Antitrust, Vol. 35, No. 3, Summer 2021. © 2021 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. What Happens Next to Antitrust—in 6 Questions JOSHUA H. SOVEN E ARE IN A BULL MARKET FOR century. Few people dispute that antitrust’s core mission debate about antitrust policy. The rapid is protecting consumers’ right to the low prices, innovation, growth and size of some companies, and diverse production that competition promises.”5 new business models, and increased Professor Hovenkamp probably overstated the level of focus on the labor markets have gener- agreement about whether the consumer welfare standard ated a volatile discussion about the future of antitrust policy protects “diverse production.” But he was right that there andW enforcement. has been consensus that the antitrust agencies should focus For many, the back and forth involves heroes and villains, on challenges to conduct that increases prices and/or reduces new friends and old foes, and antitrust “school” rivalries.1 levels of quality and innovation. The number of compet- This dynamic is healthy—it promotes candid discussion and itors in a market matters when it informs the analysis of new thinking. But the intensity of the debate can cloud the conduct’s effects on customers, but preserving a particular practical implications of the policy choices for businesses. market structure has not been an end in itself. This article unpacks some of those implications by analyz- Reflecting this consensus, in June 2021, the Supreme ing six questions. And while everyone has an agenda (and I Court, in essence, described the consumer welfare standard have mine), I do not focus on what I think should happen, in its unanimous decision that held that certain restric- but on what I think will happen, and how businesses should tions on compensation for student-athletes imposed by the prepare for what happens next.2 National Collegiate Athletic Association violated Section 1 of the Sherman Act: “[It is] a fact-specific assessment of 1. What is antitrust trying to accomplish? market power and market structure aimed at assessing the The next phase of antitrust will depend a lot on what the challenged restraint’s actual effect on competition—espe- Biden administration decides is the purpose of the antitrust cially its capacity to reduce output and increase price.”6 laws. Complete consensus on the objectives of antitrust has Members of the Biden administration (in their writings) never existed.3 Until the 1970s, prosecutors and the courts have argued that “excessive market power is a serious prob- often applied the antitrust laws to protect small businesses lem” in the United States7 and raised two concerns about the and to try to preserve and restore unconcentrated market consumer welfare standard. First, some assert that the stan- structures.4 The impact of conduct on consumers and eco- dard does not reliably cover conduct that generates short- nomic efficiency mattered, but not as much as it does today. term benefits for consumers, but potentially could produce Next came about two decades of accepting, rejecting, harms to competition in the long run. For example, they and modifying the Chicago School’s position that antitrust think that the consumer welfare standard does a poor job of should focus on price and economic efficiency, after which stopping large companies from reducing prices below costs, antitrust policy had a pretty soft landing on the consumer which they believe can over time reduce the number of com- welfare standard. In 2005, Professor Herbert Hovenkamp, petitors and innovation. Professor Timothy Wu (the Special the author of the leading antitrust treatise, described the Assistant to President Biden for Technology and Competi- state of play: “[T] oday we enjoy more consensus about the tion Policy) put it this way: goals of the antitrust laws than at any time in the last half [E]mphasis on measurable harms to consumers still tends to bias the law toward a focus on static harms and, especially, on prices. Such “price fixation” inevitably tends to mar- Joshua H. Soven is a partner at Wilson Sonsini Goodrich & Rosati in ginalize parts of the antitrust law concerned with dynamic Washington, D.C., and an Associate Editor of ANTITRUST. He served as harms—harms like the blocking of potential competition, a Section Chief and Trial Attorney at the Antitrust Division of the U.S. slowing of innovation, loss of quality competition, and Department of Justice, and as an Attorney Advisor to the Chairman of overall industry stagnation.8 the Federal Trade Commission. Mr. Soven and Wilson Sonsini represent The second concern among Biden administration offi- companies with interests in these issues. The views in this article are cials is that the consumer welfare standard does not achieve those of Mr. Soven. what they believe was Congress’ central goal for the antitrust SUMMER 2021 · 75 COMMENT laws—to prevent the “excessive