The sole purpose of the paper is to provide a description of the consumer welfare (“CW”) standard and its evolution in the context of competition law.

I begin with the definition of CW and by pointing out how the now evident issues of the Chicago school approach have relatively little to do with a (correct) application of this parameter. The document moves then to recall the unresolved and significant issues that characterise this parameter: some of a theoretical nature, such as the use of wealth instead of welfare, others relating to the problems in assessing innovation, quality, market dynamism, the oligopolistic context and, in general, its ignoring goals other than purely economic ones.

The paper then examines the alternative standards proposed from time to time (and currently with greater force), such as those based on pluralism, the competitive process, ‘bigness’, the political content of antitrust, the protection of small companies, and fairness.

The conclusion highlights the significant problems arising from these alternative parameters, starting with their inconsistency with one another, and their complexity.

Sommario/Summary:

1. Introduction. - 2. Is consumer welfare the defining issue in the Chicago-school based antitrust overhaul? - 3. The consumer welfare standard has issues. - 4. Alternative standards. - 5. Issues with the alternative standards. - NOTE

1. Introduction.

Antitrust is a peculiarly vague and case-dependent branch of the law: while it is supposed to be all about the restriction of competition, not everyone agrees even on what competition or restriction really mean in the antitrust context. The attempt by courts to overcome the problem by forging legal concepts such as ‘competition on the merits’, or ‘competition based on performance’ or (in the negative) ‘means other than those characterizing normal competition’ at times appear to add vagueness to vagueness.

This is why one can in a way sympathize with the effort to create a standard, a North Star, showing the way on the uncertain path of antitrust enforcement. Let us begin to say that, for a while, at least, courts, agencies, lawyers and economists alike, have believed to have found such lead in the so-called consumer welfare standard (from now on: CWS, and CW for ‘consumer welfare’). We will not delve, for lack of space, in the controversy of what exactly CW is (definitely, however, it is not total welfare, Bork’s slight of hand). Let us just say that at one point even the US Supreme court started referring to it, and it has not ceased doing so ever since [1].

A convincing definition runs as follows: CW is about keeping output as high as possible, so that prices will remain low [2]. Essentially, CW, if interpreted rightly (and literally), is about putting the emphasis on the consumer (whether the final or the intermediate one is yet another issue, to be left for another day).

In the European Union, the CWS has only very recently been accepted explicitly by the courts (and, in particular, the Court of Justice): see, Servizio Elettrico Nazionale, where it is stated that the protection of the consumer is the goal of competition law, although the Court adds its reference to the competitive process – which in some ways may appear to be an alternative standard to the CWS. The court avoids, however, going all the way to the concept expressed in the same case by AG Rantos, i.e., that the competitive process is relevant only in so far as it ensures the CW goal [3]. Adding to CW, not only a reference to the competitive process, as said, but also, the mention ofcompetition on the merits.

It would also be interesting to consider what a ‘standard’ is. Here, it has been said that standards are related to the goals of a given field of law. The standard of competition law should design the way to achieve, in our case, the goals of competition policy [4].

2. Is consumer welfare the defining issue in the Chicago-school based antitrust overhaul?

Most of the massive criticism levied against the so-called Chicago-school inspired enforcement of antitrust, has very little to do with the CWS, and even less with its specific implementation in the antitrust world. What alienates from that school of thought, in fact, is not so much its recourse to CW, as the many undemonstrated and ideologically motivated assumptions on which it has based its antitrust (under-)enforcement. We are referring here to the fact that [5]:

A. Efficiencies surface everywhere, and are assumed; this is particularly true for mergers;

B. It is believed that innovation and its reward need size and supra-competitive pricing. The ‘manifest’ of this is Scalia’s Trinko opinion: the assumption that bigness is the outcome of superior acumen and thwarting it disincentivizes innovation – which in many ways seems to target the meaning itself of a competition law system;

C. As a consequence: antitrust is asked to stay away from excessive pricing and other exploitative abuses;

D. Vertical restraints, including mergers, are almost always efficiency-driven;

E. Conglomerate mergers cannot almost ever be harmful;

F. Leverage never happens;

G. Monopsony merits very little attention, including the correlated labor issues;

H. Predation does not exist or, if it does, in the end it benefits consumers;

I. Oligopolistic collusion does not exist or is best left alone;

J. Acquisitions of start-up companies, no matter how promising and innovative, are ignored;

K. Issues in interlocking and minority shareholdings are ignored;

L. The fear of ‘false positives’ is all over, and begets under-enforcement;

N. There is a strong bias against the recourse to structural remedies.

This is what, really, almost killed antitrust. Not the CWS.

