Law's Honour Lost: The Plight of Antitrust

• Author: Fred S. McChesney
• Published date: 01 June 1986
• Date: 01 June 1986
• DOI: http://doi.org/10.1177/0003603X8603100205
• Subject Matter: Article

The Antitrust Bulletin/Summer 1986

Law's honour lost:

the plight

of

antitrust

BY FRED S. McCHESNEY*

359

"What is left when honor is lost?" asked a Roman philosopher

2,000 years ago. The question might well be asked

of

our system

of

antitrust law and enforcement as antitrust nears its centenary.

The honor lost by antitrust in the past 15 years has been

substantial, to the point where the legitimacy of its role in a

competitive order is disappearing altogether. That problem, and

how the legal and enforcement authorities respond to it, is the

single biggest issue facing antitrust for the coming years.

The loss in legitimacy stems from a growing perception that

antitrust is no longer a guarantor or protector

of

competition (if,

indeed, it ever was). Though lip service still is paid to the

importance of the antitrust laws in defending competition, anti-

trust is increasingly seen as either irrelevant or, worse, deleterious

to competition. In this article, I identify several sources

of

these

Emory University School

of

Law. Currently

John

M. Olin

Fellow in Law &Economics, University

of

Chicago Law School.

AUTHOR'S NOTE: Comments on an earlier draft from William MacLeod,

Thomas Morgan, Robert Rogowsky, William Shughart, E. Thomas

Sullivan, and E. G. West are gratefully acknowledged. Discussions with

Thomas Arthur during preparation

of

this article were particularly

helpful.

©1986by Federal Legal Publications. Inc.

360 The antitrust bulletin

changing perceptions concerning antitrust. I then discuss what the

loss

of

legitimacy will mean for the future

of

antitrust.

1. Competition and government

The conventional wisdom sees the antitrust laws as our "com-

petitive constitution," and the Sherman Act in particular as the

"Magna Carta

of

free enterprise." Born in that gilded era

of

"robber barons" and their "greedy trusts," the Sherman Act put

the government in the business

of

saving consumers from the

higher prices and restricted outputs that, supposedly, would

characterize the untrammeled operation

of

free enterprise.

Whether such purity of political motive truly explains the

Sherman Act is questionable, as discussed below. Initially, how-

ever, it is important to note the model

of

the economy implicit in

the passage

of

the act. The notion

of

the government as guaran-

teeing competition by attacking private trusts presupposes, first,

that private actors pose significant dangers to competition, and,

second, that government can be depended on to fight for in-

creased competition. Neither supposition appears warranted.

Several strains

of

scholarly work on the sources

of

monopoly

and market power have raised doubts about the importance

of

private attempts to impair competition. Industries accused by the

Fifty-first Congress in 1890

of

restricting output to raise prices

were actually increasing output, in some cases expanding produc-

tion 10 times faster than increases in GNp'l Relative prices

of

the

goods produced by the alleged trusts were falling prior to passage

of

the Sherman Act. Recent attempts to locate significant supra-

competitive profits from the most obviously anticompetitive be-

havior, price-fixing, have failed. 2Measure after measure has

IDiLorenzo, The Origins

of

Antitrust:

An

Interest-Group

Per-

spective, 5

INT.

REV. L. &

ECON.

73 (1985).

2Asch &Seneca, Is Collusion Profitable?, 58 REV.

ECON.

&

STAT.

1

(1976).