THE CONSUMER-WELFARE STANDARD SHOULD CEASE TO BE THE NORTH STAR OF ANTITRUST

By William Markham¹

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I. INTRODUCTION

In this article, I argue that federal antitrust law has been undermined by the consumer-welfare standard and related doctrines, and in direct consequence it has failed to accomplish its intended purposes and failed even according to the very narrow, myopic standards of consumer-welfare jurisprudence. To restore antitrust law, so that it will sufficiently protect and promote competitive markets and curtail monopolistic and anticompetitive practices, it is not necessary to adopt new doctrines or standards, but only to revive and faithfully observe the classical common-law prohibitions against restraint of trade and unauthorized monopolies. Senator Klobuchar’s bill now pending in the Senate appears to accomplish this very result and thus seems to be the kind of reform that would redress the systematic under-enforcement of federal antitrust law during the consumer-welfare era.

Since the late 1970s, antitrust law in the United States has been transformed out of recognition and rendered largely toothless by consumer-welfare jurisprudence, which was first developed in the 1960s by "neo-classical price theorists" at the University of Chicago, then embraced by Robert Bork and other conservative jurists, who believed that antitrust law imposed excessive, harmful burdens on successful companies. Their consumer-welfare standard and its related teachings were adopted by the Burger Supreme Court in the late 1970s, after which the leading treatise on antitrust law, Areeda and Hovenkamp’s Antitrust Law, explained and further developed the consumer-welfare approach to antitrust law. That treatise, long regarded as the bible of modern American antitrust law, has been regularly consulted by federal judges seeking guidance in their antitrust cases, leading to innumerable published decisions that incorporated its consumer-welfare precepts. The treatise in turn has reported, explained and analyzed those court decisions, further confirming consumer-welfare’s primacy in the antitrust canon, and leading to yet more federal decisions premised on this view of antitrust law. It has been by this self-reinforcing feedback loop that consumer-welfare jurisprudence has swept the field in the modern era, transforming American antitrust law.

The federal courts have had the authority to develop this approach, since the principal antitrust law, the Sherman Act, confers on them the obligation to develop a federal common law of competition and commerce that is supposed to govern the interstate and foreign commerce of the United States. For all that, consumer-welfare jurisprudence in my view has badly overshot its mark and should be largely abandoned before it occasions even further harm. The courts can and should use their common-law authority to reform our antitrust law accordingly.

The change is needed because consumer-welfare jurisprudence has gone much too far, not only weeding out opportunistic and ill-conceived cases that never should have been brought, but also severely limiting the reach of antitrust law, so that it now prohibits only the most egregious instances of anticompetitive conduct, but little else. Some jurists might believe that this approach has been beneficial. I respectfully disagree and argue in this article that the best possible reform of our antitrust laws would be a simple, ringing restoration of the classical doctrines on restraint of trade and unauthorized monopoly. Those doctrines remain on the books and can be easily re-affirmed without doing violence to principles of stare decisis.

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Thankfully, my call for antitrust reform is not merely that of an obscure litigator whose lonely voice remains unheard in the wilderness. Rather, the era of consumer-welfare jurisprudence finally seems to be nearing its end, or at least its unquestioned primacy in the antitrust canon: mainstream Democrats, moderate Republicans, progressive leftists, populist right-wingers, Economist-magazine liberals like me, and, far more important, many federal judges both conservative and liberal all seem to favor a revival of classical antitrust. The left-wing progressives and right-wing populists perhaps wish to push matters much further, while skeptical conservatives generally accept that some sort of reform of our antitrust law is now needed. Antitrust reform thus appears to be headed our way.

Indeed, Justice Kavanaugh has already written two forceful, eloquent antitrust decisions (one a concurrence), which remind me of President Theodore Roosevelt’s preferred approach to antitrust enforcement: announce strong antitrust principles, enforce them vigorously against the worst offenders, and aim in that manner to prod all others to restrain their anticompetitive inclinations. That is likely the best approach and the one most likely to elicit bipartisan support as well as a simpler, more sensible administration of our antitrust laws. I add that Congressional reform of the kind now being debated should afford further, highly welcome relief: at a minimum, it should clarify that the aim of antitrust law is to prevent and redress restraint of trade and monopolization, not promote maximal output in each market.

As I explain below, American antitrust law is supposed to enforce across all markets the common-law prohibitions of restraint of trade and unauthorized monopoly. These classical doctrines are codified in the Sherman Act and constitute a political and commercial judgment, discerned from centuries of experience, concerning what kinds of business practices are most likely to promote our broader prosperity, economic opportunity, honest dealings, low prices for consumers, and a healthy democracy. Regrettably, those doctrines sometimes seem to have become distant third cousins in modern antitrust jurisprudence, which for these past forty years has been largely guided by consumer-welfare jurisprudence.

According to the consumer-welfare theory, antitrust law exists solely to ensure that sellers "maximize" their output in all markets. When they do so, antitrust law offers no reproach or relief. That is the proper explanation of the misnamed consumer-welfare standard. It is premised on revisionist history, promises analytical clarity and simplicity, delivers the opposite, and serves in practice to absolve most restraints of trade and most kinds of monopolizing conduct, with catastrophic consequences for our commerce, national economy, polity, and society.

Even so, the classical doctrines of antitrust law largely remain on the books and should be revived and enforced again with vigor, as they were most notably during the long, prosperous post-WWII era. Consumer-welfare jurisprudence has been used to abrogate a succession of per se rules, but not the classical precepts. Rather, consumer-welfare jurisprudence has imposed additional, largely impossible burdens of proof that antitrust plaintiffs must meet in addition to the classical requirements. It is past time to remove the consumer-welfare obstacles from antitrust prosecutions.

The north star of antitrust should cease to be the standard consumer-welfare tests — restricted marketwide output and unprovable supracompetitive prices. Rather, the

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lynchpin of antitrust should again be the exclusionary practices test, which asks whether the defendant uses a challenged practice to co-opt or impede competitors or to improve its offerings. If the former, the defendant has committed predicate conduct that exposes it to antitrust liability; but if the latter, the defendant has competed on the merits and is absolved of any possible antitrust liability. What better message could our law of competition express to market participants?

By this approach, and by narrowing or abrogating various consumer-welfare doctrines, the classical doctrines on restraint of trade and monopolization would be fully restored and guided by easily understood, easily applied rules against naked restraints and exclusionary conduct. Judges and juries could readily understand and rule on these matters, and antitrust claims would cease to be obscured by often elusive microeconomic arguments about market output, efficient practices, and supracompetitive pricing put forth by competing experts. None of that was ever supposed to be central to antitrust.

Broadly speaking, restraint of trade as used in the common law and original antitrust cases prohibited the following commercial practices: (1) contracts and concerted business arrangements that, for the sake of hindering or suppressing competition, restrain or prevent counterparties or others from plying their trades or competing in a market; (2) business arrangements by which most sellers or buyers in a market combine their operations in order to control the market; and (3) collusion between buyers or sellers to take advantage of their common sellers or customers (e.g., conspiracies to fix prices, allocate markets or rig ostensibly competitive bidding). Classical antitrust enforced these doctrines, holding offenders in violation of Section 1 of the Sherman Act. Classical antitrust also used these doctrines to explain the meaning of unlawful monopolization in violation of Section 2 of the Sherman Act. Namely, the offense of monopolization condemned a company’s deliberate efforts to gain control of a market by acquiring or sabotaging its rivals, but never reached a company that became a monopoly by its commercial excellence or because its market naturally admitted only one seller. Those doctrines should be revived and vigorously enforced. Lastly, Section 7 of the Clayton Act should prevent many more mergers and acquisitions than it has done these past forty years. I explain below an easy, simply administered approach that is faithful to the original Clayton Act and its amendment in 1950 by the Celler-Kefauver Act.

Crucially, all of these doctrines remain on the books and are sometimes enforced by courts disinclined to require the strict showings of consumer-welfare jurisprudence. If these doctrines were openly enforced in all cases and unburdened by consumer-welfare requirements, our antitrust law would be revived, fulfill its purpose, and lay a necessary foundation for our country’s long-term prosperity.

This is not an esoteric matter that matters only to antitrust practitioners and concerned companies. Under-enforcement of antitrust law has led to a profusion of economic, political, and social harms of the very kind that antitrust law was originally enacted to prevent and redress — the myriad, worsening evils of unfettered monopoly and oligopoly, which typically include lower overall productivity, diminished economic prosperity, a less innovative economy, higher consumer prices, fewer career and business opportunities, extreme and rising inequality of wealth, and the private capture of public governance. Restoring classical antitrust law by itself cannot answer all of the many challenges that our country faces, but without it we likely cannot enjoy long-term, broad-based economic

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prosperity that rests on sound fundamentals, nor expect social comity or reliably honest governance. Monopolistic economies do not nurture those outcomes and likely render them impossible for any extended duration. The common law was right on these points, and history proves the point. It is long past time to revive our antitrust law and enforce it according to its intended meaning.

II. THE COMMON LAW OF TRADE RESTRAINTS AND MONOPOLIES

The original antitrust laws of the United States were codifications of existing common-law doctrines that prohibited restraints of trade and the willful, unauthorized acquisition of monopoly power. At common law, offending contracts, combinations, and monopolies were unenforceable and subject to equitable decrees. The antitrust laws rendered them civil and even criminal offenses and gave private litigants strong incentives to bring claims against offenders.²

The common-law doctrines were generally understood at the time and so were not explained in the antitrust statutes themselves.³ In modern times, the common-law doctrines have perhaps become unfamiliar to many jurists and the general public, so that a review of them seems vitally important to understanding why we have antitrust laws, what they are supposed to do, and why we have gone so badly astray in the modern era. I therefore offer the following review of the common-law doctrines that were codified in our antitrust laws.

A. Restraint of Trade

At common law, a contract in restraint of trade meant a covenant by which the covenantor promised to the covenantee not to practice a lawful trade, participate in

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lawful commerce, or compete in some way against the covenantee.⁴ Such restraints were permitted only when they were ancillary and narrowly tailored to legitimate transactions or collaborations.⁵ In contrast, a combination or conspiracy in restraint of trade was an agreement between two or more persons by which they established a monopoly, excluded others from competing, coordinated prices, or allocated sales within a market; restraints of this

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kind were always unlawful.⁶ At common-law, all unlawful restraints of trade were void ab initio, unenforceable, and subject to a permanent injunction prohibiting their further use.⁷

Lastly, the common law condemned trade restraints because of their tendency and likely effects. Contracts that unreasonably restrained trade subjected covenantors to idleness and penury in exchange for immediate gain; deprived society of the covenantors’ labor and skill; and allowed covenantees gradually to monopolize their markets.⁸ Combinations and conspiracies in restraint of trade deprived the public of the protections afforded by vigorous competition between competing sellers or competing buyers.⁹

B. Unauthorized Monopolies

At common law, an unlawful monopoly could be enjoined or dissolved as a matter of law and meant any business or combination of businesses that willfully acquired

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control over an entire line of commerce without a valid public writ to do so.¹⁰ Even an authorizing public writ might be later deemed an illegitimate grant of monopoly power,¹¹ but monopoly charters of limited duration could be properly granted to encourage useful, novel inventions (patent rights), authors’ works (copyrights), to encourage private investment in public works, and to regulate the skilled professions for the sake of public safety.¹² Crucially, a monopolist could never defend its acquisition of monopoly control

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by arguing that it had not abused its power or charged excessive prices, since the danger lay in its power to take advantage of counterparties, including customers.¹³

III. ANTITRUST LAW WAS ORIGINALLY DIRECTED AGAINST THE GREAT INDUSTRIAL TRUSTS OF THE SECOND INDUSTRIAL REVOLUTION

American antitrust law codified and reinvigorated the common-law doctrines against restraint of trade and unauthorized monopoly. It was enacted to establish general, charter principles for American commerce and specifically to redress the problems that a broad consensus of Americans believed had been and would continue to be caused by the great industrial monopolies and business "trusts" that emerged during the Second Industrial Revolution (c., 1865 to 1914). A brief overview of this era provides an invaluable understanding of this key point.

A. The Rise of the Great Industrial Trusts During the Second Industrial Revolution

The great industrial trusts of the United States arose during the Second Industrial Revolution. It was a remarkable period, during which the United States played a pioneering role in developing and harnessing industrial processes that transformed every aspect of its economy and society.¹⁴ To manage the new industrial work, American companies opened and operated mines, mills, foundries, factories, pipelines, and vast logistical

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operations, and they employed professional managers to direct and oversee hundreds of thousands of wage laborers, who performed increasingly specialized tasks, often doing so in increasingly large, busy cities. To fill these jobs, the United States began to receive legions of immigrants from all parts of Europe, Asia Minor, China, and elsewhere.¹⁵ All of these developments transformed the country: the largely agrarian, homogenous society of farmlands and trading centers that existed before the Civil War (1861-1865) swiftly evolved into a bustling, polyglot, increasingly urban, and highly industrialized society. By the outbreak of the First World War in 1914, the United States had already become the world’s greatest and most dynamic industrial power.¹⁶

To succeed, the great commercial endeavors of the era required enormous funding and were largely undertaken by well-connected, sophisticated entrepreneurs who had close ties to the wealthiest investors.¹⁷ The firms that became most successful in the new industrial economy quickly grew very large and sought to limit competition in their markets so as to avert strong competition on price, which they feared might ruin their costly investments.¹⁸ In one industrial market after another, the largest sellers combined and thereafter acquired all other substantial sellers.¹⁹

Some of these combinations were challenged by state prosecutors as ultra vires transactions, since the combining businesses were incorporated under corporate charters that did not authorize either the combinations themselves or the unregulated monopolies created by them.²⁰ To avert this problem, large sellers of the same products began to use "business trusts" to combine their operations. These trusts designated trustors (the combining sellers), properties held in trust (the sellers’ respective stock or their operations and assets), one or more trustees (to manage the sellers’ businesses), and beneficiaries (the sellers). By this means, the largest sellers in each market merged their operations, acquired other competitors, and thereby gained control over their markets. The largest trusts also acquired their suppliers and commercial customers, foreclosing yet more competition at different levels of distribution, and they also began to combine with other large trusts to form immense industrial conglomerates.²¹

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In this manner, the great industrial trusts quickly gained dominant positions in the great new markets of the era. Towards the end of the nineteenth century, they had become so dominant in their markets, and so large, wealthy and powerful, that they easily outmatched public authorities charged with regulating them and appeared poised to dominate not only the national economy, but American society.²²

The Standard Oil Trust offers an instructive example. Its head, the legendary John Rockefeller, formed the Standard Oil Company in Cleveland during the Civil War. He and a partner astutely managed the business and made shrewd acquisitions, and Standard Oil thus emerged as a leading concern by the end of that war. From 1870 onwards, Standard Oil steadily acquired some competitors and purposefully ruined others in order to avert meaningful competition. To this end, Standard Oil colluded with giant railroad carriers to obtain preferential shipping rates; purchased numerous competitors after threatening to ruin them if they did not accept its miserly purchase proposals; and impeded and ruined independent competitors by various means, such as (a) using its control of pipelines to cut off supplies of crude petroleum to rival refineries; (b) buying land along the pathways of rival pipeline projects and then using it to uphold or prevent the completion of these projects; (c) selling refined petroleum products at below-cost prices in places where any competing refiner made sales until the rival went out of business; and (d) bribing state legislators to deny competitors required regulatory approval. By 1880, Standard Oil had become the kingpin of the petroleum industry in the United States, controlling its extraction, transport, refinement into various petroleum products, and final delivery to customers for various industrial and household uses.²³

To avoid increasingly skeptical Ohio regulators, Standard Oil moved its operations to New York City in 1882 and there formed a "business trust," which held the stock of Standard Oil as well as the stock of most other remaining refiners and distributors of petroleum in the country. At the time of its formation, this trust’s holdings included refiners that handled more than 90% of all petroleum in the country as well as an indispensable pipeline system (over 4,000 miles long) that alone could provide required crude petroleum to petroleum refiners. John Rockefeller became the principal "trustee" of this trust, and in that capacity he acted as the manager and director of nearly the entire petroleum industry of the United States from 1882 onward.²⁴

Rockefeller’s Standard Oil Trust treated its counterparties with brutal ruthlessness. Its distinguishing characteristic was that it drove mercilessly hard bargains with everyone. It underpaid suppliers and employees while taxing them with overbearing demands; it overcharged its customers, except when offering pockets of them below-cost goods for a short duration in order to destroy a local competitor; it bribed public officials; and it systematically co-opted or destroyed its competitors. Everyone who dealt with this trust resented but submitted to its demands.²⁵

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The Standard Oil Trust was one of many such trusts. Other trusts and giant industrial conglomerates accomplished comparable feats of monopolization in most of the other great industries of the era. These giant industrial trusts incited widespread fear and apprehension in the United States in the late 1800s.²⁶

As I explain below, antitrust law was established to prevent and redress this kind of business conduct and to ensure that, once curtailed, it would not arise again in some new form. As originally conceived, antitrust law was supposed to check the industrial trusts’ economic power and increasing control of entire industries. More broadly, it was also intended to establish a regime of competition that would underpin American commerce for the ages.

