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Advocates of traditional antitrust are increasingly called upon to the defend the existing framework. In doing so they face a challenge: the traditional framework is actually quite difficult to explain. The problem is not that modern antitrust involves a lot of advanced economics—though that is also true. The problem is that foundational antitrust concepts like "harm to competition" and the protection of "consumer welfare" are shockingly ill-defined. This essay highlights several of the dormant ambiguities in these concepts, and thus the obstacles that antitrust has set for itself by failing ever to fully define its terms.
1 Associate professor of law, University of Iowa College of Law. Contact the author at
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I suspect that every antitrust attorney and economist has at some point
participated in a version of the following conversation.
Lay person: “So what area of law do you work in?”
Me: “Mainly antitrust.”
Lay person: “Oh okay. So, like, breaking up big tech companies?”
Me: “Well, not exactly. Antitrust isn’t directly concerned with the
size of a rm. It isn’t illegal to be big.”
Lay person: “I thought it was illegal to have a monopoly.”
Me: “It can be illegal to monopolize, but it isn’t illegal to be a mo-
Lay person: “What’s the difference?”
Me: “Well, monopolize is a verb and …”
Lay person: “You know what? I don’t care. Just tell me this. What
does antitrust law actually prevent?”
To be honest, I don’t answer that last question. I dodge it. And I
suspect that most antitrust specialists do the same. Oh, I give an answer.
I say something like antitrust is about preventing “harm to competition” or
that it is about protecting “consumer welfare.” These are talismanic words
in antitrust. But in reality, they don’t convey much meaning. Just looking at
the range of conduct to which each label has been applied and withheld
over the years, it becomes clear that neither statement is even close to a
literal description of antitrust policy.
The fuzziness of these foundational concerns is disquieting, but
not necessarily bad in itself. Jonathan Baker has described the unresolved
tension between total welfare and consumer welfare norms of antitrust
policy as part of the political compromise upon which modern antitrust
rests.2 Something similar may apply to things like the consumer welfare la-
bel. Depending on the context, “consumer welfare” has been used to mean
total welfare, to mean allocative efciency, to mean what Steve Salop has
termed “true consumer welfare,3 to mean certain types of concerns about
wealth redistribution, and to mean other things as well. This exibility un-
doubtedly has forestalled some irresolvable debates and probably has fa-
cilitated cogent reasoning in at least as many cases as clearer but more
rigid terminology would have allowed.
2 Jonathan B. Baker, Economics and Politics: Perspectives on the Goals and Future of
Antitrust, 81 Fordham L. rev. 2175, 2180-92 (2013).
3 Steven C. Salop, Question: What Is the Real and Proper Antitrust Welfare Standard?
Answer: The True Consumer Welfare Standard, 22 Loy. Consumer L. rev. 336, 336 (2010).
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But there remains a dark side to antitrust’s heavy reliance on amorphous phrases like “harm to competition” and “consumer welfare.”
These antitrust amorphisms make it damn near impossible to explain antitrust policy to lay people in nite time. That would be regrettable under
the best of circumstances. In times of antitrust populism — now, for example — it obstructs and delays important conversations, and risks
confused policy-making at a time when we can least afford it.
To be concrete, consider some of the recent critiques of antitrust, and the corresponding proposals for antitrust reform. One critique of
antitrust is that it is responsible for the perverse U.S. income distribution; antitrust policy is argued to be an appropriate tool for addressing and
correcting income inequality.4 Another critique is that lax and ineffective antitrust enforcement has allowed market concentration to explode
across the economy.5 The growth of wealthy companies in concentrated markets is a topic of special concern. Large companies are seen to have
too much economic and political inuence. To combat this, some politicians propose to break up large companies,6 deconcentrating markets and
reducing undue political inuence in the process.
There is room to debate the accuracy of these critiques and the wisdom of the corresponding proposals. But nobody can seriously deny
that these ideas deserve reasoned responses. Indeed, many of these very sentiments are what motivated the adoption of the antitrust statutes
in the rst place. Speaking during Congressional debate of the Sherman Act, for example, Senator Sherman relayed the following concerns and
implicit proposals:
The popular mind is agitated with problems that may disturb social order, and among them all none is more threatening than the
inequality of condition, of wealth, and opportunity that has grown within a single generation out of the concentration of capital into
vast combinations to control production and trade and to break down competition. These combinations already defy or control
powerful transportation corporations and reach State authorities. … Congress alone can deal with them, and if we are unwilling
or unable there will soon be a trust for every product and a master to x the price for every necessity of life.7
Over more than a century of experimentation, antitrust law has considered and rejected most of the current populist proposals in favor of
its modern focus on harm to competition and the consumer welfare standard. But was it right to do so? That is an important question. It deserves
a serious answer. The conversation stalls, however, when we discover that the answer depends in part on which denition of the “consumer
welfare” standard we are using; depends on which version of “harm to competition” we mean. How can we have an intelligent conversation about
the pros and cons of current antitrust policy when that policy dees concise and coherent summary at every turn?
