Prof. Herbert Hovenkamp, who many consider to be the ‘dean of American antitrust law,’ addresses the relationship between competition policy and inequality of wealth in his new article, published in Competition Policy International (CPI)’s Antitrust Chronicle. His new publication is an educational piece explaining how antitrust norms enforced under the consumer welfare standard are already having a positive impact on wealth distribution and employment. As such, Prof. Hovenkamp poses the question: “accepting that competitive markets are conducive to greater wealth equality, hasn’t antitrust already done all it can do?”
To address this question, Prof. Hovenkamp briefly examines the evolution of US antitrust norms, clarifies the reasons why consumer welfare is the appropriate standard, and illustrates how antitrust enforcement contributes to wealth distribution and employment by using Amazon as an example.
Prof. Hovenkamp acknowledges that “antitrust law unquestionably affects wealth distribution.” Furthermore, Prof. Hovenkamp reminds us of the literature suggesting that competitive markets are conducive to more even wealth distribution. Assuming this literature is true, Prof. Hovenkamp argues that rigorous antitrust enforcement aimed at increasing market competition inevitably contributes to wealth distribution. Similarly, antitrust contributes to job creation by promoting increased outputs that demand more labor forces without decreasing efficiency.
But what is rigorous antitrust enforcement? Is harm to consumers enough to invite antitrust restraints or should harm to other players, job creation, etc. be factored into the antitrust analysis? Coming to the more specific question as to what yardstick one should apply to assess if a particular conduct is anticompetitive, Prof. Hovenkamp argues in favor of the consumer welfare standard, and against the general welfare standard that calls for factoring in efficiency gains, benefits to other players, competitors, etc.