Biden Antitrust: The Paradox of the New Antitrust Populism

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Biden Antitrust: The Paradox of the New Antitrust Populism

Aurelien Portuese

Volume 29

, Issue 4

29 GEO. MASON. L. REV. 1087 (2022)

Introduction

The 2020 election placed antitrust at the center of the presidential campaign.¹ The last time antitrust was central to presidential debate dates back to 1912, which lead to the passing of two major antitrust laws in 1914: the Federal Trade Commission Act and the Clayton Act.² Would Biden’s term lead to long-lasting changes? Many have speculated that “Biden antitrust”—or the antitrust record under the Biden Administration—would be torn between President Biden’s inclination to remain a moderate democrat and the Progressives’ antitrust populism.³ The populist approach to antitrust advocated by the “New Brandeis Movement”⁴ castigates all forms of market power and aims at deconcentrating the economy by populating the market with small and medium-sized companies irrespective of the consumer welfare standard and of innovation considerations.⁵

Contrary to the expectation that Biden antitrust would somehow choose “a middle way” between antitrust populism and antitrust traditionalism, the first year of the Biden Administration has unambiguously embraced antitrust populism. Most notably, President Biden issued an Executive Order on Competition in July 2021⁶ that generally targets large companies, irrespective of their merits.⁷ President Biden appointed the heroes of the “New Brandeis Movement” to key offices, created a White House Competition Council, sued major companies and generated a chilling effect on all mergers, called for new rulemaking authority, embraced European-style regulations, and supported numerous antitrust bills aimed at reforming antitrust laws.⁸

How could a radical movement from the Progressives (known as the “New Brandeis School”) become the Democrats’ mainstream view, be endorsed by an allegedly moderate president,⁹ and be cheered by populist Republicans?¹⁰ The answer undoubtedly lies in the working of politics. Presidential candidate Senator Elizabeth Warren (D-MA) personified the radical stance of populist antitrust in 2019 and was able to leverage her political power when she finally endorsed the future President Joe Biden.¹¹ Indeed, Senator Warren was directly briefed by the leaders of the Neo-Brandeis Movement when she considered launching a 2016 bid for president:¹²

In early 2016, one of Warren’s advisers reached out to a Yale law student named Lina Khan. . . . In Warren, Khan and the head of Open Markets, Barry Lynn, found a high-profile figure in Washington who was willing to listen and who had the ability to draw attention to the cause. They met for dinner . . . . They suggested several anti-monopoly tools, including breaking up some of these giant companies.¹³

“[S]etting the Democratic field’s hostile tone on tech,”¹⁴ Senator Warren’s populist stance on antitrust, together with Senator Bernie Sanders’s (I-VT) views, proved to be extremely influential in the definitive approach to antitrust by the Democratic candidate.¹⁵ Indeed, as Senator Warren endorsed Joe Biden,¹⁶ Biden endorsed Warren’s populist stance on antitrust, even though this was contrary to the Obama era’s stance on antitrust when Biden was Vice President.¹⁷ Under the influence of Senator Warren’s and friends’ stance on populist antitrust, President Biden has changed from being the “quietest” of the Democratic candidates on antitrust¹⁸ into the kind of trust-busting president that Progressives have long idealized with Theodore Roosevelt. However, Biden does not fit with the mystified representation of Roosevelt as a trust-buster.¹⁹

In playing “monopoly games,” President Biden rolled the dice of antitrust between a radical approach and a moderate approach.²⁰ The dice have spoken: Biden antitrust is nothing but the Progressives’ agenda to endorse a populist “big-is-bad” stance and to advocate for firms to be trimmed down so that none can ever exercise market power, even if such exercise benefits consumers and promotes innovation.²¹ The first year of Biden antitrust is a year of antitrust populism, not a year of antitrust stability.²² This Article characterizes this year more fundamentally with three words: assumptions, actions, and disruption.

Part I describes the underlying assumptions of the Biden antitrust approach. Part II illustrates the actions undertaken within one year of Biden antitrust. The Article concludes by pointing out the paradox of new populism that the Biden antitrust approach represents—namely, less competition and innovation in the name of preserving competition and innovation.

I. An Avalanche of Assumptions

Breaking away from the Obama period, Biden antitrust relies on a large number of controversial assumptions underpinning the Neo-Brandeisian agenda. Several assumptions justify this efficiency-decreasing Neo-Brandeisian agenda, including the beliefs that (1) market power is contradictory with competition; (2) concentration cannot generate competition; (3) prices often are anticompetitive because they are either excessive or predatory; (4) mergers are carried out for anticompetitive reasons; and (5) the current lack of competition may lead to fascism. These assumptions are essential to Biden antitrust, and yet, they are rebuttable, as the following Sections demonstrate.

A. Market Power and Competition

The first assumption is that market power reveals the lack of competition and thus should be addressed. For instance, the executive order claims that “today a small number of dominant internet platforms use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage.”²³ The executive order does not so much target the abuse of market power (as one would presumably think so in an attempt to reinvigorate antitrust laws) but rather targets the mere exercise of market power by large corporations.²⁴ The benefits derived from large-scale enterprises (i.e., scale economies and exercise of market power) are no longer the source of fierce competition but rather the evidence of an alleged lack of competition. In that regard, the network effects of the platform business models become illustrative of unfair competition rather than the competitive goal and competitive result from entrepreneurial efforts. The executive order conveys the idea that the very competition exerted by the platform network ought to be prohibited according to Neo-Brandeisians who perceive competition from a firm exercising market power as unfair competition.²⁵

The dystopian model of perfect competition,²⁶ whereby small and numerous firms charge at a marginal cost their products so that none of them can make profits and consumers have the lowest prices, remains the ideal objective of the Neo-Brandeisian.²⁷ Biden antitrust relies on the romanticized idea of a perfectly competitive market where neither monopolies nor oligopolies operate in markets; unconcentrated markets are believed to be the source of prosperity.²⁸

But this alleged utopia is in fact a dystopia.²⁹ In such an improbable world, firms would have no ability to invest, innovate, and therefore compete.³⁰ Additionally, no entrepreneurs would ever invest or create a company compelled to make no profit. Absent the entrepreneurial rents, there will not be entrepreneurs. To ignore the existential incentive of market power for entrepreneurs is, in Joseph Schumpeter’s words, to have “Hamlet without the Danish prince”—a theoretical construct intellectually seductive but practically absurd.³¹ And yet, there is a broad consensus to say that “[m]arket power is not per se anticompetitive” because, as Jerry Ellig and Daniel Lin write, “[f]irms with market power have potentially more resources to channel into discovering or implement innovations.”³² As the Organisation for Economic Co-Operation and Development (“OECD”) reported in 2018, “it remains the case that there are potential explanations of this economy-wide evidence that are consistent with competitive innovation creating market power, rather than a lack of competition.”³³ Increased competition can lead to increased market power for successful companies.

