Former Federal Trade Commission chairman Tim Muris wrote yesterday in the Wall Street Journal about the current FTC’s outdated approach to antitrust. He began:
President Biden rejects the economics-driven antitrust policies of the past 40 years. Flanked by his White House competition adviser and his new Federal Trade Commission chair, Lina Khan, in July 2021, he asserted that the “experiment failed” and promised to return to earlier antitrust “traditions.” In a new report for the American Enterprise Institute, I show that those traditions were abandoned for a reason: They harmed consumers.
That report includes 102 pages of history and analysis that reminds the reader of how far the study of antitrust regulation has come since the early 1900s. The theories on which earlier antitrust laws, such as the Robinson-Patman Act of 1936, are based have not been supported by the evidence, and they have been rejected by generations of scholars and regulators. Muris wrote:
The enforcement of Robinson-Patman raised costs and otherwise hurt the low-priced chains that were its intended targets, harming consumers. After decades of withering criticism, first from the academy and the practicing bar, courts rejected some of the FTC’s positions, a trend that accelerated as attacks grew, including from a minority within the FTC itself in the 1960s. A 1969 American Bar Association panel excoriated FTC enforcement. The commission eased off on the statute in the 1970s and has virtually abandoned it since.
The Justice Department issued a devastating report in 1977 detailing the many follies of FTC enforcement and the significant costs for businesses and consumers alike. Since the 1970s, court decisions have significantly, albeit incompletely, interpreted Robinson-Patman consistent with the pro-competitive economic purpose of the rest of antitrust law. Yet Ms. Khan praises the law as a means of controlling what she calls the excessive power of modern retailers.
Biden enforcers also have made clear they intend to abandon the economic standards used to evaluate mergers, exemplified in the Obama administration’s 2010 guidelines. In 1950 Congress revised the statute prohibiting anticompetitive mergers. As the Supreme Court read the legislative history, Congress in part feared rising concentration from mergers, as claimed in a 1948 FTC study. Today’s enforcers similarly fear bigness, and they cite that old FTC report. But it was known by 1950, and widely within the academy since, that the FTC study was wrong, as its authors quietly admitted a few years after its publication. Modern claims of increasing concentration are similarly inaccurate.
Last week for Capital Matters, Jessica Melugin wrote about how the FTC is using Robinson-Patman to go after soda companies for their pricing. She noted many of the same deficiencies in the theory undergirding Robinson-Patman that Muris noted in his piece. That’s because these concerns are long-standing and well known to anyone who has studied antitrust over the past 50 years.
But progressives want to use the FTC for a political agenda, and the Robinson-Patman Act is a tool in their toolbox. The question is: Why didn’t Congress remove this tool a long time ago?
Since the FTC had essentially stopped enforcing Robinson-Patman for decades, Congress may have felt it unnecessary to do anything about it. The current FTC is now demonstrating why that feeling would be incorrect. Rather than leaving a bunch of statutory residue in the U.S. Code, Congress should have repealed Robinson-Patman when the FTC and Department of Justice both decided to stop enforcing it. Because Congress didn’t repeal it, progressives at the FTC can now use it to pursue a political agenda disconnected from sound economic theory.
Out-of-control bureaucracy is a perennial problem in Washington, and often it is difficult to fix. But in this case, Congress had a clear solution that it should have acted on decades ago: Repeal an old law based on disproven economics that wasn’t even being enforced. While we should be upset by the overreach of bureaucrats, all powers of the administrative state ultimately come from Congress, and the legislative branch’s failure to properly circumscribe them is the root of the problem.