Antitrust Enforcement in the Crosshairs

The Department of Justice and the Federal Trade Commission have issued new Draft Merger Guidelines (“DMG”) out of a recognition that prior merger enforcement has been inadequate. Decades of weak enforcement have resulted in tremendous industry consolidation, rising industry concentration, and steep declines in competition in many key sectors of the American economy. To take one example, the major tech platforms, Meta, Google, Microsoft, Amazon, and Apple, have each acquired literally hundreds of companies, yet until recently, not a single challenge was issued by the antitrust agencies. A contributing factor to this weak merger enforcement has been the persisting omnipresent influence of the Chicago School in the agencies’ approach to merger enforcement.[1] At the heart of the Chicago School approach is the “Consumer Welfare Standard,” a normative economic theory that holds that the only appropriate goal for antitrust enforcement is to advance consumer surplus—in short, prices and output matter but other social goals do not.[2] The Consumer Welfare Standard limited merger analysis to the impact of mergers on post-merger prices of the parties in the output market.

Two modern schools of antitrust have challenged the weak merger enforcement advocated by the Chicago School: The New Brandeisian School and the Post-Chicago Economists. The New Brandeisian School has focused its attack on the Chicago School’s abandonment of traditional antitrust goals. They argue that Congress passed the Clayton Act to regulate mergers to achieve several congressional goals[3] for merger enforcement: protecting democracy,[4] advancing the interests of small business,[5] and preventing excessive income inequality.[6] Congress believed that these goals would be advanced by limiting the industry concentration that would result from unrestricted mergers.

In contrast, the Post-Chicago School continues to embrace the Consumer Welfare Standard’s use of surplus as the goal, but in a modified form in which the surplus from sellers and labor rents are included along with consumer surplus, but the other Congressional goals remain excluded.[7] They refer to this approach as the total trading partner welfare. This is really a wrinkle on the original Consumer Welfare Standard because it simply adds the input market surplus to the consumer surplus. In this article, we will use the term “Total Social Surplus Standard” for the Post-Chicago position. To their credit, the Post-Chicago School has demonstrated that even when the antitrust inquiry is limited to prices and costs (that is, total surplus), the Chicago School’s program of weak merger enforcement is not justified.

The new DMG are an interesting mixture of the New Brandeisian approach and Post-Chicago Economic tenets. The Overview of the draft guidelines emphasizes the importance of the “mandate of Congress” with respect to national merger policy and clearly recognizes the supremacy of Congressional intent and Supreme Court precedent over changing economic theories. Yet nowhere do the draft guidelines actually enumerate the specific goals Congress was concerned with. Instead, the DMG speak about “lessening of competition” (the statutory language), but when describing competition, they revert to the total social surplus goals of “expand output, raise wages, increase product quality, lower product prices…” [8]

A “lessening of competition” standard confuses ends and means. Competition is the means to achieve antitrust goals, but the goals must be established before supporting practices can be identified. The role of an antitrust standard is to help resolve the deep ambiguities in what antitrust means by “legitimate competition” or “competition on the merits.”[9] Under the Consumer Welfare Standard, competition is beneficial when price is reduced, and output increased. But evoking competition by itself provides no guidance for antitrust enforcement. Nor can economics answer this question by referring only to competition. Under Arrow-Debreu assumptions, “perfect competition” is Pareto Optimal. Absent the assumptions of universal perfect competition (and considering the theory of the Second Best) it becomes unclear how to determine when perfect competition would advance social welfare, let alone when “competition” that is not perfect is beneficial and when it is harmful. Thus, endorsing a competition standard is incoherent on its face. Either the Total Social Surplus standard extension of the Consumer Welfare Standard should be adopted (which we do not support) or the DMG should make clear that Congressional antitrust values must replace the Consumer Welfare Standard.

The recent comments (the “Post-Chicago Comments”) submitted in regard to the Draft Horizontal Merger Guidelines, Jonathan Baker, Andrew I. Gavil, Richard J. Gilbert, Herbert Hovenkamp, Michael L. Katz, A. Douglas Melamed, Fiona Scott Morton, Daniel L. Rubinfeld, Carl Shapiro, and Howard Shelanski are telling.[10] Because most of the authors are prominent Post-Chicago economists, their comment helps sharpen the differences between the Post-Chicago positions and the New Brandeisian views on merger control. We set forth below how we read the two positions expressed as competing syllogisms.

