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January 22, 2009


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Current antitrust law does not do its job because it was almost single handedly gutted by Prof. Richard Posner who persuaded the world that the Sherman Act was written and intended to protect competition and not competitors thereby permitting aggressively competing big boys to annihilate the small fry in their industry without consequences. Fair trade practice acts are as big a joke as the anti-trust laws are now.

So of course the antitrust laws are ineffective.

There. Now that my basic thoughts are on the table, I´ll read the article and probably comment.

Dan Crane

The void of data is largely created by the lack of natural experiments in private antitrust enforcement. Although many other jurisdictions have long-standing antitrust regimes (Canada's antitrust act was adopted in 1889--a year before the Sherman Act) almost no other country in the world has a system of rigorous private enforcement like that in the U.S. Many jurisdictions formally allow a private right of action, but such actions are exceedingly rare because of a combination of restrictive standing rules, procedural hurdles (such as a lack of discovery rights), administrative preemption, limitations on damages, and generally a legal culture averse to a strong private litigation system.

It's certainly true that very little of what I propose in terms of substituting forward-looking private remedies for the current compensation/deterrence framework is likely to see the light of day in the U.S. any time soon. On the other hand, many jurisdictions around the world are beginning to consider private enforcement as a necessary adjunct to public enforcement. The model they naturally consider is the U.S. So it is important to present the successes and failures of the U.S. private litigation system and imagine how it could be better--even though the most likely impact will be beyond our borders.

Kimball Corson

I think that Prof. Crane is absolutely correct when he argues, as explained here, that “ . . . antitrust law, at least as it is applied in private suits, is failing to achieve its proper goals. The target, he argues, should be market power itself - not compensation (since the true victims can't be effectively compensated) or deterrence (since it doesn't work).”

Indeed his idea is not only correct, but it is subject to greatly needed expansion. I have watch market power work first hand in many third world countries and also in some developed nations as well. I have done so from the perspective of both a trained lawyer and a trained economist (Chicago, in both instances). In the guise of global capitalism and in many third world countries, it is nothing more than a 21st century global imperialism in very thin disguise. But it has adverse effects in developed nations as well. Some of the effects I observe of widespread market power are these:

-- it seriously concentrates the world's wealth
-- it seriously concentrates the world's income
-- it strongly leverages exploitation and injures the non-rich
-- it leverages the financial system excessively
-- it unduly concentrates control of productive resources
-- it aids price fixing and conscious parallelism
-- it corrupts and then controls political systems
-- it corrupts and controls higher education
-- it leverages privileges for those at the top
-- it runs strongly counter to environmentalism
-- it results in private standing armies and armed forces
-- it operates uniformly rather than legally across countries
-- it is an ambassador of ill-will to the world

We had better wake up and fast. The camel’s nose, head and neck are all under the tent and we remain largely clueless.

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