Have I shown an unwarranted 'pessimism' in my predictions of the
outcome in the current Microsoft case--and in others? I'm certainly guilty
on the pessimism charge. Unwarranted? Maybe, maybe not.
I've previously noted the basis of my general skepticism here: (1)
For roughly the past 20 years, virtually all of the antitrust decisions of
the U.S. courts have come down on the side of the monopolist. The 11 U.S.
appellate courts, for example, hear some 125 antitrust cases per year. I
recently reviewed the full set of such cases for a single year and found no
victories for the plaintiffs. I also reviewed--in connection with the
recent confirmation hearings of Clinton's 2 appointees to the Supreme Court
(Stephen Breyer of the lst Circuit in Boston and Ruth Bader Ginsburg of the
DC Circuit in Washington)--some 6 years of antitrust decisions by those two
appellate courts (27 cases in the latter) and again found a solid wall of
rulings that routinely came down on the side of the defending monopolists,
none for the antitrust plaintiffs. See Antitrust Law & Economics Review,
Vol. 24, No. 3, pp. 1-16; Vol. 24, No. 4, pp. 5-26; Vol. 25, No. 2, pp.
51-72; Vol. 25, No. 3, pp. 35-50.
(2) Under Reagan (1981-'89), the Justice Department (a la Ed Meese)
loaded up the U.S. bench with carefully-selected right-wingers harboring a
special distaste for antitrust, focusing on relatively young ideologues--who
would be around for decades to come. Bush ('89-'93) continued that Reagan
tradition, with the result that the overwhelming majority of U.S. judges of
the '80s started their tenures with a keen appreciation for the merits of
economic monopoly. There are dozens of Robert Borks now sitting on our
lower and appellate federal courts.
(3) Some 2/3rds of our roughly 1,000 U.S. judges have attended 1 or
more of Henry Manne's pseudoeconomics 'seminars' in a luxury sunshine resort
(dead of winter), mostly in Florida. Reagan/Meese picked 'em; Manne 'topped
off' their 'education,' carrying pro-monopoly coals to Newcastle.
(4) Clinton ('93 to date) has found no fault with any of this
pro-monopoly judicial tilt of the 2 prior decades. His antitrust chief at
Justice in his first term, Anne Bingaman (wife of a New Mexico senator),
thought her predecessors were all wise and prudent in their shutting down of
U.S. antimonopoly policy. Her successor, Joel Klein, seems to be even more
pathetic. (Bill Gates is having him for lunch.)
(5) 'Consolidation' is now the mantra of virtually all significant
U.S. industries. Concentration levels are rising across the board--via
mergers of direct, across-the-street competitors in defense, transportation
(railroads, buses), aircraft production (Boeing), tele-communications,
health care, plus our last resting places (funeral homes and
cemeteries)--and even the slowest students of public policy in America are
now clear that monopoly is not just on the rise here but is now accepted as
an essential ingredient of our international economic strategy.
Given this 20-year history of consistent, routine decisions of our
1,000 U.S. judges in favor of the monopolists and against the antitrust
plaintiffs--the killing of those 1,500 cases per annum of earlier
years--what would be a fair assessment of the odds of an antitrust plaintiff
winning in an American court in 1998? 1 out of 100? My own guess would be
well under that 1% figure but let's assume that it's closer to 5%, a
1-out-of-20 chance of emerging victorious in a courtroom fight with a U.S.
monopolist. Are those the kinds of odds that would prompt a rational
economist, let's say, to bet his money on a randomly-selected antitrust
plaintiff? I rather doubt it.
It was on the basis of all this that I confidently predicted the
outcome of the proposed Staples/Office Depot merger, namely, that (1) the
FTC would approve it and (2) even if, by virtue of some sudden infusion of
public-interest backbone, it should object, it would be unable to persuade
any U.S. judge to actually stop the merger. Wrong. Unlike the preceding
20-year period in which antitrust has been dead, we may now be in another
era. We now have Jamie Love. Thanks to his coaching--and cheerleading--the
FTC discovered that PRICES were higher in towns where one of the merging
partners had a monopoly. This intellectual breakthrough was communicated to
a district judge who, much impressed by it, enjoined the merger.
From his 100 plus list members, Jamie received, as I recall, exactly
2 posts offering congratulations--1 of which was mine. Would that
Staples/OD merger have been stopped without his efforts? I don't think so,
which is why I tendered my congratulations to him.
But can he repeat that victory in the Microsoft case? Perhaps,
though he failed, of course, in the Boeing case. Out of 2 cases so far, he
has 1 success, for a 50% track record--the same as my own prediction score.
(I bet on Staples and lost, on Boeing and won--calling 1 out of 2 of Jamie's
cases correctly to date. My broader average--a general prediction that no
plaintiff can win a monopoly case in America --remains at the 95%-99%
range.) Nothing would make me happier, of course, than to see my overall
score drop dramatically--reflecting a restored vitality in American
antitrust policy. As, again, an antitrust professional for 40 years--all of
it on the side of the monopolists' victims--I don't confuse the outcomes I
believe are right with those a loaded judiciary are likely to give us.
Odds of, say, 20-to-1 against an antitrust plaintiff in a U.S.
court--based on a 20-year record--would seem to me to rather fully justify a
'pessimistic' assessment of a new plaintiff's chances. And that's of
course the basis on which I predicted that Staples and Boeing would both
win. Figure the odds and place your bets. Any good Vegas odds-maker,
tallying up that 2-decade antitrust record of our federal courts, would give
us a similar reading on the Microsoft matter.
Is there a possibility that Bill Gates could lose? Of course.
'Miracles' happen. So even on the basis of the case statistics--whether
20-to-1 or 99-to-1 in Bill's favor-- there's no 'certainty' of the outcome
here. The decision will come, in a couple of months, from a panel of 3
judges on the DC Circuit court of appeals in Washington. Supposedly those 3
names will be drawn at 'random' from a roster of more than a dozen members
of that court. 2 votes, as I've mentioned, are what it takes to win. Are
there 2 judges on that bench who might be capable of voting against a rich
monopolist? If so, they haven't been heard from to date. But there is
always the blinding flash of light on the road to Damascus.
Perhaps, though, the odds have now been fundamentally changed.
Maybe, again, antitrust has entered a new era. Call it the 'Jamie Factor.'
He's entered the lists in 2 cases--Staples and Boeing--and won one of them,
for a 'win' record of 50%. Much better than the 1%-5% scorecard of antitrust
plaintiffs in general over the past 2 decades. So, if Jamie throws his
weight into a case--if he prods FTC/Justice, coaches and cheerleads, builds
public support for them--maybe the odds rise to an even 50-50. Not bad.
But is this a satisfactory antimonopoly POLICY for the world's most
powerful economy in 1998? Our 2 public enforcement agencies and our 1,000
U.S. judges act to protect our 270 million citizens--and our 20 million
enterprise owners--from only those particular monopolies that have the
misfortune to be deemed offensive in the eyes of an individual with no
discernible experience in the field and no political accountability to the
American public? All OTHER U.S. monopolies--those that manage to escape his
attention or displeasure--are permitted to go on with their relentless
redistribution of the nation's income/wealth from its poorest to its richest
citizens?
Perhaps Jamie Love--or his boss, Ralph Nader--could be prevailed
upon to tell us how his publicizing of 1 or 2 antitrust cases per year is
going to solve that larger problem?
Charles Mueller, Editor
ANTITRUST LAW & ECONOMICS REVIEW
http://webpages.metrolink.net/~cmueller
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