The Ideological Roots of America’s Market Power Problem
A Response To
Mounting research shows that America has a market power problem.1 In sectors ranging from airlines and poultry to eyeglasses and semiconductors, just a handful of companies dominate.2 The decline in competition is so consistent across markets that excessive concentration and undue market power now look to be not an isolated issue but rather a systemic feature of America’s political economy.3 This is troubling because monopolies and oligopolies produce a host of harms. They depress wages and salaries, raise consumer costs, block entrepreneurship, stunt investment, retard innovation, and render supply chains and complex systems highly fragile.4 Dominant firms’ economic power allows them, in turn, to concentrate political power, which they then use to win favorable policies and further entrench their dominance.5
As a few technology platform companies mediate a rapidly growing share of our commerce and communications, the problem will only worsen.6 Since these gatekeeper firms have captured control over key distribution networks, they can squeeze the businesses reliant on their channels. Furthermore, these firms leverage their platform power into new lines of business, extending their dominance across sectors. Their muscle, in turn, spurs additional consolidation, as both competitors and producers bulk up in order to avoid getting squashed.7 Concentration begets concentration.
As public recognition of this problem grows, increased attention is focusing on antitrust law. Politicians, advocacy groups, academics, and journalists have all questioned whether the failure of antitrust is to blame for declining competition, and whether the law must be reformed in order to tackle the monopoly problems of the twenty-first-century.8 For example, members of the House of Representative recently created an Antitrust Caucus, a forum for Congress to study and address monopoly issues. Democrats, meanwhile, last year identified renewed antitrust as a key pillar of their economic agenda, promising to “revisit our antitrust laws to ensure that the economic freedom of all Americans—consumers, workers, and small businesses—come before big corporations that are getting even bigger.”9 The interest is bipartisan: a Republican Attorney General, for example, is leading an antitrust investigation into Google, explaining, “We need to have a conversation in Missouri, and as a country, about the concentration of economic power.”10 In recent months, The American Prospect, The Nation, and The New York Times Magazine have all devoted stories to America’s monopoly problem.11 No longer the exclusive purview of a small group of lawyers and economists, antitrust is going mainstream.
The Yale Law Journal’s recent series on the future of antitrust, “Unlocking Antitrust Enforcement,” offers potential solutions to our market power problem. Generally, the authors seek to map out paths for stronger enforcement under current law. They do so by identifying (1) areas where cases could fix past judicial errors;12 (2) areas where enforcers have not brought cases that they could;13 and (3) areas requiring enforcers to recognize traditional harms in new settings.14 The commentary offered by many of these Features is timely and valuable.
What is missing from these pieces, however, is any discussion of what philosophy should guide antitrust law and its enforcement. Some of the authors explicitly ratify the current “consumer welfare” approach, which holds that output maximization is the proper goal of antitrust.15 Others do not address the topic directly, but nonetheless offer recommendations embedded in the current frame.16 And for others, perhaps, this question falls beyond the scope of the project: because the goal is to identify opportunities for more enforcement under the current regime, debating the guiding framework of the law is to them merely academic.
But neglecting this question is misguided. The sweeping market power problem we confront today is a result of the current antitrust framework. The enfeebled state of antitrust enforcement traces directly to an intellectual movement that fundamentally rewrote antitrust law —redefining its purpose, its orientation, and the values that underlie it. Addressing the full scope of the market power problem requires grappling with the fact that the core of antitrust has been warped. To be sure, many of the ideas the Features authors introduce are worth pursuing. But they pick at the symptoms of an ideology rather than the ideology itself.
Engaging the issue, by contrast, will go to the heart of why the current regime is crippled, enabling us to tackle the underlying theories and assumptions that have defanged antitrust. It will help ensure that calls for reinvigorated enforcement are not misdirected or exploited, and help ensure that doctrine develops to promote—and not undercut—the proper values of antitrust. Doing so is also likely to reveal or illuminate additional areas of unused authority, under-used doctrine, or contestable areas of both.
Moreover, politicians and public figures are debating the framework head-on: a Senate hearing last December asked whether “consumer welfare” is the right standard,17 while a cable TV host in January said our current approach to antitrust undermines key freedoms.18 Strikingly, critiques of the current philosophy have come from The American Conservative and The Nation alike.19 Ignoring the broader conversation risks reinforcing the latent sense that antitrust experts are blind to the society-wide impacts of their profession and dismissive—or even unwelcoming—of the public’s interest.20
This Response explains why addressing America’s market power problem requires recognizing its ideological roots. Part I describes the Chicago School’s interventions in antitrust. Part II explains how this ideological intervention bears on enforcement. Part III considers how the recommendations offered in the Collection are useful but will likely prove inadequate to address the scope of the problem, and Part IV offers some concluding thoughts.
