This book is important. Agree with it or not: do not ignore it. Many ideas here may appear radical but not only are they a very timely call for reflection and action, they include many ideas that are likely to become mainstream in the future ‒ and let’s hope, for the sake of the planet and society, that that future is not too far off. Already many young lawyers ‒ and some not so young ‒ are crying out for a more realistic approach to both competition law/antitrust and the control of corporate power more generally. Many vote with their feet ‒ or rather, their brains ‒ and will no longer join firms with a narrow, outdated focus on profit, whatever the cost. As Michelle says: ‘We are many, seeking new and better answers, and we are not giving up.’ Not since I read Kate Raworth’s Doughnut Economics have I felt such a need to rethink our approach to so many important issues facing society.1 Now is not the time to be timid!
In a book that is highly informed and enjoyable to read, Michelle challenges current conventional thinking and tackles issues of power, inequality and social harm directly, rejecting highly theoretical ideas that so-called ‘free’ markets will somehow sort these out ‒ fully recognizing that these markets are not really ‘free’, being the result of a series of complex policy and regulatory choices.
She explodes a multitude of myths, particularly the idea that the market is a given and that outcomes and prices determined by that market must automatically be the right ones. She reveals so-called ‘externalities’ for what they are ‒ costs avoided by companies and paid for by us, as citizens: ‘These harms to society and environment, which are not priced by the market system, accrue within the economic system anyway, acting as a lead weight dragging society and the economy down.’ Externalities are seen as a source of undeserved profits in the form of costs that the company does not have to pay, and exploitation of these rents is a form of unfair competition.
Whilst we may object that some externalities, such as education of the workforce, should properly be borne by society as a whole, she is right that, if companies are to make the right choices consistent with a fair and sustainable future, many of these costs should be borne by companies and reflected in their pricing accordingly. Pollution by lorries and factories and energy choices are good examples. Certainly we have a very incomplete measure of ‘efficiency’ if so many costs are simply not taken into account.
The discussion of stakeholder antitrust helpfully reminds us what a corporation or company really is ‒ and what it is not. Whilst they have been extremely useful vehicles for the development of ideas, technology, goods and services, it is important to remember that they are just that ‒ useful vehicles. They are not real, living things ‒ even if there is a trend towards attributing ‘human’ rights to them. They are a man-made artefact; ‘a publicly granted privilege allowed only at the sufferance of the state’. Privileges, including limited liability, can be withdrawn ‒ or at least made conditional. It is doubtful that companies ever owed a duty only to shareholders but it is certainly the case that, as a society, we should think carefully about who companies owe duties to. Why should shareholders’ interests be privileged over those of the planet, the environment or employees ‒ many of whom will often have more invested in the company than many shareholders? Michelle’s book is full of ideas about how to find a sane and practical balance between these interests ‒ in both the law and in the running of a modern, efficient, profitable and sustainable business.
Governments around the world are struggling with the problem of ‘big data’ and the so-called FANGs (Facebook, Amazon, Netflix and Google). At the heart of this discussion is the issue of corporate power and how (or whether) to control it. The scope of Michelle’s book is much wider than this and reminds us of antitrust’s original concern over power; it makes a powerful plea to refocus on power ‒ rather than price ‒ and makes a series of proposals to contain it. As Michelle recognizes, much more work needs to be done in this area, but this book pushes us to ask the right questions. Who has power? How was it obtained? How is it being used/abused? What should be the thresholds for intervention? What form should remedies take ‒ break up, removal of limited liability, greater stakeholder control?
Michelle’s analysis makes it inevitable that sustainability should cease to be at the ‘fringe of modern competition law’ but become an integral part of it. This fits with my own plea in relation to the existential threat posed by climate change: ‘competition law must be part of the solution, not part of the problem’.2 However, Michelle’s call for stakeholder antitrust goes much further and to the very heart of what we expect from a system of corporate law and competition law, and what it means to be a good corporate citizen.
In some respects Michelle’s experience parallels my own: working in private practice in the City of London, with a growing realization of the disconnect between the technocratic practice of competition law and the things that really matter. I spent thirty-five years as a practitioner, leading a large global practice for many years, constrained to follow the conservative decisional practice and guidance of the competition authorities and, whilst trying not to be risk averse, nevertheless constrained to give advice that reflected that conservative practice.
Now, as an academic and judge, I have a greater freedom. As an academic, I can say what I think the law ought to be if it is leading to outcomes which are either unfair or incompatible with a sustainable future. As a judge at the UK’s Competition Appeal Tribunal, I am still free to disagree with Commission guidelines but, ultimately, we are obliged to follow the treaties and the rulings of the higher courts – especially those of the Court of Justice of the EU (CJEU).
Happily, the more I look at the EU Treaties, especially what I term the ‘constitutional’ provisions ‒ i.e. the bits at the beginning of those treaties setting out their objectives and instructing us how to apply the rest of them ‒ the more I realize that they are entirely consistent with an approach to competition law that takes full account of the environment and sustainability. What is more, they say these ‘must’ be taken into account in ‘all’ the EU’s policies and activities. Just take a look again at Article 3(3) of the Treaty on European Unionfn1 and Articles 7, 9 and 11 of the Treaty on the Functioning of the European Union (TFEU).fn2
Against this background it is morally reprehensible that competition law has often failed us. It has failed us with an unnecessarily narrow focus on financial considerations and price effects. It has failed us by not factoring in sustainability, either properly or fully. Some well-intentioned attempts have been made to do so, but these have often fallen short. A good example is the ‘Chicken of Tomorrow’ case, which Michelle discusses. Here the Dutch competition authority tried to support industry efforts to improve animal welfare but failed to do so ‒ probably because it placed too much weight on subjective views, on short-term price factors, and too little weight on the interests of future consumers and society as a whole, to say nothing of the poor chickens.
Competition law has also failed to contain the increasing concentration seen in many markets and industries and, at least in the US, has failed to have the courage to act against abuses by, for example, large technology companies. There are signs of change in the US, with recent studies by the FTC, and increasing interest in corporate power in the Democratic Party. It remains to be seen, however, how this will play out.
The tragedy is that the competition authorities already have the mandate and tools to deal with all these issues ‒ for example, in the ‘constitutional’ provisions of the EU Treaties to which I have already referred. These tools have been used very effectively in the past ‒ as we have seen in cases like the Commission’s decision in the CECED case relating to energy-efficient washing machines (in which the Commission allowed an agreement between importers and manufacturers to stop marketing energy inefficient machines). However, they need to be used more often and with more confidence. As the French might say: ‘Courage, mon brave, courage!’ The authorities should stop obsessing over arcane concepts that are not in the treaties, such as consumer welfare ‒ at least the wrongly conceived, narrow price-centric version of it ‒ and refocus on what is in the EU Treaties and what they say the competition authorities ‘must’ do.
In my recent work, I have stuck strictly to what the treaties permit ‒ indeed, to what they require. Much of what Michelle advocates can be achieved within the limits of competition law and corporate law as it stands ‒ at least in countries like the UK, where company law already requires companies to take into account interests wider than those of shareholders, and companies can set out their objectives in their founding documents.
That said, Michelle also sets out a number of bold ideas that go beyond the limits of current law. But that is a good thing. Yes, changing the law often takes a long time, but the concerns Michelle raises are very real. Her ideas merit serious attention at the highest level and by those in power.
Simon Holmes
Member of the UK’s Competition Appeal Tribunal
Academic Visitor at the Centre for Competition Law and Policy, Oxford University