Below, we have provided the full transcript of the interview with Elyse Dorsey, Visiting Scholar at the University of Virginia, recorded on September 3, 2021.
This interview was done as part of the Antitrust Brainstorming Board created by CPI with the support of the CCIA.
Thank you, Ms. Dorsey, 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?
Elyse DORSEY:
So I think that’s a really great question to kick things off today. There are so many different values and benefits that are kind of competing for airtime in the popular antitrust discussion today, but at the forefront of the concern with antitrust law in the modern era and as it stands today is really consumers. The Consumer Welfare Standard puts the consumer front and center and it’s really a robust and pretty flexible system that provides this powerful and really concentrated lens through which we can analyze how various conduct or behavior affects consumers. And we’ve seen it, we’ve watched it adapt to changes in how firms compete over time. For example, while price is often a very important component of how firms compete, we see time and time again today that that’s not the only one and it might not even be a very important one in different markets.
What the Consumer Welfare Standard allows us to do though is really, to your question, put the consumer first and say, “Okay, all these things are going on. The firms are competing in these different ways. Maybe it’s through innovation or R&D, maybe it’s through introducing some updated benefits or introducing new product designs. Maybe it’s through increasing quality. All of these different ways. And at the end of the day, how is that really affecting the consumer?” That allows us to put there’s many different things we could be considering when it comes to antitrust law, many things, again, in the conversation today there’s a lot of different factors that people are arguing we should look at. But putting the focus on the consumer really allows us to really put the consumer front and center and say, “Okay, what’s going on? Is this at the end of the day good or bad for consumers?”
I think that’s where antitrust law really shines is when it’s able to have this narrow focus. Again, there are a lot of other really important values out there and things that we should be thinking about, but antitrust isn’t necessarily the way to get at all of them. I think it’s proven to be really good at helping consumers. That’s not without its challenges today, especially as firms do tend to change the way they’ve competed today. Again price is maybe not as important or not as indicative as it maybe has been in the past, so that presents challenges for enforcers in figuring out exactly what is going on and exactly what is happening to the consumer at the end of the day. But yeah, I think antitrust has been really successful in that area.
Do you believe the vertical merger guidelines need to be changed?
DORSEY:
They just came out. We have one of the FTC cases was recently in litigation. I don’t know if it’s still being litigated at the time this comes out. But I think that’ll be a good example for us to look at, see what happens there. I think some of this is… it hasn’t really had a chance to do a lot of work yet. So one of the things that I think has proven the horizontal merger guidelines, for example, have over time been really persuasive with the courts and I think done a lot of good work to help inform not only the agency cases and the courts but also the business community to give them some real guidance as to when they’re thinking about mergers and acquisitions and conduct that they’re going to engage and give them some real meaningful guidance in terms of how they can act. So that hopefully helps deter some conduct that they know is not going to be acceptable, and allows the FTC to focus on just a smaller subset of cases.
I think over time, again, the agencies have adapted these as they’ve learned more and as their approach to the horizontal mergers changes, they’ve updated the guidelines over time. And so some of this is, I just think, the vertical merger guidelines need to be given some opportunity to get out there and do some work and we can see how it’s actually going and how it’s functioning on the ground. And whether courts are really understanding what the issues are and if that’s proving to be helpful. And I think over time, again, with antitrust in the US it’s always been kind of this iterative process and courts are very good, they’re experts in fact finding and applying the facts to the law. So I think once we see what’s out there and how they’re reacting and if there are any misunderstandings or as we learn more I expect the agencies will continue to update them like they do with the horizontal merger guidelines. But I think it’s probably a little too early to say we need to be making any big, big changes.
Do you approve of the shift from competition towards regulation?
DORSEY:
I think, again, that’s a really interesting question. It’s one of these that’s been at the forefront of the discussion lately is how do we best preserve the innovation that we’ve seen over the last several years? And again, the competitive markets bring so much benefit to consumers? We see this innovation that contributes meaningly to everyone’s everyday lives. Our lives are so much better today when we have smartphones that work and we can go out and if you get lost on the side of the road, you can pull up Google Maps or Apple Maps or whatever and find your way. There’s so many ways in which they have enhanced our daily lives. We want to make sure that that process continues. And we think the best way to do that is through continuing to have competitive markets.
One of the big questions we have today is how best do we foster these competitive markets? How do we keep the environment one such that companies aren’t getting too complacent and just slowing down or doing things that aren’t going to help consumers? How do we encourage companies to keep the consumer at the forefront and again, make that their goal at the end of the day, that they have to be serving consumers or they’re going to lose out? There’s this question of when we’re regulating is the best way to do that through the way we have an antitrust historically, which is, again, a lot through litigation? Or do we need some more ex ante regulation?
