"In 2018, a young legal scholar named Lina Khan published an essay in the Journal of European Competition Law & Practice titled "The New Brandeis Movement: America's Antimonopoly Debate." She defined the core beliefs of an inchoate alliance of scholars, lawyers, activists and journalists seeking to upend a four-decade-long consensus of light-touch antitrust enforcement. Their hope was to replace it with the century-old, tough-on-big-business spirit of Louis Brandeis, the Progressive Era crusader turned Supreme Court Justice. Near the end of the article, Ms. Khan observed: "To what degree this intellectual movement influences the U.S. competition regime in the coming years is an open question."
Today, the answer is clearer than the upstarts could have imagined. They now find themselves at the center of the debate. Ms. Khan, 32, is the new head of one of Washington's two antitrust enforcement arms, the Federal Trade Commission that Brandeis helped to create in 1914. President Biden has nominated another neo-Brandeisian, Jonathan Kanter, 48, to head the other key enforcer, the Justice Department's antitrust division. White House competition policy is handled by Tim Wu, 49, who wrote a 2018 book advocating a Brandeis restoration.
They still face an uphill battle to enact their agenda, but it's a remarkable advance for a movement that didn't even have a name a few years ago. It underscores Mr. Biden's intention, as he puts it, to "change the paradigm" in economic policy, repudiating the records not only of recent Republican presidents but of Democrats as well. Just as Donald Trump ripped up decades of bipartisan consensus on trade and globalization, Mr. Biden has assembled a team attempting to transform how the federal government deals with big business. In siding with the neo-Brandeisians, he has passed over experienced Democratic antitrust experts who cast the new ideology as a reckless experiment that, as one Clinton-Obama veteran says, "will slow economic growth and harm consumers."
Much of what animates the New Brandeis movement is the rise of big tech. Its advocates believe that the dominant, winner-take-all platforms of Google, Amazon, Facebook and Apple are reminiscent of the interlocking, network-like behemoths that fostered the original antitrust movement: the railroads, the banks, Standard Oil and U.S. Steel. To Ms. Khan and her colleagues, the threat posed by the new giants requires dusting off old trust-busting strategies. If the neo-Brandeisians get their way, the federal government would challenge more mergers and business tactics and break up more companies.
But the shift is about more than big tech and tougher enforcement. It's about a change in the underlying philosophy of how Washington has governed corporate America since the 1980s. The new framework is more rooted in social and political goals than economic ones; more focused on the size of companies per se, less on trying to assess whether that size is good or bad for the economy; and more sympathetic to suppliers, small business and workers, even at the expense of consumers.
Antitrust is a "philosophical underpinning for structuring society on a democratic foundation," Ms. Khan wrote in her 2018 essay. Distrustful of economists and their assumptions, the New Brandeis movement believes, she wrote, that "there are no such things as market 'forces.'"
The resuscitation of Brandeis and his ideas is intended as a symbolic toppling of the scholar whose work defines the prevailing economics-focused, market-trusting approach to antitrust: the conservative icon Robert Bork.
For all their ideological differences, the two late legal lions -- Brandeis died in 1941, Bork in 2012 -- were similar in certain ways. They were both better known for other legacies: Brandeis for helping to create the right to privacy and for the "Brandeis brief," a court filing that supplements legal citations with economic and social data; Bork for pioneering the originalism that still defines conservative legal thought. Both faced contentious Senate nomination fights to get on the Supreme Court. Brandeis won his seat. Bork was rejected.
Brandeis dubbed himself "the people's lawyer," honing his views as a turn-of-the-century Boston lawyer representing small businesses squeezed by larger competitors. That included a fight against J.P. Morgan's bid to consolidate New England railroads. He advised Woodrow Wilson's 1912 presidential campaign in an election dominated by debate over how to toughen and modernize the seminal Sherman Antitrust Act of 1890. (Wilson's campaign had a jingle, "Bust the Trusts," with the chorus "So we'll have to Bust -- the -- Trusts; Or they'll grind us in -- the -- dust.") After Wilson's victory, Brandeis worked with the White House and Congress on the 1914 Clayton Antitrust Act, which created the FTC.
