William H. Page, The Ideological Origins and Evolution of U.S.

Antitrust Law, in
1 ISSUES IN COMPETITION LAW AND POLICY 1 (ABA Section of Antitrust Law 2008)

Chapter 1
_________________________

THE IDEOLOGICAL ORIGINS AND

EVOLUTION OF U.S. ANTITRUST LAW
William H. Page*
Two great, opposing ideologies of the market and the state have shaped the evolution of
antitrust law in the United States since 1890. The evolutionary vision views the market,
framed solely by common-law rules of property and contract, as a mechanism for
facilitating free exchanges among countless individuals in the pursuit of their best
interests; markets, in this vision, will destroy monopoly without government intervention.
The intentional vision views the market as a mechanism within which powerful interests
can coerce consumers, labor, and small businesses; markets, in this vision, tend toward
monopoly unless government intervenes. The Sherman Act embodied a legislative
compromise between these two visions. It endorsed competition in markets as the
fundamental mechanism for the allocation of resources, but it rejected the view that
government can never improve market outcomes by direct intervention. Over the ensuing
century and more, the underlying ideological tension in antitrust has continued to frame
the debate over the interpretation of the Sherman Act. In the formative era of antitrust
policy, the evolutionary vision had primary influence. In the period from the end of the
New Deal through the Warren Court, the intentional vision was dominant, producing a
multitude of new per se rules, an expansive definition of monopolization, and an
aggressive merger policy. Beginning in the mid-1970s, however, another evolutionary
approach, the Chicago School, began to influence law and policy. Still more recently,
Post-Chicago analyses have emerged that express in formal economics some of the
perceptions of the intentional vision.

1. Introduction
It has become commonplace to use the language of economics in defining antitrust.1
Courts and scholars articulate economic goals for antitrust policy and use economic
methodologies, both theoretical and empirical, in the resolution of antitrust issues.2 But
antitrust has evolved over more than a century in a series of decisions by the U.S.
Supreme Court that, in the early decades, rarely invoked formal economics. One might
be tempted to view antitrust evolution as moving from darkness to light, from ignorance
to science. Interestingly, however, antitrust opinions from every period of antitrust
history rely on similar ideas and approaches.3 One explanation for these continuities is

*
1.
2.
3.

Levin College of Law, University of Florida.

See, e.g., RICHARD A. POSNER, THE PROBLEMATICS OF MORAL AND LEGAL THEORY 229 (1999)
(describing antitrust as a branch of applied economics).
See, e.g., THE ANTITRUST REVOLUTION: ECONOMICS, COMPETITION, AND POLICY (John E. Kwoka &
Lawrence J. White eds., 4th ed. 2003) (describing the roles of economists in modern antitrust cases).
See, e.g., Verizon Commcns v. Law Offices of Curtis V. Trinko, 540 U.S. 398, 408 (2004) (citing
United States v. Colgate & Co., 250 U.S. 300 (1919)).

ISSUES IN COMPETITION LAW AND POLICY

that the Supreme Court drew on economics to some degree in its early antitrust
decisions, even if did not acknowledge doing so.4 But there is a more fundamental
reason for the conceptual continuity in antitrust law: two great, opposing ideologies of
the market and the state have shaped antitrust evolution from its inception.5
An ideology, as used here, is a system of belief that shapes perceptions of social
policy by determining what we sense or feel before we have constructed any systematic
reasoning that could be called a theory, much less deduced any specific consequences as
hypotheses to be tested against evidence.6 The first of antitrusts defining ideologies,
the evolutionary vision, views the market, framed by common-law rules of property and
contract, as a mechanism for facilitating free exchanges among countless individuals in
the pursuit of their best interests.7 In that vision, the conditions that emerge from market
processes, including the distribution of wealth, are fundamentally legitimate and, except
in rare cases, unintended by any individual market actor.8 There may be monopolies,
but they are likely to be rare because, in the absence of state privilege, their profits
strongly attract new entrants to the market.9 Governmental interference in markets
should be negative, removing legal obstructions to free private contracting.10 However,
the second great ideology, the intentional vision, views the market as a mechanism
within which powerful interests can coerce consumers, labor, and small businesses. 11

4.

5.

6.

7.

8.

9.

10.
11.

HERBERT HOVENKAMP, ENTERPRISE AND AMERICAN LAW: 1876-1937, at 287-95 (1991) (arguing that
the emergence of marginal utility analysis influenced the Supreme Courts concept of coercion);
Herbert Hovenkamp, The Reckoning of Post-Chicago Antitrust, in POST-CHICAGO DEVELOPMENTS IN
ANTITRUST LAW 1, 1-2 (Antonio Cucinotta et al. eds., 2002).
For a lucid description of the opposing ideologies, see THOMAS SOWELL, A CONFLICT OF VISIONS:
IDEOLOGICAL ORIGINS OF POLITICAL STRUGGLES (1987). See also FREDERICK A. HAYEK, THE
CONSTITUTION OF LIBERTY 54-70 (1960); Harold Demsetz, Two Systems of Belief About Monopoly, in
INDUSTRIAL CONCENTRATION: THE NEW LEARNING 164 (Harvey J. Goldschmidt et al. eds., 1974).
SOWELL, supra note 5, at 14; cf. J.M. BALKIN, CULTURAL SOFTWARE: A THEORY OF IDEOLOGY 3
(1998) (proposing an ambivalent conception of ideology that recognizes that cognitive
mechanisms can be useful in certain contexts, but in others . . . can mislead and help produce or
sustain unjust conditions). For a discussion of political, social science, and philosophical definitions
of ideology, see IAN ADAMS, THE LOGIC OF POLITICAL BELIEF: A PHILOSOPHICAL ANALYSIS OF
IDEOLOGY 1-26 (1989).
See, e.g., Edmund Burke, Thoughts and Details on Scarcity, in BURKE, PAINE, GODWIN, AND THE
REVOLUTION CONTROVERSY 60, 64 (Marilyn Butler ed., 1984) ([I]t is absolutely impossible that . . .
free contracts [between employer and employee] can be onerous to either party . . . .).
See, e.g., 1 ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS
477-78 (Edward Canaan ed., 1976) (1776) (By pursuing his own interest [the individual] frequently
promotes that of society more effectually than when he really intends to promote it.).
See, e.g., ADAM SMITH, LECTURES ON JURISPRUDENCE 363 (R.L. Meek et al. eds., 1978) ([I]f any
trade is overprofitable all throng into it until they bring it to the naturall price, that is, the maintenance
of the person and the recompense of the risque he runs.); see also William H. Page, Ideological
Conflict and the Origins of Antitrust Policy, 66 TUL. L. REV. 1, 15-18 (1991) (summarizing the
evolutionary view that freedom of contract erodes monopoly).
See, e.g., HERBERT SPENCER, Specialized Administration, in MAN VERSUS THE STATE 435, 456-57
(Liberty Classics 1981) (1884).
See, e.g., Ian Fetscher, Rousseaus Concepts of Freedom in the Light of His Philosophy of History, in
LIBERTY 29, 54 (NOMOS IV Carl J. Friedrich ed., 1962) (observing that, for Rousseau all acquisition
of wealth appears to be robbery).

