The Chicago School, Pre-Chicago, Post-Chicago

Last year Herbert Hovenkamp published an important book: The Antitrust Enterprise: Principle and Execution. It is a short, accessible overview of US antitrust, ideal both for those wishing to recap US antitrust before an exam, or those new to the subject. There is a good review and some pretty sharp commentary in the University of Chicago Law School Faculty Blog.

However, something about this book left me a little uneasy, and other on line observers have reached similar views: that the book advocates a fairly narrow, conservative vision of antitrust laws. You get this message early on at pp.10-15 where antitrust is described as a residual, reactive regulatory law. To explain why this is worthy of comment we need to track back a little.

In the 1970s two pathbreaking works were published, Richard Posner's Antitrust Law: An Economic Perspective (1976) and Robert Bork's The Antitrust Paradox (1978). The historical significance of these books was that they provided a blueprint (or a manifesto) for what we now call the Chicago School view of antitrust. Both authors were reacting to a 'populist' version of antitrust that seemed to protect the public interest. The effect of those books was to create and capture the intellectual mood of the time and led to the Chicago School approach to antitrust. Before the Chicagoans dominated the courtrooms, the major mainstream economic position was the Harvard School. I discuss key differences between these two schools in Chapter 3 of my book. Essentially, Harvardians believed that concentrated markets were an antitrust problem, while Chicagoans thought that the only problem antitrust laws should be concerned with is collusion, and that the only entry barriers were erected by government. This implied a significantly less aggressive antitrust policy. In 2001, Richard Posner published a second edition of his book, but this time the title was simply Antitrust Law. In the preface he explained that now there was no need for the subtitle, because now the ideological battle had been won: there was no other perspective to embrace.

However, in the 1980s a number of scholars began to speak of a post-Chicago approach to antitrust. In brief, this approach criticised Chicagoans for being too laissez-faire and suggested instead that, with the aid of new economic tools, especially game theory, one could endorse a more aggressive antitrust policy based on economic principles.

With Posner, I think it is best to treat these three schools of antitrust as historical labels representing the dominant economic paradigms rather than ideologies, so with some rough dates indicating the enforcement high-water marks:

1. Harvard (1960-mid 70s)
2. Chicago (mid 70s to mid 80s)
3. Post-Chicago (late 80s onwards)

Hovenkamp, at around page 37 of his book, suggests that the 'new Harvard position' is represented by the multi-volume Antitrust Law treatise, first authored by Harvard Professors Areeda and Turner. Hovenkamp is now one of the co-contributors to this work. So now every major American commentator has broadly the same economic outlook. The 'new Harvard' in this book is no different from the 'post-Chicagoan' (as defined above) take in Posner's book. What is a little disappointing about this state of affairs is that there is no antitrust alternative any longer.

However, I think that there is space for debate, there is room to assert a more aggressive antitrust policy. In fact, a close comparison suggests that Hovenkamp's 'new Harvard' might be a little more aggressive than the more conservative position of the new Chicago, for example Hovenkamp supports the failed attempt by the Department of Justice to challenge the predatory practices by American Airways to oust new entrants, which the courts rejected (I discuss this case in chapter 3, and see Aaron Edlin's on line comments). Perhaps what might have helped Hovenkamp's book is a more emphatic assertion of the key distinguishing features between his 'new Harvard' approach and the more conservative elements of the post-Chicago school. A nice textbook written with a more aggressive antitrust streak is Sullivan and Grimes' The Law of Antitrust: An Integrated Handbook (2nd ed 2006).

One reason many antitrust scholars might be a little wary of espousing aggressive antitrust policy these days is that they risk being criticised for returning antitrust to the pre-economic, populist approach, which perhaps still lingers on in European antitrust circles...