Promoting Consumer Welfare Research Articles

A Theory of Exploitation for Consumer Law: Online Choice Architectures, Dark Patterns, and Autonomy Violations

Commercial practices that exploit consumer behavioural biases (behavioural exploitation) are an increasingly prevalent issue in online choice architectures. EU policymakers have started to expressly regulate such practices. What remains unclear about this type of regulation is when an online choice architecture exploits biased consumers. What is the legal meaning and significance of exploitation in the digital environment? Even though the concept of exploitation is frequently used in scholarship concerning behavioural exploitation such as “dark patterns”, it is rarely defined. The concept’s normativity is mostly ignored, remains underdeveloped, and lacks solid foundations. This Article aims to close this gap by developing a theory of exploitation for (behavioural) consumer law in the EU that applies to online choice architectures and unfair commercial practices in general. The Article eschews welfare analysis and instead relies on the philosophical discourse on exploitation theory. Even though this discourse is mostly ignored by the literature, the Article submits that this analytical framework fits better with the existing goals and scheme of EU consumer law compared to an approach to legal analysis that is driven by promoting consumer welfare through market efficiency. Ultimately, the Article defends the autonomy theory of exploitation and contends that regulating behavioural exploitation in online choice architectures means regulating for autonomy.

Race-ing Antitrust

Antitrust law has a race problem. To spot an antitrust violation, courts inquire into whether an act has degraded consumer welfare. Since anticompetitive practices are often assumed to enhance consumer welfare, antitrust offenses are rarely found. Key to this framework is that antitrust treats all consumers monolithically; that consumers are differently situated, especially along lines of race, simply is ignored. We argue that antitrust law must disaggregate the term “consumer” to include those who disproportionately suffer from anticompetitive practices via a community welfare standard. As a starting point, we demonstrate that anticompetitive conduct has specifically been used as a tool of oppression while, at other times, minorities are the unintended victims of anticompetitive practices. In turn, this Article leans on Critical Race Theory (CRT) to explore ways that antitrust’s “colorblind” stance has failed communities of color. We also explain why antitrust law is an ideal regime to address systemic racism. Consider that antitrust law is concerned with structures; just as enforcement scrutinizes whether conduct has made a market more or less likely to promote consumer welfare, antitrust should scrutinize whether anticompetitive conduct has made a market more or less likely to benefit all consumers. To put it another way, antitrust’s claimed purpose is to enhance consumer welfare by maximizing allocative efficiency, but it ignores how discrimination is similarly inefficient if resources are misallocated along race lines rather than their most productive uses. Finally, by embracing the intellectual backbone of antitrust law as well as CRT’s lessons about power structures, we make the case that antitrust’s goal should be reimagined to benefit not only the welfare of all consumers but the welfare of communities as well.

ANTITRUST AND INEQUALITY

ANTITRUST AND INEQUALITY

ROLE OF COMPETITION COMMISSION OF INDIA IN PROTECTING THE INTERESTS OF THE CONSUMERS

Competition Act is a breed of anti-trust laws which are globally prevalent to protect the consumers at macro level, instead of micro level and also to protect the small and medium businesses from the abuse of dominant position of large enterprises or entities. Every government works towards protecting and safeguarding their consumers. At micro level, one has easy remedy. In case of any issue one can go to the service center and get the issue rectified if it is pertaining to purchase of a product and further can approach the Tribunal under Consumer Protection Act 2019. This protection or safeguard is at micro level. At macro level, business enterprises go to an extent that in the beginning it is difficult to assess the loss or the damage, but by the time one realizes, the damage is already caused. This is where, the Competition Act, 2002 comes to the rescue of the consumers by protecting them at macro level from the monopoly of big business enterprises, thereby favouring competition. The main aim of Competition Policy is to promote consumer welfare, and this can be achieved by setting minimum specifications and standards for safety for both goods as well as services. Moreover, all this can be achieved by establishing mechanisms to redress the grievances of consumers. To administer, implement and enforce the Competition Act, 2002, the Competition Commission of India (CCI)was established. CCI performs advocacy and advisory functionsapart from being a regulator of market in India. Key to consumer welfare is fair competition, which can be achieved through the purposes of the Competition Act, 2020 for protecting and promoting fair competition in the markets in India. The main aim of the research is focused upon the role of CCI and how it deals with the enterprises abusing their dominant position, thereby protecting the interests of the consumers.

