Cornell Law Review

In an essay published in the mid-1960s, historian Richard Hofstadter posed a question that was as simple as it was profound: What happened to the antitrust movement in America?^{11. RICHARD HOFSTADTER, What Happened to the Antitrust Movement?, in THE PARANOID STYLE IN AMERICAN POLITICS AND OTHER ESSAYS 188 (1st ed. 1965).} Hofstadter observed that Americans had lost their zeal for antitrust and that antitrust enforcement had become unmoored from its trust-busting roots. Ironically, the antitrust enforcement scene that Hofstadter lamented a half-century ago would appear robust compared to antitrust enforcement today. Accordingly, Hofstadter’s question is perhaps even more relevant now than it was fifty-five years ago.

Antitrust in America stands at a crossroads. As Professor Herbert Hovenkamp has observed “[a]ntitrust in the United States today is caught between its pursuit of technical rules designed to define and implement defensible economic goals, and increasingly political calls for a new antitrust ‘movement.’”^{22. Herbert Hovenkamp, Whatever Did Happen to the Antitrust Movement?, 94 NOTRE DAME L. REV. 583, 583 (2018)} The Supreme Court once exalted the antitrust laws, in general, and the Sherman Act, in particular, as the “Magna Carta of free enterprise,” but judicial construction has narrowed their reach significantly over the past forty years.^{33. United States v. Topco Assocs., Inc., 405 U.S. 596, 610 (1972).} Technical rules have triumphed over more traditional goals, sociopolitical freedom and cabining the power of big business.^{44. Hovenkamp, supra note 2, at 585.} The prevailing view today is that antitrust laws should be implemented to maximize consumer welfare.^{55. See ROBERT H. BORK, THE ANTITRUST PARADOX 81 (1978).} The consumer welfare model in turn relies heavily on Chicago School economic theory with its emphasis on efficiency, self-correcting markets populated by rational, self-interested participants, administrable rules and minimalist intervention. Specifically, the model posits that market power is not sustainable because entry will counteract any price rises resulting from the exercise of that market power.^{66. Frank H. Easterbrook, The Limits of Antitrust, 63 TEX. L. REV. 1, 15 (1984).} Not surprisingly, the current antitrust public enforcement scene reflects that minimalist approach. Although the agencies still pursue cartels with gusto, they rarely challenge mergers or single firm conduct, including refusals to deal and exclusionary behavior by dominant firms.^{77. See Victor Reklaitis, Senate Panel Grills Justice Department and FTC Chiefs Over Their Antitrust Probes into Big Tech, MARKETWATCH (Sept. 17, 2019, 4:36 PM) (quoting Oversight of the Enforcement of Antitrust Laws: Hearing Before the Subcomm. On Antitrust, Competition Policy, and Consumer Rights of the S. Comm. on the Judiciary, 116th Cong. (2019) ) (statement of Sen. Richard Blumenthal, Member, S. Comm. on the Judiciary) (“The fact that you’re coming here without any specifics, I think, reinforces the impression that federal antitrust enforcement is an empty suit. Call it a culture of capitulation. What the public sees is a façade with respect to Big Tech, and no immediate prospect of urgency[.]”), https://www.marketwatch.com/story/senate-panels-antitrust- hearing-could-deliver-hints-on-governments-probes-into-big-tech-2019-09- 17?mod=victor-reklaitis_seemore/ [https://perma.cc/B462-4M2U]. But see FTC v. Qualcomm, 411 F. Supp. 3d 658, 668 (N.D. Cal. 2019) (denying Qualcomm’s motion to dismiss an antitrust suit brought by the FTC).} Enforcers have tolerated behemoths in high tech, big data, retailing, telecommunications, and entertainment with the expectation that size will generate efficiencies and foster innovation. Paradoxically, “the antitrust laws, which were rooted in deep suspicion of concentrated private power, now often promote it.”^{88. David Streitfeld, Amazon’s Antitrust Antagonist Has a Breakthrough Idea,N.Y. TIMES, (Sept. 7, 2018), https://www.nytimes.com/2018/09/07/technology/ monopoly-antitrust-lina-khan-amazon.html [https://perma.cc/WN4N-3WEF].}

Critics of the consumer welfare model argue that its narrative is flawed and that “it is bad history, bad policy and bad law to exclude certain political values in interpreting the antitrust laws.”^{99. Robert Pitofsky, The Political Content of Antitrust, 127 U. PA. L. REV. 1051, 1051 (1979).} As Professor Tim Wu has observed, the courts’ “overindulgence” in Chicago School theory has “enfeebled” antitrust law.^{1010. TIM WU, THE CURSE OF BIGNESS: ANTITRUST IN THE GILDED AGE 17 (2018).} Moreover, Chicago School theory has largely failed to deliver what it has promised. Size alone does not necessarily generate efficiencies or foster innovation. Nor do markets necessarily self-correct in the real world, as opposed to in the Chicago School model; market power may in fact prove durable as experiences with Standard Oil, Microsoft, and Alcoa demonstrate.^{1111. Jonathan B. Baker, Taking the Error Out of “Error Cost” Analysis: What’s Wrong with Antitrust’s Right, 80 ANTITRUST L.J. 1, 10 n.39 (2015); see also WU, supra note 10, at 121 (noting the durability and growing dominance of Google, Facebook, Ebay, and Amazon).} The result may lead to higher prices and lagging innovation for a sustained period of time. Even where market power has created efficiencies that have led to lower consumer prices, it may, at the same time, have depressed wages, constrained individual economic freedom and limited consumer choice.^{1212. See Lina M. Khan, The Ideological Roots of America’s Market Power Problem, 127 YALE L.J.F. 960, 961 (2018).} Under this view, the existence of market power alone may create entry barriers, discourage investment or impede innovation. Accordingly, the current enforcement agency focus on conduct in Section 2 cases is too narrow; the appropriate inquiry is whether the conduct impairs the competitive process. This approach has been pejoratively and dismissively labelled “hipster antitrust” by its detractors, who argue that it advocates a return to enforcement policies that protect small, inefficient businesses at the expense of consumers.^{1313. See Joshua D. Wright, Elyse Dorsey, Jonathan Klick & Jan M. Rybnicek, Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust, 51 ARIZ. ST. L.J. 293, 295–96 (2019).} In fact, critics of the Chicago School, however denominated, simply seek to return antitrust enforcement to its historic roots—“constraining the accumulation of unchecked private power and preserving economic liberty.”^{1414. WU, supra note 10, at 17.}

A second problem with the current state of affairs is that antitrust law has grown overly complicated. In part, this is due to sophisticated marketplaces that have evolved in the twenty-first century and in part due to ever increasing reliance on economic assumptions and economic principles by courts and enforcers in evaluating and resolving antitrust disputes. The Horizontal Merger Guidelines provide an apt example. The Guidelines are heavily steeped in economic theory and require expert economists to translate. As a result, merger law has become largely inaccessible to the general public, as well as to large segments of the bench and bar, the very constituencies that the Guidelines were intended to inform. Third, increased reliance on economics, however, is only one source of the growing complexity of antitrust law. As the national economy has shifted away from manufacturing and into high tech, equitable remedies in monopolization cases have become difficult to fashion and costly to enforce. Damages, especially in multiparty, multidistrict, industry-wide cases, remain difficult to calculate and to apportion. Fourth, the inherently complicated nature of antitrust disputes has led some courts, fearful of decisional error and the resulting false positives that could stymie procompetitive conduct, simply not to intervene in certain cases. This Essay presents four proposals designed to address the foregoing concerns and promote a revival of antitrust enforcement in the United States.

To read more, click here: A 2020 Agenda For Re-Invigorated Antitrust Enforcement: Four Big Ideas .