Competition policy in the Biden administration: Translating election poetry into governing prose

Let me start with the 2020 campaigns, especially the Democratic primaries, where Senators Sanders and Warren have mainstreamed a debate that we in the antitrust silo have been engaging in for years: whether to continue to embrace Robert Bork’s Chicago School view, modify it, or abandon that antitrust enforcement should have very limited importance in our economy; that officers screwed up more often than they made it better; that markets are generally competitive and, where they are not, are invariably self-correcting and can be relied upon to ensure competition on price, quality and innovation.¹

Progressives have argued – in plain language (which is a compliment) – that the model is wrong: industrial organizational (IO) economists have been telling us for years that most markets are not perfectly competitive – not even close; that regulatory enforcement, in fact under-enforcement, based on this flawed assumption has led to increased concentration throughout the economy, contributed to the growing income gap between the super-rich and average workers, and enabled tech platforms to monopolize their markets; and ignored how the power of monopsony – the power of buyers – suppressed labor and other forms of competition upstream in the supply chain.

Candidate Biden embraced this progressive view in the general election, and from the outset, President Biden and his team fundamentally rethought the role that antitrust and competition policy can and should play in the U.S. economy. They highlighted the shortcomings of the Chicago School’s hands-off approach to law enforcement and questioned its reliance on “consumer welfare standards” – a phrase that has today acquired the status of a Rorschach blot, subject to so many apparent interpretations that the term today confuses more than it clarifies.

More than three years ago, Biden’s team started by asking two basic questions: Where is our economy not functioning competitively, and what tools can the federal government use to address these problems?

…The saying that comes to mind is that “politicians agitate in poetry, but govern in prose.”² Both FTC Chair Lina Khan and Deputy Attorney General Kanter, in their former lives, spoke passionately about the need to reject the tenets of the Chicago School and pursue a competition policy that took into account the imperfect competition and unaddressed harms to consumers and workers that characterize many markets. Some critics feared that their neo-Brandesian call to arms would lead to a radical agenda that the courts would systematically reject. The reality, however, is that this administration deserves credit for identifying areas where competition policy and enforcement could make a difference and taking action to respect antitrust case law while invoking it to address many areas of our economy, where markets did not deliver the price, quality and innovation competition we deserve. They translated the poetry of the progressive movement into the prose of competition policy and its enforcement. This deserves recognition.

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