Antitrust in the Next 100 Years

Abstract

Dateline: Washington, D.C., June 15, 2086 The Supreme Court today had its first opportunity to review a case based on new section 7 of the Clayton Act. The statute, amended ten years ago, provides that No person engaged in commerce . . . shall fail to acquire the whole or any part of the stock or assets of any other person engaged in commerce . .. when the effect of such acquisition ... may be to enhance efficiency. In United States v. Brown Shoe, the Bureau of Economics of the Department of Justice sued Brown Shoe for failing to acquire Kinney despite convincing evidence that the acquisition would assist allocative efficiency and help sell sneakers in Italy. In reaching its decision against Brown Shoe, the Court rejected three defense arguments: (1) Brown Shoe claimed that the effect on competition would be negligible because the relevant product market, properly viewed, consisted of shoes, sneakers, skate boards, and bottled water. The Court agreed that the effects would be slight, but noted that it hoped the deal would trigger a wave of mergers leading to efficiencies. (2) Brown Shoe argued that if the merger had been such a good idea, they would have been driven to it by market forces. Market failure, the Court replied, noting that some business people have a perverse love of smallness that Congress believes should be nipped in the bud.