Skeptical of Government Action : Bork Takes Narrow View on Antitrust Legislation

As a law student at the University of Chicago more than 30 years ago, Robert H. Bork was first exposed to the free-market economic views of Prof. Aaron Director, an experience Bork has described as akin to a “religious conversion.”

It was by applying Director’s ideas to antitrust issues that Bork went on to make his mark in the academic world--and became a leading voice in urging the Supreme Court to reconsider large parts of the nation’s antitrust law.

Indeed, in later decades, Bork’s own students at Yale University, mindful of his belief that the government should steer clear of business as much as possible, dubbed his course “pro-trust.”

Now, as a nominee to the high court, Bork’s antitrust writings are under new scrutiny, in large part because he has repeatedly urged the courts to ignore the intent of Congress.

Bork has contended that U.S. antitrust laws, dating to 1890, are based on “intellectual errors” and reflect an “absence of a rudimentary understanding of market economics.”

For example, members of Congress have said that price-fixing agreements between producers and retailers should be considered illegal because they believe that such pacts hurt consumers. Bork has disagreed--and contended that the Supreme Court should refuse to ban them.

“No court is constitutionally responsible for the legislature’s intelligence, only for its own,” he wrote in “The Anti-Trust Paradox,” his 1978 book. “Courts that know better ought not . . . to make rules unrelated to reality and which, therefore, they know to be utterly arbitrary.”

Bork’s critics say that this advocacy of judicial activism in the antitrust field flies in the face of his professed belief in “judicial restraint.” In nominating Bork to the high court, President Reagan praised him as a jurist who believes in enforcing the law as it is written, rather than imposing his own views.

One observer, University of Connecticut law professor Leonard Orland, said that Bork’s antitrust views “make it impossible to characterize him as a judicial moderate. To the contrary, we see here a blueprint for aggressive judicial activism aimed at the dismemberment of 85 years of legislative and judicial antitrust policy.”

Skeptical Analysis

But his admirers say that Bork has provided a long-needed skeptical analysis of the true value of legal antitrust protections. “He is a first-rate thinker who made a real contribution,” said William Baxter, a Stanford Law School professor who headed the Justice Department’s antitrust division in the first term of the Reagan Administration.

Senate Judiciary Committee aides say that Bork will be closely questioned about antitrust issues during confirmation hearings, set to begin Sept. 15. One aide said: “It is clear he has an agenda in this area, and it is not Congress’.”

In fact, it is close to that of the Reagan Administration, which has urged Congress to trim back on antitrust laws. The proposals have been rejected.

In attacking decades of government antitrust action, Bork has called for a very narrow interpretation by courts of the first antitrust measure enacted by Congress, the Sherman Act of 1890, and the subsequent statutes that expanded on it.

The Sherman Act, aimed at giant trusts that Congress feared could monopolize entire industries such as oil, steel or banking, generally banned business practices that are in “restraint of trade.” Congress, in the 1914 Clayton Act, further barred practices that “substantially lessen competition.”

Intent of Congress

Congress made clear that it believed the antitrust laws should be applied widely and stringently to monopolies, mergers and agreements by businesses to divide up markets or fix prices. Over the years, the Supreme Court has followed suit and prohibited virtually all such practices.

However, Bork, in his book and other writings, has sharply questioned whether the prohibited strategies actually do limit competition or hurt consumers. Contrary to conventional wisdom, he has maintained that many are actually beneficial to all and that the courts can and should find them to be legal.

He particularly defends the “vertical merger,” in which a manufacturer controls a distributor or requires it to sell the manufacturer’s product at a fixed price.

In his 1978 book, he said he had “never seen any economic analysis that shows how manufacturer-imposed resale price maintenance, closed dealer territories, customer allocation clauses or the like” have the effect of restricting competition or hurting consumers.

To the contrary, he said, letting businesses operate largely as they choose, merging and setting prices without government intrusion, generally promotes efficiency, and efficiency leads to more and better products for consumers.

Baxter said that Bork was among the first academics to argue that the antitrust laws designed to protect competition and consumers may have the opposite effect. For example, Congress and the courts took action against businesses that engaged in below-cost “predatory pricing” that could drive competitors out of business. But Baxter pointed out that such pricing policies can be viewed as vigorous competition that aids consumers.

In his book, Bork conceded that his assertion that such tactics can help consumers “will doubtless strike many readers as troublesome, if not bizarre.”

Many economists and legal experts view it in even harsher terms--radical and potentially dangerous.

“You could forget about discount retailers if Bork’s view prevailed. Manufacturers could just put them out of business,” said Stephen Ross, a University of Illinois law professor and antitrust expert. “It would cost consumers billions of dollars every year. But Bork isn’t bothered if money goes from consumers to manufacturers. He says that is efficiency at work.”

Robert Pitofsky, dean of the law school at Georgetown University in Washington, said that Bork, if given a chance, would scrap 90% of the current antitrust law, including limits on mergers and price-fixing schemes.

“His position is an extreme one and he is quite willing to substitute his views for the judgment of Congress,” Pitofsky said.

Bork’s critics say that his views on antitrust issues reflect a bias in favor of business that is pronounced in his writings and rulings on a range of cases.

“Nowhere is his pro-business bias shown more clearly than in antitrust law, his primary field of scholarship,” the AFL-CIO said in a sharp attack on Bork’s record released earlier this month.

In his articles and speeches, Bork has sharply criticized those who differ on the issue.

“Modern antitrust has so decayed that the policy is no longer intellectually respectable. A great deal of antitrust is not even respectable as politics,” he said in his book.

These “wrong ideas” and “bizarre theories” put forth by the government and academics have led to “preposterous” results, he wrote.

The courts, which “lacked strong economic theory,” have sought to blindly enforce these wrong-headed notions, Bork said.

He is particularly critical of Congress. In other areas of law, Bork has contended that judges are “elitists” who should show restraint in interpreting law because they do not reflect the will of the legislators elected by the citizens. But, in the antitrust area, he said, courts must act decisively because legislators have unwisely responded to public pressure.