Can advertising enhance consumers' desirable COVID-19 health behavioral intentions? The role of brand-pandemic fit.

This article explores the fit between the advertised brand and the pandemic as a potential influence on consumers' intentions to engage in socially responsible health behaviors (social distancing, mask wearing, and getting tested when exposed). In an advanced and emerging market setting we find that advertisements for brands that are perceived as high on brand‐pandemic fit enhance consumers' socially desirable COVID‐19 health behavioral intentions and changes in brand credibility is the mechanism that drives such intentions. Fit is especially beneficial on the intentions of consumers whose health beliefs reflect only low to moderate concern about COVID‐19. Consumers with low or moderate (vs. high) COVID‐19 health beliefs exhibit an increased susceptibility to the fit—desirable health behavioral intentions relationship. The results are also corroborated in an emerging market context. Together, the results establish links between brand‐pandemic fit of advertisements, brand credibility, health beliefs, and consumers' intentions to engage in socially desirable health behaviors. The results suggest that advertising can play a role in encouraging desirable health behaviors and can promote consumer welfare via ads of high fit products and services that provide benefits during the pandemic in both advanced and emerging markets.

COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?

This paper investigates the extent of welfare distribution amongst households in Ghana due to the government's subsidies on electricity and water as part of its relief package to households on the fallout of the COVID-19 pandemic. The study seeks to induce policy discussions on effective targeting and the consequential welfare distribution of subsidy interventions in Ghana. Subsidising the price of basic household necessities is expected to immensely benefit the poor whose expenditure is largely occupied by these necessity goods, but, as pertains in developing countries, schemes for effective targeting of the poor are nearly non-existent. This mostly leads to misalignments in income redistribution that is eventually anti-poor. Data from Ghana Living Standard Survey (seventh wave) which captures household final expenditure on goods and services in 2017, including electricity and water, is used for the analysis. First, we simulate household consumption changes as a result of the pandemic on the 2017 data, using on real-time information in the course of the pandemic on household income and expenditure changes. Next, we estimate a complete demand system for all households, and their elasticities of demand for electricity, water and food using the Quadratic Almost Ideal Demand System model. Using the computed elasticities, Taylor's approximations are then used to simulate consumer welfare in the form of compensating variation (CV) from price changes due to government subsidies. Our results indicate that the imposed subsidies promote consumer welfare of all households, especially, households living in rural areas. The blanket subsidy on water better identified the poor and the lifeline households than the subsidy on electricity which had a yardstick for targeting. However, we find that the subsidies on the household utilities are regressive in the sense that lifeline consumer households and the poorest households in both urban and rural areas are rather less advantaged in welfare redistribution in both subsidies.

Digital platforms and the transactions cost approach to competition law

Abstract For the past few decades, competition authorities around the world have said they seek to promote consumer welfare. However, in recent years, several national competition authorities have announced major investigations into behavior by digital platforms—including some behavior that does not immediately harm downstream consumers. This has reopened old questions about the fundamental purpose of competition law: What is the harm that competition law is designed to address? How, exactly, does competition law promote economic welfare? Separately, the literature on ecosystems emphasizes the central role of non-generic complementary investments as a defining feature of ecosystems and the power this can give to ecosystem orchestrators over their associated complementors. We draw these strands together to show how a recently proposed economic foundation for competition law, drawing on the transactions cost literature, provides a consistent, compelling, and economically sound foundation for competition policy toward digital platforms going forward.

Should the State Control Tariffs?

