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Antitrust Bill of Rights

          Is there such a thing as a 'model' antitrust law, one that would
  promote economic justice and prosperity in all of the world's 200 countries,
  the poor as well as the rich, the authoritarian along with the democratic?
  I suspect that there is. But what would it prohibit and what would it
  encourage?  What enforcement mechanism would best serve its great ends of
  individual equity and national affluence?  Having been an antitrust
  professional now for some 39 years, could I draft something that might be of
  some modest help, for example, to the public officials responsible for
  antimonopoly policy in the more than 60 countries that currently have
  antitrust laws?
          It is easy enough to draft a statute that says 'monopolies' are
  illegal, along with 'unfair' practices, 'restraints of trade,' and the like.
  How, though, are you going to define those broad, vague terms?  If you, the
  draftsman, don't want to tackle that chore, you can of course remain silent
  and let your nation's courts (judges) define them for you.  But that creates
  a problem:  Being quite human, they'll define them in ways that will reflect
  THEIR policy notions, not yours.  If they're 'conservative' in their
  political/economic orientation--as judges around the world generally
  are--they'll promptly gut your new antitrust law.  
          This is the history of antimonopoly policy around the world.
  Democratic legislatures enact well-meaning antitrust laws.  The world's
  judges--being largely of the aristocratic class--then repeal them by
  'interpretation.'  If a nation's antitrust policy is in the hands of its
  judges, that policy will inevitably be nullified.  To date, this has been
  the fate of every antimonopoly effort everywhere, in every society that has
  tried it.  Each country's highest court inevitably believes that IT is the
  ultimate judge of the best 'industrial policy' and routinely 'redefines' all
  national antitrust statutes in such a way as to legalize its monopolies.
          Monopoly goes on, then, so long as the judges are allowed to control
  antitrust policy.
          But how does one get rid of them?   The U.S. experience is that
  antimonopoly policy--and competition--thrives when it's in the hands of
  JURIES--panels of citizens picked at random from the voter registration
  rolls.  They have no consistent pro- monopoly ideologies.  As random members
  of a society's entire population--in the case of the U.S., 270
  million--they're not easily propagandized by the rich and powerful
  (pro-monopoly) minority.  Justice/fairness are their great strength.  That,
  in turn, translates into a LEVEL PLAYING FIELD for a society's economic
  enterprises--and thus into a maximization of the number of efficient
  enterprises in each industry and market.  Prosperity follows.  A large
  middle class emerges and multiplies.  The great human ideal of justice for
  all--including those who create economic enterprises--is also the basic
  ingredient in maximizing national wealth.  
          Until the world's 200 countries take antitrust out of the hands of
  its appointed (aristocratic) judges--and turn it over to its citizen
  juries--monopoly will continue to siphon 50% or more of each nation's
  income/wealth into the hands of its 1% to 5% richest members.
          The following is a first rough draft of what, in my view, would be
  an appropriate 'Antitrust Bill of Rights' for any country.  A statement of
  'rights' is not to be confused with a statutory draft.  It is, in effect, a
  declaration of national policy and a universal (and exclusive) set of jury
  instructions.  It's also a work in progress, still under construction.  My
  journal, the *Antitrust Law & Economics Review,* will carry in its next
  issue a detailed discussion of these dozen or so antitrust 'rights.'
  Alternative versions will be welcome.
          Charles Mueller, Editor
                                                    BILL OF RIGHTS
          1.  The founding and operation of privately-owned economic
  enterprises--and free and fair competition among them--is the ultimate
  foundation of prosperity in every civilized society.  Accordingly, it is the
  policy of this Nation to encourage, preserve, and protect the right of every
  Citizen to create, own, and operate such an enterprise and to compete on
  fair and equal terms with all others.