Additionally, “a firm possessing market power today may have earned it through past innovation.”³⁴ To remove these Schumpeterian rents is to remove any incentive to innovate and thus compete.³⁵ Furthermore, market power enables firms to compete globally by bolstering competitiveness.³⁶ Unfortunately, Biden antitrust falls into the Neo-Brandeisians’ view of attacking any sort of market power.³⁷ The Biden Administration writes that:

When past presidents faced similar threats from growing corporate power, they took bold action. In the early 1900s, Teddy Roosevelt’s Administration broke up the trusts controlling the economy—Standard Oil, J.P. Morgan’s railroads, and others—giving the little guy a fighting chance.³⁸

Not only is this inaccurate regarding Standard Oil, but this statement reveals that the protection of the “little guy” suggests fighting any company exerting some forms of market power. Moreover, President Biden’s Executive Order on Competition states that “[t]his order affirms that it is the policy of my Administration to enforce the antitrust laws to combat the excessive concentration of industry, [and] the abuses of market power.”³⁹ But since current antitrust laws already prohibit abuses of market power, the abuses referred to in the executive order must be of different nature than those already prohibited under current antitrust laws. In fact, the White House explained that the executive order “launches a whole-of-government effort to combat growing market power in the U.S. economy by seeking to ensure that markets are competitive.”⁴⁰ The White House claims that “market-specific studies show that consolidation has led to harmful price increases, providing one of the clearest indicators of enhanced market power.”⁴¹

However, this claim is unsubstantiated and, if ever demonstrated, conflates price increase with market power, thereby ignoring cost increases, quality increases, innovative efforts, and other technological improvements justifying price increases. Price competition is crippled compared to disruptive competition (or innovation-driven competition).⁴² Any discrepancy between marginal cost and marginal price, thus generating market power in perfect competition models, should be tackled according to the prevailing view in the Biden Administration. Such policy would preclude any innovations since the ability to generate profit represent the source of innovation and competition.

B. Concentration and Competition

The second assumption is that markets have consolidated, again illustrating the lack of competition. Indeed, the executive order states that “over the last several decades, as industries have consolidated, competition has weakened in too many markets, denying Americans the benefits of an open economy and widening racial, income, and wealth inequality.”⁴³ According to Neo-Brandeisians, consolidation is synonymous with reduced competition, itself leading to stifled innovation.⁴⁴ Both claims that consolidation has increased and that consolidation is tantamount to reduced competition prove inaccurate in light of theoretical discussion and empirical evidence.⁴⁵

First, consolidation has not increased when the latest data is analyzed. From 2002 to 2017, the American economy has consolidated by just one percentage point (from 34% to 35%) when analyzing the share of sales accounting by the top 4 firms in industries (i.e., the C4 ratio).⁴⁶ Monopoly has not grown, and consolidation remains over the last few decades stagnant, contrary to the Biden Administration’s claims.⁴⁷ The Chair of the Federal Trade Commission (“FTC”), Lina Khan, also argued that “[e]vidence suggests that decades of mergers have been a key driver of consolidation across industries, with this latest merger wave threatening to concentrate our markets further yet.”⁴⁸ Unfortunately, she fails to provide such evidence other than citing President Biden’s executive order, which does not provide evidence but states the same unsubstantiated claim. Instead, concentration has not increased, as demonstrated in the report published by NERA Consulting Group: “There is no general trend towards increasing industrial concentration in the U.S. economy from 2002 to 2017,” wrote the report’s authors, Robert Kulick and Andrew Card.⁴⁹

Second, not only has concentration not increased, but if concentration does increase, it is necessary to emphasize that concentration often proceeds from necessary corporate consolidations to benefit consumers and innovation.⁵⁰ The OECD wrote in 2018 that “even where there is evidence to suggest an increase in concentration, in the absence of evidence on the movements of other indicators it is extremely difficult to draw any conclusion on whether there has been a change in competitive intensity or not.”⁵¹ Indeed, the scale and scope economies are inherent efficiencies that enable firms to reap the benefits of distributional advantages necessary to offer low prices to consumers and invest and innovate dynamically.⁵² This market concentration is in fact corporate rationalization as seminally explained by the historian Alfred Chandler. The modern industrial enterprise

permitted rationalization of facilities and personnel (that is, the concentration of production in a small number of large plants of optimal size), the consolidation or creation of nationwide sales forces, and the recruitment of a managerial hierarchy to operate and plan for the enterprise as a whole. . . . One of the very first enterprises to follow this path was, of course, John D. Rockefeller’s Standard Oil Trust, which had come into being in 1882 to achieve the same ends, seven years before the New Jersey laws made the formation of holding companies easy.⁵³

However, the key adviser to President Biden on antitrust, Tim Wu, believes that “the broader goals of enforcement []should be animated by a concern that too much concentrated economic power will translate into too much political power, and thereby threaten the Constitutional structure.”⁵⁴ This gross confusion between economic concentration to generate efficient consolidations and political concentration as dictatorship is bewildering.⁵⁵ Not only have markets not concentrated over the last two decades, but if concentration does take place, these corporate consolidations often generate increased rationalization for the benefit of consumers and innovation, thus promoting, and not undermining, competition.⁵⁶

But instead of acknowledging the complex relationship between concentration and competition, the Biden Administration unequivocally endorsed the Neo-Brandeisian view that the protection of small (and legacy) businesses would increase competition, thereby amounting to competition to the protection of competitors facing disruption. For instance, on January 3, 2022, when presenting his plan for “increase[ing] competition and reducing prices in the meat-processing industry,” President Biden condemned mere oligopolistic markets and committed to defending small businesses irrespective of their efficiencies when he said:

Four big corporations control more than half the markets in beef, pork, and poultry. . . . Small, independent farmers and ranchers are being driven out of business—sometimes businesses that have been around for generations. It strikes at their dignity, their respect, and the family legacies so many of them carry for generations after generation.⁵⁷

An oligopolistic market has widely been considered as the best market structure to incentivize innovation and to ensure competition. Indeed, building on Schumpeterian insights, Keith Hylton notes that “[t]he prospect of earning large, temporary profits generates efforts to innovate. Successful innovation leads to large profits. Take away or reduce the size of profits, and you will see less innovation, and less entry.”⁵⁸ In other words, a perfectly competitive market disincentivizes innovation, preventing the very competitive process. Consequently, while fighting concentration at all costs, Biden antitrust ignores the reality that concentration is inherent to the competitive process it pretends to preserve.

C. Prices and Competition

The third assumption is that prices are too high, therefore enabling companies to profit from the alleged lack of competition.⁵⁹ The Biden Administration has conveyed the idea that the American economy faces too high prices because of the lack of competition. For instance, the executive order aims to offer “lower prices” for consumers, lamenting from “price gouging” to high prices for flight options and drugs.⁶⁰ Before delving into the assumption that current prices reflect a lack of competition, Biden antitrust has its fundamental paradox: it decries the consumer welfare standard as a “failed experiment” over the last few decades, which focused on lower prices.⁶¹ In other words, President Biden endorses the Neo-Brandeisians’ contradiction to get good riddance of a standard that ensured low prices in the name of lower prices.⁶²

This assumption is paradoxical in many respects. First, larger firms tend to charge lower prices, thanks to scale economies. To endorse the populist “big-is-bad” motto of the Neo-Brandeisians proves fundamentally contradictory for the Biden Administration. Alfred Chandler has historically demonstrated that the assumption that larger firms charge higher prices is untrue.⁶³ Large-scale enterprises reap the benefits of scale economies, thereby competing on innovation but also on lower prices.⁶⁴ Indeed, “[i]ncreasing output and overcapacity intensified competition and drove down prices. Indeed, the resulting decline of prices in manufactured goods characterized the economies of the United States and the nations of western Europe from the mid-1870s to the end of the century.”⁶⁵

Today’s industrial giants follow this historically robust trend: they offer extremely competitive prices—if not zero-priced products⁶⁶—or even negative prices where consumers become “prosumers”⁶⁷ and generate earnings from consumption. As the OECD notes, “in the digital economy, new zero-price markets have arisen with their own unique characteristics and vast scope: seven of the ten largest global companies provide zero-price products and services in digital markets.”⁶⁸ Unfortunately, the Biden Administration agrees with “competition enforcers—who operate based on neoclassical economics—[that] free is a suspicious price.”⁶⁹ The administration’s desire to protect small businesses hardly accommodates disruptive competition on prices that benefit consumers.

