The Revival of Fairness Discourse in Competition Policy

• Author: Michael Trebilcock,Francesco Ducci
• Published date: 01 March 2019
• DOI: 10.1177/0003603X18822580
• Date: 01 March 2019
• Subject Matter: Articles

Article

The Revival of Fairness Discourse

in Competition Policy

Francesco Ducci* and Michael Trebilcock**

Abstract

The resurrection of the free trade–fair trade debate at the international level parallels a renewed

pressure to incorporate fairness considerations within domestic competition policies, originating from

a perceived reduction in the level of competition in various industries. Both supporters and critics of

notions of fairness, however, have failed to advance a normatively persuasive case in their favor,

neglecting the multifaceted nature of fairness in the competition policy domain. In this article, we

disaggregate and evaluate four specific notions of fairness that are pertinent to domestic markets:

vertical fairness between producers and consumers, horizontal fairness on the demand side, horizontal

fairness on the supply side, and procedural fairness. We defend a narrow dimension of horizontal

fairness on the supply side consistent with efficiency goals and of procedural fairness in the enforce-

ment of competition laws. We conclude by comparing the free trade–fair trade debate with the return

of fairness in competition policy.

Keywords

antitrust, fairness, concentration, consumer welfare, due process

I. Introduction: The Revival of Fairness Discourse in Competition Policy

Fairness concerns are making their way back into the competition policy domain. As part of a broader

trend that, at the international level, sees the rise of economic nation alism and a political divide

between those favoring open versus closed bridges and of fair trade versus free trade debates,

1

in the

domestic context there are renewed demands to reset the balance between equity and efficiency of

markets through alternative competition policies more attuned to fairness considerations.

2

An

*SJD Candidate, University of Toronto, Faculty of Law, Toronto, ON, Canada

**Professor of Law & University Professor, University of Toronto, Toronto, ON, Canada

Corresponding Author:

Francesco Ducci, SJD Candidate, University of Toronto Faculty of Law, 84 Queen’s Park, Toronto, ON M5S 2C5, Canada.

Email: francesco.ducci@mail.utoronto.ca

1. See The Economist Special Report, In Defence of Globalization,THE ECONOMIST, Oct. 1, 2016.

2. See Competition Policy International, Antitrust’s Inequality Conundrum,1A

NTITRUST CHRON. (Fall 2017); Eleanor M. Fox,

Competition Policy at the Intersection of Equity and Efficiency,63A

NTITRUST BULL. 3–6 (2018); William J. Curran III,

Commitment and Betrayal: Contradictions in American Democracy, Capitalism and Antitrust Laws,61A

NTITRUST BULL.

236–55 (2016); Mauritius Dolmans & Wanjie Lin, Fairness and Competition Law: A Fairness Paradox,C

ONCURRENCES 4

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2019, Vol. 64(1) 79-104

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increasing number of scholars and commentators have advocated stronger incorporation of equity

considerations into competition policy in order to address problems of wealth inequality, distributive

concerns, and more generally inequities of market outcomes through the enforcement of competition

laws.

3

Among others, Anthony Atkinson has argued that competition policy should embody explicit

distributional concern,

4

Joseph Stiglitz has called for stronger and more effective enforcement of

competition laws to help address inequalities created by market power,

5

and Paul Krugman has blamed

the collapse of antitrust enforcement as a potentially important factor in the stagnating demand for

labor and increasing inequality more generally.

6

Similarly, the current European Commissioner for

Competition, Margrethe Vestager, has repeatedly stressed the importance of fairness considerations in

competition rules.

7

In contrast, other commentators, including Hovenkamp and Crane, remain skep-

tical of the role of antitrust in tackling inequality.

8

Conard in particular has advanced skeptical views

about redistribution, arguing that consumers already capture almost all of the value of competition and

innovation.

9

He finds that the split in value between consumer surplus and producer surplus in dis-

parate sectors of the economy is in the range of 20:1 in favor of consumers, including in agriculture and

offshore manufacturing.