IDEOLOGICAL ORIGINS

Market structures consequently tend toward monopoly.12 In the intentional vision, the
unfair outcomes of market processes can and should be corrected by democratic,
governmental intervention, including direct regulation.13
The influence of versions of these ideologies is apparent throughout antitrust history.
As shown in Section 2, the 1890 Sherman Act14 embodied a legislative compromise
between these two visions. This compromise was not a settlement between opposing
identifiable factions in Congress, but rather a synthesis of elements of opposing world
views. Congress was well aware of both visions and their diagnoses of the trust problem
and adopted a policy that reflected elements of both. It endorsed competition in markets
as the fundamental mechanism for the allocation of resources, but it rejected the view
that government can never improve market outcomes by direct intervention. Although
Congress left to the courts the elaboration of the rules governing governmental
intervention, it did so by a mechanism that necessarily embodied this compromise. Over
the ensuing century and more, the underlying ideological tension in antitrust has
continued to frame the debate over the interpretation of the act. In different eras, one
vision or the other has had greater influence, depending upon events in the larger
political and legal culture. In the formative era, roughly the first three decades of
Supreme Court decision making, the evolutionary vision had primary, though by no
means exclusive, influence.15 In the period from the end of the New Deal through the
Warren Court, the intentional vision was dominant, producing a multitude of new per se
rules, an expansive definition of monopolization, and an aggressive merger policy. 16
Beginning in the mid-1970s, however, another evolutionary approach, the Chicago
School of antitrust analysis, began to influence both the courts and enforcement policy.17
Still more recently, Post-Chicago analyses have emerged that express in formal
economics some of the perceptions of the intentional vision.18
This chapter describes the evolution of antitrust law by tracing the influence of the
opposing ideologies in the framing of the Sherman Act and in the judicial interpretation
of the act during the three great periods of antitrust history. To set reasonable bounds on
such a task, the chapter focuses on the influence of the competing visions concepts of
market coercion and freedom of contract. Section 2 describes the role of the competing
visions in the framing of the Sherman Act. Section 3 describes the predominant role of
the evolutionary vision in the Supreme Courts decisions during antitrust laws
formative period. Section 4 describes the increased influence of the intentional vision
and legal realism on antitrust decisions from the New Deal to the Warren Court.
Finally, Section 5 describes the Chicago Schools renewal of the evolutionary vision,
12.
13.
14.
15.
16.
17.
18.

See Page, supra note 9, at 18 (summarizing the intentional view that powerful firms can insulate
themselves from competition).
See, e.g., John Dewey, The Future of Liberalism, 32 J. PHIL. 225 (1935).
Act of July 2, 1890, ch. 647, 26 Stat. 209 (1890) (current version at 15 U.S.C. 1-7).
Page, supra note 9, at 44-66.
William H. Page, Legal Realism and the Shaping of Modern Antitrust, 44 EMORY L.J. 1, 29-42 (1995).
Id. at 42-69; William H. Page, The Chicago School and the Evolution of Antitrust: Characterization,
Antitrust Injury, and Evidentiary Sufficiency, 75 VA. L. REV. 1221 (1989).
John E. Lopatka & William H. Page, Economic Authority and the Limits of Expertise in Antitrust
Cases, 90 CORNELL L. REV. 617, 699-703 (2005).

ISSUES IN COMPETITION LAW AND POLICY

which the Supreme Court has relied upon selectively within the Legal Process Schools
framework for the legitimacy of judicial lawmaking.

2. The ideological origins of antitrust policy

Antitrust emerged in the late nineteenth century as a response to the growth of the
trusts and their power in the American economy. In that period, the prevailing ideology
of governments role in the economy was laissez faire, but it had recently been attacked
by a variety of progressive social movements that advocated greater governmental
intervention.19 The evolutionary vision on which laissez faire prescriptions rested was
evident not only in social thought but also in the common laws deference to the
outcomes of market transactions.20 Common-law courts did little to inhibit contracts or
combinations in restraint of trade other than to decline to lend their enforcement powers
to them in some cases.21 The trusts and other social injustices, however, gave
ammunition to reformers who sought to intervene in the market, often to redistribute
wealth or limit private power in the interests of fairness. Proponents of the intentional
vision saw the trusts as evidence of the markets susceptibility to manipulation by
powerful firms and demanded direct governmental controls.22 Proponents of the
evolutionary vision, by contrast, explained the trusts as the product either of inexorable
technological changes23 or of misguided governmental policies, like tariffs, and saw the
remedy, if one was necessary, in the removal of governmental privileges and licenses.24
Senator John Sherman posed the issue by telling the Senate that it must heed [the
voters] appeal or be ready for the socialist, the communist, and the nihilist.25 The
resulting statute was a legislative compromise between the two visions that consciously
delegated to the federal courts the task of evaluating the legality of specific competitive
practices.26 It invoked the language of the common law and thus implicitly endorsed
19.
20.
21.
22.

23.

24.
25.
26.