I. from anti-monopoly to pro-monopoly: the chicago school’s theory of power
The antitrust laws were passed against the backdrop of growing economic concentration and the rise of industrial trusts. Railroad barons had captured control over critical transportation networks, while monopolistic corporations dominated sectors ranging from oil and sugar to tobacco and steel. A small group of investment bankers, meanwhile, used their control of the credit system to further roll up industries, directing the fate of the economy.21
Through enacting the antitrust laws—the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914—Congress sought to check this extreme concentration of private power and federalize the antimonopoly laws that had existed at the state level. Lawmakers recognized that unchecked monopoly power threatened core liberties and precluded true democracy. Taken as a whole, the antitrust laws were intended to preserve open markets and enhance opportunity, prevent large firms from extracting wealth from producers and consumers, and safeguard against extreme concentrations of private power.22 The Celler-Kefauver Act, a supplementary antitrust law, was passed in 1950 due to fears that excessive consolidation could deliver fascism.23 Recognizing this purpose, the Supreme Court has described the antitrust laws as both a “charter of economic liberty”24 and the “Magna Carter of free enterprise.”25
The antitrust statutes do not outlaw monopoly in all instances. But they carry a strong prophylactic orientation against the concentration of private economic power. This is clear from legislative history, stretching from the Sherman Act, the Clayton Act, and the Federal Trade Commission Act, to the Celler-Kefauver Amendment and the Hart Scott Rodino Act.26 Judicial interpretation followed course: the Court, for example, stated that Section 7 of the Clayton Act forbids mergers where “the trend to a lessening of competition” was “still in its incipiency.”27 Enacting this prophylactic orientation into enforcement standards, the antitrust agencies through the 1970s relied on bright-line rules and structural presumptions.
Starting in the 1940s and 1950s, a group of scholars began questioning this approach. In an influential essay from the 1960s, Robert Bork and Ward Bowman criticized a “protectionist trend” in antitrust doctrine, claiming the law had gone awry.28 Specifically, they argued that antitrust was overly harsh towards exclusionary practices and mergers, and was penalizing pro-competitive conduct. The incipiency approach had “proved calamitous,” they argued, and was fundamentally misguided, since the very existence of concentration at its early stages “is prima facie evidence that greater concentration is socially desirable.”29 Rising concentration “indicates that there are emerging efficiencies or economies of scale,” and increased efficiency is socially valuable, “for it means that fewer of our available resources are being used to accomplish the same amount of production and distribution.”30 Lastly, Bork and Bowman criticized judicial efforts to apply the law such that it fulfilled the goals Congress expressed, dismissing these concerns as “social policy” that rendered application of the law vague and unpredictable.31
Many other writings would help build the edifice of today’s antitrust. But this piece distilled some of the key intellectual moves that form the basis of the present regime. Especially notable was their criticism of recent action by the Federal Trade Commission (FTC). In a case seeking to block a merger attempt by Proctor & Gamble, the FTC stated that “economic efficiency or any other social benefit resulting from a merger is pertinent only insofar as it may tend to promote or retard the vigor of competition.”32 Bork and Bowman claimed that this “turns the normal order of policy around.”33 They write, “Instead of desiring competition as a means to efficiency, the Commission here makes ‘the vigor of competition’ an end in itself . . . .”34 In their view, efficiency should be the goal and competition the means; in fact, the only purpose of competition is to “provide society with the maximum output that can be achieved at any given time with the resources at its command.”35 This approach—placing competition in the service of efficiency—has been followed by courts.36
As numerous scholars have documented, this represents a grotesque distortion of the antitrust laws that Congress passed.37 Not only does it supplant the goal of antitrust, but it also stamps the law with a value that is, in many ways, deeply antithetical to the goal of competition. Competition refers to a process. Efficiency, by contrast, refers to an economic outcome, and is silent on the means by which it is achieved. On Bork and Bowman’s account, the welfare-based goal should override the structural concern about competition.