3. The consumer welfare standard has issues.

Having said this, the CWS has its own issues, and not insignificant ones:

A. To begin with, the CWS focuses on ‘wealth’, and not welfare; in other words, wealth is only a substitute, often times, a poor one: this means that CW should consider “important issues that affect human well-being that can be influenced by antitrust policy. When there is sufficient social science evidence that these concerns indeed are key components of human welfare, and can be affected by antitrust policy, then they should be considered, along with the CWS concerns of price, innovation, and choice”[6]; while this already introduces the topic of ‘alternative’ standards, the point to take home here is that the whole theory is based on an idea (that antitrust should maximize welfare), except that properly-so-called welfare cannot be measured and we have to replace it with wealth;

B. Typically, CW tries to assess the impact on Marshallian demand, a criterion that is subject to some criticism in modern welfare economics[7];

C. The CWS assumes marginal utility is constant even between people who have a very different level of wealth[8];

D. It ignores loss on the input side even when efficiencies exist[9];

E. It ignores the relevance of innovation and productivity[10] and, in general, the dynamics of competition, as it is strictly based on a static pricing model; the attempt to tackle this with the idea of innovation markets did not go very far because of the high enforcement and adjudication hurdles, and general opposition[11]. This, by the way, is one of the most serious loopholes in the CWS, one which cannot lightly be either cured or tolerated;

F. Ignores ‘quality’, which was part of the original CW concept (where price was ‘quality-adjusted’);

G. Does not consider the relationship between growth and democracy, based on inclusiveness[12];

H. Ignores consumer manipulation and foreclosure; in general, consumer welfare is difficult to apply to exploitative abuses: as shown rather eloquently by the fact that, on the wings of its ‘more economic approach’, the Commission decided to not tackle exploitative abuses in its Article 102 ‘enforcement priorities’ document[13];

I. Doesn’t tackle well oligopolies, which may be at the basis of much non-competitive market performance[14];

J. Does not solve the issue of who consumers are, e.g., whether they should represent only ultimate consumers, or any customers, in general[15];

K. In its graphic representation, is normally based on Williamson’s “deadweight loss” diagram, which was not meant to be a representation of CW, but rather of efficiencies: Williamson considered in fact the trade-off model as ‘naïf’ and included a number of qualifications, including that Congress had in mind not only margin but corporate power, distribution of wealth, social ‘discontent’, etc.[16];

L. The CWS, and its correlated evidentiary apparatus, has become hospitable to increasingly complex economic models, and has sanctioned the use of a barrage of economic consultants. It has, in other words, become too complex, too difficult, too uncertain, and too expensive to administer[17]. This makes actually antitrust liability fairly unpredictable (in a world where predictability should be one of the real strengths of the CWS) and more in general may create a democracy deficit, as the general public does not understand why antitrust is enforced in certain situations and, more frequently, why it is not. Antitrust is, in the end, left to a small group of super-experts and has become very difficult for everyone else to follow[18].

Friends of the CWS reply that, while pricing is obviously the easiest variable, there is no need to focus exclusively on it, and in fact antitrust history is full of different parameters, including barriers to entry [19], quality [20], and innovation [21]. The issue being that data have to be observable, measurable, and predictable; and pricing is the aptest parameter in that regard [22]; as a cure, furthermore, one could just make a greater recourse to per se rules [23]. In any event, these authors maintain, this is not the only area of law that requires expert knowledge (think, e.g., tax, environmental law, etc.). Not to mention, CW is often applied by generalist judges, and has been for quite a while, which makes clear that it does not need such a complex expertise. And it is in any case much easier to use it rather than a number of alternative hodge-podge standards. Also, the indeterminacy problem is overstated, at the end of the day business people know when they are stranding [24];

In general, some believe that the CWS should be broadened, and extended beyond purely economic goals, by considering a number of alternative and additional addressees for antitrust protection, such as citizens in general (rather than consumers only), including workers, suppliers, small entrepreneurs, that a specific weight should be given to disruptive innovations, and issues of privacy and societal values should be considered [25]. This will be considered right away, moving to the issue of alternative standards.

4. Alternative standards.

umerous standards, alternative to CWS, have been proposed from time to time. In general, the basic difference is between those who continue to take a purely economic approach, but aim at increasing the credibility of the CWS, and those who (either by giving it up altogether, or by complementing it with different values) wish to expand it in the direction of ‘non-market’ values, such as democracy, the environment, the protection of suppliers or workers or small business. In line with what we considered above, i.e., that different standards are designed to achieve different goals, some of the alternatives represent properly-so-called standards, while others can be more precisely defined as alternative interpretations favored for the pursuit of different goals, i.e., goals other than consumer welfare. Others, finally, do more properly fall in the category of modified, rather than alternative, standards.

