Antitrust without apology*

• Published date: 01 June 1986
• Date: 01 June 1986
• DOI: http://doi.org/10.1177/0003603X8603100211
• Subject Matter: Article

The Antitrust Bulletin/Summer 1986

Antitrust without apology*

BY ABBOTT B. LIPSKY, JR.**

Introduction

481

In the 95 years since passage of the Sherman Act, the size and

complexity

of

the American economy have grown by several

orders

of

magnitude. The quantity and variety

of

the products

and services it provides, the sophistication

of

the technologies,

forms

of

organization and types

of

transactions it employs, and

the number of its participants and dependents have far exceeded

in each generation the expectations of the generation preceding.

The allocation, distribution, and use of the economy's inputs and

outputs now involve such an enormous number of options and

variables that no central planner could hope to make any signifi-

cant fraction

of

the choices directly.

If

public policy is to have any

constructive effect on this vast and chaotic process, it must be

selective in its reasons for intervention, judicious in its choice

of

control variables, and cautious in designing the institutions used

to influence them. In sum, the sheer size and complexity

of

our

economy counsel reliance upon markets to the maximum feasible

extent.

Reliance on markets allows economic decisions to be made

without the direct intervention of a centralized bureaucracy or the

other cumbersome machinery

of

public

authority-institutions

that are expensive, imprecise, and plagued with distortions,

..

Especially to Willig.

King &Spalding, Washington, D.C .

©1986by Federal Legal Publications, Inc.

482 : The antitrust bulletin

inequities, and inefficiencies. A decentralized market economy is

far more likely to place decision makers close to the data on

costs, demand, and available technology that are essential for

efficient decision making. Reliance on private initiative ensures

that

correct decisions are rewarded and encouraged and that

incorrect decisions are discouraged or rectified quickly. Even if

our

confidence in government institutions were high, we probably

would not use public regulation, planning, approval, or owner-

ship as a comprehensive solution to many problems. To the

contrary, the unwelcome consequences

of

numerous past govern-

ment interventions have produced abroad disillusionment with

those approaches. Thus, in addition to the inherent limitations on

public intervention, our recent experience also suggests a nar-

rower scope for government and abroader role for the market.

It

is this central thesis on which the virtue of

competition-

and the role

of

antitrust

law-ultimately

depend. Viewing the

relationship between the evolution

of

our

economic system and

the importance

of

markets in this historical perspective also

illustrates why antitrust is more important than it was 95 years

ago. The process of competition inevitably gives rise to a variety

of

disputes among customers, suppliers, and competitors. Nu-

merous forms

of

market conduct create disputes: secret price-fix-

ing conspiracies, aggressive price cuts, the displacement

of

old

technologies by new, dealer terminations, mergers and acquisi-

tions-all

create gains, inflict losses, and spawn disputes about

the distribution

of

both. There will always be a need for a

mechanism to resolve such disputes. Antitrust law comprises the

set

of

rules

that

has evolved to satisfy this need. Some antitrust

rules are consistent with maximizing the wealth-creating abilities

of

our

market

economy-they

deter destructive conduct or com-

pensate its victims. Others are not consistent with this

goal-they

clutter federal dockets and redistribute money in arbitrary, unpre-

dictable, and perhaps damaging ways. While the latter type

should be eliminated, the core prohibitions

of

antitrust (the rules

that

prohibit or deter the formation

of

cartels) are sound.

The following remarks identify those areas

of

antitrust most

in need of reform, recommend appropriate changes, and predict