See generally SIDNEY FINE, LAISSEZ FAIRE AND THE GENERAL-WELFARE STATE: A STUDY OF
CONFLICT IN AMERICAN THOUGHT, 1865-1901 (1956).
See Page, supra note 9, at 35.
See, e.g., Craft v. McConoughy, 79 Ill. 346 (1875) (holding that a court of equity will not lend its aid
in the division of the profits of an illegal transaction between associates).
See, e.g., Edwin R. A. Seligman, Railway Tariffs and the Interstate Commerce Law. II, 2 POL. SCI. Q.
369, 374 (1890) (arguing that we must recognize the monopolies as existing facts, but hold them
under control), quoted in FINE, supra note 19, at 338 n.125.
See, e.g., SILAS M. MACVANE, THE WORKING PRINCIPLES OF POLITICAL ECONOMY IN A NEW AND
PRACTICAL FORM 118-19 (2d ed. 1897) (arguing that if the law permitted perfect freedom of
industry there would be no serious danger to be apprehended from trusts or other combinations to
interfere with the natural course of production and exchange), quoted in FINE, supra note 19, at 72;
see also Letter from Oliver Wendell Holmes, Jr. to Frederick Pollock (May 25, 1906), in 1
HOLMES-POLLOCK LETTERS 123-24 (2d ed. 1961) (I think . . . talk about the world being slaves to
the man who commands the necessaries of life, rot. If Jim Hill (the great railway man) does not follow
the economically necessary course he comes to grief. . . . Under modern conditions the crowd presents
the inevitable to itself as the fiat of some great man, . . . but it is very silly.).
James May, Antitrust in the Formative Era: Political and Economic Theory in Constitutional and
Antitrust Analysis, 1880-1918, 50 OHIO ST. L.J. 257, 271-72 (1989).
21 CONG. REC. 2460 (1890).
Page, supra note 9, at 36 n.176 (1991) (quoting legislative history). For classic accounts of the
legislative history of the Sherman Act, see WILLIAM LETWIN, LAW AND ECONOMIC POLICY IN

IDEOLOGICAL ORIGINS

primarily the evolutionary vision in both the content of the common law and its
incremental mode of judicial development.27 It thus rejected the model of direct
administrative regulation Congress had recently adopted in the Act to Regulate
Commerce,28 and adopted as the goal of governmental intervention the restoration of a
competitive market rather than the establishment of fair outcomes. The Sherman Act
did, however, create affirmative civil and criminal sanctions for antitrust violations, a
radical step beyond the common laws passive refusals to enforce disfavored
combinations and conspiracies.29 The creation of positive remedies recognized the
possibility not only of market imperfections, such as persistent private cartels and
monopolies, but of effective, temporary governmental intervention to restore the market.
This tension between the competing visions has continued to shape the debate over the
practical content of antitrust policy.

3. Judicial evolution: The formative era

Oliver Wendell Holmes, Jr., wrote before the enactment of the Sherman Act that the
prevalent moral and political theories, intuitions of public policy, avowed or
unconscious, even the prejudices which judges share with their fellow-men influence
common-law development.30 This observation has special relevance to the evolution of
antitrust policy. Whether a judge adheres to either the intentional or evolutionary vision
can determine whether the judge views a practice as benign or harmful and thus whether
governmental intervention is warranted. While neither vision has ever entirely held
sway, they have alternated in taking the leading role in the shaping of antitrust law. The
early years of the interpretation of the Sherman Act coincided with the Progressive Eras
many social reform movements but also with the Freedom of Contract or Lochner31 era
in constitutional law, during which the Supreme Court, under the influence of the
evolutionary vision, held that some governmental interventions in the market violated
the Due Process Clause of the Fourteenth Amendment.32 The antitrust opinions of this
era show the Court struggling to reconcile the evolutionary vision with the evident intent
of the Sherman Act to set bounds on anticompetitive private action. Under a pure
evolutionary vision, the self-correcting mechanisms of the market would break down
private cartels and monopolies, except when government privileges protected them.
Consequently, in interpreting the prohibitions of the Sherman Act, the Court was most
likely to condemn practices that more closely resembled public restraints on commerce
and appeared to inhibit the markets ability to correct the restraint. They were least

27.

28.
29.
30.
31.
32.

AMERICA: THE EVOLUTION OF THE SHERMAN ACT 53-99 (1965), and HANS B. THORELLI, THE
FEDERAL ANTITRUST POLICY: ORIGINATION OF AN AMERICAN TRADITION 164-225 (1955).
See 21 CONG. REC. 3152 (1890) (remarks of Senator George Hoar, arguing that the great thing this
bill does, except affording a remedy, is to extend the common-law principles, which protected fair
competition in trade in old times in England, to international and interstate commerce in the United
States).
Pub. L. No. 49-104, 24 Stat. 379 (1887).
21 CONG. REC. 2456 (1890) (remarks of Sen. Sherman).
OLIVER WENDELL HOLMES, JR., THE COMMON LAW 1 (1881).
Lochner v. New York, 198 U.S. 45 (1905).
See generally Cass Sunstein, Lochners Legacy, 87 COLUM. L. REV. 873 (1987).

ISSUES IN COMPETITION LAW AND POLICY

likely to condemn arrangements with an established pedigree of validity in the common

law.
In Standard Oil Co. v. United States,33 Chief Justice Edward D. White, Jr. read the
Sherman Act to endorse the common laws assumption that markets were normally selfcorrecting and to assign to government the limited role of preserving this capability by
preventing only private actions that inhibited free exchange. The Sherman Act, for
example, by prohibiting monopolization, but not monopoly,
indicates a consciousness that the freedom of the individual right to contract when not
unduly or improperly exercised was the most efficient means for the prevention of
monopoly, since the operation of the centrifugal and centripetal forces resulting from the
right to freely contract was the means by which monopoly would be inevitably prevented
if no extraneous or sovereign power imposed it and no right to make unlawful contracts
having a monopolistic tendency were permitted.34

Here, White invoked the evolutionary visions view that entry, through free contracting,
would prevent the emergence of monopoly, unless inhibited by a sovereign power, or
governmental privilege. Nevertheless, he acknowledged in the very same passage the
possibility of contracts having a monopolistic tendency, that is, purely private action
that might prevent entry from eroding a monopoly. He also endorsed the Courts earlier
decisions holding a variety of cartels illegal. The Standard Oil Companys acquisition
of 90 percent of American oil production similarly warranted a presumption that it
was the result not of normal methods of industrial development, but of new
exclusionary measures that inhibited the normal functioning of the market.35 White thus
reconciled the evolutionary visions conception of the legitimacy of the market with the
prohibition of private acts of monopolization.
The concern with preserving the freedom to contract also appears in 1918 in United
States v. United Shoe Machinery Co.,36 in which the Court rejected the characterization
of the restrictive conditions in Uniteds long-term leases as coercive:
If the world buy [the manufacturers patented product] or use it the world will do so upon
a voluntary judgment of its utility, demonstrated, it may be, at great cost to the patentee.
If the price be too high, whether in dollars or conditions, the world will refuse it; if it be
worth the price, whether of dollars or conditions, the world will seek it.37

The restrictive lease terms were therefore simply bargains, not different from others,
moved upon calculated consideration, and, whether provident or improvident, are
entitled nevertheless to the sanctions of the law.38 These characterizations of the lease
terms reflect the evolutionary visions view that market transactions, even between
actors with vastly unequal endowments of wealth, are uncoerced and therefore
legitimate.

33.
34.
35.
36.
37.
38.

