Eleanor Fox evaluates “The Political Economy of the Decline of Antitrust Enforcement in the United States” by Professors Lancieri, Posner, and Zingales, praising its revelations on the depth of corporate capture while challenging its narrative of judicial and regulatory dissembling on promises to uphold antitrust.
Filippo Lancieri, Eric Posner, and Luigi Zingales have written a powerful article, “The Political Economy of the Decline of Antitrust Enforcement in the United States” (85 Antitrust LJ 441 (2023), hereafter “The Article”). Addressing the dramatic shrinking of antitrust law in the United States since the early 1980s, their thesis is that the decline was bought by corporate America. The authors reject the “enlightened technocratic narrative” – that the ideas of experts drove the revolution.
While I would give more credence than do the authors to the power of ideas, the authors are largely correct in their explanation of changes in antitrust law for the last quarter century, and their article is a major contribution to the literature and to our own education as we move forward in a world in which the long-enduring conservative consensus has at last been seriously challenged as against the public interest.
Despite the accolades, I have some serious concerns about the Article; both with the framing and, in the first part, with inferences the authors draw from the data. My concerns do not impugn the Article’s major conclusion, but they do challenge the assertions that the decline is against the will of the people and that it was a sneak operation of unaccountable, evasive judges and regulators who deceptively, as nominees, avowed their commitment to antitrust.
In this essay I first discuss the framing of the issue. Second, I state my own perspective on the causes of the decline. Third, I question the authors’ confidence in knowing what the public wants; I do not think there are grounds for concluding that the current (pre-Biden) brand of enforcement is against the public will. Fourth and fifth, I explain my disagreement with the Article’s assessments of the justices and the regulators, in terms of both their candor at confirmation hearings and their hostility to antitrust. Finally, I reaffirm my praise for the Article’s revelations of the extent of capture by corporate America.
Framing the issue
What has declined? Enforcement has not declined, in terms of numbers of cases brought and time, energy, and devotion by the antitrust agencies–the Federal Trade Commission and Department of Justice Antitrust Division–except as necessitated by Congress’ budget cutbacks. What has changed is not enforcement activity; it is substantive law. The problem is that the Supreme Court has shrunk the scope of non-cartel antitrust, beginning with the Reagan era in 1981. Until about 2020, with actions against Big Tech, the authorities brought very few monopoly cases and very few vertical cases, in view of a “common wisdom” that unilateral conduct, vertical agreements, and mergers are almost always efficient and beneficial to consumers.
A second framing problem is even more basic. What is antitrust? What does it do, and what can we expect it to do if there is more of it? What relevant information do we learn when a pollster asks: Do you have confidence in big business? Are you dissatisfied with its size and influence? Should it be broken up? Do you support antitrust enforcement and its protection of small businesses?
If we are talking about the discipline of antitrust as we know it and have known it, then we would have to acknowledge that antitrust does not break up firms because they are too big, and it does not protect small businesses from competition. As Justice Sandra Day O’Connor accurately said in her confirmation testimony, antitrust protects competition; opportunity for small business can be a by-product of protecting competition. As Justice Stephen Breyer accurately said in his confirmation testimony, the meat of antitrust is preserving market competition for the benefit of consumers, especially by way of lower prices and higher quality. (This formulation does not preclude the role of antitrust in protecting the supply side as well as the consumer side of the market. Both justices would probably have protected writers, workers, farmers, and small suppliers from cartel-like restraints on the buy-side.)
The biggest issue today regarding the shrinkage of antitrust is not whether antitrust should be expanded to protect small businesses from competition or to allow big-firm breakups. Rather, the problem is that the Supreme Court is so hospitable to big business that it has formulated legal principles regarding proof of market power and characterization of exclusionary acts as anticompetitive so as to make it extremely difficult for a plaintiff to win a case; even the most basic case in which the direct victims are consumers.