Second, prominent figures of the populist view of antitrust nominated in critical positions in the Biden Administration have lamented against low prices, thereby advocating a departure from the long-standing consumer welfare standard. For instance, FTC Chair Lina Khan complained against Amazon’s low prices and labeled these prices, without evidence of below-cost pricing, as “predatory prices.”⁷⁰ This accusation ignores the fact that the Supreme Court judged that “predatory pricing” can nevertheless have welfare-increasing consequences on the economy.⁷¹ Be that as it may, the Neo-Brandeisians cannot coherently have it both ways. The bigness of companies cannot be simultaneously claimed as the source of high prices and low prices. A more reasonable account of the market realities would lead one to conclude that large companies can charge low prices due to scaling economies, but they can also charge higher prices to fund research and innovation efforts, thereby departing from the textbook model of marginal prices charged at marginal costs.

More generally, the disruption that large-scale, technologically savvy enterprises exert on small businesses creates excessive price competition, not low price competition. When Neo-Brandeisians lament low price competition, they in fact lament extreme price competition. For example, in the case of Uber, small taxi drivers best illustrate the claim that what appears to be insufficient price competition is in fact disruptive price competition enabled through technological innovation.⁷²

D. Mergers and Competition

The fourth assumption is that mergers are inherently bad as they consolidate markets, which itself reduces competition. The Neo-Brandeisians’ mentor, Senator Warren, introduced a bill that would ban all mergers worth more than $5 billion, irrespective of efficiency considerations and stripping merger litigation from the appellate jurisdiction of the Supreme Court in what could be an unconstitutional reform proposal.⁷³ In their radical proposals, Neo-Brandeisians want to ban all large mergers,⁷⁴ thus undermining one of the key fundamentals of dynamism in capitalist society.⁷⁵

Indeed, President Biden argued that “[t]oo many companies have pursued corporate conduct and more aggressive mergers that have made all of us vulnerable. Against this background, our antitrust efforts cannot and will not slow down.”⁷⁶ However, the claim that mergers have reached an unprecedented and unexplainable level proves erroneous.⁷⁷ Biden antitrust put “corporate America on notice” because of anticipated aggressive merger enforcement.⁷⁸

The most significant wave of mergers, which occurred in the early 1900s, has demonstrated greater efficiencies and innovations and enabled America to generate the large-scale, efficient “modern industrial enterprises,” as Alfred Chandler calls them.⁷⁹ Chandler adds that in the years during the merger movement from the turn of the century to the nation’s entry into World War I,

the successful mergers had made their shift from a holding company of previously competing firms to an operating company that integrated volume production and distribution, and so took advantage of the economies of scale. At the same time, the few combinations that continued to operate old, outmoded, poorly located plants or did not build new ones that were close to optimal size failed to grow and usually failed to make as satisfactory a return on their invested capital.⁸⁰

Furthermore, the claim that merger enforcement has become tremendously lax is not supported. In fact, evidence reveals that merger enforcement intensity has remained relatively stable over the years.⁸¹ The Biden Administration incentivizes antitrust agencies to adopt a more aggressive merger policy because of an unsupported lax merger policy. Indeed, the executive order calls for agencies to “address the consolidation of the industry in many markets across the economy” and encourage antitrust agencies to “review the horizontal and vertical merger guidelines and consider whether to revise those guidelines.”⁸²

Despite being adopted recently and being widely accepted as adequate, the antitrust agencies have engaged in the process of revising guidelines.⁸³ The FTC unilaterally rescinded the 2020 Vertical Merger Guidelines and generated considerable legal uncertainty for mergers when it declared that firms might complete acquisitions at their own perils, thereby threatening to subsequently unwind consummated mergers.⁸⁴ The aggressive stance on mergers assumes that mergers are detrimental to the economy, that merger-specific efficiencies never materialize, and that mergers undermine innovation without propelling it. This peculiar view of mergers remains unsubstantiated, suggesting a risk of false positives in blocking pro-innovation and efficiency-enhancing mergers.

E. Democracy and Competition

The fifth assumption is that because smaller firms innovate more and represent economic democracy, competition policy should attack the big and insulate the small from competitive pressures. Large companies (i.e., “monopolies” in Neo-Brandeisian parlance) allegedly threaten economic democracy.⁸⁵

President Biden’s executive order conveys the assumption that “excessive market concentration threatens basic economic liberties [and] democratic accountability.”⁸⁶ This assumption lies at the heart of the Neo-Brandeisian claim.⁸⁷ Indeed, the populist fear asserts that corporate bigness irremediably leads to political corruption and fascism.⁸⁸ This assumption remains unsubstantiated. Instead, it represents a gross confusion between correlation and causation: economic concentration never leads to fascism, but rather fascism leads to economic concentration.⁸⁹ Economic history demonstrates that the causation is reverse to what Neo-Brandeisians claim. Very large corporations since the Gilded Age never turned America into a fascist or totalitarian country.

Fascism in Germany and Italy led to a reorganization of small businesses into trade associations and trusts to facilitate state authoritarianism.⁹⁰ Paradoxically, Neo-Brandeisians advocate for antitrust exemptions for small businesses and their reorganization into trade groups, which precisely contribute to the rise of Big Government through socialist planning.⁹¹ As Alfred Chandler documents, corporations were much larger in the United States than in Germany until World War II, at a time when the Nazi regime struck down large German corporations:

From 1890s on, the United States was the world’s leading industrial nation []. By 1913 it was producing 36% of the world’s industrial output as compared with Germany’s 16% and Britain’s 14%. As a consequence there have always been a greater number of large modern industrial enterprises in the United States than in any other nation . . . . A rough estimate indicates that before World War II only about a quarter of the 200 largest industrial enterprises in Britain and even less than a quarter in Germany . . . had assets greater than those of the 200th largest American firm. In addition, because many of these American firms quickly expanded abroad, they played from the start a major role in global competition, even though their managers concentrated on the home market.⁹²

In other words, America’s economy was populated with the greatest number of the largest firms who concentrated domestically to compete globally. Large-scale corporations pioneered the new “managerial capitalism” that enabled American firms to expand and compete globally.⁹³ And contrary to the Neo-Brandeisian’s false claim, the Nazi regime halted the growth of large corporations in Germany to impose a fascist control over the economy:

Thus by World War II managerial capitalism had become firmly established in the United States in the industries where the modern industrial enterprise has clustered ever since. This was less evident elsewhere. In Germany families, large investors, and banks continued to play a more influential role, at least until the coming of the Nazi regime.⁹⁴

