“6th Bill Kovacic Antitrust Salon”: An interview with Einer Elhauge

 
6TH BILL KOVACIC ANTITRUST SALON:
WHERE IS ANTITRUST POLICY GOING?
George Washington University Marvin Center, September 24th

 
‘Populist Antitrust’:
A Deviant Mutation or an Overdue Correction?
An Interview with
Einer Elhauge (Harvard Law School) by
John Briggs (Axinn)

 
John Briggs (Partner, Axinn) has interviewed Einer Elhauge (Professor, Harvard Law School) in view of their panel “‘Populist Antitrust’: A Deviant Mutation or an Overdue Correction?”
 
They will join the 6th Bill Kovacic Antitrust Salon conference that will take place in Washington, DC on September 24, 2018, at George Washington University Marvin Center.
 
To see the full program and register, please click here. 
 
Are there are elements of what is known as “Antitrust Populism” that in your view are worthy of being folded into our antitrust law?
 
Yes. I think Antitrust Populism has brought great new energy to the field by correctly stressing that our current approach has produced a systemwide underenforcement of antitrust law and by making nontechnocratic arguments that are understandable to the general public. I myself have long been a practitioner of technocratic antitrust law and economics, both as a scholar and expert witness, and I continue to think rigorous economic analysis remains important to understanding the effects of antitrust doctrines. But technocratic antitrust has also become so complicated that it is no longer understandable to many, including not only the electorate and juries, but also judges armed with only general legal sophistication.
 
This lack of understandability contributes to underenforcement. Public enforcement requires combatting powerful vested interests, which is hard to sustain without strong support from the electorate, which in turn cannot be galvanized by technocratic arguments that leave the eyes of most voters glazed over. Technocratic antitrust also means that every antitrust enforcement action requires millions and millions of dollars to bring, which discourages both private and public enforcement. And even when such enforcement actions are brought, it is relatively easy for defendants to raise a series of complicated technocratic objections that, even when invalid, at least raise the costs of proceeding with enforcement and that often succeed in procuring victory, especially because defendants benefit from a burden of proof that becomes more decisive the less the judge or jury understands the nature of that proof.
 
Do you agree with the “Antitrust Populism” critique that the consumer welfare standard has led to underenforcement of our antitrust laws?
 
No, while I think they are right about the underenforcement, I think they have the wrong diagnosis of the cause. The consumer welfare standard certainly encourages more enforcement than the total welfare standard, and as I point out in my book, the consumer welfare standard not only better comports with the law, but also ironically better advances overall societal total welfare. To be sure, some misinterpret the consumer welfare standard to permit anticompetitive harm to upstream suppliers of labor or other inputs. But as I also point out in my book, those interpretations are mistaken because the consumer welfare standard just says that antirust will not protect competitors from conduct that affirmatively improves consumer welfare.
 
Any anticompetitive harm to upstream suppliers will suppress upstream output, and if that has any effect on downstream output, it will be to reduce it and thus harm consumer welfare. The problem is not with the consumer welfare standard, but rather with the fact that modern technocratic antitrust stresses open-ended case-by-case all-things-considered analysis of whether welfare is enhanced or harmed by any specific conduct. That makes it incomprehensible to most judges and juries, so they can be bamboozled with bad arguments like the claim that anticompetitively creating monopsony power upstream should be permitted because it does not harm consumer welfare. We need to move from case-by-case welfarist analysis to more understandable rules and doctrines, but I still think that the consumer welfare standard is the correct one for judging which are the best rules and doctrines to have.
 
Does that mean antitrust should shift from emphasizing case-by-case welfarist analysis to employing greater use of rules and structural presumptions?

Precisely. In other legal fields, economic analysis has long recognized that the choice between rules and open-ended standards depends on whether the over- and underinclusion created by the rule exceeds the over- and underinclusion created by the costs or errors in applying an open-ended standard. But in antitrust, we have long overly restricted per se rules to cases where the conduct is almost always anticompetitive and hardly ever procompetitive, i.e., to cases where the rule has virtually no overinclusion, rather than comparing the overinclusion and underinclusion of a rule to what open-ended rule-of-reason analysis produces.
 
I think it is time for antitrust to become more like other legal fields, where technocratic law and economics analysis plays a vital role, but does so at the level of illuminating which rules and doctrines would maximize welfare, given their relative over- and underinclusion. As in other legal fields, the actual rules and doctrines applied by judges and juries should be more understandable to them, in part because that itself reduces error costs. In this way, I think Technocratic Antitrust and Antitrust Populism could unite on one fundamental goal: Make Antitrust Understandable Again.