The Antitrust Paradox

The Antitrust Paradox is a 1978 book by Robert Bork that criticized the state of United States antitrust law in the 1970s. A second edition, updated to reflect substantial changes in the law, was published in 1993.

Bork argued that both the original intent of antitrust laws and economic efficiency required that consumer welfare and the protection of competition rather than competitors, be the only goals of antitrust law.[1] Thus, while it was appropriate to prohibit cartels that fix prices and divide markets and mergers that create monopolies, allegedly exclusionary practices such as vertical agreements and price discrimination did not harm consumers and should not be prohibited. The paradox of antitrust enforcement was that legal intervention artificially raised prices by protecting inefficient competitors from competition.

From 1977 to 2007, the Supreme Court of the United States repeatedly adopted views stated in The Antitrust Paradox in such cases as Continental Television v. GTE Sylvania, 433 U.S. 36 (1977), Broadcast Music Inc. v. Columbia Broadcasting System, Inc., NCAA v. Board of Regents of Univ. of Oklahoma, Spectrum Sports, Inc. v. McQuillan, State Oil Co. v. Khan, Verizon v. Trinko, and Leegin Creative Leather Products, Inc. v. PSKS, Inc., legalizing many practices previously prohibited.

The Antitrust Paradox has shaped antitrust law in several ways, prominently by focusing the discipline on efficiency and articulating its goal as "consumer welfare." Many lawyers and economists, however, have pointed out that Bork was wrong in his analysis of the legislative intent of the Sherman Act and have criticized him for incorrect economic assumptions and analytical errors. One of the key criticism focuses on Bork's use of the term "consumer welfare," which became the stated goal of American antitrust law. Bork argued that Congress enacted the Sherman Act as a "consumer welfare prescription."[2] The Supreme Court embraced this view in Reiter v. Sonotone Corp., 442 U.S. 330 (1979) and in all subsequent decisions. Many scholars, however, have shown that Congress had several motives for the adoption of the Sherman Act, probably none of which was "consumer welfare."[3] Moreover, Bork's use of the term "consumer welfare" was inconsistent with its use by economists. When the Supreme Court adopted the view that Congress enacted the Sherman Act as a "consumer welfare prescription" it did not define the meaning of the term and it has remained ambiguous.[4]

References

  1. ^ Bork (1978) p.405.
  2. ^ Bork (1978) p.66.
  3. ^ Orbach, Barak,The Antitrust Consumer Welfare Paradox, 7 Journal of Competition Law & Economics 133 (2011).
  4. ^ Orbach.