Newswise — The term “antitrust”—for some maybe a dimly held memory from a high school U.S. history class—has come into focus recently as tech companies have come under scrutiny for their business practices. But antitrust and antimonopoly policy isn’t the same now as it was in the days of Teddy Roosevelt, says University of Utah economist Marshall Steinbaum. Due to the recent exclusive focus on consumer welfare, it allows many business practices that used to be outlawed. But Steinbaum says it misses the mark.
In October, Steinbaum and other leading antitrust scholars met at the U to draft a statement that sets out a vision for a new antitrust policy, with specific recommendations for lawmakers to return antitrust laws to their original purpose of deconcentrating power. It’s called the “Utah Statement.”
Read it here.
Antitrust or competition laws in the United States date back to the late 19th century when railroad, oil and steel companies merged to consolidate power and establish monopolies that threatened to choke out competitors and stifle business creation. In response, Congress passed a series of antitrust laws beginning with the Sherman Act that prohibited agreements that limited business competition. In one notable example of the act’s application in 1911, Standard Oil was broken up into 34 separate, competing companies—descendants of which include ExxonMobil and Chevron.
But in the 1970s, antitrust actions and policies shifted from restricting business practices to focusing on consumer welfare. Many practices previously banned were now allowed again, and business mergers faced less federal oversight.
“That significant shift in policy, building up over a period of decades, certainly gave rise to the tech business models that we're seeing now, but also broader economic phenomena,” Steinbaum says.
Labor practices, including the “gig economy” of companies like Uber that hire contractors who are not employees, can also fall under the umbrella of antitrust laws.
“They are allowed to essentially tell workers what to do, which customers to service, what price to charge and, otherwise direct their activities on the job without employing them while escaping from any danger of being afoul of the antitrust laws,” Steinbaum says, adding that the non-employee workers, under current antitrust laws, cannot organize and collectively bargain with the company.
The “Utah Statement”
In October, the U convened a conference titled “A New Future for Antitrust?” that included judges, law professors, attorneys and economists from around the country, including many from Utah. In one panel session, moderated by Steinbaum, University of Michigan law professor Daniel Crane challenged panelists to move beyond criticism of current antitrust policies and begin outlining a positive path forward, including actions that could restore the power of antitrust laws. In response, Steinbaum joined with Tim Wu and Lina Khan, both of Columbia University, to write the “Utah Statement.”
Watch Crane’s challenge here: https://youtu.be/8ekCDQK4zhI?t=5400
“This is responding to the question of ‘How much of a break with existing antitrust policy are you actually proposing?’” Steinbaum says. “The hope is that by writing down and publishing our perspective, we can clarify how significantly we depart from what status quo scholarship has been talking about."
The substance of the “Utah Statement” begins with a shift in philosophy: “Deconcentrating and democratizing power is the aim of antitrust.” Current policy focused on consumer welfare, particularly low prices and a wide selection of consumer goods.
In addition to arguing that workers such as Uber drivers should have the power of collective bargaining, the “Utah Statement” also targets creative workarounds for potentially monopolistic mergers. For example, the proposed merger of T-Mobile and Sprint, currently in federal court, would require selling off a portion of the business to create an additional wireless carrier.
“We're saying, if a merger is going to reduce competition, then it should be blocked, not maneuvered around,” Steinbaum says, “and if a company is found to have a monopoly and use its monopoly power to reduce competition, then that monopoly should be broken up in effect.”
Steinbaum says that antitrust reform will play out in Congress and the courts. Lawmakers, he says, are showing interest in revisiting antitrust laws. In the courts, particularly in the Sprint-T-Mobile case, state attorneys general are challenging the federal antitrust policy and opposing the merger.
“My hope eventually is that if antitrust remains in this purely litigation and case law-based enforcement regime, there will be a lot more cases, and those cases will take a different shape than they currently do,” Steinbaum says.
Antitrust theory, on the other hand, is in the realm of scholars like Steinbaum, and he says that the “Utah Statement” serves as a rallying point for other like-minded scholars and a point of reference for evaluating policy proposals and judicial nominees. He also hopes that rising generations of researchers can shape a new concept of antitrust theory, separate from that of recent decades.
“That's very gratifying as a young scholar myself to see that you're part of a larger movement that is really actually having an effect on our research agendas and scholarly output,” he says. “It's not going to stop anytime soon.”
Find this release here.