Abstract
Excerpted From: Bennett Capers and Gregory Day, Race-ing Antitrust, 121 Michigan Law Review 523 (February 2023) (317 Footnotes) (Full Document)
Antitrust law has failed people of color--or, at a minimum, failed to achieve the extent of its promise. Because antitrust's purpose, at least since the 1970s, has been to promote a concept known as “consumer welfare,” antitrust law is unconcerned with whether exclusionary conduct has injured historically marginalized groups. In fact, antitrust presumes that most types of anticompetitive behaviors benefit consumer welfare even though monopolies and trade restraints have--with little attention--disproportionally harmed minority communities.
Consider a few examples. An array of law schools historically prevented non-white students from enrolling so that white people could monopolize the legal profession, while labor unions banned Black workers from their ranks. More recently, people of color have found themselves the unintended victims of anticompetitive practices. When grocery stores merge, it can result in better and cheaper foods for affluent, predominantly white communities. In poorer areas, however, mergers have shuttered local stores to the degree that many low-income neighborhoods lack a single place to buy fresh foods--and as dollar stores replace grocery stores, “food deserts” have spread throughout minority communities. Along the same lines, bank mergers have improved welfare in affluent areas but closed branches in minority neighborhoods. As a result, poor people-- disproportionately of color--often have little choice but to patronize more expensive payday lenders and check-cashing stores. Regardless of whether a monopolist's motivation was primarily business-minded or discriminatory, people of color are too often the ones harmed.
Despite these race effects, the question of whether an anticompetitive act has harmed people of color is absent from antitrust's framework. Per antitrust's “consumer welfare” standard, exclusionary conduct must raise prices, lower quality, or economically harm consumers collectively to offend antitrust law. If consumers writ large gained a benefit (e.g., the market is now more innovative), then no violation of antitrust law has typically taken place. Further, many antitrust courts and scholars assume that restraints of trade tend to improve consumer welfare, which has enabled defendants to generally win antitrust cases, including in cases resulting in disparate racial harms. Thus, by assessing consumers monolithically, antitrust law protects those with market power and ignores types of anticompetitive acts while turning a blind eye to the welfare of minority communities. Antitrust's indifference to disparate racial effects remains prevalent to the degree that a notable antitrust scholar endorsed this framework in 2021: “Antitrust policy, in contrast to legal policy generally, is not the appropriate tool for pursuing particular goals of social equality ....” Further, “race and gender equality” may be “essential policy goals, [but] they are best left to the constitutional and statutory institutions intended to address them.”
But antitrust's deference to consumers writ large, and indifference to race effects, is neither foreordained nor obvious from the Sherman Act itself. And though many jurists treat antitrust law as fixed, it is not. This Article offers a different way of conceptualizing antitrust law. We assert that antitrust law cannot achieve its true purpose so long as enforcement remains focused solely on consumers collectively, which ignores the steeper costs paid by minorities. In fact, the deference in antitrust's approach is shown to stem from how enforcement has adopted the perspective of majority groups who are more likely to benefit from concentrated markets. An analogy to criminal law or tort law may be useful here. Both criminal law and tort law have a “reasonable man” problem since the reasonable man is usually prefigured as white, middle class, heterosexual, able-bodied, and of course, male. Similarly, antitrust has a “reasonable consumer” problem insofar as it uses a standard that is facially neutral but in fact obscures differences along race. In essence, enforcement ignores the economics of being a minority.
To illustrate, consider the higher switching costs (i.e., the costs of changing products or services, among other things) levied on people of color and low-income groups. If a company monopolizes a pharmaceutical market, affluent patients can typically acquire the drug via their insurance plan or pay higher prices. By contrast, less well-off individuals--again, disproportionately people of color more likely to (1) forego healthcare due to monopoly rates, (2) sacrifice other necessities to do so, or (3) turn to self-medication. The effect is that people of color must often endure greater costs created by monopoly conduct--that is, an elevated switching cost--yet antitrust courts typically assess conduct by whether monopoly prices impacted consumers as an undifferentiated mass. At best, this framework implicitly assumes that minorities suffer (or benefit) from trade restraints in lockstep with dominant groups. At worst, this framework simply does not care.
