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We have just marked the 90th anniversaries (Sept. 26 and Oct. 15) of two of the United States’ most important antitrust laws: the Federal Trade Commission Act and Clayton Act of 1914. Along with the Sherman Act of 1890, these laws-in their attempt to curb collusion and monopoly-constitute what the U.S. Supreme Court once heralded as the “Magna Carta of free enterprise.” By contrast, today, trashing antitrust has become a cottage industry. Almost everyone seems unhappy with the state of competition law-the business community, consumer advocates and scholars. Antitrust has descended into an economic and institutional malaise. The first step out of this mess is to realign antitrust economics with congressional intent. When Congress passed the Federal Trade Commission and Clayton acts, its primary concern was consumer welfare. But over the past 40 years, antitrust economics has fallen victim to the seduction of a group of intellectuals-loosely grouped under the rubric of the “Chicago School”-who have redefined Congress’ consumer-welfare mandate as one of overall economic efficiency, positing that if a company’s activities are good for the company, then they should be good for the economy and consumers as well. Rather than focus on some poorly defined notion of efficiency, however, antitrust authorities should place themselves in the shoes of consumers. For instance, the fact that consumers often desire alternative sources of supply would engender a much more stringent review of mergers. Similarly, antitrust is mired in trying to separate “competitive” from “anti-competitive” behavior-a meaningless game since businesses, left to their own devices, too often prefer collusion and monopoly instead of competition. Rather than try to divine intent, economic analysis should focus on understanding the structure of an industry and how the proposed activity will affect competitive dynamics. Antitrust analysis is also enamored of trying to predict possible price changes in narrowly defined markets. The result is often too much enforcement against smaller companies, but not enough against larger companies that operate across broader markets not amenable to calculations of price changes. It should perhaps be no wonder, then, that consumer advocates lament the consolidation of a broad range of industries-from airlines to banks to telecommunications-while business leaders routinely criticize antitrust authorities for harping on small markets such as those for refrigerated pickles, superpremium ice cream or refillable fountain pens. More holistic questions-around barriers to entry, the size and geographical reach of competitors, the evolution of the industry, and the like-need to become central. Economic models are useless if not supplemented with a dose of common sense. Rejigger the institutions Institutional limitations exacerbate the problems. Disputes are currently resolved in courts-not ideally equipped to address sophisticated economics. And that’s understandable: While generalist judges have an essential role to play as a check against unsound laws, they should not be occupying the front lines of competition policy. To boot, antitrust is primarily enforced by private parties-more than 90% of antitrust cases are private suits, with successful plaintiffs receiving treble damages. We can hardly expect clear public policy to emerge from outdated economics enforced primarily through private litigation. To facilitate better economics, we need institutional mechanisms that emphasize public enforcement and make political and financial tradeoffs explicit, rather than obfuscated by a medley of agencies and courts. While treble damages could still be collected from defendants, one-third could go to plaintiffs, with the rest providing sorely needed funding for enforcement agencies. One proposal worth debating would be to consolidate and streamline the U.S. Department of Justice’s Antitrust Division, the Federal Trade Commission’s Competition Bureau, and the antitrust responsibilities of a host of sector-specific regulators such as the Federal Communications Commission, into a cross-industry competition office of limited powers, much as we have a Patent and Trademark Office. Such an institution could present a number of advantages, including a specialized judiciary, and a rationalized policy agenda. A competition office would provide more certainty by defining rules upfront and providing ongoing enforcement of remedies. Contemporary antitrust suffers from incomplete economics and mismatched institutions. Making the next 90 years more satisfying requires addressing both. Reza Dibadj is an associate professor of law at the University of San Francisco.

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