Can laws created to rein in the monopolies of the industrial age still work in the information age? After spending a year as the top antitrust economist at the U.S. Department of Justice, Professor Fiona Scott Morton describes the state of antitrust regulation today.
The first antitrust laws in the U.S. focused on monopolies. Armed with the Sherman Antitrust Act of 1890, the federal government went after railroads, sugar producers, and most famously, Standard Oil. Over the years, antitrust laws were expanded to ban price fixing, price discrimination, and interlocking boards of directors. Even though the laws themselves were written during the industrial age, they've proven flexible enough to allow the government to influence the direction of a wide variety of current industries, from sports to the movies to healthcare, where the unprecedented restructuring expected as a result of the Affordable Care Act may collide with antitrust law.
For instance, one can see antitrust enforcement as a key factor in the development of the communications revolution. In 1982, the federal government used the Sherman Antitrust Act to break up AT&T, a move that launched the modern telecom industry. Nearly 20 years later, the Department of Justice sued Microsoft over monopolistic practices. When a judge finally ended court oversight of the company in 2011, the DOJ declared that the action had helped the personal computer industry become more competitive. Whether that was true or not, Microsoft no longer held the commanding position it did in 1998. Just days ago, the government won an antitrust case against Apple for conspiring with book publishers to raise the price of e-books. Some analysts believe the ruling could discourage Apple, which has been a pioneer in electronic media, from entering future markets.
In a conversation with Yale Insights, Fiona Scott Morton, professor of economics, said that policing the antitrust realm is becoming increasingly complicated. Scott Morton, who recently spent a year as the head economist for the antitrust division of the U.S. Department of Justice, said that while the essential laws dictating antitrust haven't changed in 100 years, new technology, globalization, and changes like those in healthcare delivery have greatly expanded the realm of what can fall under antitrust. "Those are products and industries that are not well settled, perhaps, in antitrust law, or where there are new strategies being tried," she said. "Nobody has quite figured out what is legal and what is not legal."