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In the fourth entry of The Prompt series, our experts shared their opinion on business conduct and its relation to antitrust:
"In recent years, the phrase “fair competition” has been used to define the ultimate role of antitrust. Is antitrust about determining what business conduct is fair, or is meant to address only that which is unfair?"
Our experts had three choices to choose from:
A. Fair
B. Unfair
C. It is the same thing
The Prompt
Answering antitrust challenges one question at a time
The Chamber has assembled a range of preeminent experts in the field of antitrust from across a wide political spectrum to offer timely views on key questions of antitrust law and policy. This group brings together senior enforcers spanning seven administrations, from both the Antitrust Division at the Department of Justice and the Federal Trade Commission.
Four contributors responded that it is for determining what is unfair...
“Section 5 of the FTC Act prohibits unfair competition. There is a distinct difference between prohibiting unfair competition and promoting fair competition, or even more of a stretch, promoting fair outcomes. Beauty is in the eye of the beholder, and so is fairness. Fair to whom? Over what timeframe? In which product lines and geographic regions? A highly subjective enforcement standard leads to changing enforcement approaches across administrations, and regulatory uncertainty inhibits investment and innovation (as the net neutrality saga has demonstrated).”
“Antitrust in the U.S. is a law enforcement, not regulatory, regime. It does not, and should not, impose affirmative obligations on firms. Rather, its role is to police conduct that lessens competition.”
“It’s meant to protect against unfair competition (or really anti-competitive competition.) I don’t know what “fair” means. There is no level playing field. Some companies have patents, some have lower-cost facilities. It’s a question of whether there are actions companies take that prevent a company from competing that aren’t within the scope of the law. And antitrust isn’t about trying to redo a market to make it more even.”
“If antitrust is appropriately considered law enforcement, and not a blunt policy tool for solving the economic, political, and social problems that spring from market power, then enforcers will bring cases about violations of the law, or 'unfair' conduct. Clear legal burdens of proof support this interpretation. But changes in how courts interpret those burdens risk shifting the debate to determinations of what is 'fair' competition versus enforcing against what is 'unfair' competition, e.g., as we increasingly see in collusion cases.”
Three contributors chose it is the same thing...
“It’s the same thing. The FTC Act prohibits 'unfair' methods of competition. From a litigation perspective, it would be hard for enforcers or the courts to identify conduct that would be unlawful (i.e., 'unfair') without also considering what is lawful (i.e., 'fair')—they’re arguably two sides of the same coin. Moreover, from a compliance perspective, it is beneficial when the agencies provide guidance to business about permissible (i.e., 'fair') conduct rather than simply identifying categories of conduct that warrant scrutiny.”
“Federal antitrust law is concerned with challenging business conduct that is 'not on the merits' because it is 'exclusionary' – conduct that is designed to harm competition (and, ultimately, consumers), rather than advance a legitimate business purpose. Federal judges have emphasized that antitrust cares not about protecting individual competitors; rather, it cares about promoting competition in order to serve as a 'consumer welfare prescription.' Because business 'fairness' typically may be viewed as protecting rival firms from overly aggressive competition, it is not accurate to say that federal antitrust (at least federal antitrust case law) is concerned with 'fairness' (even though some modern competitors use the term). Alternatively stated, 'fairness' is only relevant to antitrust if it is defined as meaning nothing more than 'promotion of consumer welfare.' I would therefore reject (A) and (B) and choose (C), but only if (C) is limited to consumer welfare promotion. If (C) is not so limited, I reject all three options.”
“Same thing, but historically this meant consumer welfare.”
Three contributors ended by choosing neither...
“Neither. Antitrust isn't about regulating business conduct under an amorphous standard of 'fairness.' It is about using law enforcement tools to prohibit specific conduct that harms competition and consumers. If the FTC's ill-fated effort to apply Section 5 of the FTC Act to whatever business conduct strikes the commissioners as 'unfair' accomplished nothing else, it reminded us of this important distinction.”
“Neither 'fairness' nor 'unfairness' works as a basis for a stand-alone legal test. Both are too squishy and undefined, too much in the eye of the beholder. Either one is fine as a characterization of the outcome of a legal analysis undertaken by reference to more objective tests, though 'unfair' is probably better for that purpose. That is, it’s OK to say conduct that violates Sections 1 or 2 or 7 or that runs afoul of other well-specified norms under Section 5 (such as attempt to collude) is deemed to be unfair. But a characterization turning only on fair/unfair doesn’t work in reverse; we can’t simply say that unfair conduct is unlawful or that only fair conduct is lawful, since neither formulation provides adequate notice of what’s permitted and what’s not.”
“Antitrust is about protecting and preserving competition. 'Unfair' is in the eye of the beholder – too vague to be the basis for antitrust.”
