Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Wednesday, April 2, 2008

The Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency

Posted by D. Daniel Sokol

Robert Lande (University of Balimore Law) and John Kirkwood (Seattle University Law) argue The Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency.

ABSTRACT: The conventional wisdom in the antitrust community is that the purpose of the antitrust laws is to promote economic efficiency. That view is incorrect. As this article shows, the fundamental goal of antitrust law is to protect consumers.

This article defines the relevant economic concepts, summarizes the legislative histories, analyzes recent case law in more depth than any prior article, and explores the most likely bases for current popular support of the antitrust laws. All these factors indicate that the ultimate goal of antitrust is not to increase the total wealth of society, but to protect consumers from behavior that deprives them of the benefits of competition. When conduct presents a conflict between protecting consumers and improving the efficiency of the economy (e.g., a merger that raises prices but reduces costs), no court in recent years has chosen efficiency over consumer protection.

The only exception is the law's determination to protect small sellers from price fixing and other anticompetitive behavior by buyers. This limited concern, however, is just the mirror image of Congress' desire to protect consumers from exploitation. In both buy-side and sell-side cases, the overarching goal is the same - preventing firms that have unfairly acquired power from imposing noncompetitive prices or other terms on their trading partners, thereby transferring wealth from the trading partners to themselves. This conclusion supports a more aggressive approach to many areas of antitrust enforcement, including mergers and joint ventures.

http://lawprofessors.typepad.com/antitrustprof_blog/2008/04/the-fundamental.html

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