B. The American Antitrust Movement of the Late 1800s

In the United States, unlike Europe, the economic and social conditions of the Second Industrial Revolution never gave rise to a powerful socialist movement. Instead, the American public preferred and increasingly demanded vaguely defined "antitrust relief" — laws suitable to the American polity that would check and prevent the abuses of the great industrial trusts. The broad antitrust movement of the late 1800s was widespread and strong, having begun among farmers, traders, merchants, and displaced businesses, and having evolved into one of the great social movements of the era. By the late 1880s, public demands for antitrust relief were a highly popular rallying cause in every part of the country and perhaps the only issue on which there was bipartisan agreement among Democrats and Republicans (which at the time were very different formations from their current incarnations). Those who demanded antitrust relief did not belong to a single group or ascribe to a common platform, but at best constituted a diverse coalition, one whose constituents had differing aims and policy preferences. It was ever thus in America.²⁷

For all that, there was one animating fear that united the entire movement, infused the historic public debates, and informed the original antitrust laws of the various states and the United States: it was the fear and profound distrust of the giant trusts’ unchecked economic power. This matter is easily confirmed by even a casual review of the era’s Congressional debates, similar debates in various state legislatures, contemporary newspaper articles, politicians’ speeches, and court decisions.²⁸

Here is how Senator Sherman, a conservative Republican, characterized the matter in 1890 when addressing Congress to explain the antitrust law that would later bear his name:

This bill [a draft version of the Sherman Act] does not seek to cripple combinations of capital and labor; the formation of partnerships or corporations; but only to prevent and control combinations made with

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a view to prevent competition or for the restraint of trade, or to increase the profits of the producer at the cost of the consumer….
Associated enterprise and capital are not satisfied with partnerships and corporations competing with each other, and have invented a new form of combination, commonly called ‘trusts,’ that seeks to avoid competition by combining and controlling corporations, partnerships and individuals engaged in the same business, and placing the power and property of the combination under the government of a few individuals, and often under the control of a single man called a trustee, a chairman or a president.
The sole object of such a combination is to make competition impossible….
It dictates terms to transportation companies. It commands the price of labor without fear of strikes, for in its field it allows no competitors. Such a combination is far more dangerous than any heretofore invented, and when it embraces the great body of all the corporations engaged in a particular industry in all the states of the Union, it tends to advance the price to the consumer of any article produced. It is a substantial monopoly injurious to the public, and by the rule of both the common law and the civil law is null and void and the just subject of restraint by the courts….
It is this kind of combination we have to deal with now. If the concentrated powers of this combination are entrusted to a single man, it is a kingly prerogative, inconsistent with our form of government, and should be subject to the strong resistance of the state and national authorities.
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 necessaries 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…. These trusts and combinations are great wrongs to the people. They have invaded many of the most important branches of business. They operate with a double-edged sword. They increase beyond reason the cost of the necessaries of life and business, and they decrease the cost of the raw material, the farm products of the country. They regulate prices at their will, depress the price of what they buy, and increase the price of what they sell. They aggregate to themselves great enormous wealth by extortion, which makes the people poor. Then making this extorted wealth the means of further extortion from their unfortunate victims, the people of the United States, they pursue unmolested, unrestrained by law, their ceaseless round of peculation under the law, till they are fast producing that condition of our people in which the great mass of them are servitors of those which have this aggregated wealth at their command.²⁹

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C. The Original Meaning of American Antitrust Law

What was the antitrust remedy demanded by the public? After much debate, and with strong disagreement on emphasis, the consensus was that the best antidote to the power of the industrial trusts was to dust off and reinvigorate the common-law doctrines on restraint of trade and monopolies and treat them as actionable offenses when committed in the interstate or foreign commerce of the United States.³⁰ The courts would be charged with applying and developing this law,³¹ and to this end they would proceed from the following general precepts. First, the law against restraint of trade would forbid companies to use contracts or coordinated business arrangements in order to impose unreasonable restrictions on market participants that would prevent or hinder them from competing or plying their lawful trades. Second, the law against unauthorized monopolies would prevent any company from using contracts, combinations or business practices to undermine or co-opt competitors and thereby gain or preserve control over an entire line of commerce. Third, the courts would have broad authority to grant traditional common-law remedies, such as decrees of avoidance, dissolution, and divestiture, as well as a sweeping array of statutory remedies not available at common law: treble damages and attorney’s fees to a prevailing plaintiff in a private action, and civil fines and even criminal penalties in successful public prosecutions. Lastly, the federal version of this law would concern only the interstate and foreign commerce of the United States, and each State would bear responsibility for

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enacting and enforcing its own competition law for its own intrastate commerce. That is American antitrust law in its original, essential conception.³²

Thus conceived, antitrust law was enacted across the land: from the late 1880s onwards, numerous States enacted their own antitrust laws,³³ and in 1890 the U.S. Congress, acting almost unanimously,³⁴ enacted the Sherman Act, which became the country’s first national antitrust law.³⁵ To redress perceived gaps in the law, Congress enacted the Clayton Act and the Federal Trade Commission Act in 1914.³⁶ Congress further supplemented these laws by its passage of the Robinson-Patman Act (1936), which clarified and expanded the Clayton Act’s prohibition of commercial price discrimination,³⁷ and by its passage of

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the Celler-Kefauver Act (1950), which closed a loophole and expanded the reach of the Clayton Act’s prohibition of anticompetitive mergers and acquisitions.³⁸

As originally conceived, antitrust laws were meant to ensure that, as a general rule, the interstate and foreign commerce of the United States would be conducted by private parties whose vigorous competition with one another would regulate and guide their behavior.³⁹ Wherever possible, markets would be generally competitive, and sellers and buyers in them would vie against one another and thus keep one another honest, even if this approach to commerce proved not to be the most efficient possible way to produce goods and provide services.⁴⁰

The immediate aim of antitrust was to curtail and check the immense power of the giant industrial trusts, and the larger purpose was to prevent marketwide restraints of commerce, corrupt trading practices, and the purposeful monopolization of entire markets.⁴¹ The underlying rationale was that curtailing these practices would preserve the best traditions and potential of American society, protect society from the unchecked power and likely malign influence of dominant industrial combinations, and thereby afford better opportunities and greater prosperity for a larger number.⁴²

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IV. CLASSICAL ANTITRUST LAW

A. The Charter Principles of Classical Antitrust Law

Stated broadly, and subject to key exceptions described below, the federal antitrust statutes and key federal court decisions established the following charter principles of American commerce during the classical period of antitrust law (c. 1890 — 1975). Namely, the interstate and foreign commerce of the United States shall be free of undue restraints of trade and monopolization.⁴³ In particular, the interstate and foreign commerce of the United States shall be free of the following commercial practices: (1) undue restraints of trade — i.e., trade covenants, concerted arrangements, and combinations used to limit or suppress competition rather than reasonably facilitate legitimate transactions and collaborations;⁴⁴ (2) monopolization — i.e., serious attempts, conspiracies, and successful

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efforts to control a market by suppressing or co-opting competitors;⁴⁵ (3) unjustified price discrimination in sales of any commodity to commercial customers that harms either competition between the seller and its customers or downstream competition;⁴⁶ (4) commercial bribery;⁴⁷ (5) exclusive-dealing or tie-in arrangements for the sale of commodities, when any such arrangement unreasonably impedes or necessarily excludes competitors of the exclusive dealer or tying seller by depriving them of access to inputs or sales outlets that they likely require to compete proficiently;⁴⁸ (6) a firm’s acquisition of

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another firm or its assets, where the likely result is a substantial lessening of competition in any market;⁴⁹ and (7) certain kinds of interlocking directorates.⁵⁰

B. The Underlying Rationale for Classical Antitrust Law

The judicial policies that underpinned the charter principles of antitrust were explained in the common-law decisions and early antitrust cases. The statutory supplements and ringing court decisions in the post-WWII era merely reinforced the ancient common-law doctrines. These policies are simple to recite and necessary to a proper understanding of the original purpose of antitrust law.

First, every person is entitled to practice a lawful trade and to compete to make sales and purchases, and every business to offer its services or wares, subject only to properly exercised public authority and regulation, which in appropriate cases can be delegated to private actors.⁵¹

Second, private markets should be naturally regulated by uncorrupted commercial rivalry between rival sellers and between rival buyers at each stage of every supply chain. That is the best way to promote economic opportunity, commercial honesty, and good trading practices without repressive public regulation that itself leads to public corruption and a stultified, excessively bureaucratic economy.⁵²

Third, competitive rivalry in our markets, if vigorous, protects all market participants. If suppliers compete to make sales to competing dealers that in turn make sales to competing commercial customers, all of them will tend to act on their best behavior and to deal fairly with their counterparts in all dealings. A seller that overcharges its customers will lose them to another seller that offers better terms. A customer that drives an overly hard bargain will find that suppliers have sold their wares to other, more reasonable customers. At the very end of a supply chain, retail sellers will not abuse consumers for fear of losing their business. More generally, competitive rivalry at each stage of a supply

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chain keeps market participants honest and prevents them from taking advantage of their counterparties. Competitive markets thus encourage best practices, commercial honesty, innovation, and responsive dealings: laggards, swindlers, overly hard bargainers, and the hidebound will tend to lose business to rivals that are enterprising, honest, accommodating, and innovative.⁵³

Lastly, a business may lawfully become a monopoly or dominant firm in a highly concentrated market only if it does so by its superior skill, happenstance, or a market’s structural limitations, but it cannot acquire or maintain its dominance by any commercial practice that needlessly impedes or prevents any rival from competing against it.⁵⁴

C. The Principal Exceptions to Classical Antitrust

During the classical era of antitrust (c. 1890 to 1975), the federal courts clarified how the common-law doctrines might be applied in the various cases that came before them. Along the way, various courts differed on numerous points, but usually acknowledged the intended meaning of the Sherman Act’s central prohibitions: they were codifications of the above-described doctrines against restraint of trade and unauthorized monopolies.⁵⁵ Even so, the courts disagreed sharply on certain key points, which I examine directly below.

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1. The First Exception: The Commerce-Clause Limitation and Early Price-Fixing Cases Led to a Great Era of Industrial Consolidation

While the Sherman Act’s meaning seemed clear to its contemporaries, its reach occasioned strong disagreement. In its first antitrust ruling, given in 1895, a reactionary Supreme Court adopted an extraordinarily narrow reading of the Constitution’s Commerce Clause,⁵⁶ holding that the Sherman Act did not apply to manufacturing performed within a State, since Congress lacked authority to regulate intrastate activities; rather, the Sherman Act governed only the interstate transport and sale of commodities, but never their manufacture or production, which by definition could be done only in one place at a time.⁵⁷ Shortly afterwards, the Supreme Court confirmed in a string of rulings that price-fixing by rival sellers of commodities was per se unlawful under the Sherman Act.⁵⁸

By these early rulings, the Supreme Court established that (1) the Sherman Act prohibited rival sellers from fixing prices or enforcing naked restraints of competition when dealing in the interstate transport and sale of commodities;⁵⁹ but (2) this law did not reach mining, agriculture, or manufacturing operations, so that producers of commodities could combine with impunity to dominate the production of any commodity.⁶⁰ Sellers that acted in interstate commerce could not allocate markets or fix prices to escape the pressures of competition, but producers could combine their operations as much as they wished, but subject to state laws.

Sellers were guided accordingly. The Supreme Court’s rulings on the Sherman Act directly led to an unprecedented wave of mergers and market consolidation from the mid-1890s to the early 1900s. These mergers were so significant that they lastingly re-shaped American commerce, and their effects persist to the present day.⁶¹ For example, the legendary financier J.P. Morgan oversaw the formation of the United States Steel Company in 1901 by combining the operations of steel producers that collectively produced nearly

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70% of all steel made in the United States, and shortly afterwards US Steel enlarged itself even further by acquiring its largest remaining competitor.⁶²

The Supreme Court’s severe limitation of the Sherman Act’s reach under the Commerce Clause was gradually lessened by a succession of decisions from the early 1900s onward,⁶³ but it was abrogated only much later, in the landmark case of Wickard v. Filburn in 1942.⁶⁴ In the meantime, the great wave of mergers at the turn of the century were largely left intact, but federal antitrust prosecutors brought several landmark cases and succeeded at dissolving several major monopolies during the Administrations of Theodore Roosevelt, William Howard Taft, and Woodrow Wilson.⁶⁵

2. The Second Exception: Which Restraints of Trade Are Prohibited?

A second notable dispute concerned an early disagreement as to whether Section 1 barred all restraints of trade or only unreasonable ones. This disagreement, although it occasioned lengthy dissents in the earliest opinions, seems to have been more semantic than substantive: courts that viewed the prohibition as absolute defined restraints of trade narrowly, so that the term as defined included only practices that other courts would have characterized as unreasonable restraints.⁶⁶ This debate was definitively resolved in Standard

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Oil and again in Chicago Board of Trade, both of which clarified that Section 1 prohibited only "undue"or "unreasonable" restraints of trade.⁶⁷

3. The Third Exception: What Is a Monopoly?

During the classical era of antitrust, the courts largely agreed that the offense of monopolization meant the purposeful acquisition or preservation of market dominance by acquiring rivals or impeding their efforts to compete proficiently.⁶⁸ But at least one Supreme Court decision set a very exacting threshold, finding that the US Steel Corporation was not an unlawful monopolist even though it was a "combination" of 180 different steel producers that collectively accounted for 80% to 90% of steel production in the United States from 1901 to 1911. In that case, the court reasoned that US Steel, despite its immense size, faced genuine competition from other producers that remained outside its fold, and that US Steel and its remaining competitors had definitively abandoned their challenged trade restraints in response to the government’s lawsuit, obviating the need for further enforcement action.⁶⁹ Regardless, the courts eventually agreed that monopolization occurred whenever one seller willfully acquired or maintained sufficient power in a given line of commerce either to exclude rival sellers or raise prices without losing profits.⁷⁰

4. The Fourth Exception: Industrial Policy and Managed Trade

The fourth great exception to the original antitrust consensus arose during the Great Depression of the 1930s, when the country endured a broad, severe economic collapse. In a desperate bid to revive the economy, Congress enacted industrial-policy legislation in 1933 that authorized producers to coordinate sales, establish production quotas, and set prices and wages under the supervision of federal authorities.⁷¹ In one case, the Supreme Court upheld

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one such arrangement,⁷² but in 1935 it invoked constitutional grounds to strike down key provisions of the principal law that authorized this form of industrial management.⁷³ In a similar vein, Congress passed another law in 1937 that authorized individual States to permit vertical price-setting schemes undertaken by a producer and its sellers. This law remained in effect until Congress repealed it in 1975 after finding that it had led to increased retail prices.⁷⁴

The federal policy of managed industry not only raised constitutional concerns, but also failed to accomplish its purposes — which were to spur economic activity, increase employment, and restore general prosperity. Franklin D. Roosevelt’s Administration therefore pivoted away from this policy from the late 1930s onward, when it chose instead to favor expansive, aggressive enforcement of the Sherman Act to prevent market concentration. Strong antitrust enforcement thus became a bulwark of American policy from the late 1930s onwards. This approach was continued by ensuing Administrations until the election of Richard Nixon in 1968, and it was generally embraced by the federal courts until the late 1970s, when Nixon’s judicial appointees began to develop a common-law of consumer-welfare jurisprudence.⁷⁵

5. The Exceptions Were Secondary and Never Upended the Charter Principles of American Commerce

Subject to the above exceptions, and with varying degrees of emphasis, the federal courts during the classical era largely agreed on the meaning of the Sherman Act’s prohibitions, which I have summarized above. This general consensus lasted from 1890 to the late 1970s. According to this consensus, companies subject to the Sherman Act could not use contracts to restrain or prevent counterparties or others from competing against them unless the restraint was both ancillary and narrowly tailored; nor could companies allocate markets or fix prices; nor could any company purposefully acquire or maintain a monopoly or near-monopoly by acquiring or sabotaging rival sellers. To make any of these showings was to prove an offense that fell within the prohibitions of the Sherman Act. The supplemental federal statutes reinforced these overarching, general prohibitions and established complimentary, specific prohibitions. State

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antitrust laws codified some of these prohibitions, most notably those that condemned restraint of trade and commercial price discrimination. The principal limitation, finally removed in 1942, was the Supreme Court’s formerly narrow construction of the Commerce Clause.

