What's Worse: Protecting Producers or Consumers; Business or People?

The scope of antitrust action seems to be a growing issue. Some now argue that dispersing private power should be the main objective; others hold for the current role of protecting consumers. In essence, the issue is whether antitrust is a matter of preventing bigness or preventing consumer harm. They are related, but not identical.

And some propose that multiple purposes be served: protecting privacy, restricting the impact of money in politics, or methods of market oligopoly that are exercised through non-price means.

Some might abbreviate the new approach to a “bigness is bad” framework that assumes consumer welfare is harmed by bigness itself, even if big firms are able to provide greater variety of goods at lower prices (or for free, in the case of ad-supported app platforms and services).

Ignore for the moment that markets lead to concentration precisely because consumers prefer the products supplied by more-successful firms. Ignore the efficiency gains from scale. Ignore the quantifiable reality of lower prices possible precisely because some firms have been able to leverage scale.

The new standards aim to shift the burden of protection from buyers to sellers; from users to suppliers; from price to non-price mechanisms. One might question whether greater reliance on human agency and courts is superior to the action of markets propelled by consumers.

But there cannot be any doubt that protecting suppliers, by restraining bigness, also will introduce greater amounts of human judgment and values into a process that arguably runs better when people are free to vote with their pocketbooks.

That argument might be more true in an era when products are intangible, not tangible, and innovation is very rapid, with few moats to protect inefficient producers. In fact, one might continue to ask why inefficient producers should be protected. “Quality” is usually some major part of the answer some offer. “Local” producers are better than remote producers, even if local producer prices are higher than remote suppliers can offer.

That is part of the charm of local hand-crafted products, for example. Still, restraining price competition will introduce or maintain some amount of inefficiency, and therefore, higher prices. The impact on variety of traded goods will be more varied, but at least some products might not be available if remote and big producers are barred.

Using the consumer welfare standard, action is required only when consumers are harmed, largely by measures of harm from higher prices. Under the “new Brandeis” perspective, bigness alone is sufficient for action, even if consumer prices are lower.

The new Brandeis approach aims to protect suppliers; the consumer welfare framework says it is consumers who need protection. The issue, I suppose is “who do you fear most: big government or big business?