Alden Abbott, senior research fellow of the Mercatus Center, advances four reasons in a detailed study on “neo-Brandeisian” legislation, like that of Sen. Amy Klochubar, which would replace the Consumer Welfare Standard. Abbott offers the Cliff Notes in a short primer that spells out the four reasons why the neo-Brandeisian approach is intellectually bankrupt and dangerous.
The Market Is Working for Consumers: The neo-Brandeisians (let’s call them the NBs for now) hang their hats on an Obama Council of Economic Advisors report in 2016 purported to show that economic competition is in decline. Abbott demonstrates that these NB market definitions are overbroad. To put it in lay terms, he shows that big companies love to beat each other’s brains out in ways that are “procompetitive.”
No Reason to Think Breakups Will Help Consumers: NB proposals would “sacrifice major economies of scale and potential efficiencies of integration, harming consumers without offering any proof that the new market structures in reshaped industries would yield consumer or producer benefits.” If, as the NBs want, companies should have to prove in advance that their proposed merger will do no harm, why shouldn’t the government have to do the same?
Nebulous Metrics Like ‘Fairness’ Will Create Confusion: The NBs also call for new factors in antitrust, such as “fairness” and interests of labor and the environment. “There is no neutral principle for assigning weights to such divergent interests and … there are no economic tools for accurately measuring how a transaction under review would affect those interests,” Abbott writes. This would promote inefficiency in production – meaning higher prices, less innovation and fewer choices – and “promote arbitrariness in enforcement decisions.”
No Solution for Social Media Gripes: Finally, Abbott writes, that people on the right and left who are frustrated with big social media companies are reaching for an axe when they need a scalpel. All of business will suffer with a neo-Brandeisian approach to antitrust, which is another way of saying the economy and consumers will suffer, too.
Enough with the “neos.” The Brandeis approach didn’t work the first time, which is why the U.S. Supreme Court threw it out and has eagerly embraced the Consumer Welfare Standard since 1979.