The Evolving Populisms of Antitrust

• Publication year: 2021
• Citation: Vol. 93

93 Nebraska L. Rev. 370. The Evolving Populisms of Antitrust

The Evolving Populisms of Antitrust

Sandeep Vaheesan(fn*)

TABLE OF CONTENTS

I. Introduction .......................................... 371

II. The Primacy of Small Producers: 1890-1930s .......... 374
A. Populism of the Era: Championing the Cause of Small Producers ................................... 375
B. Rules of the Era: Hostility to Cartels and Vertical Restraints but Permissive Toward Other Practices .......................................... 379

III. The Dueling Populisms of the Mid-Twentieth Century: Late 1930s-Early 1970s ............................... 383
A. Protecting Both Consumers and Small Producers . . 383
B. Rules of the Period: Faith in the Price System and Skepticism Toward Mergers, Collaborative Conduct, and Vertical Restraints ............................ 389

IV. Consumers as the Protected Class of Antitrust: 1970s-Present ........................................ 395
A. Consumer Welfare as the Principal Aim of the Antitrust Laws .................................... 395
B. Rules of the Chicago School Era: Hostility to Collusion but General Faith in Self-Regulating Markets ........................................... 399

V. Why Consumer Welfare Should Mean Consumer Welfare ............................................... 403

A. Prevention of Wealth Transfers from Consumers to Producers is an Important Theme in the Legislative Histories of the Antitrust Laws .................... 406

B. Consumer-Oriented Antitrust Enforcement Can Promote More Progressive Wealth Distribution ..... 409
C. Consumers Are Generally Unable to Sustain Political Movements to Protect Their Interests ..... 415

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D. Building a Consumer-Based "Antitrust Movement" Is Essential for the Long-Term Vitality of the Antitrust Laws .................................... 419

VI. Conclusion ............................................ 427

I. INTRODUCTION

By all outward appearances, antitrust enforcement has been a technocratic enterprise for many decades. It is an elite, behind-the-scenes affair: economists and lawyers represent the parties involved in antitrust matters.(fn1) Federal judges decide the antitrust matter that periodically appears on their docket, and the parties and courts rarely allow cases to reach a jury.(fn2) Political interest in antitrust can be described as modest.(fn3) Presidential candidates may, at most, issue boilerplate statements on "enforc[ing] the antitrust laws so that all Americans benefit from a growing and healthy competitive free market economy."(fn4) This lack of attention is quite a contrast to the past, particularly the late nineteenth and early twentieth centuries, when antitrust was a topic of public interest and even inspired its own popular movements.(fn5) A defining issue of the 1912 presidential election was how to tackle the trusts.(fn6) The three main candidates offered contrasting approaches to this problem and presented them as central elements of their platforms.(fn7) To contemporary practitioners and scholars, however, this popular interest in antitrust is little more than a historical curiosity, far removed from the specialized antitrust machinery of the twenty-first century.(fn8)

Perhaps based on the declining public interest in antitrust, some commentators have argued that the substance of antitrust jurisprudence can be divided into "populist" and "technocratic" eras. They have asserted a tension between the two concepts. According to this

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view, populist antitrust is in conflict with economics but has thankfully been relegated to the past.(fn9) This account, however, is an oversimplification of a complex reality. As the late Robert Bork observed, the goals of antitrust are a separate question from the specific rules to apply to business conduct.(fn10) Bork recognized that in antitrust, as in any area of law, the goals come first and the appropriate rules follow. He wrote, "[a]ntitrust policy cannot be made rational until we are able to give a firm answer to one question: What is the point of the law-what are its goals? Everything else follows from the answer we give."(fn11)

From its inception, antitrust law has sought to protect some relatively vulnerable group from the power of big businesses. Even when it has been the standard-bearer of elite opinion, the Supreme Court has applied the antitrust laws in the name of protecting a particular group of non-elite Americans from the predations of powerful business enterprises. In other words, antitrust has always been populist and claimed to "speak for the vast majority of Americans who work hard and love their country"(fn12) and "against a variety of . . . 'fat cats' and 'Big Men.'"(fn13) As articulated by the Supreme Court, antitrust law has spoken against big business on behalf of consumers, small producers, or both. The Supreme Court, however, has always relied on economics to inform its formulation of specific antitrust rules. The prevailing economics of antitrust have changed over time but economic thinking has been a constant in the Court's antitrust opinions. From its inception, antitrust jurisprudence has been a mixture of populist goals and economically-informed legal rules.

The particular non-elite group championed by antitrust law has evolved over the 120 years since the enactment of the Sherman Act. Antitrust jurisprudence can be divided into three eras of populism, each with its own goals and understandings of how a market economy functions. In the first four decades, the Supreme Court described the antitrust laws primarily as statutes intended to protect small busi-

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nesses(fn14) from larger businesses and mentioned consumers infre-quently-and even then, often only indirectly. The Court's antitrust economics, for example, comprehended the effects of cartels and monopolies, appreciated the power of scale economies, and recognized how contractual restraints can protect intangible property. Starting in the late 1930s, the Supreme Court explicitly considered the interests of consumers in its antitrust decisions and recognized that they are often harmed by the practices of business. At the same time, the Court maintained its interest in preserving small businesses and on occasion had to decide between whose ox would be gored-that belonging to consumers or small business. The economics of the era prized the free play of the price system and viewed price restraints, tying, and large mergers with suspicion. In the 1970s, the Supreme Court abandoned its commitment to protecting small businesses and held that consumers are the primary group that antitrust law should protect. And, as the Court embraced consumer welfare as the proper goal of the antitrust laws, it adopted an economic paradigm that placed great faith in the self-regulating power of concentrated markets and questioned the benefits of strict antitrust rules.

Today, some antitrust commentators have called for the Supreme Court to abandon its focus on protecting consumers and focus exclusively on maximizing so-called economic efficiency, regardless of its distributional consequences.(fn15) In more concrete terms, according to this school of thought, the antitrust enforcement agencies and courts should be indifferent toward whether a dollar goes to consumers in the form of savings or to producers and shareholders in the form of profits. The courts should reject this approach and strengthen the historic commitment of antitrust law to consumer populism. Enshrining consumers as the principal protected class of antitrust law has, at least, four bases for support.(fn16) First, consumer protection would be true to the legislative intent of Congress in enacting the antitrust laws-preventing unjustified wealth transfers from consumers to producers. Second, in adhering to Congressional intent, consumer-oriented antitrust would address the dramatic growth in inequality in recent decades and promote a more progressive distribution of wealth.

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Antitrust law can prevent producers from engaging in anticompetitive conduct that transfers wealth from consumers to generally more affluent shareholders and executives. Third, this consumerist approach would protect a group generally incapable of organizing itself due to its size-after all, nearly all adult-age Americans are consumers. Fourth, consumer-oriented antitrust would help build a popular constituency for competition law enforcement, which is essential for the long-run vitality of the legal regime. Given the political power of large businesses and their general opposition to the antitrust laws, the antitrust community should establish consumers as a core constituency if the antitrust mission is to remain viable and thrive in the long run.

This Article proceeds as follows. Part II discusses the Supreme Court's rulings in the early era of antitrust: 1890-1930s. During this period, the Court articulated the antitrust laws as preserving the commercial viability and freedom of small businesses. The Court recognized the harms from cartels and monopolies and also the benefits of scale economies. Part III reviews the Supreme Court's antitrust decisions in the mid-twentieth century. Between late 1930s and early 1970s, the Court showed concern for consumer well-being but also remained committed to the protection of small businesses. The Court during this era prized the free setting of prices and...