Dworkinian Antitrust

• Author: John O. McGinnis & Andrew M. Meerkins
• Position: George C. Dix Professor, Northwestern Pritzker School of Law/Associate, Shook, Hardy & Bacon LLP
• Pages: 1-59

Dworkinian Antitrust John O. McGinnis * & Andrew M. Meerkins ** ABSTRACT: In this paper we offer a jurisprudential explanation of the structure and evolution of antitrust law, arguing that it provides the best example of Ronald Dworkin’s famous theory of integrity in action. Dworkin’s jurisprudence describes antitrust law strikingly well because it chooses right answers by considering what guiding principle best fits and justifies the relevant law. In antitrust, the principle of consumer-welfare promotion provides the best fit for antitrust statutes as a whole because, although legislators mentioned other objectives, they did not believe they were in conflict with the first and overriding objective of consumer welfare. Moreover, even if other principles—say, the protection of small businesses—can compete with consumer-welfare promotion in terms of fit, such other principles cannot compete in terms of justification, because they cannot be coherently achieved by judges in antitrust cases and are better undertaken by other kinds of legislation. In contrast, legal positivism—the dominant jurisprudential theory to which Dworkin’s integrity played the foil—cannot explain antitrust law, because antitrust decisions often cannot be generated by the sparse statutory text available, even when combined with policy discretion. Dworkinian jurisprudence thus explains why court decisions in antitrust rely on economic principles rather than statutory text or ad hoc policy. Economic principles provide the most reliable and consistent path to promoting consumer welfare. This distinctive jurisprudence also explicates many unusual features of antitrust doctrine. For instance, the Supreme Court is unusually willing to overrule long-established cases, lower courts sometimes fail to follow older Supreme Court precedent, and courts treat Department of Justice guidelines in the area as powerful determinants of their own decisions. This breakdown of the hierarchy of precedent and the judicial/executive branch cross-pollination cannot be understood through the positivist framework. If economic principles are immanent in law, however, these practices make sense. When the pull of such principles is strong, both the executive and judiciary at all levels are engaged in a joint enterprise of explaining and applying the economics to challenged business practices and agreements, rather than guarding rival areas of policy discretion as typical in our separation-of-powers system. Dworkin’s integrity is not only the best explanation of antitrust jurisprudence, but also an attractive jurisprudence in this area. As a general matter, 1 2 IOWA LAW REVIEW [Vol. 102:1 Dworkin’s theory has been sharply criticized as unworkable, because it is argued that judges have no way of discovering the principles that ought to guide their decision-making. Moreover, people simply disagree about the principles’ content or application. While these criticisms have substantial merit in fields like constitutional law, in antitrust, microeconomics does provide consensus principles that can be relatively objectively applied to decide cases. I. INTRODUCTION .................................................................................... 3 II. ANTITRUST’S JURISPRUDENTIAL EVOLUTION ....................................... 9 A. A NTITRUST ’ S F ORMATIVE Y EARS .................................................. 9 B. P ROGRESSIVES , N EW D EALERS , AND THE W ARREN AND B URGER C OURT : A D OCTRINAL T HICKET ................................................ 12 C. C ONSUMER W ELFARE , C ONSENSUS , AND THE C HICAGO S CHOOL .. 18 III. DWORKIN’S JURISPRUDENCE OF PRINCIPLE ....................................... 21 A. L AW AS I NTEGRITY AND THE M YTH OF J UDICIAL D ISCRETION ...... 21 1. Rules Versus Principles ................................................... 22 2. Principles Versus Policies ............................................... 23 3. Doing Integrity ................................................................ 24 4. Reading Statutes with Integrity ...................................... 27 B. A TTACKS ON I NTEGRITY ............................................................ 28 IV. INTEGRITY AND ANTITRUST ............................................................. 31 A. T HE D WORKINIAN F IT AND J USTIFICATION OF C ONSUMER W ELFARE IN M ODERN A NTITRUST .............................................. 31 1. Antitrust’s Fit with Consumer Welfare ............................ 31 2. Consumer Welfare as a Dworkinian Justification ........... 35 B. I NTEGRITY E XPLAINS M ODERN A NTITRUST J URISPRUDENCE ........ 37 1. The Supreme Court’s Willingness to Discard Precedent ......................................................................... 38 2. The Supreme Court’s Willingness to Ignore Bad Precedents ....................................................................... 