Indeed, it was during the great postwar era (c. 1945-1973) that the American economy became the most competitive, innovative, and prosperous in its history. During this era, vigorous antitrust enforcement became strongly associated not only with robust economic growth and greater economic opportunities, but also with good governance.⁷⁶ On repeated occasion, influential members of Congress and successive Presidents publicly decried the political dangers then associated with unchecked industrial monopolies — those of authoritarian nationalism and communism. During the interwar period, monopolies had secretly supported, funded, and facilitated fascist movements in Nazi Germany, Mussolini’s Italy, and Imperial Japan, and those movements, once in power, had been impelled by their own internal dynamics to launch unprovoked wars of naked aggression (later called the Second World War) and to commit unspeakable atrocities against vulnerable minorities in the lands that they controlled.⁷⁷ Industrial monopolies also engendered intense antipathy and disillusionment among their many victims, giving rise to powerful socialist and communist movements that eventually led to a different form of repressive dictatorship. Antitrust, it was widely agreed, protected not only our markets and broader prosperity, but the very character of our culture, society, and political order.⁷⁸ These kinds of concerns had informed the original antitrust debates and became all the more heightened after the Second World War.⁷⁹

V. THE CONSUMER-WELFARE STANDARD HAS CONTORTED AND EMASCULATED FEDERAL ANTITRUST LAW

It all changed with President Nixon’s overhaul of the Supreme Court, which ever since has been a largely conservative court dominated by jurists who often have been skeptical of the merits of federal antitrust law, and who have narrowed its reach and meaning while completely redefining its intended purpose. From the late 1970s onward, the Supreme Court and lower federal courts have adopted one restrictive or unworkable antitrust doctrine after another, all of them premised on the absurdly misnamed consumer-welfare standard, which has harmed consumers by permitting every species of monopoly and trade restraint to hinder and suppress competition with impunity, so long as the offenders take care not to charge prices that are demonstrably and provably supracompetitive.⁸⁰

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A. The Consumer-Welfare Standard, Explained

The consumer-welfare standard was originally formulated by a legendary conservative jurist, Robert Bork, who was famously hostile to federal antitrust law, believing that it did more harm than good and imposed indefensible burdens on American businesses.⁸¹

According to the consumer-welfare standard, the only proper purpose of federal antitrust law is to promote maximum productive efficiency, which is usually if not always best accomplished by permitting sellers and other market participants to make commercial agreements among themselves and to conduct commerce and allocate resources as they deem fit to do without any hindrance imposed by federal antitrust law.⁸² Antitrust law should therefore condemn conduct only when (1) it constitutes an antitrust offense under classical antitrust jurisprudence; and (2) its effect or necessary tendency is to reduce overall output of a good or service in a properly defined market. Under this standard, an antitrust plaintiff must prove the traditional elements of its claim and further prove that the defendant’s conduct has diminished or inevitably must diminish overall output in a given line of commerce.⁸³

That is the consumer-welfare standard. Its title is a misnomer, since it is solely concerned with conduct that lessens overall output in a given market: an alleged antitrust violation might severely harm customers, but if it does not reduce or promise to reduce marketwide output, it

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is absolved.⁸⁴ Under the consumer-welfare standard, the apprehended evil is economic inefficiency, not harm to consumers, much less the unchecked power of giant industrial monopolies and combinations. A business commits an antitrust violation only when it charges captive customers so much for its goods that the customers end up purchasing fewer of them, thus ensuring that resources that otherwise would have been used to make these goods are instead diverted to another, less efficient use in another market.⁸⁵

Consumer-welfare jurists describe this diversion of resources as the "social cost" of monopoly pricing: an offending monopolist or cartel reduces marketwide output of its product or raises prices and thereby forces customers to bid up prices for the product; the monopolist or cartel thereby generates higher profits from fewer overall sales; customers in the aggregate receive less of the product, while paying more for it; and the national economy is thus deprived of the additional output of the product that would have been produced in a competitive market (one in which sellers, to survive, would be forced to set prices as low as those charged by competitors, resulting in customers buying more of the product and in sellers producing more of it to meet the customers’ increased demand for the product).⁸⁶

It is that deprivation of output alone that bothers proponents of the consumer-welfare standard. They refer to it as the "dead weight of monopoly."⁸⁷ A monopolist that can practice perfect price-discrimination should be permitted to do so if the practice allows it to maintain the same level of output that sellers would provide in a competitive market, which is possible if the seller’s price discrimination is perfectly calibrated to each buyer’s reservation price and not too costly to administer.⁸⁸

Under the consumer-welfare standard, the telltale signal of a cognizable antitrust offense is "supracompetitive prices" — prices higher than those that a seller could profitably charge in

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a competitive market.⁸⁹ According to the theory, supracompetitive prices can be profitably charged for an extended duration only by a monopolist or cartel whose customers are largely beholden to it for want of a viable alternative.⁹⁰ Even then, supracompetitive prices are unobjectionable when they do not result in lesser output — an outcome that is possible when a monopolist can implement "perfectly calibrated" price discrimination.⁹¹

It is only when a monopolist or cartel successfully imposes supracompetitive prices without practicing perfect price discrimination that market inefficiencies occur: buyers pay more to receive less of the product in question; and the monopolist or cartel earns higher profits from selling less of the product in question. Therefore, the monopolist or cartel makes less and

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delivers less of the product to the buyers.⁹² That is the sole or principal evil to be prevented and redressed by the Sherman Act, according to consumer-welfare jurisprudence.⁹³

To justify using the consumer-welfare standard, its proponents have argued that federal antitrust law was originally enacted and should always be enforced only to prevent trade restraints and monopolizing conduct that result in sub-optimal output, supracompetitive prices, and the ensuing misallocation of resources in the national economy, which is the "social cost" of monopoly. Only these matters constitute "harm to competition" under the consumer-welfare standard. Nothing else should be condemned as an antitrust violation, nor was ever intended to be condemned.⁹⁴ On this telling, the evil to be averted is not the economic power of giant business concerns that can dominate their counterparties and regulators, but reduced output in a given line of commerce.⁹⁵ If a widget company commits a classical violation and in so doing causes less widgets to be produced in the United States, it can be held liable for an antitrust violation. Otherwise, it gets a free pass. Indeed, monopolies are to be encouraged

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and congratulated for their contributions to the economy unless they restrict overall output in their lines of commerce.⁹⁶

Perhaps the most forthright characterization of consumer-welfare jurisprudence is the following passage from Rebel Oil, a famous antitrust decision rendered by the Ninth Circuit in 1995 (with original citations preserved in the quotation):

Competition consists of rivalry among competitors. Hasbrouck v. Texaco, Inc., 842 F.2d 1034, 1040 (9th Cir.1987), aff’d, 496 U.S. 543 … (1990). Of course, conduct that eliminates rivals reduces competition. But reduction of competition does not invoke the Sherman Act until it harms consumer welfare. Products Liab. Ins. Agency, Inc. v. Crum & Forster Ins. Cos., 682 F.2d 660, 663 (7th Cir.1982); see Reiter v. Sonotone Corp., 442 U.S. 330, 343 … (1979) (Congress designed the Sherman Act as a "consumer welfare prescription") (quoting ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 66 (1978)). Consumer welfare is maximized when economic resources are allocated to their best use. National Gerimedical Hosp. and Gerontology Ctr. v. Blue Cross of Kansas City, 452 U.S. 378, 387-88 & n. 13, … and when consumers are assured competitive price and quality. Products Liab. Ins., 682 F.2d at 663-64. Accordingly, an act is deemed anticompetitive under the Sherman Act only when it harms both allocative efficiency and raises the prices of goods above competitive levels or diminishes their quality.⁹⁷

Apart from everything else, this theory of federal antitrust law is contrary to the original aim of antitrust law, which was to deter and prohibit undue restraint of trade and monopolization even if doing so entailed a sacrifice of commercial efficiency.⁹⁸

B. The Practical Significance of the Consumer-Welfare Standard

In practice, the consumer-welfare standard has been usually impossible to satisfy. That is because its principal required showing — supracompetitive prices — is usually difficult or impossible to make in most markets, in which sellers offer differentiated products or services that are sold at varying prices, often under confidential contracts, so that a defendant’s prices might be higher than those of its rivals, but justified by its brand, or by superior or additional features in its product, or because the defendant offers related services that its rivals do not

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provide or provide in slightly different ways.⁹⁹ Also, it is usually difficult or impossible to ascertain a firm’s true marginal cost — the economic cost of selling an additional unit; but Chicago School price theory posits that a monopolist or cartel charges supracompetitive prices only when its pricing is higher than its marginal costs, including the cost of attracting capital investment (i.e., paying reasonable profits to investors).¹⁰⁰

That means that antitrust plaintiffs usually must make a poorly defined substitute showing, using "indirect evidence" to prove that a defendant’s challenged practices likely have resulted in reduced output.¹⁰¹ In most cases, the courts find these proofs to be deficient.¹⁰²

It turns out that supracompetitive prices can be readily shown only in perfectly competitive markets, where by definition such prices will never be charged, except when a secret cartel organizes and enforces a marketwide conspiracy to fix prices or allocate markets. In perfectly competitive markets, all sellers offer an undifferentiated commodity at the market price (say, sweet corn by the bushel for sale at Chicago). The market price, in turn, is the price that it costs reasonably efficient sellers to bring the commodity to market, including a minimally reasonable profit. If any seller strays above this price, it will instantly lose all future sales to other sellers that continue to charge the market price. If a seller charges below the market price, its ensuing sales will be done at a loss, and it will be quickly inundated with orders that will harm it the more it fills them.¹⁰³ In such a market, sellers have no power over their prices, and every seller can deprive every other of business if the other charges uncompetitive prices or otherwise imposes unfair terms of trade. That is a perfectly competitive market. It is perfectly competitive precisely because many sellers vie to make sales of an undifferentiated commodity that buyers will readily buy from any seller that offers it at the market price.¹⁰⁴ Cartels might occasionally try to fix prices and allocate sales in such markets, giving rise to conduct that is condemned under the consumer-welfare standard. It is the mere low-lying fruit of antitrust law, but seemingly the only target of consumer-welfare jurisprudence.¹⁰⁵

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In contrast to a perfectly competitive market, a monopolized market is one in which one seller or a cartel has so much power over its customers that it can profitably charge higher prices than it could ever do in a perfectly competitive market.¹⁰⁶

Most markets, however, are neither perfectly competitive, nor monopolized, but are said to be "monopolistically competitive." Sellers in these markets have varying degrees of market power over subsets of customers, and each tries to distinguish its offerings from those of rival sellers by brand, product features, service options, financing terms, and so forth. It is almost impossible to measure supracompetitive prices in these markets, since by their very nature they include differentiated products or services.¹⁰⁷

There lies the rub. Supracompetitive prices can be readily shown only in markets where they typically cannot be charged — i.e., in perfectly competitive markets. In consequence, antitrust claims in the modern era too often fail because the consumer-welfare standard requires a showing of a classical antitrust offense, plus a further showing of supracompetitive prices, but this second showing usually cannot be made by direct evidence in the very markets where classical antitrust offenses are most likely to occur — markets that have been monopolized or are monopolistically competitive. The courts have limited any possible daylight by usually taking

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a skeptical, narrow view of "indirect evidence" used to show how a defendant’s challenged practices have reduced economic efficiency in such markets.¹⁰⁸

The upshot is easy to state. In the age of consumer-welfare antitrust, countless plaintiffs have forgone claims that would likely have prevailed on simple proofs in the era of classical antitrust jurisprudence, while countless others have made the attempt in vain, devoting much of the case to proving supracompetitive prices or other harms to economic efficiency, and paying fortunes to expert economists to prepare supporting reports, but all too often with the same luck as Don Quixote enjoyed when trying to joust against the windmills of Spain. In these cases, any court so inclined can find fault with the plaintiff’s evidence, or merely find that the plaintiff has failed to provide preponderant evidence of supracompetitive prices, which properly speaking do not exist or are usually impossible to discern or demonstrate in markets that are monopolistically competitive or monopolized.¹⁰⁹

Even so, some antitrust claims have miraculously survived the consumer-welfare standard. Most notably, when the charging offense is a trade restraint challenged under a per se or quick-look standard, the courts presume "harm to competition" (i.e., macroeconomic inefficiency)

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and excuse a demonstrative showing of supracompetitive prices.¹¹⁰ This concession has mattered less than it should, since the same courts have abolished most of the per se prohibitions from the classical era, finding that these prohibitions cannot be reconciled with the ideal of "economic efficiency" extolled by consumer-welfare jurisprudence.¹¹¹

The courts have also been willing to issue preliminary injunctions to prevent anticompetitive mergers and acquisitions challenged under Section 7 of the Clayton Act by the Federal Trade Commission or the U.S. Department of Justice.¹¹² But here too the relief has been very modest, often amounting to mere tinkering at the edges, since merger challenges in the modern era are infrequent and made only in accordance with the FTC-DOJ’s highly exacting merger guidelines, which are predicated on consumer-welfare analysis.¹¹³

Lastly, a few courts sometimes invoke classical antitrust doctrines still on the books to condemn especially egregious misconduct that plainly exposes the defendant’s exclusionary aims and practices, but these cases are rare and always vulnerable to challenge on appeal on the

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ground that the plaintiff failed to show harm to competition — i.e., supracompetitive prices or reduced marketwide output.¹¹⁴

Indeed, the consumer-welfare standard has not been absolutely fatal to American antitrust law only because it has been superimposed on existing classical precepts, even if many of the bright-line rules have been abrogated by consumer-welfare jurisprudence. Courts inclined to enforce antitrust law expansively have therefore been able to recite the consumer-welfare standards in passing while imposing antitrust liability that typically depends at bottom on classical doctrines. Courts disinclined to find antitrust liability have tended to apply the consumer-welfare standard more rigorously to absolve defendants, except those that have committed a core cartel offense (price-fixing, market-allocation, or bid-rigging secretly undertaken by orthodox cartels).

