The Impact of Antitrust

The functions of the antitrust laws have never been well articulated. Some proponents of the law emphasize the economic benefits of competition, i.e., incentives to economic efficiency and growth. Others emphasize the political and social advantages of minimizing the concentration of economic power. A review of the history and present status of antitrust suggests that both these views play a part.

The Sherman Act prohibitions of "restraint of trade" and "monopolizing" suggest concern that entry into an industry shall not be barred by arbitrary restraints and that decisions of various firms shall be arrived at independently. This is not the same as requiring "competition" in the economist's sense, whether perfect competition or monopolistic competition with free entry. The Robinson-Patman Act, Fair Trade Laws, Judge Learned Hand's decision in the Alcoa case and the Celler Anti-Merger Amendments to section 7 of the Clayton Act all indicate concern for the social and political effects of protecting the weak against the strong and perpetuating several firms in an industry, even at the expense of economic efficiency. No one can understand the role of antitrust policy in the United States without understanding the interplay of these two objectives.