President Joe Biden has announced plans to nominate Lina Khan to a seat on the Federal Trade Commission. If confirmed, Khan will advocate for an interventionist approach to antitrust enforcement that will have a chilling effect on American innovation.
Khan has been a leading scholar in the progressive Neo-Brandisian movement to abandon the consumer welfare standard and use antitrust law to address broad, unrelated social goals, also known as “hipster antitrust.”
The liberals leading the movement believe that big companies wield disproportionate influence over the economy and political system because of their size. They believe that this bigness allows companies to stifle competition, cheat their rivals, and harm workers. They blame big companies for a whole host of social ills, like poverty, income inequality, and racism. For these reasons and others, Neo-Brandisians believe that antitrust enforcers should break these companies up.
Of course, this misguided line of thinking is nothing new. Supreme Court Justice Louis Brandeis, who pioneered the emotionally-charged “big-is-bad” antitrust approach over a century ago, is the intellectual godfather of the hipster antitrust movement. Under the Brandeis approach, antitrust law was vague and unfocused, leading to inconsistent rulings and enforcement actions designed to punish political enemies or reward political allies.
Under the consumer welfare standard, business conduct is evaluated on whether or not it harms consumers. If consumers are not being harmed through effects like higher prices, enforcement action is not taken.
Simply beating a rival firm through competition does not qualify as anticompetitive conduct. The consumer welfare standard exists to protect the competitive process, not individual competitors in a market. The standard, underpinned by straightforward economic analysis, sharpened the focus and general direction of antitrust enforcement by giving judges and regulators a coherent process to follow. Undermining the standard would lead to arbitrary antitrust enforcement, creating a chilling effect on competition and harming consumers in the process just as it did a century ago.
Antitrust law is meant to be used as a scalpel to surgically address truly anticompetitive business practices and maximize consumer benefits. Liberals want to uproot decades of precedent to turn antitrust law into a chainsaw to attack companies they don’t like. If the left wants to address social concerns, they should work to pass legislation through Congress. Antitrust law is just not the right tool for the job.
If Lina Khan takes a seat on the FTC, she will play a leading role in turning the clock back decades on antitrust enforcement, harming consumers and stifling innovation in the process. OCC opposes Khan’s nomination.