None of this should come as any surprise. The consumer-welfare standard was initially developed and applied by judges who did not want to enforce antitrust law at all, and the standard was one that sounded eloquent and easily applied on paper, but meant in practice that the antitrust laws would hardly ever be enforced.¹¹⁵ Here is how Professor Eleanor Fox stated the matter when this transformation of antitrust law was underway but not yet completed:

Proponents of one currently popular formula for the solution of all antitrust problems would examine challenged behavior to determine whether it is primarily output-restricting and therefore inconsistent with short-run aggregate consumer welfare as adduced from neo-classical price-theory. If so, the business activity would be condemned. If not, it would be encouraged. This conception of antitrust would prohibit almost nothing at all.¹¹⁶

C. Consumer-Welfare’s Evisceration of Classical Antitrust’s Bright-Line Rules to Protect Competition

From the start, consumer-welfare jurists allowed that certain kinds of trade restraints should remain unlawful per se, but only those that fit within their extraordinarily narrow

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construct.¹¹⁷ Using this analysis, they have shortened the list of per se offenses, so that it now includes only secret conspiracies between "horizontal competitors" to fix prices, allocate markets, and rig bids. During the consumer-welfare era, the Supreme Court has struck down and abrogated the classical per se rules against vertical market allocations,¹¹⁸ vertical maximum price-fixing,¹¹⁹ resale price maintenance (vertical minimum price fixing),¹²⁰ most kinds of group boycotts,¹²¹ and most kinds of tie-in arrangements,¹²² all of which used to be treated as trade restraints that were unlawful per se under Section 1.

During the consumer-welfare era, the courts have also adopted other restrictive doctrines that have further limited the reach of antitrust law, such as the doctrines on antitrust injury,¹²³ circumstantial evidence of antitrust conspiracies,¹²⁴ predatory pricing,¹²⁵ beneficial

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monopoly,¹²⁶ beneficial vertical price-fixing,¹²⁷ beneficial price discrimination,¹²⁸ beneficial tie-in arrangements,¹²⁹ "two-sided markets",¹³⁰ and the presumption of legality for all vertical mergers.¹³¹ Crucially, it is the consumer-welfare standard that justifies these other doctrines, so that all of them properly belong within the category of consumer-welfare jurisprudence.

Collectively, the various consumer-welfare doctrines have been repeatedly used during the past forty years to defeat antitrust claims, exonerate the defendant, and absolve conduct that likely would have been condemned during the classical era.¹³² Under the consumer-welfare standard, very little conduct is prohibited by federal antitrust law, and conduct that would have been readily deemed unlawful and therefore rarely or never attempted is openly tolerated under our modern antitrust law.

D. The Consequences of Consumer-Welfare Jurisprudence

The debate is anything but academic. The consumer-welfare standard, as presumably intended, has severely limited the reach and force of federal antitrust law, which in its modern version prevents only the most egregiously anticompetitive behavior. For this reason, antitrust law has ceased to accomplish its original purposes.

That has mattered greatly. It has been during the forty-year period of consumer-welfare jurisprudence that the American economy has ceased to be one characterized by competitive markets. Instead, markets in the United States have been increasingly dominated by monopolies, duopolies, and closed oligopolies that overcharge and underserve their captive

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customers, underpay their suppliers and employees, and stifle threatening innovators before they can get their operations off the ground.

In 2016, the Economist published a groundbreaking study on the dearth of competition in American markets, characterizing the modern United States economy as follows:

After a bout of consolidation in the past decade the [American airline industry] is dominated by four firms with tight financial discipline and many shareholders in common. And the return on capital is similar to that seen in Silicon Valley.
What is true of the airline industry is increasingly true of America’s economy as a whole. Profits have risen in most rich countries over the past ten years but the increase has been biggest for American firms….
Profits are an essential part of capitalism. They give investors a return, encourage innovation and signal where resources should be invested. Their accumulation allows investment in bold new ventures….
But high profits across a whole economy can be a sign of sickness. They can signal the existence of firms more adept at siphoning wealth off than creating it afresh, such as those that exploit monopolies. If companies capture more profits than they can spend, it can lead to a shortfall of demand. This has been a pressing problem in America….
High profits can deepen inequality in various ways. The pool of income to be split among employees could be squeezed. Consumers might pay too much for goods. In a market the size of America’s prices should be lower than in other industrialised economies. By and large, they are not. Though American companies now make a fifth of their profits abroad, their naughty secret is that their return-on-equity is 40% higher at home.
[T]he most troubling aspect of America’s profit problem [is] its persistence. Business theory holds that firms can at best enjoy only temporary periods of ‘competitive advantage’ during which they can rake in cash. After that new companies, inspired by these rich pickings, will pile in to compete away those fat margins, bringing prices down and increasing both employment and investment. It’s the mechanism behind Adam Smith’s invisible hand.
In America that hand seems oddly idle…. The obvious conclusion is that the American economy is too cosy for incumbents.¹³³

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Dave Leonhardt of The New York Times performed independent research in 2018 and reached similar conclusions: large firms have increasingly dominated American commerce and use their dominance to exploit their counterparties — their suppliers, employees, and customers.¹³⁴

Indeed, a surprising number of markets in the United States have become highly concentrated, including markets for key online services, air travel, wireless telephone, cable television, broadband internet, hospital services, food products, beer, and numerous other markets.¹³⁵ Before the coronavirus pandemic began in early 2020, the number of start-ups in the American economy had been in decline since 1979, resulting in a clear loss of innovation and commercial dynamism.¹³⁶

As the Economist explained in its above study, large firms not only hold dominant positions across the American economy, but generate far higher pre-tax profits from their sales in U.S. markets than they do from their sales in foreign markets.¹³⁷ That sounds like the very kind of harm that the consumer-welfare standard supposedly seeks to prevent (unless all of these incumbents have successfully practiced perfect price-discrimination all the while, which would seem to be an impossible scenario as well as a highly unwelcome one to most people).

The consumer-welfare standard, it appears, has failed even according to its own myopic terms: plaintiffs have been too often rebuffed by stringent applications of the standard, and many have been discouraged from even trying to meet it. Modern antitrust law, informed by the consumer-welfare standard, has failed even to redress the one evil that the standard was purportedly invented to redress. As happened before during the original Gilded Era, dominant firms in our own era increasingly control the country’s markets and regularly abuse this control to charge supracompetitive prices that result in the misallocation of resources, lesser overall output, and the dead weight of monopoly pricing.¹³⁸ But the consumer-welfare standard, rather than redress even this circumstance, weeds out cases that by its own standards it should condemn. The standard is too difficult to prove and largely unworkable, and more than anything else it resembles a "get-out-of-jail-for-free" card that adroit monopolists and oligopolies can readily invoke to defeat antitrust challenges.

In direct consequence, the private markets of the United States have become far less competitive than they otherwise would have been. Indeed, a persistent, endemic dearth of

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competition has become the hallmark of our modern economy: this fatal flaw in the national commerce has foreclosed business opportunities, stifled innovation, diminished general prosperity, and given rise to various popular discontents. Our antitrust laws, hobbled by consumer-welfare doctrines, have permitted this state of affairs and as currently interpreted are largely powerless to redress it.

It is time, then, to reform federal antitrust law.

VI. EXCLUSIONARY CONDUCT BY DOMINANT FIRMS SHOULD AGAIN BECOME THE LYNCHPIN OF ANTITRUST LAW

The antidote is simple. The federal courts have long recognized their authority to develop and revise a common law of American commerce under the Sherman Act and its sequel statutes.¹³⁹ The courts should exercise this prerogative to clarify that the consumer-welfare standard is never a sine qua non of any antitrust claim, but at most one method among others to prove a relevant market, a defendant’s monopoly power or a defendant’s anticompetitive conduct.

The lynchpin of antitrust, however, should be the exclusionary practices test — i.e., deciding whether the defendant’s challenged conduct has been used to exclude or impede competitors rather than improve its own offerings. Under this standard, an antitrust offense occurs when a firm uses a trade restraint (an agreement with another that somehow limits competition) to subdue or prevent marketwide competition rather than improve its offerings; and an antitrust offense likewise occurs when a firm nearly acquires, gains or preserves a monopoly position by using one or more practices whose primary purpose is to subdue or prevent competition rather than improve its offerings. These standards

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are already recognized by the modern law,¹⁴⁰ but are burdened in most cases by the additional requirement of proving supracompetitive prices or some other marketwide reduction of output.¹⁴¹ It is long past time to remove these crippling obstacles to successful antitrust prosecutions.

Above all, the exclusionary-practices test furthers the original and enduring aim of federal antitrust law, which is to protect the interstate and foreign commerce of the United States from undue restraint of trade and monopolizing conduct, which historically have been the preferred methods of dominant firms to repress competition and thereby preserve and enlarge the advantages of incumbency.

Crucially, the exclusionary-practices test distinguishes between commercial excellence, which should always be encouraged, and deliberate efforts to hinder or suppress marketwide competition, which should always be prohibited when accomplished by trade restraints or used to acquire a dominant market position.

The exclusionary-practices test is also much easier for judges and juries to apply than is the consumer-welfare standard. Experts can still opine on matters suitable for their testimony, but antitrust cases will cease to be mystifying, mind-numbing sagas between competing microeconomic analyses, each dwelling on abstract, elusive notions of supracompetitive pricing and restricted output that are far removed from the common experience of most people and the actual behavior of firms in most markets.

Lastly, the courts have long recognized the exclusionary-practices test. It is classical antitrust jurisprudence, encapsulated in an easily applied standard that jurists and jurors can readily grasp. Adopting this test as the seminal criterion in antitrust cases will not require the heavy lifting and judicial controversy that other standards currently under debate might entail.

Concretely, here is how the exclusionary practices test can be applied in cases that come before the courts.

First, and perhaps most important, two or more independent firms that agree in some way not to compete against one another commit a per se violation of Section 1 unless their agreement is necessary to their collaboration or reasonably promotes its success and is

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narrowly tailored to serve only this purpose.¹⁴² Such agreements include naked horizontal restraints such as price-fixing, market-allocation, and employers’ no-poaching agreements.

Second, a firm’s participation in a group boycott (concerted refusal-to-deal) should constitute an antitrust offense if the demonstrable aim of the boycott is to prevent competition rather than to improve the offerings of any of its participants. When a defendant can plausibly argue that the boycott improves its own offerings or those of another participant, the boycott should be condemned only if (1) its use substantially forecloses access on commercially reasonable terms to necessary inputs or sales channels, or (2) its use forecloses a significant part of overall competition for sales in a market.

Third, the exclusionary-practices test should be used to assess the propriety of tie-ins and exclusive-dealing.¹⁴³ Specifically, a firm commits predicate antitrust misconduct if its tie-in or exclusive dealing is imposed by contract or accomplished by connivance with another firm and is clearly used to prevent competition rather than to improve its offerings. When a defendant can plausibly assert that its tie-in or exclusive dealing improves its offerings, the practice should be condemned only if (1) its use substantially forecloses access on commercially reasonable terms to necessary inputs or sales channels, or (2) its use forecloses a significant part of overall competition for sales in a market.

Fourth, vertical price-fixing imposed by a manufacturer should be presumptively unlawful, but can be saved if the manufacturer can justify its use by showing how it improves the manufacturer’s offerings. Vertical price-fixing imposed at the behest of any dealer or reseller should be unlawful per se. The old distinction between Colgate pricing policies and concerted vertical price-fixing should be abolished because it is unworkable and leads to unpredictable outcomes.

Fifth, a gatekeeper firm (i.e., one that controls an essential input or facility required to compete) commits predicate antitrust misconduct when it denies others access to necessary inputs or sales channels on commercially reasonable terms. If it does so by contract or in connivance with another firm, it should be held in violation of Section 1; and if it does

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so to acquire, gain or preserve its own near-monopoly or monopoly, it should be held in violation of Section 2.¹⁴⁴

Sixth, a defendant commits predicate antitrust misconduct when it obtains a standard-essential patent (SEP) and thereafter uses it to restrict marketwide competition or monopolize a market. Where it does so by contract or connivance, it should be held in violation of Section 1. Where it uses its SEP to acquire, gain or preserve its own near-monopoly or monopoly, it should be held in violation of Section 2. One leading decision already recognizes this rule.¹⁴⁵

Seventh, the exclusionary-practices test should be used to assess all other challenged trade restraints and alleged monopolization. The fundamental inquiry should be whether the defendant uses the accused practice to improve its offerings or prevent competition. In Section 1 cases, the plaintiff must also show that the accused practice is accomplished by contract or connivance and either (1) substantially forecloses access on commercially reasonable terms to necessary inputs or sales channels, or (2) affects or forecloses a significant part of overall competition for sales. In Section 2 cases, the defendant’s use of the accused practice must have significantly contributed to its acquisition or maintenance of a monopoly or near-monopoly position.

Eighth, predatory pricing constitutes predicate antitrust misconduct when a firm uses it to drive rivals out of business and thereby gain or preserve a monopoly or near-monopoly position. There should be no required showing of the predator’s subsequent recoupment of its loss-making sales.

The exclusionary-practices test should thus become the lynchpin of antitrust law. In addition, the courts should further revive antitrust law by adopting the following modifications or abrogations of consumer-welfare jurisprudence.

First, a merger or acquisition of a rival’s business should be presumptively unlawful if it takes place or results in a market that is "moderately concentrated" per existing HHI

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guidelines, and absent extraordinary circumstances it should be prohibited if it takes place or results in a market that is "highly concentrated."¹⁴⁶

Second, a vertical merger or acquisition should be presumptively unlawful if it raises dual barriers to entry at two levels of distribution, or if it exposes rivals at either level of distribution to a plausible threat of increased costs or limited access to a necessary input or sales channel. Existing case law supports this rule.¹⁴⁷

Third, a merger or acquisition of a rival’s business should not be permitted if its purpose is to avert or stifle a competitive threat posed by a disruptive or innovative rival.

Fourth, proving antitrust injury should never be a plaintiff’s burden, but a defendant can still invoke the doctrine of antitrust injury as a narrowly construed affirmative defense. The doctrine, which defendants routinely employ to confuse issues, should be clearly stated as follows: when a defendant has committed an antitrust violation, a private plaintiff cannot obtain money damages caused by the violation if the plaintiff’s damages have been caused by increased competition with the defendant rather than the defendant’s efforts to overcharge or underserve its customers or exclude or impose burdens on its rivals.

Lastly, the courts and Congress should confirm that the Sherman and Clayton Acts exist to prevent firms from unduly restraining or monopolizing the interstate and foreign commerce of the United States. If the immediate aim was to check the increasing power and encroachments of the original industrial trusts, the larger aim will always be to keep our commerce free of trade restraints and monopolizing conduct aimed at suppressing or limiting competition. I can think of no better way to promote general prosperity, economic opportunity, honest business practices, innovation, low prices, social comity, and sound democratic governance.

[Page 45]

——–

Notes:

^1. William Markham (www.markhamlawfirm.com) is an antitrust attorney based in San Diego who has practiced law for thirty-three years. A graduate of Harvard Law School (J.D., 1987), he obtained his initial training in antitrust litigation at the San Francisco office of a global firm (Coudert Brothers, now dissolved). He opened his own practice while still a young attorney in order to try his own cases. Since then, he has litigated and tried many commercial and real estate disputes and brought and opposed several appeals. Since 2005, he has worked mostly on large antitrust matters and other complex business disputes, litigating only a few large cases at a time and offering ongoing antitrust counseling. He has represented and advised global companies, industry-leading firms, their challengers, disruptive innovators, investors, and others. He has also written several articles on antitrust, trial practice, and other matters, all of which are available on his firm’s website. A dedicated surfer, he lives with his family close to the sea.

^2. See infra, Section III.C.

^3. See generally ALBERT H. WALKER, HISTORY OF THE SHERMAN LAW OF THE UNITED STATES OF AMERICA 14 (1910) ("[W]hat is this bill? A remedial statute to enforce, by civil process in the courts of the United States, the common law against monopolies. How is such a law to be construed? Liberally, with a view to promote its object.") (Senator Sherman, characterizing a draft version of the bill that in its final form became the Sherman Act); see also Apex Hosiery Co. v. Leader, 310 U.S. 469, 497 (1940) ("The common law doctrines relating to contracts and combinations in restraint of trade were well understood long before the enactment of the Sherman law. They were contracts for the restriction or suppression of competition in the market, agreements to fix prices, divide marketing territories, apportion customers, restrict production and the like practices, which tend to raise prices or otherwise take from buyers or consumers the advantages which accrue to them from free competition in the market. Such contracts were deemed illegal and were unenforcable at common law. But the resulting restraints of trade were not penalized and gave rise to no actionable wrong. Certain classes of restraints were not outlawed when deemed reasonable, usually because they served to preserve or protect legitimate interests, previously existing, of one or more parties to the contract.").

