Despite its original stated goal, US antitrust policy has always been used merely to ensure the free entry of competitors into all markets, rather than to address the problem of market power. But in the age of Big Tech, this approach has become woefully inadequate.
STANFORD – When the United States enacted the Sherman Antitrust Act in 1890, Senator John Sherman offered a famous justification: “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessities of life. If we would not submit to an emperor, we should not submit to an autocrat of trade, with power to prevent competition and to fix the price of any commodity.”
The real aim of antitrust law, then, is to curb excessive economic and political power of business. Yet the original legislation made only the restraint of trade illegal. Finding this too vague, the courts compelled Congress – in 1914, 1936, and 1950 – to spell out unlawful market practices, but always without reference to the exercise of power. Thus, in practice, antitrust policy has been used to ensure the free entry of competitors into all markets.
While Milton Friedman opposed antitrust because it creates bureaucracy, most of the opposition to it has rested on the claim that it penalizes the best for being the best. University of Chicago economists and legal scholars such as Robert Bork convinced the courts that the real intent of the Sherman Antitrust Act was to enhance consumer welfare. The only relevant problem is the short-term market price – not market power. Monopoly power and business practices do not matter if a firm is the best and offers products at prices and qualities that benefit consumers.
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