This defining move has crippled antitrust enforcement in two important ways, as I describe in Part II. But it is also worth examining how this shift ushered in a profoundly different theory of power. Writing on behalf of four Justices in United States v. Columbia Steel Co., Justice Douglas in 1948 stated:
In final analysis, size in steel is the measure of the power of a handful of men over our economy. That power can be utilized with lightning speed. It can be benign or it can be dangerous. The philosophy of the Sherman Act is that it should not exist. For all power tends to develop into a government in itself. Power that controls the economy should be in the hands of elected representatives of the people, not in the hands of an industrial oligarchy. Industrial power should be decentralized. It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed men. The fact that they are not vicious men but respectable and social-minded is irrelevant. That is the philosophy and the command of the Sherman Act. It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it.38
The account Justice Douglas offers views economic power as inextricably political. Power in industry is the power to steer outcomes. It grants outsized control to a few, subjecting the public to unaccountable private power—and thereby threatening democratic order. The account also offers a positive vision of how economic power should be organized (decentralized and dispersed), a recognition that forms of economic power are not inevitable and instead can be restructured.
Compare this account with one offered by Justice Scalia in Verizon v. Trinko. The case involved a telecommunications carrier’s refusal to deal with a competitor, and—like Columbia Steel Co.—was brought under Section 2 of the Sherman Act:
The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts “business acumen” in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.39
This account, by contrast, views monopoly power as not just unthreatening but also beneficial. Economic power is both a product of metaphysical “free-market” forces and a key stimulus for them.40 Far from being viewed as a menace, monopoly power is revered as a vital guardian of innovation.41 Five members of the Court—including Justices Breyer and Ginsburg—joined Justice Scalia’s opinion. The decision was unanimous.
These two passages offer a glimpse into the drastically different descriptive and normative accounts of power that mark the overhaul in antitrust. The transformation is often described in terms of legal standards, but it is also worth recognizing how starkly the background set of assumptions—about the source and the effects of concentrated economic power—have changed. (Indeed, the shift in legal standards has been justified largely on the basis of this new view of power as benign.) This particular move is part of a broader trend away from understanding concentrated private power as a problem of domination, implicating our ability to self-govern.42 In other words, we have shifted from a republican theory of antitrust to a neoliberal one.
Some antitrust scholars dismiss the focus on the Chicago School’s role, claiming that its actual influence on the law is overstated and that “at the level of specific rule making” antitrust has “tended to take a moderate position between extremes.”43 Others argue that the set of ideas that shaped contemporary antitrust have more complex and diverse roots than a single source.44 I acknowledge that the intellectual history is not simple. But, for the purpose of this Response, I focus on one aspect of the Chicago School’s contribution: that they embedded at the core of antitrust law a radically different descriptive and normative account of power. The shift was not so much a matter of adopting more technical rules as it was of ushering in a new ideology.45
Given the broad and general terms in which Congress wrote the antitrust statutes, their application turns critically on notions of economic power. When suspicion of concentrated power is replaced with reverence for it—and when power is viewed as inevitable rather than as the product of legal choices46—the antitrust laws founder.
II. how the current ideology enfeebles antitrust enforcement
As authors of the Yale Law Journal Collection observe, the current market power crisis demands more active and aggressive antitrust enforcement. The opportunities they identify are valuable. But developing an antitrust regime equipped to tackle the full scope of our competition problem will also require grappling with the descriptive and normative account of market power that underlies current interpretation. Even under existing statute and case law, a different theory of power would illuminate under-used legal authorities and could encourage antitrust authorities to bring cases that reach forms of harm neglected by the current regime. This Part explains how the Chicago School’s account of market power cripples enforcement.
A. Welfare Effects and Mythic Markets
Adopting consumer welfare as the single goal of antitrust codified the central role of welfare analysis in antitrust enforcement. As ample scholarship has documented, this shift was wrong as a matter of legislative history.47 But as is now clear, it also turned out to be deeply damaging for enforcement. In this Section, I argue that one reason the present antitrust framework fails to adequately address market power is that the law pegs liability to welfare effects rather than to the competitive process.48
Congress enacted the antitrust laws to rein in the power of industrial trusts.49 Responding to a fear of concentrated power, antitrust sought to distribute it. In this sense, antitrust was “guided by principles,” or a specific set of values that the law sought to promote.50 The law was “for diversity and access to markets; it was against high concentration and abuses of power.”51 By being against excessive concentration, the law conceived of “competition” as a set of conditions, including the openness of markets and the dispersion of market power.
