In less than two and a half years, the Federal Trade Commission (FTC) and U.S. Justice Department (DOJ) have undone more than two decades of work aimed at moving global competition law toward an economics-friendly consumer welfare standard. In tandem with foreign competition authorities, the U.S. antitrust agencies are now cooperating in an effort to lead competition law in a consumer welfare-inimical direction, characterized by the promotion of debunked structuralist antitrust principles and a disdain for economic efficiency.
To better appreciate the dramatic turnabout represented by recent policy, an overview of U.S. efforts to promote global convergence toward best practices in competition law—an effort in which DOJ and FTC played leading roles—is warranted. In particular, I will focus on the role played over two decades by the International Competition Network (ICN) in fostering support for an economics-based, consumer welfare-centric approach to competition policy. Unfortunately, the Biden administration’s antitrust policies have short-circuited these efforts, at least temporarily.
Background
The fall of the Berlin Wall and the subsequent demise of communist regimes in Europe led the U.S. government to engage in a new form of international economic diplomacy during the 1990s. U.S. officials sought to promote the adoption of market-based commercial-law and public-law systems in emerging newly democratic regimes and in developing countries around the world. A key part of these efforts involved support for the enactment of competition laws, which were viewed as bulwarks of successful market-based economies.
By the mid-1990s, the DOJ and FTC had reached a bipartisan consensus in support of applying a consumer welfare standard in American antitrust enforcement. DOJ and FTC leadership also consistently advocated this standard to their foreign counterparts during both Democratic and Republican administrations.
During the Clinton administration, bipartisan agreement was also reached on the importance of promoting the convergence of competition-law systems around the world. This reflected an understanding that, with the globalization of commerce, inconsistencies in competition-law rules (for example, substantive merger standards and merger-filing procedures, single-firm conduct) would impose substantial costs on businesses—including, of course, American multinationals. Those costs could potentially stymie the full realization of gains from the expansion of international trade and investment. More generally, it was believed that greater consistency in competition-law standards, informed by market-friendly economic principles, would promote the orderly development of market economies and thereby help reduce international political tensions.
The Role of the ICN
During the 1990s, bipartisan discussions among U.S. antitrust scholars and practitioners to develop an “antitrust globalization” initiative proceeded under the aegis of the International Competition Policy Advisory Committee (ICPAC), a DOJ advisory body, chaired by President George H.W. Bush’s Assistant Attorney General for Antitrust James Rill. A 2000 ICPAC report—followed by a 2001 meeting of major competition authorities at Ditchley Part in the United Kingdom—led to the formation of the International Competition Network in 2001.
The other key U.S. figure who promoted the worldwide development of sound competition-law standards was George Washington University Law School’s William Kovacic, who later served as FTC’s general counsel, a commissioner from 2006 to 2011, and chair of the commission from 2008 to 2009. George W. Bush’s initial FTC Chairman Timothy Muris—who had previously worked with Rill in private practice and who selected Kovacic as FTC general counsel in 2001—strongly backed the ICN initiative. Charles James—George W.’s Bush’s initial assistant attorney general for antitrust, who had worked for Muris at the FTC during the Reagan administration—also supported strong U.S. involvement in the ICN.
The ICN was to be a virtual network, “all antitrust all the time,” consisting of individual competition agencies, but not governments. This was deemed a virtue, not a flaw; by engaging in nonbinding discussions—rather than negotiating binding agreements—the ICN agencies could jointly explore common practical problems and (it was hoped) move the global antitrust enterprise toward acceptance of substantive and procedural reforms. This would be a form of “soft convergence” toward “best practices.” It was the U.S. hope that this would result in the greater acceptance of empirically focused and economically informed approaches to antitrust enforcement, centered on consumer-welfare enhancement. (These principles were sufficiently flexible to allow Democratic and Republican administrations to forge their own particular enforcement programs.)
Then-Chairman Muris put forth an optimistic view of the ICN’s capability to promote convergence toward best practices in a 2002 speech in Brussels, Belgium. He explained how consensus-building institutions like the American Law Institute (ALI) and the National Conference of Commissioners on Uniform State Laws (NCCUSL) had proposed standards for American contract law (embodied in the Uniform Commercial Code and Restatement of Contracts) that led individual states voluntarily to adopt contract law “best practices.” Muris saw an analogy to the consensus-building work undertaken by the ICN:
At the international level, our experience suggests the valuable function that bodies such as the International Competition Network can play in the consensus building that is necessary for the phase of opting in. The ICN might do for competition law what the ALI and NCCUSL did for contract law in the USA. For example, efforts by ICN working groups to identify best practices could evolve into a restatement of competition law that would command respect from antitrust authorities around the world.