Tariffs or price control has been a controversial subject in recent years. The debate between legal experts and economists is still a hot topic in any discussion. Tariff control regulated in the work creation omnibus law seems to be a topic that must be discussed again regarding this regulation’s urgency. Are specific prices so impressive that the government can intervene in regulating them? This article examines the urgency of rules regarding price controls to create a healthy competitive environment. After conducting a critical literature review, it was analyzed with critical analysis and looking at the objective of competition law was to maximize welfare by protecting competition. The results in this article indicated that the government could only intervene in regulating price-fixing only if companies’ pricing could harm the country’s economy and consumer welfare. The government, therefore, had an interest in regulating the price ceiling. Meanwhile, the price floor, which was believed to be pro-consumer and could promote consumer welfare had no interest and should not have been limited by the government.

Antitrust, Dominant Firms, and Public Policy Problems: A Framework for Maximizing Success by Minimizing Uncertainty

This first of two reports in a series creates a general framework for policymakers to assess potential outcomes when combating dominant-firm behavior using federal antitrust litigation under existing legal doctrine. It explains that when a single firm achieves dominance in a critical market, it can give rise to complex public-policy problems with economic, social, and political dimensions that call upon government to craft creative solutions using a variety of available tools. The menu of available options includes antitrust law, economic and/or social regulation, intellectual property law, labor and trade policy, tax law, and other legal and regulatory mechanisms. And, it is up to policymakers to choose the right combination of tools and wield them collaboratively and effectively. Because of modern antitrust law’s technical complexity, non-expert policymakers often struggle to understand how antitrust law can be effectively deployed as part of a broader public-policy strategy. The first report solves for this problem by creating a framework that policymakers can use to assess degrees of uncertainty associated with litigation-based antitrust challenges to dominant-firm behavior under existing legal doctrine. It derives five variables that implicate litigation uncertainty, each of which arises from core areas of policy agreement or disagreement in antitrust law. The core area of policy agreement that informs litigation uncertainty under existing antitrust law is the idea that antitrust law, as currently constituted, serves to protect and promote competitive markets. The core area of disagreement is over whether antitrust, in the course of protecting competition, should seek to protect and promote consumer welfare as its primary or exclusive goal. Each of these areas has been a flashpoint in recent public policy debates over the adequacy of existing antitrust law as applied to modern digital technology markets. But, importantly, each area also tends to inform the litigation arguments of parties who appear before judges in actual antitrust cases. Consequently, these areas of policy agreement and disagreement tend to shape the contours of applied antitrust law, affecting arguments and outcomes from jurisdiction to jurisdiction and even from case to case. After a detailed analysis, the report identifies and explains the five uncertainty variables that emerge from an understanding of these key areas of agreement and disagreement, as well as their implications for policymakers.

The Globalization of Antitrust: History and Prospects

The United States stood virtually alone when it enacted its first antitrust statute in 1890. Today, almost all nations have adopted competition laws (the term used in most other nations), and US antitrust agencies interact with foreign enforc-ers on a daily basis. This globalization of antitrust is becoming increasingly important to the economic welfare of many nations, because major businesses (in particular, massive digital platforms like Google and Facebook) face grow-ing antitrust scrutiny by multiple enforcement regimes worldwide. As such, the United States should take the lead in encouraging adoption of antitrust policies, here and abroad, that are conducive to economic growth and innovation. Anti-trust policies centered on promoting consumer welfare would be best suited to advancing these desirable aims. Thus, the United States should oppose recent efforts to turn antitrust into a regulatory system that seeks to advance many objectives beyond consumer welfare. American antitrust enforcers should also work with like-minded agencies—and within multilateral organizations such as the International Competition Network and the Organisation for Economic Co-operation and Development—to promote procedural fairness and the rule of law in antitrust enforcement.

