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The Antitrust Enterprise: Principle and Execution
After thirty years, the debate over antitrust's ideology has quieted. Most now agree that the protection of consumer welfare should be the only goal of antitrust laws. Execution, however, is another matter. The rules of antitrust remain unfocused, insufficiently precise, and excessively complex. The problem of poorly designed rules is severe, because in the short run rules weigh much more heavily than principles. At bottom, antitrust is a defensible enterprise only if it can make the microeconomy work better, after accounting for the considerable costs of operating the system. The Antitrust Enterprise is the first authoritative and compact exposition of antitrust law since Robert Bork's classic The Antitrust Paradox was published more than thirty years ago. It confronts not only the problems of poorly designed, overly complex, and inconsistent antitrust rules but also the current disarray of antitrust's rule of reason, offering a coherent and workable set of solutions. The result is an antitrust policy that is faithful to the consumer welfare principle but that is also more readily manageable by the federal courts and other antitrust tribunals.
376 pages, Hardcover
First published January 1, 2006
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August 14, 2017
Herbert Hovenkamp is one of the great antitrust scholars of our generation, and in this book he tries to synthesize what the country and the courts get right and what they get wrong in antitrust law.
His basic position is that of a tempered "Chicago School" lawyer, who believes that antitrust does best when its touch is light and when it recognizes its own limitations. He attacks many 1960s and 1970s era rulings that applied overbroad "per se" tests to automatically strike down competitive conduct. For instance, the U.S. v. Schwinn ruling from 1967 argued all vertical nonprice agreements were "per se" unlawful, and the Albrecht v. Herald Co case in 1968 did the same for maximum "resale price maintenance" rules (both were overturned, in GTE Sylvania (1977) and State Oil v. Kahn (1997)). He attacks others that still survive, such as the "per se" ruling against "tying" a product with another in which a company has a dominant market. Most of these, and most of everything outside "naked" agreements between competitors to raise prices and lower output, should be evaluated under the "rule of reason" to see if they have real negative effects.
He condemns a host of other laws, cases, and practices, such as the 1992 Kodak case which said the company had a "monopoly" on its own camera purchasers to sell them future supplies, or the Robinson-Patman Act which forbids manufacturers giving differing discounts to distributors (he argues that usually its distributors who monopolize, not manufactures). But, on the whole, he thinks most contemporary antitrust works pretty well, much better than it did before. He just counsels that we have to recognize that antitrust can't discover much and can't "balance" equities easily, so it should aim to "underdeter" to prevent overbroad cases. The book was a little tedious, but it's a good case, well made.
His basic position is that of a tempered "Chicago School" lawyer, who believes that antitrust does best when its touch is light and when it recognizes its own limitations. He attacks many 1960s and 1970s era rulings that applied overbroad "per se" tests to automatically strike down competitive conduct. For instance, the U.S. v. Schwinn ruling from 1967 argued all vertical nonprice agreements were "per se" unlawful, and the Albrecht v. Herald Co case in 1968 did the same for maximum "resale price maintenance" rules (both were overturned, in GTE Sylvania (1977) and State Oil v. Kahn (1997)). He attacks others that still survive, such as the "per se" ruling against "tying" a product with another in which a company has a dominant market. Most of these, and most of everything outside "naked" agreements between competitors to raise prices and lower output, should be evaluated under the "rule of reason" to see if they have real negative effects.
He condemns a host of other laws, cases, and practices, such as the 1992 Kodak case which said the company had a "monopoly" on its own camera purchasers to sell them future supplies, or the Robinson-Patman Act which forbids manufacturers giving differing discounts to distributors (he argues that usually its distributors who monopolize, not manufactures). But, on the whole, he thinks most contemporary antitrust works pretty well, much better than it did before. He just counsels that we have to recognize that antitrust can't discover much and can't "balance" equities easily, so it should aim to "underdeter" to prevent overbroad cases. The book was a little tedious, but it's a good case, well made.
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