39 3. Lower Courts’ Willingness to Innovate .......................... 40 4. The Weakness of Separation Powers in Antitrust ......... 41 C. T RANSCENDING I NTEGRITY ’ S C RITICS ......................................... 43 V. SOME OBJECTIONS AND PROBLEMS ..................................................... 45 A. E CONOMIC P RINCIPLES AS D WORKINIAN P RINCIPLES ................... 45 B. E CONOMIC P RINCIPLES AS O BJECTIVE P RINCIPLES ....................... 46 C. H ARDEST C ASES ......................................................................... 48 2016] DWORKINIAN ANTITRUST 3 VI. CONSENSUS IN THE COURTS ............................................................. 49 A. D ATA ........................................................................................ 50 B. A NTITRUST AS P ERCENTAGE OF THE D OCKET .............................. 53 C. D ISSENT R ATE IN A NTITRUST C ASES ........................................... 55 VII. INTEGRITY’S PROVINCE ..................................................................... 56 A. R EQUIREMENTS ......................................................................... 57 B. A REAS L IKELY S UITABLE FOR I NTEGRITY ..................................... 57 VIII. CONCLUSION .................................................................................. 59 “In view of these circumstances, it must be confessed that there is no consistent or intelligible policy embodied in our law by which public officials and business men may distinguish bona fide pursuit of industrial efficiency from an illicit program of industrial empire building.” —Robert H. Jackson & Edward Dumbauld 1 “[T]here is widespread agreement today among courts, antitrust-enforcement agencies, and antitrust practitioners and scholars about the goals of the antitrust enterprise. . . . [M]ost contentious issues in antitrust are nonideological and no longer require appealing to endogenous preferences or foundational views about the legitimacy of the capitalist order . . . .” —Daniel A. Crane 2 I. INTRODUCTION Justice Jackson and Professor Crane were talking about the same statutes—and they were both right. America’s competition law dramatically changed course in the 20th century. Once trumpeted as a populist rallying cry, antitrust now is the law that most relentlessly reflects economic analysis. Yet this shift did not flow from statutory revisions by Congress, but from a new way of interpreting the same statutes by the courts and the executive branch. The federal judiciary, at times taking its lead from the Department of Justice Antitrust Division and the Federal Trade Commission (“FTC”), now sketches the boundaries of our competition law. It does so with a sparse statutory framework that provides concepts that appear to defy precise definition like * George C. Dix Professor, Northwestern Pritzker School of Law. Thanks to Robert Burns, Josh Fischman, Andrew Koppelman, Stephane Mechoulan, Lindsey Simon, and participants in workshops at Northwestern and William and Mary law schools for comments, and to Joseph Delich for research assistance. ** Associate, Shook, Hardy & Bacon LLP. 1. Robert H. Jackson & Edward Dumbauld, Monopolies and the Courts , 86 U. PA. L. REV. 231, 237 (1938). 2. See Daniel A. Crane, Technocracy and Antitrust , 86 TEX. L. REV. 1159, 1211–12 (2008) (citation omitted). 4 IOWA LAW REVIEW [Vol. 102:1 “restraint of trade” and “monopolization.” And despite an increase in partisan and ideological divisions in politics and on the Supreme Court, antitrust consensus has steadily increased for decades. At one time, antitrust was a field of ideological disagreement and political combat. Some thought antitrust could be an instrument of redistribution, suitable to combat the evils of big business and protect “small dealers and worthy men,” or that it could project a Jeffersonian vision that circumscribed the political power of large corporate actors. 3 Others rejected efforts to aid competitors and advocated exclusive focus on improving consumer welfare. 4 Antitrust to that point suffered from fits of inconsistency and economically harmful decisions. 5 Today, this fundamental dispute has dissipated. Consumer-welfare protection is the dominant paradigm employed by courts, commentators, and practitioners. 6 Decisions have become more predictable as consumer-welfare analysis has taken hold. 7 This antitrust sea change is a matter of substantial jurisprudential interest, because it shows how judges can resolve legal questions by reference to coherent principles outside the text of the law. It was certainly not the positive law—provided by competition statutes themselves—that have provided new answers or narrowed judicial discretion. The Sherman Act, antitrust’s oldest and most prominent statute, is renowned for its brevity: Sec. 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. . . . Sec. 2. Every person who shall monopolize, or attempt to monopolize...