Antitrust Forever
While Microsoft may have “won” this decision, the government still triumphed.

By D. T. Armentano, professor emeritus of economics at the University of Hartford and a research fellow at the Independent Institute in Oakland, CA. He is the author of Antitrust and Monopoly (Independent Institute, 1998) and Antitrust: The Case for Repeal (Mises Institute, 1999).
July 2, 2001 8:25 a.m.

ntitrust regulation is so righteously correct in the public consciousness (and at some Ivy League schools) that to question seriously its intent and performance amounts to near religious blasphemy. Antitrust has its own sacred texts (the laws and many bewildering court decisions) its own set of high priests (judges, lawyers, economists) who alone can decipher textual meanings, its own tortured theories of sinful behavior (monopolization, price fixing, tying) and its own notions of redemption, retribution, and salvation (fines, jail sentences, and corporate divestiture if you have been really naughty). And like all religions, antitrust is energized by a core belief that is accepted on faith by the congregation: that satanic monopolists will rape innocent consumers absent antitrust protection. Justice Department, save us, please save us!

Never mind that the empirical evidence from the classic antitrust cases demonstrates that antitrust has generally attacked innovative firms that increased output and lowered prices. (These are "mistakes" cry the antitrust establishment! These mistakes have gone on for 110 years) And never mind that many antitrust suits are inspired by business rivals of the defendant, and that most antitrust litigation is one firm suing another over lost sales or lower prices. The only thing that matters for bipartisan true "believers" is that the laws be "vigorously enforced" and that heretics be ignored or silenced.

Once in a great while the core antitrust belief is severely shaken and objective truth bubbles to the surface. The recent U.S. Court of Appeals for the D.C. Circuit decision on Microsoft qualifies as a solid example. This decision was in some important ways a stunning embarrassment for the official orthodoxy. (Yet Attorney General John Ashcroft opined that the decision was a clear "victory" for the Department of Justice. What planet is he on? Moreover, why is he so thrilled about this Clinton monstrosity of a lawsuit?) The D.C. Circuit rejected unanimously the government's primary contention, namely, that Microsoft had illegally tied its web browser to its operating system and it also rejected the government's over-the-top divestiture remedy. And in its blistering reversal, it ungraciously exorcised Judge Thomas Penfield Jackson from any retrial and helped diminish the intellectual "legacy" of former Assistant Attorney General Joel Klein and the "world's smartest attorney," David Boies. All this is to the good.

But at a deeper level while Microsoft may have "won" this decision, the government still triumphed in the larger antitrust war. Even in this case, the obscenely inaccurate "findings of fact" by the trial court went essentially unchallenged, opening Microsoft to substantial future civil liability. And the activist state attorney generals still salivate over the prospects of additional litigation. But far beyond that, the core antitrust belief paradigm survives essentially untouched. The fact remains that all of the antitrust laws still exist (even the explicitly anti-consumer Robinson-Patman Act), crucial concepts such as "monopoly power" and "relevant market" still remain hopelessly undefined, high market share and aggressively low prices are still inherently suspect, and even simple product integration decisions may eventually have to pass some subjective, judiciously sanctioned cost/benefit analysis. In short, the antitrust theology lives on past this decision and will continue to work its mischief in high-tech as well as low-tech industries for the foreseeable future, as it has in the past. Worse, the myth now marches abroad to the European Community where it portends additional social costs.

Consumers and businessmen deserve to be protected from force and fraud, that is, they need their property rights protected, but they don't need antitrust regulation. Antitrust violates property rights. It restricts the competitive process. It regulates prices and mergers and innovations, and it protects some firms from the competition of other firms. Microsoft is only the latest victim in a very long line. Antitrust has always been a myth and a hoax and it all should be abolished, root and branch. But don't hold your breath. Myths, regardless of facts, always have a life of their own.