’Abuse of Dominance’: Was this what Congress originally intended for Section 2?

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Early this year, Senator Amy Klobuchar introduced a proposed Competition and Antitrust Law Enforcement Act that was heralded as a broad, “sweeping revamp,” and “the most ambitious antitrust reform in nearly half a century.” Among other things, Klobuchar’s proposed legislation would strengthen U.S. antitrust enforcement by cracking down on single-firm dominance, breaking up conglomerates, enhancing merger restrictions, and encouraging the entrance of new market participants. In the age of technology giants, Klobuchar’s approach seems novel and bold: for almost twenty years, monopolies have come to be seen as almost benign, at least where there is no evidence of barriers to entry or actual anticompetitive effects. Reinforcing the impression that the Democrats will use their increased power in Washington, D.C. to take on 21st century counterparts to Theodore Roosevelt’s “malefactors of great wealth,” President Biden appointed former Columbia Law Professor Lina M. Khan to chair the Federal Trade Commission. Both Klobuchar and Khan appear to agree that single-firm dominance diminishes sound competition by reducing innovation, product quality, and product variety. But Klobuchar and Khan’s arguments for forcefully policing single-firm conduct are not new. Historically, U.S. antitrust enforcers and courts were suspicious of the concentration of market power in the hands of a single economic actor. Single-firm dominance was thought to diminish, not enhance, healthy competition. Moreover, this “new” thinking regarding single-firm dominance mirrors the way in which substantial market power is treated by regulators in the EU and other jurisdictions. The European “abuse of dominance” standard encourages rivalry and competition, and imposes limits on the exploitation of a dominant position by a single firm. Although the EU and U.S. approaches to single-firm conduct have diverged in recent decades, these recent developments suggest that we may be on the brink of a new convergence.