Cardozo professor Dan Crane and I are living parallel lives. We both attended Wheaton College and the University of Chicago Law School (Dan was two years ahead of me). We began teaching at the same time. We both teach antitrust law and have written on bundled discounts. Like Josh, we’re both presenting at the DOJ/FTC hearings on single-firm conduct. And we’ve both recently written reviews of Herbert Hovenkamp’s terrific new book, The Antitrust Enterprise: Principle and Execution. Dan’s review, forthcoming in Michigan Law Review, is entitled Antitrust Modesty. Mine, forthcoming in Texas Law Review, is called Tweaking Antitrust’s Business Model.
As both titles indicate, Hovenkamp’s book does not call for radical change to existing antitrust rules. In that sense, the book differs from the famous antitrust expositions by Robert Bork (The Antitrust Paradox, 1978) and Richard Posner (Antitrust Law: An Economic Perspective, 1976). The difference in tone, though, does not reflect a difference in underlying philosophy. Like his Chicagoan predecessors, Hovenkamp rejects the Warren Court-era’s focus on protecting competitors rather than competition, and he defines “competition” in a manner that focuses not on the number of firms in a market but on the degree to which the market generates low prices, high output, and innovation. He maintains that
Antitrust is a defensible enterprise only if intervention into the market is economically justified. That entails that the market be “bigger†in some sense as a result of the intervention—whether “bigger†is measured by higher output, improved quality, lower prices, or more innovation. Furthermore, the increase must be enough to justify the high cost of operating the antitrust machinery.
Hovenkamp can afford to be “modest” and call for a mere “tweaking” of antitrust because the Chicago School largely succeeded in transforming antitrust doctrine. It is therefore curious that Hovenkamp takes pains to distance himself from the Chicago School, ultimately aligning himself with the competing Harvard School.
As Hovenkamp describes it, the Harvard School developed out of Cournot oligopoly theory (under which market structure dictates firm conduct, which determines market performance), evolved substantially in the 1970s, and became the position “most followed by the federal courts today.”
Both Dan and I find Hovenkamp’s eschewal of the Chicago label to be a bit odd. Here’s Dan’s take:
While [Hovenkamp] describes his own position as primarily “new Harvard” (p. 37), one is hard-pressed to locate the core tenets of this “new Harvard” school. It certainly does not resemble the Structure-Conduct-Performance Harvard school of the 1950s and 60s that viewed antitrust problems in formalized structuralist terms. As Hovenkamp acknowledges, the Harvard school (and the Areeda treatise) took a sharp turn westward, toward Chicago, after Donald Turner’s conversion experience in the late 1970s (p. 37). Although “new Harvard” borrows from the institutional design concerns of the traditional Harvard School — administrability is one of Hovenkamp’s chief concerns — this “new Harvard” school could just as easily be called “Chicago lite.”
Here’s my take:
[Hovenkamp] acknowledges that the Harvard School all but abandoned its structuralist roots and “underwent a significant transformation in the late 1970s†into something that looks much more, well, Chicagoan. It is not entirely clear why the Harvard School is permitted to evolve while the Chicago School is not …. [A]s Hovenkamp repeatedly acknowledges, prevailing antitrust doctrine is coated with Chicago’s fingerprints. Moreover, the noninterventionist “principles of antitrust administration†Hovenkamp advocates in his discussion of the design of antitrust rules similarly suggest that Hovenkamp is more of a Chicagoan than he might care to admit.
University of Chicago law professor Randy Picker also seems to think Hovenkamp is a closet Chicagoan. In his review of the book for the Chicago Faculty Blog, he observes that Hovenkamp’s five suggested principles of antitrust administration “turn[] Hovenkamp into a Chicago School apologist.” Those five principles are:
(1) Not every anti-competitive practice can be condemned;
(2) Intent evidence should be used sparingly;
(3) Whether intervention is justified may defend depend on the remedy;
(4) An antitrust rule that cannot be administered effectively is worse than no rule at all; and
(5) Administrative and compliance costs count.
Sounds awfully Chicagoan to me.