Ideological Divisions vs. Consensus
If the first step in solving a problem is recognizing that one exists, the second step is agreeing on what exactly the problem is. Progress on some issues, like climate change, is impeded by the fact that a sizeable portion the public and many politicians deny that there is a real problem at all. On other issues lots of people are concerned, but they disagree, often vehemently, over the nature of the problem. Is the real issue with elections one of voter suppression, or election fraud? Should immigration reform focus on stronger border security, or fairer treatment of immigrants? The intensity of the public discussion of these issues often seems to hinder consensus, not further it.
In contrast, antitrust policy has over much of its history evolved through a more insular process, driven by the relatively few scholars, jurists, and politicians who made antitrust their concern. Public awareness of antitrust has generally been limited, and political intervention sporadic, often driven more by the concerns of particular industries or interest groups than by broad public interests. Partisanship in antitrust enforcement has typically been nuanced, with occasional shifts in emphasis from one administration to the next, but with a good measure of continuity. Even the major doctrinal shift in the 20th century toward economic analysis, while initially developed by academics who had free-market philosophies, ultimately became mainstream antitrust thought, as the Chicago School’s underpinnings took hold in the enforcement agencies and the courts. Many of the economics movement’s core principles continue to underlie Post-Chicago pro-enforcement theories that were developed by antitrust progressives. Until fairly recently, disagreements over antitrust policy tended to focus more on analytical details or individual case outcomes than on doctrinal fundamentals.
Now that antitrust is attracting a larger and often more politically motivated audience, there are both new opportunities and new challenges for antitrust policy. A more inclusive policy process could, in theory, lead to reforms that make antitrust more effective in dealing with a wider range of problems. But this assumes, first, that antitrust policy is in need of major changes; and second, that our political and other institutions are capable of producing reforms that will make things better, not worse. Even back in the days when a less gridlocked Congress was capable of passing major reform bills, there was a saying that proposing antitrust legislation was like opening Pandora’s Box: once antitrust is exposed to the vagaries of the political process, anything can happen, much of it bad. Think of the various industry-specific antitrust exemptions Congress has enacted over the years, for example, or misguided expansions of the antitrust laws like the Robinson-Patman Act.
For now, partisan and ideological stalemate will probably forestall the passage of major antitrust legislation. While there is support among both Democrats and Republicans for changes in antitrust policy, their main concerns differ widely, ranging from some Democrats’ focus on addressing various forms of inequality to some Republicans’ charges that big social networks stifle conservative viewpoints. If significant policy changes are to occur in the near term, they will probably have to come from the enforcement agencies and then, perhaps over time, from the courts. The U.S. agencies and the states filed several high-profile cases against large technology firms in the waning months of the Trump administration, and presumably these cases will be prosecuted vigorously by the Biden administration. But the cases, as noteworthy as they are, focus on relatively narrow conduct and break no new analytical ground, relying instead on established antitrust theories such as exclusive dealing and potential competition. As such, the cases have disappointed critics who want to use antitrust to address a wider range of ills they attribute to the excessive size and power of Big Tech.
How far the Biden administration will go in trying to take antitrust in new and more aggressive directions remains to be seen. At this writing, new leaders have not yet been confirmed at the Federal Trade Commission and the Justice Department’s Antitrust Division, though one leading critic of Big Tech and proponent of populist antitrust reforms was appointed to the White House’s National Economic Council, and another has been nominated to be an FTC commissioner. Even before new appointees took charge, the FTC and Antitrust Division began taking incremental steps, such as suspending early termination of the Hart-Scott-Rodino waiting period for filed mergers, which may signal more aggressive enforcement policies to come. The agencies’ authority to articulate new enforcement policies, file cases based on those policies, and revise their enforcement procedures makes them the best-positioned catalysts of antitrust policy change in the foreseeable future.
Agency attempts to alter antitrust doctrine in major ways, however, will be constrained by the courts. Legal principles that have been years in the making, often with bipartisan support from the agencies and the courts, will not easily be reversed. Adoption of the consumer welfare standard, skepticism toward presumptions and per se rules of illegality, recognition of efficiencies, even concerns over the error-cost implications of antitrust litigation—these and other principles are now established elements of antitrust law. Arguably these developments have made antitrust analysis more rigorous, transparent, and likely to lead to pro-consumer outcomes, both by facilitating well-founded cases and weeding out bad ones. But for those who disagree with that viewpoint—and absent legislation—moving antitrust law in a substantially different direction will require a coherent, sustained effort of advocacy and litigation that is ultimately convincing to the judiciary.
Facts, and Alternative Facts
Some arguments for major antitrust reform rest to a significant degree on ideological grounds, such as the neo-Brandeisian school’s belief that allowing businesses to become too large and powerful leads to a variety of economic, political, and social harms. Such arguments do not always invite, nor are necessarily receptive to, empirical responses. But other antitrust reform advocates assert fact-based arguments. A prevailing narrative contends that lax antitrust enforcement, as well as legal doctrines and a judiciary that are unduly hostile to antitrust, have allowed the U.S. economy to become more concentrated, more dominated by monopolist firms, and less competitive.