In other words, antitrust law was structured to preserve a set of structural conditions (competition) as a way of promoting a set of outcomes and principles.52 Essential to this set-up was the idea that “the competitive process is the preferred governor of markets.”53 Promoting this set of conditions would mean “power is by definition dispersed, opportunities and incentives for firms without market power are increased, and the results are acceptable and fair.”54
Reorienting antitrust analysis around welfare has largely severed the definition of “competition” from an analysis of structure and process (especially in cases involving conduct rather than mergers). The primacy of effects-based economic analysis has crippled enforcement in two major ways. First, it has imported into antitrust a set of assumptions about how markets work that are overly simplistic and systematically bias antitrust against intervention.55 Second, it has prompted a shift away from per se rules and towards rule of reason analysis—rendering litigation highly protracted and costly.56
Embedded in current analysis are a series of neoclassical economic theories about how markets work.57 These include the idea that market power is fleeting and monopolies often benign. Dominant firms can both deliver efficiencies and abuse their power, the argument goes, but the risk of abuse is checked by constant threat of entry by firms that will compete away any monopoly profits, rendering abuse of power unlikely. Two aspects of this theory are worth teasing out: first, the assumption that any abuse of market power will necessarily generate higher margins and spur new entrants and, second, the implication that abuse or maintenance of market power will not be durable. Growing empirical research casts doubt on both points: in fact, players that have captured control over a market often impede entry by small upstarts, thereby maintaining their dominance.58 Yet this myth persists in the doctrine.
Perhaps the clearest example of how neglecting structural concerns in competition analysis handicaps enforcement is the refrain that the antitrust laws are meant to “protect competition, not competitors.” It is true that some actions that enhance competition may also undermine competitors, and that the antitrust laws should not be used to protect competitors at the expense of competition. But, in practice, the “competition, not competitors” refrain is often used to tarnish enforcement action and justify inaction. After all, as the Ninth Circuit has noted, “[i]njury to competition necessarily entails injury to at least some competitors” and competition “consists of a rivalry among competitors.”59
Enforcement has lagged not just because welfare-based analysis blinds us to important metrics and measures of competition, but also because of how the consumer welfare standard has been administered. The shift from rules to standards has meant that most forms of conduct are analyzed under the “rule of reason.” In today’s formulation, the rule of reason serves as a supposed balancing test of harms and benefits. In practice, gauging the effects of particular conduct ends up turning on the “conflicting testimony of the parties’ retained expert economists.”60 Indeed, as Rebecca Allensworth notes, the evolution and increasing centrality of the rule of reason approach has meant a “delegation of authority from judges and juries to economists,” who now determine “the application, and sometimes even content, of antitrust rules.”61
Although the heightened role of economic expertise is justified as bringing greater certainty and objectivity to the law, the rule-of-reason regime has rendered the law unpredictable and indeterminate.62 It also seems to undermine enforcement. For one, it results in heavy discovery costs and inconsistent outcomes, which tend to dissuade private parties from filing suit.63 Studies also show that when plaintiffs do litigate claims governed by the rule of reason, they “almost never win.”64 Lastly, the Court has cited the steep costs and indeterminacy of the rule of reason as a basis for restricting plaintiffs’ access to courts, further narrowing avenues for enforcement.65
Centering antitrust on welfare concerns means that legal analysis largely turns on economic models that seek to assess on a case-by-case basis when given activity is anticompetitive.66 This move away from structure, in turn, has tied the law to a set of neoclassical assumptions about markets that disinvite antitrust action against dominant firms. In other words, the current regime assesses competition by analyzing how conduct affects welfare, and then defines market dynamics such that conduct is rarely anti-competitive.
B. An Embedded Preference for Under-enforcement
A second major reason the current framework in antitrust fails to address our market power problem is its embedded preference for under-enforcement. This orientation is justified by a set of theories about market dynamics and particular notions of legal institutions, which I describe below. As with the neoclassical assumptions that shape how courts and enforcers analyze consumer welfare, there is reason to doubt the empirical basis for preferring under-enforcement to over-enforcement.
