One Step Forward, Two Steps Back: Economic Analysis and Political Considerations in Antitrust Law Revision

• DOI: 10.1177/0003603X8603100405
• Date: 01 December 1986
• Author: Thomas A. Balmer
• Published date: 01 December 1986
• Subject Matter: Symposium on the Reagan Administration's Legislative Proposal

The Antitrust Bulletin/Winter 1986 981

One step forward, two steps back:

economic analysis and political

considerations in antitrust law revision

BY THOMAS A. BALMER*

Since the passage

of

the Sherman Act in 1890, economics and

politics have both played key roles in antitrust. Antitrust enforce-

ment and the major statutory revisions of 1914 and 1950 have

reflected the politics and the economic wisdom of the times. In

the last decade, the ascendancy of the Chicago school has led to

more rigorous economic analysis of antitrust statutes, lawsuits,

and enforcement. But the Chicago school as well as its critics

acknowledge-whether

approving or

disapproving-the

political

underpinnings

of

antitrust.

The twin threads

of

economics and politics are again in-

terwoven in the antitrust law revision package submitted by the

Reagan Administration to Congress in early 1986.IWhile each

of

the five components

of

the package can be analyzed in economic

and political terms, two

of

the proposed revisions illustrate the

different origins of parts

of

the package and provide an interest-

Partner in the law firm of Lindsay,

Hart,

Neil &Weigler,

Portland,

Oregon.

1S. 2160, 99th Cong., 2d Sess. (1986) (Merger Modernization

Act); S. 2161, 99th Cong., 2d Sess. (1986) (Promoting Competition in

Distressed Industries Act); S. 2162, 99th Cong., 2d Sess. (1986) (Anti-

trust Remedies Improvements Act); S. 2163, 99th Cong., 2d Sess. (1986)

(Interlocking Directorate Act); S. 2164, 99th Cong., 2d Sess. (1986)

(Foreign Trade Antitrust Improvements Act).

©1987 by Federal Legal Publications, Inc.

982 The antitrust bulletin

ing comparison of the relative roles of politics and economics in

antitrust.

Following years

of

analysis by lawyers and economists, and

reviving changes suggested over 30 years ago,' the treble damage

proposal would significantly alter the antitrust landscape by

allowing treble damages only to those having been overcharged or

underpaid by an antitrust violator and only for the amount

of

the

overcharge or underpayment.3At the other end

of

the spectrum is

the proposal to partially exempt industries harmed by imports

from section 7

of

the Clayton Act

4-a

bill that seems to have

sprung to life without rigorous study and that responds almost

exclusively to domestic political concerns, while ignoring the

consumer welfare which is at the heart of antitrust.

This article examines the treble damage and import relief

portions

of

the antitrust revision package and some

of

the

economic and political considerations behind each proposal.

Rather than simply viewing "political" considerations as

"bad"

and "economic" analysis as

good-or

vice

versa-the

article

attempts to evaluate these proposals from the standpoint of the

antitrust practitioner and to assess their impact on what, for lack

2See K.

ELZINGA

&W.

BREIT,

THE

ANTITRUST

PENALTIES:

A

STUDY

OF

LAW

AND

ECONOMICS

63-96 (1976); Wheeler, Mandatory Treble-Damage

Actions: Do They Work?, 61

CALIF.

L.

REV.

1319 (1973).

For

a recent

proposal to end

mandatory

treble damages,

but

give the court discretion

to award treble damages in particular cases, see Committee on Antitrust

and

Trade Regulation, Report on Treble Damages, 40

REC.

A.B.

CITY

N.Y. 647 (1985) [hereinafter cited as Report on Treble Damages].

3S. 2162, 99th Cong., 2d Sess. §201 (1986). The Administration's

proposal would also allow the government to recover treble damages if

it was overcharged or underpaid, allow defendants to recover attorneys'

fees from plaintiffs in certain cases, provide for automatic prejudgment

interest,

and

provide

that

antitrust claims against

more

than

one

defendant be reduced by amounts based on payments received by the

plaintiff

from

settling defendants. These provisions are beyond the

scope

of

this article.

415

U.S.C.

§18. The proposal is S. 2161, 99th Cong., 2d Sess.

(1986).