Whistle-Blowing on the Lawyers Cartel: An Analysis of Anti-Competitive Trade Practices in the Malawian Legal Profession

Competition Law is mainly concerned with promoting consumer welfare. Competition Law aims at encouraging competition by prohibiting anti-competitive trade practices. The Competition and Fair-Trading Act prohibits certain horizontal practices i.e., certain arrangements or agreements between firms that are in actual or potential competition. Among other things, the Competition and Fair-Trading Act prohibits price fixing and other arrangements that have a substantial negative impact on competition. This paper argues that there are a number of trade practices in the Malawian Legal Profession which violate provisions of the Competition and Fair-Trading Act. More specifically, the paper argues that The Scale and Minimum Charges Rules are anti-competitive because they prescribe the fee or minimum fee that Legal Practitioners can charge for certain specified services. The paper argues that this is a form of price fixing that affects consumer welfare; therefore, contravenes the Competition and Fair-Trading Act. The paper further argues that the complete prohibition of advertisement and touting in the Malawian Legal Profession is anti-competitive and violates provisions of the Competition and Fair-Trading Act.

Is protecting sunk investments an economic rationale for antitrust law?

Abstract In recent years, the economic foundation of antitrust law is increasingly being called into question. The hypothesis that antitrust law seeks to promote consumer welfare has historically been extremely popular but in recent years has come under attack. In part, this is due to the fact that neither the law, nor the decisions of competition law enforcers, can be fully explained as consistent with a strict consumer welfare standard. Neither do competition laws promote a textbook concept of total economic welfare, neither in their wording, nor in the way they are enforced. Some commentators argue that competition law should protect the competitive process, but this approach lacks a foundation in welfare economics and therefore lacks the ability to make basic trade-offs between desirable goals. This article puts forward an alternative hypothesis, which focuses on the sunk, relationship-specific investments made by market participants. We propose that an important, and overlooked, role of competition law is to protect trading partners from the threat of hold-up, where it is unreasonable for the parties to use conventional mechanisms to protect those sunk investments themselves. This approach can help to explain features of competition law and law enforcement that cannot be explained by the traditional consumer welfare or total welfare frameworks. We suggest that this approach offers promise as providing a consistent, comprehensive, economic foundation for competition law.

U.S. Antitrust Policy in the Age of Amazon, Google, Microsoft, Apple, Netflix and Facebook

Are U.S. digital markets advancing, or threatening, the American economy? There is keen interest in the answer to this question. Sweeping changes have disrupted society courtesy of the Information Revolution, presenting great opportunities in radically transformed economic markets but also great challenges in adapting to new and different forms of organization. Great hope accompanies the former, much concern attends the latter. Now important discussions are engaging as to the impacts of market power, where competitive forces – beneficial in discovering new efficiencies and promoting Consumer Welfare – may be thwarted. Antitrust laws and other elements of competition policy are being re-examined. This paper attempts to inform the answers to these questions by examining industrial concentration in the information economy and its impact on U.S. market competition; vertical integration in digital platforms; forces driving innovation in business models and product markets; and the use of competition policy tools in high tech markets. These latter include broadband access and mobile phone industries, which have attracted attention as specific examples of areas where the U.S. has is seen by some as lagging rival economies due to insufficient antitrust enforcement.

Social Media Enhances Consumer Behaviour During e-Transactions: An Empirical Evidence from Bahrain

This study aims to investigate the role of social media on consumer behaviour in the restaurants industry of Bahrain. The objectives of this research were to assess importance of social media as a marketing tool for Bahrain’s restaurants for influencing consumer purchase decision-making. Such an objective was reached by the scholars who randomly collected data from 224 respondents in Bahrain, who use social media, using a survey instrument. The findings of the descriptive analysis revealed that social media affects consumers’ decision-making, such that the consumers use the social media to study new products, services, and particularly new brands. Also, ongoing consumer discussions reveal how social media exposes the pros and cons of products, services, and brands, so consumers are comfortable with their online decisions, since they can select broads before settling on what is the best price, quality, etc. Moreover, the social media speeds the spread of information unlike any other mass media; ensuring that new knowledge reaches consumers, hence enhancing competition among retailers in the restaurant industry. This study concludes that social media plays a vital role in promoting consumer welfare and decision-making.

Reinvigorating Criminal Antitrust?

