Twelve Fallacies of the 'Neo-Antitrust' Movement

Abstract

Antitrust enforcement is back in the spotlight with advocates from both the political left and the populist political right demanding fundamental competition policy changes. While there are differences among those calling for such changes, several common beliefs generally unite them. This includes a contention that the writings and interpretations of Robert Bork and the Chicago School of economics have led antitrust astray in a manner fundamentally inconsistent with the original intent of the Sherman Act. Further, they are united by a belief that recent empirical, economic studies indicate the economy is becoming overly concentrated, that market power has been increasing dramatically, that performance in many, if not most, markets has been deficient, and that too much profit is going to too few firms. In this article, we identify and detail twelve fallacies of what we call the “neo-antitrust movement” and their associated claims. At the heart of these fallacies is a fundamental misunderstanding of economics and the consumer welfare standard that has been at the heart of competition policy since at least the 1960s. Additionally, there is a heavy reliance on studies that, upon closer scrutiny, do not support the positions of those who cite them. While competition law should be amenable to change, many of the proposals of the neo-antitrust movement would make antitrust less effective in its core mission without achieving the goal of ameliorating other possible injustices about which they are concerned.

Keywords: antitrust, competition, Sherman Act, Robert Bork, Chicago School, consumer welfare standard

JEL Classification: K2, K21, L4, L40