221 U.S. 1 (1911).

Id. at 62.
Id. at 75.
247 U.S. 32, 65-66 (1918).
Id. at 65 (emphasis added).
Id. at 66-67.

IDEOLOGICAL ORIGINS

The Courts decision in United States v. Colgate & Co.39 reflected the same
perception of the market. In Dr. Miles Medical Co. v. John D. Park & Sons,40 the Court
had extended the per se illegality of price fixing to resale price maintenance, reasoning
that a manufacturers freedom of contract extended only to the first sale, and that any
price conditions on subsequent sales infringed the common laws policy against
restraints on alienation.41 The resulting uniformity of prices had the same effect as a
cartel among dealers.42 In Colgate, however, the Court relied on the freedom of contract
to set another important limit on the per se illegality of resale price maintenance. Where
the manufacturer only announced its terms of dealing, including a resale price term, and
then refused to deal with those who did not comply, the manufacturer merely exercised
the long recognized right of trader or manufacturer engaged in an entirely private
business, freely to exercise his own independent discretion as to parties with whom he
will deal.43 Consequently, there was no agreement between the parties that could be in
restraint of trade. The Court thus insisted on a right to refuse to contract, the necessary
flip side of the freedom of contract, as an essential aspect of the legitimating force of the
market.
The Courts use of ideas like freedom of contract in creating antitrust rules during
this period was typically formalistic. Justices invoked the idea of freedom of contract as
if it needed no further justification or explanation of its relevance. In Colgate, for
example, it is not clear why the sale of products subject to a price condition followed by
resale of the products at the stipulated price is not an agreement. With no rationale for
the invocation of freedom of contract, it was not clear what the reach of the Colgate
exception might be. The Court in United States v. General Electric Co.44 also held that
the absence of an agreement immunized price restraints in consignment arrangements.45
The Court thus invoked the idea of agencya common-law concept with a long history
as a productive form of business organizationas the basis for limiting the scope of the
per se illegality of resale price maintenance.

4. From the New Deal to the Warren Court

Proponents of the intentional vision criticized both the formalism of the Courts
approach and the ideology of the market implicit in its uses of concepts like freedom of
contract to legitimate transactions against governmental interventions through antitrust
liability or economic regulation. Against the formal characterization of free, wealthmaximizing exchange, the proponents of the intentional vision set the idea of coercion as
the reality of market relationships. As Harvard Law Professor Robert Lee Hale put it,
[e]ach party to a bargain is forced by the bargaining power of the other to surrender
certain property . . . or his freedom to act . . . . The economically strong retain a

39.
40.
41.
42.
43.
44.
45.

250 U.S. 300 (1919).

220 U.S. 373 (1911).
Id. at 404-09.
Id. at 408.
250 U.S. at 307.
272 U.S. 476 (1926).
Id. at 483-88.

ISSUES IN COMPETITION LAW AND POLICY

considerable residuum of liberty and property; the economically weak, very little.46
This view of markets, taken up by the Legal Realists, implied that courts should not use
formalisms like freedom of contract to hold unconstitutional state laws that were aimed
at protecting the economically weak47 but should feel free to invalidate contracts on
grounds of duress.48 In antitrust, the intentionalist critique implied that courts should
recognize the coercive character of market relationships in evaluating the likely
competitive effects of terms in distribution contracts like those at issue in United Shoe
Machinery and Dr. Miles.49
The intentional vision, reinforced by disillusionment with markets during the Great
Depression, found expression in New Deal social policies.50 In the early years of the
period, the Roosevelt administration experimented with corporatist programs like the
National Recovery Administrations economic recovery measures.51 In the so-called
Second New Deal of the late 1930s, however, the administration turned to antitrust
enforcement.
Beginning with the tenure of Thurman Arnold, a prominent Legal Realist, as
assistant attorney general, the Antitrust Division began an ambitious enforcement
program aimed in part at changing the law to reflect a different understanding of
markets.52 One area of special emphasis was distributional restraints. Arnold believed
Big Business was choking off the channels of distribution by coercive measures that
undermined the freedom of action of independent dealers.53 This turn reflected the
ideological preconceptions of the intentional vision, especially in its preoccupation with
preserving small competitors and insulating them from coercion by their suppliers and
from competition by larger, more efficient firms.
This populist conception of the role of antitrust found representation on the Supreme
Court, which, by the early 1940s, was composed primarily of Roosevelt appointees.54
Justices William Douglas and Hugo Black, for example, signaled early in their terms a

46.
47.

48.
49.
50.

51.
52.
53.
54.

ROBERT LEE HALE, FREEDOM THROUGH LAW: PUBLIC CONTROL OF PRIVATE GOVERNING POWER
131 (1952).
For example, in striking down state laws prohibiting such contracts the Supreme Court reasoned that
the employees and employers rights were equivalent in labor contracts, and any qualification of the
terms of the contract interfered with their freedom. Coppage v. Kansas, 236 U.S. 1, 10-11 (1915). It
observed that it was impossible to uphold freedom of contract and the right of private property
without at the same time recognizing as legitimate those inequalities of fortune that are the necessary
result of the exercise of those rights. Id. at 17.
See, e.g., Friedrich Kessler, Contracts of AdhesionSome Thoughts About Freedom of Contract, 43
COLUM. L. REV. 629, 640 (1943).
See Page, supra note 16, at 24-29.
See, e.g., Rexford G. Tugwell, The Principle of Planning and the Institution of Laissez Faire, 22 AM.
ECON. REV. SUPP. 75 (Mar. 1932); Walton H. Hamilton, The Problem of Anti-Trust Reform, 32
COLUM. L. REV. 173 (1932).
ELLIS W. HAWLEY, THE NEW DEAL AND THE PROBLEM OF MONOPOLY 19-146 (1966).
See Page, supra note 16, at 18-20. For more on Arnold, see SPENCER WEBER WALLER, THURMAN
ARNOLD: A LIFE (2005).
THURMAN ARNOLD, THE BOTTLENECKS OF BUSINESS 4-12 (1940).
C. HERMAN PRITCHETT, THE ROOSEVELT COURT: A STUDY IN JUDICIAL POLITICS AND VALUES
1937-47, at 39 (1948).

