The 60-Second Read:
Today’s debate over the need to reboot antitrust enforcement centers on the appropriateness of the consumer welfare standard that guides U.S. antitrust enforcement. Although the modern U.S. Supreme Court consistently enforces the consumer welfare standard as the guiding principle for antitrust analysis, some observers do not necessarily see the consumer welfare standard as the solution for antitrust enforcement, and claim that other public interest considerations should factor into the antitrust analysis.
A sound understanding of the evolution of the U.S. competition system reveals that it is hard to reconcile economic analysis with public interest considerations other than consumer welfare within the antitrust framework. On the contrary, factoring other public interest concerns into the antitrust analysis could result in inconsistent application of competition norms and of political intervention in the decision-making process.
What is the consumer welfare standard?
The consumer welfare standard is the economic model for decision-making employed by antitrust enforcers to determine whether a business conduct deserves antitrust restraint or not. It focuses solely on the surplus gains for consumers and disregards the efficiency gains for producers. Thus, a competition system guided by the consumer welfare standard, has as a goal the maximization of consumers’ benefits.
With the adoption of the consumer welfare standard, other public interest considerations — such as unemployment, discrimination or protection of small businesses — do not factor into the antitrust analysis.