Let's talk antitrust

Caroline Thomas: So Richard, thank you very much for coming to see us today. We’re going to talk a little bit about hipster antitrust and I thought maybe a good place to start would be if I could ask you to explain what exactly hipster antitrust is?

Richard Whish QC: Well, that’s a very good question and it’s a relatively new term. It comes from the United States. As long as we have competition law and policy there will be a debate about what is this law intended to achieve and in the history of US law over, what 128 years, antitrust has been used for different purposes; sometimes with the idea of protecting mom and pop, the small corner store, redistribution of wealth, how should antitrust be applied in times of high unemployment, the depression etc. But there has been a broad consensus for the last, I don’t know, 30, maybe 40 years that essentially competition law should be applied with the aim of promoting consumer welfare in mind. However, in recent times, in particular as we have seen the rise of the platforms, Google, Amazon etc and the sense of vast aggregations of power and wealth, more and more people have started to question, is it really about consumer welfare in some narrow sense of the term? Maybe other aims are important. Maybe it wasn’t so bad, you know, 50, 60 years ago and somehow the label hipster antitrust has been given to this movement.

Caroline Thomas: So why exactly do you think the hipsters are calling into question the notion of consumer welfare as the basis for competition enforcement? Do you think it’s changes that we are seeing in the wider economy, the kind of move to an innovation economy and big data and so on?

Richard Whish QC: Well, I think one of the questions, of course, is what do we mean by consumer welfare? And, if that’s applied in a very narrow sense, it could be seen to be a reference simply to the question, will this conduct lead to higher prices? Is it only price that matters? Well, of course, that clearly isn’t good enough. Price isn’t the only manifestation of competition. Competition is manifested through improved products, choice, innovation and so on, and so some people I think fear the idea that a consumer welfare standard overly focusses on price competition to the exclusion of other parameters of competition, if one likes to use that expression.

Caroline Thomas: You have mentioned that this is a term that’s come from the US. Do you think that there are reasons why in the US, in particular, this criticism has been made of the consumer welfare standard?

Richard Whish QC: Well, I think so actually. Let’s face it, especially when it comes to unilateral behaviour, Article 102 and Section 2 of the Sherman Act are very different. To begin with, Section 2 does not engage with excessive pricing at all. It applies only to monopolisation. Also, some of the rules in the US on things like predatory pricing, margin squeeze, refusal to deal are very, very strict. Much stricter that the rules that we have in the EU and so I can see that if one has had a fairly extreme version of consumer welfare pricing in the US and if there is now perceived to be a different problem or range of problems, I can see that it would be in the US that people would start to question the underlying philosophy of Section 2. I think Article 102 has always been capable of applying to a broader range of circumstances than Section 2.

Caroline Thomas: That’s the US position but from an EU perspective, do you think that there needs to be a change of approach in order to reflect a wider consumer welfare standard?

Richard Whish QC: Well, I would begin my answer by saying that I don’t think consumer welfare when we use that term in the EU, I don’t think it’s ever been focussed exclusively on price. I think that the Commission and other competition authorities around Europe are perfectly clear about the idea that competition can manifest itself in other ways and so, for example, there was a lot of fuss recently about Dow/DuPont and the Commission investigating whether there was a detriment to competition in relation to innovation. I wasn’t surprised about that case as a theory of harm. I think that we can find the Commission’s concern with R&D and innovation stretching all the way back to the 1968 notice on horizontal co‑operation agreements; there were references to that there. And also, clearly in some of these markets especially when we’re talking about platforms, it’s not really about price. I mean, I search free. I use Facebook free, but this is using the word “free” in a somewhat misleading way. Competition unfolds in other ways and, of course, these are two-sided or multi‑sided markets. My feeling is, in the end it’s about the judgement of competition authorities and determining the right theory of harm for the right case, but I think they are perfectly capable of doing that. I don’t think we need any wholesale change in the EU.

Caroline Thomas: Thank you very much Richard.