The Nazi regime interrupted the few large institutions capable of financing corporate growth and installed a state-control model of trusts and trade groups at the expense of the natural growth of private enterprises.⁹⁵ The Nazi regime inherited an economy made of small companies, not large companies.⁹⁶ Nazism flourished based on the Mittelstand, a group of stable small businesses that represented 8 million Germans.⁹⁷ The Nazi party (“NSDAP”) was designed to protect small businesses from competition.⁹⁸ It is unquestionable that “[d]uring the 1920s, craftsmen and small shopkeepers were greatly overrepresented among NSDAP members.”⁹⁹ In fact, the party “called for the protection of a ‘healthy middle-class’ (Mittelstand) [and] the municipalization of large department stores.”¹⁰⁰

As Nazis wanted “the protection of small and middle-sized trade businesses from competition,” it is thus unsurprising that

one of the first laws that the Hitler government enacted after it acquired absolute power dealt with the cause of the retailers. The “law for the protection of the German retail trade”, enacted on May 12, 1933, set out to ban the opening of any new retail shops. An additional decree ordered all handicraft businesses that operated inside department stores to close down. . . . Contrary to its initial promises, the Hitler government shied away from closing down existing department stores, thus leaving one of the pivotal demands of small retailers unfulfilled.¹⁰¹

Consequently, even though government intervention did not go as far as small independent retailers wanted regarding the assault on department stores, the Nazi party, and then Hitler’s government, clearly relied on a strong popular basis. The government insulated small businesses from the competition while closing down larger businesses.¹⁰² Big business was not the root of Hitler’s rise to power; widespread xenophobia and antisemitism was.¹⁰³ If big business later donated money to the NSDAP, it was to obtain economic protection after failed resistance, rather than support an ideological endorsement.¹⁰⁴

The Neo-Brandeisian’s myth of Nazism as an opponent to small businesses and the defender of big companies cannot be further from the truth. Hitler municipalized and nationalized large businesses while overly protecting small businesses from competition.¹⁰⁵ The Nazis controlled and nationalized companies because of the “total mobilization” that war required, a concept also relied upon in the United States, which suspended antitrust rules during wartime.¹⁰⁶ Again, fascism led to nationalized, large conglomerates and not the reverse. As Daniel Crane aptly notes, “[t]he idea that concentrated economic power breeds concentrated political power has much rhetorical appeal, but documenting the relationship historically, exploring the variations and mechanisms, and prescribing the particular antidotes remains a largely incomplete project.”¹⁰⁷ The lack of causation from big businesses to fascism appears clear with benchmark models. Indeed, fascism in Japan and in Italy further demonstrate that fascism emerges from an economy populated with small firms, not with large firms—namely, zaibatsu in Japanese economy¹⁰⁸ and corporazioni in Italy.¹⁰⁹

The Neo-Brandeisian reference to weaponizing fascism and Nazism to promote a misguided agenda amounts to Godwin’s law¹¹⁰ in antitrust: it is a prolonged discussion in search of thought-terminating clichés. Bigness never caused fascism. But, fascism always protected small businesses and nationalized few companies. It is historically evident that “[t]he fundamental, distinguishing factor in fascism is its economic program, which aims at rehabilitating the middle class.”¹¹¹ The Biden Administration’s decision to impute Neo-Brandeisians’ gross historical mistakes about the stance of Nazism and fascism on small businesses is regrettable, especially when it proves to be a major assumption stated in the first sentence of an executive order on competition. “[E]xcessive market concentration” does not threaten “basic economic liberties[and] democratic accountability.”¹¹² Rather, market concentration is probably one of the reasons behind the absence of fascist government in American history, as opposed to European and Japanese histories.¹¹³

However, this mistake is unsurprising since Tim Wu, who helped draft the executive order, has repeatedly and baselessly claimed that concentration led to fascism and that today’s economy is “ripe for dictatorship.”¹¹⁴ Neo-Brandeisian’s assumptions and mistakes on economic history pervaded the economic order on competition and can thus only lead to unintended consequences due to incorrect analysis. Paradoxically, Neo-Brandeisians’ bias toward small businesses and advocacy for Big Government’s control over the way firms compete ironically bear resemblances with the economic program of fascism.¹¹⁵

These assumptions inherently underpin the Neo-Brandeisian agenda supporting Biden antitrust. Contrary to professor Crane’s advice that President Biden should not tie himself to Neo-Brandeisianism,¹¹⁶ the President has tied himself to the controversial fringe of antitrust radicals on the assumptions they convey.¹¹⁷ Expectedly, Biden antitrust has adopted several initiatives that fulfill the Neo-Brandeisian agenda despite its unintended consequences.

II. A Storm of Actions

President Biden’s most visible actions on antitrust were the appointment of the most prominent figures of the Neo-Brandeis Movement in critical positions in the administration. Lina Khan is Chair of the FTC,¹¹⁸ Tim Wu advises President Biden in the White House,¹¹⁹ and Jonathan Kanter heads the antitrust division of the Department of Justice (“DOJ”).¹²⁰ All three personalities are unwavering Neo-Brandeisians who disparage the contributions of the Chicago School which introduced the consumer welfare standard in antitrust¹²¹ and advocate for a return to the populist roots of antitrust, which aim to restructure the economy around atomistic competition made by small firms who benefit from a lenient antitrust policy.¹²² In contrast, larger firms are either broken up or subject to aggressive antitrust enforcement.¹²³

A. The Executive Order

President Biden’s Executive Order on Competition is a notable effort to promote competition by a president. Rarely has a president adopted an executive order to encourage competition and address antitrust matters. One notable exception is President Obama’s executive order issued a few months before leaving the White House, titled “Steps to Increase Competition and Better Inform Consumers and Workers to Support Continued Growth of the American Economy.”¹²⁴

However, Biden’s executive order differs in its ambitions. With seventy-two initiatives, the order is more ambitious and radical than any other policy from the current White House or previous administrations that broadly accepted the bipartisan consensus on modern antitrust policies.¹²⁵ The antitrust philosophy of the Biden Administration is contained in the executive order: touted as a “progressive” document,¹²⁶ the executive order encapsulates Biden’s endorsement of the Neo-Brandeisians’ view of antitrust. Some suggest that the executive order “does not speak about displacing antitrust’s current economic approach.”¹²⁷ However, a close read of the executive order does not just reveal that the assumptions conveyed in the executive order demonstrate that the Neo-Brandeisians’ analysis has become central to the Biden Administration’s stance on antitrust. More importantly, the recommendations implement “an agenda progressives call ‘predistribution’—the idea that ‘the best path forward is to deal with the underlying market forces that cause inequality in the first place.’”¹²⁸

For instance, two main policy priorities of the executive order illustrate this “predistribution” agenda by conveying the populist idea that “big is bad,” irrespective of efficiencies. First, section 5(c) of the executive order calls for the antitrust agencies to revise the merger guidelines to adopt a much more aggressive stance on mergers.¹²⁹ Aggressively fighting mergers would irremediably slow down the corporate consolidation rate and prevent potential innovations from arising out of vertical integration. Additionally, a departure from the traditional merger enforcement policy would signal a bias toward smaller firms, preventing these firms from competing globally. American competitiveness can deplete due to the impediment to the emergence of “superstar firms.”¹³⁰ The Neo-Brandeisian case against mergers is a predistributionist case: the idea is to prevent firms from exercising market power in the first place rather than to redistribute power and income subsequently.

