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Antitrust Law Journal

Volume 83, Issue 1

Antitrust Law and Its Critics

A. Douglas Melamed

Summary

  • Antitrust law is the subject of substantial current controversy, criticism, and proposed reform. On the surface, there appears to be a conversation about the future of antitrust law between three groups: conservatives who argue that antitrust law is basically fine as it is, progressives who argue that antitrust enforcement has been too lax and that antitrust law should be adjusted but within the prevailing consumer welfare paradigm; and populist critics who have more far-reaching reform proposals.
  • In fact, however, there are really two very separate conversations. One, between conservatives and progressives, concerns how antitrust law might best promote economic welfare. The other, pushed largely by the populists, concerns how to replace what is now known as antitrust law with alternatives that will serve other objectives, in addition to economic welfare, such as promoting an equitable distribution of wealth and of economic and political power.
  • This paper analyzes the current controversies. It explains what the consumer welfare standard means, why proposals for abandoning or replacing it are unsound, and how the two conversations have not intersected. It ends by describing ways in which the various critics and defenders of antitrust law might fruitfully join in a single conversation that addresses both antitrust law and regulatory issues.
Antitrust Law and Its Critics
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Antitrust law is back in the news and, perhaps for the first time since 1912, in the presidential campaign. The Federal Trade Commission and various committees of Congress have held hearings on fundamental antitrust questions. Scholars from multiple disciplines have published books, articles, and reports addressing whether antitrust law needs substantial revision. Perhaps the most compelling evidence of the winds of change is that leading academic economists now appear to take seriously proposals that acquisitions by tech platforms that create “risks of anticompetitive effects” should be prohibited and that large tech platforms like Amazon should be “broken apart from any participants on the platform.” Prominent conservative commentator Peggy Noonan has said of Facebook: “Break them up. Break them in two, in three; regulate them.”

A confluence of four factors seems to have provoked this unrest. The first is a rising populism, on both the left and the right, that decries free markets, globalism, and increasing inequality within the developed countries. The second is the rise of big tech, which provokes unease because its power seems to expand without limit through scale and scope economies and network effects; because it is based on new and largely invisible technology; because it aggregates data and threatens privacy; because it implicates broader themes of powerful communications media, which have repeatedly been subject to antitrust scrutiny in the past; and because some fear that big tech undermines political stability and familiar communities and associations. The third is a growing body of economic studies that suggest that market concentration and market power have increased in recent years. The fourth is the increasing concern of libertarians about private, as well as government, power and evidence of widespread increases in industry concentration.

Antitrust law is the tool that comes first to mind as a means of addressing concerns about private economic power. On the surface, there appears to be a conversation about the future of antitrust law between three groups. The first group might be called the conservatives. They argue that antitrust law is basically fine as it is and that market concentration is transitory and, when enduring or not a reflection of superior efficiency, is largely “the result of heavy regulation rather than a natural development from the nature of business.” To the extent they advocate revisions to antitrust doctrine, they generally support modifying doctrinal provisions, such as market-share presumptions in horizontal merger cases, that make enforcement easier, and extending doctrinal provisions that restrict enforcement, such as the price-cost test for predatory pricing, to more complex forms of conduct, such as loyalty discounts. The second group might be called mainstream progressives. They argue that antitrust enforcement has been too lax and that antitrust law should be adjusted but within the prevailing consumer welfare paradigm. The third group might be called the populist critics. They include the self-described “New Brandeis” proponents and some who have more far-reaching and eccentric proposals.

In fact, however, there are really two very separate conversations. One, between conservatives and progressives, concerns how antitrust law might best promote economic welfare. The other, pushed largely by the populists, concerns how to replace what is now known as antitrust law with alternatives that will serve other objectives, in addition to economic welfare, such as promoting an equitable distribution of wealth and of economic and political power. The two conversations seldom intersect in any meaningful way.

Part I sets the stage by briefly summarizing the core principles and institutional context of antitrust law as it now exists. Part II addresses the conversation between the conservatives and the mainstream progressives about antitrust law and economic welfare. Part III explains why the concerns raised by the populist critics, although often couched in terms of economic welfare, are not really about economic welfare and why antitrust law cannot prudently address both economic welfare and the other objectives with which these critics are concerned. Part IV gazes through a hazy crystal ball and suggests possible ways to bring the conversations closer together.

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