Morality and Antitrust

Abstract

Unlike many other crimes involving wealth transfers, such as theft or fraud, there is no consensus on the morality of antitrust offenses. Some opine that antitrust offenses are: (i) immoral, (ii) amoral (being mala prohibitum rather than mala in se), or (iii) moral and consistent with natural human behavior so it is the federal antitrust laws that are immoral. But these differing viewpoints have not sparked any debate over the morality of antitrust violations. Under the continued influence of the Chicago-school’s neoclassical economic theories, antitrust analysis is primarily concerned with economic efficiency. Since terms like “morality” and “evil” are judgmental, not descriptive, they are deemed outside the discourse of economic theory’s self-described positivism. Reducing antitrust to normative morality judgments would represent, for Richard Posner and others, antitrust’s descent into “a weak field, a field in disarray, a field in which consensus is impossible to achieve in our society.” But antitrust analysis is not beyond the judgmental. One may question the need to address these moral issues. But over the past thirty years, while antitrust’s civil remedies have remained relatively unchanged, the criminal penalties for price fixing, bid rigging, and other Sherman Act antitrust violations have soared–from a misdemeanor to a felony punishable by up to ten years imprisonment. If the criminal laws reflect society’s moral judgments, then antitrust and morality ultimately are intertwined. Even if a utilitarian sought to divorce morality from antitrust, in asserting that antitrust’s criminal penalties have increased to ensure optimal deterrence, morality resurfaces in addressing the means of deterring such behavior and the degree to which criminal sanctions are employed. Inevitably moral issues will surface as the Sherman Act’s criminal penalties continue to escalate. A broader implication is that antitrust policy, to borrow Robert Bork’s phrase, may be at war with itself. If policy makers assume that the federal antitrust laws are concerned solely with allocative efficiency and are essentially amoral, then efforts to deter such conduct through criminal sanctions may be self-defeating. Criminal law, as many legal scholars have argued, reveals society’s moral opprobrium to certain conduct. That moral component (through internalizing the standard of conduct and the attendant guilt or fear of shame) can be effective in deterring socially unacceptable conduct. But to harness that moral component, antitrust policy makers should re-examine certain policies underlying antitrust law. To date, antitrust policymakers, enforcers, and scholars have largely encamped in utilitarianism and the economic theory of optimal deterrence, whereby general deterrence is achieved through the right mixture of financial penalty and incarceration to offset the profit-maximizer’s expected cartel gains. But it is unclear whether that alone will effectively deter cartel behavior. Instead, fostering a moral component to antitrust crimes may more effectively deter these violations at a lower social cost, encourage other nations to increase their prosecution of cartel behavior, and prevent antitrust from slipping into irrelevancy.