Using Antitrust to Subvert Competition
There is a specter that haunts our antitrust institutions. Its threat is that, far from serving as the bulwark of competition, these institutions will become the most powerful instrument in the hands of those who wish to subvert it. More than that, it threatens to draw great quantities of resources into the struggle to prevent effective competition, thereby more than offsetting the contributions to economic efficiency promised by antitrust activities. This is a specter that may well dwarf any other concern about the antitrust processes. We ignore it at our peril and would do well to take steps to exorcise it. 1
The case for characterizing antitrust as a mechanism for wealth redistribution, or what Robert Bork calls predation through governmental processes, 2 derives from three distinct, but related, contributions to the literature on public policies toward business. One component of this literature consists of studies attempting--and failing--to find evidence in support of the hypothesis that antitrust cases are selected on the basis of their potential net benefit to society. 3 The second is comprised of research showing political influences on the enforcement process. 4 And the third element is represented by the normative literature on antitrust, which is highly critical of enforcement efforts in a large number of specific cases.
More fundamentally, however, the emerging appreciation of the incentives of firms to use the apparatus of antitrust policy for the purpose of subverting competition is grounded in the theories of economic regulation and rent seeking. The first of these theoretical contributions explains the level and pattern of traditional economic regulation of price and entry, as well as newer forms of "social" regulation (health, safety, and environmental policies, for example), in interest-group terms. 5 That is, certain groups, whose stake in regulation is sufficiently concentrated and whose costs of mobilizing political influence are sufficiently low, have an incentive to lobby for regulatory favors that increase their own wealth at the expense of other groups whose interests are more diffuse and that face relatively high costs of mobilizing to oppose regulation. The regulators, in turn, serve as brokers of these wealth transfers, clearing the market for