More than a century after passage of the Sherman Act, one might safely assume that support for the need for antitrust law is nearly universal. Who could disagree with the view that competition is good for consumers, lowers prices, enhances quality, and spurs innovation? Who could disagree that monopolies, price fixing, cartels and other antitrust evils harm consumers, raise prices and depress output, and therefore ought to be banished from the economy?
Edwin S. Rockefeller of the Cato Institute, a former head of the American Bar Association's Antitrust Law section, most certainly would. Indeed, in "The Antitrust Religion," Rockefeller attempts to do for antitrust what Christopher Hitchens and Sam Harris are currently seeking to do to organized religion: argue that it is a foolish invention, a belief system without any basis in empirical truth.
In Rockefeller's radical view, "[t]here is no such thing as antitrust law. Antitrust is a religion. Antitrust is arbitrary, political regulation of commercial activity, not enforcement of a coherent set of rules adopted by Congress."
A Broad-Based Attack, Arguing that Antitrust Law Is Far Too Vague and Imprecise
Rockefeller's polemic, a slim volume of 103 pages, manages to attack virtually every core element of antitrust -- from the need to stop anticompetitive mergers (which he claims is motivated by an "irrational fear of corporate consolidation" ), to preventing monopolies (he says "no one can monopolize any part of trade or commerce for long enough that we need a law against it"), to the concept of market power (he claims this is an "imagined power, like witchcraft"), to antitrust enforcement officials (who he says invent "sinister sounding terms for natural phenomena" and "enjoy feelings of self-righteousness"), to even the belief that there is anything wrong with price fixing (which he deems nothing more than "partial, temporary mergers" that might actually enhance "efficiency").
Perhaps nursing a family grudge that has taken one hundred years to fester, Rockefeller believes that the government's break-up of the Standard Oil trust at the beginning of the last century was completely misguided and ineffective. "History shows that the breakup of Standard Oil accomplished nothing," he declares. Moreover, every other prominent antitrust case since then, down to the Microsoft case - the recent antitrust "trial of the century" - was just as ineffectual, Rockefeller argues.
The basis for Rockefeller's attack is what he views as the fundamental imprecision and vagueness of antitrust law. He contends that the basic antitrust statutes - forbidding such things as combinations, contracts and conspiracies "in restraint of trade" (the Sherman Act) and mergers that may "substantially lessen competition or tend to create a monopoly" (the Clayton Act) - lack any "coherent, ascertainable rules." Using words that more than slightly echo those of the discredited 1905 Supreme Court decision in the infamous Lochner case, he argues that antitrust law gives "those in positions of power wide discretion to interfere with commercial activity and freedom of contract."
At base, Rockefeller believes, antitrust is merely "an intuitive mix of law, economics, and politics; a mystical collection of aspirations, beliefs, suspicions, presumptions, and predictions. Antitrust is a quasi-religious faith independent of the provisions of the antitrust statutes." All of us would be better off without this "useless, mischievous activity portrayed as law enforcement," he contends.
The Vulnerabilities of Rockefeller's Radical View
Rockefeller's Pollyannaish views of the virtues of an unregulated free market, without the intervention of antitrust law, might cheer those who wish to renew the Standard Oil trust, but should be unsatisfying for the rest of us. Anyone who has tried to win an argument over a bill with his or her cable television company, or tried to avoid an "early termination fee" 18 months into a two-year contract with his or her cell phone provider has experienced the market power controlled by a dominant firm with little competition. Anyone who has seen air fares rise when a competing airline exits a market in the face of predatory pricing, or is merged into a dominant carrier, would not be very happy to forego antitrust enforcement. Anyone who has observed what happens to prices when they are controlled by cartels - for example, crude oil in the hands of the OPEC cartel - might not be so willing to dismiss the need to prohibit price-fixing.
Not in Rockefeller's world, however. Because he believes antitrust law is unacceptably vague and uncertain - a "meaningless word game without merit," as he puts it, he concludes that antitrust does nothing more than "provide a vehicle for the antitrust community to carry on a useless, mischievous activity portrayed as law enforcement."
Of course, it's true that the antitrust laws are broadly worded and general. But so are so many other statutes and legal principles. The Civil Rights Act of 1964 makes it illegal to "discriminate" on "terms" of employment. The National Labor Relations Act of 1935 prohibits "unfair labor practices" and protects workers' right "to engage in concerted activities for the purpose of collective bargaining." Tort law assesses liability by following the standard of the "reasonable man." The Constitution itself prohibits deprivation of "due process" and "equal protection of the laws" - hugely vague concepts Does this make the Constitution a quasi-religious statement of aspirations, not law? Of course not. Mathematical precision in statutes meant to address great social and economic problems is neither possible nor, in many cases, desirable. Rockefeller completely fails to see that the flexibility of antitrust law in adjusting to economic conditions is its great strength, not weakness.
Moreover, the extreme nature of Rockefeller's wholesale assault on antitrust makes some of his assertions just plain silly. "There is no way to tell which mergers will be allowed and which will not," he tells us. Really? No way? The truth is that one doesn't need to take a course in advanced antitrust to know that a merger between two firms that don't compete - an airline and a fast food restaurant, for example -- would be allowed, while a merger between the only two direct competitors in an industry (the attempted merger between DIRECTV and the Dish Network satellite TV services springs to mind) will not. That there is a degree of ambiguity for mergers in the middle is surely not a reason to throw out the whole enterprise. As the saying goes, the existence of twilight does not negate the difference between day and night.
While Antitrust Has Flaws, Its Core Principles Are Solid and Valid
There is no question that antitrust law has its flaws, and chief among them may be its uncertainty and the difficultly of its application in close cases. And of course, Rockefeller is correct to point out that the antitrust bar is self-interested - but so is any organized group of lawyers, whether tax lawyers, personal injury lawyers, or criminal defense lawyers. What Rockefeller completely misses, however, is that the premise of antitrust law is sound, and the protections offered by antitrust are necessary. After all, even the great Eighteenth Century free market economist Adam Smith recognized that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." Centuries of experience - going back at least as far as cases decided at English common law in the reign of Queen Elizabeth I - have taught policymakers that monopolies and cartels harm consumers, harm the development of a dynamic economy, and therefore must be outlawed. Nothing in Rockefeller's book alters this fundamental conclusion.
Rockefeller does not shirk from the logical conclusion of his argument. To the contrary, he ends his book with an appeal for the abolition of antitrust law. But what would be the result of a world without antitrust? Would businesspeople no longer seek to form cartels and control the prices of essential commodities? Would there be any restraint on mergers that could create monopolies in dozens of industries? Wouldn't consumers suffer if competitive markets were destroyed? For these questions, Rockefeller has no answer.