Contemporary rhetoric surrounding antitrust in an age of populism has potential implications with regard to criminal antitrust enforcement. In areas such as resale price maintenance, monopolization, and Robinson-Patman violations, antitrust criminalization remains the law on the books. Antitrust populists and traditional antitrust thinkers who embrace a singular economic goal of antitrust push to enforce antitrust law that is already “on the books.” A natural extension of enforcement by the antitrust populists would be to advocate the use of criminal sanctions, outside of collusion, for various antitrust violations which are “on the books” but have not been used in over a generation. A return of criminalization for noncollusion related antitrust abuses presents potential legal problems. Current antitrust jurisprudence and policy make a return to criminalization of various practices not merely problematic as a matter of optimal deterrence, but also unconstitutional as a matter of law. The antitrust policy of today bears little resemblance to that of the earlier era of criminalization for a wider variety of antitrust violations. The first issue is one of time. It has been at least a generation since antitrust criminal cases have been brought for noncollusion based cases. The nature of antitrust violations is also different today. Antitrust criminal cases of the earlier era that included criminal enforcement for noncollusive activity were misdemeanors rather than felonies. Further, antitrust economics has pushed antitrust case law to its current state based on a goal of consumer welfare, which weighs the potential procompetitive benefit as a justification to pursue certain behavior. That is, behavior that was once per se illegal is now governed by a rule of reason that weighs both the pro- and anticompetitive effects regarding civil liability. An economically informed rule of reason makes the use of criminal sanctions problematic. These changes to antitrust policy in the past forty-plus years create the basis for a challenge to the reintroduction of criminal penalties for noncollusion antitrust cases. First, this Article introduces the criminal antitrust regime and places it in historical context. Then, the Article explores the transformation of antitrust policy starting from the 1970s, which shifted antitrust policy towards a singular efficiency based goal. This focus on economic effects has significant repercussions for criminal antitrust enforcement, as it limits the possible use of criminal sanctions for Sherman Act § 1 and § 2 violations as well as the Robinson-Patman Act. These limitations apply only in situations where there is no ambiguity that the restraints in question are clearly anticompetitive. In practice, this means that only express collusion is such a situation. Criminal enforcement of noncollusive antitrust activity that is per se illegal creates two potential constitutional law problems, which the next part of the Article explores. The first is a desuetude problem, and the second is a void for vagueness problem. As a matter of constitutional law, these two doctrines limit possible overreach by antitrust populists inclined to use existing law to “get tough” on antitrust violations. The final part offers concluding thoughts on how antitrust must promote consumer welfare and how law enforcement must bring cases that optimally deter anticompetitive conduct but must not bring cases that inhibit the sort of business risk taking that promotes consumer welfare.

Antitrust in the Internet Era: The Legacy of United States v. A&P

Critics from both the right and the left claim that modern antitrust doctrine, rooted in consumer welfare, is inadequate to handle the challenges of the twenty-first century economy. They express nostalgia for 1960s antitrust, when the field had no clear objectives and cases were decided on impressionistic notions of “fairness” and good corporate citizenship. This article exposes the intellectual void at the heart of this new populist movement and begins by following Justice Holmes’ tenet that “a page of history is worth a volume of logic.” More than 80 years ago, the AP then “big box” brick-and-mortar stores; and now online retailers—have challenged traditional retail models by offering consumers lower prices and greater convenience. For decades, critics across the political spectrum have reacted to such disruption by urging Congress, the courts, and the enforcement agencies to stop these American success stories by revising antitrust doctrine to protect small businesses rather than the interests of consumers. Using antitrust law to punish pro-competitive behavior makes no more sense today than it did when the government attacked A&P for offering consumers too good a deal on groceries. In addition, antitrust doctrine does not need an overhaul. It is shaped by many economic perspectives, follows no one “School,” and is flexible enough to address any monopoly abuses in today’s economy. It is also well-calibrated to serve its central function: promoting consumer welfare. It does so not only by prohibiting conduct that harms consumers in the long run, but also by avoiding interference with conduct that might appear problematic to non-economists but that demonstrably benefits consumers over time. Antitrust remains a work in progress, but it is far superior to any alternative that the critics propose.

