Priorities for the Next President: Antitrust Law

Posted on Categories Business Regulation, President & Executive Branch, U.S. Supreme Court

The priority of the new administration in the field of antitrust law will be to undo the damage wrought by Chicago School dogmatists. This does not mean that the economic theories that form the basis of Chicago School economics or its application are incorrect. But, the broad assault by academic, bureaucratic, and juristic theorists over practical reality that has gained significant momentum during the administration of George Bush the younger (hereafter the Bush Administration) has struck down the existing antitrust legal analysis without regard to precedent, evidence, jury findings, and the value to society of private attorneys general in the enforcement of antitrust laws.  During the Bush Administration, the older Chicago School theorists on the United States Supreme Court and the lesser appellate courts have joined with new appointees to alter in many basic ways the structure of antitrust law, e.g., they have undone the per se standard for vertical minimum price-fixing, created high barriers for plaintiffs at the pleading stage for antitrust cases so that it is difficult to avoid dismissal prior to discovery, and strengthened the freedom of monopolists to refuse to deal with parties dependent on what they sell and thereby to avoid greater competition for whatever their products may be used to produce.

The current neoconservative majority of the United States Supreme Court and the lesser appellate courts will make it difficult for a new presidential administration to bring the change needed to correct the imbalances fostered by the Bush Administration. Because the development of antitrust law is driven more by the courts than by the executive branch (especially when one is trying to open the spigot to allow application of antitrust law to police the marketplace, as against using the government as a bottleneck), the new administration may have little effect in its efforts to rein in the excesses wrought by the Chicago School theorists. Still, like the Bush Administration, the new administration can use its executive branch powers to foster practical doctrines. By challenging the unsupported parts of the Chicago School doctrine (e.g., fear of free riders where none seem to appear) and showing respect for administrative agency determinations, the new administration may enable a revival of antitrust law protection against the abuses in vertical distribution and elsewhere that have been sheltered by the Bush Administration.  A healing of the open rift between the Antitrust Division of the Department of Justice and the Federal Trade Commission that has simmered for many years and finally erupted over the past year may foster more effective cooperation and thereby better protection of the marketplace. 

Still, whenever the Antitrust Division, the FTC, or private parties bring antitrust actions, the judicial theorists are very likely to apply standards set by the Chicago School dogmatists.  Consider the willingness of the neoconservative members of the Supreme Court last year (in Leegin Creative Leather Products, an antitrust case, when addressing a substantive standard of proof that had been actively upheld for almost a century) to abandon the stare decisis standards that had been endorsed by some of the same neoconservative jurists a year earlier in Wisconsin Right to Life.  This augurs poorly for the prospects that their judicial activism will be stilled by a new administration. Indeed, even the ability of the FTC to bring reasoned application of the antitrust laws administratively has been undermined by the neoconservative jurists, who have not avoided treading on the historic fact-finding role of administrative agencies. Although a new presidential administration may change the focus of enforcement by the Department of Justice, it may take many years to undo the actions of the neoconservative majority of the current Supreme Court and of the Bush appointees in the lower-level United States courts.

2 thoughts on “Priorities for the Next President: Antitrust Law”

  1. Is there a chance that the consolidation of the banking industry during our current economic crisis becomes a major antitrust concern? I would imagine (I’ll admit that I haven’t looked) that some markets will be dominated by a small number of banks. In the long run, I think a reduced number of “major” banks will harm consumers.

  2. Senator Biden has already co-sponsored legislation (Senate Bill S.2261 “Discount Pricing Consumer Protection Act”) to correst the Supreme Court’s misinterpretation of the Sherman Antitrust Act in the Leegin decision. Five Supreme Court Justices should not be allowed to determine National Antitrust Policy. If the Five Supreme Court Justices got this Leegin decision correct then Congress will have no problem affirming the decision. The “Consumer Goods Pricing Act of 1975” put an end to the dark days of Fair Trade Laws (really UNFAIR manufactuer PRICE FIXING laws). When then President Ford signed the CGPA into law he said, “This act will make it ILLEGAL for manufactuers to FIX the PRICES of products sold by retailers”. What more did these Five Supreme Court Justices need to understand Congressional intent ? President Ford certainly understood what Congressional intent was when he signed the CGPA. Illegal means Illegal and not some end run around the law with the rule of reason application. Illegal means “PER SE” illegal.

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