The Effective Competition Standard: A New Standard for Antitrust

By Marshall Steinbaum, Maurice E. Stucke |

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America’s failing antitrust system is, in large part, to blame for today’s market power problem. Lax antitrust law and enforcement have allowed troubling trends like corporate consolidation to remain unchallenged, further embedding our skewed economy. In highly consolidated markets, consumers have limited choice and little power to pick their price, quality, or provider for the goods and services they need; workers are met with massive employers and have little agency to shop around for competitive wages and benefits; and suppliers can’t reach the market without paying powerful intermediaries or succumbing to acquisition.

In The Effective Competition Standard: A New Standard for Antitrust, Roosevelt Research Director and Fellow Marshall Steinbaum and University of Tennessee Law Professor Maurice E. Stucke offer an alternative to the consumer welfare standard. Ambiguous and inadequate, the consumer welfare standard identifies threats to competition only by the potential consequences for consumers and ignores adverse effects on workers, suppliers, product quality, and innovation.

The effective competition standard would restore the primary aim of antitrust laws, namely to protect competition wherever in the economy it has been compromised, including throughout supply chains and in the labor market. The changes Steinbaum and Stucke call for—including amendments to the Sherman Act and the Clayton Act—are essential to protect competitive markets in the U.S., as well as individuals and the economy at large. To stop harmful market consolidation, the antitrust rules must be updated and strongly enforced. Read the brief.

The Effective Competition Standard was released alongside Taking Antitrust Away From the Courts: A Structural Approach to Reversing the Second Age of Monopoly Power, a paper from Ganesh Sitaraman, Director of Policy and Co-Founder of the Great Democracy Initiative. Sitaraman explains the problems with court-established antitrust policy and outlines a set of institutional reforms to the Federal Trade Commission in order to reinvigorate antitrust policymaking and combat the second Gilded Age.

Together, the papers provide a progressive blueprint for a robust 21st century antitrust regime that can begin to address today’s market power crisis.

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Also published on Medium.

Marshall Steinbaum is a Fellow at the Roosevelt Institute, where he researches market power and inequality. He works on tax policy, antitrust and competition policy, and the labor market, in particular declining entrepreneurship and labor mobility as well as credentialization and its result: the student debt crisis. He is a co-editor of After Piketty: The Agenda for Economics and Inequality (Harvard University Press 2017), and his work has appeared in Democracy, Boston Review, New Republic, American Prospect, Industrial and Labor Relations Review, and ProMarket. He has a Ph.D. in economics from the University of Chicago.

Maurice E. Stucke is a co-founder of the law firm, the Konkurrenz Group, and a law professor at the University of Tennessee. With 20 years experience handling a range of competition policy issues in both private practice and as a prosecutor at the U.S. Department of Justice, he advises governments, law firms, consumer groups, and multi-national firms on competition and privacy issues. Professor Stucke serves as one of the United States’ non-governmental advisors to the International Competition Network, as a senior fellow at the American Antitrust Institute, and on the board of the Institute for Consumer Antitrust Studies. He co-authored two books, Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy (Harvard University Press 2016) and Big Data and Competition Policy (Oxford University Press 2016).