Antitrust Good Update - Michigan 2024 CGO

Antitrust Good – Cards
Antitrust Good – Big Tech
Antitrust key to big tech innovation
Massarotto 4-10 [Giovanna; 4-10-2024; Massarotto is an Academic Fellow at the Center for Technology, Innovation & Competition (CTIC) at the University of Pennsylvania and an affiliate of the University College London’s Centre for Blockchain Technologies (UCL CBT); “Driving Innovation with Antitrust”; ProMarket; https://www.promarket.org/2024/04/10/driving-innovation-with-antitrust//]
Presently large digital companies, known as Big Tech, are in the crosshairs of regulators and Congress for alleged monopolistic conduct. Antitrust lawsuits, and government and legislative interventions worldwide against Big Tech, are hard to count. Keeping track of their developments has become challenging. A recent study published in this journal identified “100-plus antitrust cases” only considering Google in 23 jurisdictions.
The U.S. has often been criticized for being lax compared to EU antitrust enforcers in dealing with Big Tech’s power. But innovation does not seem to be a hallmark of EU companies. In the U.S., Alexander Bell invented and patented the telephone before founding what was later called AT&T. It was at AT&T that other game-changer technologies, such as the transistor and Unix operating system, were also invented. IBM, Microsoft, Google are only three other examples of U.S. tech companies which changed the computer industry forever by setting the tone for the present digital economy. This raises the question of whether U.S. antitrust enforcement action played a prominent role in the innovation process which led to breakthrough technologies flourishing especially in the computer industry. It also begs the question “why do we see less innovation on the other side of the Atlantic?”
The economist Reuven Brenner argued that “every business competes by betting on new ideas,” and he is probably right. Although innovation is a broad term, which might be difficult to precisely define, “new ideas” are fundamental in the innovation process. However, it is hard to think we can either regulate or predict new ideas effectively. Judge Richard A. Posner wisely observed that antitrust intervention might be slow in comparison to the rapidity of innovation. However, the computer industry would certainly look different today without any antitrust intervention. Although antitrust in the U.S. is not the cure for any economic diseases, more than a century of experience in enforcing this law shows some important evidence. Antitrust law often paved the path of innovation toward the creation of new markets and development of new technologies, which according to economists, such as Joseph Schumpeter, is what competition is all about.
History tells us that antitrust enforcers can be crucial in maintaining the delicate balance between controlling the actions of large players without compromising their incentives to innovate through consent antitrust measures. In each situation, the company’s role in shaping antitrust remedies were fundamental. And in retrospect, as we look closely at the computer industry, it was the U.S. antitrust approach, albeit not perfect, that seems to have done its job well.
Antitrust Good – Warming
Strong antitrust laws induce the competition necessary to rapidly innovate green technology – that’s key to solve climate change.
Schinkel and Treuren [Maarten Pieter Schinkel is from the University of Amsterdam - Department of Economics. Leonard Treuren is from KU Leuven - Department of Economics. “Green Antitrust: (More) Friendly Fire in the Fight against Climate Change.” SSRN. https://pure.uva.nl/ws/files/123876846/SSRN_id3749147.pdf] //ahuero
Green antitrust appears very sympathetic: a fast transition to more sustainable production and consumption is essential to the future of our planet, and corporations must certainly take their responsibility for it. Where government coordination fails to nudge the balance from grey to green equilibria – because of lack of information, legal options, political will, or otherwise – perhaps private coordination can come to the rescue. After all, polluting companies will typically know best how to reduce their own externalities. And indeed, green CEOs increasingly stand up for good causes. For some time now, passionate competition law scholars have been hammering home the importance of sustainability.15 But is contributing to the fight against climate change truly a nail in this case? Or is it rather a screw? Deciding this first is essential when selecting the right tool to use to fix the problem – all the more so when it is urgent. The central question here, therefore, is whether it can be expected that undertakings will take more corporate social responsibility when they compete less. The key premise of the green antitrust movement is that tensions between competition and sustainability can be eased with less competition. But is that premise true?
