More competitors is not the measure of more competition

Through the weekend, I saw an interesting exchange on Twitter related to a Chicago Law Review paper by Herbert Hovenkamp, a professor at University of Pennsylvania Law and the Wharton School of Business. The paper postulates “when antitrust pursues a goal of higher output in product markets it is benefitting labor and consumers alike.”

According to Professor Hovenkamp,

Both antitrust’s neoliberal right and its Progressive left have advocated policies that are harmful to labor. The right did so by developing a cynical vision of “consumer welfare” that incorporated producer profits into the definition and advocated for lower output in product markets. The left has done the same thing with its hostility to large firm size, even when dictated by scale economies or network effects, and its protection of small business.

The Twitter exchanges he had through the weekend looked at a number of major anti-trust cases in the US, including AT&T, Google and Facebook. On AT&T, Professor Hovenkamp said, “I cannot identify a single upside from the regional separation and as far as I know no one has. The interconnection obligations are a completely different matter.”

But the post that caught my eye was his reply to a lawyer who suggested splitting Facebook-parent Meta vertically and horizontally to create more competitors.

“More competitors is not the measure of more competition.”

I thought that statement was worth capturing, especially in view of the various mergers and acquisitions under examination in Canada’s telecommunications market.