IDEOLOGICAL ORIGINS

commitment to an intentionalist view of markets and the need for state intervention.55
By the 1960s, Blacks views had the support of a majority of the Court. The Courts
populist outlook found support in the economics of the time, particularly the Harvard
Schools structure-conduct-performance paradigm, which predicted a variety of
anticompetitive consequences of oligopolistic market structures.56 The Court relied
explicitly on this body of theory in extending liability, especially in the law of mergers.57
The intentionalist view of coercion had unusual influence in the law of vertical
restraints. In FTC v. Texaco, Inc.,58 Black held unlawful as inherently coercive
Texacos sale of tires, batteries, and accessories (TBA) to its dealers under a
commission arrangement with the tire manufacturer, despite the absence of evidence of
pressure on the dealers to accept the products. He wrote that, [w]ith the dealers supply
of gasoline, his lease on his station, and his Texaco identification subject to continuing
review, we think it flies in the face of common sense to say, as Texaco asserts, that the
dealer is perfectly free to reject Texacos chosen brand of TBA.59
For the Warren Court, this sort of coercion of dealers was itself an injury to the
competitive process because it interfered with the discretion of independent dealers to
make critical decisions affecting their business. This conception of distribution
relationships as intrinsically coercive led to a broad expansion of per se rules. For
example, the Court narrowed to the point of insignificance the Colgate doctrine, which,
as we have seen, created an exception to the per se illegality of resale price maintenance
in order to preserve the suppliers freedom of contract.60 The Court also, as a practical
matter, overruled General Electric by invalidating price floors in large-scale
consignment arrangements on the ground that they coercively laced [dealers] into an
arrangement under which their supplier is able to impose noncompetitive prices on
thousands of persons whose prices otherwise might be competitive.61 In a particularly
bizarre twist, the Court in United States v. Arnold Schwinn & Co.62 held territorial
restrictions on consignment arrangements subject to the rule of reason, even though it
held the same restraints per se illegal if they took the form of sale transactions.63

55.
56.
57.

58.
59.
60.

61.
62.
63.

United States v. Columbia Steel Co., 334 U.S. 495, 534 (1948) (Douglas, J., dissenting); Ford Motor
Co. v. United States, 335 U.S. 303, 323 (1948) (Black, J., dissenting).
See generally JOE S. BAIN, INDUSTRIAL ORGANIZATION (1959); EDWARD S. MASON, ECONOMIC
CONCENTRATION AND THE MONOPOLY PROBLEM (1959).
See, e.g., United States v. Philadelphia Natl Bank, 373 U.S. 321, 363 (1963) (noting that the
announced test for the legality of mergers is fully consonant with economic theory). See generally
Joseph F. Brodley, Oligopoly Power under the Sherman and Clayton ActsFrom Economic Theory to
Legal Policy, 19 STAN. L. REV. 285, 298 (1967) (observing that, after Philadelphia Bank, Bain,
Machlup, and Mason, all economists, have become authorities alongside prior judicial precedent and
legislative history).
393 U.S. 223 (1968).
Id. at 229.
See Parke, Davis & Co. v. United States, 362 U.S. 29, 44 (1960) (producer enlisted wholesalers in
efforts to enforce resale prices through threats of termination). For a contemporary discussion, see
Robert Pitofsky & Kenneth W. Dam, Is the Colgate Doctrine Dead?, 37 ANTITRUST L.J. 772 (1968).
Simpson v. Union Oil Co., 377 U.S. 13, 24 (1964).
388 U.S. 365 (1967).
Id. at 379-80.

10

ISSUES IN COMPETITION LAW AND POLICY

The influence of the intentional vision is also apparent in the Courts legal treatment
of other vertical arrangements. The preconditions for illegality of tying arrangements
were sharply limited to reflect the perception that suppliers could easily coerce dealers
to limit competition. Black suggested, for example, that the very existence of [a] host
of tying arrangements is itself compelling evidence of the defendants great power, at
least where, as here, no other explanation has been offered for the existence of these
restraints.64 In a similar vein, the Court hinted that the suppliers ability to offer a tying
product at attractive terms was evidence that it had power to force the buyer to accept
the tied product.65 Thus, the Court viewed as coerced transactions in which the buyers
were fully compensated for restrictive terms.

5. The Chicago School/Legal Process era and beyond

Beginning in the 1950s, Aaron Director of the University of Chicago Law School
began to articulate a sweeping critique of antitrust law that eventually influenced the
writings of numerous scholars associated with Chicago, including Robert Bork, Lester
Telser, John McGee, and Richard Posner.66 The Chicago critique applied neoclassical
economics, which in turn rested on the evolutionary vision of the market as a locus of
value-maximizing exchange.67 In the evolutionary vision, coercion in market
transactions meant, if anything,68 only the exercise of monopoly power.69 The Chicago
approach thus formalized many of the intuitions of the judges of the formative period,
focusing the analysis on the effects of practices on output in the market rather than on
trader freedom. The critique grew to encompass a shared set of models of practices such
as tying arrangements, vertical integration, cartels, resale price maintenance, and
predatory pricing.70 These models, when paired with the empirical assumptions of the
evolutionary vision, tended to suggest that practices like vertical restraints and predatory
pricing were rarely anticompetitive. Consequently, Chicago scholars recommended
abolishing many per se rules and refocusing antitrust primarily on cartels. 71

64.
65.
66.

67.
68.

69.
70.
71.

N. Pac. Ry. v. United States, 356 U.S. 1, 7-8 (1958).

Fortner Enters. v. U.S. Steel Corp., 394 U.S. 495, 505 (1969) (observing that uniquely and unusually
advantageous terms can reflect a creditors unique economic advantages over his competitors).
For a rare written expression of his views, see Aaron Director & Edward H. Levi, Law and the Future:
Trade Regulation, 51 NW. U. L. REV. 281 (1956). For testimonials to the influence of Director, see
generally Page, supra note 17, at 1229 n.44 (collecting references). The two great syntheses of the
Chicago School approach (in their first editions) are ROBERT BORK, THE ANTITRUST PARADOX: A
POLICY AT WAR WITH ITSELF (1978) and RICHARD A. POSNER, ANTITRUST LAW: AN ECONOMIC
APPROACH (1976).
See Page, supra note 17, at 1229-31.
Wesley J. Liebeler, Resale Price Maintenance and Consumer Welfare: Business Electronics Corp. v.
Sharp Electronics Corp., 36 UCLA L. REV. 889, 909 n.93 (1989) (stating that coercion has no
operative meaning in market transactions).
WARD S. BOWMAN, PATENT AND ANTITRUST LAW: A LEGAL AND ECONOMIC APPRAISAL 164 n.7
(1973) (In economic terms all exercise of monopoly power is coercive.).
See Page, supra note 17, at 1231-37.
Id. at 1237-50.