          2.  The family farm is the basic building block of national
  sufficiency on the agricultural side.  Similarly, the family-owned and
  operated business enterprise is the heart of every vibrant country's
  commercial and industrial life.  Accordingly, it is the policy of this
  Nation to encourage the maximum number of such family enterprises,
  consistent with efficiency, in every industry and market.   Reflecting this
  high value of family enterprise to the Nation, training in Entrepreneurship
  shall be required in all of its schools, along with the traditional 3 Rs,
  and tests for entrepreneurial aptitudes shall be periodically conducted at
  all grade levels, with advanced schooling in the skills of self-employment
  and job creation for those students displaying an exceptional aptitude
          3.  Monopolies, by concentrating the ownership of an industry or
  market into the hands of one or a few wealthy and powerful individuals or
  organizations, are inconsistent with the national goal of maximizing the
  number of efficient, wealth- generating family enterprises.  They exclude
  others, inflate costs and prices, reduce output and jobs, suppress
  innovation, and redistribute income and wealth from the many to the few,
  thus slowing or preventing the development of a strong middle class and a
  widely-shared national prosperity.  Accordingly, aside from patents and
  other such specific statutory exceptions, it is the policy of this Nation to
  protect the right of every enterprise owner to compete in a monopoly-free
  market, and of every consumer to buy in one, and upon complaint by either to
  the Antimonopoly Authority, any such monopoly shall be forthwith dissolved.
          4.  Monopolies are most commonly built and preserved in three ways,
  namely, (1) by merging with competitors, (2) by colluding with competitors,
  and (3) by excluding competitors via unfair acts and practices.  It is the
  policy of this Nation to prevent the development of any new monopolies in
  the future and, pending its dissolution, to prevent the exercise of any
  existing monopoly power.  Accordingly, the three (3) foregoing practices are
  hereby declared unlawful and, upon complaint by any Citizen to the
  Antimonopoly Authority, shall be forthwith enjoined without regard to their
  effects in any market.
          5.  The free, fair, and effective competition that is the engine of
  prosperity in dynamic societies--that, in Adam Smith's memorable phrase,
  creates the "wealth of nations"--is competition on the economic merits,
  namely, on price and quality.  No business firm, whether large or small, has
  a right to be free of such fair competition. Unfair competition, on the
  other hand, is the kind that is unrelated to the economic merits and thus
  has the effect or injuring or excluding a competitor for reasons other than
  its abilities in the two critical dimensions of price and quality.
  Accordingly, it is the policy of this Nation to protect the right of every
  Citizen to be free of such unfair acts and practices--to succeed or fail
  solely on the basis of his own efficiency in providing price and quality to
  his fellow Citizens--and upon his complaint to the Antimonopoly Authority,
  they shall be forthwith enjoined without regard to their effects in any
          6.  Over 60 of the world's 200 countries have antimonopoly laws on
  their books.  It is a commonplace observation, however, that none has yet
  succeeded in preventing or eliminating even the most egregious of its
  monopolies.  The most frequent barrier to an effective antimonopoly policy
  is the national judiciary.  Legislatures pass sound laws but the judges,
  having in the main a pro-monopoly bias, routinely gut them, "interpreting"
  them to death.  They generally belong to wealthy families, have spent their
  professional lives in the service of large corporate clients, and thus
  harbor an ideology that is commonly hostile to the enforcement of such laws.
  Being relatively few in number, they are also vulnerable to systematic
  "educational" programs sponsored and paid for by reactionary, right-wing
  organizations and interests.  Accordingly, the antimonopoly policy of this
  Nation shall be kept free from the control of its judiciary.
          7.  Every consumer has the right to buy at a competitive
  price--minimum cost plus a competitive profit--and sustained pricing at a
  higher-than-competitive level shall be prima facie evidence of monopoly.  In
  no case, however, shall the Antimonopoly Authority be required to prove such
  supracompetitive pricing, either currently or in the past.  Empirical
  economic science has established, and the Legislature so finds, that
  effective (price) competition generally ceases--and price begins to exceed
  the competitive level--when the 4 largest firms in an industry or market
  control 40% or more of its total sales and the single largest 12% or more.
  To require the litigation of this issue in every case is prohibitively
  expensive, time- consuming, wasteful, and ultimately defeating for national
  antimonopoly policy.  Accordingly, it is the policy of this Nation to
  promote deconcentrated economic markets and to prohibit monopoly as
  evidenced by the foregoing controlling market shares.
          8.  A competitive price for consumers being a by-product of
  effective competition among a sufficient number of competitors--generally 10
  or more of roughly equal size--the central value of this Nation's
  antimonopoly policy is the encouragement of the maximum number of
  efficient-size firms in each industry and market and their protection from
  monopoly and unfair competition.  It is plainly inconsistent with that
  policy to allow a so-called "rule of reason" defense under which one or more
  competitors may be injured or eliminated by unfair means so long as the
  so-called "market" in which they do business has not been similarly
  impaired.  Accordingly, in this Nation there is no right to destroy or
  damage even the smallest of competitors by the unfair acts or practices
  noted herein and, upon his complaint to the Antimonopoly Authority, the
  latter shall be forewith enjoined without inquiry as to its market "effects."