These arguments are susceptible to empirical analysis. The assertion that antitrust enforcement has become increasingly lenient over time is often made, and is sometimes supported with examples of cases that critics believe should have been brought or should have been won, or examples of industries that they argue have become more concentrated and less competitive. But whether enforcement activity has actually declined, at least in the important merger area where comprehensive data is readily available, is a question that can be studied, as some of my colleagues at Georgetown’s McDonough School of Business have done. They found that, during a period encompassing most of the HSR Act’s existence (1979–2017) and controlling for the number of mergers filed, the likelihood of a filed merger being challenged not only did not decrease, but more than doubled. Whether antitrust legal doctrine, or the judges who create and apply that doctrine, have become less receptive to antitrust enforcement is also a subject that my Georgetown colleagues and I have been studying in the merger area. Our initial findings indicate that litigated merger challenges over time have become more likely to succeed in court, not less. We also found no statistically significant difference in antitrust merger case outcomes depending on whether the judges were appointed by Republican or Democratic presidents. Whether the U.S. economy has become more concentrated and less competitive (due to lax antitrust enforcement, or for other reasons) involves more complex issues, but they too are susceptible to analysis, and considerable empirical work is being done in this area. Without suggesting that those questions have been settled, claims of declining competition due to increasing market concentration have been sharply challenged.
If antitrust policy becomes driven by ideology, partisanship, or populism, fact-based discussions will be of little relevance. That would be unfortunate because, whatever one may think about the state of antitrust analysis, it was forged in a rigorous process that led it to gain widespread, bipartisan support. The burden should be on those who want to abandon or substantially modify that analysis to support their arguments with facts that stand up to scrutiny.
Institutions and the Rule of Law
Recent events have subjected our society to a stress test, and some institutions have seen their weaknesses exposed while others have stepped up. Threats to governmental continuity and civil society in the aftermath of the 2020 election were contained, in large part, by the courts, applying the rule of law. Dozens of baseless lawsuits challenging the election were dispatched—efficiently, decisively, and fairly—by state and federal courts, including judges nominated by the outgoing president who prompted the lawsuits. Many of the people who stormed the Capitol in January are finding that the judicial system knows how to deal with them, too. The judiciary’s effectiveness in dealing with the election cases may have surprised some people who tend to view the courts and the litigation process skeptically, but many lawyers saw it coming. They understood that the legal system, and certainly individual judges, are far from perfect, and that elements of unfairness persist. But they also knew that the judiciary is institutionally capable of performing with competence and professionalism when presented with a situation like this. Facts matter; assertions are not evidence; clear legal rules can distinguish weak cases from good ones; and just outcomes follow when those rules are applied dispassionately.
When we consider the rule of law in the United States, or proselytize about it abroad, we are talking about an ideal—one in which legal principles are clearly defined (not arbitrarily determined by the whims of powerful individuals, nor by shifting public sentiment) and applied equally to all, and that are enforced through transparent and fair processes. How has antitrust law held up against these criteria?
The broad language of the antitrust statutes themselves provides little clarity about what is prohibited and what is not. Over time, judicially created classifications deemed certain conduct as inherently problematic, which at least had the virtue of being relatively clear, while other types of conduct and mergers were, before the economic analysis movement took hold, assessed in ways that often appeared arbitrary and inconsistent. The economics movement ushered in an analytical framework that eventually eliminated per se rules for virtually all conduct other than horizontal price fixing. From the standpoint of legal clarity, this shift produced mixed results. Categorical rules have the advantage of being relatively transparent, so reducing reliance on them can reduce certainty about what the law requires. But some categorical rules had condemned conduct based on arbitrary distinctions and without regard for potential benefits (e.g., whether a vertical practice restricted resale prices vs. resale territories). Economic analysis provides a framework that avoids such arbitrary categories, relying instead on effects-based principles that can be applied to virtually any type of industry, product, or practice. But this more flexible, principles-based approach can at times make outcomes less predictable, particularly in complex cases where experts battle over economic intricacies in front of perplexed judges and juries.
Some antitrust reform proposals circulating in academia and on the Hill would chart a course back toward more categorical rules and presumptions based on the type of conduct, markets, or firms involved. The main concern with these proposals is not whether they are transparent, but rather whether they would be good for the economy and consumers. Other proposals offer a less rigid, but also less transparent, approach; they would extend antitrust’s scope beyond (and even potentially sacrifice) protection of competition and consumers, in order to address concerns such as privacy, data security, unemployment, protection of small businesses, curbing large firms’ political influence, and income and other inequality. Some objections to these proposals focus on their goals, but the bigger question is one of means—assuming these policy concerns call out for reforms, are there more direct and effective ways to address them than by trying to expand antitrust to encompass them? If our political and regulatory systems struggle to deal with these concerns through more focused policies, why would we assume that antitrust can effectively be redesigned to do so?
Antitrust as it has been understood in the United States for several decades has been more transparent, effective and, I believe, pro-consumer than what it replaced. Reforms could be imagined that might make it work better. For it to be replaced with something wholly different, we need to evaluate the new approach’s goals; if a consensus forms around those goals, we need to test the factual basis for believing the proposed reform elements will achieve those goals; and finally, we need to ensure that any new approach to antitrust can be administered in a way that is consistent with the rule of law.