The “father” of the Neo-Brandeisians—Barry Lynn—has recently described the executive order as a “revolutionary” change that would put “democracy and human liberty” at the cornerstone of the future antitrust:

President Biden gave a revolutionary speech in support of an executive order to fight concentrated power and control in the United States. This was back in July, a revolutionary speech in which he says neoliberalism, Borkism – Robert Bork, the antitrust scholar of the late 70s and early 80s who was the father of much of neoliberal competition policy – President Biden said Borkism is a failed experiment, and the north stars for our competition policy shall be democracy and human Liberty.¹³¹

This is no surprise. The executive order, which is predistributionist, is transformative by notably deconcentrating the economy by blocking mergers.¹³² It is also transformative by focusing on promoting smallness, not consumer benefits or innovation.¹³³ The Neo-Brandeisian idea of liberty is a peculiar idea whereby there is no liberty when consumers shop from large companies.¹³⁴ Allegedly, liberty can only come from an unconcentrated economy populated with small firms.¹³⁵ Of course, this notion of liberty ignores the considerable benefits associated with consumers being offered the most efficient and innovative products irrespective of the size of the companies. It also conflates liberty that takes place through political institutions with liberty that does not reflect through the market mechanism.

Second, the executive order aims to weaken the rights of patent holders. It is unsurprising since Neo-Brandeisians see patent holders as monopolists who should be subject to a wrath of obligations and prohibitions rather than to the profits that patent holders can legitimately expect.¹³⁶ Section 5(d) of the executive order calls agencies to “avoid the potential for anticompetitive extension of market power beyond the scope of granted patents, and to protect standard-setting processes from abuse.”¹³⁷ To do so, the executive order enjoins the agencies to “revise the Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments issued jointly by the Department of Justice, the United States Patent and Trademark Office, and the National Institute of Standards and Technology on December 19, 2019.”¹³⁸ This 2019 policy statement contributed to a rebalancing from the implementers’ concerns to standard essential patent (“SEP”) holders’ concerns.¹³⁹ In other words, the 2019 policy statement contributed to the much-needed strengthening of intellectual property rights by making injunctive reliefs available against unwilling licensees.¹⁴⁰

The executive order’s stance against patent holders and in favor of implementers reveals a preference toward competition over innovation. Inventions must be made available to rivals irrespective of their good faith behaviors and irrespective of the disincentive such availability can create for innovators. The very use of market power by an innovator toward its innovation appears suspicious for Neo-Brandeisians, and such an approach is reflected in the executive order.

These two illustrations demonstrate that the executive order disparages the rationales for innovation—namely, mergers and patent protection—in the name of a more “perfect” competition. Corporate size through mergers and corporate control through patents become suspicious forms of competition. The executive order promotes a form of competition where innovations become less readily available. In other words, the executive order promotes a static state of competition rather than the most valuable form of dynamic competition pioneered by Joseph Schumpeter and widely understood as being the engine of disruptive competition.¹⁴¹

More generally, the executive order is made of six sections: (1) Policy; (2) The Statutory Basis of a Whole-of-Government Competition Policy; (3) Agency Cooperation in Oversight, Investigation and Remedies; (4) The White House Competition Council; (5) Further Agency Responsibilities; and (6) General Provisions.¹⁴² Each section guides both the federal government and the private sector regarding the ways the Biden Administration intends to increase competition and decrease the barriers that are perceived as inhibiting competitive behavior. Section 5 calls upon the different federal agencies to take a number of specific actions supporting the administration’s stated policy objectives.¹⁴³ Many of these action items focus on labor and employment, health care and medicine, transportation, agriculture, technology, and defense procurement.¹⁴⁴ The implementation of the executive order is ensured through the creation of the White House Competition Council, which reflects the executive order’s whole-of-government approach to promoting competition.¹⁴⁵

B. The White House Competition Council

The original aim of the executive order was to create the White House Competition Council. As part of the whole-of-government approach of the Biden Administration to competition, the executive order details the fourteen federal agencies that are charged with administering authorities associated with preventing anticompetitive behavior:

(1) the Department of the Treasury;

(2) the Department of Agriculture;

(3) the Department of Health and Human Services;

(4) the Department of Transportation;

(5) the Federal Reserve System;

(6) the Federal Trade Commission;

(7) the Securities and Exchange Commission;

(8) the Federal Deposit Insurance Corporation;

(9) the Federal Communications Commission;

(10) the Federal Maritime Commission;

(11) the Commodity Futures Trading Commission;

(12) the Federal Energy Regulatory Commission;

(13) the Consumer Financial Protection Bureau; and

(14) the Surface Transportation Board.¹⁴⁶

These agencies are tasked with implementing the executive order mainly through new guidelines, rulemaking activity, and the elimination of government-created barriers to competition.¹⁴⁷ These agencies are represented in the White House Competition Council.¹⁴⁸ Indeed, the Council is comprised of eight cabinet members and the heads of seven independent agencies.¹⁴⁹ This Council is an innovative and promising institutional forum that can best identify areas where regulations stifle competition. For instance, the area of occupational licensing represents a major venue for promoting competition in the labor markets.

The White House Competition Council catalogs the key areas of action.¹⁵⁰ First, competition in healthcare aims at “[l]owering prescription drug and healthcare costs for consumers.”¹⁵¹ Second, competition in labor markets aims at “[e]mpowering workers to demand dignity and respect in the workplace.”¹⁵² Third, competition in finance aims at “[l]owering costs and increasing market transparency for consumers and businesses.”¹⁵³ Fourth, competition in food and agriculture portends at “[l]owering food prices for consumers and increasing earnings for farmers and ranchers.”¹⁵⁴ Fifth, competition in technology strives to “[l]ower prices and better options for broadband, devices, and other services.”¹⁵⁵ Sixth, competition in transportation aims at “[l]owering prices for travelers and reducing shipping costs for businesses.”¹⁵⁶ Finally, “[s]topping [a]nticompetitive [m]ergers” is designed to “[e]nforc[e] the antitrust laws to combat monopoly power.”¹⁵⁷

The inaugural meeting of the White House Competition Council took place on September 10, 2021.¹⁵⁸ The Council is chaired by Brian Deese, Director of the National Economic Council.¹⁵⁹ The inaugural meeting was the opportunity for the Biden Administration to emphasize that the executive order on competition fits within a broader agenda. Indeed, the Council Chair noted that the “President’s competition agenda is core to the Administration’s plan to Build Back Better and critical to keeping prices low for American consumers, spurring innovation, and allowing small businesses to compete on a level playing field.”¹⁶⁰ The emphasis of the executive order to promote and favor small businesses over large businesses is thus clearly stated, thereby demonstrating a bias in favor of deconcentration over innovation concerns.

The second meeting of the White House Competition Council took place on January 24, 2022.¹⁶¹ At the second meeting, the Council, comprised of ten cabinet members and the heads of seven independent agencies, welcomed two new members (i.e., the Chair of the Securities and Exchange Commission and the Chair of the Commodity Futures Trading Commission).¹⁶²

C. Key Nominations

Beyond the Executive Order on Competition, Biden antitrust is characterized by the role and tremendous influence that the Neo-Brandeisians gained during President Biden’s presidency. Key nominations demonstrate such influence.

