This post discusses a trend that is growing in antitrust circles: the demand for the creation of rules applicable to all, taken on the basis of micro-practices committed by a few.
First, let’s stress the overall economic trends are po-si-tive. Concerning the US, despite several studies suggesting that the U.S. economy is, overall, more concentrated today at the national level than it was 20 years ago, this isn’t true at the local level, but also, it does not amount to an absence of competition. In fact, studies suggest a strong competitive pressure between big companies. For that, in 2018, the United States has regained the first rank of the world’s most competitive economy.
Concerning the Eurozone, the overall level of concentration has been stable over the last ten years. The same goes for entry and exit of firms as well as markups. The competitiveness level is also high, Germany being the world’s third most competitive economy, Switzerland the fourth, the Netherlands the sixth and so on…
In short, quoting here the World Economic Forum, “North America and Europe are, combined, home to seven of the ten most competitive economies” And if we have a look at the broader picture, since the creation of the Sherman Act or the Rome Treaty, growth and wealth have increased more than in the history of humankind, see the work of Steven Pinker and Philippe Aghion.
These tendencies do not mean that part of antitrust law should not be improved, or that market failures don’t exist, but it shows that antitrust law as it is currently designed does not hinder good results. Antitrust law is NOT broken.
But here’s the problem: it is easy to point out negative events (generally, anti-competitive practices or so-called killer mergers) but much harder to take notice of positive trends because they are usually not embodied by a single fact. Because of that, some micro-legal analyses of anti-competitive practices are being put under the spotlight, while great macroeconomic trends are being ignored. This is indirectly pointed out by the OECD which is noticing the “simplicity” of the proponents’ of a more oppressive antitrust law.
Indeed, all this is instrumentalized by a few who are asking for radical changes on the basis of a few potential anti-competitive practices; but let us not take the risk of undermining macro-economic trends because everything’s not perfect at the micro level. Instead, let’s fix things at the micro-level.
Download “Antitrust Without Romance” over here for more on that subject