Brandeis, Competition, and Sectorial Regulation

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In the world of competition law, Louis Brandeis applauded “the introduction of two governmental devices designed to protect the rights and opportunities of the individual.” One was, of course, antitrust. The second was the creation of “[c]ommissions to regulate public utilities.” Brandeis always preferred competition to regulated monopoly, but he recognized that there were times when sectoral regulation was needed, as, for example with local gas, water, and telephone monopolies. He viewed such instances as “exceptional” but obviously important. For example, Brandeis understood price-setting as a tool to be used only in the context of specific industries where such government involvement was necessary. Brandeis believed there to be a “radical difference between attempts to fix rates for transportation and similar public services and fixing prices for industrial services.” Brandeis also recognized the importance of sectoral regulation where regulated entities were not monopolies. He supported “effective regulation of railroads as well as of other public-service corporations, whether they be monopolies or competitive concerns,” but he vehemently argued that such sectoral regulation should work to preserve and create competition, not, as in the Theodore Roosevelt view that he opposed in 1912, simply to acquiesce in the existence of non-competitive markets.

[Jonathan Sallet is a Benton Senior Fellow]


Brandeis, Competition, and Sectorial Regulation