^4. See United States v. Addyston Pipe & Steel Co., 85 F. 271, 279 (6th Cir. 1898), aff’d after modification on other ground 175 U.S. 211 (1899) ("From early times it was the policy of Englishmen to encourage trade in England, and to discourage those voluntary restraints which tradesmen were often induced to impose on themselves by contract. Courts recognized this public policy by refusing to enforce stipulations of this character."); see also Mitchel v. Reynolds, 1 P.Wms. 181, 190 (1711) (Parker, C.J.) ("The mischief which may arise from [such restraints of trade are] (1) to the party by the loss of his livelihood and the subsistence of his family; (2) to the public by depriving it of an useful member. Another reason is the great abuses these voluntary restraints are liable to; as, for instance, from corporations who are perpetually laboring for exclusive advantages in trade, and to reduce it into as few hands as possible."); Alger v. Thacher, 19 Pick. 51, 54 (Mass. S. Ct. 1837) (same); Oregon Steam Nav. Co. v. Winsor, 87 U.S. 64, 68 (1873) ("[A] contract in restraint of trade is void as against public policy. One is, the injury to the public by being deprived of the restricted party’s industry; the other is, the injury to the party himself by being precluded from pursuing this occupation and thus being prevented from supporting himself and his family. It is evident that both these evils occur when the contract is general, not to pursue one’s trade at all, or not to pur sue it in the entire real m or country. The country suffers the loss in both cases; and the party is deprived of his occupation, or is obliged to expatriate himself in order to follow it. A contract that is open to such gave objection is clearly against public policy.").

^5. Addyston Pipe & Steel, 85 F. at 280-81 (extended dissertation on contractual restraints of trade at common law); see also N. Sec. Co. v. United States, 193 U.S. 197, 404 (1904) (at common law, a contract in restraint of trade meant one by which the covenantor agreed not to compete in some way against the covenantee and was lawful only if it was reasonable in scope and duration and used to afford the covenantee appropriate protection) (Holmes, J., dissenting on unrelated grounds); Horner v. Graves, 7 Bing. 735, 743, 131 Eng. Rep. 284 (1831) ("An agreement in general restraint of trade is illegal and void; but an agreement which operates merely in partial restraint of trade is good, provided it be not unreasonable, and there be a consideration to support it. In order that it may not be unreasonable, the restraint imposed must not be larger than is required for the necessary protection of the party with whom the contract is made. A contract, even on good consideration, not to use a trade anywhere in England is held void in that country as being too general a restraint of trade."); Oregon Steam, 87 U.S. at 66 ("Questions about contract in restraint of trade must be judged according to the circumstances on which they arise, and in subservience to the general rule that there must be no injury to the public by its being deprived of the restricted party’s industry, and that the party himself must not be precluded from pursuing his occupation and thus prevented from supporting himself and his family.").

^6. See N. Sec., 193 U.S. at 404 (At common law, "[c]ombinations or conspiracies in restraint of trade … were combinations to keep strangers to the agreement out of the business. The objection to them was … to their intended effect upon strangers to the firm and their supposed consequent effect upon the public at large. [T]hey were regarded as contrary to public policy because they monopolized, or attempted to monopolize, some portion of the trade or commerce of the realm."); United States v. E. C. Knight Co., 156 U.S. 1, 25 (1895) ("[A] general restraint of trade has often resulted from combinations formed for the purpose of controlling prices by destroying the opportunity of buyers and sellers to deal with each other upon the basis of fair, open, free competition. Combinations of this character … have always been condemned as illegal because of their necessary tendency to restrain trade. Such combinations are against common right, and are crimes against the public.") (Harlan, J., dissenting on other grounds); SIR WILLIAM ERLE, LAW RELATING TO TRADE UNIONS 5-7 (1869) (Chief Judge of Court of Common Pleas writing: "Restraint of trade, according to a general principle of the common law, is unlawful…. [A]t common law every person has individually, and the public also have collectively, a right to require that the course of trade should be kept free from unreasonable obstruction," and "the right to a free course for trade is of great importance to commerce and productive industry, and has been carefully maintained by those who have administered the common law.").

^7. Addyston Pipe & Steel, 85 F. at 279 ("Contracts that were unreasonable restraint of trade at common law were not unlawful in the sense of being criminal, or giving rise to a civil action for damages in favor of one prejudicially affected thereby, but were simply void, and were not enforced by the court.") (citing Mogul Steamship Co. v. McGregor, Gow & Co., App. Cas. 25 (1892); Hornby v. Close, L.R. 2 Q.B. 153 (1867); Hilton v. Eckersley, 6 El.& Bl. 47, 66 (1893); Farrer v. Close, L.R. 4 Q.B. 602, 612 (1869)); N. Sec., 193 U.S. at 339-41.

^8. See supra note 4.

^9. See, e.g., Craft v. McConoughy, 79 Ill. 346, 350, 22 Am. Rep. 171, 174 (1875) ("So long as competition was free, the interest of the public was safe. The laws of trade, in connection with the rigor of competition, was all the guaranty the public required; but the secret combination created by the contract destroyed all competition, and created a monopoly against which the public interest had no protection.") (invalidating a combination among grain dealers).

^10. See N. Sec., 193 U.S. at 339-41 (listing numerous common-law decisions that condemned combinations that gave the combining parties control over a line of commerce); see also Proprietors of Charles River Bridge v. Proprietors of Warren Bridge, 36 U.S. 420, 451 (1837) ("A monopoly, then, is an exclusive privilege conferred on one, or a company, to trade or traffick in some particular article; such as buying and selling sugar or coffee, or cotton, in derogation of a common right. Every man has a natural right to buy and sell these articles; but when this right, which is common to all, is conferred on one, it is a monopoly, and as such, is justly odious"); Richardson v. Buhl, 77 Mich. 632, 43 N.W. 1102, 1110 (1889) ("[C] onsolidation of separate, otherwise competing, companies into one large corporation amounted to a restraint of competition, and an illegal monopoly…."); People v. Chicago Gas Trust Company, 130 Ill. 268, 22 N.E. 798, 801-803 (1889) (same); Distilling & Cattle Feeding Co. v. People, 156 Ill. 448, 41 N.E. 188, 202 (1895); see, e.g., Arnot v. Coal Co., 68 N.Y. 558, 565 (1877) (decreeing invalid a contract between two coal companies by which they established a monopoly over the sale of anthracite coal in part of New York State) ("A combination to effect such a purpose is inimical to the interests of the public. [A]ll contracts designed to effect such an end are contrary to public policy, and therefore illegal. If they should be sustained, the prices of articles of pure necessity, such as coal, flour, and other indispensable commodities, might be artificially raised to a ruinous extent far exceeding any naturally resulting from the proportion between supply and demand.").

^11. See United States v. E. C. Knight Co., 156 U.S. 1, 9-10 (1895) ("In commenting upon the statute (21 Jac. I. c. 3), at the commencement of chapter 85 of the third institute, entitled ‘Against Monopolists, Propounders, and Projectors,’ Lord Coke, in language often quoted, said: ‘It appeareth by the preamble of this act (as a judgment in parliament) that all grants of monopolies are against the ancient and fundamentall laws of this kingdome. And therefore it is necessary to define what a monopoly is. ‘A monopoly is an institution, or allowance by the king by his grant, commission, or otherwise to any person or persons, bodies politique, or corporate, of or for the sole buying, selling, making, working, or using of anything, whereby any person or persons, bodies politique, or corporate, are sought to be restrained of any freedome or liberty that they had before, or hindred in their lawfull trade.’").

^12. See Butchers’ Union Slaughter-House & Live-Stock Landing Co. v. Crescent City Live-Stock Landing & Slaughter-House Co., 111 U.S. 746, 763-64 (1884) ("I do not mean to say that there are no exclusive rights which can be granted, or that there are not many regulative restraints on civil action which may be imposed by law. There are such. The granting of patents for inventions, and copyrights for books, is one instance already referred to. This is done upon a fair consideration, and upon grounds of public policy…. So, an exclusive right to use franchises, which could not be exercised without legislative grant, may be given; such as that of constructing and operating public works, railroads, ferries, etc…. So, licenses may be properly required in the pursuit of many professions and avocations which require peculiar skill or supervision for the public welfare…. But this concession does not in the slightest degree affect the proposition … that the ordinary pursuits of life, forming the large mass of industrial avocations, are and ought to be free and open to all, subject only to such general regulations, applying equally to all, as the general good may demand; and the grant to a favored few of a monopoly in any of these common callings is necessarily an outrage upon the liberty of the citizen as exhibited in one of its most important aspects, — the liberty of pursuit. [S]uch a grant [is] beyond the legislative power, and contrary to the constitution….").

^13. See E. C. Knight, 156 U.S. at 25 (at common law, trade restraints were "illegal because of their necessary tendency to restrain trade.") (Harlan, J., dissenting on other grounds); see, e.g., Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666, 672 (1880) (decreeing unlawful "an association of substantially all the manufacturers of salt in a large salt-producing territory," and declaring that "[p]ublic policy unquestionably favors competition in trade to the end that its commodities may be afforded to the consumer as cheaply as possible, and is opposed to monopolies which tend to advance market prices, to the injury of the general public. The clear tendency of such an agreement is to establish a monopoly, and to destroy competition in trade, and for that reason, on grounds of public policy, the courts will not aid in its enforcement. It is no answer to say that competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreasonably advanced. Courts will not stop to inquire as to the degree of injury inflicted upon the public; it is enough to know that the inevitable tendency of such contracts is injurious to the public."); State of California ex rel. Van de Kamp v. Texaco, Inc., 46 Cal. 3d 1147, 1167 (1988) (summarizing the "clear majority view at common law," which was that combinations of business operations that resulted in a monopoly were unlawful because of their "purpose, tendency, or natural consequences").

^14. Among the many striking advances of the era were the introduction and increasing use of mass-produced steel; the laying of steel railroads and use of greatly improved locomotives for regional and transcontinental transport; industrial shipping; macadamized roads paved with asphalt; gas-fired internal-combustion engines; automobiles; greatly improved cable telegraph networks and the first telephone systems; still photography; the greatly improved use of kerosene, gasoline, and coal for lighting and heating; the earliest uses of electrical power; a growing array of chemical compositions for industrial uses; the laying of steel pipelines for carrying water, sewage, petroleum products, and other liquids; greatly improved industrial mining and manufacturing systems; and the increasingly ubiquitous use of standardized machinery, tools, and parts to produce food and finished goods of every description. Towards the end of this era, industrialists initiated the mass production of automobiles and began to build airplanes. These remarkable technologies and new industries came one after the other at a dizzying space. See generally PETER N. STEARNS, THE INDUSTRIAL REVOLUTION IN WORLD HISTORY 61-68 (2018); HUGH BROGAN, THE PENGUIN HISTORY OF THE UNITED STATES OF AMERICA 377-406 (2nd Rev. Ed. 2001); MICHAEL HILTZIK, IRON EMPIRES: ROBBER BARRONS, RAILROADS, AND THE MAKING OF MODERN AMERICA, Introduction (2020).

^15. See generally STEARNS, supra note 14 at 61-68; BROGAN, supra note 14 at 377-406.

^16. See generally STEARNS, supra note 14, at 61-68; BROGAN, supra note 14 at 377-406.

^17. See BROGAN, supra note 14 at 381-91.

^18. See id.

^19. See supra note 14 at 61-68; Brogan, supra note 14 at 377-406.

^20. See, e.g., State v. Vanderbilt, 37 Ohio St. 590, 593-95 (1882) ("The attempted consolidation [of competing railroads] was ultra vires of the corporations joining therein…. The attempted consolidation is contrary to public policy. The [railroads] are competitive, and the object of the consolidation is to prevent competition. It is the settled public policy of the country not to permit consolidation of competing [railroads]. In nine states of the Union this principle has been incorporated in strong terms into the constitution…. In six states the same principle has been established by statute…. In twelve states there is no general provision authorizing consolidation. Such action can be there taken only by special act…. All of the remaining States, with the exception of two (California and Nevada), impose various limitations upon the power of consolidation. This principle of public policy is recognized by the courts. The policy of the state of Ohio upon the subject is the same…. This court has recognized the public policy which forbids monopolies.") (internal citations omitted).

^21. See generally BROGAN, supra note 14 at 381-91; STEARNS, supra note 14 at 61-68.

^22. See BROGAN, supra note 14 at 381-91; STEARNS, supra note 14 at 61-68.

^23. MATT CLAYTON, THE GILDED AGE: A CAPTIVATING GUIDE TO AN ERA IN AMERICAN HISTORY at 48-51 (2021); BROGAN, supra note 14 at 385, 389-90.

^24. See CLAYTON, supra note 23 at 48-51 (2021); BROGAN, supra note 14 at 385, 389-90.

^25. See CLAYTON, supra note 23 at 48-51 (2021); BROGAN, supra note 14 at 385, 389-90.

^26. See BROGAN, supra note 14 at 381-391; STEARNS, supra note 14 at 61-68.

^27. See TIM WU, THE CURSE OF BIGNESS: ANTITRUST IN THE NEW GILDED AGE 29-32 (2018); SandeepVaheesan, Accommodating Capital and Policing Labor: Antitrust in the Two Gilded Ages, 78 MD. L. REV. 766, 771-777 (2019); Robert Pitofsky, The Political Content of Antitrust, 127 U. PA. L. REV. 1051, 1053-54 (1979); John J. Flynn, The Reagan Administration’s Antitrust Policy, Original Intent, and the Legislative History of the Sherman Act, 33 ANTITRUST BULL. 259, 304-305 (1988); Rudolph J. Peritz, A Counter-History of Antitrust Law, 1990 DUKE L.J. 263, 314-315 (1991).

^28. See WALKER, supra note 3, at 13-16.

^29. See 21 CONG REC. 2462 (1890).

^30. See George F. Edmunds, The Interstate Trust and Commerce Act of 1890, 194 NO. AM. REV. 801, 813 (1911) (Senator Edmunds, principle co-draft of Sherman Act, writing: "[A]fter most careful and earnest consideration by the Judiciary Committee of the Senate it was agreed by every member that it was quite impracticable to include by specific description all the acts which should come within the meaning and purpose of the words ‘trade’ and ‘commerce’ or ‘trust’, or the words ‘restraint’ or ‘monopolize’, by precise and all-inclusive definitions; and that these were truly matters for judicial consideration"); 36 CONG. REC. 522 (Jan. 6, 1903) (statement of Senator Hoar) ("We undertook by law to clothe the courts with the power and impose on them and the Department of Justice the duty of preventing all combinations in restraint of trade. It was believed that the phrase ‘in restraint of trade’ had a technical and well-understood meaning in the law."); see also WALKER, supra note 3 at 47-48.

^31. See supra note 30.

^32. See Apex Hosiery, 310 U.S. at 497-98 ("The common law doctrines relating to contracts and combinations in restraint of trade were well understood long before the enactment of the Sherman law. They were contracts for the restriction or suppression of competition in the market, agreements to fix prices, divide marketing territories, apportion customers, restrict production and the like practices, which tend to raise prices or otherwise take from buyers or consumers the advantages which accrue to them from free competition in the market. Such contracts were deemed illegal and were unenforcible [sic] at common law. But the resulting restraints of trade were not penalized and gave rise to no actionable wrong. Certain classes of restraints were not outlawed when deemed reasonable, usually because they served to preserve or protect legitimate interests, previously existing, of one or more parties to the contract. In seeking more effective protection of the public from the growing evils of restraints on the competitive system effected by the concentrated commercial power of ‘trusts’ and ‘combinations’ at the close of the nineteenth century, the legislators found ready at their hand the common law concept of illegal restraints of trade or commerce. In enacting the Sherman law they took over that concept by condemning such restraints whereever they occur in or affect commerce between the states. They extended the condemnation of the statute to restraints effected by any combination in the form of trust or otherwise, or conspiracy, as well as by contract or agreement, having those effects on the competitive system and on purchasers and consumers of goods or services which were characteristic of restraints deemed illegal at common law, and they gave both private and public remedies for the injuries flowing from such restraints."); see also 15 U.S.C. §§ 1-7 (original Sherman Act passed in 1890); 15 U.S.C. §§ 8-11 (supplemental statutes enacted in 1894).