A selection of the most interesting alternative standards proposed so far includes:

A. The ‘Reasonable Competitive Conduct (RCC) Standard, proposed by Steven Salop[26]. This represents a twist in the CWS, which aims more directly at ‘powerful, dominating’ firms, as well as at the protection of smaller firms and consumers. More specifically, it proposes to do this is by (1) avoiding balancing, particularly when this means sacrificing (in the name of efficiency) the interest of the ‘protected’ categories, such as workers and small firms; (2) asserting more interventionist standards (mainly by way of per se rules, or through presumptions, including by raising and lowering, depending on where appropriate, the relevant burden of proof) towards exclusionary practices (e.g., by using Raising Rivals’ Costs analysis, scrutinizing more accurately exclusivity, etc.), and mergers (e.g., lower HHI thresholds), and by creating an antitrust exception to allow consumers or smaller firms to band together in order to acquire bargaining power vis-à-vis more powerful firms;

B. A number of standards, or goals, which aim at controlling the structure of the market, the size of firms, the political clout of firms, or more straightforwardly to protect or achieve some form of structural ‘pluralism’ with both, in a way, market and political implications, such as:

1. A focus on process and structure[27]: though critics of such choice highlight that the content of such standard is not always very clear, nor is its difference with the traditional CWS[28]. This theory is well known and accepted by the Court of Justice: there, it is often raised for countering the unrestrained Chicago-school argument (that only final consumers count and neither size nor the survival of competitors do), mainly in the sense that you have to consider competitors too, as without them, at least in the end, competition would not exist and even consumers would be worse off; in short, there is no competition without a ‘competitive structure’.

In the recent and provisional 102 Guidelines amendment, e.g., the Commission, citing Unilever, considers: “In this document the term ‘anti-competitive foreclosure’ is used to describe a situation where the conduct of the dominant undertaking adversely impacts an effective competitive structure”. This is somewhat attenuated by the ‘As Efficient Competitor’ rule: competitors count but only if they are as efficient; which has its own problems (e.g., if by foreclosure the dominant firm prevents them from attaining the optimal size). However, the 102 Guidelines amendment relaxes this latter test as well [29].

Irrespective of the Chicago idiosincrasies, it remains true at the end, that the concept of ‘process’ or ‘structure’ is as undefined as the one of ‘competition’, and becomes difficult to apply if the underlying idea is that no firm should ever harm its competitors [30]. One critical area is of course the one of mergers ^[31]?

In any event, the issue of harm to the competitive structure by and large overlaps with the one of ‘bigness’ [32].

2. Bigness (as in: The curse of bigness): An antitrust focusing on ‘bigness’ would meet considerable enforcement hurdles: first of all, market power does not strictly relate to size: a firm can have power over price even with a minuscule size: this, is by the way, at least part of the idea behind such recent phenomenon as the revival of ‘below threshold’ Article 22 merger notification and the whole theory of ‘killer acquisitions’[33]. In general, market power depends on the product, not the firm; and, it depends on the market, not the bigness of the firm[34].

Also, it is often objectively difficult to distinguish between exclusionary growth and growth on the merits. In a neo-Brandeisian world (where the protection of small business is the main concern and an increase of price which is caused by the protection of small firms is even considered a good thing) we would protect small firms and stifle the larger, no matter how innovative, ones.

Concerning the relationship between size and innovation it needs to be pointed out that size itself is indeed often the product of innovation and of changes in technology [35]. This is particularly true in the new advanced markets, where variable costs are often negligible.

On the other hand, at one point even Oliver Williamson [36] commented that maybe the Government could pick the top 100 companies and should just not allow them to merge at all. In general, big corporations are disliked by constituencies. This is not because of their presumed power over price but because they are supposed to hurt anyone who is not their customer. Skepticism towards corporate power is one of the main driving forces of antitrust law as adopted [37].

Needless to say, however, a vision of antitrust as devoted to contrast ‘bigness’ (which, at the end, is a rather fair description of the ‘neo-Brandeisian’ school of antitrust) is ridden with enforcement issues. If you manage a company which holds a significant market share, and you know ex ante that you cannot overstep 30%, what do you do? You reach, say, 28% and then you stop selling. The practical outcome is the following: competition is stifled as basically there will remain a cartel of quiet competitors where each one tries not to hurt the remainder too much; and if consumers still prefer the bigger company (e.g., because its services are of a better quality) they will either have to queue for weeks or the firm in question will raise its price and prices will spike in general.

One should also wonder if this is ‘democratic’, i.e., if consumers (who in the end are those who create bigness) would prefer an atomized market with high prices and possibly lower quality to larger firms offering lower prices; not to mention that if they should not want to go to the major firms and keep favoring the corner store instead, they would be free to do so [38].

3. A focus on structure and on bigness is not too far from recognizing the relevance of the so-called ‘political content’ of antitrust. Both US and EU antitrust laws have a long political tradition which re-surfaces from time to time, when the issue of antitrust goals is explored.

While the existence of such background cannot be disputed, the fact remains that the idea that antitrust, by limiting the market power of certain prominent companies, would contain their political leverage and save the proper functioning of the democratic system, does not seem to properly consider that, on one hand, the link between the market presence of a firm and its ability to tamper with the political system, is far from straightforward (according to certain recent studies, there is no clear correlation between market concentration and political financing as well as lobbying activities, while others maintain just the opposite [39]) and that, on the other, there are clearly legal ways which are both more effective and much more precisely targeting the containment of such ‘political issues’.