In a 2021 Mercatus Center podcast interview with me, during which Rill and Kovacic discussed the development of competition law worldwide, Rill observed of the ICN’s development and growth:
[I]n September of 2001, coincident with the [annual] Fordham [Law School antitrust] program that year, the formation of what was called the International Competition Network took place. My recollection is that it was 12 signatories of nations’ antitrust agencies joined onto the creation of the International Competition Network. As Bill has indicated, now not only 130 antitrust jurisdictions plus around the world, 130 members of the International Competition Network.
And another important aspect of the ICN—and it was recommended in the ICPAC report—that there be nongovernmental advisers to do the work of this international discussion organization, if you will. So now it is peopled by not only the 130 members, but a large number of non-governmental advisers who are designed to make a contribution and recommendation and really elbow grease as well through the work of the ICN.
Now, how important is the ICN? In my view, it’s very important. I think much of the work done by the ICN has advanced a sensible antitrust policy around the world. From merger prenotification recommendations, recommendations on predatory pricing, through recommendations on unilateral conduct and, I think very importantly, recommendations on fair procedure, sensible procedure—still a work in progress.
Now, recently, the ICN has adopted a proposal initially voiced by the assistant attorney general at the time [of the Trump administration], Makan Delrahim, to create some level of accountability and organization, to create some level of accountability for whether or not fair procedures were being adopted and followed. And now it’s embraced in the ICN, taken over by the ICN in the Competition Antitrust Program, called CAP.
The CAP is beginning to function, and it’s very important to see how CAP works, to see if there is some level of accountability that can be produced by this organization. That I think could be a very major contribution of the ICN at this point. That’s where it stands.
Commenting on the evolution of ICN activities directed to substantive policy, Kovacic assessed the ICN’s role as one of several multinational networks directed toward competition-law collaboration:
[F]or all of the effort that had gone into creating awareness that a new forum [the ICN] would be valuable, the specific ingredients, work plan, methodology of that new forum had not been fully specified. That was all work that had to be done. But here you had a new administration, different party, saying that this effort, established before, is worth carrying on, and we are not going to disparage it because it was not created during our tenure. We’re going to embrace it and carry it forward.
I would say that if we think about that—how do good programs develop over time—it is exactly that kind of attitude that treats good policy as a relay race and not an individual event. I agree with Jim that there’s been a lot of progress—we’re 20 years out now, coming out almost 20 years this coming fall from the creation.
Now, what things have happened? One good thing that happened is that it put a real charge into the existing international networks that Jim was referring to: the United Nations Commission on Trade and Development, the Competition Committee of the Organisation for Economic Co-operation and Development that he mentioned too. Competition in the entry of this new institution made those institutions much better. It focused their work in a much more practical way. It turned projects that had been 5 or 10 years in duration into 1- to 2-year turnarounds. It inspired a much greater degree of inclusiveness.
The OECD shifts to a model that includes a global competition forum. That unmistakably reflected part of the influence of the nurturing and germination of the International Competition Network itself. So it made those networks much better than they had been before. It inspired the creation and has inspired the creation of regional replicas of the ICN.
A problem for the ICN and a number of other of the large international networks is that, within the umbrella of so many institutions, you have diverse interests. The interest capabilities and position of many competition authorities created in the last 20 years, especially in emerging market environments, are much different in many ways than those of the oldest of the institutions.
We now see a recognition that joining up those newer authorities on a geographic basis, for example, enables them to address common needs and common conditions much better than they would otherwise. We’ve had the development, in many ways, in Africa, in Latin America, in Asia—to take three regions of regional groups inspired by the opt-in, standard-setting, inclusive model established by ICN—being created. I don’t think that would have happened in the same way that it did without ICN.
I’ll just mention one other element that ICN has brought to the picture, and that’s a much greater emphasis on policy implementation. Now, good systems have two major ingredients. One is broader conceptual ideas about, well, what’s an abusive dominance? What’s a substantial lessening in competition? But a second ingredient is, how do you actually do this? How do you cross the gap between the policy aspiration and its realization and practice? A big part of the work program, a growing part of the work program at the ICN, became policy implementation.
What’s come out of the working groups and out of the work of the other international organizations is an outpouring of highly practical advice, guidance and know-how about how to actually do it. How do you do an investigation in a merger? How do you investigate a cartel? How do you run a leniency program? And very important, bringing together agency leadership and asking, in small groups often, in workshops, “How do you actually do the job?” To turn to the head of an agency and say, “What do you know today that you wish you’d known on day one? And how do we make that know-how accessible to your successors so that they travel down the learning curve much faster?”
