AN ECONOMIC PERSPECTIVE ON THE USEFULNESS OF THE CONSUMER WELFARE STANDARD AS A GUIDING FRAMEWORK FOR ANTITRUST POLICY

By Lawrence Wu and Craig Malam¹

I. INTRODUCTION

In the area of antitrust, the consumer welfare standard is under fire. This is not the first time. In 1978, noted legal scholar and judge, Robert Bork, made the case that the purpose of antitrust law was to protect consumer welfare.² He could not have been more clear when he stated that "[t]he only legitimate goal of antitrust is the maximization of consumer welfare."³ At the time, this was a controversial opinion as antitrust policy was largely focused on other goals, such as protecting small business owners.⁴ Maximization of consumer welfare as the goal of antitrust policy also challenged existing perspectives because it was made at a time when the application of economics to antitrust was fairly new, and possibly not well accepted.⁵ But in the 30 years that followed, Bork’s view of antitrust policy prevailed.⁶ Indeed, in 2007, when the Antitrust Modernization Commission concluded its review of the antitrust laws, it seemed to most that there was little to debate when it came to the goals of antitrust policy. As the Commission stated in the introduction of the report, "[f]ree trade, unfettered by either private or governmental restraints, promotes the most efficient allocation of resources and greatest consumer welfare."⁷

The debate is back, though. In an article titled "Amazon’s Antitrust Paradox," which famously references the title of Robert Bork’s influential 1978 book, The Antitrust Paradox, Lina Khan—now the Chair of the Federal Trade Commission—describes her view of the goals of antitrust policy quite differently: