Reversing Course: The Need to Renew American Antitrust

A merica’s system of government is founded on the protection of freedom in all aspects of life, including business. This freedom has fueled the nation’s prosperity, transforming it into a beacon of opportunity that millions worldwide aspire to join. Yet, under the Biden administration’s misguided approach to antitrust, this economic freedom is now under threat.

The Biden administration has infected U.S. antitrust with a political ideology that aims to limit consumer choice rather than protect the freedom to choose. This risks stifling the dynamism of U.S. businesses, shifting their focus away from serving customers and toward pleasing government officials. The next administration, regardless of who leads it, must reverse this trend and restore health to our antitrust system.

The administration launched its antitrust agenda with a sleight of hand to obtain the Senate confirmation of Lina Khan, a progressive activist, as chairwoman of the Federal Trade Commission. Under Khan’s leadership, antitrust decisions have discounted rigorous economic analysis, collegial debate, and legal precedent, instead favoring ideological goals. This shift undermines the statutorily sound, principled, and predictable enforcement standards that have historically governed U.S. antitrust laws.

The Biden administration’s Department of Justice and FTC turned antitrust enforcement into a tool for the pursuit of social and political favoritism, disguised as efforts to rebalance “power asymmetries.” These efforts are in effect attempts at economic and political engineering, aspiring to determine the distribution of wealth and political power through the control of business models. These attempts will fail to achieve their desired ends, just as have all previous attempts at social engineering, because they ignore fundamental truths about human nature: namely, our inherent qualities of initiative, individual knowledge and purpose, and yearning to be free.

The essence of American antitrust laws — embodied in the Sherman Antitrust Act, the Clayton Act, and the Federal Trade Commission Act — is to protect fair competition in trade and commerce, such that both large and small enterprises are treated equally and are subject to free-market processes rather than government favoritism.

The Biden antitrust team’s narrow definitions of “competition” and arbitrary interpretations of “fairness” contradict these foundational principles. They equate competition solely with rivalry among many, nearly identical small firms. The administration disregards the diversity and scale that drive true innovation and market efficiency. “Fair” has become whatever outcome the Biden team prefers.

To restore the health of our antitrust system, the next administration should work with Congress and task its Council of Economic Advisers with designing several key reforms:

1. Restructure the FTC. The FTC chairperson is unusually powerful. That authority can be given to the commissioners as a whole, leaving the chairperson to carry out their decisions. The number of commissioners could be reduced from five to four, with no more than two from the president’s party, diminishing the chances of partisan marginalization.
2. Refocus on customer harm. Protecting free markets in trade and commerce means deferring to customer choice regarding innovations, quality, and prices. Such regard for customer choice creates value for entrepreneurs, employees, and investors.
3. Attack market power at its roots. Traditionally, antitrust enforcement occurs after officials have observed the presumed symptoms of market power. But these observations can be illusory, because creating the necessary core competencies is risky and costly for businesses. Instead, preventative measures are needed, such as the removal of government-created barriers to competition.
4. Respond to Europe’s attacks. America needs a response to Europe’s increasing propensity to take control of successful tech companies, especially American companies. Under Europe’s new digital regulations, its regulators must approve the basic business strategies of industry leaders. The controls are ad hoc and created behind closed doors. The Biden response has been to applaud Europe’s actions and to even send American antitrust personnel overseas to help.

Reversing current antitrust policies and returning to principles that promote fair competition and innovation is essential for maintaining America’s economic success. The next administration must prioritize these reforms to ensure a vibrant and competitive market that benefits all Americans.