Such are certainly the laws regarding the financing of political parties and political activities in general, as well as those regulating lobbying. The same is true of the laws protecting media pluralism, as well as the targeted use of tax law. One should ponder if the reason why antitrust is invoked to perform such a straightforward political function does not have something to do with the fact that the laws which are precisely meant to do this are very far from fulfilling their function. Which does not imply however that antitrust could so easily replace them, and do so efficiently. One should also wonder whether antitrust agencies would be the best placed to perform that function, considering that they maintain various formal and informal links to the political system which, i.a., selects and appoints their executive personnel.

4. A further alternative goal attributed to competition laws, closely related to the ones just considered, is the one of ‘pluralism’, otherwise referred to as ‘plurality’[40].

In the US, by way of example, the D.C. federal court has recently ruled against the Shuster merger, opining that:

The proposed merger would have reduced competition, decreased author compensation, diminished the breadth, depth, and diversity of our stories and ideas, and ultimately impoverished our democracy [41].

In the EU context one could go to the Google Android General Court’s judgment, where the Court considers that:

Google’s abusive practices had the effect […] of depriving competitors of the possibility of offering, without hindrance, alternatives to the general search service Google Search to those users wishing to use them […]. Thus, in general terms, those practices were detrimental to the interest of consumers in having more than one source for obtaining information on the internet. Accordingly, in more concrete terms, those practices also restricted the development of search services directed at those segments of consumers that attached particular value to, inter alia, the protection of privacy or specific linguistic features within the EEA. Such interests were not only consistent with competition on the merits, in that they encouraged innovation for the benefit of consumers, but were also necessary in order to ensure plurality in a democratic society [42].

This passage, which groups together properly-so-called plurality, its ‘political’ aspect (plurality “in a democratic society”), and ‘choice’ (the “interest of consumers in having more than one source”), has been echoed in a speech by Commissioner Vestager, approvingly quoted in the Commission’s Article 102 policy brief [43]. In such speech, Ms. Vestager affirms that:

EU competition policy is able to pursue multiple goals, such as fairness and level-playing field, market integration, preserving competitive processes, consumer welfare, efficiency and innovation, and ultimately plurality and democracy [44].

Now, antitrust law has for a while showed this worrying tendency where, in order to preserve the centrality of the CWS, this has been progressively expanded to include, besides price and output, i.e., the only ingredients of the CWS as originally articulated, goals such as innovation or quality, which are not only distinct but also often incompatible with the original ones: a higher quality good or service, or a more innovative one, that is, will also often if not always be characterized by a higher price. Also, there is no CWS parameter which could enable an agency or court to decide between the two (or three). When, however, to the already full plate, other goals are added on, such as ‘fairness’, ‘level-playing field’ (in so far as this is not already intrinsic in the concept of fairness), preserving the competitive process, and, ‘ultimately’ (whatever this should mean: is the idea that this is a catch-all for all of the previous values, or that it is one value which goes beyond the rest of them?) plurality and democracy, one is left with but two options: either CW remains the one we know (i.e., higher output and lower prices) and the additional values are for declamatory purposes only (ad pompam, as it were) or, if they are to be considered in the measurement and application of the CWS, it is difficult to see how such a standard could take so many disparate goals into consideration. And there is obviously a further issue, i.e., that the agencies and courts would be given unlimited discretion.

One should also point out that, while it is true that a standard is qualified by its ability to achieve certain goals, there is still an essential difference, including in the language, between a goal and a standard: and, while CW can be uncontroversially defined as a goal which is set to a standard, there is no antitrust standard that we know of which has been found to achieve, say, democracy, plurality, or fairness [45].

One way to solve the problem would obviously be to identify a ‘ranking’ among the different competition law goals (or standards). This ranking could perhaps be found in nuce in Article 101.3, which, after all, is about the disapplication of the competition law prohibition. Same holds true for Article 106.2. The Court of Justice has also exhibited a certain amount of inventiveness when deciding whether to save a given ‘value’, by unilaterally deciding to suspend competition law provisions. This has happened in a number of cases concerning sport (where, basically, certain rules of ‘fairness’, typical of sport activities, have been considered preponderant vis-à-vis a straight-on application of Articles 101 or 102) [46], or regarding the liberal professions [47], or the workings of labor union bargaining [48]. This, however, has all happened in too a sporadic and case-by-case fashion, to enable us to imagine a hierarchy of values, even assuming that such development of competition law should be imitated in other instances.

Another version of this particular range of antitrust goals, is the one which identifies the goal of antitrust in a generic ‘Freedom from Domination’, i.e., a general hostility towards economic concentration, in so far as this can transform itself into a factor of economic and social oppression [49].

Obviously, getting the metrics or these specific goals is far from easy. The issues are similar to the ones which characterize the implementation of the goals regarding the competitive process, bigness or, in general, political content. It is perhaps not a coincidence if, in her 80-page long opinion in the Penguin Random House/Simon & Shuster merger case, judge Pan refers to but then never even attempts to quantify the loss in ‘democracy’: her review is based exclusively on traditional antitrust doctrines such as concentration, unilateral effects, coordinated effects, monopsony, efficiencies, etc.

