Neo-Brandeisian Antitrust: Repeating History’s Mistakes

Key Points

• The antitrust policy of the 1960s and 1970s that the Biden administration’s Federal Trade Commission (FTC) is seeking to resurrect was initially abandoned due to its negative impact on consumers.
• Before the 1980s, the FTC’s aggressive interpretation and enforcement of the Robinson-Patman Act of 1936 raised costs and impeded the competition of its intended targets, passing on higher prices and fewer options to the consumer.
• Under the mindset that “big is bad,” the FTC of the 1950s, 1960s, and 1970s restricted mergers under largely noneconomic and highly stringent standards and used several Supreme Court decisions from the Warren Court to support its crusade against mergers.
• As part of its reversion to a neo-Brandeisian mindset, the Biden administration has dismissed consumer-focused antitrust policy as a mistake of the “Chicago School” and Robert Bork. This report outlines how this abrogation of an antitrust policy aimed at improving the welfare of the consumer and the villainization of Bork is a grave error.

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Executive Summary

President Joe Biden rejects the economics-driven antitrust policies of the past 40 years. Flanked by his White House competition adviser and his new Federal Trade Commission (FTC) chair in July 2021, he asserted that the “experiment failed” and promised to return to earlier antitrust traditions. This report shows those traditions were abandoned for good reason: They harmed consumers.

Two such traditions are discussed in this report in detail. One involves the Robinson-Patman Act of 1936, which the FTC promises to reinvigorate. The second involves what FTC Chair Lina Khan calls the controlling precedents of old Supreme Court merger decisions, especially from the Warren Court. Those decisions stand in sharp contrast to the modern economic standards used to evaluate mergers, as exemplified in court decisions and the Obama administration’s 2010 guidelines.

President Biden blamed the alleged failure on Robert Bork and the “Chicago School.” Blaming, or crediting, Chicago scholars for what has happened over the past 40 years is inaccurate. In fact, modern antitrust analysis was much richer than any school, including professors and judges affiliated with Harvard, especially Phillip Areeda and Stephen Breyer, both of whom have had profound impacts.

The true “failed experiment” was populist antitrust and its policies that the new enforcers praise.

Read the full report.