Attention Platforms, the Value of Content, and Public Policy

This paper shows that two related aspects of attention platforms are important for the sound economic analysis of public policy including antitrust: first, attention platforms generate valuable content. Even though people often don’t pay for content, we know from revealed preference that content is valuable because people spend a considerable amount of time—which has an opportunity cost—consuming it. Second, demand for advertising and the supply of content are interdependent. A decrease in the demand for advertising reduces the returns to supplying content and therefore the amount of content that is provided. Accounting for the value of content and these positive feedbacks cannot determine optimal interventions; but failing to do so can result in policies that reduce consumer—as well as advertiser—welfare. The paper then considers the implications of these considerations for public policy: particularly privacy regulation and antitrust enforcement. From the standpoint of promoting consumer welfare, the failure to account for the value of content and the ad-content interdependencies increases the chances that authorities do not intervene when they should and do intervene when they should not.

Attention Platforms, the Value of Content, and Public Policy

This paper shows that two related aspects of attention platforms are important for the sound economic analysis of public policy including antitrust: First, attention platforms generate valuable content. Even though people often don’t pay for content, we know from revealed preference that content is valuable because people spend a considerable amount of time -- which has an opportunity cost -- consuming it. Second, demand for advertising and the supply of content are interdependent. A decrease in the demand for advertising reduces the returns to supplying content and therefore the amount of content that is provided. Accounting for the value of content and these positive feedbacks cannot determine optimal interventions; but failing to do so can result in policies that reduce consumer -- as well as advertiser -- welfare. The paper then considers the implications of these considerations for public policy: particularly privacy regulation and antitrust enforcement. From the standpoint of promoting consumer welfare, the failure to account for the value of content and the ad-content interdependencies increases the chances that authorities do not intervene when they should and do intervene when they should not.

The Interface of Competition and Intellectual Property Law – Taking Stock and Identifying New Challenges

The increasing prominence of the digital economy, a vital sector driving economic growth, is reflected in the increasing focus that competition authorities devote to intellectual property-intensive and high technology industries. This brings into relief longstanding tensions between competition and intellectual property (IP) laws. IP rights challenge some traditional assumptions about the benefits of competitive markets, in that they protect innovators from some forms of competition, thereby allowing them to price above competitive levels for a period of time. This conflict is more apparent than real, however, as competition law and policy encourages the innovation that IP rights promote. Ultimately, both policies seek to promote consumer welfare, economic growth and innovation. At the same time, the interface between competition and IP law raises significant challenges regarding how the two regimes relate to each other, particularly in areas where they overlap. Approaches to the relationship between competition and IP laws s have evolved over time, moving from the application of formalistic rules to a contemporary focus on the effects of IP-related practices. Even following these developments, new challenges regarding the interface between competition and IP laws keep arising as the economy evolves, new business practices develop and potentially anticompetitive conducts are identified. The goal of this paper is to provide an overview of the competition/IP interface, with a focus on identifying the main challenges that competition law faces in this respect at the moment. Its purpose is merely to identify challenges that the competition law community will likely face in coming years at the interface with IP laws and areas worthy of research. With this goal in mind, the paper is structured as follows. Part II of provides a very brief recapitulation of the tensions between, and common goals of IP and competition policy. Part III reviews how the interface between IP and competition laws and policies has evolved throughout the years, concluding with a description of the current international consensus regarding this interface. Part IV then addresses current areas of tension between IP and competition. Part V concludes.

Why Patent Hold-Up Does Not Violate Antitrust Law

Owners of standard essential patents (SEPs) are cast as villains for engaging in “patent hold-up,” i.e., taking advantage of the fact that they negotiate royalties with implementer-licensees that already have made sunk investments in the standard. In contrast to “patent ambush,” patent hold-up involves no standard-setting misconduct or harm to any competitive process, and thus cannot violate antitrust law. Commentators taking a contrary positions confuse the ends of antitrust law with its means. Antitrust law promotes consumer welfare only by protecting competition. Casting aside this core principle would expose business decisions, including ordinary price setting, to judicial oversight. Commitments made by SEP owners in the standard-setting process, however, should be enforced, and they are enforced. Without an antitrust cause of action, implementers invoke the powers of the courts to resolve royalty disputes over SEPs.