In this paper we review the available economic literature to find that it provides little to no ground for believing that restrictions of competition would incentivize companies to take more sustainability initiatives. On the contrary, it appears that competition induces companies to produce more sustainably, also if they are in part intrinsically motivated to so do. Even if first-mover disadvantage, a concept to which the proponents of green antitrust policy point, would lead to a deadlock preventing more sustainable production, sustainability agreements create no incentive to break that impasse. The rare genuine sustainability agreement cannot justify relaxing general competition rules. It seems proper, therefore, to regard the corporate cheers for green antitrust policy with some skepticism and suspicion. That is also the attitude that we should expect our competition agencies to have. After all, they are tasked first and foremost with the protection of competition.
We warn against two major risks of green antitrust policy. One risk is cartel greenwashing. Competitors who are allowed to coordinate their trade, have an incentive to provide minimal sustainability benefits for maximum price increases. The more accommodating the competition authority, the less green will be delivered. Competition authorities will have to strictly demand sufficient compensatory sustainability benefits, and then constantly monitor exempted agreements. This task requires a staggering amount of information that these agencies cannot reasonably be expected to have. It will tie up a lot of their resources at the expense of other enforcement and advocacy priorities. The second risk is that being able to point to corporate self-regulation gives the part of government that should promote sustainability further excuses to shun their responsibility for designing proper regulation. The green antitrust movement may thus exacerbate the very government failure it seeks to correct.
Antitrust Good – Racism
Antitrust laws are a key aspect of reducing workplace racism and discrimination. Anti-discrimination laws can’t solve alone, and weakening antitrust sacrifices the well-being of People of Color in favor of expanding the market.
Davis et al 21 [Joshua P. Davis, Center for Law and Ethics, University of San Francisco School of Law. “Antitrust as Antiracism: Antitrust as a Partial Cure for Systemic Racism (and Other Systemic “Isms”).” https://journals.sagepub.com/doi/pdf/10.1177/0003603X211023620#:~:text=It%20offers%20redress%20when%20a,industries%2C%20disproportionately%20people%20of%20color] //ahuero
**problematic language has been replaced in brackets**
This essay focuses on the possibility of ameliorating the effects of systemic racism through antitrust litigation on behalf of workers. It takes as a useful point of comparison such efforts as pursued through employment discrimination and antitrust laws. Of course, there is no need for a binary choice. Employment discrimination lawsuits can work in tandem with antitrust lawsuits toward a common goal. Nor is there a competition between the two. The goal of the essay is not to show that antitrust is a better tool for taking on systemic racism than antidiscrimination law. We do not claim it is. Still, antitrust laws may hold some important advantages in some contexts, especially given some of the crabbed ways in which the courts have interpreted employment discrimination laws in recent years.
From this perspective, antitrust laws have five potential advantages over employment discrimination laws:
1. Individual Employers and Actions Versus Systems: Employment discrimination laws tend to focus on individual employers and, increasingly, on individual employment decisions, whereas antitrust laws focus on systemic effects in a market as a whole.
2. Income v. Capital: Employment discrimination law focuses on disparities in pay. Antitrust law can address harms that flow from disparities in capital.
3. Apples to Apples Versus Apples to Oranges: Employment discrimination laws generally compare how workers in a protected group are treated with how other workers are treated. In contrast, antitrust laws address economic imbalances between, on one hand, workers as a whole and, on the other hand, ownership and management.
4. Dividing the Pie Versus Enlarging the Pie: Employment discrimination generally addresses how to allocate a firm’s pay whereas antitrust law can increase the total compensation firms pay to workers.26
5. Centrist Economic Principles: Antitrust law tends to rely on relatively popular and uncontroversial free market principles. Antidiscrimination laws depend on notions of racial equality that have become fraught as the nation finds itself embroiled in “culture wars.”
