Breaking Out of Consumer Welfare Jail: Addressing the Supreme Court's Failure to Protect the Competitive Process

Abstract

It is time to free antitrust law from the yoke of Robert Bork’s consumer welfare terminology. Bork’s vision has gained ascendency over the past 40 plus years and, subject to variations, is now widely regarded as the core antitrust paradigm. In a companion article, I examined why a consumer welfare standard cannot sustain this role. I made the case for a symmetric welfare standard anchored to the traditional view that the Sherman Act protects the competitive process. In this article, I expand this analysis. A consumer-labelled paradigm invites a static analysis—one focused on competitive effects at only one end of the distribution chain. In fact, competition is a dynamic and interactive process in which players at all levels of the chain add value and affect each other’s choices. All participants in the distribution chain are disciplined by competition – and all should be protected from power-based abuse of competition. I provide extended analysis of why non-price and non-efficiency preferences of buyers and sellers are a critical part of the competitive process and cannot be comfortably accommodated by consumer welfare standards. I offer examples of preferences, not just of consumers but of all participants in the distribution of goods and services, that are at the heart of the competitive process. I then examine Supreme Court decisions. More than a few recent cases demonstrate a fixation with consumer welfare standards and fail to protect competition. Righting the antitrust ship will require embracing a tradition-based, symmetric welfare standard that equally protects all players in the competitive system.