A&P Files for Bankruptcy

Josh Wright —  14 December 2010

Recent coverage of the A&P bankruptcy has alluded to its era of “dominance” in grocery retail, describing it as “the Wal-Mart of its day.”   See this earlier post on the unconvincing antitrust case against Wal-Mart.  However, what the A&P bankruptcy brings to mind for me is Justice Stewart’s famous dissent in Von’s Grocery.  The famous line from Stewart’s powerful dissent objecting to the majority’s analysis, devoid of economic analysis and full of now well known contradictions, is his description of the merger law: “the only consistency is that the government always wins.”

I have a different passage in mind with implications for antitrust analysis not only in grocery retail, but with respect to innovation generally:

Section 7 was never intended by Congress for use by the Court as a charter to roll back the supermarket revolution. Yet the Court’s opinion is hardly more than a requiem for the so-called “Mom and Pop” grocery stores – the bakery and butcher shops, the vegetable and fish markets – that are now economically and technologically obsolete in many parts of the country. No action by this Court can resurrect the old single-line Los Angeles food stores that have been run over by the automobile or obliterated by the freeway. The transformation of American society since the Second World War has not completely shelved these specialty stores, but it has relegated them to a much less central role in our food economy. Today’s dominant enterprise in food retailing is the supermarket. Accessible to the housewife’s automobile from a wide radius, it houses under a single roof the entire food requirements of the family. Only through the sort of reactionary philosophy that this Court long ago rejected in the Due Process Clause area can the Court read into the legislative history of Section 7 its attempt to make the automobile stand still, to mold the food economy of today into the market pattern of another era.

For related thoughts on antitrust and innovation, check out Manne and Wright on Innovation and the Limits of Antitrust.