A Comparison of the Logic of the Post-Chicago School and the New Brandeisian School

	Post-Chicago Position	New Brandeisian Position
	Premises	Premises
1.	There is too much monopoly power.[11]	There is too much monopoly power.
2.	Mergers contribute to monopoly power.	Mergers contribute to monopoly power.
3.	Monopoly power’s main harms are higher prices to consumers or less innovation.	Monopoly power’s main harms are undermining of democracy, increased inequality via suppression of labor and small businesses, and reduced economic growth.
4.	A meaningful number of mergers result in “efficiencies” (lower costs).	Few or no mergers result in significant “efficiencies” (lower costs).
5.	Full-blown economic analyses of mergers are worth their cost because economists can discern which mergers increase price and which generate significant cost savings.	Full-blown economic analyses of mergers are too costly to be justified. The enormous expense of hiring economists gives an undue advantage to large, wealthy firms over government enforcers, harming the general public.

The major differences between the Post-Chicago School and the New Brandeisian School are their respective stances on the Total Social Surplus Standard and on the likelihood of so-called “efficiencies” that result from horizontal mergers. Because the DMG take equivocal positions on these topics, the thrust of the Post-Chicago Comments hone in on a demand for clarity on them.

Premise 3: The Post-Chicago Justification for the Total Social Surplus Standard

The central point of the Post-Chicago Comments is that the DMG have strayed too far from the Total Social Surplus Standard. As they state early in the comment “[w]e understand merger analysis to be concerned with the risk that a merger will enhance the exercise of market power, thereby harming trading partners (i.e. buyers including consumers, and suppliers including workers).”[12] They suggest that the DMG add a clarifying upfront statement that merger regulation is aimed at preventing market power defined as higher price, lower output, or diminished innovation.[13] This is simply a restatement of the Consumer Welfare Standard expanded to some other trading partners. Such a statement leaves no room for Congressional concerns about democracy, small business, or inequality. Thus, the Post-Chicago Comments seek to push the agencies back toward a full embrace of the Total Social Surplus Standard.

This can also be seen in the Post-Chicago Comments’ complaint that absent an adoption of the Total Social Surplus Standard, there may be no room for the merging parties to rebut a structural presumption. By this, they mean that a merger that results in concentration above the guidelines’ thresholds, or results in fewer competitors, or is part of a series of acquisitions or a trend toward greater concentration, can nonetheless be cleared if further economic analysis demonstrates that no post-merger price increase is likely (and no trading partners are hurt—although this is primarily lip service, since the Post-Chicago School does not pay attention to it in their actual analyses). The Post-Chicago economists have invested heavily in new methods such as price pressure tools[14] to analyze unilateral effects. These tools include the Upward Pricing Pressure,[15] Gross Upward Pricing Pressure Index,[16] Compensating Marginal Cost Reductions,[17] and merger simulation.[18] All of these tools, endorsed by the 2010 Merger Guidelines, involve using data on profit margins and diversion ratios (and sometimes demand) in an attempt to forecast price changes and offsetting cost savings (“efficiencies”).[19] It is extremely important to recognize that these tools assume that the harm from mergers is limited to price increases. Congress did not believe this.

A. Congress was Concerned that Concentration Can Reduce Social Welfare and Harm the Economy Through Mechanisms Other than Price

We agree that mergers that raise prices and increase monopoly profits harm the economy and social welfare. Mordecai Kurz measures the increase in monopoly power since the 1980s and points out the myriad detrimental consequences.[20] However, higher concentration and greater corporate power can lead to lower social welfare and harm to the economy through mechanisms other than higher prices. Excess concentration in banking can result in “too big to fail” institutions and economic instability.[21] Media concentration can undermine political democracy.[22] High concentration can limit entrepreneurial opportunities for small business, harming innovation and local control.[23] Mergers that lead to high unemployment can directly damage social welfare and social cohesion.[24]

Congress was concerned in amending Section 7 of the Clayton Act that highly concentrated corporate power achieved through mergers would lead to concentrated political power. Concentrated political power is directly harmful to social welfare and economic performance because powerful interests alter regulations and laws in order to cause further transfers of income to the wealthy, which, in turn, undermines economic performance.