5. On (1) through (4), it should also be considered that:

(i) Consumer welfare stricto sensu has some political content anyway, as it at least favors redistribution from suppliers to consumers;

(ii) This applies to all ‘under-enforced’ areas considered, merger control to begin with, which can be an effective way to keep in check size [50]; this is also true for any potential consequences, through de-concentration, on the protection of democracy [51];

(iii) Many of the above considerations could perhaps be addressed more directly by focusing more precisely (rather than inventing new antitrust standards) on the already available remedies, such as:

(a) ‘incorporating’ democratic values in antitrust analysis and decisional practice; e.g.: to tackle fake news or social network disinformation, sometimes a specific standard could be added. A solution of such kind has been attempted in Austria for the purpose of achieving a more targeted control of mergers in the media sector: in such case, specific elements are included in the law, such as providing for lower turnover thresholds, modifying the amount of information to be provided upon filing, and taking into account ‘media pluralism’, when assessing the competitive impact of the merger.

In some other situations, self-preferencing can be explicitly considered relevant, as when a given conduct, which is to be considered anti-democratic goes to the benefit of the platform (this is the ‘Twitter’ dilemma, where disinformation and raising tones, also of the aggressively anti-democratic kind, actually contributes to the profits of the platform). In yet other situations the standard of quality degradation could be used (in itself already accessible within the traditional CWS): this could in particular be the case of fake news or disinformation.

In the end, however, even the Author who puts forward such ‘solutions’, does not propose specific interventions (although the Austrian legislation seems to be convincing, for a limited scope at least), and limits herself to advocate an ‘interdisciplinary’ (e.g., with behavioral economics, political science, etc.) analysis [52]. Other authors are much less optimistic and believe that this inoculation of democratic ‘values’ into the tissue of antitrust laws would simply bring the level of indeterminacy and unpredictability to new and unacceptable heights [53];

(b) In general, several jurisdictions exist, which explicitly incorporate in their competition laws non-economic, non-competition related values: the best known examples being South Africa, Canada, and Japan [54];

(c) straight-out prohibitions could maybe also be an option sometimes, e.g., beyond certain market share thresholds or concerning some given conduct; this was the Hart Bill approach, it is (though it is not said too loud) in many ways the DMA approach (e.g., prohibition of self-preferencing), and maybe at the core of the legislative initiatives mentioned by Robertson regarding media pluralism. A very evident attempt has been Senator Warren’s (unapproved) draft ‘Prohibiting Anticompetitive Mergers Act of 2022’, which would have:

(1) Prohibited outright certain very large mergers (those valued over $5 billion, that would result in either more than 33% market share or a “highly concentrated” market under the 1992 Merger Guidelines);

(2) Equipped the DOJ and the FTC with the authority to block certain mergers without seeking an injunction;

(3) Extended HSR waiting periods;

(4) Incorporated impact on workers and other market participants into the factors to be considered in evaluating mergers;

(5) Limited all companies to two acquisitions in any five-year period; and

(6) Required remedial attention (including potential divestiture) to any merger in this century that resulted in a 50% market share.

(d) The use of structural presumptions is also often called for, based, e.g., on firm-level characteristics (such as turnover, capitalization, margin: this is again part of the approach adopted by the DMA, by the way) [55], the consideration agreed upon (i.e., price or price minus tangible assets), or the concentration level (such as market shares or HHI levels) [56];

(e) Some other authors have suggested doing away with the creating or strengthening of market power leg of the CWS [57]; to which other authors have objected that the market power test usefully limits the scope of antitrust enforcement, makes it more predictable and, finally, keeps the focus on the competitive process. Thus avoiding the risk that all kinds of ‘values’ may find their way into the relevant antitrust standard [58];

6. A further competition goal contemplated by some, both in the old and in very recent times, is the protection of small firms[59]; the possible conflict between such goal and the one of protecting competition stricto sensu has been for long (i.e., including vis-à-vis the old school of antitrust thought) highlighted; a possible theoretic way to solve such conflict – though it does not seem that the modern sponsors of this goal would share this interpretation, is to believe that, in a dynamic prospective, the small firms of today are the big ones of tomorrow, so that giving them a certain time to grow cannot but do good to competition as such, only a few years down the line[60];

7. In very recent times, ‘fairness’ is often raised as a central goal of antitrust laws. It should be recalled that Section 5 of the FTC Act does in fact prohibit ‘unfair methods of competition’, which is certainly at least part of the reason why, in the previous years, Section 5 had been so much as abandoned by the FTC. Now the FTC, in its 2022 § 5 policy notice, revives fairness and equates it to conduct ‘on the merits’, a very European term of reference. More precisely, the FTC starts by saying that:

[in order to violate Section 5] the method of competition must be unfair, meaning that the conduct goes beyond competition on the merits.

And goes on defining what competition on the merits (and, therefore, fairness), is:

There are two key criteria to consider when evaluating whether conduct goes beyond competition on the merits. First, the conduct may be coercive, exploitative, collusive, abusive, deceptive, predatory, or involve the use of economic power of a similar nature. It may also be otherwise restrictive or exclusionary, depending on the circumstances, as discussed below. Second, the conduct must tend to negatively affect competitive conditions. This may include, for example, conduct that tends to foreclose or impair the opportunities of market participants, reduce competition between rivals, limit choice, or otherwise harm consumers [61].