^33. See Texaco, 46 Cal. 3d at 1154-62 (discussing state antitrust laws that were adopted around the same time as the Sherman Act, including antitrust laws adopted in Arkansas, California, Kansas, Maine, Michigan, Mississippi, Missouri, Nebraska, New York, North Dakota, Ohio, South Dakota, Tennessee and Texas.); see, e.g., Marin Cty. Bd. of Realtors, Inc. v. Palsson, 16 Cal. 3d 920, 925 (1976) ("A long line of California cases has concluded that the Cartwright Act is patterned after the Sherman Act and both statutes have their roots in the common law.").

^34. The vote in the House was unanimous, and in the Senate all but one member voted for the bill. See WALKER, supra note 3 at 34, 41-46.

^35. See 15 U.S.C. §§ 1-7 (original Sherman Act passed in 1890); 15 U.S.C. §§ 8-11 (supplemental statutes enacted in 1894).

^36. These laws are now codified at 15 U.S.C. §§ 12 et seq.

^37. See 15 U.S.C. § 13. The Clayton Act’s original prohibition of price discrimination was directed against predatory pricing schemes conducted by dominant sellers to undermine lesser rivals. The Robinson-Patman Act supplemented this prohibition to protect smaller commercial customers from large chain-store buyers that could otherwise prevail on manufacturers to give them preferential prices. See FTC. v. Morton Salt Co., 334 U.S. 37, 43 (1948) (explaining why Congress enacted the Robinson-Patman Act — to ensure that large commercial buyers could not undermine competition in their markets by prevailing on sellers to give them favorable prices for commodities, except where the lower prices were justified by cost-efficiencies or competitive conditions).

^38. See Brown Shoe Co. v. United States, 370 U.S. 294, 315-18 (1962) (explaining that the Celler-Kefauver Act amended the Clayton Act’s prohibition of anticompetitive acquisitions so that it reached asset acquisitions, vertical mergers, and conglomerate mergers, and further explaining that the purpose was to arrest a general tendency towards economic concentration in the country’s private markets).

^39. See N. Sec., 193 U.S. at 337 (1904).

^40. WALKER, supra note 3 at 47-62; see also United States v. Aluminum Co. of Am., 148 F2d 416, 428-29 (2d Cir. 1945)("Alcoa") ("Throughout the history of these statutes it has been constantly assumed that one of their purposes was to perpetuate and preserve, for its own sake and in spite of possible cost, an organization of industry in small units which can effectively compete with each other.").

^41. Standard Oil Co. of New Jersey v. United States, 221 U.S. 1, 83-84 (1911) ("All who recall the condition of the country in 1890 will remember that there was everywhere, among the people generally, a deep feeling of unrest. The nation had been rid of human slavery,—fortunately, as all now feel,—but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people; namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life. Such a danger was thought to be then imminent, and all felt that it must be met firmly and by such statutory regulations as would adequately protect the people against oppression and wrong. Congress therefore took up the matter and gave the whole subject the fullest consideration…. Guided by these considerations, and to the end that the people, so far as interstate commerce was concerned, might not be dominated by vast combinations and monopolies, having power to advance their own selfish ends, regardless of the general interests and welfare, Congress passed the anti-trust act of 1890….") (Harlan J., concurring in part and dissenting in part on unrelated grounds).

^42. See WALKER, supra note 3 at 16 (Senator Teller, commenting on the same law) ("[T]he general complaint against trusts is that they prevent competition"); see also Alcoa, 148 F.2d at 427-29 (examining the original statutes and early case law to discern and explain their purpose and meaning); see also United States v. Trans-Missouri Freight Ass’n, 166 U.S. 290, 323-24 (1897) (explaining that the Sherman Act was intended to protect competition, prevent any combination from destroying it in any line of commerce, and thereby promote economic opportunity and self-reliant commercial enterprise, both of which are vital to a healthy economy and society).

^43. See N. Sec., 193 U.S. at 337 (the Sherman Act establishes "a rule for interstate and international commerce … that it should not be vexed by combinations, conspiracies, or monopolies which restrain commerce by destroying or restricting competition.").

^44. See 15 U.S.C. § 1; see also Addyston Pipe & Steele, 85 F. at 279-284 (confirming the doctrine of ancillary restraints summarized above); United States v. Joint Traffic Assn., 171 U.S. 505, 568-570 (1898) (agreement between railroad companies to set prices is an unlawful restraint of trade even if the prices thus established are reasonable or fair); N. Sec., 193 U.S. at 331-32 ("[T]he natural effect of competition is to increase commerce, and an agreement whose direct effect is to prevent this play of competition restrains instead of promoting trade and commerce; … to vitiate a combination such as the act of Congress condemns, it need not be shown that the combination, in fact, results or will result, in a total suppression of trade or in a complete monopoly, but it is only essential to show that, by its necessary operation, it tends to restrain interstate or international trade or commerce or tends to create a monopoly in such trade or commerce and to deprive the public of the advantages that flow from free competition…."); Standard Oil, 221 U.S. at 58-60 (Section 1 codifies common-law prohibition of unreasonable restraints of trade, which are contracts and business arrangements that impose "an undue limitation on competitive conditions"); Nash v. United States, 229 U.S. 373, 376 (1913) (The Sherman Act forbids "contracts and combinations" that "by reason of intent or the inherent nature of the contemplated acts, prejudice the public interests by unduly restricting competition or unduly obstructing the course of trade."); Chicago Board of Trade v. United States, 246 U.S. 231, 238 (1918) ("Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition."); United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940) ("[F]or over forty years this Court has consistently and without deviation adhered to the principle that price-fixing agreements are unlawful per se under the Sherman Act and that no showing of so-called competitive abuses or evils which those agreements were designed to eliminate or alleviate may be interposed as a defense."); id. at 221 ("Even though the members of the price-fixing group were in no position to control the market, to the extent that they raised, lowered, or stabilized prices they would be directly interfering with the free play of market forces. The Act places all such schemes beyond the pale and protects that vital part of our economy against any degree of interference.").

^45. See 15 U.S.C. § 2; see also United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) ("The offense of monopoly under § 2 of the Sherman Act has two elements: (1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident."); Alcoa, 148 F2d at 429-32 (a firm that purposefully acquires or preserves a monopoly over a given line of commerce commits unlawful monopolization in violation of Section 2); Am. Tobacco Co. v. United States, 328 U.S. 781, 809-10 (1946) (concerted conduct to acquire or preserve monopoly power is unlawful under Section 2); Apex Hosiery, 310 U.S. at 497 ("A combination of two great railroads resulting in destroying or greatly abridging the free operation of competition theretofore existing was enjoined in United States v. Union Pacific R. Co., 226 U.S. 61 [1912]" and a combination that confers the "power to control the output, supply of the market and the transportation facilities of potential competitors, in the anthracite coal market, the arrangement was held void in United States v. Reading Co., 253 U.S. 26, 47-48 [1920].").

^46. See 15 U.S.C. § 13(a)-(b), (d)-(f); see also Morton Salt, 334 U.S. at 43 ("The legislative history of the Robinson-Patman Act makes it abundantly clear that Congress considered it to be an evil that a large buyer could secure a competitive advantage over a small buyer solely because of the large buyer’s quantity purchasing ability. The Robinson-Patman Act was passed to deprive a large buyer of such advantages except to the extent that a lower price could be justified by reason of a seller’s diminished costs due to quantity manufacture, delivery or sale, or by reason of the seller’s good faith effort to meet a competitor’s equally low price.").

^47. See 15 U.S.C. § 13(c).

^48. See 15 U.S.C. § 14; see also Tampa Elec. Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961) (Exclusive dealing contract violates Section 3 of the Clayton Act when "it [is] probable that performance of the contract will foreclose competition in a substantial share of the line of commerce affected."); Times-Picayune Pub. Co. v. United States, 345 U.S. 594, 605 (1953) ("Tying arrangements, we may readily agree, flout the Sherman Act’s policy that competition rule the marts of trade. Basic to the faith that a free economy best promotes the public weal is that goods must stand the cold test of competition; that the public, acting through the market’s impersonal judgment, shall allocate the Nation’s resources and thus direct the course its economic development will take. Yet tying agreements serve hardly any purpose beyond the suppression of competition. By conditioning his sale of one commodity on the purchase of another, a seller coerces the abdication of buyers’ independent judgment as to the ‘tied’ product’s merits and insulates it from the competitive stresses of the open market.").

^49. See 15 U.S.C. § 18; see also Brown Shoe, 370 U.S. at 315-18 ("The dominant theme pervading congressional consideration of the 1950 amendments [of the Clayton Act] was a fear of what was considered to be a rising tide of economic concentration in the American economy. Apprehension in this regard was bolstered by the publication in 1948 of the Federal Trade Commission’s study on corporate mergers. Statistics from this and other current studies were cited as evidence of the danger to the American economy in unchecked corporate expansions through mergers. Other considerations cited in support of the bill were the desirability of retaining ‘local control’ over industry and the protection of small businesses. Throughout the recorded discussion may be found examples of Congress’ fear not only of accelerated concentration of economic power on economic grounds, but also of the threat to other values a trend toward concentration was thought to pose. [Congress] hoped to make plain that [Section 7 of the Clayton Act] applied not only to mergers between actual competitors, but also to vertical and conglomerate mergers whose effect may tend to lessen competition in any line of commerce in any section of the country…. [I]t is apparent that a keystone in the erection of a barrier to what Congress saw was the rising tide of economic concentration, was its provision of authority for arresting mergers at a time when the trend to a lessening of competition in a line of commerce was still in its incipiency. Congress saw the process of concentration in American business as a dynamic force; it sought to assure the Federal Trade Commission and the courts the power to brake this force at its outset and before it gathered momentum.").

^50. See 15 U.S.C. § 19.

^51. See supra Section II.

^52. See WALKER, supra note 3 at 13-16; Alcoa, 148 F2d at 429-32.

^53. Alcoa, 148 F.2d at 427 (L. Hand, J.) (The Sherman Act protects customers from price-gouging imposed by monopolists, and it also has "wider purposes" and therefore forbids the willful acquisition or preservation of a monopoly position even when the monopolist does not charge monopoly rents. The animating theory is "that possession of unchallenged economic power deadens initiative, discourages thrift and depresses energy; that immunity from competition is a narcotic, and rivalry is a stimulant, to industrial progress; that the spur of constant stress is necessary to counteract an inevitable disposition to let well enough alone. [C]ompetitors, versed in the craft as no consumer can be, will be quick to detect opportunities for saving and new shifts in production, and be eager to profit by them.").

^54. See id., 148 F.2d at 429-30.

^55. See WALKER, supra note 3 at 295-96 (commenting on the "numerous judicial decisions" that interpreted and applied the Sherman Act during its first twenty years, and observing that these decisions, "with a close approach to unanimity," agreed on the meaning of the Sherman Act’s prohibitions); see also United States v. Trans-Missouri Freight Assn., 166 U.S. 290, 340-343 (1897) (expansive statement of the law of restraint of trade, so that it encompasses all contracts by which companies combine to control any line of commerce and thereby avert price competition, regardless of whether they charge reasonable prices or unreasonably high prices); Addyston Pipe & Steele, 85 F. at 279-284 (explaining doctrine of ancillary restraints); Alcoa, 148 F.2d at 428-29 (examining the original statutes and early case law, and finding that they agreed on the following matters: "[T]he vice of restrictive contracts and of monopoly is really one, it is the denial to commerce of the supposed protection of competition…. We have been speaking only of the economic reasons which forbid monopoly; but, as we have already implied, there are others, based upon the belief that great industrial consolidations are inherently undesirable, regardless of their economic results. In the debates in Congress Senator Sherman himself in the passage quoted in the margin showed that among the purposes of Congress in 1890 was a desire to put an end to great aggregations of capital because of the helplessness of the individual before them…. Throughout the history of these statutes it has been constantly assumed that one of their purposes was to perpetuate and preserve, for its own sake and in spite of possible cost, an organization of industry in small units which can effectively compete with each other.").

^56. Congress’ power to regulate interstate commerce is conferred by the Constitution’s Commerce Clause. See U.S. CONST., art. I, § 8 ("The Congress shall have Power … To regulate Commerce with foreign Nations, and among the several States….").

^57. See E. C. Knight, 156 U.S. at 16-17. This ruling permitted the infamous Sugar Trust to proceed with its challenged acquisitions of several large sugar refineries by which it gained ownership and control over 98% of all refined sugar produced in the United States. See id. at 18.

^58. See Trans-Missouri Freight, 166 U.S. at 339 (holding that agreements among railroad operators to fix their respective rates were unlawful under Section 1 even if the rates are reasonable); Joint Traffic Assn., 171 U.S. at 568-570 (1898) (agreement between railroad companies to set prices is an unlawful restraint of trade under Section 1 even if the prices thus established are reasonable or fair); Addyston Pipe & Steele, Co. 85 F. at 291 (covenants to fix prices and coordinate bidding made between producers of cast-iron pipes were violations of Section 1).

^59. See id.

^60. See E. C. Knight, 156 U.S. at 16-17.

^61. See Vaheesan, supra note 27 at 783-786.

^62. See CHARLES R. MORRIS, THE TYCOONS: HOW ANDREW CARNEGIE, JOHN D. ROCKEFELLER, JAY GOULD, AND J.P. MORGAN INVENTED THE AMERICAN SUPERECONOMY 255-58 (2005); Len Boselovic, Steel Standing: U.S. Steel celebrates 100 years, PG NEWS – BUSINESS & TECHNOLOGY, Feb. 25, 2001.

^63. See, e.g., Swift & Co. v. United States, 196 U.S. 375, 396-397 (1905) (ruling that several combinations to control production and sale of commodity within various states was part of overall plan to restrain interstate commerce, and that this outcome fell within Congress’ authority under the Commerce Clause because the effect on interstate commerce was "not accidental, secondary, remote, or merely probable," but rather was the plan’s "direct object," so that "the case [was] not like United States v. E. C. Knight Co."); see generally United Leather Workers’ Int’l Union, hoc. Lodge or Union No. 66 v. Herkert & Meisel Trunk Co., 265 U.S. 457, 468-69 (1924) ("The Knight Case has been looked upon by many as qualified by subsequent decisions of this court. The case is to be sustained only by the view that there was no proof of steps to be taken with intent to monopolize or restrain interstate commerce in sugar, but only proof of the acquisition of stock in sugar manufacturing companies to control its making.").

^64. See Wickard v. Filburn, 317 U.S. 111, 124 (1942) ("The commerce power is not confined in its exercise to the regulation of commerce among the states. It extends to those activities intrastate which so affect interstate commerce….").

^65. See WALKER, supra note 3 at 179-216, 270-284 (recounting the federal government’s prosecution of Sherman Act claims during the Administrations of Theodore Roosevelt and William Howard Taft); see also Vaheesan, supra note 27 at 787 ("Although the administrations of Theodore Roosevelt, William Howard Taft, and Woodrow Wilson launched a vigorous anti-monopoly campaign, these efforts, at most, undid only a part of the consolidation that resulted from the merger mania between 1897 and 1904…. Given the creation of monopolies in a number of key industries, the public clamored for government action. The administrations of Theodore Roosevelt and especially of William Howard Taft and of Woodrow Wilson initiated a number of major monopolization suits.").

^66. Compare, e.g., N. Sec., 193 U.S. at 331-32 (all restraints of trade are outlawed, but the term refers only to a practice intended to "prevent [the] play of competition" and that "restrains instead of promoting trade and commerce") with Standard Oil, 221 at 1, 58-60 (Section 1 codifies common-law prohibition of unreasonable restraints of trade, which are contracts and business arrangements that impose "an undue limitation on competitive conditions").

^67. See Standard Oil, 221 U.S. at 58-69; Chicago Board of Trade, 246 U.S. at 238 ("Every agreement concerning trade, every regulation of trade, restrains. To bind, to restrain, is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition.").