IDEOLOGICAL ORIGINS

11

Beginning with Continental T.V. v. GTE Sylvania, Inc.72 and Brunswick Corp. v.
Pueblo Bowl-O-Mat, Inc.,73 both decided in 1977, the Chicago Schools models began to
influence the law, although not typically in the sweeping ways contemplated by the
Chicago policy program. Chicago scholars, in keeping with the evolutionary visions
conception of governmental competence, tended to view courts as generally less capable
than markets in identifying and destroying monopolies.74 In contrast, the Supreme Court
applied Chicago School models within the framework of the Legal Process Schools
concept of institutional competence, which requires courts to defer to established
precedent, particularly in matters of statutory interpretation.75
Consequently, the Court has only twice expressly overruled Warren Court decisions
and the per se rules they embodied: Sylvania overruled Schwinn in 1977, and 20 years
later State Oil Co. v. Khan76 overruled Albrecht v. Herald Co.77 In both instances, the
decisions reflected acceptance of Chicago School models and the attendant evolutionary
vision of market relationships. In Sylvania, for example, the Court rejected more than
Schwinns per se rule. Schwinn, like the other decisions on restricted distribution,
assumed that an inhibition of independent dealers discretion was an interference with
the competitive process itself. In Sylvania, however, the Court accepted the free-rider
problem as a justification for territorial restraints.78 A manufacturer could thus justify
territorial restrictions as necessary to prevent discount retailers from free riding on the
services provided by full service dealers.
Notice the critical shift in perspective that this change entails. In the Schwinn view,
free riding was simply competition among dealers;79 in Albrecht, the Court even
suggested that the free-rider problem was irrelevant to the vertical restraints analysis.80
Sylvania, in contrast, recognized that free riding might inhibit competition by preventing
dealers from providing the optimal level of service. Far from being coercive,
manufacturers enforcement of restraints to prevent free riding were necessary to protect
the consumer interest.
Shortly after Sylvania, Posner suggested that the Courts recognition of the free-rider
justification for vertical restraints portended the wholesale overruling of many Warren

72.
73.
74.
75.
76.
77.
78.
79.

80.

433 U.S. 36 (1977).

429 U.S. 477 (1977).
See, e.g., Frank H. Easterbrook, Comparative Advantage and Antitrust Law, 75 CAL. L. REV. 983
(1987).
For discussion of the Courts reliance on legal process jurisprudence, see Page, supra note 16, at 4953.
522 U.S. 3, 16-18 (1997); see Roger D. Blair & John E. Lopatka, The Albrecht Rule After Khan: Death
Becomes Her, 74 NOTRE DAME L. REV. 123 (1998).
390 U.S. 145 (1968).
Continental T.V. v. GTE Sylvania, Inc., 433 U.S. 36, 55 (1977); see Lester Telser, Why Do
Manufacturers Want Fair Trade? 3 J.L. & ECON. 86 (1960).
Robert Pitofsky, In Defense of Discounters: The No-Frills Case for a Per Se Rule Against Vertical
Price Fixing, 71 GEO. L.J . 1487, 1493 (1983) (Until the recent ideology about free-riders became
fashionable, they were regarded as the very heart of a free market competitive system.).
390 U.S. at 151 n.7.

12

ISSUES IN COMPETITION LAW AND POLICY

Court precedents, including Albrecht.81 Although Albrecht was indeed eventually

overruled, the evolution of antitrust law followed a very different path from the one
Posner predicted. As the remainder of this section will show, the Court, following the
tenets of the Legal Process School, has preferred to resolve cases on narrower grounds
that preserved existing substantive doctrine, for example, by holding that the alleged
offense did not cause antitrust injury to the plaintiff, that there was insufficient evidence
of the offense to create a jury question, or that the alleged facts did not come within an
established rule.82
The starting point for the antitrust injury doctrine was Brunswick, decided the same
year as Sylvania.83 The case seemed trivial at the time: the plaintiffs had claimed the
right to sue for the profits they lost because a merger kept their failing rivals in business.
The Court held that the lost profits were not antitrust injury, that is, harms that flow
from a reduction in competition; on the contrary, the harms stemmed from an increase in
competition. Significantly, the Court did not change the substantive law of mergers to
make the sort of acquisition in Brunswick lawful; it chose to change the law of remedies
to better reflect the substantive goals of antitrust law. In time, it became clear that
antitrust injury was a limitation on damages for all antitrust violations.
Antitrust injury is important because it aligns the penalties for antitrust violations
with the efficiency rationale for antitrust, more closely approximating a regime of
optimal penalties.84 But the doctrine also has played a critical role in the evolution of
substantive antitrust law. By directing courts to examine the relationship between an
asserted harm and the anticompetitive aspect of a practice, antitrust injury required
courts to measure antitrust rules against the standard of efficiency. This exercise has
had special importance for the lower federal courts, which found in it the freedom to
reinterpret the law in light of the standard of consumer welfare. For example, despite
the Supreme Courts failure to decide a substantive merger case in decades, the lower
courts now freely ignore market share thresholds that invalidated mergers in the Warren
Court era.85
Antitrust injury also played a leading role in the overruling of Albrechts prohibition
of maximum resale price fixing. A critical precursor to Khan was Atlantic Richfield Co.
v. USA Petroleum Co.,86 in which the defendant had imposed maximum resale prices on
its dealers. Rivals of the dealers sued the supplier for the profits the rivals lost because
81.
82.
83.

84.

85.

86.

Richard A. Posner, The Rule of Reason and the Economic Approach: Reflections on the Sylvania
Decision, 45 U. CHI. L. REV. 1, 12 (1977).
See generally Page, supra note 17, at 1257-94.
On the role of antitrust injury in the evolution of antitrust doctrine, see John E. Lopatka & William H.
Page, Brunswick at 25: Antitrust Injury and the Evolution of Antitrust Law, ANTITRUST, Fall 2002, at
20.
See William H. Page, Antitrust Damages and Economic Efficiency: An Approach to Antitrust Injury,
47 U. CHI. L. REV. 467 (1980); William H. Page, The Scope of Liability for Antitrust Violations, 37
STAN. L. REV. 1445 (1985).
See, e.g., Hosp. Corp. of Am. v. FTC, 807 F.2d 1381, 1386 (7th Cir. 1986) (holding that the Supreme
Court had cast doubt on its Warren Court merger cases by recognizing in, for example its antitrust
injury cases, that economic concept of competition, rather than any desire to preserve rivals as such,
is the lodestar that shall guide the contemporary application of the antitrust laws).
495 U.S. 328 (1990).