The brevity of this essay should dispel any hope that answers to these difcult questions are forthcoming here. Rather, the following pages
detail the perhaps surprising difculty of pinning down the content of our foundational antitrust objectives — preventing harm to competition and
harm to consumer welfare. Viewed in the most constructive light, this essay outlines the complexities that advocates of traditional antitrust will
need to face in seeking a meaningful dialogue about the merits of proposed antitrust reforms and critiques of existing standards.
4 E.g. Lina Khan & Sandeep Vaheesan, Market Power and Inequality: The Antitrust Counterrevolution and its Discontents, 11 harv. L. & PoLy rev. 235 (2017).
5 E.g. Lance Lambert, Here’s How They Play Monopoly in America, and Who Wins, BLoomBerg Business, April 5, 2017,
here-s-how-they-play-monopoly-in-america-and-who-wins (“Market concentration in the U.S. has reached a three-decade high, while the government has opened fewer anti-
trust cases.”).
6 E.g. Elizabeth Warren, Here’s How We Can Break Up Big Tech, medium Business, March 8, 2019,
7 21 Cong. Rec. 2460 (1890).
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Suppose you are being held hostage by a niche-movie serial killer and the only way to save your life is to get a room full of antitrust practitioners
to agree on something. First of all, it’s been nice knowing you. Second, your best bet is probably to propose some version of the following claim:
antitrust law is about preventing harm to competition. The spirit of that statement is captured in Brown Shoe’s famous admonition: “It is compe-
tition, not competitors, which [antitrust] protects.”8 (We can politely agree to ignore the next few sentences of the opinion.9)
Selective memory aside, the general acceptance of this proposition belies a difcult question: what does harm to competition actually
entail? Anthropomorphizing competition as something that can be harmed is a bad start. People can be injured; all that competition can be is
modulated. And nothing about the modulation of trade or competitive interaction is good or bad in the abstract. Assigning the label of “harm” or
“injury” to a given modulation thus requires some basis upon which we are separating the desirable modulation from the undesirable.
Early antitrust cases struggled with this problem. After a brief experiment in treating every restraint of trade as an illegal injury to compe-
tition,10 the Supreme Court retreated to a exible position in Chicago Board of Trade:
[T]he legality of an agreement or regulation cannot be determined by so simple a test, as whether it restrains competition. ... The
true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or
whether it is such as may suppress or even destroy competition.11
Of course, this merely rephrases the problem. The question now becomes what distinguishes a restraint that regulates or promotes com-
petition from one that suppresses or even destroys it? Unhelpful and conclusory glosses in other early cases included the blessing of restraints
that merely secure “fair opportunity” to compete when “engendered by an honest desire for gain,”12 or that serve “lawful” and “legitimate”
business ends,13 as opposed to those abhorrent acts that “unduly restrict competition.”14 Throughout many of the early cases, there also lurked
a still-persistent tendency to seek to dene harm to competition on the dubious basis of the subjective mental states of the responsible actors.
The ambiguity of these early efforts to dene harm to competition reects the difculty of the task. For all the ink that has been spilled
over the legislative intent behind the antitrust laws, the truth remains that Congress never purported to draw a clear line between legal contracts
and illegal harm to competition. In the same speech quoted above, Senator Sherman admitted to this punt:
[I]t is difcult to dene in legal language the precise line between lawful and unlawful combinations. This must be left for the courts
to determine in each particular case. All that we, as lawmakers, can do is to declare general principles, and we can be assured that
the courts will apply them as to carry out the meaning of the law.... This bill is only an honest effort to declare a rule of action.15
Perhaps it was wise of Congress to leave to the courts the task of saying, in effect, what harm to competition entails. By most accounts,
years of judicial efforts to build this framework have been a success. U.S. antitrust law is among our county’s most popular exports. But years of
judicial efforts have not distilled a legal standard that is easy to communicate to anyone not already steeped in the eld.
8 Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962).
9 Id. (“But we cannot fail to recognize Congress’ desire to promote competition through the protection of viable, small, locally owned business. Congress appreciated that occa-
sional higher costs and prices might result from the maintenance of fragmented industries and markets. It resolved these competing considerations in favor of decentralization.
We must give effect to that decision.”).
