As the incoming Trump administration contemplates ways to promote U.S. economic growth and innovation, it may wish to consider two possible new global competition-policy initiatives. These actions, if successful, could help protect American (and foreign) firms from foreign government impediments to effective competition.
Antitrust Around the World
Antitrust law (called competition law in other countries) spread around the world following the fall of the Berlin Wall. Multinational American firms have to be concerned about antitrust rules that may affect their operations wherever their products and services are produced or sold. Costs arise from the need to adapt business strategies to competition rules and enforcement philosophies that differ among nations.
American companies increasingly are threatened by enormous fines and requirements to reshape their organizations and commercial practices based on the particular whims of different enforcers. This can be an enormous drag on American businesses’ incentives to innovate and grow. A U.S. Chamber of Commerce study very recently characterized large European antitrust fines directed at U.S. firms as arbitrary, unjustifiable, and discriminatory.
A new foreign threat is the adoption of “competition rules” banning specific business conduct in advance, layered on top of traditional case-by-case antitrust-law enforcement.
In the European Union, for example, the new Digital Markets Act (DMA) authorizes multibillion-euro fines for rules violations by digital “gatekeepers,” tied to sales volumes. It applies only to Alphabet (Google), Amazon, Apple, ByteDance (TikTok), Meta (Facebook), and Microsoft—all American firms except for TikTok. Similarly, large penalties continue to be applied to gatekeepers and to other U.S. firms under preexisting EU antitrust laws.
Regrettably, many other countries are planning to follow the EU’s “double whammy” approach of antitrust litigation plus regulation. Successful American tech firms, in particular, are likely to face growing sanctions around the world.
The U.S. government cannot directly control foreign sovereign states’ antitrust policies, of course. But it can take actions to promote the rule of law and sound substantive antitrust globally based on consumer-welfare enhancement.
The Rule of Law
Procedural fairness is key to the rule of law, but it is too often lacking in foreign antitrust proceedings. As former Assistant U.S. Attorney General for Antitrust James Rill and a coauthor explained in a 2021 article:
Fundamental due process rights are unfortunately not universally available, sometimes leaving companies in the crosshairs of a competition law investigation without even a basic written charge, the absence of meaningful access to enforcers’ records in a matter, the absence of an opportunity to engage and defend against a charge, or even without a final written decision and a basis or venue for appeal. As a result, companies today can face considerable disruption and difficulty in attempting to defend against competition law charges across several foreign jurisdictions.
The U.S. government has sought in recent decades to advance due process through multinational institutions. These bipartisan efforts culminated with the 2019 launch of the Framework for Competition Agency Procedures under the umbrella of the International Competition Network. The ICN is a voluntary organization of national competition agencies, founded in 2001 with strong U.S. government support, that promotes non-binding “best practices” for consideration by its members. The CAP Framework addresses the full set of due-process concerns, and all competition agencies are invited to agree to its terms by becoming CAP signatories.
The first Trump administration made CAP a major initiative. The Biden administration did not actively promote CAP, however, and it has not been a focus of ICN action since 2020. Although the CAP has 75 signatories (almost all came on board during the first Trump administration), there are scant indications that it has significantly influenced foreign governments’ actual behavior.
Actions to Promote Procedural Fairness
The time may be ripe for the federal government to consider reemphasizing the need for antitrust-related due-process protections.
This could include high-level public pronouncements from the administration promoting CAP, coupled with an emphasis on due process in regular consultations between the United States and foreign antitrust agencies.
Furthermore, the new administration might also consider targeted actions to support American firms’ legitimate due-process complaints stemming from foreign antitrust investigations. In that regard, a coordinated U.S. government initiative involving multiple agencies might be called for. This could feature, for example, the evaluation of appropriate retaliatory measures authorized by federal law for blatant disregard of American enterprises’ due-process rights.
Enhanced procedural fairness for American firms would diminish unequal or arbitrary treatment of their business conduct. This would help to level the competitive playing field and enhance American firms’ international competitiveness in a neutral manner that fully respects other nations’ interests.
Advancing the Consumer-Welfare Principle
For more than 30 years prior to the Biden administration, the U.S. government stressed consumer-welfare enhancement as the overarching goal of antitrust enforcement.
Acting on a bipartisan basis, it advanced this position before international organizations (including the ICN, the United Nations, and the Organization for Economic Cooperation and Development) and in bilateral enforcement consultations. The consumer-welfare philosophy also underlay U.S. negotiations that resulted in international antitrust-cooperation agreements and in competition chapters within bilateral and multilateral trade agreements.
Biden administration antitrust enforcers, however, rejected this approach. The Federal Trade Commission (FTC) and the U.S. Justice Department (DOJ) explicitly abandoned the consumer-welfare standard in favor of considering various other interests, such as combating “bigness” and protecting labor and small business.
This abrupt change, of course, undermines acceptance of the consumer-welfare principle by foreign competition enforcers. It will thereby raise business uncertainty for American firms regarding the standards to which they will be held overseas. This may be expected to discourage some efficient pro-consumer business initiatives and thereby tend to diminish American companies’ competitive vitality and global competitiveness.
More generally, a rejection or downplaying of consumer welfare as the key competition-enforcement principle may threaten economic growth and innovation.
Herbert Hovenkamp, author of the leading U.S. antitrust treatise (frequently cited by the U.S. Supreme Court), defended the consumer-welfare standard as superior to its alternatives in a widely cited law-review article. He explained that it benefits the economy by “encourag[ing] markets in which output, measured by quantity, quality, or innovation, is as large as possible consistent with sustainable competition.”
Distinguished Oxford University economics professor John Vickers very recently addressed the economic benefits of the consumer-welfare standard in a major economic-policy article. Reviewing competition enforcement across multiple jurisdictions, he concluded that “attacks on the consumer welfare standard are not compelling” and thus “it should not be dislodged.”
As these and other scholars explain, the consumer-welfare standard is a neutral principle that does not cater to the interests of particular competitors. All business conduct “not on the merits” is fair game. That includes anticompetitive monopoly conduct, as well as competitively harmful mergers and agreements among firms. In short, antitrust enforcement would remain vigorous under the consumer-welfare standard.
As is the case with due process, the incoming Trump administration, if it so chooses, could promote the consumer-welfare standard worldwide through international advocacy, consultations with peer governments, and negotiations.
The Way Forward
The second Trump administration (and the Biden administration, if it cares to “switch gears” in its final two months) may wish to assess antitrust policy changes that could strengthen American firms in a procompetitive manner in international commerce. Key policy initiatives that may merit consideration include advancing stronger due-process protection and greater acceptance of the consumer-welfare standard. If the next (or current) administration chooses to act, it will have a combination of advocacy, negotiations, and (where legally feasible) targeted enforcement tools at its disposal.
