Daniel Francis calls for looking past the profit paradigm in antitrust
In a recently published article in the Yale Law Journal, Associate Professor of Law Daniel Francis JSD ’20 notes that antitrust “leans heavily on the assumption that businesses aim to maximize their profits.”
The idea of profit as the primary driver of commercial conduct in a market economy may strike many as perfectly logical. But, as Francis documents in “Post-Profit Antitrust,” while that assumption often holds, the real world is replete with examples of behavior that is not motivated by profit but “can lead to all the harms with which antitrust is traditionally concerned, including higher prices and the loss of output and innovation.” Francis offers a range of examples or alleged examples: competitors cooperating to pursue environmental, social, and governance (ESG) goals; market participants engaging in social media boycotts to express their values; digital startups that prioritize viral growth over profit, with the aim of being acquired; and a religious hospital that acquires a rival and then terminates its abortion services, putting faith over profits.
Francis explains how antitrust analysis often has excluded arguments and evidence that businesses have engaged, or will engage, in potentially harmful behavior that is not aimed at maximizing profits. And yet, he notes, “a mountain of theoretical and empirical scholarship shows that [such behaviors] exist.” Given that, he writes, “the time is ripe for an explicit and principled account of antitrust’s role outside the profit paradigm.” To that end, “Post-Profit Antitrust” advances a theoretical and doctrinal framework for an antitrust analysis of non-profit-maximizing behavior.
Francis joined the NYU Law faculty in Fall 2022. Prior to that, he was an antitrust practitioner, in major law firms from January 2008 to May 2018 and then at the Federal Trade Commission’s Bureau of Competition from May 2018 to January 2021.
We spoke to Francis about the backdrop to and implications of his latest scholarship.
As you write in your paper, the assumption of profit maximization is so ingrained, the US Court of Appeals for the District of Columbia Circuit has described it as “a principle of antitrust law, not a question of fact.” What led you to question it?
I’ve had the idea for this paper at the back of my mind for a long time, ever since encountering a tricky case involving what seemed to be a non-profit-maximizing practice during my time as an antitrust enforcer. That case involved a “tie”: that is, a business refusing to sell one product except in combination with a second, separate product. My impression was that the practice was taking place and that it was inflicting harm, even though it was probably unprofitable for the business in question. Since then, I’ve kept an eye out for other examples of non-profit-maximizing behavior showing up in antitrust cases.
Sometimes, if you wait long enough, an issue that seems to be of purely academic interest starts to become relevant to policy debates. And over the last few years, practices or alleged practices motivated by social, political, or ethical goals have started to draw some attention in antitrust circles. For example, for several years commentators and lawmakers have been expressing concerns about joint investor conduct reflecting ESG objectives, culminating in a lawsuit brought by Texas that’s still ongoing today. Others have drawn attention to hospital mergers and acquisitions that lead to the loss of healthcare services for religious reasons.
Despite the very different politics of those two examples, they raise the same antitrust question: when and how should antitrust analysis grapple with the prospect of non-profit-maximizing behavior?
So the rising policy salience of the issue started to nudge the project up toward the top of my writing agenda. And then at some point I saw some academic commentary in the press, expressing the view that antitrust is categorically inapplicable to practices unmotivated by profit—which wasn’t my instinct at all—so I thought, well, maybe it’s worth dedicating some time to a close look at the puzzle.
Is there anything about the current moment that makes the idea of post-profit antitrust particularly salient?
Certainly. The surge of interest in antitrust over the last decade or so, and a chorus of calls to use antitrust enforcement in new or expanded ways, have brought antitrust policy into contact with a broader set of contexts and practices. Some of these implicate social, political, and cultural values that we don’t always encounter in antitrust cases. All this sharpens the need for an explicit account of antitrust’s relationship with practices that aren’t driven by profit—or at least can’t be shown to be profit-motivated.
Give some real-world examples of antitrust cases you think private plaintiffs or the government might bring today if not constrained by the profit paradigm.
