Don’t trust the courts to fight monopolies. They are a barrier to progress

America has a concentration problem. Across the political spectrum – from progressives like Joe Stiglitz to centrists at Brookings and conservatives at Breitbart – experts and commentators agree that antitrust needs to be a priority. But there has been significant debate on what to do: do we need more enforcement or new laws? Is the problem technical or ideological? This year, one thing has become clear: the courts are a barrier to making progress in fighting the new age of monopoly power – and reform will have to involve taking antitrust away from the courts.

Some background will be helpful. Antitrust policymaking differs from virtually every other area of policymaking. In other areas of policymaking, Congress passes laws commanding government agencies to regulate different areas. The EPA regulates pollution in air and water. The National Highway Transportation Safety Administration ensures that cars and trucks are safe. The Consumer Products Safety Commission oversees children’s toys. Each agency is filled with experts in these fields, and they rely on this expertise in issuing regulations. They are also required to follow an extensive process to receive input from industry and from the general public. Courts do review regulations, but they grant significant deference to the agency’s expertise.

Antitrust isn’t like this. In antitrust law, the courts have become the primary expositors of antitrust policy. They interpret the main antitrust statutes in a “common law” fashion – in other words, judges have embraced the role of policymakers. This is a serious problem. First, in our constitutional system, judges are not supposed to be policymakers. They are supposed to interpret the laws and review regulations to ensure they are not outside the scope of the law. Second, the courts have no expertise in the economy. They don’t conduct studies or investigations, and certainly can’t keep up with our dynamic, fast-moving business sector. The courts thus make policy by relying on the parties in a case and on amicus briefs, and the result is an unbalanced set of intellectual inputs. Third, the courts are not politically accountable. The judicial process has limited public participation and oversight. Judges can’t be fired for coming up with the wrong decisions. And it is very difficult for Congress to fix an incorrect judicial decision. These are all virtues when judges are interpreting the constitution and the laws, but they are vices when judges become policymakers.

Earlier this year, this problem became acutely apparent to everyone. First, a federal judge allowed the merger of AT&T and Time Warner, over the objections of the justice department. Then, in the final days of its term, the supreme court issued the most important antitrust decision of the year. In Ohio v American Express, the supreme court found that American Express’s use of “anti-steering” provisions was not anticompetitive. AmEx charges much higher fees to retailers than Discover, and as part of its contract with retailers, it prevents them from informing consumers of this fact (and steering them to Discover instead). The US government and a number of states alleged this was illegal, anticompetitive behavior because AmEx can jack up the fees without facing competitive pressure. Putting aside the merits of whether or not anti-steering provisions are anti-competitive and should be illegal, the real question is this: why should the supreme court make that decision? Policy choices like this should be the job of Congress and agencies, not the courts.

In a new paper, I offer a blueprint for how to fix this state of affairs. At a minimum, we need to start by making antitrust like other areas of law. Congress should pass a law that states clearly that the Federal Trade Commission has the power in the first instance to issue regulations under all of the antitrust laws. The law should also expand the FTC’s inspection and investigation powers and allow for greater enforcement of antitrust laws by state attorneys general. Under this system, the courts would still retain the power to review regulations to ensure they are not outside of Congress’s statutorily granted authority. But the courts would no longer be the primary makers of antitrust policy.

In addition, reforms should go further to revitalize antitrust law and policy. Right now, merger approvals are split between the FTC and the Department of Justice. Which agency reviews what mergers is largely a function of tradition, not statutory command. Merger approvals should all be concentrated in the FTC, ensuring consistency in their application. Second, proposed mergers should be subject to a period of public comment, and the FTC should have to respond to public comments, as regulatory agencies do in every other sector when setting important policies. This would allow members of the public to raise concerns about mergers that economists and industry players might not be thinking about. As is conventional in other areas, courts would be able to strike down an agency approval for failure to consider these comments adequately.

There is no good reason for antitrust to diverge from every other area of law. Judges are not experts in the complexities of the economy nor in the cutting edge of business practices. They are insulated from public accountability. And, under our constitutional system, they are not supposed to be policymakers. Economic concentration is one of the most pressing policy issues of our time. If we want to address concentration, we will need to take antitrust away from the courts.

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