What will US antitrust policy look like under Trump?

What will antitrust policy look like in the Trump Administration? It could, reflecting the recent campaign, take on a more populist tone, looking with disfavor on companies that are “too big” and prices that are “too high.”

This would represent a move closer to the approach of competition authorities in Asia and the European Union and away from the traditionally economics-based approach of the U.S., which focuses on harms to competition rather than to competitors and avoids condemning pure size.

In recent years, the differences between U.S. and other competition agencies have been striking:

  • The EU has accused Google of abusing its dominant position in search and advertising and its Android operating system.  The FTC ended its investigation of Google search practices in 2013, concluding there were procompetitive explanations for Google’s actions. U.S. authorities are not pursuing the new allegations.  
  • The European competition authorities, according to its chief competition official, are entertaining the theory, without benefit of empirical analysis, that ownership of big data by large internet companies is, itself, a competition problem and a potential barrier to entry. U.S. authorities do not appear to be seriously entertaining this theory.
  • Similarly, German antitrust authorities are investigating whether Facebook is abusing its dominant position in social networking to collect user information. U.S. authorities have never indicated that data collection, even by a dominant company, would be the basis of an antitrust violation.

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Recently, however, the FTC took a step away from its economics-based approach. Three days before the end of the Obama Administration the Federal Trade Commission fell in line with competition authorities in Asia and the European Union and filed a lawsuit against chipmaker Qualcomm for its patent licensing and royalty practices.

 

FTC Commissioner Maureen Ohlhausen (now acting chairman), dissenting from the decision, noted that the FTC found “no robust economic evidence of exclusion and anticompetitive effects.” The complaint seemed to be simply that royalty rates were too high for the FTC’s taste.

Going forward, we appear to be faced with two competing influences on U.S. antitrust policy. 

What we know about President Donald TrumpDonald John TrumpO’Malley tells Dems not to fear Trump Right way and wrong way Five things to know about the elephant trophies controversy MORE’s transition advisors suggests that his new appointees will follow a more traditional, economics-based, approach. On the other hand, Trump has shown no hesitation in engaging directly with companies based on a populist and mercantilist understanding of markets. This impulse could create incentives to apply ad-hoc criteria for determining when to prosecute corporations.

Given these competing tendencies, along with the quickening trend abroad to abandon economic principles, it is crucial that U.S. antitrust authorities rapidly re-establish themselves as leaders in economics-based analysis.  As former FTC Chairman William Kovacic has written, “The chief means of international influence…is persuasion.” And while perhaps persuasion is not the chief means of domestic influence, establishing clear principles may help maintain a consistent and rigorous approach to antitrust. The new antitrust appointees will need to effectively advocate for the economic principles that have guided U.S. antitrust policy, which are often not shared by other major antitrust enforcement agencies and may not be instinctively shared by those who wish to strong arm companies without analysis.

In order to establish consistent principles the U.S. needs to exhibit consistency across administrations and agencies. In addition to the FTC and the Department of Justice, agencies such as the Federal Communications Commission, which are also viewed as competition agencies, should be on the same page. When these agencies fail to adhere to common principles, the task of persuasion becomes more difficult. That task is also made more difficult when high-level officials weigh in on important competition issues in an ad hoc manner — whether it be Obama on the open internet order or Trump on the AT&T-Time Warner merger and drug prices.

In a global economy, inconsistent policies will limit the ability of the U.S. to control the agenda, even within our borders, when competition agencies in other countries are pursuing other agendas, frequently against U.S. companies.  This makes it all the more important that the new appointees become effective and consistent advocates for a sensible, competition-as-a-process position.

Thomas M. Lenard is the senior fellow and president emeritus of the Technology Policy Institute, a think tank which focuses on economics of innovation and technology, and the related regulations in the United States and around the world.


The views expressed by Contributors are their own and are not the views of The Hill.