First, President Biden nominated Tim Wu as competition adviser at the White House.¹⁶³ Wu, a Columbia law professor, is best known in the antitrust community for his book The Curse of Bigness: Antitrust in the New Gilded Age.¹⁶⁴ Borrowing explicitly from the “Curse of Bigness” chapter in Justice Brandeis’ book Other People’s Money–and How the Bankers Use It, written in 1914,¹⁶⁵ Wu starts his book by writing:

We are four decades into a major political and economic experiment. What happens when the United States and other major nations weaken their laws meant to control the size of industrial giants? What is the impact of allowing unrestricted growth of concentrated private power, and abandoning most curbs on anticompetitive conduct? The answers, I think, are plain. We have managed to recreate both the economics and politics of a century ago–the first Gilded Age—and remain in grave danger of repeating more of the signature errors of the twentieth century. . . . If we learned one thing from the Gilded Age, it should have been this: The road to fascism and dictatorship is paved with failures of economic policy to serve the needs of the general public.¹⁶⁶

Compare this with President Biden’s speech when signing the Executive Order on Competition:

We’re now 40 years into the experiment of letting giant corporations accumulate more and more power. And . . . what have we gotten from it? Less growth, weakened investment, fewer small businesses. Too many Americans who feel left behind. Too many people who are poorer than their parents. I believe the experiment failed. We have to get back to an economy that grows from the bottom up and the middle out.¹⁶⁷

Biden antitrust therefore reflects a Neo-Brandeisian policy that Wu advocates. This is evidenced in Wu’s writing about the need to adopt “a Neo-Brandeisian Agenda,”¹⁶⁸ which revolves around six aspects:

(1) “Merger review”: “The priority for Neo-Brandeisian antitrust is the reform of merger review,” according to Wu.¹⁶⁹ Calling for “broader and tougher merger standards,” Wu advocated for “a higher bar for giant mergers (over $6 billion in value)” and “a return to structural presumptions, such as a simple but per se ban on mergers that reduce the number of major firms to less than four.”¹⁷⁰ These proposals echo antitrust bills which propose a per se ban on mergers or reversed burden of proof on the merging parties.¹⁷¹

(2) “Democratization of the Merger Process”: Wu proposed that “[i]ndustry comments on a major merger should be filed publicly, not in secret, and any interested member of the public should be encouraged to file comments.”¹⁷² Wu disparaged the risks of “politicization” of this public participation, considering that “big mergers are political.”¹⁷³

(3) “Big Cases”: Neo-Brandeisian antitrust fits into the “trustbuster” tradition, and Wu suggests taking inspiration from Europe’s trustbusting record against tech platforms.¹⁷⁴ He indeed wrote that “European antitrust is far from perfect, but its leadership and willingness to bring big cases when competition is clearly under threat should serve as a model for American enforcers and for the rest of the world.”¹⁷⁵ Recently, the General Court of the European Union annulled an antitrust fine that the European Commission imposed on Intel because of the lack of economic analysis in its fining decision.¹⁷⁶ Also, the same court considered that Google should be treated as an essential facility, thereby opening the doors to public utility-style regulation.¹⁷⁷ Transplanting European antitrust into American antitrust as Neo-Brandeisians hope will mean less economic analysis of antitrust enforcement and a more precautionary approach to innovative companies.

(4) “Breakups”: Supposedly, “[b]reakups or structural remedies are, effectively, self-executing, and thereby a much cleaner way of dealing with competition problems.”¹⁷⁸ Advocating for breaking up large companies, Wu takes Facebook as an example: “While Facebook might not like being dissolved, and might find the new competition unwelcome, it is hard to see what the great social cost, if any, would be. . . . The simplest way to break the power of Facebook is breaking up Facebook.”¹⁷⁹ Given Wu’s ignorance of the benefits for consumers and innovation of large-scale enterprises, breakups appear to generate only net benefits. However, contrary to the apparent simplicity of breakups, the reality seems less straightforward: a judge dismissed the FTC’s first complaint against Facebook because of the FTC’s inability to demonstrate the market power of Facebook in an artificially defined market.¹⁸⁰ Breakups are not only complicated, but they are also efficiency-decreasing.

(5) “Market Investigations and Competition Rules”: Wu proposes “market investigation . . . tool[s]” to tackle “stagnant and longstanding but not particularly abusive or aggressive monopolies or duopolies.”¹⁸¹ The basic idea is that a market “dominance of at least ten years or longer” would be addressed, absent anticompetitive conduct, through “pro-competitive rules instead of bringing cases.”¹⁸² This ex ante regulatory intervention may very well tackle innovators who enjoy first-mover advantages and who foster rather than stifle competition. These regulatory tools—inherent to the Neo-Brandeisian agenda—portray the characteristics of the precautionary principle applied to competition matters: innovation and disruption may inevitably be deterred due to risks of overregulation against beneficial practices.¹⁸³

(6) “Antitrust’s Goals”: Wu argues that antitrust should no longer be about the consumer welfare standard.¹⁸⁴ He considers that “there will be a post-consumer welfare antitrust that is practicable and arguably as predictable as the consumer welfare standard.”¹⁸⁵ This new standard is the “protection of competition” test which is “focused on protection of a process, as opposed to maximization of a value.”¹⁸⁶ This test allegedly “attempts to capture far more of the dynamics of the competitive process than do existing analyses, and also implicates political considerations as well.”¹⁸⁷ The risks of politicization and increased legal unpredictability loom large with such an open-textured legal standard of “the protection of competition.” Efficiency considerations would become marginalized in an analysis aiming at preserving the market structure irrespective of the lack of anticompetitive conduct. Large corporations not harming consumers may ultimately be considered to thwart “the protection of competition” and thus be subject to a populist anti-bigness antitrust policy at the expense of these firms’ innovation capabilities.

The nomination of Wu to steer the White House’s competition policy demonstrates that Biden antitrust has fully endorsed the Neo-Brandeisian perspective. This is further confirmed by the nomination of the new Chair of the FTC.

Second, President Biden nominated Lina Khan as Chair of the FTC.¹⁸⁸ An associate law professor from Columbia University, Khan personifies the New Brandeis School of antitrust, as she has advocated for an “anti-monopoly movement.”¹⁸⁹ Khan acclaimed Wu’s book as a necessary “prerequisite for creating the political pressure needed to reorient antitrust around the antimonopoly values it has abandoned in recent decades.”¹⁹⁰ Khan embarked in Wu’s agenda in agreeing that by “rejecting a strictly welfare-based theory of antitrust, Neo-Brandeisians have an opportunity to design an antitrust regime that reflects republican values and democratizes the institutional structure of antitrust.”¹⁹¹

Khan rose to preeminence for her article, Amazon’s Antitrust Paradox, where she accused Amazon of charging too low prices (i.e., predatory prices).¹⁹² She called for “breaking up” Amazon or “applying some form of public utility regulation” to the online supermarkets because that “could make sense.”¹⁹³ To ignore the consumer benefits generated by the companies Neo-Brandeisians purportedly target, Khan and other Neo-Brandeisians have advocated for antitrust to focus on “structures and a broader set of measures to assess market power”—namely, the preservation of “market structures.”¹⁹⁴ The antimonopoly movement that Khan calls for returns to controversial and economically harmful decisions that protected the “viable, small, locally owned businesses” against the disruptive competition.¹⁹⁵ Now, Khan has embarked on a battle against the rule of reason (in favor of per se rules of illegality) and the consumer welfare standard more generally.¹⁹⁶

Jonathan Kanter is perhaps a less radical nominee for President Biden’s radical change on antitrust policy. An antitrust lawyer who notably sued Google and represented Microsoft,¹⁹⁷ Kanter is the new head of the antitrust division at the Department of Justice.¹⁹⁸ As the new Assistant Attorney General, Kanter has recently demoted the current state of antitrust by stating that “when I look at the current state of antitrust law, the most charitable explanation is that we are stuck fighting the last generation’s war, with precedent that bears little or no resemblance to today or the future.”¹⁹⁹ This radical departure from current antitrust analysis echoes the Neo-Brandeisian call for a return to a state of enforcement before the “40 years experiment” that President Biden lamented when signing the Executive Order on Competition.²⁰⁰

These three nominations reveal not only the unprecedented role of Neo-Brandeisians in shaping antitrust policy in America, but they reveal the influence of progressives in designing the economic policy of the Biden Administration more broadly. Together, with the nomination of Rohit Chopra at the Consumer Financial Protection Bureau,²⁰¹ these three nominations epitomize the unparalleled power that progressives have attained over the economic policy of President Biden. In other words, while Biden won the presidential elections in 2020, it is Senator Warren (and secondarily Senator Sanders) who won the intellectual debates over economic policy among Democrats.

