Antitrust Enforcement During the Great Depression

Abstract

We offer an empirical study of antitrust enforcement by the Department of Justice (DOJ) and Federal Trade Commission (FTC) during the New Deal. The goal of this research is to address arguments that antitrust policies during the Great Depression were harmfully lax or even “suspended”. These arguments stem from the National Industrial Recovery Act (NIRA), lasting from 1933 to 1935, that allowed industries to collude in specific ways under specific rules. Therefore, on the surface, the NIRA indicates antitrust policies were nonexistent during this period. Other non-legislative antitrust actions by regulators and the courts also affected antitrust policy. However, changes in antitrust policy do not imply no enforcement of competition law during this period. We seek to resolve this growing assumption in the literature by creating a detailed dataset, and then carefully examining federal antitrust cases from 1925-1939. Resolving this growing assumption of nonexistent antitrust enforcement is important because some base conclusions on the extent of the Great Depression and output on an assumption of suspended antitrust policy. Such policy implications during this period have been paralleled to potential policy changes in today's economic environment. Our analysis provides a detailed look at the industries and alleged violations investigated and prosecuted by the DOJ and FTC, as well as other non-legislative antitrust policies in place, the size of the regulatory agencies, the resulting remedies, and length of cases. We examine the years 1925-1939 due to vacillating antitrust enforcement perspectives of the government between these years, as well as to compare to periods outside of the NIRA. Complementing our case data with specifics of the NIRA Codes of Fair Competition (rules of collusion for each industry), as well as data on other non- legislative antitrust policy, we determine factors that explain antitrust enforcement, thereby providing a clearer picture of exactly how antitrust enforcement responded to changes in antitrust policy during this fragile period. As of the date of this draft, data is still being entered and we have not examined any data in detail.