Review of Industrial Organization 19: 49–53, 2001.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands.
The Decline of Antitrust Enforcement
Department of Economics, Graduate School of Business, University of Chicago, Chicago, IL 60637,
Abstract. American Antitrust policy has abandoned tight restrictions on mergers and on a variety of
business practices, such as vertical restraints in distribution. I argue that the change is permanent for
three reasons: 1) rising skepticism about government intervention generally, 2) lack of deleterious
effects from the new policy, and 3) increasing irrelevance of antitrust in global markets. Due process
considerations will reinforce the change in policy. New technologies may, however, revive traditional
antitrust concern with price ﬁxing.
Key words: Antitrust enforcement, business practices, mergers.
Antitrust enforcement has a cyclical aspect. The enthusiasm of the Progressive
Era gave way to subsequent dormancy and even explicit abandonment in the early
depression years. This was followed by a post World War II revival that probably
peaked around 1970. The subsequent decline has rent asunder much of the legacy
of the preceding activist period.
This cyclical history makes any forecast risky. But I will argue that, at least as
far as the eye can see and the Microsoft case to the contrary notwithstanding, the
decline in antitrust enforcement is permanent. By this I mean that the most notable
features of the post World War II revival will remain quiescent. These are: (1) a
rigorous, even compulsive, attention to industry structure in merger cases. This was
probably best typiﬁed by the Von’s case, where a minor increase in market share
in an unconcentrated market was enough to block the merger; and (2) a jaundiced,
almost paranoid, view of business practices in which monopoly lurked under every
bed. Thus vertical mergers, vertical restrictions like exclusive territories and even
conglomerate mergers were regarded as suspect because they might “foreclose” or
preempt competition. Tie-ins and other forms of bundling would extend monopoly
from one sector to another if left unchecked, etc.
The legacy of this period remains. The current merger guidelines are organized
around structural criteria even if they leave many avenues of escape from them. The
Microsoft case represents a major, perhaps even historically important attempt to
revive a focus on business practices. If the government ultimately succeeds in that
case, the temptation of regulators to pursue that revival will be enhanced. What is,
however, permanent in my view is the much more lax enforcement of that legacy
and “rule of reason” approach to it by the courts. The days when every signiﬁcant