D. Antitrust Bills

Biden antitrust cannot be directly linked with congressional activity. However, the Biden Administration has recently backed a number of antitrust bills that would revolutionize the way antitrust agencies enforce competition rules. The number of antitrust bills introduced over the last two years is unprecedented.²⁰² However, the Biden Administration has explicitly defended two bills. Indeed, it is reported that the “Biden team came out in favor of the antitrust measures moving through both houses of Congress.”²⁰³ This support specifically concerns the American Innovation and Choice Online Act (S.2992)²⁰⁴ and the Open App Markets Act (S.2710),²⁰⁵ which were both passed in the Senate Judiciary Committee.

These two bills signal a radical departure from traditional antitrust laws. Indeed, both bills are only narrowly applicable to a few large online platforms, thereby leaving these platforms’ rivals outside the scope of these bills. For instance, the S.2992 bill singles out “online platforms” with a market capitalization higher than $550 billion, leaving multi-billion-dollar rivals (domestic or foreign) free to engage in the very conduct that these bills prohibit.²⁰⁶ Among other criteria, this size threshold creates a two-level playing field, thereby creating unfair competition, not fairer competition. The S.2710 bill singles out “app stores” with more than 50 million U.S. users.²⁰⁷ Again, smaller app stores remain outside the remits of the bill, thereby arbitrarily creating an uneven playing field for competition to take place.

Moreover, the business practices prohibited in these bills often are pro-efficiency and pro-innovation. They proceed from competitive constraints rather than subvert the competitive process. For example, the common business practice of self-preferencing enables companies to compete against incumbent on prices, quality, and product differentiation, thereby providing consumers with greater choice, lower prices, and better quality products.²⁰⁸ For these bills to prohibit self-preferencing, it amounts to prohibiting one of the key tenets of the competitive process (i.e., competition through innovation, imitation, and differentiation).²⁰⁹

Additionally, Biden antitrust means the support to one of the most controversial and radical antitrust piece of legislation: the European Union’s Digital Markets Act.²¹⁰ This act was designed to harm large U.S. tech platforms²¹¹ with a range of prohibitions and obligations represents a source of inspirations for Neo-Brandeisians.²¹² But, the Secretary of Commerce, Gina Raimondo, voiced considerable concerns about the clear protectionist bias of the Digital Markets Act against U.S. tech companies.²¹³ Indeed, Raimondo expressed concern over the harm to innovation, consumers, and U.S. entrepreneurship that this future legislation will inevitably have.²¹⁴ In considering U.S. interests, Raimondo cautioned the EU against this protectionist regulation.²¹⁵

However, Neo-Brandeisians quickly corrected this departure from Neo-Brandeisian doxa. Indeed, Senator Warren pressured the Biden Administration to endorse the Digital Markets Act²¹⁶—however targeted against U.S. tech companies this regulation can be—and to express support for the Digital Markets Act.²¹⁷ This is precisely what happened: the Biden Administration, dominated by Neo-Brandeisian philosophy, has shown signs of support for the Digital Markets Act.²¹⁸ This piece of precautionary antitrust detrimental to American innovation and competitiveness ultimately finds support from the Biden Administration itself. The “Brussels effect” has reached it apex.²¹⁹

Consequently, Biden antitrust is an active support for radical antitrust bills and a controversial piece of EU legislation aimed at harming American innovation and competitiveness. The Neo-Brandeisian’s admiration for the European competition approach entered U.S. antitrust through the Biden Administration.

E. Activities and Reports

The Biden Administration’s activity on antitrust and competition more generally is characterized by a wide range of activities and reports, pursuant to the Executive Order on Competition. Unsurprisingly, the new FTC has engaged in the largest number of initiatives in the most radical way. After having discussed this aggressively activist FTC, this Article will outline the different agencies and departments activities in pursuing the objectives laid down in the executive order on competition.

On July 1, 2021, the FTC rescinded a bipartisan statement issued in 2015 during the Obama presidency regarding the necessary boundaries in pursuing “unfair methods of competition.”²²⁰ The statement stated that traditional antitrust laws (the Sherman Act and the Clayton Act) are to be preferred in order to tackle unfair methods of competition and that a rule of reason applies to assessing the unfair methods of competition.²²¹ New FTC Chair Khan considered that this bipartisan statement was all wrong; the Neo-Brandeisian FTC writes that “the 2015 Statement contravenes the text, structure, and history of section 5.”²²² These allegations are dubious and themselves contravene the very history and text of section 5.²²³ But, perhaps what is most important is the fact that the new FTC has disparaged the rule of reason and the consumer welfare standard to impose blanket prohibitions with per se rules of illegality designed to protect rivals, workers, and an unlimited range of public interest considerations. However, this increased legal uncertainty is not a defect but rather the legal policy of the new FTC.

Indeed, the new FTC has dramatically increased the legal uncertainty when it signaled that merging firms may close their deals but at their own perils²²⁴—namely, the FTC is now keen to unwind consummated mergers.²²⁵ The regulatory threats and legal uncertainty surrounding acquisition deals have never been as high. Nevertheless, such uncertainty is, again, not a defect but rather the virtue, according to Neo-Brandeisians, of a more aggressive antitrust enforcement.²²⁶ But, as uncertainty deters innovation, and as innovation fosters competition in the marketplace, the uncertainty that the Neo-Brandeisian FTC generates will irremediably decrease the ability of firms to compete through mergers. To prevent firms from competing through external growth (i.e., mergers and acquisitions) leaves firms with the only alternative of competing through internal growth (i.e., sales increase). But, internal growth is often lengthy and not like the disruptive nature of external growth. In other words, the FTC implicitly encourages incremental competition through internal growth as opposed to disruptive competition through external growth. The collateral damage is consumers who may enjoy innovations at a slower pace, companies that may experience slower productivity gains, and ultimately American competitiveness which may degrade given the unrestrained growth of rival powers.

