Open Markets Institute Legal Director, Sandeep Vaheesan, writes in The Law and Political Economy (LPE) Project about how the present rules of antitrust law do not protect consumer welfare but instead promote oligarchy.

In the late 1970s, the Supreme Court initiated a radical reinterpretation of the antitrust laws. What the Court had described as “a comprehensive charter of economic liberty” in 1958 was reinvented as a “consumer welfare prescription” in 1979. The Department of Justice (DOJ) and the Federal Trade Commission (FTC) followed suit in the Reagan administration. In implementing this vision for antitrust, the Supreme Court and the antitrust enforcement agencies adopted two critical assumptions. First, the DOJ and the FTC presumed that corporate consolidation, in general, can create more productive enterprises with lower cost structures and thereby reduce prices for consumers. Given these assumptions, the two federal antitrust agencies adopted a highly tolerant posture on corporate mergers. Second, the Supreme Court and the DOJ and the FTC treated price coordination among rivals, whether large corporations or independent contractors, as categorically harmful. Accordingly, they made price-fixing and other collusion involving competitors the central focus of antitrust enforcement.

The result has been not bountiful consumer welfare, but oligarchy unleashed. Taking advantage of relaxed anti-merger enforcement, corporations have strengthened their power in a series of consolidation waves since the 1980s. In contrast to their deference to the combination of corporate property, the antitrust agencies, in enforcing the anti-coordination rule, have struck at independent contractors, professionals, and small firms and thwarted their efforts to organize and build power. The net effect is a concentration of power at the very top of the economy. Corporate executives and financial interests have consolidated control through mergers while independent workers and businesses have been stymied from collectively contesting managerial and Wall Street domination.

Read the full article on LPE Project here.