The Roberts Court and Supreme Court's New Antitrust Law for the Global Knowledge and Entrepreneurial Economy in a “Perfect Storm” of Danger—And Opportunity

• DOI: 10.1177/0003603X0905400105
• Date: 01 March 2009
• Author: Charles D. Weller
• Published date: 01 March 2009
• Subject Matter: Economics

The Roberts Court and Supreme Court’s

new antitrust law for the global knowledge

and entrepreneurial economy in a “perfect

storm” of danger—and opportunity

BY CHARLES D. WELLER*

In 1905, new facts had emerged that changed science forever.

The greatest theory then known to science, Newtonian physics,

failed to explain them.

“All of my attempts to adapt the theoretical foundation of physics

to this knowledge failed completely,” Albert Einstein explained. “The

ground had been pulled out from under us, with no firm foundation

to be seen anywhere.”1

Einstein accepted the new facts and crafted an entirely new the-

ory. His theory explained the new facts regarding the photoelectric

effect, something Newtonian physics could not do, and was the basis

for his only Nobel Prize. He was twenty-six years old.2

Similarly in the fall of 2008, in the midst of the greatest financial

turmoil since the 1980s and the Great Depression, borrowing Ein-

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* Charles D. Weller, LLC, Cleveland, Ohio

1WALTERISAACSON, EINSTEIN 96 (2007).

2Id. at 96–101.

© 2009 by Federal Legal Publications, Inc.

stein’s words, the ground has again been pulled out from under us

and no firm foundation is seen anywhere. In the words of the “pre-

eminent management thinker of our time,”3Peter Drucker, we are in

an “age of discontinuity,” the “foundations have shifted under our

feet,”4and the best known theories in antitrust, economics, govern-

ment, and other fields cannot be assumed to work adequately with

the new facts—like Newtonian physics in 1905. Three facts cited by

Drucker are especially promising, and in ways revolutionary:

•Global Knowledge Economy is Replacing National Industrial Economies.

“Knowledge has become the central economic resource” for creat-

ing wealth, in the U. S. and internationally.5

•New Entrepreneurial Economy. The “most significant and hopeful

event to have occurred in recent economic and social history” is

“the emergence of a truly entrepreneurial economy in the United

States,” starting in the 1970s and now spreading worldwide.6

•Knowledge is Changing From Disciplines to Application. “What is

totally new,” and “in contradiction to all the modern university

has ever believed,” is the “shift away from disciplines as the center

of teaching and learning” to organization by applications, which

was “bound to happen as application became central to knowl-

edge.”7This shift also makes each discipline accountable to some-

thing beyond its own walls and its own members—areas of

application, just as science and law are accountable to an outside

measure, factual reality.

These new factual realities can unleash a “perfect storm” of

opportunity for the United States and for people around the world.

Palpable proof of the opportunity in these doom and gloom times

includes these examples:

158 :THE ANTITRUST BULLETIN:Vol. 54, No. 1/Spring 2009

3Amanda Bennett, Management Guru, WALL ST. J., July 28, 1987, at 1. See

Peter Drucker,T

HE ECONOMIST, Oct. 17, 2008, http://www.economist.com/business

/management/displayStory.cfm?source=hptextfeature&story_id=12429448.

(“Peter Drucker is the one guru to whom other gurus kowtow.”).

4PETER DRUCKER, THE AGE OF DISCONTINUITY 10 (1992). See also Peter

Drucker on the New Business Realities, in Symposium: New Foundations for Joint

Ventures and Antitrust, 44 ANTITRUST BULL.787, 799 (1999).

5DRUCKER, supra note 4, at 40.

6PETER DRUCKER, INNOVATIONAND ENTREPRENEURSHIP vii (1985).

7DRUCKER, supra note 4, at 350.

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• Google did not exist ten years ago. Today it has cash revenues of

$20 billion and a market capitalization of $150 billion.

• Apple’s iPod/iTunes did not exist five years ago. Today they gener-

ate $10 billion in revenue and have helped Apple’s stock grow from

a market capitalization of $1 billion in 2003 to $150 billion in 2008.

• Manufacturing companies like Cleveland’s Parker-Hannifin and

Nordson Corp., Canton, Ohio’s Timken Co. and Akron’s B. W.

Rogers Co., have switched from cost-plus pricing to customer-

value pricing to prosper in the global economy. (See part V.)

At the same time, the new factual realities of a global knowl-

edge and entrepreneurial economy raise critical questions about the

assumptions of antitrust law and policy crafted in another eco-

nomic era. Moreover, they provide a fundamentally new factual

foundation for antitrust law and policy. This article explores the

application and implications of these new factual realities for

antitrust law and policy under the Roberts Court since 2005 and in

the future, as well as the sea-change in applicable law by the

Supreme Court since 1977.

Part I highlights some of the key factual differences between a

global knowledge and entrepreneurial economy and the national

industrial economy facts upon which U.S. antitrust law and policy of

the past rest.

Part II shows that the Roberts Court since 2005 and the Supreme

Court since 1977, like Einstein responding to new facts, have already

significantly revised antitrust law and litigation.

As to antitrust litigation, part II.A shows that the Roberts Court

2007 Twombly 8decision is just the tip of the iceberg of the Supreme

Court’s major changes in litigation law impacting antitrust from

inside and outside antitrust, as if responding to the stunningly low

regard with which World Economic Forum surveys of over 10,000

people doing business internationally rank the U.S. state and federal

judicial systems. (See part II. A.).

As to substantive antitrust law, part II.B shows that the Roberts

Court since 2005 has continued what the Supreme Court started in

ANTITRUST FOR THE ENTREPRENEURIAL ECONOMY :159

8Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955 (2007).

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