- - Tuesday, July 5, 2022

Mistakes are most painful when made for the second time.

Some politicians have not learned from the tragi-comic history of antitrust laws in the United States. As businesses grew in the late 1800s, some politicians argued that “big is bad” and argued (with a straight face?) that the only way to keep large companies from becoming monopolies would be to put them under the control of the largest monopoly in America — the federal government.

What could go wrong?



In the 1970s and ’80s both Democrat (President Jimmy Carter) and Republican (President Ronald Reagan) administrations realized that government agencies that were supposed to protect consumers — the Interstate Commerce Commission that regulated trucks and trains, the Civil Aeronautics Board that regulated airlines, and antitrust laws — were in fact hurting consumers and limiting competition.

In a rare moment when the government actually learned from decades of failure, Congress and the courts dismantled the structures that did the opposite of what was promised.

It should not have taken so long.

Antitrust law was created by the Sherman Act of 1890. In theory, the government was going to use its monopoly on force to stop businesses from becoming monopolies and hurting consumers. Sounded good.

But from the start, politicians and bureaucrats abused antitrust law to attack individuals, businesses and industries that politicians did not like — consumers be damned.

Politicians bravely attacked Standard Oil. It was big. But were consumers harmed? Did the antitrust attack on Standard Oil help consumers?

The objections of Standard Oil’s competitors was that due to efficiencies generated by Standard Oil’s size, the company was able to deliver petroleum to consumers at a very low cost. (That had to be stopped!) Between 1870 and 1885, the price of refined kerosene dropped from 26 cents to 8 cents per gallon, and Standard Oil dropped the average cost per gallon from nearly three cents in 1870 to 0.452 cents in 1885. Consumers were winning.

By the time the government sued Standard Oil, it had more than 150 competitors and its market share was falling. Some monopoly. The government’s case could not prove that consumers were harmed. It contained no evidence that Standard Oil engaged in predatory pricing to drive its competitors out of business. Nevertheless, the Supreme Court ordered Standard Oil dismantled into 34 separate companies.

In the name of fighting monopolies, the federal government passed a law granting monopoly status to one phone company (of many) — AT&T.  Almost 100 years later technology was making the idea of a “natural monopoly” look silly and the courts undid the previous decades of a monopoly created and protected by government.

Antitrust case law in the early 20th century is littered with examples of overzealous regulators and activist judges targeting companies for political reasons. In Supreme Court Justice Potter Stewart’s dissent to United States v. Von’s Grocery, he wrote: “The sole consistency that I can find is that in litigation under [Section 7 of the Clayton Act], the government always wins.” 

Such politically driven antitrust enforcement continued until conservative Judge Robert Bork’s seminal 1978 work, “The Antitrust Paradox.” In the book, Judge Bork analyzed legislative history and argued that the sole legitimate aim of antitrust law is to protect consumers. Under the “consumer welfare standard,” unless consumers are being harmed through higher prices, declining output, lower quality or reduced innovation, a company is not in violation of antitrust law. 

The consumer welfare standard has stopped many of the previous abuses of antitrust law for the last four decades. During this period, the size of the U.S. economy has nearly tripled. Contrary to the rantings of the new trustbusters, small business employment has grown by 51% during the same period.  

Left-wing progressives know their history. They want to return to the days when an attorney general can — at the president’s order — attack any businessman who annoys them. This was “cancel culture” with the full force of the government. Progressives know they cannot do this unless they jettison the consumer welfare standard.

The left hates any entity that is independent of state power. They want to return to the bad old days when the government could smash those it disliked and “the government always won.” But how could they convince others to restore a failed and abused version of “antitrust?”

One bill, the American Innovation and Choice Online Act, sponsored by Sen. Amy Klobuchar, is a mega-regulation bill masquerading as “consumer-friendly” antitrust legislation. The bill outlaws a range of routine business conduct because of the size of a company. 

The bill targets five American companies. Their names are known. This is a thinly disguised bill of attainder. A law that hits only specific targets. Not equality before the law.

Progressives promise the new mandates will only damage businesses with over $550 billion in market capitalization and 50 million monthly users … for now. Sure. The U.S. income tax was imposed promising to only hit “the rich.” 

AICOA is part of a broader antitrust package that the left is attempting to ram through Congress. All of the bills abandon the consumer welfare standard, giving the government sweeping new power to levy enormous fines on companies that President Biden’s political appointees do not like. 

Nothing about this package is conservative or free market. Lawmakers who may be flirting with the idea of voting for radical antitrust reforms need only look to the history of antitrust law to see how progressives use it to torment American companies. Let’s not let the antitrust evil genie out of the bottle. Again.

• Grover Norquist is the president of Americans for Tax Reform, Tom Hebert is the federal affairs manager for Americans for Tax Reform.

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