Politics v. Antitrust: We Draw the Line

A successful presidential candidate calls for the government to pursue specific antitrust actions against specific companies, while decrying concentrated corporate power. Last month, a United States Senator called for antitrust examination of companies that he asserts are harming democracy.

The connections between antitrust and democracy go back a long way, growing out of fear of corporate power and concerns about late 19^th and early 20^th Century “trusts”. In 1890, Ohio Senator John Sherman, who gave his name to the first federal antitrust law, called monopoly power “a kingly prerogative, inconsistent with our form of government.” Louis Brandeis, America’s leading proponent of antitrust in the early years of the next century, similarly pulled no punches. Testifying before Congress in 1912, Brandeis said, “we cannot maintain democratic conditions in America if we allow organizations to arise in our midst with the power of the [U.S.] Steel Corporation.”

So, if antitrust serves democracy, what’s the problem with democratically-elected officials serving up the outcomes of antitrust?

The answer turns on what we mean by democracy in the world of antitrust. Because democracy is a multi-faceted idea. For example, political campaigns are winner-take-all. A friend of mine once said it was as if all but the most popular brand of cereal were removed from supermarket shelves on a particular day in November.

That’s not the way that competitive markets work. A company that wins 70% of a market on a particular day has no inalienable right to be free from continued competition. But similarity exists as well: in both settings, the legitimate victor properly gets to reap the benefits of its success. But that victor can’t and shouldn’t be allowed to harm remaining competition, as with free speech in the political context and rival competitors in the monopoly market.

Of course, economic analysis supports the view that abuse of a monopoly market position is harmful, even for the monopolist’s own customers.

Restraint of such monopoly conduct, however, also invokes a democratic principle. Antitrust advances the cause of individual economic opportunity. That may be the opportunity of an entrepreneur who starts a business, a worker who chooses among competing job offers, or a consumer who buys, well, anything.  

The blunting of individual economic aspirations resembles the deprivation of individual constitutional rights, a comparison that the first Justice John Marshall Harlan made plain in 1911 in his separate opinion in Standard Oil v. United States.  Similarly, in sketching out the political content of antitrust, former-Federal Trade Commission Chairman Robert Pitofsky included the interest in disperse decision-making authority that comes from a free market; he quoted with approval the principle that “[a]nother political objective of antitrust is the enlargement of individual liberty.”

This sense of democracy counsels against turning antitrust enforcement into a political enterprise. Antitrust defines the manner in which the competitive process is preserved and protected. Law enforcement embodies the provision of equal justice under the law. Those two principles go hand-in-hand.

A necessary (if not always sufficient) requirement for individual opportunity is the existence of competitive markets.

A necessary (if not always sufficient) requirement for equal justice is the rule of law, by which we mean the profound realization that the law is not simply a tool of those in power; it is just as much a tool that controls the use of power.

An important means of reconciling our political system with antitrust enforcement turns on the role of Congress. As Barry Lynn, Executive Director of the Open Markets Institute and a leading voice for enhanced antitrust, explained before a congressional committee at the end of 2017, “antitrust enforcers should not have to make political decisions, or judge between different political outcomes. That’s because Congress already made those political decisions when it originally framed and enacted those statutes.“

Yes. The job of Congress is to translate politics into legislation. Congress sets the terms of executive action, considers whether new laws are needed, and oversees the administration of antitrust justice.  

The job of antitrust enforcers is to vindicate the legislature’s larger social and economic goals by applying the chosen economic standard to the facts in a determined and detailed manner, while avoiding day-to-day political considerations.

In 2013, long-time antitrust advocate Albert Foer put it this way:

[E]conomic values should remain paramount. We need some anchoring [because] antitrust and political values that are not attached to economics carry the risk of subjectivity, frequent changes in direction, even corruption.

What does this mean in practice? Jonathan Baker, who has served as Director of the FTC’s Bureau of Economics, identified a number of economic factors pointing toward an increase in market power, among them insufficient deterrence of anticompetitive conduct, increasing concentration in many industries, and declining economic dynamism. Such economic analysis is also at the heart of an issue in the Yale Law Journal, entitled “Unlocking Antitrust Enforcement.”

So let’s remember that the core notion of democracy underlying antitrust is the value of individual opportunity, free from the workings of political or economic power.  Individual choice in democratic elections and individual choice in competitive markets share an intellectual legacy. These democratic roots of antitrust are best served by upholding the ability of antitrust enforcement to carry out its duties free from the jousting and scuffling of day-to-day politics.