By planting the idea that more antitrust enforcement means protection of small businesses and abundant use of breakups, the Article thus creates noise in the questions and irrelevance in the answers. It would be very hard to take a meaningful poll of “the people” to determine whether they are for or against the changes wrought by the Reagan antitrust revolution. We could observe that Congress has not taken action to reverse the key Supreme Court decisions that have led us down the path of neoliberalism, despite the plentitude of bills that would have done so; but that would assume, contrary to fact, a functional Congress.
My perspective on the causes of the shrinkage
I believe that the shrinking of U.S. antitrust law, beginning in the mid-to-late 1970s, was a result of five factors: 1) In the 1970s, U.S. antitrust law had become overbroad in its prohibitions, prohibiting even pro-market collaborations of small firms. The overbreadth became particularly apparent when barriers to trade declined substantially and foreign competitors were outcompeting U.S. firms. 2) In the run up to the presidential election of 1980, there was widespread concern that law and regulation (not just antitrust) was smothering businesses and needed to be cut back, in the interests of U.S. consumers, international competitiveness, and even small businesses. 3) Meanwhile, economics was beginning to inform all law. The Chicago School of Economics was waiting in the wings to rush in; it wanted to be THE economics, in the guise of being neutral. The rise and anchoring of Chicago School economics was carefully orchestrated in symbiosis with its angels: big business – as the Article testifies. 4) Corporate America was happy to fund the “beautiful ideas” generated by a wing of the academic community that deeply believed — and still does — in laissez faire as the economic order that makes people better off. 5) There were deep facilitators of the shrinkage of non-cartel antitrust. The move to technocracy across all specialties of economic law was a prominent facilitator. As technocracy entails, only the experts understand the intricacies of the law; only the experts can perceive the effect of presumptions used in legal analysis, such as the Chicago School presumptions that markets work, and that business can seldom get and keep market power. Deep facilitators also included judicial selection and judicial “education,” beginning with Reagan’s hundreds of judicial appointments and intensive judge training by committed neoliberal scholars — supported by corporate funds, as well detailed in the Article.
What does the public want? Is the reformulation against the will of the public?
I addressed aspects of this question under Framing the issue, above. I would add:
It is impossible to know whether the public wanted, opposed, or had a view on the reformulation of the substantive antitrust law from the polling data presented. For example, that people are dissatisfied with the size and influence of major corporations says nothing about what they would do about it. Repeal Citizens United? Create a new regulatory agency? Pass a law to break up five Big Tech companies – risking that they may not get their packages delivered overnight or may lose easy access to their customers?
It may be fair to assume that people want lower prices. Would they want antitrust to protect small businesses or to break up big businesses if that action could stand in the way of lower prices? Technical experts debate the effects of more antitrust at a level of sophistication that may be beyond the ability of the public to engage.
I cannot conclude that the public has an opinion on the contraction of non-cartel antitrust law.
Candor: Was neoliberalism in antitrust a stealth project?
On this question, too, I signaled my concerns in framing the issue, above. I shall be more detailed here.
According to the Article, a litany of regulators and Supreme Court nominees avowed in confirmation hearings that they supported antitrust, and it turned out that they didn’t. The Article says: “[W]henever nominees expressed an opinion, it was generally in favor of stronger enforcement and the protection of small business.”
I do not read the testimony quoted in the Article to support this statement. Part of the problem is the authors’ assumption that stronger enforcement means protection of small businesses and, quite separately, that commitment to cartel enforcement and other enforcement that lowers prices does not count as commitment to antitrust.
O’Connor simply said, as quoted in the Article:
“Certainly I recognize that the object of the Sherman Act was to reduce or eliminate monopolies. To that extent, of course it has the effect of encouraging competition and encouraging smaller units to be in operation” (at note 157).
This is a far cry from saying that antitrust protects small businesses. O’Connor’s statement is a good example of the testimony of the other judicial nominees that the Article quotes in favor of stronger enforcement. Moreover, strangely, the authors treat Breyer as an exception from those who generally expressed (deceptively) an opinion in favor of stronger enforcement. As Breyer said in his testimony:
“[I]f you are going to have a free enterprise economy, if you are not going to have the Government running everything, then you must have a strong and effective antitrust law. … Antitrust law aims, through the competitive process, at bringing about low prices for consumers, better products, and more efficient methods of production.” (at note 163)
The apparent reason for excepting Breyer from the group of “dissembling” nominees is that he did not say he would apply antitrust law to protect small businesses; but neither did the testimony of any other nominee or regulator, read correctly.