concentrations of economic consumer welfare standard because it requires them to hit power,” by protecting smaller businesses, suppliers, and only a single evidentiary target—showing that the defendants labor. FTC Chair Lina Khan has written: planned to increase prices, drop levels of output or service, Focusing antitrust exclusively on consumer welfare is a mis- and/or reduce innovation. The standard also has helped the take. For one, it betrays legislative intent, which makes clear antitrust agencies defeat efficiencies defenses in merger cases that Congress passed antitrust laws to safeguard against because, as applied by the courts, companies must show that excessive concentrations of economic power. This vision they will pass most or all of the efficiencies on to customers.14 promotes a variety of aims, including the preservation of In contrast, the “competitive process” standard is broader open markets, the protection of producers and consumers and less precise, which will leave room for businesses to from monopoly abuse, and the dispersion of political and economic control. Secondly, focusing on consumer welfare urge the courts to adopt favorable interpretations. And if disregards the host of other ways that excessive concentra- a variety of welfare concerns become relevant in antitrust tion can harm us—enabling firms to squeeze suppliers and litigation—concentration of power, labor, suppliers, etc.— producers, endangering system stability (for instance, by businesses can advocate that the courts should incorporate allowing companies to become too big to fail), or under- these factors into the analysis. For example, companies can 9 mining media diversity, to name a few. sometimes make credible arguments that a merger will help Chair Khan, Professor Wu, and others in the Biden them avoid layoffs, increase wages, and support unions. administration want to replace the consumer welfare stan- In addition, a renewed emphasis on “market structure” dard with a benchmark that focuses on protecting the “com- and protection of smaller businesses will present strategic petitive process.”10 Professor Wu has written that to develop opportunities for businesses in litigation if it causes the this approach “will require much further work and practice courts to place greater emphasis on old-style market defini- to arrive at practicable standards,” but that “the basic ques- tion. For several decades, the primary litigation obstacle that tion is whether the complained-of conduct is competition the antitrust agencies faced was not the Chicago School’s on the merits, or, rather, an effort to disable or subvert the de-emphasis of market structure, but the inability to prove competitive process.”11 “This is a test primarily focused on a traditional market structure in the first place. To deal with protection of a process, more specifically, which is different this problem, the antitrust agencies successfully advocated than the maximization of a value.”12 Professor Wu wrote for a more flexible view of market definition that used that the competitive process standard is “not ultimately tied econometric tools to measure the relative intensity of price to arguments about whether, in the final analysis, consumer and quality competition between companies.15 This has pro- welfare has been served or not.”13 duced big benefits for the antitrust agencies in litigation. For The courts will not replace or modify the consumer wel- example, the FTC’s flagship hospital merger enforcement fare standard overnight. But the desire to do so by mem- program often sidesteps traditional market definition and bers of the Biden administration will produce immediate policy objectives favored by some critics of the consumer consequences for businesses. Many antitrust investigations welfare standard (e.g., wages and impacts on suppliers). are resolved at the agencies, without litigation. (Lawyers like Instead, the program hinges on an FTC economic model trials; most companies do not.) The Biden administration that has a singular focus on whether a merger is likely to will, in many cases, investigate the wide set of issues raised increase prices to the hospitals’ customers. by those who favor the competitive process standard. This will lengthen some investigations and expand the scope of 2. Does antitrust policy play dice the information the parties need to produce. For example, with competition?16 the antitrust agencies have already started to ask for more On the surface, the antitrust debate is about legal doctrine. information about how transactions affect labor markets. But the substance of the disagreements largely boils down to To reduce regulatory risk and manage investigation costs, how much risk to take that conduct will reduce competition. companies will need to broaden the scope of their advocacy In an enforcement framework, the risk issue reduces to to go beyond price effects and incentives to innovate.