Regardless of your political affiliation, it is worth understanding the potential changes to antitrust enforcement in the next administration. We will take a look at how antitrust might be handled by each of the two major party candidates. This week, we’ll take a look at a possible Clinton administration.
The Clinton Campaign has released an economic manifesto of sorts that discusses, among other things, what her vision of antitrust enforcement would be if she were elected President. This paper represents the third statement on antitrust made by the Campaign or its surrogates. The first, an op-ed from October 2015, was a high level piece discussing the need for vigorous enforcement. The second, in the form of a speech by Elizabeth Warren, was more radical. It too insisted on aggressive enforcement. The speech did raise at least some issues, like a revision to the vertical merger guidelines, that seemed a bit far afield from current thought, both conservative and liberal. The most recent is a more balanced and practical statement of what the administration plans to do, and as such I think serves as a very good barometer for what antitrust could look like with Mrs. Clinton at the helm. Of course, the proof will be in the pudding. Who President Clinton nominates to run the Agencies, as well as how much funding she can secure for them, will tell you a lot about whether she truly does wish to or even can invigorate the antitrust laws.
It is simply impossible today to just turn on antitrust enforcement and deconcentrate large numbers of markets and break up monopolies. Chicago school economics permeate the jurisprudence, the biases of academics and the views of most enforcers, both conservative and liberal. The courts have significantly reduced what sort of behavior violates the antitrust laws. And with the adoption of the 2010 Merger Guidelines, the Agencies have significantly reduced the number of mergers that they feel are worth investigating. Simply bringing more merger challenges will not result in more mergers being stopped. The case law simply cannot support that. Moreover, bringing more cases without having a clear plan and theory will result in more bad decisions for enforcers, further contracting the jurisprudence, the opposite of reinvigorating enforcement.
What really needs to be done is either create a whole new antitrust regime where behaviors that are presently excusable are condemned or engage an anti-Chicago insurgency where the tenants of the Chicago school are systematically tested and debunked and the case law is overturned. But that is a long and slow process and it may be impossible with a split Congress.
Enforcers are not helpless, however. What the Agencies can do is increase the scope and scale of their investigations. They need to look at more behaviors and look at them more deeply. And through those investigations develop a new antitrust lexicon, a set of analytical tools economists, courts and future enforcers can use to tackle problematic behaviors. With compulsory process, the Agencies have a unique ability to look at an industry in depth. And with their stature and importance in our economy, they have the ability to engage the brightest minds to understand and articulate the potential harms. Mrs. Clinton’s last paper seems to invoke this notion.
From a purely practical standpoint, the first thing the Agencies need to do to “reinvigorate antitrust” is to redefine what an agency “success” is. In recent years, the Agencies have been expressing pride at the fact that the vast majority of second requests result in some remedy. The feeling is that that high ratio means that they are enforcing efficiently and effectively. It is likely true that those investigations were warranted, but the other way to look at that statistic is that a great deal of borderline cases were not investigated and that perhaps some violations were in fact missed. A true enforcement-oriented regime would not shy away from investigating a borderline case but would embrace it. False positives in a Clinton regime would impose added expense on some businesses, but the law and theory of antitrust would have the opportunity to bloom again.
And with that in mind, here are my top 5 predictions for a Clinton Administration.
- Civil non-merger investigations increase by 20%. Settlements increase by 10%. Suits remain relatively stable.
- Second requests increase by 20%. Settlements increase by 10%. Suits remain relatively stable.
- Merger retrospectives increase by 30%. Settlements increase by 10%.
- Industry studies increase by 30%.
- Commission papers increase by 30%.