My favorite example, which I touch on briefly in the article, is a policy adopted by a national art museum association strictly limiting when museums can sell items from their collections, which—based only on public information, of course—looks to me a lot like a naked restriction on sales adopted by a group of competitors and enforced by the threat of a boycott. Antitrust traditionally looks very sternly on such practices, and doesn’t much care about whether your subjective purposes are good, or whether you have professional ethics in mind. It’s interesting that it hasn’t been the subject of litigation.
Even as you call for broadening antitrust enforcement beyond limits imposed by the profit paradigm, you present what you call a “bounded” argument that aims to “preserve antitrust’s coherence and predictability.” Explain the concern you’re trying to address.
My view is that you can’t entirely let go of profit-maximization logic in antitrust—at least not if you want to retain antitrust’s basic character and a workable system. Antitrust is traditionally suspicious of exclusion and collusion because they have the effect of making it profitable for the defendant to harm consumers as a result, often by increasing prices. That’s a very important pillar of antitrust theory and practice, and it can’t be eliminated without really transforming the enterprise. So there’s a conceptual reason to retain at least some profit-maximization logic in antitrust. I accommodate that concern by retaining the logic of profit-maximization in the final step of any antitrust theory of harm. Even a “post-profit” theory still has to involve some story about why someone is going to find it profit-maximizing to increase prices, or otherwise inflict consumer harm.
Separately, there’s also a practical concern, which is that it’s probably not a good idea to let every defendant introduce the argument that it is uniquely altruistic and will refuse to harm consumers even if it would be profitable to do so as a result of a practice or transaction. I’m sure many businesses that want to buy a direct rival would love to be able to say, “Hey, Judge, we are really committed to low prices, so you can trust that we won’t increase prices even if this deal would make it profitable for us to do so.” If every defendant could advance that argument, and if every plaintiff had to rebut it, the result would be a massively wasteful increase in the length and cost of litigation, for very little countervailing benefit. I accommodate that concern by proposing different rules for plaintiffs and defendants.
At the end of your paper, you offer two proposals to “operationalize” post-profit antitrust—one broad, the other narrow. Why?
Because different readers, hopefully including courts, may have different levels of tolerance for doctrinal innovation! The article offers a broad approach, just as you say, which one might think of as a first-best. It offers a general framework for parsing arguments about non-profit-maximization behavior. That framework would apply to all antitrust litigation: agreements, unilateral conduct, and mergers.
But I appreciate that a new whole-cloth framework might be a lot for a court to accept in one go. So the article also offers a narrow approach, which is a use-case for the FTC’s existing powers under Section 5 of the FTC Act. That’s a more incremental venue for the project of challenging non-profit-maximizing practices that harm consumers in the relevant ways. I suspect different readers will have different preferences between the two.
You’ve spent more than a decade as a practitioner, both in private practice and at the FTC. How has that shaped your approach to scholarship?
It’s been foundational. I couldn’t be more grateful for that set of experiences. Thirteen years of practical experience has given me a long list of real-world puzzles to noodle on as a scholar; a belief that doctrine really matters and that “academic”-seeming disputes about the intricacies of antitrust doctrine are in fact terribly important for litigants and judges; and a community of fellow antitrusters that means a ton to me. And my own instincts as a writer can sometimes be theory-forward, so all that practical background helps to keep my feet on the ground and in conversation with what really matters in practice.
In 2024, you published “Antitrust Without Competition,” in which you also cast doubt on what many would consider a fundamental inquiry in antitrust—whether the conduct at issue in a given case harms or promotes competition. Should we be spotting a pattern here in terms of the targets of your inquiry?
Yes! My favorite line of work deals with what you might call—if you were trying to make it sound fancier than it probably is—fundamental antitrust theory, which is really just the enterprise of trying to be accurate and very clear about the most basic building blocks of antitrust. I think antitrust’s hardest questions are often lurking in what seems to be its introductory material. And there’s a long list of those projects on my research agenda! So lots more of that kind of thing ahead.