10

Sceptics have also labelled as “Hipster Antitrust” the emerging concerns

against the prevailing economic analysis and consumer welfare–based approach to competition

policy.

11

In our view, the debate suffers from a lack of a coherent analytical framework in evaluating the

scope of fairness in the competition policy domain. First, the notion that competition policy should

incorporate considerations of fairness is extremely vague in defining what the term should mean in

practice and in advocating consequential legal and policy changes in the competition policy domain.

Second, arguments dismissing any notion of fairness fail to do justice to the variety of forms that

fairness may take in the competition policy context, possibly neglecting legitimate considerations of

fairness that may be pertinent to the scope and functioning of this area of law.

In this article, we address the scope of fairness in competition policy by disaggregating and

evaluating four distinct notions of fairness that are pertinent to market power in domestic markets:

vertical fairness (between producers and consumers), horizontal fairness on the demand side (between

consumers), horizontal fairness on the supply side (between producers), and procedural fairness (due

process and private enforcement). Not only can the different dimensions of fairness be distinguished

using the categories of supply and demand (fairness between and within supply and demand), but they

(2017); Alfonso Lamadrid de Pablo, Competition Law and Fairness,8J.COMPETITION L. & PRAC. 147 (2017); Lina Khan &

Sandeep Vaheesan, Market Power and Inequality: The Antitrust Counterrevolution and Its Discontents 11 HARV.L.&POL’Y

REV. 235 (2016); Sean F. Ennis, Pedro Gonzaga, & Chris Pike, Inequality: A Hidden Cost of Market Power (2017), https://

ssrn.com/abstract¼2942791; Jonathan Tepper, The Myth of Capitalism: Monopolies and the Death of Competition (Wiley,

2018). See also Suresh Nadiu, Eric A. Posner, & E. Glen Weyl, Antitrust Remedies for Labour Market Power,HARV. L.R.

(forthcoming); Ioana Marinescu & Herbert Hovenkamp, Anticompetitive Mergers in Labor Markets, 1965 FAC.SCHOLARSHIP

(2018).

3. See Jonathan Baker & Steven Salop, Antitrust, Competition Policy, and Inequality 104 GEO. L.J. 1 (2015). For a different

view, see Daniel A. Crane, Antitrust and Wealth Inequality 101 CORNELL L. REV. 1171 (2016).

4. ANTHONY ATKINSON,INEQUALITY:WHAT CAN BEDONE? (2015).

5. JOSEPH E. STIGLITZ,THE PRICE OF INEQUALITY:HOW TODAY’SDIVIDED SOCIETY ENDANGERS OUR FUTURE 338 (2012).

6. Paul Krugman, Robot s and Robber Barons,N.Y.T

IMES, Dec. 10, 2012, http://www.nytimes.com/2 012/12/10/opinion/

krugman-robots-and-robber-barons.html?mcubz¼1; Paul Krugman, Robber Baron Recessions,N.Y.TIMES,Apr.18,

2016, https://www.nytimes.com/2016/04/18/opinion/robber-baron-recessions.html?mcubz¼1.

7. Margrethe Vestager, How Competition Can Build Trust in Societies, TED Talk (Sep. 21, 2017), https:// ec.europa.eu/

commission/commissioners/2014-2019/vestager/announcements/how-competition-can-build-trust-our-societies_en.

8. Herbert J. Hovenkamp, Antitrust Policy and Inequality of Wealth, 1769 FAC.SCHOLARSHIP (2017); Crane, supra note 3.

9. EDWARD CONARD,UNINTENDED CONSEQUENCES:WHY EVERYTHING YOU’VE BEEN TOLD ABOUT THE ECONOMY ISWRONG (2012).

10. Id. at 38.

11. Competition Policy International, Hipster Antitrust,1ANTITRUST CHRON. (2018).

80 The Antitrust Bulletin 64(1)