When Breyer, O’Connor, David Souter, Clarence Thomas, and others went on to pen or join opinions for antitrust defendants, even or especially if those opinions contained laissez faire assumptions, did they betray their representation that they supported antitrust enforcement? The authors think: yes. I think: no. Affirming support for antitrust was hardly like saying, in a confirmation hearing, “I will not reverse Roe v. Wade,” and then going ahead and doing it. Supporting a cartel-centered antitrust can reasonably be called supporting antitrust enforcement, in accepted parlance.
Antonin Scalia, on the other hand, in the amusing statement the Article quotes, candidly admitted that he did not like the antitrust law as it existed when he went to law school. It did not make any sense to him (very Borkian). Scalia said he was happy to see that antitrust was becoming grounded in economics. Had he been asked if he planned to overrule the Warren Court antitrust cases if they came before him, the candid answer would have been: yes. But everyone knew he would. He never made it a secret that he had a project to “rationalize” antitrust law.
It is true that judicial nominees do not like to antagonize the senators who grill them and will or will not confirm them. Candidates are literally prepared today to be evasive; a sad societal comment. Some of the nominees did give senator-pleasing answers; I count Souter as one (at note 220). But even Souter did not admit to using antitrust to protect small businesses; rather, he testified that the law protects “a free and open competitive economic system for everyone”—which is correct. Although Souter was expected to be — and for antitrust (as opposed to constitutional law), turned out to be — one of the conservative justices, he probably thought that he was protecting the antitrust mission.
It is doubtful that the senators did not realize the conservative bent of the conservative nominees when they confirmed them.
Tallying justices’ degrees of hostility to antitrust
In tallying justices’ antitrust hostility, the Article purports to “put some empirical meat on the anecdotal bones.” Something seems to have gone wrong here. The “empiricism” — coding who voted for antitrust defendants how often — produced dubious results. And what the Article calls “anecdotal bones” are neither anecdotal nor mere bones; they are insights that come from deep reading of the raw material: all of the relevant Supreme Court decisions, majority and dissents, and reports drawn from the papers of the justices that have been made public.
The Article says: “O’Connor, Thomas, and [John] Roberts are also [with Souter] among the most anti-antitrust justices that ever sat on the Supreme Court, voting against enforcement in the large majority of their rulings and in contradiction with their statements at the time of their nomination.”
This statement is flawed. Apart from the fact that these justices’ rulings did not betray their testimony, the list is not the most credible one. Roberts is not hostile to antitrust. O’Connor, while usually a trusted vote to join decisions for antitrust defendants, was not a leader of the decline. Scalia was far and away the most important leader of the project to rationalize antitrust by shrinking it, because of his clarity, wit, brilliance, persuasiveness, and determination. In Trinko, and the string of his dissenting opinions leading up to it, he did more to clinch the selling of the neoliberal vision than anyone else has done. It is not clear how, in the Article, Scalia escaped the “honorific” of the most notorious anti-antitrust judge. I imagine that the Article’s overlooking the mastermind, Scalia, is a product of black-box coding, which by definition misses the passion and context of words.
The Article characterizes the judges and regulators as unaccountable, non-transparent actors who betrayed trust at their confirmation hearings by falsely pretending that they supported antitrust when they didn’t, and who re-molded antitrust law against the will of the people. I have explained why I disagree with this narrative. But my disagreement is a detail, because it does not undermine the principal conclusion of the Article: the shrinking of antitrust was bought. It just makes the story less colorful.
The Article does an excellent job in amassing information on the power of money and corporate interests that relentlessly worked, and still work, to make American antitrust toothless. And antitrust is not alone. The bigger picture is accountability of corporate America vis-à-vis economic regulation. The Article is exactly what is needed to expose a gnawing problem that has lurked beneath the radar screen. What to do about it is a daunting question, but the first step to solutions is awareness.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.