          9.  Monopoly is the mother of inefficiency.  In an effectively
  competitive market, price will be, in Adam Smith's words, the "lowest which
  the sellers can commonly afford to take, and at the same time continue their
  business."  In other words, there can be no long-term inefficiency in such a
  competitive market because, with both unit costs and prices at the lowest
  level permitted by the existing state of technology, any firm with higher
  costs will be unable to earn a competititve rate of profit and will thus be
  forced to either withdraw from the market or cure its inefficiency.
  Monopolies, on the other hand--being under no such relentless cost- price
  pressure from low-cost competitors--inevitably become "bloated," with costs
  (and prices) typically exceeding the competitive level by 30% or more.
  Accordingly, the Antimonopoly Authority will in no case excuse a monopoly on
  the ground that it is more "efficient" than competition would be.
          10.  Firms can be too small to realize all "economies of scale," as
  is often the case with new (startup) enterprises.  Normal growth typically
  cures this initial problem.  In rare instances, however, markets can be too
  small to support more than one or a few efficient-size firms, thus producing
  the traditional "natural" monopoly.  In that event, it is not the policy of
  this Nation to allow uncontrolled monopoly pricing but to subject the
  monopolies in question to regulation, including the prices they will be
  allowed to charge, by an appropriate public body.  More commonly, the
  "scale" economies are minor, elevating the cost of multiple competitors so
  slightly that the resulting competitive price will again be far lower than
  that of even the regulated monopolies.  In addition, many so-called scale
  economies are of the "pecuniary" variety, a mere transfer of money between
  firms (e.g., retail chains that amass monopsony power to extract below-cost
  prices from their relatively small suppliers) and not a genuine saving of
  society's scarce resources.  Accordingly, the Antimonopoly Authority will
  view with great skepticism any claims that prohibited levels of
  concentration are based on an alleged smallness of the markets involved.
          11.  The second most frequent barrier to an effective antimonopoly
  policy-- after the national judiciary--is economic theory.  All such theory,
  except where it has been validated by experience and solid empirical
  (factual) studies, is mere speculation and has no place in proceedings
  before an antimonopoly tribunal.  Professional economists, understandably
  eager to be hired as "experts" by the richer monopoly firms and thus to
  maximize their personal incomes (fees of $5,000 per day are not unheard of),
  almost invariably adopt the views of their paymasters, making it virtually
  impossible for a country to have a meaningful antimonopoly policy that
  depends on the support of expert economic opinion.  It is therefore the
  policy of this Nation that its business enterprises and its Citizens shall
  have the right to have their complaints under its antimonopoly laws
  evaluated solely on the basis of facts as determined in open court, not
  speculative theories. The participation of economists, whether by testimony
  or in written materials, shall be limited to the describing and offering of
  such scientifically-valid empirical investigations and shall in no case
  include their opinions on any material issue. 
          12.  The Antimonopoly Authority shall consist of the Director and
  such staff attorneys and the like as required to fully implement this
  Antimonopoly Bill of Rights.  He may commence an action either on his own
  initiative or upon the complaint of a Citizen or a business enterprise.  If
  after an investigation he believes corrective action is required, he will
  issue a formal statement of charges, appoint an officer to preside over the
  hearings, and arrange for the impaneling of a jury of 12 Citizens to decide
  the matter.  Complainants may participate and may have their attorneys'
  fees, up to a maximum of the highest hourly rate allowed to its own staff
  lawyers, paid by the Authority.  The role of the jury is to decide (1)
  whether the defendant committed the alleged acts or practices and (2)
  whether they are in fact "unfair."  The jury shall be given a copy of this
  Antimonopoly Bill of Rights and the sole instruction shall be that it is to
  implement these declared Rights in the matter at hand.  The verdict of the
  jury--including its award of damages, if any, to the complaining
  party--shall be final.  The national courts shall, at the request of the
  Director, enforce the jury's verdict but shall have no authority to alter or
  set it aside.      
                                  Charles Mueller, Editor
                                  ANTITRUST LAW & ECONOMICS REVIEW