10 E.g. Northern Securities Co. v. United States, 193 U.S. 197 (1904); United States v. Trans-Missouri Freight Association, 166 U.S. 290 (1897).
11 Board of Trade of The City of Chicago v. United States, 246 U.S. 231, 238 (1918).
12 F.T.C. v. Sinclair Ref. Co., 261 U.S. 463, 476 (1923).
13 United States v. Addyston Pipe & Steel Co., 85 F. 271, 282 (6th Cir. 1898), aff’d as modied, 175 U.S. 211 (1899) (“[N]o conventional restraint of trade can be enforced
unless the covenant embodying it is merely ancillary to the main purpose of a lawful contract, and necessary to protect the covenantee in the full enjoyment of the legitimate
fruits of the contract.”).
14 United States v. Am. Tobacco Co., 221 U.S. 106, 179 (1911).
15 21 Cong. Rec. 2460 (1890).
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To a lay person, apparent contradictions and equivocations abound. For example, is it “harm to competition” if a rm so underprices its
rivals that it drives them out of business? Sometimes, but not always.16 What about outright acquisition of rivals: is it harm to competition if a
rm acquires a direct rival, suffocating all competition between the two rms? Sometimes, but not always.17 Is it harm to competition to enter an
agreement with competitors that affects price? Sometimes but not always.18 Is it harm to competition to agree not to compete at all along some
dimension of trade? Sometimes, but not always.19
The point is not that competitive nuances should be ignored; nor that these equivocations about the meaning of “harm to competition” are
wrong or misguided. The point is simply that the actual content of antitrust’s goal of preventing “harm to competition” turns out to be quite tech-
nical and complicated when you sit down to try to explain it. Indeed, “competition” is not even the thing that antitrust law protects. It is primarily
harm to something called “interbrand competition” that draws antitrust’s attention.20 And this is to say nothing of further nuances relating to the
mode of competition: price vs non-price competition, static vs dynamic competition, competition in brand positioning, in quality, in innovation,
and so on.
Antitrust insiders do not feel these complexities acutely in our day to day affairs. The eld has largely sidestepped the problem by adopting
the shorthand terminology of consumer harm — and the consumer welfare standard — as the core content of what harm to competition entails.
This focus on consumer welfare is helpful and clarifying. Unfortunately, it too masks more knotty technicalities and equivocations than one might
To be clear, the consumer welfare focus is one of modern antitrust’s greatest strengths. Like most antitrust insiders, I constantly rely on consumer
welfare arguments when trying to explain and analyze antitrust cases. With that said, I think we all must admit that a good part of the clarifying
power of the consumer welfare standard actually comes from the false sense of simplicity that it gives to modern antitrust practice.
Consumer welfare is in many ways a head fake. It is not always, and/or not exactly, about consumers. It also contains policy ambiguities
that remain unanswered to this day. In every respect, consumer welfare is a far more technical and complicated concept than meets the eye.
Part of the head fake is a well-known secret. While outsiders and early students of antitrust law often perceive antitrust to be focused
solely on preventing harm to consumers, insiders know that it isn’t so simple. This is not to diminish the excellent basis for confusion. Ever since
the Supreme Court decided Reiter v. Sonotone, there has been an easy cite for the proposition that “Congress designed the Sherman Act as a
‘consumer welfare prescription.’”21 To all the world, this would seem an unambiguous statement of antitrust’s motivating principle.
But this is antitrust, and nothing in antitrust is simple. The sole authority that Reiter relies upon for the phrase “consumer welfare pre-
scription” is Robert Bork’s Antitrust Paradox. And Bork famously used the language of “consumer welfare” to label a concept closer in spirit to
what economists would call “total welfare,” an objective no more focused on consumers than on any other interest in the economy.22 With no
clear answer on how to interpret this passage in Reiter,23 internal debates about whether antitrust should focus on consumer welfare or total
welfare continue to this day.
16 E.g. Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222–27 (1993) (sharply restricting the conditions under which exclusionary pricing is illegal).
17 E.g. Int’l Shoe Co. v. Fed. Trade Comm’n., 280 U.S. 291, 297–98 (1930) (“Mere acquisition by one corporation of the stock of a competitor, even though it result in some
lessening of competition, is not forbidden.”).
18 E.g. Broadcast Music, Inc. v. Columbia Broadcasting System, Inc., 441 U.S. 1 (1979) (“Not all arrangements among actual or potential competitors that have an impact on
price are … unreasonable restraints.”).
19 E.g. California Dental Ass’n v. F.T.C., 526 U.S. 756, 771 (1999) (“[I]t seems to us that the CDA’s advertising restrictions might plausibly be thought to have a net procompetitive
effect … on competition….”).