IDEOLOGICAL ORIGINS

13

the maximum held down prices in the market. But the court held the loss of those
profits was not antitrust injury because the rationale for Albrechts per se rule was to
prevent interfering with the pricing discretion of the defendants dealers, thereby
harming the dealers and their customers. The fact that rivals were harmed by
nonpredatory lower prices in the market was not connected to any reduction in
competition associated with the practice. Atlantic Richfield also recognized that the
procompetitive potential of a vertical maximum price restraint is more evident now
than it was when Albrecht was decided87 because of recent scholarship and changes in
the law. The Court thus signaled that the rationale for Albrecht had been eroded.
Several years later, in Khan,88 Judge Posner forced the issue by refusing to hold that
a dealer who was subject to a maximum resale price agreement did not suffer antitrust
injury.89 He noted that, although the foundations of Albrecht were wobbly and motheaten it must apply to the case before him if it had any meaning at all.90 Because the
antitrust injury analysis revealed that there was no inefficiency associated with
maximum resale price fixing, the only basis for upholding the rule against it would be on
noneconomic grounds. The Supreme Court took the hint and finally overruled Albrecht,
substituting a rule of reason inquiry.
The Court has also looked to the Chicago models in evaluating the sufficiency of the
evidence of particular offenses to create a jury issue. In Monsanto Co. v. Spray-Rite
Service Corp.,91 for example, the Court declined an opportunity to overrule Dr. Miles
and to establish a uniform rule of reason for vertical price and territorial restraints. 92
Instead, it held that evidence that dealers had complained to their supplier about a pricecutting rival, and that the supplier thereafter terminated the price cutter in response to
the complaints, was insufficient to create a jury issue of vertical price-fixing agreement.
To allow a jury to infer an agreement in those circumstances would, among other things,
undermine the Colgate doctrine, which protects the suppliers right to refuse to deal for
its own independent reasons.93 Thus, the Court revived the moribund Colgate doctrine
rather than attempt to rationalize the law of vertical restraints by making resale price
maintenance subject to a rule of reason.
The Court also looked to the Chicago models in altering the standard of sufficiency
of the evidence to prove predatory pricing. In Matsushita Electric Industrial Co. v.
Zenith Radio Corp.,94 American electronics suppliers alleged that their Japanese rivals
were conspiring to charge high prices in Japan and predatory prices in the United States.
The Court, however, citing the Chicago Schools literature on predatory pricing, 95 held

87.
88.
89.
90.
91.
92.
93.
94.
95.

Id. at 343 n.13.

State Oil Co. v. Khan, 522 U.S. 3 (1997).
Khan v. State Oil Co., 93 F.3d 1358 (7th Cir. 1996) (Posner, C.J.), vacated and remanded, 522 U.S. 3
(1997).
Id. at 1363.
465 U.S. 752 (1984).
Id. at 761 n.7.
Id. at 762-64.
475 U.S. 574 (1986).
Id. at 589-90.

14

ISSUES IN COMPETITION LAW AND POLICY

that such a campaign of predatory pricing made no economic sense;96 the Japanese
manufacturers could not realistically expect to profit by conspiring to suffer losses for
decades in hopes of monopoly profits in the distant future. Consequently, the plaintiffs
were required to produce more than the usual amount of evidence to create a jury issue
that the practice had occurred.97 The antitrust injury doctrine played a role in the case as
wellthe Court refused to consider the alleged conspiracy to raise prices in Japan
because it could not cause antitrust injury to the plaintiffs and did not provide a motive
for an otherwise irrational predatory pricing scheme.98 Despite the existence of expert
testimony on the issue,99 the Court concluded that summary judgment was appropriate.
Matsushita again illustrates the characteristic form of antitrust evolution in the
Chicago School/Legal Process era. The Chicago models provided the economic
framework for the analysis, but the Court did not overrule an established rule of liability,
preferring instead to adjust subsidiary rules like evidentiary sufficiency and antitrust
injury. In doing so, Matsushita laid the groundwork for the Courts later adoption in
Brooke Group v. Brown & Williamson Tobacco Corp.100 of an explicit requirement that
a plaintiff alleging predatory pricing articulate a theory of how the defendant might
realistically expect to recoup its losses from a predatory pricing campaign.101
Finally, the characterization inquiry has been a principal mechanism of legal
evolution. As we have seen, the Court has explicitly abandoned an established per se
rule only twice, in both instances substituting a rule of reason inquiry rather than a rule
of per se legality, as some Chicagoans have advocated. But the Court has also limited
per se rules by characterizing some forms of conduct as outside of the rule. Thus, in
Broadcast Music Inc. v. CBS,102 the Court held that agreement among owners of
performing rights in music to license their rights through performing rights societies at a
fixed price was not the sort of price fixing contemplated by the per se rule. Before
applying a per se rule, the Court reasoned, one must conduct a preliminary
characterization inquiry to determine if condemning the proposed conduct would be
consistent with the rationale for the rule.103 In that inquiry, a court must ask whether the
practice is one that facially appears to reduce output and increase price on the one
hand, or to reduce costs and increase output on the other. One way of conducting this
inquiry is to determine if the practice is ancillary to an apparently productive
arrangement. The Court found the blanket licensing of performing rights was so
obviously more efficient than alternative transactions, and so held that per se rule was
inapplicable.104 The Court took a similar approach in Northwest Wholesale Stationers v.
Pacific Stationery & Printing Co.105 in concluding that a wholesale buying cooperatives
96.
97.
98.
99.
100.
101.
102.
103.
104.
105.

Id. at 587.
Id.
Id. at 586.
Id. at 594 n.19.
509 U.S. 209 (1993).
Id. at 224.
441 U.S. 1 (1979).
Id. at 19-20.
Id. at 20-22.
472 U.S. 284, 289-90 (1985).

