Amazon is the titan of twenty-first century commerce. In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space. Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive. These concerns are heightened in the context of online platforms for two reasons.

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Basic Books. The tide of antagonism ebbed after a while, leaving on the beach a doctrine and enforcement mechanism that have operated since then in an atmosphere of increasing specialization and enduring obscurity. Every so often, in one of those recurring moments of national excitement on the subject, someone steps up to decry the corruption of an antitrust system that cannot seem to perform the self-evidently necessary job of breaking up General Motors or Big Oil or the cornflakes cartel or whatever happens to be the currently fashionable target of the political agenda.

But antitrust is too complex and too tedious a subject to hold the public spotlight for very long. Bork, former Solicitor General of the United States and now professor of law at Yale, argues that while public attention has waxed and mostly waned, antitrust itself has not been languishing.

On the contrary, it has been growing in its hospitable shade like a slightly poisonous variety of mushroom. Senator John Sherman clearly wanted to enhance the efficiency of our economic arrangements by putting an end to the artificial restriction of output that occurs when a monopolist gets control of a line of commerce and discovers that he can make more by producing less.

It was this kind of output restriction, Sherman realized, which brought about unnecessarily high prices for consumers, and it is this which the Sherman Act was framed to prohibit.

But over the course of time, the courts have built up a body of antitrust law which has increasingly impeded the efficiency that John Sherman sought. Certain kinds of economic integration, Taft thought, increase the welfare of the community; we should therefore allow as much elimination of competition as serves to make the integration more efficient. But this sort of reasoning about antitrust was soon compromised by the introduction of other standards into the case law. It began to be said that we should declare an unlawful injury to competition wherever we see certain business practices that do harm to individual competitors, and that we should do so even in a situation where there is no obvious threat to the competitive process that comes from the existence of very large market shares or from monopolistic intent.

Competition is always a process in which rivals try to hurt each other. If the competition is promoting efficiency—that is, working well for the population as a whole—it may indeed destroy rivals who are relatively inefficient.

By systematically slighting this elementary point, antitrust judges and prosecutors have often produced the opposite of what antitrust policy was meant to do. By protecting the inefficient competitor, they have done harm to competition. Bork shows that this kind of economic perversity has operated in the treatment of one business practice after another. For instance, the law has been consistently and increasingly stern in prohibiting trading arrangements such as tie-ins—in which a seller of, say, salt-dispensing machines makes his customers buy salt from him as well.

Antitrust doctrine assumes that the seller is using his market power in one product to get similar power in another. Yet most such arrangements, as Bork makes clear, occur in situations where the seller really has no monoply power that he can transfer in this way. To prohibit such arrangements is to rule out those functions which tie-ins can perform to enhance efficiency and consumer welfare. Perhaps most important, the law has been pernicious and intellectually shoddy when it comes to the issue of mergers and of the levels of concentration that should be thought safe for the competitive process.

Bork points out that the theories commonly used to justify attacks on concentrated industries are simply without internal plausibility or empirical support. And our general merger policy is even worse, since it often bars the increased efficiency a merger might bring even when the market shares involved could not possibly pose a real threat to the existence of significant competition in any line of commerce; even under prevailing oligopoly theories.

Instead, what he wants is to reform the standards by which it is applied, and to direct it against those sorts of actions—price fixing, horizontal mergers that create very large market shares, and deliberately predatory behavior—which make little or no redeeming contribution to efficiency.

In some cases, this redirection would involve an increase rather than a decrease in enforcement activity. And in one case in particular—namely, the predatory misuse of the government—it would call for a substantial rise in antitrust energy: Bork reminds us that both the courts and administrative and regulatory agencies have been the objects of manipulation by businessmen trying to get rid of inconvenient rivals. But perhaps more important than these recommendations themselves is what Bork has seen about the fundamental nature of the doctrine that courts and enforcement agencies have framed.

It is a body of thought that almost from the beginning has found it somehow impossible to comprehend the idea of a market, to deal with competition as a process whose imperatives—whose rights and wrongs—are essentially different from the imperatives suggested simply by the suffering of a small businessman or the prosperity of a large corporation. The law has quite massively and systematically imposed upon its concern with competition a set of goals and prejudices about size and personal power that are in fact quite foreign to the logic of competition in its economic sense.

We have here an object lesson in the capacities and incapacities of this country to make and carry out social policies which demand something more sophisticated than an appeal to popular instincts or fashionable opinion. The lesson that the history of antitrust teaches in this regard is hardly encouraging; in fact, it may be bleaker than Bork indicates. Bork tells us that our original antitrust policy was well conceived, no matter how far it has strayed, and clearly he believes that courts and lawyers can be brought back to a better understanding of antitrust through rational arguments like the ones he makes.

Perhaps so. But when one reads the speeches of John Sherman, with their imagery of struggle over political and personal power, it really comes as no surprise to find current antitrust doctrine so confused about where economic power ends and personal power begins. And when one looks at the enforcement mechanism Sherman established, manned by prosecutors advocating their cases before federal judges, it becomes hard to imagine a more effective way than this of turning enforcers into partisans.


The Antitrust Paradox, by Robert H. Bork

Jump to navigation Jump to search The Antitrust Paradox is a book by Robert Bork that criticized the state of United States antitrust law in the s. A second edition, updated to reflect substantial changes in the law, was published in It is claimed that the work is the most cited book on antitrust. The paradox of antitrust enforcement was that legal intervention artificially raised prices by protecting inefficient enterprises from competition. The book was cited by over a hundred courts.


Amazon’s Antitrust Paradox




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