In his writings as a Wilson adviser and in his 23 years on the bench, Brandeis laid out two core themes of antitrust. First, the purpose is more about preserving democracy than fostering growth. As Brandeis wrote in a broadside against the big banks, "Even more important than efficiency are industrial and political liberty." Second, as he argued in his 1934 book, "The Curse of Bigness," big business is suspicious in itself, whether economic harm can be proven or not. Brandeis's antipathy to size was also aimed at government, a nuance often overlooked by his current followers.
His most famous antitrust ruling, in the 1918 case of Chicago Board of Trade v. United States, gave courts wide latitude to police any business conduct suspected of attempting to "suppress or even destroy competition." Brandeis repeatedly sided with small businesses, from ice sellers to lumber mills, even when they tried to band together and collude, as long as they claimed to be preserving a more diversified marketplace against bigger rivals.
After Brandeis retired in 1939, the baton was picked up by his successor William O. Douglas. In 1948, Douglas issued a landmark ruling restricting vertical integration -- a strategy by businesses to extend market power by controlling suppliers and distributors. He once wrote that "monopoly power, whether lawfully or unlawfully acquired, may itself constitute an evil . . . even though it remains unexercised."
Congress followed suit by giving antitrust enforcers and judges ever greater power to rein in big business. The 1936 Robinson-Patman Act was designed to protect small retailers from the "price discrimination" of larger chains using their size and efficiency to offer cheaper goods. In 1950, Congress passed the Celler-Kefauver "Anti-Merger Act," giving government still more authority to block vertical mergers and cross-sector combinations. In 1968, President Lyndon Johnson's Justice Department issued strict merger guidelines indicating that combinations controlling a certain market share would be challenged.
The 1960s saw new heights of antitrust enforcement -- or, to critics, the depths of a regime untethered from any logic. One of the decade's most controversial decisions was Utah Pie Co. vs. Continental Baking Co. in 1967, which concerned a claim of "predatory pricing." The Supreme Court ruled that a price war launched by out-of-state frozen pie companies against a dominant local supplier in Utah was illegal -- even though the ostensibly injured party retained a 45% market share, its total sales grew, and the local frozen-pie market expanded nearly fivefold, fueled by lower prices.
"There is no economic theory worthy of the name" to justify the ruling, wrote Robert Bork, then a Yale Law School professor. "There could be no cleaner demonstration than the Utah Pie decision" that antitrust had become "essentially anticompetitive and anti-consumer." That argument found a receptive audience in the 1970s, a period of runaway inflation, slow growth and rising unemployment. Many economists blamed big government, high taxes and intrusive regulation.
A group of conservative economists and legal scholars, many associated with the University of Chicago, also criticized antitrust for stifling efficiency-enhancing mergers and business strategies. The most prominent spokesman for the "Chicago School" was Bork, a graduate of both the college and the law school.
Bork's influential writings included a Fortune magazine article titled "The Crisis in Antitrust" and his 1978 book "The Antitrust Paradox: A Policy at War With Itself." At the time, antitrust experts across the political spectrum agreed that enforcement had gone too far and were calling for recalibration. Bork was more ambitious, seeking his own paradigm shift. He had no patience for the Brandeis-Douglas jeremiads on liberty and the threat of bigness. "The only legitimate goal of American antitrust law," he declared, "is the maximization of consumer welfare."
Bork insisted that a singular focus on consumer welfare was the original intent of Congress and the courts -- that is, in his telling, until Brandeis perverted it. Bork labeled Brandeis's Chicago Board of Trade ruling "deviant" and quoted approvingly a Brandeis critic who portrayed the justice as "an 'activist' prepared to enforce his own views of proper social policy."
Bork's basic view was that antitrust should focus on economics and shed political and social aims. He coupled that framework with a belief in the superior wisdom of the private sector over the public. Attempts by business to gain damaging monopoly power would inevitably be corrected by free markets, he argued, while government intervention to fix perceived problems would cause lasting harm.
That meant setting a much higher bar for government or judicial action. For Bork, many common antitrust complaints should simply disappear. He dismissed the idea that vertical integration could undermine competition. He derided the concept of "predatory pricing" -- the notion that firms might monopolize a market by taking losses with low prices -- for prohibiting basic competitive practices. Bork felt that antitrust should largely be restricted to challenging the biggest horizontal mergers -- combinations of direct competitors -- and the most egregious anticompetitive practices, such as explicit price fixing.