IDEOLOGICAL ORIGINS

15

enforcement of its rules to expel a member did not come within the per se rule against
horizontal boycotts, which was designed to encompass other types of horizontal
exclusionary agreements.
The influence of the Chicago Schools models in these contexts has not gone
unanswered. Post-Chicago economic analyses have formalized pre-Chicago intuitions
by showing that, in some circumstances, practices like exclusive dealing, tying
arrangements, and predatory pricing can be anticompetitive.106 Post-Chicago theories
have not yet had a dramatic effect on the evolution of antitrust law, but they have had
some successes. Post-Chicago methodologies have, for example, shown a merger to be
probably anticompetitive where conventional market definition would have suggested
anticompetitive effects were unlikely.107
Post-Chicago arguments have also had some success in cases alleging monopolistic
refusals to deal. For example, in Eastman Kodak Co. v. Image Technical Services,108 the
Court held that a producer who sold photocopiers and micrographic equipment in a
competitive equipment market, and sold replacement parts and repair service in its own
aftermarket,109 could have monopolized the aftermarket by refusing to sell its parts to
independent service organizations (ISOs) who competed with it in the aftermarket for
service.110 Kodak made the Chicago-inspired argument that competition in the
equipment market precluded meaningful market power in the service market as a matter
of law;111 the majority, however, accepted the Post-Chicago argument that purchasers of
Kodaks equipment were locked in at least temporarily and therefore were subject to
exploitation.112 Kodaks policy thus could have forced its customers to buy Kodak
service and forced the ISOs out of business. This reasoning strongly echoed the preChicago intentionalist concept of anticompetitive coercion in the absence of market
power.
Similarly, in Aspen Skiing Co. v. Aspen Highlands Skiing Corp.,113 the Court refused
to overturn a jurys determination that the operator of three of the four skiing areas in
Aspen had monopolized the market by refusing to continue to cooperate with its rival,
the operator of the fourth skiing area, in an all-Aspen ticket. Even though it was
difficult to see that the market could be affected by the termination of the pass, the Court

106. See, e.g., HOVENKAMP, supra note 4.

107. See FTC v. Staples, Inc., 970 F. Supp. 1066, 1082-83 (D.D.C. 1997) (issuing a preliminary injunction
against the merger of two office supply superstores where statistical analysis showed prices of the
merging stores were higher in markets with only a single superstore); Serdar Dalkir & Frederick R.
Warren-Boulton, Prices, Market Definition, and the Effects of Merger: Staples-Office Depot (1997), in
THE ANTITRUST REVOLUTION: ECONOMICS, COMPETITION, AND POLICY 52 (John E. Kwoka &
Lawrence J. White eds., 4th ed. 2003).
108. 504 U.S. 451 (1992).
109. Id. at 454.
110. Id. at 458-60.
111. Id. at 465; see also id. at 495 ([A] rational consumer considering the purchase of Kodak equipment
will inevitably factor into his purchasing decision the expected cost of aftermarket support.) (Scalia,
J., dissenting).
112. Id. at 472-74.
113. 472 U.S. 585 (1985).

16

ISSUES IN COMPETITION LAW AND POLICY

found the evidence of consumer harm sufficient to support the finding that the refusal to
deal was anticompetitive.114
These Post-Chicago victories, however, have had limited precedential effect. The
lower courts have largely neutralized Kodak.115 More important, the Court has more
recently reaffirmed the evolutionary visions emphasis on the importance of the right
to refuse to deal, even for monopolists. For example, in NYNEX Corp. v. Discon,
Inc.,116 the Court stressed the importance of the freedom to switch suppliers, noting
that it lies close to the heart of the competitive process that the antitrust laws seek to
encourage.117 The Court even referred directly to the evolutionary vision of the
formative era, quoting Standard Oils assertion that the freedom of the individual right
to contract when not unduly or improperly exercised [is] the most efficient means for the
prevention of monopoly.118
Still more recently, in Verizon Communications v. Law Offices of Curtis V. Trinko,119
the Court held that Verizon, a local telephone provider, did not violate the Sherman Act
by failing to give smaller rival telephone providers adequate access to elements of its
network. Although the Court based its decision largely on the existence of regulation by
state and federal agencies,120 it also emphasized the importance of the right to refuse to
deal, pointing out that compelling a monopolist to deal may reduce the monopolists
incentive to invest, enmesh the courts in the intractable problem of determining
reasonable terms of dealing, and even facilitate the supreme evil of antitrust:
collusion.121 This language reaffirms the evolutionary visions reliance on markets and
its belief that government intervention will be ineffective or have harmful unintended
consequences.

6. Conclusion
The conflict between the evolutionary and intentional visions the market and the role
of government in it has shaped the formation and evolution of antitrust policy. Antitrust
embodies a synthesis of elements of both visions. While fundamentalists on both sides
have denounced the resulting policy as incoherent or fraudulent,122 less pure adherents
114. Id. at 611.
115. See 2 JOSEPH P. BAUER & WILLIAM H. PAGE, KINTNERS FEDERAL ANTITRUST LAW 382 n.329
(2002).
116. NYNEX Corp. v. Discon, Inc., 525 U.S. 128 (1998).
117. Id. at 131.
118. Id. at 137 (quoting Standard Oil Co. v. United States, 221 U.S. 1, 62 (1911)).
119. 540 U.S. 398 (2004).
120. The Telecommunications Act of 1996 specifically precluded a finding of implied immunity.
01(b)(1), 47 U.S.C. 152, note (2004) ([N]othing in this Act or the amendments made by this Act
shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.). See
Trinko, 540 U.S. at 405-06. But antitrust enforcement to compel interconnection was unlikely to
improve competitive conditions in a regulatory environment with far more detailed interconnection
requirements. See id. at 409-10.
121. Id. at 408.
122. See, e.g., Fred S. McChesney, Be True to Your School: Chicagos Contradictory Views of Antitrust
and Regulation, in CAUSES AND CONSEQUENCES OF ANTITRUST: THE PUBLIC CHOICE PERSPECTIVE 7,
9 (Fred S. McChesney & William F. Shugart II eds., 1995) (arguing that antitrust should be viewed,

IDEOLOGICAL ORIGINS

17

have interpreted antitrust in ways that moved it closer to their policy goals. As the
political climate has shifted over the past century, one or the other position has gained
ascendancy. In the formative period, the Supreme Court invoked freedom of contract as
a limitation on the reach of antitrust rules. In the post-New Deal period, the Supreme
Court largely accepted the intentional visions idea of market coercion and the attendant
view that arrangements that limited dealer freedom harmed the competitive process.
This shift in perspective led the court to create new rules of per se illegality and to close
exceptions to existing ones. Beginning in 1977, however, the Chicago Schools version
of the evolutionary vision has guided antitrust evolution. The changes have come first
in subsidiary decisions on questions like antitrust injury, evidentiary sufficiency, and
characterization, but experience in these contexts has led to changes in the substantive
law, primarily in the direction of versions of the rule of reason. In recent years, PostChicago economic analyses have qualified some of the traditional Chicago positions,
and these insights have begun to influence the law, though they have not slowed the
trend toward fewer rules of per se illegality.

like all forms of regulation, as a mechanism for private rent-seeking, with no coherent public interest
purpose); JOHN K. GALBRAITH, THE NEW INDUSTRIAL STATE 197 (2d ed. 1971) (arguing that antitrust
is a charade . . . that helps to conceal the reality of [corporate] industrial planning).