The Effective Competition Standard: A New Standard for Antitrust

September 25, 2018

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, 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.

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, 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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