20 E.g. State Oil Co. v. Khan, 522 U.S. 3, 15 (1997).
21 Reiter v. Sonotone Corp., 442 U.S. 330, 342–43 (1979).
22 roBert h. Bork, the antitrust Paradox: a PoLiCy at War With itseLF 66, 97–101 (1978).
23 Salop, supra note 3, at 347 (“[I]t is unclear if the Court even understood that Judge Bork was effectively re-dening the term ‘consumer welfare’ to mean something very
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Surprisingly, however, these debates have not marshaled any serious efforts to revisit or undermine the “consumer welfare prescription”
which Congress apparently laid out. Instead, today’s antitrust paradox is that while everyone ostensibly agrees that antitrust is about consumer
welfare, the same term — “consumer welfare” — is tacitly allowed to mean different things to different people at different times. Again, nothing
in antitrust is simple.
Sometimes “consumer welfare” does indeed mean what it sounds like: a primary interest in preventing things like higher prices for
consumers. An example of this understanding of consumer welfare is the efciency pass-through requirement in the 2010 Horizontal Merger
Guidelines, which predicates the availability of a merger efciency defense on the condition that consumers not pay higher prices as the result of
a merger.24 Similar reasoning is evident in the Supreme Court’s analysis in Brooke Group, where a reasonable prospect of recoupment is required
before below-cost pricing can be found illegal because “unsuccessful predation is in general a boon to consumers.”25
Other times, the terminology of “consumer welfare” is used where the real concern is not consumers at all, but allocative efciency and
total welfare. The hallmark of this use of consumer welfare language is the actual identication of anticompetitive conduct with reduced out-
put.26 A recent example is the opinion in Ohio v. American Express, in which the Supreme Court majority stated that “[harm] to consumers in the
relevant market” was the basic test of illegality,27 but then quietly dened “anticompetitive prices” to include only those prices raised “protably
by restricting output.”28 Harm to consumers, in this approach, is not what the consumer welfare standard is about. Consumer harm is merely a
corollary and convenient proxy for the real focus on conduct that restricts output and thus reduces allocative efciency and total welfare.29
This ambiguity in the meaning of the consumer welfare standard is known and increasingly accepted. Recent scholarship shrugs it off as
benign if not desirable. Perhaps it is. But it adds yet another wrinkle to the already difcult task of explaining modern antitrust to a lay person.
And the wrinkles don’t stop there.
Beneath the surface of the consumer welfare label lurk unresolved policy decisions. There isn’t space here to do them justice, but exam-
ples include the following. In monopsony and oligopsony theories, is it harm to the immediate consumer or the nal consumer that matters? How
is harm to consumers dened for practices — like many types of price discrimination — that benet one group of consumers while harming
another group? Must injury to competitors always result in harm to consumers to state an antitrust violation? (The answer should depend on
how close to total welfare one denes the “consumer welfare standard.”)30 Does consumer harm result from an activity that reduces output but
also results in higher quality goods or services? What if the activity lowers the price of some products, while simultaneously eliminating other
products, thus restricting consumer choice?
These types of complexities and ambiguities are familiar to antitrust specialists. They have persisted for decades and, apart from com-
plicating specic cases and investigations, they have not seriously derailed the enterprise. But ambiguities they remain. As such, they represent
continuing obstacles to the communication of modern antitrust policy to lay people. In a world where all ideas must be reduced to soundbites,
the meaning of antitrust’s consumer welfare standard is hopelessly opaque.
24 u.s. dePt oF JustiCe & Fed. trade Commn, 2010 horizontaL merger guideLines §10 ¶6 (“The Agencies will not challenge a merger if cognizable efciencies are of a character
and magnitude such that the merger is not likely to be anticompetitive in any relevant market.”).
25 Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224 (1993); see also id. (noting that, without recoupment, “consumer welfare is enhanced”).
26 E.g. Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988) (dening “conduct that is manifestly anticompetitive” as conduct “that would always or almost always
tend to restrict competition and decrease output.”).
27 Ohio v. Am. Express Co., 138 S. Ct. 2274, 2284 (2018).
28 Id. at 2288 (emphasis in original) (citing PhiLiP areeda & herBert hovenkamP, FundamentaLs oF antitrust LaW § 5.01 (4th ed. 2017)).
29 See Herbert Hovenkamp, Implementing Antitrust’s Welfare Goals, 81 Fordham L. rev. 2471, 2477 (2013) (“[A]ntitrust policy in the United States follows a consumer welfare
approach in that it condemns restraints that actually result in monopoly output reductions ….”); id. at 2474 (“[T]he economic analysis from the dominant Harvard and Chicago
schools of antitrust is consistently concerned with [total] welfare….”).
