The course of antitrust law in American history has proved a barometer of good governance. In the New Deal, the Roosevelt administration lurched from one policy to another, united only by the injury they did to the economy. Sometimes that administration broke up companies simply on account of size and at other times permitted actual collusion by competitors on prices. In the Warren Court era, both the Department of Justice and the Court itself prevented mergers, even though they were economically beneficial. In Brown Shoe, the nadir of all antitrust law, Chief Justice Earl Warren invalidated a merger between two relatively small shoe companies in an extremely competitive market because he concluded that it might become part of a merger trend and because it would make the companies more efficient at selling shoes!
In contrast, since the Chicago School revolution in antitrust was empowered by the Reagan administration and sustained by its successors, antitrust law has become quite sensible. It has intervened only when needed to protect the welfare of consumers, preventing collusion or mergers that would likely keep prices higher than in a free market. The consumer welfare standard of modern antitrust has also offered relatively clear rules of conduct derived from microeconomics, thus protecting the rule of law and curbing government discretion over business.
But ideas percolating on the left threaten this sound consensus and an oped in the New York Times yesterday exemplifies the danger. Lina Khan, who was the policy director for Zephyr Teachout, the radical Democratic candidate for New York Governor in 2014, complained about Amazon’s recent purchase of Whole Foods.