The new FTC has embarked on a Neo-Brandeisian revolution that has not gone unnoticed and uncontroversial.²²⁷ The FTC requested staff members not to speak publicly.²²⁸ Also, the FTC’s priorities for 2022 primarily involve engaging in rulemaking activity for “unfair methods of competition,” under the Executive Order on Competition.²²⁹ Indeed, the new FTC leadership writes:

Over the coming year, the commission will also explore whether rules defining certain “unfair methods of competition” prohibited by section 5 of the FTC Act would promote competition and provide greater clarity to the market. A recent Executive Order encouraged the Commission to consider competition rulemakings relating to non-compete clauses, surveillance, the right to repair, pay-for-delay pharmaceutical agreements, unfair competition in online marketplaces, occupational licensing, real-estate listing and brokerage, and industry-specific practices that substantially inhibit competition. The Commission will explore the benefits and costs of these and other competition rulemaking ideas.²³⁰

Although the FTC is likely to lack the authority to engage in substantive “unfair methods of competition” rulemaking,²³¹ and although there are likely economic costs associated with the false positives of this rulemaking, one may predict that the new Chair will nevertheless pursue such rulemaking authority.

Also, the FTC has unilaterally rescinded the 2020 Vertical Merger Guidelines, without coordination with the DOJ’s antitrust division, on the premise that these guidelines incorrectly accounted for efficiency defenses and were no longer in line with “market realities.”²³² Such radical and unilateral withdrawal justified on specious claims generated considerable surprise and disappointment, including by leading antitrust scholars.²³³ For instance, professors Shapiro and Hovenkamp argued that this unilateral withdrawal illustrates the fact that “we have the spectacle of a federal agency basing its policies on a demonstrably false claim that ignores relevant expertise.”²³⁴ The authors lament that “[i]f the FTC does not understand that basic point about how our economy operates, they are likely to cause real harm.”²³⁵ The DOJ’s antitrust division and the FTC have now launched a revision of the merger guidelines, both horizontal and vertical.²³⁶ This coordinated effort is to be preferred, although the underlying assumptions for such revision remain questionable.²³⁷

More generally, pursuant to the Executive Order on Competition, agencies and departments have engaged in several activities, including:

* Competition in Healthcare. The Department of Health and Human Services announced reforms of nursing homes,²³⁸ aims of improving the affordability and accessibility of hearing aids,²³⁹ a desire to lower prescription drug prices,²⁴⁰ aims at forcing hospital to increase price transparency,²⁴¹ a desire to import lower-priced drugs from Canada,²⁴² and its engagement in reforming the patent system for prescription drugs;²⁴³

* Competition in Labor Markets. The Treasury Department, together with the DOJ, the Department of Labor, and the FTC, issued a report on competition in labor markets.²⁴⁴ In addition, the DOJ and the Department of Labor want to promote competitive labor markets.²⁴⁵ Finally, the DOJ and the FTC organized a public workshop on competition in the labor markets;²⁴⁶

* Competition in Finance. The Consumer Financial Protection Bureau has taken action “to halt prepaid card providers [] siphoning . . . government benefit[s],”²⁴⁷ aims to “save [Americans] billions by reducing [] junk fees,”²⁴⁸ and helps “people transitioning out of the corrections system.”²⁴⁹ Additionally, the Securities and Exchange Commission has proposed to enhance private fund investor protection;²⁵⁰

* Competition in Food and Agriculture. The Department of Agriculture supported expanding “meat and poultry processing options”²⁵¹ and promoted American-made fertilizers.²⁵² The Treasury released a competition report for the alcohol market.²⁵³ The DOJ and the Department of Agriculture created a tool for farmers and ranchers to report anticompetitive practices.²⁵⁴ The Biden Administration articulated a plan to increase competition in the meat and poultry supply chain.²⁵⁵ The Department of Agriculture launched a loan guarantee program,²⁵⁶ made investments in meat and poultry processing capacity,²⁵⁷ enhanced price transparency,²⁵⁸ and will propose new rules to enforce the Packers and Stockyards Act;²⁵⁹

* Competition in Technology. The Federal Communications Commission intends to increase broadband competition²⁶⁰ and increase price transparency.²⁶¹ It also sought comments to access broadband.²⁶² The Patent Office implemented the trademark modernization act²⁶³ and launched the National Council for Expanding American Innovation.²⁶⁴ The FTC ramped up law enforcement against illegal repair restrictions.²⁶⁵ The DOJ sought comments on draft policy statement on licensing negotiations and remedies for standards-essential patents subject to F/RAND Commitments;²⁶⁶

* Competition in Transportation. The Department of Transportation provided funds to promote competition in airport terminals²⁶⁷ and acted against unfair and deceptive practices for aviation consumers.²⁶⁸ The Federal Maritime Commission and the DOJ strengthened their partnership to promote fair competition in the shipping industry,²⁶⁹ launched an ocean carriers audit program,²⁷⁰ provided guidance on complaints process,²⁷¹ launched an inquiry into eight ocean carriers’ surcharge fees,²⁷² and approved a new demurrage and detention rule,²⁷³ as well as a refunding fees rule.²⁷⁴ The Department of Transportation published a report on its work to for airline companies to provide timely refunds²⁷⁵ and intends to increase access at Newark for lower cost carriers.²⁷⁶ The FTC Chair announced that the FTC would fight anticompetitive practices on oil and gas markets;²⁷⁷ and

* Merger Policy. The Department of Defense published a report on consolidation in the defense sector.²⁷⁸ The FTC and the DOJ started the revision process of the merger guidelines²⁷⁹ and sought comments on bank merger competitive analysis.²⁸⁰

Conclusion

Biden antitrust is characterized by an abundance of actions based on numerous assumptions. This Article discussed the dubious assumptions that Neo-Brandeisians achieved to convey within the Biden Administration. To be sure, a number of actions outlined above are beneficial to competition and innovation—mostly because they remove government-created barriers to competition.²⁸¹ However, key proposals are detrimental to generating further innovation and growth in the name of competition.

Biden antitrust is the revival of an antitrust populism that was co-existential with the adoption of the Sherman Act more than a century ago. The antitrust and competition policy of the Biden Administration relies on a large number of flawed assumptions that Neo-Brandeisians have successfully disseminated over the last few years. The competition policy adopted by the Biden Administration signals a radical departure from economic analysis of antitrust laws, disapproves of the legal and economic knowledge accumulated over the last few decades on antitrust enforcement, and is, generally, detrimental to disruptive competition–namely, unfettered competition through radical innovation. Indeed, the promotion of competition by the Biden Administration rests on the promotion of small businesses with incremental, modest forms of competition by preserving a deconcentrated market structure. This renewed antitrust populism disparages disruptive innovation enabled by large businesses. It favors incremental competition by smaller (and sometimes less efficient) businesses. But, it is radical innovation that generates the dynamic competition that benefits consumers, improves American competitiveness,²⁸² and, more fundamentally, best embraces the fundamental dynamics of capitalism.

Contrary to the new antitrust populism inherent to Biden antitrust, federal antitrust agencies and courts are well-advised to approach innovation and competition more dynamically.²⁸³ Competition for the next innovation, competition through large-scale enterprises enabling the commercialization of innovation, and competition for opening new markets are essential features of the competitive process. Neo-Brandeisians shaping Biden antitrust unfortunately overlook these aspects at the expense of consumer benefits and the dynamism of the capitalist society. Antitrust agencies should instead focus on the most egregious practices (i.e., cartels and collusive practices) rather than engaging in policies promoting incremental competition at the expense of innovation and consumer welfare. Unfortunately, Biden antitrust has so far embodied the paradox of the new antitrust populism—namely, fighting the disruptive innovation of dynamic competition in the name of promoting “fairer” or “open” competition, which nevertheless stifles innovation and distorts the competitive process.

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Biden Antitrust: The Paradox of the New Antitrust Populism

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