Policy Failure: The Role of “Economics” in AT&T-Time Warner and American Express

Pro-Market:

The recent AT&T and Amex decisions showcase the pitfalls of considering antitrust cases solely on the basis of economic analysis and may have the effect of immunizing tech giants from serious antitrust scrutiny, argue Marshall Steinbaum of the Roosevelt Institute and James Biese in this op-ed.

Antitrust cases are increasingly driven solely by “economic” analysis. Yet in many cases, economic evidence provides false certainty that leads courts astray. The very idea of consumer harm under the antitrust laws has largely become synonymous with economic inefficiencies and net costs to consumers, typically in the form of higher prices. This restrictive view of antitrust requires courts and enforcers to consider false, biased, and irrelevant evidence in satisfaction of misguided legal requirements supposedly grounded in economics. As a result, the real-world economic problems that should be the focus of antitrust economists are too often ignored.

Two recent blockbuster antitrust cases illustrate the pitfalls of relying on the wrong economics when enforcing the law. First, Judge Richard Leon’s ruling in U.S. v. AT&T allowing the AT&T-Time Warner merger to proceed was a spectacle of flawed economic analysis on both sides of the courtroom. Second, the Supreme Court’s ruling in Ohio v. American Express accepted as gospel a skewed understanding of economic theory concerning “two-sided platforms” that may have the unfortunate effect of immunizing tech giants like Google, Amazon, Uber, and Facebook, as well as powerful labor market monopsonists, from serious antitrust scrutiny.

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