The current quasi-competition, quasi-regulatory legislation is by the way full of references to fairness: this applies, e.g., to the DMA, the DSA, the Data Act, and the European theory of abuse of economic dependence [62].

It may be useful at this stage to note that also Advocate General Rantos, has put forward its own definition of ‘competition on the merits’, a concept which goes back a long time in the Court of Justice’s case-law. In fact, in its opinion in the Unilever case, the AG affirms:

[…] the concept of ‘competition on the merits’, to which the Court refers, does not correspond to a specific form of practices, remains abstract and cannot be defined in such a way as to make it possible to determine in advance whether or not particular conduct comes within the scope of such competition. The concept of ‘competition on the merits’ expresses an economic ideal, the background to which is the current trend in EU competition law to favour an analysis of the anti-competitive effects of the conduct rather than an analysis based on its form […] [63].

Obviously, the idea that such notion ‘cannot be defined’, sort of defies its purpose. Also, there may be a tension in saying that competition on the merits “expresses an economic ideal”, and recurring elsewhere to notion of fairness.

It should also be recalled at this stage that in Ms. Vestager’s above cited speech of October 2022, ‘fairness’ is the first reference on the list, no matter how long, of antitrust goals.

8. Needless to say, environment has also made it to the list of antitrust goals, though in fairly recent times[64].

9. Finally, labor issues and the protection of workers have been at the forefront of the recent ‘revival’ of antitrust laws, particularly in the US context[65].

5. Issues with the alternative standards.

Such ‘alternative standards’ have of course problems of their own, when it comes to their implementation:

1. Different outcomes: One useful exercise, to begin with, though probably not as frequent as one would predict, is to ask oneself whether the recourse to different standards really would make any difference in the outcome of the case. One could imagine, e.g., a merger situation or the one of an environment-friendly but otherwise restrictive agreement: in such cases, it may make a difference if a merger is judged based on a CWS in the traditional sense of the word, a CWS where total welfare applies (where wealth transfers are uninfluential, that is), or of a standard which takes into consideration environmental protection as a value. In fact, based on the OECD study, in such cases the standard could indeed make a difference[66]. The same is true of a parallel trade situation (such as in the Glaxo Spain case), depending on whether the ’consumer’ to be protected in the CWS framework is the ultimate consumer or the wholesaler (i.e., the one who is really making money out of the parallel trade)[67].

A possible conflict exists, furthermore, in situations such as those occurring in joint purchasing agreements, no-poaching clauses, subcontracting and franchise agreements, depending on whether the antitrust focus is put on the consumer or on the supplier/the workers. The same reasoning applies, in general, to the issue of monopsony, which has been vastly overlooked in the traditional, CWS-oriented school of antitrust [68].

As considered by Einer Elhauge, in fact:

[…] there are at least four […] Supreme Court cases for which the adoption of a consumer welfare standard cannot be dismissed as dicta because it was necessary to their holdings. In Brooke and Weyerhaeuser, it was necessary for the holdings that, respectively, below-cost pricing and overbidding without subsequent recoupment should be allowed as procompetitive because they benefit consumer welfare while they exist without harming them in the long run, rather than condemned as anticompetitive because they inefficiently impede rival competition while they exist. In Leegin, it was necessary for the holding that the prior per se rule against vertical minimum price-fixing agreements should be overruled because such agreements could benefit “consumer welfare” with higher service levels, rather than condemned per se because they restrain free market choice and could eliminate some dealers. Finally, in Jefferson Parish, it was necessary for the holding that the quasi per se rule against ties with tying market power but no substantial tied foreclosure share should be retained because such ties could increase the exploitation of that market power in a way that harmed consumer welfare, rather than allowed on the ground that such ties did not harm “competition” because they did not increase the degree of tied or tying market power [69].

A recent European case (CK Telecom) also seems to hinge on such general questions, as the contrast between the General Court and the Court of Justice focuses, i.a., on whether restricting competition between two competitors rather than on the market as a whole can be subject to a merger prohibition or remedy. At the end of the day, the conflict here is between a merger which can clearly harm consumers and one where this cannot be demonstrated, at least in the short term [70].

B. Predictability: The CWS is favored by those who highlight the relevance of predictability. Whether this really is true, should be left to another day (though, see immediately below, under ‘complexity’, for some immediate limitation). Also, it has been pointed out that, when the system is too predictable, this might not be a good thing, as it might make the system too susceptible to manipulation[71].

C. Complexity: There is little doubt that applying the CWS, an aggregate of a dozen different, partly conflicting, partly overlapping, values, may confer unlimited discretion to the agencies and the courts. Which some may favor, but does obviously not fit too well with the very notion of ‘standard’. We have stressed already that the limits of excessively composite standards are exacerbated by the difficulty of producing a ranking among the disparate and often conflicting values, which make them up[72].