The justification for under-enforcement has been articulated succinctly by Judge Frank Easterbrook. Explaining that courts face “a fundamental difficulty” in assessing the effects of conduct, he weighed the tradeoff: “If the court errs by condemning a beneficial practice, the benefits may be lost for good . . . If the court errs by permitting a deleterious practice, though, the welfare loss decreases over time.”67 The basis for this is that “[m]onopoly is self-destructive,” given that monopoly prices attract entry that will compete away market power.68 In other words, punishing efficiency-enhancing conduct is costlier than failing to punish efficiency-reducing conduct, as the latter will eventually self-correct while bad legal precedents persist. This view has significantly shaped judicial thinking and analysis.69 It is such a mainstay of contemporary analysis that at a recent oral argument, Justice Neil Gorsuch stated, “[W]hy shouldn’t we take Judge Easterbrook’s admonition seriously, that judicial errors are a lot harder to correct than an occasional monopoly where you can hope and assume that the market will eventually correct it? Judicial errors are very difficult to correct.”70
Decision theory provides another way to describe this approach. Courts and doctrine have adopted the principle that Type II errors (false negatives, or not finding violations when the conduct harmed competition) are to be preferred over Type I errors (false positives, or finding violations when the conduct did not harm competition). While the cost-benefit framing of this principle lends it a veneer of scientific truth, it is worth identifying how this principle represents select assumptions about market dynamics and a particular conception of government institutions.
First, favoring Type II errors assumes away entry barriers and holds markets as “self-correcting,” suggesting that any abuse of market power will eventually be checked through competition. But antitrust case law provides numerous examples of dominant companies that possessed durable market power,71 and of dominant firms that successfully erected entry barriers to exclude new rivals.72 Second, this approach assumes a backdrop of chronic epistemological doubt and uncertainty, with courts and enforcers unable to distinguish between conduct that promotes competition and that which undermines it. This, too, stands on shaky ground, as it fundamentally inverts the relationship between legal standards and the institutions that apply them. Whether particular conduct in a given context is anticompetitive should be determined through legal standards, not the independent assessment of individual judges. Concerns that enforcers and courts will decide improperly should be addressed through clarifying legal standards and minimizing the role of judicial discretion, not through requiring that enforcers and courts simply err on the side of not acting.
Notably, the need for this error cost judgment arises precisely because antitrust currently measures competition through welfare effects. The focus on this outcome leads to the recognition that “the economic impact of many contestable business behaviors is uncertain and therefore very difficult to assess correctly ex ante.”73 Because the effects of conduct are deemed unknowable, enforcers and courts will frequently confront instances where they must effectively guess. The preference for false negatives is offered as a way to guide enforcers through uncertainty. In other words, the focus on consumer welfare first privileges a narrow set of economic metrics—which then enables the admission that “[e]conomics is incapable of providing enforcers many of the definitive answers they seek.”74 Consumer welfare weds analysis to an inquiry that ultimately proves indeterminable, and that indeterminacy is then used as justification for under-enforcement.
But this indeterminacy is not inevitable. It reflects the pegging of liability largely to welfare effects while neglecting the competitive process.75 This is not to argue that expectations of future effects should be abandoned completely, but that present indicia can be used to structure analysis so as to encompass gradations of error analysis, rather than a binary choice between false positives and false negatives.76 By anchoring enforcement in a default preference for false negatives, the current antitrust framework structurally favors under-enforcement.
III. tackling our market power problem requires tackling the framework of antitrust
Against the backdrop of growing calls to rehabilitate antitrust, the Features in the Collection identify ways to strengthen enforcement. Many of the contributions offer useful roadmaps for harnessing current doctrine to address anticompetitive conduct. But most either ratify or simply neglect to address the current philosophy that orients antitrust. By doing so, they pick at the symptoms of an ideology rather than grappling with the ideology itself. Identifying paths for greater enforcement within a framework that systematically disfavors enforcement will fall short of addressing the scope of the market power problem we face today.
In some cases, the authors acknowledge that the case law in a particular doctrinal area obstructs enforcement, but offer avenues through which meritorious plaintiffs could succeed. For example, in their review of predatory pricing doctrine, C. Scott Hemphill and Philip J. Weiser note that the Court’s dicta in Brooke Group reflects “a deeply skeptical attitude” toward predatory pricing, but they read the doctrinal test as more accommodating than dicta suggests.77 Citing two circuit court decisions, they observe that courts may be willing to accept modern theories of recoupment, which would make it possible for plaintiffs to meet one of the two prongs of the doctrinal test. Hemphill and Weiser briefly suggest in passing that courts should presume recoupment in certain contexts, but they largely focus on offering alternate ways to measure both recoupment and below-cost pricing. Yet it is not clear that any predatory pricing regime that keeps the recoupment requirement, as currently structured, will meaningfully revive enforcement against anticompetitive forms of predation. After all, embedded in the recoupment test is the idea that predatory pricing should be treated as anticompetitive only if a firm can recoup its losses—even though predatory pricing can be anticompetitive even in the absence of recoupment.78
Jonathan Sallet and Michael Katz, meanwhile, astutely unpack how the Second Circuit’s analysis in American Express is erroneous and confused.79 They explicate the numerous missteps in the court’s reasoning, connecting them to foundational definitional and legal questions in antitrust. But the deeper issue—which the authors do not engage—is that the Second Circuit’s misguided approach follows the logic of the existing framework. On the one hand, this analysis is new: never before has a court effectively held that anticompetitive behavior is legal if the harms to one population are sufficiently offset by benefits to another set of users. But, on the other hand, the Second Circuit’s move accords with and maps onto the approach the “consumer welfare” inquiry introduces: namely, to ignore structure and focus on net effects.
