Antitrust law is a form of economic regulation. And like all economic regulation, it transfers wealth, often in response to special-interest urging. Partly in recognition of such shortcomings, many economic sectors, such as transportation and telecommunications, have been partially deregulated. But antitrust regulation is typically praised. Even in the new economy, this hundred-year-old smokestack era law is used to justify constraints imposed on companies like Microsoft and AOL Time Warner. Antitrust law is almost universally seen as being in the public interest and having a 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 that antitrust law is in the public interest do not change the fact that the private motives of rivals, and even ambitious enforcers, are always lurking in the background. The idea that antitrust law helps consumers and that it has a role to play in the new economy deserves close examination.
Under antitrust law, a laundry list of business practices is regarded with suspicion, and other practices are outlawed altogether. But business transactions are fundamentally voluntary, non-coercive dealings—unlike antitrust interventions. From this fresh perspective, one finds that even the most “despised” business behavior—such as collusion and megamergers—can be pro-competitive and pro-consumer. To the extent that antitrust regulations strike down practices that have efficiency justifications that are misunderstood or ignored, those regulations make individuals and society needlessly poorer.
The list of vilified business practices is long, but it needn’t be. A list of vilified trustbuster practices might be more helpful to consumers.