^68. See 15 U.S.C. § 2; see also United States v. Union Pacific R. Co., 226 U.S. 61, 88 (1912); Reading, 253 U.S. at 47-48. See generally Grinnell, 384 U.S. at 570-71; Alcoa, 148 F.2d at 429-32.

^69. See United States v. U.S. Steel Corp., 251 U.S. 417, 444-445 (1920).

^70. See United States v. E. I. du Pont de Nemours & Co., 351 U.S. 377, 389 (1956) ("Our cases determine that a party has monopoly power if it has, over any part of the trade or commerce among the several states, a power of controlling prices or unreasonably restricting competition.").

^71. See The National Recovery Act of 1933, PUB. L. 73-67, 48 STAT. 195 (to encourage growth and full employment at higher wages, this law suspended federal antitrust law, authorized federal supervision of entire industries, and, subject to this federal supervision, allowed producers in various industries to coordinate and set prices, production quotas, market allocations, and wages); see generally WU, supra note 27 at 78, 92.

^72. See Appalachian Coals v. United States, 288 U.S. 344, 359-378 (1933), overruled on unrelated ground by Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984). In Appalachian Coals, the Supreme Court rejected a Sherman Act challenge to an agreement among rival coal producers in Appalachia to appoint a single sales agent to coordinate their sales, set prices, set wages, allocate profits, and thereby ensure that the producers did not undercut one another’s prices and thus bring ruin upon themselves. In that decision, the Court went out of its way to identify the unfavorable economic circumstances that beset the Appalachian coal industry, and it endorsed industry-wide collaboration as an appropriate means to address these threats to the industry’s stability and prosperity. That approach constituted a radical departure from the classical common-law doctrines.

^73. See A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 551 (1935) ("On both the grounds we have discussed, the attempted delegation of legislative power and the attempted regulation of intrastate transactions which affect interstate commerce only indirectly, we hold the code provisions here in question [key provisions of the National Industrial Recovery Act of 1933] to be invalid and that the judgment of conviction must be reversed.").

^74. See Leegin Creative Leather Prod., Inc. v. PSKS, Inc., 551 U.S. 877, 904-05 (2007) ("In 1937, Congress passed the Miller-Tydings Fair Trade Act, 50 Stat. 693, which made vertical price restraints legal if authorized by a fair trade law enacted by a State. Fifteen years later, Congress expanded the exemption to permit vertical price-setting agreements between a manufacturer and a distributor to be enforced against other distributors not involved in the agreement. McGuire Act, 66 Stat. 632. In 1975, however, Congress repealed both Acts.").

^75. WU, supra note 27 at 78-83;Vaheesan, supra note 27 at 792-93.

^76. See WU, supra note 27 at 78-81; Vaheesan, supra note 27 at 779.

^77. See WU, supra note 27 at 78-81; Vaheesan, supra note 27 at 779.

^78. See WU, supra note 27 at 78-81; Vaheesan, supra note 27 at 779.

^79. See WU, supra note 27 at 78-81; Vaheesan, supra note 27 at 779.

^80. WU, supra note 27 at 102-109; Vaheesan, supra note 27 at 792-800.

^81. To develop this standard, Judge Bork relied heavily on the antitrust teachings of the so-called "Chicago School," which purported to apply neo-classical price theory to antitrust issues, an exercise that almost invariably entailed making a complicated, counter-intuitive showing as to why the defendant’s conduct should not be condemned as an antitrust violation. Once the Supreme Court adopted this approach to antitrust, it was more fully developed and explained with more nuance and moderation in a widely respected treatise on antitrust law compiled by two highly regarded law professors, the late Philip Areeda of Harvard Law School and his protegé, Herbert Hovenkamp, who now teaches law and economics at the University of Pennsylvania. That treatise in turn has long served as the authoritative guide to federal antitrust law that is routinely consulted by federal judges in antitrust cases. See WU, supra note 27 at 102-109.

^82. See ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF locs. 634, 696, 733 (Digital Ed. 2021).

^83. See id.; see also Robert H. Bork, Legislative Intent and the Policy of the Sherman Act, 9 JOURNAL OF LAW AND ECONOMICS 7 (1966), reprinted in THE POLITICAL ECONOMY OF THE SHERMAN ACT: THE FIRST ONE HUNDRED YEARS 39 (1991) (When enacting the Sherman Act, "Congress intended the courts to implement … only that value we would today call consumer welfare…. [T]he policy the courts were intended to apply is the maximization of wealth or consumer want satisfaction. This requires courts to distinguish between agreements or activities that increase wealth through efficiency and those that decrease it through restriction of output."); id. at 43-47, 52-58, 61-70 (arguing that the Sherman Act condemns only trade restraints and monopolization that lessen "economic efficiency," which occurs when a cartel fixes prices or allocates markets, and which otherwise occurs only when the challenged practices are used to eliminate marketwide competition in order to restrict marketwide output and force customers to pay supracompetitive prices); see generally HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY: THE LAW OF COMPETITION AND ITS PRACTICE 62-64, 77 (3rd Ed. 2005) ("The consumer welfare principle in use has become identical with the principal that the antitrust laws should strive for optimal allocative efficiency" — a concept whose "cruder" statement is that antitrust law exists to promote the "highest output and lowest prices in the market in question.").

^84. See generally HOVENKAMP, supra note 83 at 63-64 (according to consumer-welfare jurisprudence, "[a] ntitrust enforcement should be designed in such a way as to penalize conduct precisely to the point that it is inefficient, but to tolerate or encourage it when it is efficient" and "the decision to make this market efficiency model the exclusive guide for antitrust policy is nonpolitical…. Thus if a practice produces greater gains to business than losses to consumers, it is efficient and should not be illegal under the antitrust laws.").

^85. See id.

^86. See generally id. at 17-26.

^87. See generally id. at 18-20. Related harms entailed by the same conduct are monopoly rents, id. at 20-23, and lost competitor investment, id. at 23-26. All of these harms result in less output and less efficient economic production, which in turn are the only proper concerns of antitrust law, according to consumer-welfare jurisprudence.

^88. See id. at 575 ("Perfect price discrimination has two important results. First, the [amount] of traditional monopoly profits, or producers’ surplus, is increased. Everything that would be consumers’ surplus in a competitive market may become monopoly profits under perfect price discrimination. Second, output under perfect price discrimination is … the same as under perfect competition. For this reason perfect price discrimination is often said to be as efficient as perfect competition, even though one result of perfect price competition is that customers are far poorer and the seller far richer.").

^89. See Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1433 (9th Cir. 1995) ("[A]n act is deemed anticompetitive under the Sherman Act only when it harms both allocative efficiency and raises the prices of goods above competitive levels or diminishes their quality.") (citing Brook Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223-225 (1993) (holding that a seller’s predatory pricing, even if undertaken to destroy rival sellers, becomes unlawful under the Sherman Act only if the plaintiff can show that the seller, after excluding its rivals by predatory pricing, is likely to "recoup" the cost of predatory pricing by imposing supracompetitive prices)).

^90. See William M. Landes & Richard A. Posner, Market Power in Antitrust Cases, 94 HARV. L. REV. 937, 937 (1981) ("The term ‘market power’ refers to the ability of a firm (or a group of firms, acting jointly) to raise price above the competitive level without losing so many sales so rapidly that the price increase is unprofitable and must be rescinded."); see, e.g., United States v. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001) ("[A] firm is a monopolist if it can profitably raise prices substantially above the competitive level.").

^91. See HOVENKAMP, supra note 83 at 575.

^92. See PHILLIP E. AREEDA & HERBERT HOVENKAMP, ANTITRUST LAW: AN ANALYSIS OF ANTITRUST PRINCIPLES AND THEIR APPLICATION ¶¶403-405 (2021). In a competitive market, sellers would have sold the product at lower prices, buyers would have purchased more of the product, and sellers therefore would have made and delivered more of it. Inputs that would have been used to make this product in a competitive market are diverted to less efficient uses elsewhere in the economy when this market is monopolized or allocated by a price-fixing cartel. That diversion of inputs to other markets is the sole concern of the consumer-welfare standard. See id.

^93. See Rebel Oil, 51 F.3d at 1433. In theory, consumer-welfare jurisprudence acknowledges that harm to competition can also occur when the "quality" of output is reduced by the challenged conduct, id.), but the courts almost never find a defendant liable on this ground, see AREEDA & HOVENKAMP, supra note 92 at ¶¶403-405. Indeed, there are vanishingly few cases in which the courts have even taken up the matter in earnest. Perhaps the most well-known instance occurred in the Glen Holly case, in which the Ninth Circuit held that a plaintiff had adequately pled an antitrust claim under Section 1 by alleging that two sellers, whose offerings competed directly, agreed to remove one of their product offerings from the market, thereby obliging customers to buy the sole remaining offering; this conduct, if presumed true, was actionable under Section 1 because it "limited consumers’ choice to one source of output." See Glen Holly Enter., Inc. v. Tektronix Inc., 343 F.3d 1000, 1010-11 (9th Cir.), opinion amended on denial of reh’g, 352 F.3d 367 (9th Cir. 2003). But even this example shows how narrow is the reach of antitrust under the consumer-welfare standard: under classical antitrust law, any such agreement between the only two sellers in a market would be readily condemned as market allocation, or as an unlawful "combination," and at best could be justified only if the defendants were able to show at trial that they had removed one of their offerings in order to improve the other under a joint collaboration agreement — which would have been a highly implausible and difficult showing. Any complaint alleging such an agreement never would have been dismissed on the pleadings as it was by the district court in Glenn Holly. Even more startling, the most aggressive proponents of consumer-welfare jurisprudence have cast doubt on the very theory of harm to competition caused by the removal of an entire product offering in order to force consumers to buy the only remaining version of the product at a higher price. See Brantley v. NBC Universal, Inc., 675 F.3d 1192, 1202 (9th Cir. 2012) ("[A]llegations that an agreement has the effect of reducing consumers’ choices or increasing prices to consumers does not sufficiently allege an injury to competition. Both effects are fully consistent with a free, competitive market.").

^94. See BORK, supra note 82 at loc. 696, 733; see also Bork, supra note 83 at 39, 43-47, 52-58, 61-70; see generally HOVENKAMP, supra note 83 at 62-64; AREEDA & HOVENKAMP, supra note 92 at ¶¶402-405.

^95. See BORK, supra note 82 at loc. 696, 733; see also Bork, supra note 83 at 39, 43-47, 52-58, 61-70; see generally HOVENKAMP, supra note 83 at 62-64; AREEDA & HOVENKAMP, supra note 92 at ¶¶402-405.

^96. See Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004) (Scalia, J.) ("The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system. The opportunity to charge monopoly prices—at least for a short period—is what attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth. To safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anticompetitive conduct.").

^97. Rebel Oil Co. v. Atl. Richfield Co., 51 F.3d 1421, 1433 (9th Cir. 1995).

^98. See supra Sections III & IV.

^99. AREEDA & HOVENKAMP, supra note 92 at ¶504 ("[T]he technical measure of [proving supracompetitive pricing] … can seldom be used explicitly in antitrust cases…. Many firms do not sell their products at a single price. Rather, they have a schedule of prices, to which they may not adhere consistently. They have different prices for differing conditions of sale, different size containers, different transaction sizes, different degrees of risk assumption, and perhaps for different classes of customers. In addition, the firm may offer several differentiated products whose prices and costs vary from one to the next").

^100. Id. (explaining the practical impossibility of proving "the excess of price over marginal cost to find market power"); see also Microsoft, 253 F.3d at 51 ("[D]irect proof [that a firm profitably charges supracompetitive prices] is only rarely available….").

^101. See Ohio v. Am. Express Co., 138 S. Ct. 2274, 2284 (2018) ("Amex") ("Direct evidence of anticompetitive effects would be proof of actual detrimental effects on competition, such as reduced output, increased prices, or decreased quality in the relevant market. Indirect evidence would be proof of market power plus some evidence that the challenged restraint harms competition.").

^102. See Nat’l Collegiate Athletic Ass’n v. Alston, 141 S. Ct. 2141, 2161 (2021) ("[C]ourts have disposed of nearly all rule of reason cases in the last 45 years on the ground that the plaintiff failed to show a substantial anticompetitive effect.") (citing Brief for 65 Professors of Law, Business, Economics, and Sports Management as Amici Curiae 21, n. 9 ("Since 1977, courts decided 90% (809 of 897) on this ground")).

^103. See generally HOVENKAMP, supra note 83 at 3-12 (explaining how firms set prices in perfectly competitive markets);Vaheesan, supra note 27 at 792-800.

^104. See generally HOVENKAMP, supra note 83 at 3-12 (explaining how firms set prices in perfectly competitive markets); see also PAUL A. SAMUELSON, ECONOMICS 483-509 (1st Ed. 1948).

^105. WU, supra note 27 at 104-109 ;Vaheesan, supra note 27 at 792-800.

^106. See generally HOVENKAMP, supra note 83 at 12-14 (explaining how monopolies and cartels set prices in monopolized or cartelized markets); see also SAMUELSON, supra note 104 at 493-509.

^107. See SAMUELSON, supra note 104 at 491-493.

^108. Cf. AREEDA & HOVENKAMP, supra note 92 at ¶504 (explaining practical difficulties of proving that a defendant is charging supracompetitive prices). In fairness, during the consumer-welfare era the Supreme Court has expressly clarified that restraint of trade concerns all "undue" restrictions on competition, see Amex, 138 S. Ct. at 2283, and that restraint of trade encompasses a broader range of business practices than do attempted or actual monopolization, see Copperweld, 467 U.S. at 768 ("§ 1 prohibits any concerted action in restraint of trade or commerce, even if the action does not threaten monopolization."); Am. Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 190 (2010) ("Section 1 applies only to concerted action that restrains trade. Section 2, by contrast, covers both concerted and independent action, but only if that action monopolizes or threatens actual monopolization, a category that is narrower than restraint of trade."). A necessary corollary is that a plaintiff should never be obliged to prove supracompetitive prices or restricted marketwide output in a Section 1 case, since, by definition, those practices can be implemented only by a monopolist or cartel. See id. This point is impliedly confirmed by Supreme Court decisions during the consumer-welfare era. See, e.g., California Dental Ass’n v. F.T.C., 526 U.S. 756, 781 (1999) (remanding case for full rule-of-reason review of dental association’s restrictions of dental advertising, since the restraints were binding on most dentists in various local markets and, as worded, appeared likely to result in less competition on price and quality in these markets, but with no required showing of supracompetitive prices or restricted market output); FTC v. Indiana Fed’n of Dentists, 476 U.S. 447, 460-61 (1986) (an association of dentists violated Section 1 under the rule of reason by enforcing a rule that none of its members could provide x-rays to their payors, since the rule was binding on the "great majority" of dentists in three counties in Indiana and tended to diminish marketwide competition among them). Nonetheless, some lower courts appear to have overlooked this key distinction, using the same requirement of harm to competition for claims under Section 1 and Section 2, and thus rendering all such claims overly difficult to prove. See, e.g., Rebel Oil, 51 F.3d at 1433 (for purposes of antitrust law, actionable harm to competition occurs only when the defendant’s exclusionary conduct results in supracompetitive prices, restricted output, and a misallocation of economic resources). Even if the reform that I recommend in this article is not adopted, the courts should clarify the foregoing points and make clear that harm to competition under Section 1 does not require proof that the defendant has acted as only a monopolist or marketwide cartel can do. Otherwise, Section 1 would be rendered a largely superfluous statute that merely duplicates Section 2 and even imposes an additional requirement (proof of concerted conduct) that is not required under Section 2. See Copperweld, 467 U.S. at 768.

^109. See Alston, 141 S. Ct. at 2161 (the overwhelming majority of rule-of-reason cases lose on the ground that the plaintiff has failed to show harm to competition); Vaheesan, supra note 27 at 792-800.

