Books: The Antitrust Religion By Edwin Rockefeller

 

(Drivebycuriosity) - It seems that Antitrust is en vogue. Politicians, bureaucrats, journalists, lawyers and social media influencers call for more regulatory oversight of America`s companies. President Joe Biden signed an executive order to sharpen the government controls over private enterprise and increased funding for America´s antitrust agencies Federal Trade Commission (FTC) & the Antitrust Division of the Justice Department. There is a cult of professional followers - opinion makers in journalism and many intellectuals - who feel antipathy toward commercial activity and serve as a priesthood to carry out the ceremonial function of antitrust. Most Americans believe that antitrust laws preserve our free market system, protect consumers from rapacious corporations, and ensure competition in the marketplace. Many believe that antitrust "is the law that protects small business from multinational corporations” ( twitter).

"The Antitrust Religion" by Edwin S. Rockefeller, published in 2007, gives a sharp, analytical and sometimes humorous overview of America´s antitrust history ( amazon). The author, a former chairman of the American Bar Association’s Section of Antitrust Law and member of the FTC staff, describes "how blind faith in antitrust has led to confusing and arbitrary enforcement".

America`s antitrust politics started with the Sherman Act of 1890 which aimed to break trusts, meaning very powerful corporations. Since then antitrust enforcement led to the split of Standard Oil and caused long running crusades against General Motors, Microsoft, IBM and many other big corporations. Today´s trustbuster are going against Walmart, Apple, Meta, Google, Amazon and many other corporations who´s success is disliked by less efficient competitors & hated by populist politicians.

              Bad Economics

Below are some of Rockefeller´s statements:

Antitrust is a term which can`t be translated in foreign languages. Antitrust is not a coherent set of rules. Experts are required to interpret it. 

Antitrust is based on "faith that government can protect us from evils". The trustbusters want to fight market power, which is  "an imagined power, like witchcraft". 

Antitrust is "a mystique;  "an intuitive mix of law, economics, and politics, a mystical collection of aspiration, beliefs, suspicions." 

Antitrust is based on bad economics and on false interpretation of the history of American business. It is "a religious faith" and "an intuitive mix of law, economics, and politics; a mystical collection of aspirations, beliefs, suspicions, presumptions, and predictions". 

Lawyers are unable "to distinguish between contracts that promote competition and those that suppress or destroy competition... the result has been to leave to judges, and officials at the Justice Department and FTC power to make arbitrary decisions on a subjective basis". Lacking any coherent, ascertainable rule in the written antitrust statutes, judges and other government officials make arbitrary decisions using antitrust doctrines based on faith not easily overcome by reason, logic, or empirical data. 

"Antitrust is a sort of poetry".

The antitrust history moved like a pendulum. Theodore Roosevelt promoted a public relations image of being a trust buster. During the closing days of the Eisenhower administration the antitrust community was debating how to protect competition without protecting competitors. The Justice Department began an investigation of IBM in 1967 and filed a complaint in 1969, alleging that IBM had monopolized general purpose digital computers. By 1980 the antitrusters aimed to protect small business and tried to prevent concentration.  

Standard Oil went from a 85% Market Share to 60% before Antitrust Legislation was used against them.

 

 

             Based On Quicksand

 

During Reagan´s regency the pendulum swung back and antitrust activity focused more on consumer welfare, like low prices & product quality. The antitrust crowd followed Judge & Law Professor Rober Bork`s  statement that "the only legitimate goal of American antitrust law is maximization of consumer welfare"

It was rumored that one prominent Washington law firm had to borrow money to meet their monthly payroll. The firm that former Justice Department antitrust chief Herbert Bergson had started in the early 1950s began downsizing and eventually disappeared. For a while the "big business chimera" was largely forgotten.

But the chimera came back, leading to a years long crusade against Microsoft. The success of the software company came at the expense of some of her competitors - losers in the marketplace who sought government action against a winner. 

Rockefeller defends mergers: "There is some economic evidence that, where one or two firms dominate a market, the creation of a strong third firm enhances competition." Thus, prohibiting mergers may lessen competition. 

Government harassment of mergers is arbitrary and unpredictable and is done in secret and randomly driven by competitors. Merger regulation is based on "quicksand". It "lacks a firm foundation" because of "the uncertain empirical basis of existing theories for attacking mergers". In the 1960s government attorneys had the "arbitrary power to decide whether a merger will be allowed or prohibited, guided only by an irrational fear of corporate consolidation.

In cases of "predatory pricing" (selling at prices lower than those at which competitors want to sell) or "predatory buying or predatory bidding" (buying at prices higher than those at which competitors wish to buy), nothing predatory is occurring. People are simply making freely-arrived-at contracts of purchase and sale.

The multiple goals of antitrust provide psychic income to all participants by applying sinister-sounding labels to natural business activities.

 

             Sheltering Inefficient Firms

In conclusion: Antitrust resulted from Congress`desire to something even though nothing could be done. Antitrust was founded on the desire to solve a basic problem of capitalism: What to do about the losers?

The Sherman Act  reflects a hope of preserving a nation of farmers, craftsmen, and traders in small towns before industrialization  and corporate organizations transformed America ionto factories, offices and cities.

"The antitrust laws provide a vehicle for the antitrust community to carry on a useless, mischievous activity portrait as enforcement . Antitrust is"a subcategory of ideology", "a religion without a cause" and "a hoax". Rockefeller quotes Justice Abe Fortas: "Antitrust is a general sometimes conflicting statement of articles of faith and economic philosophy". A meaningless word game without merit but rewarding to those who play it well .

Antitrust "has often served to shelter inefficient firms from lower prices and innovations". Antitrust is a form of regulation that makes the economy less efficient. Antitrust attorneys, private plaintiffs, consultants, and the antitrust bureaucracy have much to gain from a continuation of antitrust and much to lose from any repeal of or reduction of antitrust enforcement.