Antitrust law is a form of economic regulation.And like all economic regulation, it transferswealth, often in response to special‐interest urging.Partly in recognition of such shortcomings,many economic sectors, such as transportationand telecommunications, have been partiallyderegulated. But antitrust regulation is typicallypraised. Even in the new economy, this hundred‐year‐old smokestack era law is used to justify constraintsimposed on companies like Microsoft andAOL Time Warner. Antitrust law is almost universallyseen as being in the public interest and havinga role to play in policing markets.
Yet in antitrust cases, the targeted companies’rivals have a direct financial, as opposed to ethical,interest in the outcome. Assertions thatantitrust law is in the public interest do notchange the fact that the private motives of rivals,and even ambitious enforcers, are always lurkingin the background. The idea that antitrust lawhelps consumers and that it has a role to play inthe new economy deserves close examination.
Under antitrust law, a laundry list of businesspractices is regarded with suspicion, and otherpractices are outlawed altogether. But businesstransactions are fundamentally voluntary, non-coercivedealings–unlike antitrust interventions.From this fresh perspective, one finds that eventhe most “despised” business behavior–such ascollusion and megamergers–can be pro‐competitiveand pro‐consumer. To the extent thatantitrust regulations strike down practices thathave efficiency justifications that are misunderstoodor ignored, those regulations make individualsand society needlessly poorer.
The list of vilified business practices is long,but it needn’t be. A list of vilified trustbusterpractices might be more helpful to consumers.