Message from Makan

Division Update Spring 2018
Makan Delrahim

Makan Delrahim
Assistant Attorney General

The Antitrust Division is pleased to provide its annual Spring Update for 2018. This spring, I have had the opportunity to reflect on my six-month anniversary as Assistant Attorney General of the Antitrust Division, looking back on the important achievements of our career staff and the exciting new developments and announcements still on the horizon. Some of the Division’s milestones are highlighted in these pages, and rather than recounting them all here, I would like to highlight the key priorities that the Division is pursuing to protect competition and the American consumer.

What makes antitrust great is the bipartisan consensus approach that has emerged through decades of trial and error, followed by careful empirical study of how market actors respond to legal constraints on their behavior. The consumer welfare standard is a byproduct of that approach. Antitrust enforcers across administrations have adhered to the consumer welfare standard, helping drive economic growth, innovation, and dynamic competition. The consumer welfare standard also acts as a constraint on our power. It focuses our attention and enforcement efforts on transactions and restraints that threaten to harm competition and consumers. As a caretaker of this consensus approach, my goal as Assistant Attorney General is to ensure that the Antitrust Division exercises its power so that the American consumer can reap the rewards of free market competition and innovation.

Antitrust Is Law Enforcement, Not Regulation

To protect consumer welfare, the Division exercises its power through the lens of law enforcement, not regulation. Competition and enforcement work together, not at cross-purposes. Indeed, free markets work best in the absence of regulatory barriers to innovation and growth, and antitrust law reinforces the free market by condemning transactions and restraints that harm competition. As former Supreme Court Justice Robert Jackson wrote during his time as Assistant Attorney General for the Antitrust Division, “The antitrust laws represent an effort to avoid detailed government regulation of business by keeping competition in control of prices. It was hoped to . . . let [government] confine its responsibility to seeing that a true competitive economy functions.” The Division has taken Justice Jackson’s words to heart in its approach to carrying out its mission.

A key component of an enforcement-first approach is evident through our strong preference for structural remedies to mergers that would harm competition and consumers, rather than so-called behavioral remedies. A behavioral remedy requires the Antitrust Division to regulate an entire marketplace through complex decrees that ignore the profit-maximizing incentives of private actors. A structural remedy, by comparison, eliminates harm while not requiring the Government to take on a long-term regulatory role. The Division’s recent settlements reflect this preference for structural relief and importantly include new enhancements to make consent decrees enforceable.

The “New Madison” Approach to Antitrust Law, Intellectual Property, and Innovation

Antitrust law likewise benefits consumer welfare by protecting incentives for innovation. This is most evident in the realm of intellectual property rights. James Madison, the Founding Father and principal drafter of the Constitution, despite his distaste for monopolies, recognized the value of patent rights. He saw patent rights “as encouragement to . . . ingenious discoveries” that are “too valuable to renounce” as mere monopolies because of their importance to fueling innovation. His vision carried the day at the Founding, as Article I, Section 8 of the Constitution empowers Congress to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

Despite its historical origins, the “New Madison” approach to antitrust law and intellectual property is forward-looking: It rests on the idea that dynamic innovation works best through policies that ensure incentives for inventors to innovate and create exciting new technologies, and for licensees to implement those technologies. In recent years, many have expressed a one-sided focus on the so-called problem of patent “hold up” by owners of patents incorporated into technology standards, while overlooking the arguably more problematic concern of patent “hold out” that occurs when licensees refuse to compensate patent holders who have already incurred significant up-front costs of innovation.

Against this backdrop, the Division will take steps to help ensure that enforcers and policymakers do not misapply the antitrust laws to undermine the incentives for innovation. We recognize that antitrust law should not police disputes between patent holders and implementers over licensing disputes where common law remedies are available and more proper. At the same time, we will be skeptical of standard setting organizations that allow blocks of implementers or innovators to engage in concerted action and skew those organizations’ rules and policies in their favor.

In the spirit of self-reflection, the Division is taking a hard look at its approach to antitrust and intellectual property to ensure that our advocacy and enforcement efforts appropriately consider incentives for innovation that benefit consumers. By refining and applying its approach, we hope to fuel the discussion of how enforcers at home and abroad can best apply the antitrust laws.

International Engagement and Exporting the Antitrust Consensus

As domestic enforcers in a global economy, our work to promote consumer welfare relies heavily on our partnerships and engagement with foreign competition authorities. The Division’s International Section grows stronger by the day, and it has been a particular focus of our resources and efforts in recent months. That trend will continue as we continue to encourage our foreign partners toward convergence on procedural norms for law enforcement.

Our global engagement has yielded real results. Last month, we saw the International Competition Network—an organization first envisioned by former Assistant Attorney General Jim Rill—adopt guiding principles for procedural fairness in competition agency enforcement. The Division took a leading role in bringing about this important document, and it is spearheading the effort to ensure that enforcers adopt norms of procedural fairness, transparency, and nondiscrimination.

This spring, competition enforcers from around the world will gather to share their perspectives and priorities with antitrust practitioners in Washington, D.C., at the ABA Spring Meeting. The Division looks forward to engaging with our friends to share best practices and other perspectives. We will also continue to explore mechanisms to improve our international norms and interactions as global business relies more and more on predictable, objective, and rules-based approaches to competition enforcement.

Updated April 11, 2018

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