A. Individual Employers and Actions Versus Systems
Courts have interpreted employment discrimination laws to emphasize individual employment decisions—or at most individual employers—at the expense of assessing the discriminatory impact of market structures or other larger systems. That has limited the effectiveness of employment discrimination law at combatting systemic racism.27
Antitrust laws, in contrast, focus on larger economic systems, including entire markets. They can reach beyond the boundaries of a single employer or firm to address a multitude of market actors, even across different levels of the supply chain. For example, both government and private enforcement actions against illegal “no poach” or wage-fixing agreements address anticompetitive conduct across multiple employers that can affect entire markets or types of workers.28 Similarly, the “reasonable interchangeability” standard widely employed by courts and economists to define product and labor markets can extend the analysis of relevant harms beyond the workers for a single firm.29 Further, antitrust litigation is capable of targeting conduct that extends beyond, and upstream from, the terms or manner of employment. Targeted conduct can include, for example, mergers or acquisitions that create market power over workers or agreements among competitor employers that reduce the relative leverage that workers have versus management.30 Antitrust laws can also consider a broader range of detrimental effects flowing from challenged conduct than employment laws might, including effects experienced beyond an individual or group of complainants or outside the boundaries of a particular employer. Antitrust actions can address wage, price, quality, and output effects market-wide.31 They take into account how different firms can interact to subvert competition on the whole.
B. Income Versus Capital
Employment discrimination law focuses on differences in pay, for example, between people of color and white people. As noted above, however, the greater disparity pertains to capital. Systemic racism often involves those with capital—disproportionately white people—exploiting those without capital—disproportionately people of color.32 Antitrust laws can be used to rectify some of these situations, even if the exploitation is not only of people of color but also of white people.
C. Apples to Apples Versus Apples to Oranges
Employment discrimination laws generally use as a benchmark the treatment of workers not in a protected group.33 For example, under Title VII, the use of a “comparator”34 can be a powerful tool to prove discrimination.35 Employment discrimination claims generally succeed only if workers in a protected group are treated worse than similarly situated workers not in the protected group. Under employment discrimination laws, the comparison is in that sense apples to apples.
Systemic racism, however, can manifest as poor treatment of all workers by owners and management—treatment that may be motivated by race and that may have disproportionate effects on people of color but that does not operate by treating disempowered white people better than their peers. That limits employment discrimination law’s ability to address the poor treatment of all workers, including when systemic racism is the root cause of the mistreatment. Employment discrimination law is not designed to compare apples to oranges—workers to capital.
Antitrust laws, in contrast, can redress wrongs that occur because ownership or management uses improper means to exploit workers as a whole—people of color and white people alike. Antitrust views worker harms through the lens of relevant labor markets in which management are buyers and workers are sellers of their labor or human capital.36 The relevant effects and harms are to workers as a whole, not necessarily to one group of workers in contrast to another. When systemic racism sweeps in white workers as victims, antitrust law may thus have an advantage over employment discrimination law.
D. Dividing the Pie Versus Enlarging the Pie
Without meaning to criticize employment discrimination law, we can acknowledge that it can create tensions between workers. The gains of some workers can come at the expense of others.37 Often, as a practical matter, the size of the proverbial pie is fixed. Employment discrimination law addresses how to divide it.
Antitrust law, on the other hand, can increase the size of the proverbial pie. It can obtain compensation for the underpayment of all workers. It can also end practices that artificially decrease the compensation firms pay to workers. Antitrust law, then, may pit workers against those who pay them— just as employment discrimination law does—but it may avoid dividing workers from each other.