I would say, for all the challenges that lie ahead—and they are formidable for this network and [for] any other—policy implementation has arisen on the agenda to assume, I would say, equal significance along with the analytical and conceptual framework. In other words, we’re not just talking anymore about the physics of competition law; we’re talking about the engineering that enables you to make sure that the broad insights are put to work in a highly practical way.
The ICN and the Consumer Welfare Standard
The ICN also served as a vehicle for promoting the importance of consumer welfare in competition law. Under both Republican and Democratic administrations, the FTC and DOJ—with the cooperation of kindred spirits from other jurisdictions—gently and incrementally pushed for market-sensitive approaches to competition enforcement. (The following comments draw on my involvement in ICN activities during the 2006-2020 period, as both a U.S. government official and a nongovernmental adviser to the ICN.)
In this regard, several individuals deserve special mention.
Kovacic was the “big picture” policy adviser to the ICN Steering Committee and senior ICN officials. He focused heavily on agency institutional reforms needed to adopt and implement sound policies.
Eduardo Perez Motta—a UCLA-trained and free-market-oriented economist who headed Mexico’s competition authority—chaired the ICN Steering Committee for several years. He did a great deal of work promoting market-based regulatory reforms, calling upon his experience in taking on large institutional actors (including the politically powerful Mexican communications monopoly) during his many years as the head of Mexico’s competition agency and (previously) as Mexico’s ambassador to the World Trade Organization.
Longtime OECD Competition Committee Chair Fred Jenny—a French economist with a Harvard Ph.D. in economics—supported cooperation between the OECD and the ICN. With Jenny’s support, the World Bank became actively involved during the Obama and Trump administrations in sponsoring “competition advocacy” contests for ICN member agencies. Those contests promoted stronger consideration of costs and benefits (including consumer-welfare effects) in regulatory assessments by competition agencies, underscoring the economic underpinnings of competition. Relatedly and importantly, a new “competition assessment toolkit” developed by OECD economists highlighted the consumer-welfare considerations central to such assessments. In short, these ICN and World Bank initiatives underscore the importance of consumer welfare to vigorous competition.
Italian economist (and later, Italy’s prime minister from 2011 to 2013) Mario Monti was instrumental in promoting a focus on consumer welfare within the European Commission during his period as European Union commissioner for competition from 1999 to 2004. Monti also oversaw EU competition-law modernization. Perhaps most significantly for the long term, he responded to suggestions from the United States and instituted a cadre of professional economists as a permanent feature of the European Commission’s Competition Commission. By increasing the emphasis on actual competitive effects, rather than pure formalism, he brought the European approach to competition a bit closer to the American model, despite the substantial differences that remained. (For commentaries on Monti’s support for an economics-based, consumer welfare-centric approach to competition enforcement, see, e.g., here, here, and here.)
Last but not least, the key “unsung hero” in this saga, who was actively involved in ICN activities from 2001 to 2022 (when he retired), was Randolph Tritell, who ran the FTC’s Office of International Affairs (OIA). Tritell was an FTC staff attorney early in his career, from the late 1970s to the mid-1980s, including a stint as attorney-advisor to Acting FTC Chairman Terry Calvani. He then developed international expertise and contacts during two decades with the Weil Gotschal law firm, spending many of those years as head partner of Weil’s Brussels office. Tritell returned to the FTC in the late 1990s to head what eventually became OIA.
Tritell’s diplomatic skills and leadership abilities came to the fore at the time of the ICN’s launch. Over two decades, he was the “go to” reliable dispassionate U.S. career professional who ICN participants consulted as the network developed. (Tritell was also known for his humorous recitation of host-country proverbs at each annual meeting of the ICN.) Tritell worked closely behind the scenes with ICN Steering Committee members—as well as leaders of other competition agencies—to advance the evolving work of the ICN, while never failing to advance the positions of the United States in a subtle and effective manner. Thanks to Tritell, the FTC was far more effective than its fellow U.S. ICN agency: the DOJ. Tritell also relied on the hard work of his long-time collaborator and deputy Elizabeth Krauss, and the tireless efforts of various highly competent OIA staffers.