^110. For per se violations, harm to competition is presumed, and there is no need to show supracompetitive prices or a reduction of output. See Amex, 138 S. Ct. at 2283 ("A small group of restraints are unreasonable per se because they always or almost always tend to restrict competition and decrease output."). For quick-look violations, harm to competition is presumed, but the defendant is afforded an opportunity to justify its use of the challenged trade restraints, after which the plaintiff can rebut the asserted justification as either a pretext or as unnecessarily restrictive because a lesser restraint could readily accomplish the defendant’s stated purposes. See Law v. Nat’l Collegiate Athletic Ass’n, 134 F.3d 1010, 1020 (10th Cir. 1998) (a quick-look review is used when a trade restraint is not unlawful per se, but "has obvious anticompetitive effects," in which case the court need not conduct a market analysis and can directly decide "whether the procompetitive justifications advanced for the restraint outweigh the anticompetitive effects.").

^111. See infra Section V.C.

^112. See, e.g., F.T.C. v. H.J Heinz Co., 246 F.3d 708, 715-725 (D.C. Cir. 2001); F.T.C. v. Whole Foods Mkt., Inc., 548 F.3d 1028, 1035 (D.C. Cir. 2008); F.T.C. v. Penn State Hershey Med. Ctr., 838 F.3d 327, 337-39 (3d Cir. 2016). To do so under the current standards, the plaintiff must show that each seller’s market share in a properly defined market; then calculate the sum of each market share squared. The resulting number, if sufficiently high, confirms that the market is "highly concentrated" according to the DOJ-FTC Horizontal Merger Guidelines of 2010. Any such merger is presumptively anticompetitive and subject to injunction or divestiture, especially if it directly eliminates existing competition between the merging parties. Even then, the merger’s proponents can try to justify it by arguing that on balance it is pro-competitive. See generally H.J. Heinz, 246 F.3d at 715-25. In these cases, the required threshold showings are so high that successful challenges are usually made only to patently anticompetitive mergers, which mergers likely would never have even been attempted in the classical era. More generally, antitrust has utterly failed to check rampant, pervasive market consolidation during the consumer-welfare era. Public prosecutors and private claimants, knowing what to expect, choose not to challenge most of them.

^113. See generally U.S. DEPARTMENT OF JUSTICE & FEDERAL TRADE COMMISSION, HORIZONTAL MERGER GUIDELINES (2010);Vaheesan, supra note 27 at 800-03.

^114. See, e.g., F.T.C. v. Qualcomm Inc., 969 F.3d 974, 982-1003 (9th Cir. 2020) (a district court held that defendant, a maker of computer chips for smartphones, had committed unlawful restraint of trade and monopolization by (1) fraudulently obtaining standard-essential patents ("SEPs") that rendered its computer chips the compulsory industry-standard for smartphones, and (2) thereafter using its SEPs to exclude rivals and force its customers to pay exorbitant royalties: specifically, the defendant obtained the SEPs from neutral standard-setting organizations only on condition that it sell or license its chips or technology to all comers, including rival chip makers; but afterwards the defendant largely refused to sell or license its chips or technology to rivals and obliged its captive customers to accept licenses under which they must pay royalties to it based on the number of smartphones that they sell, including those that used a rival’s chip; but on appeal this judgment was reversed for want of showing of harm to competition within the meaning of the consumer-welfare standard).

^115. WU, supra note 27 at 102-09 ; Vaheesan, supra note 27 at 792-800.

^116. Eleanor Fox, The Modernization of Antitrust: A New Equilibrium, 66 CORNELL L. REV. 1140 (reprinted in The Political Economy of the Sherman Act: The First One Hundred Years 260 (1991)) (citing Rowe, New Directions in Competition and Industrial Organization Law in the United States, ENTERPRISE LAW OF THE 8o’s, at 177, 201 (1980) ("Carried to its full logical rigor, as it has been by the Chicago School of economics, economic analysis keyed solely to ‘efficiency’ and ‘consumer welfare’ has revealed with stark simplicity that there will be very little remaining of antitrust.")).

^117. See Leegin, 551 U.S. at 886 ("Resort to per se rules is confined to restraints, like those mentioned, that would always or almost always tend to restrict competition and decrease output. To justify a per se prohibition a restraint must have manifestly anticompetitive effects, and lack any redeeming virtue."); see generally AREEDA & HOVENKAMP, supra note 92 at ¶2000 (explaining how naked price-fixing and market-allocation can be successfully employed only by a cartel — i.e., a group of sellers that collectively wield market power — since only such sellers can increase their profits by restricting output or levying supracompetitive prices).

^118. See Cont’l T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 59 (1977) (abrogating per se rule against manufacturer restraints that prohibit a distributor from selling its products in specified locations or to specified categories of customers).

^119. See State Oil Co. v. Khan, 522 U.S. 3, 7 (1997) (abrograting per se rule against vertical maximum price-fixing — which is a producer’s requirement that its sellers not sell its products above specified prices).

^120. See Leegin, 551 U.S. at 907 (abrogating per se rule against resale price maintenance — which is a producer’s requirement that its sellers not sell its products below specified prices).

^121. See Nw. Wholesale Stationers, Inc. v. Pac. Stationery & Printing Co., 472 U.S. 284, 294 (1985) (limiting the per se rule against group boycotts); NYNEX Corp. v. Discon, Inc., 525 U.S. 128, 135 (1998) (further limiting the per se rule against group boycotts, so that it applies only to agreements between direct competitors to withhold their facilities, products or services from one or more targeted customers in order to deprive them of inputs or sales channels that they require to compete proficiently).

^122. See Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 15-17 (1984) (significantly limiting per se rule against tie-in arrangements); Illinois Tool Works Inc. v. Indep. Ink, Inc., 547 U.S. 28, 31 (2006) (abrogating per se rule against tie-ins of a patented tying product and a tied product).

^123. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (to prevail on an antitrust claim, a plaintiff must prove its antitrust injury, which is harm that "should reflect the anticompetitive effect either of the violation or of anticompetitive acts made possible by the violation."); Rebel Oil, 51 F.3d at 1433 (the doctrine of antitrust injury requires a private plaintiff to "prove that his loss flows from an anticompetitive aspect or effect of the defendant’s behavior….").

^124. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) ("On summary judgment the inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion. But antitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case…. Conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy.").

^125. See Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222-23 (1993) (severely limiting, or rendering unprovable, the rule against predatory pricing and primary-line price discrimination, doing so by requiring plaintiff to prove that (1) the defendant has sold its products at prices lower than its own costs, and (2) the defendant is likely to recoup its loss after driving its rivals from the market).

^126. See Trinko, 540 U.S. at 407 (2004).

^127. See Leegin, 551 U.S. at 887-892 (explaining why resale price maintenance should not be unlawful per se and recounting its various procompetitive, beneficial uses and effects).

^128. See generally HOVENKAMP, supra note 83 at 574-575 (explaining how a monopolist’s perfect price discrimination does not result in any reduction of output); id. at 578-581 (explaining how rules against price discrimination abet cartels that practice price-fixing, impose unreasonable enforcement costs, and do not distinguish between procompetitive and anticompetitive practices).

^129. See generally HOVENKAMP, supra note 83 at 399-410 (explaining how economic efficiency can be improved by tie-in arrangements, warning against the cost of enforcing rules against tie-in arrangements that do not diminish economic efficiency, and explaining how locked-in customers forced to buy after-market products likely should pursue contract claims, not antitrust claims).

^130. See Amex, 138 S. Ct. at 2287 (to prevail on a claim for unlawful restraint of trade "in two-sided transaction markets" such as a credit-card platform that affords credit to customers and immediate payments to merchants, the plaintiff must define a single market that captures these transactions and show how the challenged trade restraint has increased the cost or reduced the overall number of these transactions).

^131. See Alberta Gas Chemicals Ltd. v. E.I. Du Pont de Nemours & Co., 826 F.2d 1235, 1244 (3d Cir. 1987) ("Indeed, respected scholars question the anticompetitive effects of vertical mergers in general") (citing William H. Page, Antitrust Damages and Economic Efficiency: An Approach to Antitrust Injury, 47 U. CHI. L. REV. 467, 495 (1980) ("Foreclosure [by vertical merger] does not, however, reflect an actual reduction in competition in any meaningful sense."); ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 226, 237 (1978) ("Antitrust’s concern with vertical mergers is mistaken. Vertical mergers are means of creating efficiency, not of injuring competition. The foreclosure theory is not merely wrong, it is irrelevant"); Herbert Hovenkamp, Merger Actions for Damages, 35 Hastings L.J. 937, 961 ("[O]f all mergers, vertical acquisitions are the most likely to produce efficiencies and the least likely to enhance the market power of the merging firms")).

^132. See Alston, 141 S. Ct. at 2161; see generally Lino A. Graglia, The Antitrust Revolution, 9 ENGAGE 3, 37-42 (2008).

^133. Too much of a good thing, THE ECONOMIST, Mar. 26 , 2016, https://www.economist.com/briefing/2016/03/26/too-much-of-a-good-thing.

^134. David Leonhardt, The Charts That Show How Big Business Is Winning," N.Y. TIMES, June 17, 2018, https://www.nytimes.com/2018/06/17/opinion/big-business-mergers.html (explaining how in the 1980s small companies — those that employ less than 50 employees — collectively employed millions more employees than did large firms — those that employ more than 10,000 employees, but now the reverse is true, and explaining how large firms in recent years have been able to "take advantage of workers, consumers, taxpayers, and small businesses.").

^135. David Autor, et al., Concentrating on the Fall of the Labor Share, 107 AM. ECON. REV.: PAPERS & PROCEEDINGS 180, 183 (2017) (identifying "a remarkably consistent upward trend in concentration" in various industries that provide manufacturing, finance, services, utilities, retail trade, and wholesale trade).

^136. See Ryan A. Decker, et al., Where Has All the Skewness Gone? The Decline in High-Growth (Young) Firms in the U.S., 86 EUR. ECON. REV. 4 (2016) (finding a decline in the firm entry rate since 1979); see also Ian Hathaway & Robert E. Litan, Declining Business Dynamism in the United States: A Look at States and Metros 1, fig. 1 (2014), https://www.brookings.edu/search/?s=Hathaway+Litan (finding a decline in the firm entry rate between 1978 and 2011).

^137. See Too Much of a Good Thing, supra note 133.

^138. See id.

^139. See Leegin, 551 U.S. at 899-900 ("From the beginning the Court has treated the Sherman Act as a common-law statute. Just as the common law adapts to modern understanding and greater experience, so too does the Sherman Act’s prohibition on restraints of trade evolve to meet the dynamics of present economic conditions. The case-by-case adjudication contemplated by the rule of reason has implemented this common-law approach"); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 271-72 (2d Cir. 1979) ("The Sherman Antitrust Act of 1890 has been characterized as a charter of freedom. For nearly ninety years it has engraved in law a firm national policy that the norm for commercial activity must be robust competition…. In passing the Sherman Act, Congress recognized that it could not enumerate all the activities that would constitute monopolization. Section 2, therefore, in effect conferred upon the federal courts a new jurisdiction to apply a common law against monopolizing."); Northwest Airlines, Inc. v. Transport Workers, 451 U.S. 77, 98, n. 42 (1981) ("In antitrust, the federal courts act more as common-law courts than in other areas governed by federal statute."); see also Edmunds, supra note 30 at 813 ("[A]fter most careful and earnest consideration by the Judiciary Committee of the Senate it was agreed by every member that it was quite impracticable to include by specific description all the acts which should come within the meaning and purpose of the words ‘trade’ and ‘commerce’ or ‘trust’, or the words ‘restraint’ or ‘monopolize’, by precise and all-inclusive definitions; and that these were truly matters for judicial consideration"); 36 CONG. REC. 522 (Jan. 6, 1903) (statement of Senator Hoar) ("We undertook by law to clothe the courts with the power and impose on them and the Department of Justice the duty of preventing all combinations in restraint of trade. It was believed that the phrase ‘in restraint of trade’ had a technical and well-understood meaning in the law."); see also WALKER, supra note 3 at 47-48.

^140. See Cascade Health Sols. v. PeaceHealth, 515 F.3d 883, 894 (9th Cir. 2008) ("Anticompetitive conduct tends to impair the opportunities of rivals and either does not further competition on the merits or does so in an unnecessarily restrictive way.") (adopting the test stated in P. AREEDA & D. TURNER, 3 ANTITRUST LAW 78 (1978)); see also Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585, 605 (1985) ("If a firm has been attempting to exclude rivals on some basis other than efficiency, it is fair to characterize its behavior as predatory.").

^141. See supra Section V.

^142. Addyston Pipe & Steel, 85 F. at 279-84 (explaining doctrine of ancillary restraints); L.A. Mem’l Coliseum Comm’n v. NFL, 726 F.2d 1381, 1395 (9th Cir. 1984) ("The common-law ancillary restraint doctrine was, in effect, incorporated into Sherman Act section 1 analysis by Justice Taft in [Addyston Pipe, supra]. [T]he doctrine teaches that some agreements which restrain competition may be valid if they are subordinate and collateral to another legitimate transaction and necessary to make that transaction effective…. Generally, the effect of a finding of ancillarity is to remove the per se label from restraints otherwise falling within that category."); Polk Bros. v. Forest City Enters., Inc., 776 F.2d 185, 188-89 (7th Cir. 1985) (naked restraints are horizontal covenants between competitors that exist merely to suppress competition; as such, they are unlawful per se; ancillary restraints are horizontal covenants between competitors that restrain their competition, but exist to facilitate "a larger endeavor whose success they promote;" as such, they are reviewed under the rule of reason).

^143. Tie-ins and exclusive dealing of commodities can be challenged under Section 1 or Section 3 of the Clayton Act, 15 U.S.C. § 14.

^144. See Otter Tail Power Co. v. United States, 410 U.S. 366, 377 (1973) ("The record makes abundantly clear that Otter Tail used its monopoly power in the towns in its service area to foreclose competition or gain a competitive advantage, or to destroy a competitor, all in violation of the antitrust laws. The District Court determined that Otter Tail has a strategic dominance in the transmission of power in most of its service area and that it used this dominance to foreclose potential entrants into the retail area from obtaining electric power from outside sources of supply. Use of monopoly power to destroy threatened competition is a violation of the attempt to monopolize clause of s 2 of the Sherman Act. So are agreements not to compete, with the aim of preserving or extending a monopoly. In Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013, a cooperative news association had bylaws that permitted member newspapers to bar competitors from joining the association. We held that that practice violated the Sherman Act, even though the transgressor had not yet achieved a complete monopoly.").

^145. Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 314 (3d Cir. 2007) ("We hold that (1) in a consensus-oriented private standard-setting environment, (2) a patent holder’s intentionally false promise to license essential proprietary technology on FRAND terms, (3) coupled with an SDO’s reliance on that promise when including the technology in a standard, and (4) the patent holder’s subsequent breach of that promise, is actionable anticompetitive conduct. This holding follows directly from established principles of antitrust law and represents the emerging view of enforcement authorities and commentators, alike. Deception in a consensus-driven private standard-setting environment harms the competitive process by obscuring the costs of including proprietary technology in a standard and increasing the likelihood that patent rights will confer monopoly power on the patent holder.").

^146. The Herfindahl-Hirschman Index or "HHI" is used by the DOJ, the FTC and the courts to measure the degree of market concentration in a given relevant market. It is used most frequently to review proposed or contested mergers, and is also used to detect cartel activity and assess the competitive performance of markets. See Malaney v. UAL Corp., 2010 WL 3790296, at *12 (N.D. Cal. 2010), aff’d, 434 F. App’x 620 (9th Cir. 2011) ("The Herfindahl-Hirschman Index ("HHI") is an index used to measure concentration in a market, which is calculated by squaring the market share of each firm competing in a market and then summing the resulting numbers. DOJ uses HHI numbers to determine thresholds for when an industry is considered highly concentrated or when potential mergers require investigation.")

^147. See Fruehauf Corp. v. F. T. C., 603 F.2d 345, 352 (2d Cir. 1979) (if a vertical merger obliges competitors to vertically integrate, and if this vertical integration by itself does not create inherent efficiencies, it poses a probable threat to competition and may be properly enjoined under Section 7 of the Clayton Act ).