NOTE

[1] Starting from Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979) (quoting Robert Bork, The Antitrust Paradox (1978), 66: “Congress designed the Sherman Act as a consumer welfare prescription.”).

[2] C. Shapiro, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day One, accessible at https://www.youtube.com/watch?v=qXGipgaz
A7cStigler I/8hr.

[3] A. Komninos, Consumer Welfare’ and the EU Courts: An Unexpected Refuge for a Persecuted Concept?, in Antitrust and the Bounds of Power – 25 Years On, ed. by O. Andriychuk, Oxford, Hart Publishing, 2023, 73 et. seq.

[4] C. Shapiro, The Consumer Welfare Standard in Antitrust: Outdated, or a Harbor in a Sea of Doubt?, Opening Statement, Senate Judiciary Committee Subcommittee on Antitrust, Consumer Protection and Consumer Rights, 2017, available at http://faculty.haas.berkeley.edu/shapiro/anti
trustpopulism.pdf.

[5] I cannot find a shorter way to buttress all this with a footnote than citing my Antitrust: A Heimlich Manoeuvre, in 11 Eur. Competition J., 2015, 221.

[6] M. Glick, G.A. Lozada, D. Bush, Why Economists Should Support Populist Antitrust Goals, Institute for New Economic Thinking, Working Paper No. 195, December 6th, 2022.

[7] F. Lancieri, T. Valletti, Structuring a Structural Presumption for Merger Review, in Promarket, 2023, available at https://www.promarket.org/2023/04/14/structuring-a-structural-presumption-for-merger-review/.

[8] M. Glick, G.A. Lozada, D. Bush, (fn. 6), 12 et seq.

[9] Ivi, 20 s.

[10] But C. Syverson, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day One, (fn. 2): this mainly depends on technology, which is unaffected by antitrust.

[11] F. Lancieri, T. Valletti, (fn. 7).

[12] M. Glick, G.A. Lozada, D. Bush, (fn. 6), 38.

[13] Communication from the Commission - Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings.

[14] On which, infra.

[15] C. Shapiro, (fn. 2).

[16] E. Posner, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day Two, https://www.youtube.com/watch?v=Jsegmmv8ZdE.

[17] T. Wu, The Consumer Welfare Standard is Too Tainted, in Promarket, 2023, available at https://www.promarket.org/2023/04/19/the-consumer-welfare-standard-is-too-tainted/; E. Elhauge, Should The Competitive Process Test Replace The Consumer Welfare Standard?, in Promarket, 2022, available at https://www.promarket.org/2022/05/24/should-the-competitive-process-test-replace-the-consumer-welfare-standard/.

[18] F. Lancieri, T. Valletti, (fn. 7); OECD, The Consumer Welfare Standard - Advantages and Disadvantages Compared to Alternative Standards, OECD Competition Policy Roundtable Background Note, 2023, available at www.oecd.org/daf/competition/consumer-welfare-standard-advantages-and-disadvantages-to-alternative-standards-2023.pdf, 27.

[19] United States v. Alcoa, 148 F.2d 416 (2d Cir. 1945).

[20] Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).

[21] United States of America v. Microsoft Corporation, 253 F.3d 34 (D.C. Cir. 2001).

[22] OECD, (fn. 18).

[23] A.D. Melamed, N. Petit, Before “After Consumer Welfare”, a Response to Professor Wu, in Competition Policy International, July 2018, 4.

[24] A.D. Melamed, N. Petit, (fn. 23), 6 et seq.

[25] I. Lianos, The Poverty of Competition Law: The Short Story, in Reconciling Efficiency and Equity: A Global Challenge for Competition Policy (Global Competition Law and Economics Policy), ed. by D. Gerard, I. Lianos, Cambridge University Press, 2019.

[26] S. Salop, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day Two, (fn. 16); see also E.M. Fox, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day One, (fn. 2).

[27] E.M. Fox, Against Goals, in 81 Fordham L. Rev., 2013, 2157; T. Wu, (fn. 17).

[28] A.D. Melamed, N. Petit, (fn. 23), 8.

[29] Communication from the Commission: Amendments to the Communication from the Commission Guidance on the Commission’s enforcement priorities in applying Article 82 of the EC Treaty to abusive exclusionary conduct by dominant undertakings.

[30] H. Hovenkamp, F. Scott Morton, The Life of Antitrust’s Consumer Welfare Model, in Promarket, 2023, available at https://www.promarket.org/2023/04/10/the-life-of-antitrusts-consumer-welfare-model/, who also give examples of how the standard can be used with opposite results.

[31] E. Elhauge, (fn. 17), makes the 100 plumbers to 99 plumbers restriction example.

[32] D. Biggar, A. Heimler, Is Protecting Sunk Investments an Economic Rationale for Antitrust Law?, in 9(2) J. of Antitrust Enforcement, 2020: competitive process is the means, not the end. How would you decide a number of cases (which the author describes) purely upon a ‘protecting the competitive process’ principle?

[33] Communication from the Commission: Commission Guidance on the application of the referral mechanism set out in Article 22 of the Merger Regulation to certain categories of cases.