30 See Salop, supra note 3, at 343 (discussing this point); see also riChard a. Posner, antitrust LaW 13–15(2d ed. 2001) (discussing rent seeking inefciencies when rms use
certain activities to gain market power as a justication for antitrust law).
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I want to emphasize that I am not denigrating the goals of preventing harm to competition or protecting consumer welfare in this essay. Few
evolutions in the law of antitrust have done more to improve, clarify, and rationalize this area of law than the adoption of these standards. But
those very real benets do not diminish the costs of these standards — the complexity and technicality that they import to antitrust practice.
These are unyielding terms of art. And that it not innocuous.
Even if current antitrust law were the nest approach to competition policy ever invented, its ultimate sticking power would still rest on
the persuasiveness of this claim to a generalist audience (citizens, voters, the affected population). Antitrust amorphisms like “harm to competi-
tion” and the protection of “consumer welfare” work ne within the highly technical and specialized connes of the antitrust bar, but ounder at
the point where outsiders are exposed to antitrust policy. It takes concerted effort to give an honest answer to the simple question: “What does
antitrust prevent?” At this point in the history of our eld, that’s a problem.
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United States antitrust policy is said to promote some version of economic welfare. Antitrust promotes allocative efficiency by ensuring that markets are as competitive as they can practicably be, and that firms do not face unreasonable roadblocks to attaining productive efficiency, which refers to both cost minimization and innovation. One important welfare debate is whether antitrust should adopt a “consumer welfare” principle rather than a more general “total welfare” principle.The simple version of the consumer welfare test is not a balancing test. If consumers are harmed by reduced output or higher prices resulting from the exercise of market power, then this fact trumps any offsetting gains to producers. In this sense the consumer welfare test is easier to administer on a case by case basis than general welfare tests that may have to trade consumer losses and producer gains against each other.The volume and complexity of the academic debate on the general welfare vs. consumer welfare question creates an impression of policy significance that is completely belied by the case law. Few if any decisions have turned on the difference. In fact, antitrust policy generally applies both tests in the following sense. First, the economic analysis from the dominant Harvard and Chicago schools of antitrust is consistently concerned with general welfare. Second, however, if the evidence in a particular case indicates that a challenged practice facilitates the exercise of market power, resulting in output that is actually lower and prices that are actually higher, then tribunals uniformly condemn the restraint without regard to offsetting efficiencies. Indeed, one is hard pressed to find a single appellate decision that made a fact finding that a challenged practice resulted in lower market wide output and higher prices, but that also went on to approve the restraint because proven efficiencies exceeded consumer losses. In sum, courts invariably apply a consumer welfare test.In the paradigm cases that are commonly used as illustrations in this debate, all consumers either gain or lose from a practice. Often things are not that simple. Many practices affect different consumers in different ways, making the computation of net effects very difficult. Among such practices are (1) variable proportion ties; (2) ties that result in interproduct price discrimination; (3) tying and bundled discounts of imperfect complements; (4) vertical restraints and other practices used to facilitate third degree price discrimination; and (5) resale price maintenance which causes nominally higher prices but produces services that are more valuable to some customers than to others.When a practice causes both consumer harm and consumer benefit but net effects are unknown, producer gains may become more relevant, particularly if they result from significant production efficiencies.
at 2288 (emphasis in original) (citing PhiLiP areeda & herBert hovenkamP, FundamentaLs oF antitrust LaW § 5
  • Id
Id. at 2288 (emphasis in original) (citing PhiLiP areeda & herBert hovenkamP, FundamentaLs oF antitrust LaW § 5.01 (4th ed. 2017)).
A]ntitrust policy in the United States follows a consumer welfare approach in that it condemns restraints that actually result in monopoly output reductions …
  • L Fordham
  • Rev
Fordham L. rev. 2471, 2477 (2013) ("[A]ntitrust policy in the United States follows a consumer welfare approach in that it condemns restraints that actually result in monopoly output reductions ….");
at 2474 ("[T]he economic analysis from the dominant Harvard and Chicago schools of antitrust is consistently concerned with
  • Id
id. at 2474 ("[T]he economic analysis from the dominant Harvard and Chicago schools of antitrust is consistently concerned with [total] welfare….").
supra note 3, at 343 (discussing this point); see also riChard a. Posner, antitrust LaW
  • See Salop
See Salop, supra note 3, at 343 (discussing this point); see also riChard a. Posner, antitrust LaW 13-15(2d ed. 2001) (discussing rent seeking inefficiencies when firms use