A similar dynamic is that antitrust errs against liability because, as the Supreme Court has held, monopolies are often expected to improve consumer welfare. We show, however, that firms in concentrated markets can more easily, and are more likely to, prioritize dominant groups-- notably white consumers. By remaining indifferent to the varying plights of consumers, antitrust law subordinates the welfare of people of color to white majorities and the idealized white consumer. In fact, the very term “consumer” plays favorites along lines of race and class by prioritizing those with resources. Thus, as an initial matter, this Article argues that antitrust law gauges consumer welfare from a white perspective and, as a result, people of color have predictably suffered heightened costs. And yet reimagining antitrust law is possible.
In important part, we assert that antitrust law is ideally suited for the task of remedying systemic inequalities in market systems. Antitrust's concern lies with structures; just as enforcement delves into whether anticompetitive conduct has made a market more or less likely to benefit consumers, antitrust law could ask whether anticompetitive conduct has altered a market's structure to erode the welfare of specific groups. To put it another way, antitrust's claimed purpose is to enhance consumer welfare by maximizing allocative efficiency, though it has largely ignored the preexistence of economically inefficient racial structures such as residential segregation; in fact, modern antitrust enables inefficiencies insofar as it permits the misallocation of resources along lines of race rather than their most productive uses. Since racism is a structural inefficiency based on excluding certain types of actors from the market, we argue that enforcement must inquire into whether a market's competitive structure has inflicted unreasonable costs on minorities.
There is one more thing to say before this Article begins in earnest, and that is about the moment we are in. Since the killing of George Floyd, this country has undergone a racial reckoning. Along those lines, the time is ripe for a recognition of antitrust's race problem and for a reimagining of antitrust's possibilities. Cracks have even begun to form in antitrust's framework as enforcers notice the disparate experiences of minorities. In 2020, Commissioner Rebecca Slaughter of the Federal Trade Commission noted that antitrust's “value-neutral” stance is “bizarre.” She cited healthcare as an industry in which porous competition has caused Black consumers to incur greater costs such as inadequate treatment, concluding that antitrust must become anti-racist rather than adhering to the fa‡ade of neutrality. And in 2021, President Biden sought to increase antitrust enforcement via executive order, acknowledging that some restraints inflict disproportionate costs on “[c]ommunities of color.” In a sense, this Article is responding to a moment that has been over a century in the making. Its ambition is nothing short of making antitrust anti-racist.
This Article proceeds in four parts. Part I details examples of anticompetitive acts that have intentionally or unintentionally harmed people of color. Part II reviews antitrust law to explain why the consumer welfare standard has so far failed to remedy anticompetitive conduct that disproportionately harms people of color. Part III relies on theories of racial capitalism to excavate the racial history behind antitrust's emphasis on consumer welfare. It shows that racial discrimination is a historic feature of economic systems, and antitrust is no different. This sheds light on why a supposedly colorblind antitrust law has actually generated disparate effects. Finally, Part IV argues for another way. Relying on Critical Race Theory and returning to the common law that preceded the Sherman Act, as well as the Sherman Act's legislative history, it reimagines antitrust in a way that would acknowledge, and benefit, all consumers. Indeed, it goes a step further and argues for a reconceptualization of antitrust's purpose. Instead of the narrow purpose of promoting consumer welfare, antitrust should and can return to its earlier, broader purpose of promoting community welfare, whether we are consumers or workers. Put differently, it should return to promoting the welfare of us all.
[. . .]
Antitrust has a race problem. But as we have demonstrated, this problem is not inevitable. Change is possible. We have mined the history of antitrust law and consumer welfare--then leaned on CRT's lessons--to reimagine antitrust. Our goal in proposing a community welfare vision is to restructure enforcement to benefit us all, including marginalized groups. The task, now, is simply to begin.
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John D. Feerick Research Professor of Law and Director of the Center on Race, Law, and Justice, Fordham Law School.
Assistant Professor, Terry College of Business at the University of Georgia; Courtesy Appointment, University of Georgia School of Law; Visiting Fellow, Yale Law School's Information Society Project. From Professors Capers and Day:
