The Antitrust Anachronism
Wall Street Journal columnist Gordon Crovitz has a great column in today’s paper on the anachronism that is antitrust law. He writes:
“Markets were so much simpler in the 1890s, when Sen. John Sherman got almost unanimous support in Congress to go after the Standard Oil Co. of Ohio. The Sherman Act and later antitrust laws were supposed to protect consumer interests. That’s not so easy when regulators have to deal with industries as different as oil, with its cartels and long product cycles, and technology, where fast change is a constant necessity for survival.”
and, especially in regard to computer technology and the Internet,
“by the time regulators can assess a technology market, the market has often moved on. Not long ago, Google was the upstart and the search leaders included names like AltaVista and Excite. ‘Regulatory intervention in the high-tech sector thwarts the natural evolution of the market,’ argues Wayne Crews of the Competitive Enterprise Institute. ‘Worse, it distorts the response of competitors. Antitrust investigations steer the market in unnatural directions, creating instabilities in entire industry sectors.'”
Since the 1980s, antitrust law has undergone a seachange, due in large part to scholarly research at Harvard and the University of Chicago, documenting the competition-enhancing effects of many behaviors previously viewed as anti-competitive. As a consequence, regulators and courts have become vastly less aggressive in their pursuit of anti-competitive witches.
Unfortunately, new Assistant Attorney General for Antitrust Christine Varney is trying to reverse much of this progress, claiming at one point that “there is no such thing as a false positive [i.e. that antitrust enforcement would accidentally preclude pro-competitive behavior], you know, let’s get real.” Now, that’s a pretty stern rebuke to most antitrust scholars–including Supreme Court Justice Stephen Breyer, who has helped roll back the sterner edges of antitrust enforcement, specifically on the grounds that false positives are real, substantial, and pernicious. Let’s just hope that the courts take their obligations seriously, and that they don’t give Ms. Varney a free pass on this kind of radical reactionary enforcement.