For example, corporate pressure to revise the Securities and Exchange Commission rule 10b-18 in 1982 allowed firms to repurchase shares.[25] Payment in the form of stock options to corporate directors and officers incentivized their focus on the stock market performance of the firm. The rule change allowed firms to effectively divert rents to shareholders through share buybacks. This process directly reduced investment and growth.[26]

Transferring labor rents to shareholders and corporate executives also reduces firm investment in retaining employees with deep human capital as well as in-house research and technological innovation. This process supplants the prior firm’s “retain and reinvest” regime that was so successful in the United States up until the 1980s, with a “downsize and distribute” approach through which short-run cash is extracted from the firm to increase executive and shareholder incomes, as described by Lazonick and Shin:

Under the retain-and-reinvest regime, senior executives made corporate resource-allocation decisions that, by retaining people and profits within the company, permitted reinvestment in productive capabilities that could generate competitive (high-quality, low-cost) products. The social foundation of retain-and-reinvest was employment relations that offered decades-long job security, in-house promotion opportunities, rising real earnings, and health insurance coverage, with a defined benefit pension at the end of a long career…. In sharp contrast, under downsize and distribute a company is prone to downsize its labor force and to distribute to shareholders, in the form of cash dividends and stock buybacks, corporate cash that it might previously have retained.[27]

Concentrated corporate political power has also undermined unions through changes in labor laws, while at the same time politically resisting increases in the minimum wage. This contributed to further inequality, reductions in social welfare,[28] and deterioration of innovation.[29]

Acemoglu and Robinson’s comprehensive study of successful economies across history and geographies concludes that the one common critical factor necessary for success is an inclusive political democracy.[30] They argue that inclusive political institutions create successful economies by allowing creative destruction of old technologies and the encouragement of new and better innovations (think replacement of fossil fuels by more efficient climate-friendly technologies). Only when dominant firms unduly wield political power can rent-seeking and extraction of value be sustained.[31] As Acemoglu and Robinson show, if dominant firms wield great political power, then the more successful firms gradually get larger and larger, either through mergers and acquisitions or simply by driving their competitors out of the marketplace. As their size increases, they see the advantages of locking in profits by finding paths to profits that are protected from any kind of competition and by shifting costs onto others through sweating workers or contributing to environmental degradation. Acemoglu and Robinson conclude that without strong democracy, this degenerative process saps an economy of its dynamism.[32]

Accordingly, we believe that Congress was quite prescient in not limiting the goals of antitrust to price and output. Higher prices and monopoly profits is only one important mechanism by which concentration harms social welfare and the economy. Therefore, in our view, the DMG should more firmly reject the Total Social Surplus Standard—not embrace it further as the Post-Chicago Comments advocate.

B. Squaring the Total Social Surplus Standard with the Supreme Court Precedents cited by the DMG

The DMG rely on Supreme Court precedents and Congressional Intent in developing its guidelines. These precedents occurred before the neoliberal revolution that adopted the Consumer Welfare Standard in the late 1970s and 1980s. The Post-Chicago Comments question the use of these precedents (but do not mention Congressional Intent) because “[i]t does not reflect developments in economics since that time and the best economic thinking today.”

It is naïve to think that the adoption of the Consumer Welfare Standard and the hobbling of effective antitrust enforcement in the lower courts were the result of “advances” in economics. Quite the contrary. The Courts accepted Chicago School economics because it was conservative and favored big business, not because it represented advances. This is evident from the fact that Chicago School economics won rapid acceptance, while Courts have been resistant to the Post-Chicago revisions of the Chicago School doctrines which do represent economic advances. For example, in Brooke Group Ltd v. Brown & Williamson Tobacco Corp.,[33] the Supreme Court heightened the burden for demonstrating predatory pricing while ignoring the Post-Chicago School theories of recoupment.[34] In Leegin, the Supreme Court overturned one hundred years of precedent to hold that resale price maintenance was no longer per se illegal and that the rule of reason would apply.[35] The majority accepted the Chicago School presumptions without factual confirmation and sampled literature only from Chicago School orthodoxy.[36] The only case in which the Post-Chicago School analysis arguably prevailed over the Chicago School at the Supreme Court appears to be Eastman Kodak Co. v. Image Technical Services, Inc.[37]

The change in perspective in the lower courts and their references to the Consumer Welfare Standard (in Dicta) was part of the neoliberal revolution. The neoliberal revolution was led by big business and the conservative think tanks they funded that sought to release big business from the constraints of the New Deal Consensus that protected workers and prevented massive income inequality.[38] It is clear that the neoliberal revolution spectacularly achieved its goals of unbridling corporate power, increasing income inequality, and eroding democracy.

