The Antitrust/consumer Protection Paradox: Two Policies at War with Each Other

By Wright, Joshua D. | The Yale Law Journal, June 2012 | Go to article overview
Save to active project

The Antitrust/consumer Protection Paradox: Two Policies at War with Each Other

Wright, Joshua D., The Yale Law Journal



     A. Consumer Protection Law
     B. Antitrust Law

     A. Example 1: Entry and the Introduction of New Products
     B. Example 2: Above-Cost Price Discounting
     C. Example 3: Product Bundling

     A. The Economic Institutions of Consumer Law: Price Theory and
        Behavioral Economics
     B. The Legal Institutions of Consumer Law: Common Law and the CFPB
     C. The Political Institutions of Consumer Law: The Last Hope for



The intellectual soul of American consumer law is up for grabs as a battle emerges between its two pillars--conventional consumer protection law and antitrust law. The former focuses on ameliorating the deleterious effects of market failures associated with consumers' imperfect or incomplete information; the latter provides the institutional framework for protecting consumers from losses associated with the creation and acquisition of monopoly power. As both share the common goal of protecting consumer welfare, it is unsurprising that legal scholars, economists, and regulators envision a fully integrated "consumer law"--a term I use hereafter to refer jointly to antitrust and consumer protection.

The potential complementarities between antitrust and consumer protection are well known. (1) Both consumer law institutions seek to maximize consumer welfare, with antitrust policy focusing on market failures associated with the creation of market power and consumer protection emphasizing instances in which, despite ample competition, consumer welfare is threatened by information asymmetries and deception. (2) A simple price-theoretic, rational choice model of complementary operation of antitrust and consumer protection institutions might therefore envision consumer protection institutions allocating resources aimed toward improving disclosures, filling information gaps, and protecting against fraud and deception, with antitrust limited to preventing the unlawful creation or acquisition of market power and failures of the competitive process. While the consumer welfare paradigm would discipline both consumer law institutions under this complementary view, lines would clearly be drawn between them so as to minimize conflict. (3) Indeed, the global trend is toward integration of consumer law institutions. (4) Despite these substantial economic and legal complementarities, the Dodd-Frank Wall Street Reform and Consumer Protection Act portends a deep rift in the intellectual infrastructure of consumer law that threatens the development of both bodies of law, as well as consumer welfare and economic growth. This Feature identifies the intellectual and institutional origins of that rift and describes the emerging paradox it has created: a body of consumer law at war with itself.

Dodd-Frank heralded a revolution in consumer protection law and enforcement. It created the Consumer Financial Protection Bureau (CFPB) and granted it unprecedented regulatory powers in the consumer law context, including the exclusive rulemaking and primary enforcement authority over consumer financial protection, (5) while divesting consumer financial protection functions from the Federal Trade Commission (FTC) and other federal regulators. (6) In addition to the authority to prohibit unfair or deceptive practices in consumer financial product markets, (7) a statutory grant of power otherwise identical to that granted to the FTC, (8) the CFPB is charged with eliminating "abusive" practices (9) in the consumer financial services business and ensuring that consumer disclosures are "fully, accurately, and effectively disclosed to consumers in a manner that permits consumers to understand the costs, benefits, and risks associated with the product or service.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this article

Cited article

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

The Antitrust/consumer Protection Paradox: Two Policies at War with Each Other


Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?