Admittedly, the ICN did not change nations’ competition policies overnight, nor could it have done so. (My Mercatus Center research paper on the globalization of antitrust explores the nature of the differences among national competition agencies.) It did, however, foster a fruitful “evolutionary” dialogue among agency officials from around the world, by developing substantive and procedural “best practices” for enforcers’ consideration, and by facilitating technical assistance by sophisticated enforcers (in particular, the European Commission, the FTC, and the DOJ). An important part of that dialogue was a growing familiarity with and appreciation for consumer welfare by ICN member agencies.
By the end of its first decade, the ICN had brought the importance of consumer welfare in competition enforcement to the fore.
Notably, in 2011, the 10th Annual ICN Conference in the Hague featured discussion of a newly released ICN report, “Competition Enforcement and Consumer Welfare: Setting the Agenda,” which drew on a questionnaire dealing with the consideration of consumer welfare by ICN member agencies. It noted that “in recent years, a growing number of Authorities refer to the role of consumer welfare in their competition law enforcement,” though “interpretations of what should be included in the definition consumer welfare differ.” Significantly, the report concluded that “the promotion of consumer welfare is a common theme for most Authorities throughout the world, regardless of whether or not it plays a formal role in their legal framework.” Moreover, “[e]ven though Authorities do not agree upon a formal definition of consumer welfare, there seems to be agreement on the main elements that define the concept.” In short, by 2011, consumer-welfare considerations had assumed a significant role in competition law enforcement thinking around the world.
More generally, the ICN’s initiatives bore substantial fruit in a number of areas during its first decade. Bill Kovacic and Hugh Hollman have authored a thoughtful analysis of ICN achievements during that decade.
The ICN continued its efforts at “soft convergence” during its second decade. ICN working groups dealing with advocacy, agency effectiveness, cartels, mergers, and unilateral conduct continued to support training, hold webinars, and produce nonbinding reports and recommendations for ICN members. The ICN produced “gold standard” best practices recommendations that reflected consensus-building efforts by member agencies and nongovernmental advisers (NGAs). In particular, certain NGAs played a major role in helping to ensure that consumer-welfare considerations were included in substantive best practices documents. A 2021 report issued at the 20th Annual ICN Conference in Budapest, Hungary, presented a year-by-year catalogue of ICN accomplishments since 2001.
The year 2021 marked a sea change, however, in FTC and DOJ involvement with the ICN. The FTC and DOJ renounced the consumer welfare standard as their enforcement policy lodestar (see here and here, for example) and failed to reappoint market-oriented pro-consumer welfare NGAs. (In their stead, the U.S. agencies appointed a new slate of individuals with relatively little private sector or ICN-related experience.) Without strong U.S. backing, ICN support for a primary focus on consumer-welfare discussions is likely to fade.
The European Commission—the other major competition jurisdiction—is likewise moving in an increasingly interventionist direction (see here, for example), particularly with regard to unilateral conduct. (For a discussion of key European Commission enforcement actions through the beginning of 2023, and possible pushback in some instances by European Union courts, see here.) Enforcers’ actions have manifested particular concern for the protection of individual competitors, rather than emphasizing consumer welfare.
In sum, recent developments regrettably have undermined the ICN’s role as a key vehicle for fostering acceptance of consumer-welfare enhancement as the touchstone for competition-law enforcement.
Conclusion
The global move away from a consumer welfare standard in antitrust, promoted by the U.S. agencies that spent decades advocating for such a standard, is a cautionary tale. As Ronald Reagan famously said:
Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children’s children what it was once like in the United States where men were free.
This statement speaks generally to rejecting excessive governmental constraints on individual liberty. On a smaller scale, it also applies to all aspects of public administration, including antitrust policy.
With respect to antitrust, rejecting empirically based, economically centered consumer-welfare analysis invites agencies to base enforcement determinations on the subjective application and invocation of a host of factors, including labor, environmental, “social policy,” and other interests.
Such an approach is inherently arbitrary and offends the rule of law (see, for example, here, here, and here). It lacks clarity (businesses do not know what actions may be condemned and challenged) and thus institutional legitimacy. It is antithetical to ordered liberty, which is central to the concept of freedom that President Reagan reminded us must be fought for ceaselessly.
One can only hope that the current efforts by FTC and DOJ leadership to reject principled rule-of-law enforcement principles in antitrust will be short-lived.
The FTC and DOJ can, if they choose, reinvigorate the efforts of decades past to promote consumer-welfare enhancement as the key goal of competition law. This could be done once again through the ICN, with support from the OECD, and through bilateral and plurilateral discussions with fellow competition agencies. Let us hope that the U.S. agencies “see the light,” reverse course, and act promptly. (It would also greatly help, of course, if the European Commission were to have an epiphany that led it to join forces with the U.S. agencies in such an endeavor.)