The 60-Second Read:
Recent commentary on competition law and policy might lead one to believe that size is all that matters in the competition policy sphere: big is bad; small is beautiful. However, an assessment of the evolution of modern competition law enforcement shows that size is just one element of a broader and more sophisticated analysis. In the early days, antitrust enforcement penalized successful companies based solely on market share. The ¨retro antitrust¨ approach created disincentives for companies to invest, innovate, and grow. Subsequent refinement in the application of economic analysis led the U.S. Supreme Court to adopt the consumer welfare standard and recognized that: “Congress designed the Sherman Act as a consumer welfare prescription.” This approach established the right balance for companies to compete and agencies to effectively maintain competition in the markets.
Hence, the adoption of a consumer welfare standard has provided for a “wise technocratic equilibrium”, spurring economic growth in the form of new and better products and services at lower prices to the benefit of consumers. Therefore, testimonials worrying about bigness are old-fashioned and mistaken. Well-informed analysis must understand that size is not a proxy for monopoly power.