Below, we have provided the full transcript of the interview with Prof. Eleanor Fox, the Walter J. Derenberg Professor of Trade Regulation at New York University School of Law, recorded on August 27, 2021.
This interview was done as part of the Antitrust Brainstorming Board created by CPI with the support of the CCIA.
Thank you, Prof. Fox, for sharing your time for this interview with CPI.
A video of the complete interview is available HERE.
Do you think the current antitrust framework works for consumers?
Eleanor FOX:
First, if you don’t mind, I’d like to reframe the question because it does assume that the antitrust laws are for consumers and even assume that they’re only for consumers. So in terms of whether the antitrust laws work, I’d like to put it into a little larger framework because in my view, the antitrust laws are to make markets work and consumers are a really big, good proxy most of the time and not all of the time. So I would ask myself the question, do I think the antitrust laws work to help the markets work better, to take away the obstructions that keep them from working? And my view is they don’t work very well because they, most of, this is us, in the US they work very well for business, especially big business because they’re very oriented towards the libertarian view of markets.
I think what needs to change is, first of all, moving away from the language of consumer welfare, which to me is it implies short-term consumer welfare and it implies only the consumer. And I’d like to sort of raise it a notch or two and look at markets and how well markets are working. And number two, I think a really big fallacy is the way our law has built into it. A presumption that markets work very well and you don’t need interventions to make them work well. And mostly that the restrictions that are there or good for the market instead of obstructing the market. So those are very basic fundamentals that need to be changed.
Do you believe the vertical merger guidelines need to be changed?
FOX:
I think the vertical merger guidelines, first of all, were a big improvement. I do think they could stand re-examination. And this is what I would really like to see is that there is a re-thinking on vertical and conglomerate. That some of the new issues are about cross market effects of market power. And a lot of these new issues seem to come out in digital economy where certain firms are getting power and keeping power and getting power and using it across markets. Other countries are looking at this problem and I think the United States should too.
Do you approve of the shift from competition towards regulation?
FOX:
I think there’s no chance that the big tech because it’s big tech firms, I think there’s no chance will be treated as public utilities. But I think that you’re actually raising a very interesting question. Why short of public utilities? Because there is a movement in the world, including some legislation in the United States, to say that there should be some mix of regulation, as well as case by case antitrust. And in my view, as long as it’s very light regulation, maybe that is what is needed. Especially because taking again, this handful of firms which have been documented to do a handful of what looked like very severely anti-competitive practices, they could be prohibited by rulemaking, which is regulation too prohibited from doing certain, very perverse things that we know they are doing rather than going through the very long process of case by case.
In my view, I don’t like the idea of the heavy regulation. I actually think that the regulation aspect in Europe is too heavy and proposed in Europe and proposed in the UK it’s less heavy, but probably still more regulation than needs to be done, but that light regulation is good and needed.
How would you ensure antitrust is enforced vigorously if no changes are made to the current antitrust system?
FOX:
It’s very tough to make antitrust enforced much more vigorously if basic rules like the presumptions about how well markets work are not changed. However, if the law is not changed, I would say the Federal Trade Commission should make much more use of the Federal Trade Commission Act section five and could move the law along in directions I have just said like changing the presumptions without a change of law. That section five is very underused. The agencies, actually at the end of the Trump administration, were bringing a lot of suits and a lot of good suits. And so I know a number of people will say, “Well, it’s already vigorous.” The problem to me is that foundation of the law, rather than an attempt to be vigorous under existing standards, but move the envelope so that standards recognize new forms of power and abuses that are not caught by the law easily.
What are your thoughts regarding start-up acquisitions?
FOX:
My thought is that it ought to be the killer acquisitions, potential competition, nascent acquisition, startups should be considered in context. And I actually loved the way the Federal Trade Commission has put this into context in the amended FTC against Facebook. When a dominant company has taken steps, even through special software, to identify startups that could impose a threat and buys them all, I think that’s a really good example of monopolization, monopoly maintenance. I don’t think that acquisitions of startups say by the dominant tech firms should be prohibited. I think that would not be a good idea. It would be perverse. It’s case by case.
Is break-up the best solution for the digital economy and for consumers?
FOX:
Break up, like public utility regulation, to me is a red flag word. I actually don’t think we’re going to get there. I think the way to think about what to do about dominant firm power is to look at the particular case, to look at the particular actions and to think about the whole array of remedies that would be tailored and fit to prohibit that action. And sometimes it will be preventing contracts of Apple Google to give Google search preferences on Apple. The only way you get rationally to a break-up remedy is if the structure of the industry is so perverse, the competition will not work well, such as in our old AT&T case. That was clearly the case.
I don’t think the big tech situations are that case. The only bills in the U.S. that referred to break-up are about big platform gatekeepers. And here, of course, the idea is that the big platform gatekeepers who compete with the rivals that they host on their platform are abusing them and taking advantage of them and squeezing them out whenever they get very good. I would like to see conduct remedies and rules first and probably last. And I think one must consider the costs of break-up as well as the benefits of break-up before even considering the idea.
How do you see the role of the FTC and the DOJ in ensuring competition works for consumers?
FOX:
I see their role as doing what they’re doing well and they’re seeing that it works for the marketing, including sometimes for workers when the employers have conspiracies against the workers. So I simply think they ought to be doing what they are doing. Thinking where are the problems? Where are the obstructions to the markets? Where is power being used and abused to keep the market from working?
How would you reconcile competition and competitiveness? Should antitrust reforms take into account the potential impact on proposed changes vis-à-vis China?
FOX: That’s a really good and important question. What I think is that what is good for competition is almost always good for competitiveness, especially in the United States where our markets are very, very big. In developing countries where they’re small that can be different. But our firms achieve competitiveness through good works, the efficiencies they achieve and the competition among them. So I think standing up to China requires us to keep competition. I also think, and I just wrote an article on this called “The China Card” that defendants often in mergers but other cases are very happy to use the idea or the epithet, we’ve got to do this merger, or we’ve got to license our technology in this way to outdo China. It almost always is not the case. In fact, as I have seen it, it always is not the case, but it’s a very telling pressure point because governments want to do what they need to do to keep up with China. It’s a diversion. What’s good for competition is good for competitiveness.
