The Antitrust Religion
By Edwin S. Rockefeller
Washington, DC: Cato Institute, 2007
124 pages, $16.95; ISBN-13 978-1933995090
The Antitrust Religion, by Edwin S. Rockefeller, convincingly documents myriad problems with government antitrust policies. The book’s cover promises to tell “How blind faith in antitrust has led to confusing and arbitrary enforcement.”
The book fulfills that promise, but the author’s broadest attacks on antitrust fail to persuade.
As Rockefeller shows, the federal government’s antitrust statutes–the Sherman Act and the Clayton Act–are vague, and so overbroad that they would forbid most ordinary economic activity. Accordingly, the courts and enforcement agencies have developed doctrines and rules to implement the statutes.
Unfortunately, many of the rules created by courts and agencies are themselves vague and constantly changing, and their application is impossible to predict.
Rockefeller’s chapter on mergers is especially persuasive. He explains how Supreme Court decisions from the 1960s gave the government carte blanche to block mergers. In recent decades, the government has used this power much less aggressively, but no one can predict which mergers will be blocked.
Likewise, the chapter on monopolization shows how businessmen are subjected to a legal regime in which “Everything is relevant and nothing is determinative,” so that a business that is conscientiously trying to obey the antitrust laws cannot tell whether antitrust enforcers will claim a particular action is an effort to monopolize. “This is not the rule of law but of roulette,” Rockefeller observes.
The chapter on tying (e.g., “You can buy my sewing machine only if you also agree to purchase thread for the machine from me.”) starts off well with a standard libertarian critique of tying: that there is only one monopoly profit to be had, and it does not matter whether the monopolist extracts the profit all at once (from the sale of the sewing machine) or gradually (from high-priced thread).
But then we are told of new research from professors Thomas Krattenmaker and Steven Salop showing tying can in certain circumstances be used to obtain a new monopoly, not just to exploit an existing one. Rockefeller dismisses the theory because it is “Explained with the help of charts and not easily understood” and because “a hypothetical condition” described by academic economists might not exist in the real world.
Yet Rockefeller offers not the slightest evidence to convince the reader that the Krattenmaker/Salop conditions do not sometimes prevail in the real world.
In contrast to the rest of antitrust policy, there is a very clear rule on price-fixing: It is always illegal, and it is the only antitrust violation for which the government uses its criminal enforcement powers. Rockefeller notes there are some instances in which price-fixing may actually improve economic efficiency, and that government sometimes creates cartels to engage in the very crimes that are otherwise forbidden.
But Rockefeller does not prove why a carefully tailored antitrust rule against price-fixing, enforced only with civil sanctions, would not promote efficiency.
Bigoted, Ignorant Claim
The weakest part of the book is Rockefeller’s insistence that antitrust is like a religion because (he claims) people believe in it based on blind faith instead of factual inquiry and because (he says) antitrust and religion both impose vague, shifting mandates.
That is a bigoted and ignorant claim. Orthodox Judaism, to name one of many possible examples, imposes many rules that rarely change and are extremely easy to understand (and obey, if one chooses).
Likewise, the world of religious thought is replete with great minds, such as Thomas Aquinas and John Locke, whose analysis is based on reason instead of blind faith.
Similarly, Rockefeller’s examples of quasi-religious faith in antitrust are weak. He notes, for instance, that legal writers personify antitrust with phrases such as “the task of antitrust.” But this is simply a common mode of scholarly expression. Such locutions are hardly evidence of blind faith in a particular law.
The book pessimistically concludes antitrust reform is futile. One reason, Rockefeller says, is that the now-large body of antitrust experts, represented by the Antitrust Section of the American Bar Association, has a strong economic interest in keeping antitrust alive.
Rockefeller has written a convincing critique of many aspects of antitrust enforcement, but the book is weakened by overstatement.
Although there may be good arguments showing the Sherman and Clayton Acts should never have been enacted, and that antitrust provides no benefits to the economy, the only people who would accept such claims based solely on The Antitrust Religion are readers acting on blind faith.
David Kopel (www.davekopel.org) writes frequently on technology issues for The Heartland Institute. He is also research director of the Independence Institute in Golden, Colorado.