Loyola University Chicago School of Law, Weekend JD 2023
Antitrust laws regulate the concentration of economic power, the core of which was passed under the Sherman Act in 1890 and remain central to antitrust today. However, the laws are not applied today the way they were in their heyday of antitrust regulation – in the 1970s and 1980s, the Chicago School of Economics took hold over the courts’ antitrust jurisprudence, and since then the courts have been far more amiable to market concentration. The Chicago School’s economic analysis of law argued that big firms were not a threat to growth and prosperity and have successfully argued for a hands-off approach to monopolies and mergers outside of a narrow focus on consumer welfare.
It has been within this environment of a hands-off approach that wealth in the United States has become extremely concentrated and wage growth for most workers has stagnated. Economist and former Secretary of Labor Robert Reich recently wrote on the parallels between these circumstances and the circumstances under which the Sherman Act was passed in the first place. Similarly, economist Paul Krugman has echoed those sentiments, lamenting over the collapse of antitrust enforcement in the Reagan years leading to a return of the robber barons. Those sentiments are not shared by all, however, as prominent antitrust scholars such as Daniel Crane have argued that “the trust-busting prescription to cure wealth inequality is highly speculative, at best. Economy-wide, the wealth distribution effects of anticompetitive conduct and remediation through antitrust enforcement are too ambiguous, attenuated, and dynamically interactive to permit the sort of broad claims commonly advanced in the monopoly regressivity thesis.”
The next era of antitrust
Despite push back from scholars like Crane, politicians like Elizabeth Warren and small think tanks like the Open Markets Institute have pushed Washington to crack down on this generation’s monopolies for years – notably Big Tech monopolies such as Facebook, Amazon, and Google. And recently with the Biden Administration appointing high profile anti-monopolists to federal agencies such as Lina Khan to the Federal Trade Commission, Amy Klobuchar introducing sweeping legislation to strengthen antitrust enforcement, and the appearance of bipartisanship in the face of Big Tech, it’s clear that antitrust is having a political moment.
In this political moment, scholars, journalists, lawyers, and organizers have come together to form a new school of thought – the New Brandeis Movement. The group advocates for a return to stronger antitrust enforcement aimed at a more democratic distribution of power in the economy. Their ideas trace their intellectual roots to Justice Louis Brandeis, who as a Supreme Court Justice between 1916 and 1939 laid the groundwork for a great strengthening of antitrust enforcement in the United States and an antitrust philosophy that held sway into the 1970s. In addition to rejecting the Chicago School’s contention that consumer welfare is the only thing that regulators should focus on, the New Brandeis Movement is concerned with issues such as freedom of the press and privacy.
Backlash to the backlash
The New Brandeis Movement certainly hasn’t been welcomed in every corner of antitrust. Daniel Crane has said that “it’s one thing to say that antitrust enforcement has gotten far too weak, it’s a bridge much further to say we should go back to the populist goal of leveling playing fields and checking ‘bigness.’” Bigness, in this case, refers to what Brandeis called “the curse of bigness” in which he expressed hostility and concern about either business or the government accumulating too much power. Others on the right have derided the movement as “hipster antitrust” and accuse it of abandoning the consumer welfare standard in favor of a hodgepodge of social goals. Additionally, Crane elsewhere has noted that this is a play we have seen before – Congress announces that the antitrust laws are too weak and that reforms are necessary, and then the courts take whatever reform is intended from new statutes and read them down to the benefit of industrial interests.
New Brandeis Movement proponents also face skepticism outside of antitrust of its ability to deliver on progressive change after decades of growing inequality and concentration. Matt Bruenig of People’s Policy Project has written about how even with more antitrust enforcement, the idea that the U.S. economy would be truly competitive is an illusion. Bruenig argues that because wealth is concentrated in the hands of so few, competitors often share common owners. If competitors are largely “owned in significant part by the same investors, it hardly matters which one you choose: the money all goes to the same place.” In reconciling that reality, Bruenig would argue that antitrust remedies are inadequate, and that policymakers must turn elsewhere.
The concern around common ownership is heightened by the rise of index funds as an important investment vehicle, with enforcers and academics taking notice. The three largest asset management firms, BlackRock, Vanguard, and State Street, known as the “Big Three,” manage over $15 trillion in assets under management. The problem is pervasive – according to the American Economic Liberties Project, the largest shareholder for 88% of companies on the S&P 500 are one of the Big Three. Economists have found a relationship between prices and the stakes owned by the big funds as well. As Bruenig noted, competition is more complicated when you boycott one airline in favor of another, just to learn that they’re owned by the same investors.
Chicago’s monopoly may be ending – for now
As Zephyr Teachout told the House antitrust subcommittee last April, “forty years of weak antimonopoly policy has led to such extreme concentration, that case-by-case efforts will not lead to decentralization quickly enough. We need new tools to enable break-ups.” Regardless of what the future of antitrust looks like, Teachout is certainly right in that even with the restoration of antitrust enforcement in the United States, the economy is not going to change overnight. The New Brandeis Movement has made a splash in academic circles and inroads in Washington, but it hasn’t won yet – it’s only made the marketplace of ideas more competitive.