Indeed, rather than the adoption of the Consumer Welfare Standard being the adoption of an economic advance, it was actually a rejection of modern approaches to welfare economics in favor of the old Marshallian surplus approach to economic welfare. No modern welfare economist the authors are aware of supports this flawed surplus approach today.[39] As Baujard, a prominent welfare economist, describing the surplus approach states, “extremely serious…criticisms of this approach have been raised by leading experts in the field.”[40] The 2015 Economics Nobel laureate Angus Deaton famously concluded that “there is no valid theoretical or practical reason for ever integrating under a Marshallian demand curve” (that is, calculating consumer surplus).[41]

Premises 4 and 5: Merger “Efficiencies” and the Role of Economic Modeling and Forecasts

The Post-Chicago Comments advocate a detailed rule of reason analysis of the price effects of each merger. They contend that this approach would provide the benefits of stopping mergers that increase market power but at the same time allow mergers that increase cost savings to proceed. There are three problems with this contention. First, concentration alone has been demonstrated to be a good predictor of post-merger price increases, either from unilateral or coordinated effects. As John Kwoka reports, if both concentration and the number of remaining competitors in the market are considered, the post-merger price effects of a merger can be predicted with little error.[42] Second, a rebuttal to a structural presumption can only be effective in the presence of merger cost savings that are passed on to consumers. There is no evidence that horizontal mergers ever result in such cost savings—really none.[43] Third, the costs of a full-blown analysis using sophisticated economic techniques advantage the big business because they have the resources to hire expensive consultants and undertake such analyses, while the government cannot in many cases. In this section, we explain these points further.

All horizontal mergers increase prices if there are no cost savings. The Post-Chicago Comments claim that the structural presumptions of the DMG should be weakened in favor of a full economic analysis of price effects, assuming that some horizontal mergers result in cost savings that are passed on to consumers. In our view, the claim that horizontal mergers result in cost savings is analogous to the claim that tax cuts for the wealthy increase growth. There is little or no empirical support for the claim, but it is so often repeated that many take it as gospel. According to the Post-Chicago Comments:

The empirical evidence does not warrant such a near per se ban on mergers and acquisitions among oligopolists [footnote 11, see Objection 4 below]. If such a policy were applied in a systematic and thoroughgoing way, without regard to whether the ability of firms to exercise market power is enhanced in individual cases, it would interdict or deter some mergers that would be expected to generate lower quality-adjusted prices for buyers, higher quality-adjusted prices for suppliers, and enhanced incentives to innovate. It would also be expected to have economy-wide effects in inhibiting economic growth and exacerbating inequality.

In their Footnote 11, the Commentators write:

Some of us interpret the research literature in economics as providing little or no evidence that, on average, efficiencies from merger in oligopoly markets benefit competition. That conclusion is not inconsistent with recognizing that efficiencies from merger benefit competition in some cases. Competition and consumers would benefit by permitting those mergers that benefit competition through the efficiencies they generate to proceed.

In a recent paper, we reviewed the empirical literature on horizontal merger efficiencies.[44] We were unable to identify any empirical study in which a merger led to cost savings that were sufficient to offset a predicted anticompetitive price increase. Our findings are consonant with John Kwoka’s similar conclusion that “[t]here is, in short, no good evidence that mergers generally result in substantial and verifiable cost savings, notwithstanding claims to the contrary.”[45] Indeed, defendants have rarely demonstrated merger cost savings passed on to consumers. As one district court recently stated, “The Court is not aware of any case, and Defendants have cited none, where the merging parties have successfully rebutted the government’s prima facie case on the strength of the efficiencies.”[46]

Moreover, even if there were cost savings that are passed on following a merger, it is unlikely that such savings are merger-specific, as required by the DMG. Economies of scale and scope can generally be achieved through internal expansion. The 1968 Merger Guidelines, for example, stated that “where substantial economies are potentially available to a firm, they can normally be realized through internal expansion.” Other commentators have agreed with this assessment. In 1983, Fisher and Lande wrote that “it would be extremely difficult for merging firms to prove that they could not attain the anticipated [so-called] efficiencies or quality improvements through internal expansion….”[47] Indeed, firms that have existed in a market for some time are unlikely to continue to have unexploited economies of scale or scope.

