Open Access
The superiority of the consumer welfare standard
Loading...
Files
LAW_2024_20.pdf (461.85 KB)
Full-text in Open Access
License
Attribution 4.0 International
Cadmus Permanent Link
Full-text via DOI
ISBN
ISSN
1725-6739
Issue Date
Type of Publication
LC Subject Heading
Other Topic(s)
EUI Research Cluster(s)
Initial version
Published version
Succeeding version
Preceding version
Published version part
Earlier different version
Initial format
Author(s)
Citation
EUI; LAW; Working Paper; 2024/20
Cite
PETIT, Nicolas, RADIC, Lazar, The superiority of the consumer welfare standard, EUI, LAW, Working Paper, 2024/20 - https://hdl.handle.net/1814/77685
Abstract
Why did antitrust law in most jurisdictions adopt the consumer welfare standard (CWS)? A popular explanation, which we term the Critical Political Economy Theory of Antitrust (CPETA) pretends that the CWS reflects the triumph of conservative, anti-enforcement, and free-market ideology. The CPETA asserts that neoliberals like Robert Bork and his acolytes cajoled US courts into believing that antitrust law application required a narrow focus on economic evidence of consumer harm. By limiting the universe of injuries cognizable under antitrust law and raising plaintiffs’ burden of proof, the CWS achieved the neoliberals’ intended purpose: to enucleate antitrust law of any social and political relevance. This ‘minimalist' version of antitrust law was subsequently globalized as part of the standard neoliberal ideological package, under the auspices of US hegemony. The CPETA is a fable. First, the CWS is not a “plant” of Robert Bork and the Chicago School. Antitrust history shows footprints of a CWS as far back as the common law of the seventeenth century, in the first cases of the US Supreme Court, and antitrust legislation in the US and the EU decades before the ascent of neoliberalism. Second, the proposition that the CWS is slanted against antitrust enforcement cannot be reconciled with many demonstrable instances in which the CWS leads to more antitrust law intervention, not less. In fact, proponents of more antitrust enforcement in the 1980s favored the CWS over more “laissez-faire” alternatives. What explains the success of the CWS is a more mundane, practical need for endowing reallife cases with the weight of empirical evidence. By adding an evidential filter, the CWS makes sense of an absurdly vast statute that could, on its face, condemn everything from law firm partnerships to wedding contracts. The CWS limits two types of decisional errors of antitrust laws focused on the protection of competition or the competitive process. First, the CWS reduces the type 1 error of false conviction when straight limitations of competition like collusion, monopolization, or mergers do not translate in welfare losses. Second, the CWS reduces the type 2 error of false acquittal when there is no straight evidence of a limitation of competition. Of course, the benefits of reducing type 1 and 2 errors comes with costs. Those costs relate mainly to the uncertainty of having to grapple with hard economic evidence in the face of ambiguous business conduct. These costs must be acknowledged, since one of the main welfare benefits of antitrust law lies in its predictability. But the existence of uncertainty further proves that the CWS is not a deterministic standard wedded to an anti-enforcement conservative agenda, as the CPETA suggests. If it were, non-enforcement would be assured, and no antitrust cases would be brought or won. However, this is inconsistent with the dynamics of antitrust enforcement and litigation over the past fifty years. We conclude that CWS is a judicial interest in the truth about market competition, not a socially constructed power structure propelled by the skullduggery of a neoliberal cabal. The former explains the emergence and endurance of the CWS in US antitrust law. This view further suggests that it would have been plausible for antitrust law to orient itself towards a CWS without Robert Bork.