On June 1, 2016, FTC Commissioner Maureen Ohlhausen delivered remarks in Hong Kong, pushing back on recent news reports implying that the United States currently suffers from a “monopoly problem” causing a reduction of competition in the marketplace. Recent articles and opinion pieces in The Economist and The New York Times suggest that the consolidation of market power, and lack of antitrust enforcement preventing such consolidation, are having a noticeable effect and harming consumers and innovation. Indeed, the precursor to these reports—an April 14, 2016 report from the Council of Economic Advisers (“CEA”), entitled “Benefits of Competition and Indicators of Market Power,” argues there has been a decline of competition in certain parts of the U.S. economy due the concentration of monopoly power in the hands of a select few players in certain industries (e.g., airlines, cable, networking). The CEA report suggests U.S. agencies should explore how certain factors—the use of Big Data, increased price transparency, and common stock ownership—affect competition. As a result of the CEA report, President Obama issued an Executive Order on April 15, 2016, directing antitrust enforcement agencies to use their authority to “promote competition.”
Commissioner Ohlhausen encourages a healthy dose of skepticism in response to these recent reports and articles. She notes that trying to extrapolate a broad “causal relationship from consolidation to market power to supracompetitive rents” may be misdirected for several reasons, including for example variation in concentration benchmarks, inherent difficulties in measuring profits, and potential bias in cross-section studies of markets in disequilibrium. Ohlhausen also urges caution in advocating for an “interventionist approach to antitrust enforcement.” While some argue that antitrust enforcement has been lacking, Ohlhausen disagrees with that assessment, commending the FTC and DOJ as “expert agencies that aggressively litigate cases, scrutinize merges to protect competition and to facilitate efficiencies, and rigorously identify anticompetitive effects.” She also notes that “competition law is not regulatory [and] should not intervene to order more competition or to reengineer market structure.” Rather than expanding regulatory overlay or potentially overreaching enforcement, Ohlhausen suggests pruning the regulatory thicket to enhance competition, including a focus on “government regulations that inhibit entry, stifle business in red tape, and distort economic activity without offsetting gains.”
Ultimately, Commissioner Ohlhausen agrees that consumers benefit from increased competition. She simply offers an alternative route to achieve that goal—instead of leading with a heavy hand, agencies should focus on providing clear guidance and reduced regulatory overlay to help foster competition.