Since there is no proof of significant material cost savings from mergers there is no reason to go beyond the DMG structural presumptions.[48] In the case of coordinated effects, there really is no viable rebuttal other than that the presumption is mistaken. With regard to unilateral effects, there is simply no possibility that any of the sophisticated economic unilateral forecasting tools in use today can believably assert that unlike in any past mergers, a future merger would generate material efficiencies that will be passed on to consumers and would offset any harm to trading partners. Finally, if a merger really did lead to cost decreases, and those cost decreases arose not because of harming trading partners but because of increasing returns to scale, the proper policy response is given by well-accepted economic theory which has been, under neoliberal pressure, not taught to younger economists but has not been forgotten by Mordecai Kurz: the firms should be allowed to merge and should then treated like Facebook, and “Facebook should be turned into a public utility.”[49]

The conclusion is inescapable: actual economic theory, rather than its neoliberal stand-in, rejects the consumer welfare standard and the social surplus standard. As illustrated in Kurz’s book, the history of unbridled mergers with neither strict ongoing public regulation nor public ownership of large firms has led to increased inequality and reduced economic growth. Actual economic theory therefore supports the reorientation of merger regulation directly towards the Congressional concerns that motivated Congress to pass the amendments to Section 7 of the Clayton Act in the first place.

Notes

[1] The Chicago School believed that only mergers to monopoly were a competitive concern. Anything short of this was likely motivated by efficiencies and any market power concerns would be remedied by market forces.

[2] We discuss the “Origin and Meaning of the Consumer Welfare Standard” in Mark Glick, Gabriel A. Lozada, and Darren Bush, “Why Economists Should Support Populist Antitrust Goals,” 2023 Utah L. Rev. 769 (2023).

[3] Congressional support for these goals were expressed during the debates leading to the passage of the Sherman Act, The Clayton Act, and the FTC Act. See Mark Glick and Darren Bush, “Breaking Up Consumer Welfare’s Antitrust Policy Monopoly,” 56 Suffolk L. Rev. 203 (2023); Zephyr Teachout & Lina Khan, “Market Structure and Political Law: A Taxonomy of Power,” 9 Duke J. of Const. Law & Pub. Pol. 1, 62 (2014); Robert Lande & Sandeep Vaheesan, “Preventing the Curse of Bigness Through Conglomerate Merger Legislation,” 52 Ariz. St. L.J. 75, 82–85 (2020).

[4] Robert Pitofsky, “The Political Content of Antitrust,” 127 Univ. of Penn. L. Rev. 1051, 1064 (1979) (“A striking feature of the legislative history of amended section 7 was the widely-shared perception of danger to the political well-being of the country and its citizens stemming from the merger movement.”); Daniel Crane, “Antitrust and Democracy: A Case Study from German Fascism,” Univ. of Mich. Law & Economics Working Paper, April 17, 2018 at 3 (“Celler and Kefauver’s floor speeches reflected a broader concern of the U.S. Congress that industrial concentration facilitated the incubation of totalitarianism and threatened democracy.”)

[5] Wesley Cann, “Section 7 of the Clayton Act and the Pursuit of Economic ‘Objectivity’: Is There any Role for Social and Political Values in Merger Policy,” 60 Notre Dame L. Rev. 273 (1985) (“Congress [when passing the Celler-Kefauver Act] expressed concern for small businesses and for local communities in which these businesses had played such an important role.”); Stacy Mitchell and Ron Knox, “Rolling Back Corporate Concentration: How New Federal Antimerger Guidelines Can Restore Competition And Build Local Power,” Institute for Local Self-Reliance, June 2022 (discussing the legislative history of the Clayton Act and the economic benefits of small business). Amy Klobuchar, Antitrust: Taking on Monopoly Power from the Gilded Age to the Digital Age 342–343 (2022) (“For decades (indeed, since the country’s founding), small businesses have been the engine of America’s economy and of job growth. We need to make sure that small businesses continue to power economic growth…In what I see as a warning sign, however, a December 2018 report measuring the contribution of small businesses to the American economy determined that the small-business share of GDP declined from 48 percent in 1998 to 43.5 percent in 2014.”).

[6] Robert Lande, “Wealth Transfers as the Original and Primary Concern of Antitrust: The Efficiency Interpretation Challenged,” 34 Hastings L. J. 65 (1982–83); Lina Khan and Sandeep Vaheesan, “Market Power and Inequality: The Antitrust Counterrevolution and Its Discontents,” 11 Harv. L. & Pol’y Rev. 235 (2017).

