The Revolution in Antitrust: An Assessment

• DOI: 10.1177/0003603X20950626
• Date: 01 December 2020
• Published date: 01 December 2020

Article

The Revolution in Antitrust:

An Assessment

Dennis W. Carlton* and Ken Heyer**

Abstract

In this essay, we evaluate the impact of the revolution that has occurred in antitrust and in particular

the growing role played by economic analysis. Section II describes exactly what we think that revo-

lution was. There were actually two revolutions. The first was the use by economists and other

academics of existing economic insights together with the development of new economic insights to

improve the understanding of the consequences of certain forms of market structure and firm

behaviors. It also included the application of advanced empirical techniques to large data sets. The

second was a revolution in legal jurisprudence, as both the federal competition agencies and the courts

increasingly accepted and relied on the insights and evidence emanating from this economic research.

Section III explains the impact of the revolution on economists, consulting firms, and research in the

field of industrial organization. One question it addresses is why, if economics is being so widely

employed and is so useful, one finds skilled economists so often in disagreement. Section IV asks

whether the revolution has been successful or whether, as some critics claim, it has gone too far. Our

view is that it has generally been beneficial though, as with most any policy, it can be improved. Section

V discusses some of the hot issues in antitrust today and, in particular, what some of its critics say

about the state of the revolution. The final section concludes with the hope that those wishing to turn

back the clock to the antitrust and regulatory policies of fifty years ago more closely study that

experience, otherwise they risk having its demonstrated deficiencies be repeated by throwing out the

revolution’s baby with the bathwater.

Keywords

antitrust economics, mergers, antitrust critics

I. Introduction

This essay presents our views on the scope and impact of the major changes that have occurred in

antitrust thinking and practice since the mid-1960s. We approach the issue from somewhat varied

backgrounds. Carlton joined the University of Chicago in the mid-1970s, a time of intellectual ferment

in antitrust thinking. Soon thereafter, two leading scholars in antitrust, Richard Posner and William

* Booth School of Business, University of Chicago, Chicago, IL, USA

** Retired from FTC and Department of Justice, USA

Corresponding Author:

Dennis W. Carlton, Booth School of Business, University of Chicago, 5807 S. Woodlawn Ave., Chicago, IL 60637, USA.

Email: dennis.carlton@chicagobooth.edu

The Antitrust Bulletin

2020, Vol. 65(4) 608–627

ªThe Author(s) 2020

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DOI: 10.1177/0003603X20950626

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Landes, together with Andrew Rosenfield, created a consulting firm, Lexecon, whose goal was to

apply rigorous economic theory confirmed by empirical evidence to issues in antitrust and regulation.

Carlton became associated with Lexecon in the late 1970s and since then has worked on hundreds of

antitrust cases. He has frequently served as an adviser to both the Federal Trade Commission (FTC)

and the Antitrust Division of the Department of Justice (DOJ) and has been involved in the drafting of

several of the federal guidelines for horizontal and vertical mergers. He also served as Deputy Assis-

tant Attorney General for Economic Analysis in the DOJ during the period 2007–2009. Heyer joined

the Antitrust Division of the DOJ in 1982, after obtaining his PhD in economics from the University of

California, Los Angeles. He wa s employed at the Division for th ree decades, initially as a staff

economist and subsequently in a senior management capacity, including serving as Acting Economics

Deputy on several occasions. After leaving DOJ, he worked for three years at the FTC, where he served

as Deputy to the Chief Economist in that agency’s Bureau of Economics. Heyer has worked on many

of the federal competition agencies’ most significant antitrust investigations and cases over the past

several decades and participated in antitrust policy developments and their implementation—and has

seen close up how antitrust policy at the federal level has evolved over the years. Together, our long

and varied set of experiences has provided the two of us with a useful, perhaps idiosyncratic, vantage

point from which to assess the antitrust revolution.

1

In this essay, we evaluate the impact of the revolution that has occurred in antitrust and in particular

the growing role played by economic analysis. Section II describes exactly what we think that revo-

lution was. There were actually two revolutions. The first was the use by economists and other

academics of existing economic insights together with the development of new economic insights

to improve the understanding of the con sequences of certain forms of market stru cture and firm

behaviors. It also included the application of advanced empirical techniques to large data sets. The

second was a revolution in legal jurisprudence, as both the federal competition agencies and the courts

increasingly accepted and relied on the insights and evidence emanating from this economic research.

Section III explains the impact of the revolution on economists, consulting firms, and research in the

field of industrial organization. One question it addresses is why, if economics is being so widely

employed and is so useful, one finds skilled economists so often in disagreement. Section IV asks

whether the revolution has been successful or whether, as some critics claim, it has gone too far. Our

view is that it has generally been beneficial though, as with any policy, it can be improved. Section V

discusses some of the hot issues in antitrust today and, in particular, what some of its critics say about

the state of the revolution. The final section concludes with the hope that those wishing to turn back the

clock to the antitrust and regulatory policies of fifty years ago more closely study that experience,

otherwise they risk having its demonstrated deficiencies be repeated by throwing out the revolution’s

baby with the bathwater.

II. What Was the Revolution?

As just noted, there were really two revolutions. The first had to do with advances in economists’

thinking about the effects of high and/or increasing concentration, the efficiency of business practices

within and between firms, the goals of antitrust, and the economic effects of regulation. The second

had to do with the application of price theory and economic evidence to antitrust issues by federal

agencies and the courts. We first discuss the state of thinking pre-1969 in economics and the courts and

then contrast it to post-1969. (We choose 1969 somewhat arbitrarily, but the DOJ’s first formal Merger

1. It also means that certain of the cases and firms mentioned in this article are ones for which the authors may have worked or

are working.

Carlton and Heyer 609