Some of the narrative and the arguments with, “We should move to this ex ante regulation,” is this narrative that the litigation approach is all ex-post and all antitrust can do is try and solve problems after the fact. That’s really not true. We see that a lot. So in mergers especially, most countries today have proactive merger regimes, in the US here we have the Hart-Scott-Rodino Act that requires pre-notification. The antitrust agencies get to look at what we think are likely to be some of the most problematic mergers before they ever occur. Wwe have some preemptive steps and within the litigation that we have today, we also have various rules and standards, and some of them essentially function very similarly to ex ante regulation. In the US we have things that are per se unlawful and we obviously execute that maybe through some litigation at the end of the day.
But that wouldn’t really change if you put that into the statute. If you said cartel agreements are agreements to set prices is per se illegal. If we put that into the statute versus how it functions today, I think it’s not really a big change. And again, I think the courts really have a lot of value to add here. We’ve seen that over the years here in the US where we have these really broad statutes and the courts have done a lot of work to make them functioning, to get them to a place where we understand what the rules are. Again, the courts are experts in fact finding and applying the facts to the law. And I think we get a lot of benefit out of allowing the courts to see what’s going on. So they add a lot of value in that sense. It also is one way in which we can help hold the regulators responsible for their decisions. You can make the agencies take their cases to court and prove them in front of the court. It’s one of our systems of checks and balances that I think is working really well.
How would you ensure antitrust is enforced vigorously if no changes are made to the current antitrust system?
DORSEY:
Again, I think that’s one of the things that really so important today to make sure that we have these functioning markets, that the markets are doing what we want them to do for consumers. And the agencies play a really critical role in this. I think one of the things that’s really important is for them to keep bringing these cases to the federal courts. So there’s been a trend in the US I know for the agencies to enter into a lot of settlements. Settlements can be really useful when we think that we have a good solution, if there’s, for example, in merger cases if it’s a national merger and we think there’s only problems in some localized geographic jurisdictions and we can solve that through some divestitures that can be really effective and allow us to get the benefits of the mergers without the harms. But so much of these cases end up going to settlement or abandoned before they get to court, that I think we’re missing out on some of the benefits of seeing the actual case law develop.
I think that’s some of what’s driving some of the discussion today is there seems to be a bit of a mismatch between what people might see in cases, because they tend to be as a general matter so few and far between, and what the agencies are actually doing. I think some of this is for the agencies to keep bringing these cases to court so that we can see what they’re doing and to also keep engaging in a lot of this outreach that they do. It’s, I think, really important for the FTC and the DOJ to be communicating to not just the business community but the rest of the world what it is that they’re doing, what they’re thinking. Because that not only provides guidance, it lets the public know what it is that they’re doing and what they’re working on and how they’re seeing these problems evolve and what they’re doing about them. I think continuing to communicate what it is that they’re doing is going to be really important.
What are your thoughts regarding start-up acquisitions?
DORSEY:
There are a lot of really important considerations here again. There’s a lot going on in this space. Killer acquisitions are, I think, just one of many concerns about mergers and acquisitions in the startup space. And some of what you want to think about is mergers and acquisitions have always been an important part of the innovative landscape. There are lots of reasons why they might be happening. Some of them are certainly anti-competitive, some of them might be pro-competitive and some of them might just be neutral. A really robust and effective antitrust regime should account not only for the potential harms, but also for the very real potential benefits.
If we think about this disparity and the kinds of acquisitions that might occur here, there’s some where there might be some sort of IP or trade rights that play, where if one certain company is acquired that might have a very meaningful impact on a market. But there’s other situations where there might be many players. I think we’ve seen a lot of this over time where there’s ideas that are coming to market, and the market for these startups tends to get a bit maybe saturated even. And you see a ton. I think during the pandemic we saw this, right? A ton of delivery food apps just getting a ton of investment. And I couldn’t keep up with all the different delivery services where I might be able to order food off of, and was getting inundated with all of the different marketing from them. I think one of the things to keep in mind in this is the life cycle of investment and development here. You’ll see some natural expansion and then contraction over time, and I think some of this is important.
If we think that there’s a particularly important nascent competitor that some bigger company is trying to buy off, we want to be alert to that and consider whether there are some real harms at play there. But also not to over deter some just natural occurrence here, because I think there are also a lot of beneficial reasons that might happen, including some of these people who are interested in the startup space, some of the people who are on the ground, some of them might want to hold onto the company over time, but some of them like the startup space, like identifying the ideas and the initial startup and want to get out of the market. They aren’t necessarily the best managers for a big company. So being able to sell it off as some really positive benefits in terms of getting people into these markets in the first place. And so I think we just want to be cognizant of the full atmosphere and that there’s more than just antitrust and more than just potential harms at play.
Is break-up the best solution for the digital economy and for consumers?
