Should Antitrust Go Beyond “Antitrust”?

• Author: Timothy J. Brennan
• Published date: 01 March 2018
• Date: 01 March 2018
• DOI: http://doi.org/10.1177/0003603X18756143
• Subject Matter: Articles

Article

Should Antitrust Go Beyond

“Antitrust”?

Timothy J. Brennan*

Abstract

Numerous observers, from all sides of the political spectrum, have proposed alternatives to economic

efficiency as objectives for antitrust enforcement and decisions. A list includes fairness, inequality, labor

share of income, jobs, effect on competition (apart from consumer welfare), consumer choice, pro-

moting democracy, concentration of political power, globalization, domestic control over resources,

media veracity, environmental protection, managerial competence, and mitigating consumer error.

Three factors raise general doubts about the merits of doing so. One is that antitrust is sufficiently

complex and that adding additional factors to balance may make it even less comprehensible to the

general public (and even experts). A second is that other policies are available to pursue these

alternatives that are both better designed to do so and are not subject to the vagary of whether a

particular firm or sector might be involved in an antitrust violation. The third is that antitrust ought not

be distracted from its economic efficiency mission, since there is no other economy wide tool for

promoting economic efficiency. Those considerations and others are used to assess the potential

effectiveness of incorporating each of these alternatives into antitrust enforcement and adjudication.

Many of these alternatives may be a side benefit of antitrust enforcement, but not a factor that antitrust

enforcers and courts can be expected to sensibly trade off against economic efficiency.

Keywords

Antitrust, objectives, efficiency, fairness, inequality

I. Introduction

Toward the end of the Obama administration, a number of prominent officials raised the possibility

that antitrust enforcement should be motivated by goals other than economic efficiency. Renata Hesse,

the acting Assistant Attorney General for Antitrust in 2016, gave a speech that posited that antitrust

should be concerned with fairness.

1

Jason Furman, chair of President Obama’s Council of Economic

*University of Maryland, Baltimore, MD, USA; Resources for the Future, Washington, DC, USA

Corresponding Author:

Timothy J. Brennan, University of Maryland, Baltimore County, 1000 Hilltop Circle, Baltimore, MD 21250, USA.

Email: brennan@umbc.edu

1. Renata Hesse, Opening Remarks, 2016 Global Antitrust Enforcement Symposium (Sep. 20, 2016). For a critique, see Alden

Abbott, Acting AAG’s Policy Speech Sends the Wrong Signals on Antitrust Enforcement (or “a Wild Ride Back to the Fifties

The Antitrust Bulletin

2018, Vol. 63(1) 49-64

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DOI: 10.1177/0003603X18756143

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Advisers, expressed the view that stronger antitrust enforcement can and should be employed as a tool

to address rising economic inequality in the United States.

2

These views were mirrored in opinion

pieces in in the New York Times.

3

The unexpected victory by Republican candidate Donald Trump in the 2016 presidential election,

along with continuing Republican majorities in both houses of Congress, has likely made changes

along these lines less immediate—although Mr. Trump’s campaign statements indicated that other

populist concerns should play a role in antitrust enforcement.

4

Moreover, the Democratic Party has

argued that antitrust enforcement should be strengthened, although a specific role for considerations

other than consumer welfare was not set out.

5

In light of the mushrooming of these arguments and the

likelihood of political cycles, it is worth considering whether antitrust enforcers should go beyond

what has become standard practice and incorporate these other goals.

The view that antitrust should be guided by static economic efficiency is a relatively recent

development. Its practical manifestations might be traced to the creation in 1974 of an independent

group of economists in the U.S. Department of Justice’s Antitrust Division (the Economic Policy

Office, now the Economic Analysis Group), the Supreme Court’s 1977 elimination of the per se rule

for nonprice vertical restraints,

6

the 1978 establishment of the Bureau of Economics in the Federal

Trade Commission, and the first edition in 1982 of the modern Horizontal Merger Guidelines under

William Baxter’s leadership of the Antitrust Division.

7

This trend by and large has continued.

8

In 2007

the Supreme Court added vertical price restraints—resale price maintenance—to nonprice restraints as

requiring a rule of reason analysis rather than illegal per se.

9

The most recent 2010 edition of the

Horizontal Merger Guidelines widened the set of analytical tools to assess price effects and consumer

harm of mergers, from market definition under a significant and nontransitory increase in price

(SSNIP)–based hypothetical monopolist test to unilateral effects evaluated through models including

but not limited to upward pricing pressure and econometrics-based merger simulation.

10

Nevertheless, the idea that something other than static economic efficiency is and should be the

motive for antitrust enforcement has been around for some time. Robert Bork advocated the view that

economic efficiency was the motivation for antitrust, but not without objection from Robert Lande,

who viewed antitrust as preventing “theft” from consumers when firms exploit their market power to

raise price.

11

Decades before, Richard Hofstadter articulated the view that the purpose of antitrust

enforcement was to limit the political power that would otherwise accrue to large businesses.

12

and Sixties”),HERITAGE FOUNDATION (Sept. 22, 2016), http://www.heritage.org/economic-and-property-rights/commentary/

acting-aags-policy-speech-sends-the-wrong-signals-antitrust.

2. Jason Furman, Beyond Antitrust: The Role of Competition Policy in Promoting Inclusive Growth, Searle Center Conference

on Antitrust Economics and Competition Policy (Sept. 16, 2016).

3. Eduardo Porter, In a Merger Boom, Labor Loses Ground,N.Y.T

IMES (Nov. 2, 2016), at B1.

4. Contrast Alan Neuhauser, On Antitrust, Trump Signals a Return to the Bush Years,U.S.N

EWS AND WORLD REPORT (Dec. 9,

2016), with David Kully, Trump Team May Inject Populist Agenda into Antitrust Decisions,T

HE HILL (Jan. 31, 2017).

5. Chuck Schumer, A Better Deal for American Workers,N.Y.T

IMES (July 24, 2017), at A19.

6. Continental Television v. GTE Sylvania, 433 U.S. 36 (1977).

7. U.S. DEP’TOFJUSTICE,HORIZONTAL MERGERGUIDELINES (1982), https://www.justice.gov/archives/atr/1982-merger-guidelines.

8. A potential exceptio n to this trend arguably was the when the leadership of the Antitrust Divisi on, newly appointed

following President Obama’s inauguration in 2009, withdrew guidelines for assessing “single firm conduct” under

Section 2 of the Sherman Act.

9. Leegin Creative Leather Products, Inc. v. PSKS, Inc., 551 U.S. 877 (2007).

10. U.S. DEP’TOFJUSTICE &FED.TRADE COMM’N,HORIZONTAL MERGER GUIDELIN ES (2010), https://www.justice.gov/atr/file/

810276/download.

11. ROBERT BORK,THE Antitrust Paradox: A POLICY AT WAR WITH ITSELF (1978); Robert Lande, Wealth Transfers as the Original

and Primary Concern of Antitrust: The Efficiency Interpretation Challenged,34H

ASTINGS L.J. 65 (1982).

12. Richard Hof stadter, What Happened to the Ant itrust Movement? in THE MAKING OF COMPETITION POLICY:LEGAL AND

ECONOMIC SOURCES (Daniel Crane & Herbert Hovenkamp eds., 2013).

50 The Antitrust Bulletin 63(1)