This short contribution seeks to propose the implementation of a “Proof of Vigilance” to meet the challenges of antitrust constitutional moment.
Hypothesis
This short paper is based on a simple hypothesis: the face of antitrust is changing to an extent that will have a lasting impact on the future of the field. Academics, policymakers, enforcers, and practitioners are debating the extent to which antitrust should address and protect sustainability, industrial sovereignty, privacy, labor rights, anti-racism, democracy, media plurality, small business, LGBTQ+ rights, etc. New “constitutional” rules are emerging for the field. The discussion will define tomorrow’s enforcement actions and policies.
State of the art
A common idea put forward by proponents of a more “social” antitrust regime is that failure to explicitly protect these goals is tantamount to diminishing the underlying rights. What is much less discussed and addressed with clear solutions is, first, whether implementing these goals in antitrust will prove effective in achieving them, and, if effective, how to handle the trade-offs between these goals and consumer welfare, as well as the trade-offs between these goals.
Nevertheless, there is already evidence of these objectives being implemented. For the record, I believe that the implementation of these objectives in antitrust is, for the most part, contra legem in EU competition law. Articles 101 and 102 clearly state that antitrust is about practices that “affect trade,” exception being made for Article 101 practices “which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit.” The clarity of the TFEU makes it unnecessary in my view to debate the original intention of the policymakers.
But regardless of (my) legal interpretation of EU law, antitrust is expanding around the world. The Dutch competition agency has published “Guidelines on sustainability agreements;” the Japan Fair Trade Commission put out a draft of antitrust guidelines for corporate conduct promoting sustainability; platform workers will get EU antitrust guidelines on joint negotiations in the coming months, one FTC commissioner expressed her desire to consider the impact of antitrust enforcement on systemic racism; US lawmakers met with news publishers over the creation of an antitrust exemption; etc. The pendulum swing from a strict CWS to a more social antitrust is accelerating every day.
Methodology
Against this background, how can we approach the implementation of these objectives in antitrust law from a scientific, well-grounded method? In this short article, I propose implementing a “Proof of Vigilance.” By “Proof of Vigilance,” I mean a public mechanism that documents the effects of broadening antitrust objectives and adapts policy accordingly. “Proof of Vigilance” requires a three-step implementation.
First, one should expect experimentalism, whether conducted in laboratories (see the work of Vernon Smith), digitally (see agent-based modeling), or in the so-called “real world.” Experimentalism requires flexible legal regimes that allow antitrust agencies to try new policies and enforcement actions. Once implemented, experiments are only valuable if policymakers get as much data from them as possible. This means that agencies should implement sensors in the market when they choose to experiment “out there.” The creation and demarcation of these sensors will force agencies to clearly define the goals they wish to achieve. Importantly, these sensors and the data they collect should be made public in real-time. Transparency is key to implementing a trusted and effective “Proof of Vigilance.”
Second, agencies should build processes to look for short and long-term (unexpected) consequences of their experimentation. For this purpose, agencies should document markets and industries pre-experimentation in order to provide the public with clear counterfactuals. They should make the data and analyses public. Agencies should also build on external expertise and contributions to grow the list of factors they monitor as, by definition, they cannot anticipate unexpected consequences (or where they will manifest) before beginning experimentations.
Third, agencies should be prepared to pivot quickly. Different responses can and should be implemented in reaction to the real-time data generated by the sensors, ranging from raising flags (i.e., a situation that needs to be closely monitored) to abandoning the experiment (and the associated policy). Agencies should publish in advance the thresholds they will use to trigger these different responses.
Implementation
The implementation of a “Proof of Vigilance” is both legally and technically feasible. Most competition agencies have the necessary discretion to conduct these experiments and decide how to react. From a technical perspective, there is a consistent body of literature on real-time adaptive regulation (see here, here, and here).
Of course, “Proof of Vigilance” requires that antitrust agencies broaden their expertise. Social scientists will help design experiments on labor issues. Biologists and ecologists will help with sustainability issues, etc. Data and computer scientists, together with economists and lawyers, will help to create sensors that document the right parameters while complying with existing data protection rules. Of course, acquiring this expertise will be expensive. But one way or another, agencies will have to put money on the table if they are serious about expanding to meet social goals.
Finally, one might want to open a new debate on the legitimacy of the agencies’ expanding goals. Antitrust agencies are competition experts with a clear mandate to protect competition. They were not designed to deal with other issues. If they are to move in this social direction, I would see the need for elected officials to make political decisions within antitrust agencies, i.e., to deal with the numerous trade-offs that will arise, to guide the agency in implementing experiments, to stop them, to create new ones, etc.
What’s next
The road to implementing a “Proof of Vigilance” is a tenuous one, but it is worth the effort, as “Proof of Vigilance” could be instrumental in underpinning the new antitrust constitution with evidence. I invite interested competition agencies to get in touch.
Thibault Schrepel
***
| Citation: Thibault Schrepel, A “Proof of Vigilance” for Antitrust Constitutional Moment, Network Law Review, Spring 2023. |