[34] H. Hovenkamp, F. Scott Morton, (fn. 30).

[35] H. J. Hovenkamp, Is Antitrust’s Consumer Welfare Principle Imperiled?, in Penn Law: Legal Scholarship Repository, 2019.

[36] Mentioned by E. Posner, (fn. 16).

[37] Ibidem.

[38] H. J. Hovenkamp, (fn. 35), who points to the US e-books case to point to what could go seriously wrong in the antitrust world if the neo-Brandeisian approach should be adopted.

[39] But, N. McCarty, S. Shahshahani, Economic Concentration and Political Advocacy, 1999-2017, available at https://www.law.nyu.edu/sites/default/files/Sepehr%20Shahshahani%20Paper
%20Final.pdf, finds no clear correlation between size/concentration and spending in lobbying; but other studies point to the opposite direction, see OECD, (fn. 18), 26.

[40] See the comment by E. Posner (fn. 16): would you say that a two-to-one merger which does not give the resulting monopoly the ability to raise prices should be cleared on the basis of the CWS? The answer is ‘no, because it eliminates competition’.

[41] U.S. District of Columbia, U.S. v Bertelsman et alii, Case 1:21-cv-02886-FYP, delivered on October 31, 2022.

[42] Judgment of the General Court of 14 September 2022, T-604/18, Google Android, § 1028.

[43] Competition policy brief, Issue 1, March 2023: a dynamic and workable effects-based approach to abuse of dominance.

[44] M. Vestager, ‘A Principles Based approach to Competition Policy’ (Keynote at the Competition Law Tuesdays, 25 October 2022, available at https://uk.practicallaw.thomsonreuters.com/w-037-3818?contextData=(sc.Default)&transitionType=Default&firstPage=true).

[45] On democracy as a goal, see M. Glick, G.A. Lozada, D. Bush, (fn. 6), 10: the authors cite the studies by Frey, which prove that people who live in democracies are on average happier than those who do not: in this sense, one could say that democracy really contributes to welfare, rather than merely wealth.

[46] In a similar spirit, P.C. Mavroidis, D.J. Neven, Eyes on the Ball. The Super-League Litigation before the CJEU, 2023, available at SSRN: https://ssrn.com/abstract=4461465 or http://dx.doi.org/10.2139/ssrn.4461465.

[47] Judgment of the Court of 19 February 2002, case C-309/99, Wouters.

[48] Judgment of the Court of 21 September 1999, case C-67/96, Albany.

[49] L. Hinrichs, Freedom from Domination: A Revival of Antitrust Law and the Will to Choose Democracy, in The Flaw, September 6, 2022, available at https://theflaw.org/articles/freedom-from-domination-a-revival-of-antitrust-law-and-the-will-to-choose-democracy/.

[50] In this sense, T. Wu, (fn. 17).

[51] D.A. Crane, Antitrust as an Instrument of Democracy, in 72 Duke L. J. Online, 2022.

[52] OECD, Directorate for Financial and Enterprise Affairs - Competition Committee, Digital Merger Control: Adapting Theories of Harm, note by V. H.S.E. Robertson, DAF/COMP/
WD(2023)59, 16 June 2023.

[53] A.D. Melamed, N. Petit, (fn. 23), 8.

[54] OECD, (fn. 18).

[55] F. Lancieri, T. Valletti, (fn. 7).

[56] S. Salop, (fn. 26); J. Kwoka, in 2023 Stigler Center Antitrust and Competition Conference - Beyond the Consumer Welfare Standard? Day One (fn. 2).

[57] T. Wu, (fn. 17).

[58] A.D. Melamed, N. Petit, (fn. 23), 8.

[59] FTC § 5 2022 policy statement, which includes in anticompetitive conduct “impairing other market participants”.

[60] E.M. Fox, (fn. 26).

[61] FTC, Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act Commission File No. P22120, November 10, 2022, available at https://www.ftc.gov/system/files/ftc_gov/pdf/P221202Section5PolicyStatement.pdf.

[62] G. Colangelo, Fairness and Ambiguity in EU Competition Policy, in International Center for Law and Economics, ICLE White Paper 2023-02-15, 9 et seq.

[63] Judgment of the Court of 19 January 2023, case C‑680/20, Unilever, § 78.

[64] OECD, (fn. 18).

[65] OECD, (fn. 18).

[66] OECD, (fn. 18), at 2.8.

[67]A. Komninos, (fn. 3).

[68] S. Salop: Burdens of Proof and Presumptions in the Merger Guidelines, in Promarket, 2023, available at https://www.promarket.org/2023/09/08/steven-salop-burdens-of-proof-and-presumptions
-in-the-merger-guidelines/.

[69] E. Elhauge, (fn. 17).

[70] G. Monti, EU Merger Control After the Grand Chamber’s Judgment in Commission v CK Telecoms Investments, TILEC Discussion Paper No. 2023-13, available at https://ssrn.com/
abstract=4537510 or http://dx.doi.org/10.2139/ssrn.4537510.

[71] OECD, (fn. 18).

[72] OECD, (fn. 18), 30.