His arguments soon transformed the debate. Forty years after publication, "The Antitrust Paradox" had been cited in more than 150 federal court rulings, including 18 Supreme Court opinions by 10 different justices. In 1982 Ronald Reagan placed Bork on the U.S. Court of Appeals for the District of Columbia Circuit, while the Reagan administration's antitrust enforcers scrapped Johnson's 1968 merger guidelines. They were replaced with more flexible parameters based on Borkian economic analysis, trying to determine whether such combinations could really be shown to cause economic harm. By 1992, Democrats had dropped antitrust and any mention of monopoly from their party platform for the first time since the Progressive Era.
A vivid illustration of Bork's victory over Brandeis came in the 2003 case of Verizon Communications, Inc. v. Trinko. The telecom company was accused of illegal "exclusionary conduct," refusing to give rivals access to its network infrastructure. The court rejected the claim. Justice Antonin Scalia -- a colleague of Bork's on the D.C. Circuit and a fellow originalist -- struck directly at Justice Douglas's argument that monopoly is inherently evil, writing in his ruling that "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 opinion was joined by liberals Ruth Bader Ginsburg and Stephen Breyer.
In the 21st century the U.S. once again entered a period of economic angst, marked by the recession of 2008-09 and a long slow recovery. Inequality of income and wealth reached the scale of the 19th-century Gilded Age, which gave rise to the Progressive Era.
The rapid rise to dominance of the big tech giants offered consumers infinite new conveniences. But it also fostered widespread disruptions to economic, social and political systems. Big business faced a populist backlash from left and right. Ms. Khan helped to channel the uprising with a 2017 essay in the Yale Law Journal titled "Amazon's Antitrust Paradox," a riposte to Bork. She argued that the online marketplace had undermined the theories and assumptions of his influential book.
As Democrats retook power over the past three years -- the House in 2018, the Senate and White House in 2020 -- they turned to the New Brandeis school to shape antitrust strategy. Ms. Khan was hired in 2019 as counsel to the House antitrust committee. She helped to run a high-profile investigation of the big tech companies and to write a 449-page report outlining the ways they had supposedly evaded antitrust enforcement and suggesting strategies for curbing their market clout. The report cites a Brandeis quotation as its guiding spirit: "We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both." In June, the Senate confirmed Ms. Khan to join the FTC by a 69-28 vote, with 21 Republicans backing her.
In March, Mr. Biden tapped Mr. Wu -- author of the 2018 New Brandeis manual, "The Curse of Bigness: Antitrust in the New Gilded Age" -- to craft competition policy. Mr. Wu helped to write a July executive order that included 72 actions by more than a dozen agencies aimed at restraining big business, in sectors ranging from tech and banking to airlines and agriculture. The order called for a review of the flexible Reagan-era merger guidelines, with an eye toward possibly restoring more concrete rules.
In July, the administration nominated Mr. Kanter as assistant attorney general for antitrust, and he awaits Senate confirmation. As head of a boutique law firm, he has led private suits against big tech companies and helped a number of states and the federal government launch a complaint against Google last year. (He has also represented News Corp., the parent company of The Wall Street Journal).
While the neo-Brandeisians are influential in the legislative and executive branches, they will struggle unless they also win over the judiciary. The courts have considerable sway in antitrust, because the original Sherman Act was vague, and judges have claimed great discretion interpreting it. As Justice John Paul Stevens wrote in a 1978 opinion, "the legislative history makes it perfectly clear that [Congress] expected the courts to give shape to the statute's broad mandate."
So far, there's no evidence that the Brandeis view is gaining traction in a court system filled with judges trained in Borkian principles. The Supreme Court has continued to further restrict antitrust enforcement powers. In Ohio v. American Express Co. in 2018, a 5-4 court rebuffed a complaint from the Justice Department and more than a dozen states accusing the credit card issuer of abusing its dominant market power to prevent merchants from steering customers to rival card companies.
During oral arguments, Justice Neil Gorsuch interrupted the Ohio state solicitor making the case against AmEx. "We're not here to protect competitors right?" Justice Gorsuch asked, in classic Bork mode. "The antitrust laws are aimed at protecting consumers; you'd agree with that?"” [1]
- REVIEW --- The Return Of the Trustbusters --- A new generation of regulators inspired by Louis Brandeis hopes to overturn the light-touch approach to antitrust shaped by Robert Bork.Schlesinger, Jacob M. Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 28 Aug 2021: C.1.
Komentarų nėra:
Rašyti komentarą