Antitrust enforcement presents unique challenges within the landscape of U.S. law. Unlike criminal cases, where law enforcement is focused on proving that specific acts either did or did not happen (such as theft or assault), antitrust enforcement relies heavily on proxies, or indirect measures, to assess competitive conditions in the marketplace. This reliance is both a practical necessity and a limitation. However, those wanting to reform antitrust enforcement through the introduction of new proxies, such as structural presumptions, should remember that such changes will only better serve consumers if they accurately reflect market realities.
Historically, antitrust policy has been somewhat obscure, but the field gained new attention under the leadership of Federal Trade Commission (FTC) Chair Lina Khan. Critics argue that the FTC, under Khan, has adopted “novel enforcement theories” that expand beyond traditional competition concerns and emphasize structural assumptions over traditional economic theories, all of which has resulted in an uptick in unsuccessful court cases. This novel approach has sparked debate, because it mischaracterizes competition in part due to the choice of proxies.
The key problem with the new antitrust approach is the bluntness of the proxies. For instance, in the 2023 merger guidelines, the FTC and Department of Justice (DOJ) have emphasized the Herfindahl-Hirschman Index (HHI) as a primary indicator of market concentration. While HHI can be useful, it is limited: relying solely on HHI scores overlooks factors like market entry potential and the intensity of competition among incumbent firms. Similarly, structuralist arguments, such as those from Tim Wu’s The Curse of Bigness: Antitrust in the New Gilded Age, advocate for a minimum number of firms in a market to ensure competition. This approach may lead to the presumption that fewer firms necessarily indicate reduced competition, which is not always true, as vigorous competition can exist even in duopolistic markets.
Other proxies, such as profit margins or firm size, are also flawed indicators of competition. High profit margins, for example, do not necessarily imply market power. As the American Consumer Institute (ACI) has noted, the issue is not the use of proxies per se, but the reliance on inaccurate or overly simplistic proxies, which can distort enforcement priorities and harm consumer welfare.
The Consumer Welfare Standard (CWS), which has traditionally guided U.S. antitrust policy, is itself a type of proxy. CWS aims to identify consumer harm as a sign of anticompetitive behavior, based on the belief that healthy competition benefits consumers. This framework has shaped antitrust enforcement by focusing on indicators such as consumer prices, output, and quality as proxies of competition, rather than on firm size or market concentration alone. However, the reliance on consumer harm as a proxy has also faced criticism for potentially overlooking long-term competitive harm that does not immediately translate into higher prices or other consumer harm.
This ongoing debate centers around the accuracy and relevance of different proxies. Those who support moving away from the CWS argue for a broader analysis that could capture competition dynamics even before they manifest as consumer harm. Proponents of CWS, however, emphasize the importance of measurable outcomes to guard against speculative enforcement.
The core question for antitrust today is not whether proxies should be used, but rather how to develop and refine them to reflect market realities more accurately. Current antitrust proxies need critical evaluation: do they truly capture competitive dynamics in a way that serves consumer interests? For example, while firm size and profit margins may offer clues about market conditions, they should not be treated as definitive indicators of competition. Similarly, focusing solely on protecting smaller competitors without recognizing the natural competitive process may miss the mark, as competition inherently produces winners and losers.
Future antitrust enforcement must lean into economic analysis to refine its toolkit, ensuring that proxies are grounded in a realistic understanding of competitive dynamics. Improved economic methodologies could allow for a more nuanced assessment of practices like vertical integration, exclusionary contracts, and business models such as flywheels. If these practices are indeed detrimental to competition, economic analysis should reveal that impact. Conversely, if they are benign or even pro-competitive, accurate proxies would demonstrate that as well.
Ultimately, the purpose of antitrust should be to protect both consumers and the competitive process. For antitrust to evolve effectively, enforcement agencies must prioritize proxies that are not only theoretically sound but empirically reliable. Political motivations or punitive agendas have no place in antitrust, which should remain grounded in the economic principles that guide competition.
Tirzah Duren is the Vice President of Policy and Research at the American Consumer Institute, a nonprofit educational and research organization. You can follow her on X @ConsumerPal.