[7] Opening Statement of Professor Carl Shapiro: “The Consumer Welfare Standard in Antitrust: Outdated, or a Harbor in a Sea of Doubt,” before the S. Judiciary Comm. Subcomm. On Antitrust, 115th Cong. (Dec. 13, 2017); C. Scott Hemphill & Nancy Rose, “Mergers that Harm Sellers,” 127 Yale L. J. 2078 (2018).

[8] Draft Merger Guidelines at 12.

[9] We agree on this point with Elner Elhauge, “Should the Competitive Process Test Replace the Consumer Welfare Standard,” ProMarket (May 24, 2022).

[10] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4574947

[11] Post-Chicago Comments at 1 (“we believe that enforcers need to do more to deter anticompetitive mergers than in past decades”). Jon Baker has made this point in his book Jonathan Baker, The Antitrust Paradigm, Harvard U.P. (2019).

[12] Post-Chicago Comments at 2.

[13] Id. at 6.

[14] Tommaso Valletti and Hans Zinger, “Mergers with Differentiated Products: Where Do we Stand?”, 58 Rev. of Ind. Org. 179 (2021).

[15] Carl Shapiro, “The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox in Forty Years,” 77 Antitrust Law J. 701 (2010).

[16] S Salop and S Moresi, “Updating the Merger Guidelines: Comments,” Georgetown Law Faculty Publications (2009).

[17] G Werden, “A Robust Test for Consumer Welfare Enhancing Mergers Among Sellers of Differentiated Products,” 44 J. of Ind. Econ. 409 (1996).

[18] G Werden and L. Froeb, “Simulation as an Alternative to Structural Merger Policy in Differentiated Products Industries,” in The Economics of the Antitrust Process, Chapter 4, Springer (1996).

[19] No such tools exist to analyze the prospect of post-merger coordinated effects. These effects could be significant, yet are often ignored.

[20] Mordecai Kurz, The Market Power of Technology: Understanding The Second Gilded Age (2023).

[21] Carl Bogus, “The New Road to Serfdom: The Curse of Bigness and the Failure of Antitrust,” 49 U. Mich. J. L. Reform 1 (2015),

[22] Remarks of Zephy Teachout, 36 Antitrust 17 (2022) (“I think it is pretty hard to say that the market structure in communications infrastructure isn’t relevant for democracy. This one’s a no-brainer…”).

[23] Fred Block and Matthew Keller, “Where Do Innovations Come From?” in State of Innovation: The U.S. Government’s Role in Technological Development 162-164 (2011); Stacy Mitchell, Big Box Swindle: The True Cost of Mega Retailers and the Fight for America’s Independent Business (2006).

[24] Andrew Clark & Andrew Oswald, “Unhappiness and Unemployment,” 104 Econ. J. 648 (1994).

[25] Willaim Lazonick, Mustafa Sakirc,and Matt Hopkins, “Why Stock Buybacks are Dangerous for the Economy,” Harvard Bus. Rev. (2020); Lenore Palladino, “The $1 Trillion Question: New Approaches to Regulating Stock Buybacks,” 36 Yale J. Reg. Bull. 89 (2018).

[26] Gerard Dumenil & Dominique Levy, The Crisis of Neoliberalism, Harvard (2011) at 152 (contending that high cash payouts to shareholders have reduced funds for investment); Jonathan Lewellen & Katharina Lewellen, “Investment and Cash Flow: New Evidence,” 51 J. Fin. & Qant. Analysis 1135, 1161 (“Our results suggest that investment and cash flow are strongly linked after controlling for a firm’s investment opportunities….”). See also Laurent Cordonnier & Franck Van de Velde, “The Demands of Finance and the Glass Ceiling of Profit Without Investment,” 39 Camb. J. of Econ. 871 (2014).

[27] William Lazonick & Jang-Sup Shin, Predatory Value Extraction: How the Looting of the Business Corporation Became the U.S. Norm and How Sustainable Prosperity Can Be Restored, Oxford (2020) at 3.

[28] Richard Wilkinson & Kate Pickett, The Spirit Level: Why Greater Equality Makes Societies Stronger, Bloomsbury (2010) at 38–39; Shigehiro Oishi, Selin Kesebir and Ed Diener, “Income Inequality and Happiness,” 22 Psch. Sci. 1095 (2012) (showing that U.S. happiness levels are negatively related to inequality, and suggesting perceived unfairness and lack of trust as the mediating factors).