Perhaps another sign that the existing framework constrains vigorous action is that some of the suggestions touch the periphery of the problem rather than the problem head-on. Jonathan Baker and Fiona Scott Morton, for example, offer a useful piece exploring how to apply antitrust to most-favored nation clauses employed by dominant platforms.80 While the piece targets one mechanism through which dominant platforms illegitimately maintain and expand their market power, the scope and sources of the platform power problem extends far beyond their use of MFNs. The more pressing antitrust issues regarding the big tech platforms concern how their control over and access to data, as well as their integration across multiple lines of business, enables them to entrench their dominance in ways that undermine competition. Against these dynamics of online platform markets, relying on welfare-based tools will leave much unaddressed.
To be sure, some of the authors’ recommendations would address the market power problem more directly. For example, Herbert Hovenkamp and Carl Shapiro defend the structural presumption in merger enforcement and identify ways to strengthen it and broaden its application—a worthy and important part of reinvigorating the law. The structural presumption is based on the idea that the elimination of a significant competitor in a concentrated market will likely lead to market power, and that concentrated markets often feature significant barriers to entry. Critically, competition analysis in this context is guided by these structural markers, rather than by an inquiry into future welfare effects. But the authors’ commitment to the existing frame ends up distorting their interpretation of the structural tool. They write that “market structure has been a means of tackling merger law’s more fundamental concerns, which are higher prices or reduced output or other consumer harms that result from less competitive market structures.”81 But this imports into structural analysis a focus on outcomes, misreading its purpose and orientation and potentially exposing it to weaker enforcement.
The piece that comes closest to grappling directly with the current antitrust framework is Steve Salop’s on vertical mergers. Salop cogently picks apart the set of flawed economic assumptions that underlie the current approach and make enforcers overly sanguine about the competition effects of vertical tie-ups. Striking at the heart of some of the theories that sustain the current framework is powerful.
Strikingly, none of the pieces focus on monopolization law, or Section 2 of the Sherman Act. This is the doctrinal area that has been most enfeebled by the current antitrust framework—and whose revival could go furthest to addressing our market power problem head-on, given that it would target existing concentrations of market power that have been acquired or maintained illegally. Another key and potentially far-reaching tool that goes unmentioned is Section 5 of the FTC Act.82 Yet reversing guidance that the FTC issued narrowing the reach of Section 5 and bringing actions under the provision would be one of the clearest steps the FTC could take to invigorate enforcement. Doing so, however, would likely require a clear reckoning with how the current framework debilitates antitrust tools, given that the existing guidance weds Section 5 to “consumer welfare.” Until we reckon with the ideological frame that cripples our enforcement tools, our attempts to revitalize enforcement will fall short of the rehabilitation that is needed to address today’s market power problem.
Given the systemic market power problem we face today, identifying ways to restore antitrust enforcement is vital. Doing so first requires recognizing that the source of the problem is not just a lack of enforcement, but also the current philosophy of antitrust. The existing approach is premised on a theory of market power that proves deeply hostile to enforcement. Restoring a theory of power that accords with the original values of antitrust—including a distrust of concentrated private power—is critical for reviving an enforcement regime that can fully address the concentrated market power across our political economy. This would require refocusing antitrust analysis on a structural inquiry about process and power, rather than on a set of metrics focused on a narrow set of outcomes.83 While the “Unlocking Antitrust Enforcement” Collection offers some useful suggestions for how to strengthen enforcement, they neglect to grapple with the current framework, ratifying an orientation and set of assumptions that ultimately undermine their project.
Lina Khan is Director of Legal Policy at the Open Markets Institute and a Visiting Fellow at Yale Law School.
Preferred Citation: Lina M. Khan, The Ideological Roots of America’s Market Power Problem, 127 Yale L.J. F. 960 (2018), http://www.yalelawjournal.org/forum/the-ideological-roots-of-americas-market-power-problem.