Bork v. Brandeis

What’s the purpose of antitrust law?

I have been publishing books with Penguin Random House since before it was Penguin Random House. My first book with the Doubleday imprint of Random House appeared in 2000. I have continued to publish with Doubleday ever since. In 2013 Penguin and Random House merged to form Penguin Random House.

I had previously published with Penguin as well as Random House. When they were separate companies, they had to compete with each other for authors and book deals. I’m not sure if their competition increased the amount they paid me, but once they became a single company, the competition ceased.

Penguin Random House is currently trying to purchase Simon & Schuster, another big publisher. The Department of Justice is blocking the merger, asserting that the purchase would “would result in substantial harm to authors.”

I agree. My royalties have already fallen as the number of competing publishers has diminished. Although Penguin Random executives aren’t saying publicly that the point of the Simon & Schuster purchase would be to squeeze authors, it’s clear that that is a central goal. Mergers of competing firms are always about increasing leverage in the markets the firms operate in.

But should the Justice Department be looking out for me? Or should it be looking out for my readers, who might hope that the economies of scale—and lower payments to authors—from a PRH/S&S merger will lead to lower book prices?

More broadly, should the government’s priority in evaluating mergers and other corporate moves be to protect producers or consumers?

Since the 1980s, the emphasis has been on consumer protection. In 1978 Robert Bork published The Antitrust Paradox, in which he argued that antitrust law in American had originally been about consumer protection, and that was what it should be about again, after decades in a liberal wilderness of other objectives.

Largely on the strength of this argument, Ronald Reagan nominated Bork for a spot on the Supreme Court. The nomination failed, but the argument won, and from the 1980s until very recently, consumer welfare has been the touchstone of antitrust policy. If mergers benefited consumers, or at least didn’t appear likely to harm them, the mergers have generally been allowed. Under the Bork regime, Silicon Valley blossomed, creating the first trillion dollar corporations in history. Apple, Facebook, Google and Microsoft made plausible cases that consumers were getting more for their money as those corporations grew, and Washington said okay.

But there was another argument, dating back to the Progressive era of the early twentieth century. This argument held that antitrust laws should protect producers as well as consumers. Associated with Louis Brandeis, an associate justice of the Supreme Court, it declared that the fact that consumer prices for kerosene fell steadily as John D. Rockefeller’s Standard Oil monopoly grew shouldn’t shield Standard from antitrust prosecution. Standard drove other producers out of business, and that was bad for the producers, and would be bad for consumers eventually.

The Brandeis rule won over progressives and their New Deal descendants, and it remained in force until the Bork rule overturned it. It is staging a comeback now that many people have grown suspicious of Big Tech. Those who want to take down Facebook and Google find the Bork rule useless, because those companies are a consumers’ dream, charging no prices at all.

The new Brandeisians point out that people aren’t simply consumers. They are producers and workers and citizens, and in these roles they are threatened if not actually injured by the enormous companies. Producers who might become competitors are crushed or absorbed by the giants. Workers are overmatched in negotiations with them. Citizens struggle in vain to defeat Big Tech’s efforts to elicit favors from Congress.

The Brandeisians add that while consumers have benefited from the giants’ bigness so far, they will suffer when the giants have eliminated all competition and have their markets to themselves.

The Borkians respond that that day might never come. In the modern era, no niche is secure. Even as Facebook’s critics said its corporate heft made its Instagram app impregnable, TikTok came out of nowhere and stole Instagram’s lunch with the crucial Gen Z crowd.

The Brandeisians are the ones behind the attempt to block the Penguin Random purchase of Simon & Schuster. The author in me is rooting for them, even as the book purchaser in me likes the Borkian approach.

The historian in me is simply waiting to see who wins, so I can write the outcome.