[29] There is also a direct adverse impact on innovation from inequality. See H.J. Habakkuk, “American and British Technology in the Nineteenth Century: Search for Labor Saving Inventions,” Cambridge (1962); Robert Allen, “Global Economic History: A Very Short Introduction,” Oxford (2011) at 33; Gerard Dumenil & Dominique Levy, “A Stochastic Model of Technical Change, Applications to the U.S. Economy (1869-1985), 46 Metroeconomica 213 (1995); Robert Gordon, The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (2016) at 563; Lance Taylor & Ozlem Omer, “Race to the Bottom: Low Productivity, Market Power, and Lagging Wages,” INET Working Paper, Aug. 8, 2018 at 5.

[30] Daron Acemoglu & James Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, Currency (2010).

[31] Id. at 430-32.

[32] Fred Block, Capitalism: the Future of an Illusion, Univ. of Cal. (2018) at 75..

[33] 509 U.S. 209 (1993).

[34] See id. at 225–26; Jonathan Baker, “Predatory Pricing After Brooke Group: An Economic Perspective,” 62 Antitrust L.J. 585, 585-586 (1994) (arguing that predatory pricing is not always irrational).

[35] Leegin Creative Leather Products v. PSKS, Inc., 551 U.S. 877, 881–82, 900 (2007). The majority opinion largely recounted the Chicago School claims about the “efficiencies” that can be derived from controlling free riders in retail using resale price maintenance. In his dissent, Justice Stephen Breyer identified the weakness in the Chicago School argument. He asked, “How often, for example, will the benefits to which the Court points occur in practice? I can find no economic consensus on this point…. All this is to say that the ultimate question is not whether, but how much, ‘free riding’ of this sort takes place.” Id. at 915–16 (Breyer, J., dissenting).

[36] See id. at 889 (citing amicus briefs containing “procompetitive justifications for a manufacturer’s use of resale price maintenance”).

[37] 504 U.S. 451 (1992). In that case, the Court rejected Kodak’s proposition that as a matter of law competition in the equipment market for copy machines would protect Kodak’s installed base from all possible exploitation by Kodak. The Court rejected the presumption stating that “[l]egal presumptions that rest on formalistic distinctions rather than actual market realities are generally disfavored in antitrust law.” Id. at 466–67.

[38] Mark Glick, “Antitrust and Economic History: The Historic Failure of the Chicago School of Antitrust,” 64 Antitrust Bull. 295 (2019).

[39] The authors discuss the various problems with the Consumer Welfare Standard discussed by welfare economists in Mark Glick, Gabriel A. Lozada & Darren Bush, “Why Economists Should Support Populist Antitrust Goals,” 2023 Utah L. Rev. 769 (2023).

[40] Antoinette Baujard, “Welfare Economics,” HAL Open Science, (2013) at 8 (listing prominent the prominent welfare economists that criticize this approach and describing the main problems).

[41] Marco Becht, “The Theory and Estimation of Individual and Social Welfare Measures,” 9 J. of Economic Surveys 53, 77 (1995) (quoting Angus Deaton).

[42] John Kwoka, “The Structural Presumption and Safe Harbor in Merger Review: False Positives or Unwarranted Concerns?” 81 Antitrust L. J. 837 (2017).

[43] See Mark Glick, Gabriel A. Lozada, Pavitra Govindan, and Darren Bush, “The Horizontal Merger Efficiency Fallacy,” available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4566274.

[44] Supra note 43.

[45] John Kwoka, “Reviving Merger Control, A Comprehensive Plan for Reforming Policy and Practice,” American Antitrust Institute, (2018).

[46] FTC v. Peabody Energy, et. al, Case No. 4:20-cv-00317-SEP, E.D. Missouri, March 23, 2020. However, in F.T.C. v. H.J Heinz, Co., 246 F. 3d 708 (D.C. Cir. 2001) the lower Court did find that efficiencies could rebut some claimed anticompetitive effects. However, the case was later overturned.

[47] Alan Fisher and Robert Lande, “Efficiency Considerations in Merger Enforcement,” 6 Cal. L. Rev. 1580 (1983).

[48] However, new post-merger entry is a viable rebuttal because it offsets concentration and therefore takes into account all of the harmful impacts from concentration.

[49] Supra note 20 at 334.