The Evolving Populisms of Antitrust

Abstract

Some scholars divide the history of U.S. antitrust law into eras of “populism” and “economics” and assert a fundamental conflict between the two concepts. Generally, the period from the late 1970s to the present is described as economic, and the mid-twentieth century era is labeled populist. A review of Supreme Court antitrust decisions reveals a more complex picture. From the enactment of the Sherman Act in 1890, the Court’s antitrust rulings have officially espoused the protection of non-elite groups from the power of big business – a populist goal – and aimed to advance this objective through economically informed rules. Populism versus economics is a false dichotomy.

The populism and economics underlying antitrust jurisprudence have changed over time. In the decades following the passage of the Sherman Act, the Supreme Court often spoke of protecting small producers and displayed, at most, only secondary concern for consumers. The Court in the early era proscribed certain horizontal and vertical restraints but viewed many forms of dominant firm and horizontal conduct more favorably. Starting in the late 1930s, the Court assumed consumer protection as a principal aim of the antitrust laws but continued to champion the cause of small businesses as well. Antitrust economics took a skeptical posture toward many big business practices and treated many forms of horizontal and vertical conduct as inherently problematic. Since the 1970s, the Court has held that the antitrust laws exist only to protect consumers and also adopted the view that most forms of business conduct can benefit consumers.

Although some scholars argue that antitrust law should seek to maximize “economic efficiency” and ignore distributional consequences, the courts should continue to interpret the antitrust laws as a consumer protection regime. First and foremost, Congress, as revealed in the legislative histories of the antitrust laws, showed an interest in preventing large firms from using their market power to raise prices and transfer wealth from consumers. The Congressmen that drafted the antitrust statutes showed no awareness of the neoclassical concept of efficiency, let alone an intention to promote it. Second, consumer-oriented antitrust enforcement, in respecting Congressional intent, can prevent regressive wealth transfers from consumers to producers and play an important part in containing growing economic inequality. Third, in light of how consumers often cannot organize politically on account of their vast numbers, the federal courts can serve as trustees for this group and protect its interests from better-organized producer groups. Last, just as antitrust can help consumers, consumers can provide vital popular support for antitrust enforcement.

Keywords: antitrust, legal history