E. Antitrust Law’s Limitations and Corresponding Advantages
We acknowledge that antitrust law has significant limitations as a tool to combat systemic racism. Most obviously, antitrust law does not target racism directly. It is framed in terms of market efficiency. To be sure, in an important sense, racism is inefficient. As the Nobel Prize–winning economist Milton Friedman observed, “The man who objects to buying from or working alongside a [Black person], for example, thereby limits his range of choice. He will generally have to pay a higher price for what he buys or receive a lower return for his work.”38 Economists have long recognized racism as an obstacle to ensuring that the most capable and competent people perform the tasks they are best suited to perform.39 Labor economists sometimes use the term “human capital frictions”40 to describe this type of “systematic misallocation of human resources.”41 Nevertheless, while antitrust law may be able to understand and explain the anticompetitive effects of racism, it is not built to detect or rectify racism. Nor can antitrust law effectively distinguish economic power imbalances that are specifically motivated by race. Put simply, antitrust is no substitute for employment discrimination law. Nor is it a substitute for political and social efforts to reduce racism and its manifestations.
Antitrust law also has been interpreted largely to address corruption of free market principles through the abuse of market power. Systemic racism does not always—and may not even mostly— involve the abuse of market power as framed by antitrust doctrine. Moreover, the free market, as conceived and defined by courts, can often allow for what many would consider financial exploitation of workers. In particular, the so-called consumer welfare standard—sometimes interpreted to mean that consumers are more important than all other economic agents—may allow firms to offset worker harms by pointing to allegedly offsetting consumer benefits.42 As economist Hal Singer explains, “Valuing consumers over other ‘trading partners’ allows many anti-competitive schemes, including those that harm Black athletes, employees, and business owners, to go unchecked.”43
That said, when antitrust law does provide a basis for challenging systemic racism, its limitations can confer certain advantages. Its lack of a direct focus on race can cause it to appeal to all workers, as noted above. Further, limiting antitrust to the enforcement of free market principles should make it attractive to a broad swath of the population. It is not designed to pick winners and losers—as politicians sometimes frame the issue—but to protect honest businesses and punish cheaters. It aims to ensure that firms compete on the merits rather than distort the free market to their own economic advantage. That limits the potential impact of antitrust law, perhaps in unfortunate ways. But it also makes it harder to criticize the impact that the antitrust laws can have.44
Antitrust Good – Startups
Weakening antitrust empirically reduces venture capital investment which is key to the success of startups which foster innovation.
Zhang 23 [Wentian Zhang is a PhD candidate in Finance at the University of Rochester, Simon Business School. Her research focuses on empirical corporate finance, with specific interests in venture capital, corporate innovation, entrepreneurship, and production network. “The Effect of Antitrust Enforcement on Venture Capital Investments.” https://arxiv.org/pdf/2312.13564] //ahuero
Venture capital (VC) and startups backed by VCs are important contributors to the economy. According to Gornall and Strebulaev (2021), around half of the U.S. public firms founded within the past fifty years were financed by a VC fund in their early stage, accounting for 41% of the total market capitalization. Moreover, the macroeconomic impact of VC investments is much greater than that indicated by market valuations since the profound contribution of innovations generated by VC-backed startups is not fully reflected in the valuations (Opp, 2019). However, these startups are vulnerable to the anticompetitive conduct of incumbents (e.g., killer acquisition (Cunningham, Ederer, and Ma, 2021), predatory or exclusionary acts, etc.). To promote competition in the product market and foster innovation, antitrust laws intend to protect startups from being abused and deterred by the monopoly power of incumbents. Recently, these protections are becoming more intense. In December 2022, the U.S. Federal Trade Commission (FTC) sued Microsoft’s acquisition of Activision for harming the competition in gaming consoles and subscription services. Shortly thereafter, in January 2023, DOJ antitrust division filed its second antitrust lawsuit against Google in just over two years, seeking to break up Google’s online advertising business. These major antitrust cases brought against tech giants have caused debates among VCs on whether more intense antitrust enforcement could hurt the startups they are meant to protect 1 . Some VCs express the concern that intense antitrust enforcement will deter the incumbents from acquiring the startups and thus stifle an important pathway for VC exit. Other VCs suggest that adequate enforcement on anticompetitive practices can level the playing field. Therefore, it’s worth investigating how antitrust enforcement affects VCs’ investment decisions and VC-backed startups.
Antitrust laws 

Preview shortened. Download the file for the full document.