Carl Shapiro and Josh Wright Debate Antitrust and Competition Policy

Episode Summary

Executive Summary: Carl Shapiro and Josh Wright debated why antitrust has become politically prominent, whether U.S. market power has risen, and how enforcement should change. Both agreed concentration and markups have increased in some areas, but disagreed on whether the right response is stronger structural presumptions, broader merger challenges, or new digital regulation. Shapiro argued for tougher enforcement; Wright warned against simplifying antitrust into “big is bad.”

Main Topics: Why antitrust became a major political issue (Priority: 5/5): The speakers tied antitrust’s rise to public concern over corporate power, inequality, and the sense that large firms capture too much of the economic pie. Wright added that digital platforms and social media made these concerns more visible and salient. Whether market power has increased (Priority: 5/5): Shapiro argued that economy-wide evidence shows rising markups, profits, and firm concentration, implying greater market power. Wright largely accepted the data on markups but stressed that concentration can rise for benign reasons such as efficiency and scale. Merger enforcement and structural presumptions (Priority: 5/5): Shapiro called for tougher merger enforcement and a stronger structural presumption, especially in horizontal mergers. Wright rejected bright-line rules based on size and argued that merger policy must preserve nuance and case-specific analysis. Potential competition and digital markets (Priority: 4/5): Both discussed mergers involving future or potential rivals, noting the difficulty of predicting technological convergence. Shapiro favored skepticism when dominant firms buy likely future competitors; Wright emphasized uncertainty and the risk of blocking complementary transactions. Monopolization and exclusionary conduct (Priority: 4/5): Shapiro argued courts have narrowed Sherman Act enforcement too much in areas like exclusive dealing and pay-for-delay. Wright agreed some cases are problematic but criticized overreach, highlighting what he saw as weak evidence in some enforcement actions. Institutional reform and agency structure (Priority: 4/5): Wright discussed problems created by overlapping DOJ/FTC authority and supported rationalizing enforcement roles. Shapiro criticized poor coordination between agencies and argued the FTC should play a stronger, more proactive role in studies, rulemaking, and enforcement. Digital regulation beyond antitrust (Priority: 5/5): Shapiro supported a dedicated digital regulator, likely within or alongside existing institutions, to address privacy, cybersecurity, misinformation, and interconnection issues. Wright opposed creating a new regulator, arguing existing agencies already have broad authority and that another layer would add confusion.

Key Arguments: Shapiro’s central claim is that market power has increased across much of the U.S. economy, as shown by rising price-cost margins, profits, and falling labor share, which justifies stronger antitrust enforcement. Wright agreed that markups may be rising, but argued that this does not automatically imply antitrust harm because increases can reflect productivity, scale economies, or innovation. Shapiro argued that merger policy is too lax and that the structural presumption should be stronger, especially because many harmful mergers likely pass unchallenged. Wright countered that modern antitrust should preserve nuance and avoid crude proxies such as firm size; he opposed “big is bad” rules and bright-line presumptions. On exclusionary conduct, Shapiro said the courts have reduced Sherman Act reach too far in cases like American Express, pay-for-delay, and exclusive dealing. Wright replied that some enforcement claims overstate the evidence and that courts and agencies still win many cases, so a few losses do not prove the law is too weak. On digital regulation, Shapiro believed antitrust alone cannot cover privacy, cybersecurity, misinformation, and platform governance, making a digital regulator useful. Wright argued those issues are already covered by existing agencies and that a new digital regulator would create overlap, inconsistency, and more bureaucracy. Both agreed the FTC could be a natural home for any expanded digital oversight, but Wright preferred strengthening current institutions over creating a new one. Both rejected a blanket tech-merger moratorium, though Shapiro supported tougher scrutiny of acquisitions involving likely future competitors.

Data Points: Date of episode: June 3, 2020 - The podcast episode was introduced with this recording date. Hart-Scott-Rodino reported deals: 2,111 - Shapiro referenced FY2018 HSR filings to show the large volume of merger activity. Second requests in HSR filings: 45 - Used to illustrate that only a small fraction of deals receive deeper review. FTC/DOJ merger challenges: a few dozen - Shapiro noted only a small number of reported deals are formally challenged. Post-merger share threshold in structural presumption: 30% - Wright cited this as the conventional trigger for shifting the burden in merger cases. Litigated Section 7 efficiency-defense wins: 1 case - Wright argued only one federal Clayton Act merger case has been successfully defended on an efficiency defense. FTC majority votes in cases: 94% - Wright said he voted with the FTC majority in 94% of cases, responding to Shapiro’s criticism. T-Mobile/Sprint merger: 4-to-3 merger - Shapiro cited the merger as an example where he thought structural concerns were not given enough weight. FTC case example: McWane - Shapiro referenced Wright’s dissent in this exclusive dealing case as evidence of Wright’s leniency toward enforcement.

Pivotal Quotes: "market power has been increasing in the United States economy" — Carl Shapiro: Shapiro summarized the empirical case for stronger antitrust enforcement. "we should not be going in the direction of bright line rules about size" — Josh Wright: Wright rejected simplifying antitrust into a size-based standard. "I do think we need a digital regulator" — Carl Shapiro: Shapiro endorsed adding specialized oversight for digital-platform issues beyond competition law.

Implications: The debate suggests antitrust policy will stay contested: one camp wants tougher presumptions and broader intervention, while the other favors evidence-based, case-specific enforcement and institutional restraint. Digital governance may expand, but whether through a new regulator or existing agencies remains unsettled.