Market Power, Antitrust Policy, and the Roberts Court

• Author: James W. Brock
• Date: 01 March 2008
• DOI: 10.1177/0003603X0805300111
• Published date: 01 March 2008
• Subject Matter: A Continuing Symposium on Antitrust and Roberts Court

THE

ANTITRUST

BULLETIN:

Vol.

53, No. 1/Spring 2008 179

Market

power,

antitrust

policy,

and

the

Roberts Court

BY JAMES W. BROCK*

"Therule is, jam

tomorrow,

andjamyesterday-but

neverjam

today."

"it

must

come

sometime to 'jam today',"Alice

objected.

"No, it can't," said the

Queen.

"It'sjameveryother

day;

today

isn't any other

day,

you

know."

-LEWIS

CARROLL,

Through

the

Looking

Glass

In

the

beginning,

the

goal of

American

antitrust

policy

was

to

sustain

a

structurally

decentralized

balance

of economic power,

wherein

eco-

nomic

decision

making

would

be

dispersed

into the

hands

of

numer-

ous

firms

functioning

as

an

effective

system

of

competitive

checks

and

balances on

each

other. This

structural

balance of economic deci-

sion

making-analOgous

to

the

constitutional

structure

of

political

governance-would

guard

against

the

abuse

of

discretionary

eco-

nomic

power

while

compelling

good

economic performance.

It

would

provide

freedom

of

enterprise

while

channeling

that

freedom

into

socially beneficial outlets: Businesses

would

be free to

choose

their

prices, free to choose the

quality

of their offerings, free to choose their

production

methods

and

costs,

and

free to choose

whether

to

inno-

vate,

but

that freedom

would

be

constrained

and

regulated by com-

petitive

market

structures

compelling

firms

to

choose

low

prices,

*Moeckel Professor of Economics, Miami University, Oxford, Ohio.

©2008 by

Federal

LegalPublications.Inc.

180

THE

ANTITRUST

BULLETIN:

Vol. 53, No. 1/Spring 2008

better

quality,

more

efficient

production

processes,

and

improved

products

and

services

if

they were to

remain

financially viable. Like

the

constitutional

system,

and

in

line

with

the

nation's

traditional

core

distrust

of concentration of power, this structure of competitive

free enterprise

would

prevent the

abuse

of economic

power

by pre-

cluding

the

structural concentration

that

gives rise to it.

Senator

Sherman

clearly

understood

this to be the objective of his

proposed

antitrust

policy,

and

what

would

become the

country's

first

federal

antitrust

law.

"The

popular

mind

is

agitated

with

problems

that

may

disturb

social order," he

said

in

the

Senate,

and

among

them

all

none

is more

threatening

than

the inquality of condi-

tion, of wealth,

and

opportunity

that

has

grown

within

asingle genera-

tion

out

of the concentration of capital into

vast

combinations to control

production

and

trade

and

to break

down

competition

....

If

we will not

endure

aking as a political

power

we

should

not

endure

aking over the

production, transportation,

and

sale of

any

of the necessaries of life.

If

we

would

not

submit

to an

emperor

we

should

not

submit

to an autocrat of

trade,

with

power

to

prevent

competition

and

to fix the price of

any

com-

modity.'

Senator

George

similarly

articulated

the

paramount

goal

of

this

emerging

antitrust

legislation as

one

of blocking

the

economic

power

of

dominant

firms to "dictate to the

people

of this

country

what

they

shall

pay

when

they

purchase,

and

what

they

shall receive

when

they

sell."?

Although

dominant

firms

might

initially

appear

to

perform

well, Senator

Edmunds

added,

the absence of a structural balance of

economic

power

would

inevitably

enable

them

to abuse their discre-

tionary

power

and

withhold

those economic benefits from their mar-

kets-a

concern

shared

by

Senator

Sherman.'

The Congress of 1890

that

enacted

the

Sherman

Antitrust

Act

clearly

was

concerned about

the

structural balance of economic

power

and

the

ways

market

con-

centration

and

market

power

upset

it. Those legislators "confronted

the

concentration crisis from the perspective of an ideological tradi-

tion

that

equated

excessive economic

power

with

political corruption

Quoted

in

HANS

THORELLI, THE FEDERALANTITRUST POLICY 180 (1955).

Quoted

in David Millon, The Sherman

Act

and the Balance of Power, 61

S. CAL.L.

REV.

1219, 1278 (1988).

[d. at 1277, 1282-83.