As I skimmed through the White House White Paper on innovation (HT: Patently-O), I noticed that a repeated theme in the document is that US innovation policy must “Promote Competitive Markets that Spur Productive Entrepreneurship” (e.g., p. 9). There is no real substantive discussion of antitrust issues in the White Paper, except for the following passage, suggesting that the key role for antitrust in promoting innovation is to:
Protect small businesses from unfair business practices. In many industries, small companies are critical innovators, bringing enormous benefits to consumers while putting competitive pressure on incumbent firms. The Obama Administration is committed to enforcing the antitrust laws to insure that innovative entrepreneurs are not excluded from the market by anti-competitive conduct. The Department of Justice actively investigates allegations of exclusionary conduct as part of its law enforcement mission to keep markets open and competitive.
This language is hearkens to an era of antitrust where the protection of small businesses and individual competitors was an acceptable antitrust goal. From an economic perspective, this view was long ago rejected on the basis of the new learning in industrial organization economics during the 1960s and 1970s. The last sentence is rather unobjectionable. Nobody is surprised that the Administration is interested in bringing more monopolization cases based on allegations of exclusionary conduct. But I am a little bit surprised to see the open and explicit appeal to using antitrust as a weapon to protect small businesses. Perhaps this is the product of a failure to communicate? Maybe the administration antitrust crew ought to sit down and have a talk with the administration intellectual property folks and tell them that protection of small businesses (rather than the competitive process and consumers) is no longer considered a legitimate goal of antitrust in the courts, agencies, or by antitrust economists.
I note that, back in 2007, I criticized then Presidential Candidate John Edwards for making similar (but much more detailed) statements on his intention to use antitrust “to protect fair competition for small businesses and family farmers” and as a tool to attack vertical integration in the agricultural industry. Candidate Obama’s antitrust statement pitches the standard “more is better” approach, but says nothing about protecting small businesses.
