Tweaking Antitrust's Business Model

Tweaking Antitrust's Business Model THE ANTITRUST ENTERPRISE: PRINCIPLE AND EXECUTION. By Herbert Hovenkamp.[dagger] Cambridge, MA: Harvard University Press, 2005. Pp. 368. $49.95. I. Introduction Not too long ago, economically minded antitrust scholars were a gloomy bunch. In his famous 1978 antitrust critique, whose very title mocked antitrust's incoherence, Robert Bork remarked that "modern antitrust ha[d] so decayed that the policy [was] no longer intellectually respectable,"1 and he cynically referred to then-prevailing antitrust rules as "an internal tariff against domestic competition and free trade."2 About the time Bork's book was published, Richard Posner published Antitrust Law: An Economic Perspective.3 Posner's book, whose title indicated the prevalence of noneconomic perspectives on antitrust, similarly complained (albeit less polemically) that "[t]he conventional tools of antitrust analysis ha[d] not stood up well under the pressures of rapid expansion of the role and importance of antitrust enforcement."4 My, how times have changed. The years since Bork and Posner published their first editions have witnessed several developments that, from the perspective of economically minded antitrust scholars, have been quite salutary: the composition of the Supreme Court has changed to include more Justices possessing a "sympathetic understanding of the business world";5 a robust body of scholarship, produced largely by members of the Chicago School, has persuasively called for antitrust to be both more consumer focused and more economically rigorous;6 the antitrust enforcement agencies have altered their views in accord with this scholarship;7 and members of the federal judiciary-including lower court judges-have become more economically sophisticated.8 In subsequent editions of their classic antitrust works, both Bork and Posner have lauded these developments. Bork entitled the introduction to his 1993 second edition "The Passing of the Crisis,"9 and Posner went so far as to drop his first edition's subtitle (An Economic Perspective) in recognition of the fact that "the other perspectives ha[d] largely fallen away."10 But the work is not done. Despite the "passing of the crisis," Bork acknowledges that "areas for improvement remain,"11 and Posner remarks that the antitrust enterprise, though now based on "economically rational principles," could still use some tweaking.12 He observes that "[t]he chief worry at present is not doctrine or direction, but implementation."13 Into this discussion enters renowned antitrust scholar Herbert Hovenkamp, with his wonderful new book, The Antitrust Enterprise: Principle and Execution (The Antitrust Enterprise). Like Bork and Posner, Hovenkamp rejoices that antitrust law has (generally) shed its Warren Court era focus on protecting competitors rather than competition and has properly defined competition in a manner that focuses not on the number of firms in a market but on the degree to which the market generates low prices, high output, and innovation.14 Rather than criticizing contemporary antitrust's fundamental objectives, Hovenkamp sets out to tackle Posner's "chief worry" about antitrust implementation, proposing a number of substantive and procedural reforms that would make the antitrust enterprise work better. This Review evaluates Hovenkamp's ideas for tweaking antitrust's business model, concluding that most of his proposed changes are sound, that a few might be slightly revised to enhance their effectiveness or administrability, and that a couple are downright unwise. Because Hovenkamp's implementation-focused discussion necessarily covers a number of specific antitrust topics rather than hammering a single general theme, this Review addresses his prescriptions for numerous antitrust doctrines. Part II summarizes The Antitrust Enterprise, offering a number of "shorter" criticisms of Hovenkamp's arguments and proposals. Part III then provides longer, more detailed critiques of two of Hovenkamp's suggestions: his proposal that the Supreme Court abandon the indirect purchaser rule and his proposed test for identifying exclusionary conduct. …