Like the snake oil of old, antitrust law is enjoying a new vogue as the cure for what ails you.
Want better pay for workers? You’re in luck. There’s a movement “to use antitrust law to address wage suppression and inequality caused by the power of employers in labor markets.” Sexism and racism? Antitrust. Income inequality? You guessed it: antitrust. In fact, there is a new school of “hipster trustbusters” promoting a wider use of antitrust law so that “companies could be forced to provide documentation on how a merger or acquisition might affect wages, wage growth, and even political power.”
Did someone say “political power”? What if you’re a conservative who is upset that Big Tech social media companies aren’t friendly enough to your favorite political leaders? That’s right: Antitrust law is the cure for what ails you.
President Biden has already signed an executive order promoting precisely this broad application of antitrust law to “labor markets, agricultural markets, Internet platform industries, healthcare markets (including insurance, hospital, and prescription drug markets), repair markets.”
Why are both the left and right suddenly developing a mania for antitrust doctrine, invoking it for a grab bag of different goals and motives?
The ‘Room of Requirement’
I came across the answer in a brief, intriguing comment by Ashley Baker of the Committee for Justice, who argues that the goal of this profusion of uses for antitrust law, untethered from one single aim or objective criterion, is actually “to weaponize competition policy to reorder large sectors of the economy.”
That is exactly what’s going on. Antitrust law is being invoked as an all-purpose tool giving politicians and regulators the power to do whatever they happen to want to do for whatever reason.
This is pretty much the open goal of the hipster trustbusters, who are seeking to overthrow the “consumer welfare” standard promoted 40 years ago by Judge Robert Bork, in which regulators have to show economic evidence of measurable harm to consumers, usually in the form of higher prices, in order to establish an antitrust case. The hipsters, by contrast, want antitrust law to be used for a multiplicity of goals: from income inequality, wages and consumer privacy to political influence—because politicians think no one but they should have such influence—to just plain bigness, targeting companies purely on the grounds of size, without regard for effect on consumers.
If you are of a certain age (or have had kids of a certain age), you might remember that in the Harry Potter books our heroes discover a magical chamber called the Room of Requirement. It is a space that can become whatever its users need it to be—a bathroom, a gymnasium, a dormitory, a place to hide contraband, and so on.
Antitrust policy is becoming Big Government’s Room of Requirement: a body of law that can turn into whatever it needs to be to fulfill a politician’s desire to restructure any aspect of our lives.
Void for Vagueness
The root of the problem lies in the fundamental subjectivity of antitrust law, which was evident from the very beginning. The first major antitrust statute in the U.S., the Sherman Antitrust Act of 1890, prohibits “restraint of trade.” What does that mean? Who knows? For generations this vagueness in the statue constituted a grant of power to judges, who could decide in any particular case what did or didn’t amount to “restraint of trade.” This ambiguity ultimately led to the infamous and unsolvable antitrust trilemma: Successfully charge more than your competitors and it’s proof of monopolistic power; charge less and it’s “predatory” competition designed to put your competitors out of business; charge the same and it’s collusion.
In reality, the only thing that can restrain trade and establish a monopoly is the coercive power of government. It is illegal, for example, to compete with the U.S. Postal Service on letter delivery, no matter how much it deserves the competition. The other great long-lasting communications monopoly, AT&T, was established and maintained with extensive cooperation from the government over a period of 70 years. Yet it is the ordinary competitive strategies of private business that trustbusters have generally regarded as the real threats to competition.
Now consider the other main clause of the Sherman Act, which outlaws the “attempt to monopolize … any part of the trade or commerce among the several States.” Any part? This leads to what has long been the main game of antitrust law in practice, which is the battle to define a company’s “relevant market,” on the premise that if you define “any part” of the nation’s commerce narrowly enough, any company can be reasonably said to monopolize it.
For example, is Facebook a monopoly, even though it faces competition from multiple other social media platforms—not to mention all the other possible ways to waste one’s time? Or is its relevant market only other social media companies that are exactly like Facebook, in which case it can’t help but have a monopoly? The subjectivity of these determinations is not just a grant of power to the courts. It is also a grant of power to prosecutors. The vagueness of the law gives them the ability to decide, for arbitrary and often political reasons, whom to prosecute and whom to leave alone.
Thus we see the Trump administration rushing an antitrust case against Google, filing it just before the 2020 election, in an attempt to show Donald Trump’s supporters that he was taking on Big Tech. Before that, his administration tried unsuccessfully to block a Time Warner deal, allegedly in an attempt to punish the parent company of CNN for unfriendly coverage. But this is a problem that long predates the Trump administration. “As documented from transcripts of recorded calls and discussions in the Oval Office, President Johnson threatened to block a merger involving a leading Houston bank unless the head of the bank helped secure the endorsement of the leading Houston newspaper for Johnson’s 1964 campaign.”
Recently, the scope of this arbitrary power was broadened in a sweeping memo from new Federal Trade Commission Chair Lina Khan, who declared that the agency would focus on “anticipating problems” and “checking anticompetitive conduct that would lead markets to tip, or targeting unfair practices before they become widely adopted.” In other words, she is claiming the power to regulate companies based not on the actual results of their actions, but on what the agency speculates those results might be. As the University of Florida’s Mark Jamison points out, this pre-emptive, ex ante regulation implies a command economy in which businesses potentially have to gain prior approval from the FTC for everything they do.
This is not just a threat to the economy. The abuse of open-ended powers granted by a vague statute is a threat to the rule of law. There has been a lot of discussion recently about comparing the relative threats of right-wing authoritarianism and left-wing authoritarianism. Antitrust expansion manages to be both at the same time.
Note all the talk about using antitrust law to rein in the “political power” of corporations. In Facebook’s case, for example, such a nakedly political motive is obvious, though each side of the political debate has a different variation on that motive. The left wants social media companies to be far more expansive in blacklisting the political speech of people on the right. The right wants to force social media companies to broadcast their favorite conspiracy theories. In either case, Facebook’s real offense is that it is an avenue of political discussion that the politicians would like to control.
In this context, antitrust law serves as a grant of arbitrary power to the executive, initiated under left-wing slogans about inequality but also available for use by the right to target ideological enemies. It is as if these two issues, economic freedom and political freedom, are just two aspects of the same underlying freedom.
If we want to defend either freedom, let’s keep the Room of Requirement—and other fantasies of unlimited power—safely in the realm of fiction. It has no place in the laws of a free society.