division. He is an expert in antitrust, consumer protection, financial services, intellectual property and healthcare competition.
The views expressed by contributors are their own and not the views of The Hill.