DORSEY:
I think there’s some real problems and impediments to the idea of trying to break up these really big companies that are doing a lot of different things, including some practical ones. So if we just look back at the history of antitrust over time, break up, and especially when it’s not a situation where the company has grown solely through acquisitions, if we’re trying to break up a company that’s grown internally or is doing a lot of different things, it’s a pretty extreme remedy and one that’s really not been used very often. When it has been used, it’s not necessarily been super successful over time. It’s not necessarily done what we think it’s going to do. When you think back to what was happening in the US and in antitrust around this time in the 20th century, a lot of what we were talking about were much closer to commodity products. So steel and sugar and oil. What we have today is these really disparate businesses. And we have big companies like Facebook and Google and Apple and Amazon that are all doing some similar things, some different things. The way they interact on the markets and compete is very different and much more nuanced, I think, than a lot of what we saw before.
I think there’s a lot of trying to figure out how to break them up would be very difficult in the first place, just as a practical matter. How do you carve out sections of the company and create smaller ones that are going to be able to function on their own? If you need someone else to buy it to make it functionable, how do you find a good buyer for that? I think these are really complex considerations and real challenges for enforcers at the end of the day. And I don’t know, at the end of the day, that it makes anything better for consumers. Some of this is going back to the idea of vertical integration. There’s been this idea floated that they shouldn’t be able to enter into adjacent spaces. But I think a lot of the empirical evidence on vertical integration and restraints is that a large part of them are pro consumer, tend to benefit consumers or competitively neutral. So we’re outlawing this or breaking up the company to stop that, it’s really unclear what the benefits to consumers are going to be at the end of the day.
How do you see the role of the FTC and the DOJ in ensuring competition works for consumers?
DORSEY:
I had the opportunity to serve at both the FTC and the DOJ over the last several years, which was just really wonderful and really gave me a lot of insights into what is actually going on at the agencies. So it was fascinating and really rewarding. One of the things that that experience highlighted for me is that litigation and filing cases is obviously a very important part of what the agencies do, and it’s often where the most notoriety comes from. When you see the headlines, it’s often about the FTC or DOJ filed this case, or they won this case, or sometimes they lost this case. But there’s so much more that they do that is contributing to making sure that competition works for consumers.
Again, we talked a little bit earlier about how making sure the cases actually get to federal court is an important part of this, that helps with building the law and making sure that it keeps pace with what’s going on. But there’s a lot of other things that the agencies do. There’s their investigations that are private, there’s all of their policy work, not just with companies. They’ll have companies come in, they’re listening, looking at what’s happening on the ground. The FTC, for example, has it’s 6(b) authority to just investigate markets. There’s a lot of learning that happens to try and understand so that they’re prepared when problems do arise on the market, that they’re not caught flat-footed, that they’ve thought about these ideas.
I think a lot of it is just communicating to the world what it is that they’re seeing and what it is that they think is problematic so that companies can react to it if they want to, the business community can react. Antitrust today, it’s a global phenomenon, right? It’s happening across the globe, so this interaction with other agencies and learning from other agencies is another really important part. So it’s kind of all of these pieces together that I think are working to complement one another. And it’s obviously, at the end of the day, I think better that the FTC and DOJ can go out there and say, “Okay, we think these things are problematic.” And so that those things don’t occur, as opposed to just having to take them to litigation after the fact.
How would you reconcile competition and competitiveness? Should antitrust reforms take into account the potential impact on proposed changes vis-à-vis China?
DORSEY:
So again, like we were just talking about, antitrust is a global phenomenon today; the decisions aren’t happening in a vacuum. What happens often resounds across the globe. So even if it’s a domestic decision by its terms, you’re going to feel the effects elsewhere. I think the EU, the GDPR is a pretty good example of where we have all seen some of the repercussions, even in our daily lives across the globe. I think that’s absolutely when agencies are thinking about the decisions they want to make, the cases they want to bring and where they want to prioritize, that that’s something that I think they just has to be part of the consideration.
Here in America, the technology sector here has been one of the most innovative and successful in the world. I think today, the US, some stats I read recently was that we’re home to more than half of the top 100 global public companies. And technology’s a big part of this. I think it’s over half of America’s contributions. I read recently over $10 trillion. So when we talk about competitiveness and whether the US antitrust agencies are doing enough to make sure we’re keeping innovation and competitiveness in the markets, I think those factors are really telling. And again, we need to look at all of these things when we’re thinking about how to react and how best to make the antitrust laws work for consumers today.
Any final comments you would like to make?
DORSEY:
I think we covered a lot today. Thank you so much for having me. One final thing, and I think I’ve been saying this a lot lately, is just we have here in the US over 100 years’ worth of antitrust enforcement to build off of and insights and a lot that we’ve learned. So when we’re talking about these really important questions, I think it’s really important to keep in mind the history of what our experiences have been and to learn from that so we’re not repeating the same mistakes, and we can continue to grow and really create an antitrust regime that’s protecting consumers and again keeping us with this really innovative and dynamic market.
