Antitrust Lawyer Blog Commentary on Current Developments

DOJ’s Top Antitrust Cop Says Evidence Based Enforcement Is Sufficient to Protect Consumers With Regards to Digital Platform Companies

On April 19, 2018, Makan Delrahim, Assistant Attorney General of DOJ’s Antitrust Division delivered the keynote address at the at the University of Chicago’s Antitrust and Competition Conference. The focus of his remarks was “evidence-based enforcement.” He said that “an evidence-based approach requires enforcement built on credible evidence that a practice harms competition and the American consumer, or in the case of merger enforcement, that it creates an unacceptable risk of doing so.”

Delrahim noted that outside of flat out price fixing and naked restraints of trade, which are clearly illegal, “antitrust demands evidence of harm or likely harm to competition, often weighed against efficiencies or procompetitive justifications.”  He added that “taking an evidence-based approach to antitrust law should not be mistaken for an unwillingness to bring enforcement actions.” He said that if there is clear evidence of harm, the antitrust enforcers should vigorously prosecute the antitrust laws. He noted that antitrust enforcers that failed to take action when they had credible evidence and accepted behavioral “band-aid” fixes to anticompetitive mergers should accept some blame.  Delrahim noted that “the Microsoft case proved that an evidence-based antitrust enforcement approach can be flexible in its application to new types of assets and markets—in that case, the computer code and software markets.”

His message was that the U.S. and international antitrust agencies should not simply go to war with digital platform companies rather a more effective approach would be grounded in evidence.  He added that “in certain platform markets involving network effects, there may be barriers to entry or a tendency toward a single firm emerging as the sole winner” and in those situations, “antitrust enforcers may need to take a close look to see whether competition is suffering and consumers are losing out on new innovations as a result of misdeeds by a monopoly incumbent.”

While Delrahim said it should be a high bar to condemn charging a lower price than one’s competitor, he noted that antitrust officials should be “open and receptive” to evidence that some incumbent monopolist tech firms may be engaging in exclusionary conduct, such as below-cost pricing aimed at driving out competitors, to gain control of a market.  Though Delrahim does not share the same views as Lina Khan’s regarding how predatory pricing or other exclusionary conduct claims might apply to digital platforms, he gave her some props.  Lina Khan wrote a paper which outlines the threats Amazon poses to competition, and argues that the framework used by U.S. antitrust enforcers is ill-equipped to take on today’s dominant online platforms.  “Her note surely has been subject to some criticism,” Delrahim said, “but we should encourage fresh thinking on how our legal tools apply to new digital platforms.  We need more thinking – diverse thinking – about these questions.  And, we need a civil discourse on this topic.”

While the Trump Administration has its eye on Facebook and Amazon, Delrahim’s remarks were really about having a measured approach to enforcing the antitrust laws, one based on economic evidence.  He basically said if there is “clear evidence of harm to competition in digital platforms, enforcers must take vigorous action and seek remedies that protect American consumers, so that free markets or consumers don’t instead bear the risk of failure.”

Andre Barlow
(202) 589-1838
abarlow@dbmlawgroup.com