The consumer welfare standard and avoiding the dangers of polarized debate in the USA

Abstract

The Biden Administration is seeking to redefine US antitrust policy that it views as largely responsible for historical underenforcement of antitrust laws in the USA.1 To achieve this, President Biden appointed progressive reformers to leadership positions2 and lawmakers are proposing amendments to the antitrust laws.3 These reforms could be described as a battle for the very soul of antitrust though such policy shifts in antitrust enforcement are not unprecedented.4 Arguably a victor of a previous antitrust policy battle was the Chicago School with its core underlying assumption that markets self-correct.5 Allied to that view was its emphasis on economic theory and analytical methods that rely heavily on economic analysis, especially the consumer welfare standard (CWS). A complete overhaul of US antitrust enforcement policy has yet to take place, but the current leadership of the US antitrust agencies have not held back in their criticism of the Chicago School with what they describe as its ‘focus on “consumer welfare”’ that is ‘warping America’s antimonopoly regime’ and ‘largely blinded enforcers to many of the harms caused by undue market power, including on workers, suppliers, innovators and independent entrepreneurs’.6 While the Chicago School’s influence was profound, focusing solely on the Chicago School does ignore the influence of other scholarship, including the modern Harvard School, and other influential scholars.7 This current ‘obsession’ with the Chicago School without a broader discussion of the nuanced views of many other scholars is polarizing the debate, including over the use of the CWS.8