Are the Roberts Court Antitrust Decisions Really Pro-Business?

Josh Wright —  20 March 2008

I’m a bit late to the party on Jeffrey Rosen’s provocative article in the NY Times Magazine claiming that the Supreme Court is biased in favor of businesses. For readers not familiar with Rosen’s claim, the basic assertion is that:

With their pro-business jurisprudence, the justices may be capturing an emerging spirit of agreement among liberal and conservative elites about the value of free markets.

Eric Posner’s insightful response hits the nail on the head in critiquing Rosen’s characterization for lack of evidence and exposing Rosen’s implicit assumption that populist jurisprudence is the “unbiased” baseline. I want to focus in the role of the Roberts Court antitrust cases in Rosen’s claim. Rosen cites to these cases as evidence in favor of his bias claim, noting the significant increase in antitrust activity in the Court in recent years and emphasizing the fact that “the Roberts Court has heard seven [cases] in its first two terms – and all of them were decided in favor of the corporate defendants.”

So what are we to make out of these cases? Are the Roberts Court cases really pro-business? Rosen’s “pro-business bias” claim is analytically identical to Erwin Chemerinsky’s take on the Supreme Court cases that I criticized here awhile back (Chemerinsky concluded that the Supreme Court’s antitrust decisions favored “businesses over consumers”). It is also identically incorrect.

Posner gives one excellent reason in his response when he notes that 6 out of the 7 Roberts Court cases involve businesses as both plaintiffs and defendant. Only Twombly involved consumer plaintiffs (and Credit Suisse involved a mixed class of plaintiffs including corporate investors). As Posner notes, it is a bit of a reach to credibly claim “pro-business bias” on this track record where a corporate plaintiff loses in the majority of the cases.

But there is another reason that this “pro-business bias” argument should be dismissed as incorrect with respect to the antitrust cases despite the superficial and soundbyte style argument that a winning streak for defendants is a sufficient condition for anti-consumer bias. I’ve argued elsewhere at length that the Roberts Court’s antitrust jurisprudence can be characterized as embracing the Chicago School tradition of antitrust analysis with its emphasis on theoretical rigor, empirical evidence, and sensitivity to error costs. To the extent that this is consistent with the view that the Roberts Court’s antitrust cases are increasingly “pro-market,” there is an important difference between that statement and the leap to “biased in favor of businesses over consumers!”

The 5-4 decision in to overrule Dr. Miles’ per se prohibition against minimum resale price maintenance in Leegin provides an illustration of that difference in practice. Is Leegin pro-business? Quite obviously, we would need to know something about whether minimum RPM is good or bad for consumers before we concluded that lifting the per se prohibition was a good or bad thing. A Supreme Court interested in consumer welfare analysis (what antitrust does) would be interested in the competitive effects of minimum RPM in order to address the underlying issue: are consumers better or worse off when we allow the practice? A Supreme Court biased in favor of business would have no need at all for that sort of inquiry. But Justice Kennedy’s opinion on behalf of the majority relies extensively on economic theory and empirical evidence that minimum resale price maintenance made consumers better off! Now, one might think that the Court got it wrong, misunderstands the evidence, and that RPM actually harms consumers. For the record, I disagree and believe Leegin was correctly decided. But to argue that the Court got there by favoring business over consumers is not accurate, and obvious from reading the opinion.

What about Twombly? The one case which involves a consumer plaintiff. Is Twombly biased in favor of businesses? It certainly makes it more difficult for plaintiffs to survive a motion to dismiss in a Section 1 case. But is that anti-consumer? Again, only under a superficial analysis of the reasoning in that case. Specifically, the Court is concerned that abuse of the antitrust laws through discovery and frivolous claims exposes firms to the risk of false positives and may chill pro-competitive conduct — which is bad for consumers. One might disagree with these concerns, or believe that the Court misunderstands their magnitude or impact on consumers. But the Court explicitly motivates its analysis with concern about the social costs of abuses of private antitrust enforcement which are passed on to consumers. Similar concerns motivated the Court’s analysis in Credit Suisse. To argue that this conclusion comes from some sort of pro-business bias is a stretch.

We could do this with the rest of the cases. There is clearly a shift in antitrust analysis in the Supreme Court both in terms of activity level and, to a lesser extent, the analytical framework employed. The adoption of the Chicago School of antitrust analysis principles is not properly viewed as a pro-business bias. In fact, it was contributions from that movement in economics that demonstrated why some business practices previously thought to be inefficient actually improved consumer welfare. Subsequent empirical evidence has been overwhelmingly consistent with this approach. I don’t have enough expertise in the other areas of law that Rosen covers to say something about the general claim, though I suspect Posner’s characterization is correct. With respect to the antitrust cases, the Roberts Court decisions have been thoughtful and mindful of the ultimate goal of antitrust: consumer welfare. The conclusion that these cases are biased must rely on some implicit assumption that there is an “unbiased” baseline approach to these cases that does not involve consumer welfare analysis. At least for the past 30 years, and to the benefit of consumers, modern antitrust analysis has rejected alternative approaches that favor small businesses (“small dealers and worthy men”) or non-economic concerns.