How States Should Think About Antitrust

There are fewer policy topics more talked about, and less understood than antitrust. Many Americans are aware that the government has from time to time broken up companies when they have amassed too much power, but how do we know when that line has been crossed? How should market power be balanced against benefits to consumers from the existence of larger companies?

This is a question that states, specifically the attorneys general who are in charge of bringing antitrust cases, are grappling with today. They have recently brought 5 lawsuits against large technology companies alleging monopolistic behavior of one kind or another. Will these lawsuits be successful? And if they are successful, will they improve the lives of consumers who use these products?

To answer this question, Eric Peterson, Director of the Pelican Center for Technology and Innovation partnered with Professor Ted Bolema of Wichita State University to examine instances in which states attorneys general have brought similar cases. In examining these cases they offered the following advice for how states attorneys general should act with regard to antitrust cases.

Remember the Role of Antitrust

The goal of antitrust according to the antitrust laws is to “prevent the restraint of trade”. To help determine if that is the case, the courts adopted the Consumer Welfare Standard. This standard is an objective test in antitrust cases which allows large companies to merge as long as consumer welfare is increased.

Focus Where States Have the Advantage in Antitrust   

States are the closest to the people hurt by anticompetitive practices. States can use their local knowledge to pursue cases that have large impact on their constituents such as local price fixing cases where federal agencies might not intervene.

Have States Act as a Force Multiplier

Both the Federal Trade Commission (FTC) and Department of Justice (DOJ) can bring antitrust cases. When states join these cases, as seen with the Microsoft antitrust case, they can often supplement federal resources and ad a unique prospective increasing the chance of success.

Avoid States Bringing Novel Antitrust Cases Alone

When states bring their own cases or continued federal cases, states have fared poorly. Not only have they often failed to win, but the process is also often long and expensive. States should look for federal partners in such cases.

States Should Push Back on Overly Aggressive Enforcement

As federal agencies are moving away from the consumer welfare standard, attorneys general can play a unique role in defending the standard. In the AT&T merger case, 9 states argued the merger should be allowed and the court agreed under this standard.  The court ultimately sided with the states. In this way states can play an important role as a check against overreaching federal agencies.

States have an important role to play in antitrust by protecting consumers and the consumer welfare standards. They should make sure they are effective when doing so.

You can read the full report here