Question

1. How does the first era of antitrust thinking (1890–1950s) differ from the second era?

Answer 1

The antitrust thinking is coming from the law in US, namely, Sherman Antitrust Act of 1890 that promotes competition among enterprises in favor of consumers and to regulate trusts. The law was passed during the presidency of Benjamin Harrison.

Antitrust thinking between 1890-1950 ( 1^st era of Antitrust thinking)

Sherman Antitrust Act of 1890 was followed by many other Acts like Sherman Antitrust Act of 1887, Clayton Antitrust Act of 1917, Federal Trade Commission Act of 1914, Robinson-Patman Act of 1936, Celler-Kefauver Act of 1950. This period can be classified into three cycles;

1. 1900s-1920s:- This era is marked by the breakup of Standard oil and enactment of the Clayton Antitrust Act and  Federal Trade Commission Act in order to prevent enterprises from making trust and monopolies.
2. 1920s-1930s:- This era is marked by the cooperation between the State and industry.
3. 1930s- 1950s:- It was the period when the Antitrust became Magna Carta of free trade and preserved political and economic freedom. This era can be considered as golden era of Antitrust and competition was considered as countermeasure to fascism and Antitrust became an enabling factor of that competition. The end of this era was a shift to robust Antitrust policies which were necessary for effective competition. In order to make those conditions, regulators went back to the first era when the congress saw the process of concentration in American economy as a dynamic force; so Clyton Act, which was amended in 1958, gave the agencies and courts "the power to brake this force at its outset and before it gathered momentum'.

Antitrust thinking after 1950 (2^nd era of Antitrust thinking)

4. The antitrust policy started declining its importance after 1950s. With the rise of Chicago School of Economics its pace was increasing. The political and moral cases for antitrust became insufficiently rigorous and diluting antitrust policies. It relied on incomplete and distorted version of competition.

Adopting the assumptions of the Chicago school like self-correcting markets and self-interested market participants some courts and enforcers compromised with important political, social and moral values to promote certain economic beliefs. Thus there no robust antitrust law enforcement conditions to create competition.

Now the new era is running which we can count as 5th era that is progressive, anti monopoly, New Brandies School. Liberals and conservatives warn that consumers are not benefiting from the meager competitions in markets. Their concern is that, the present competition laws are in favor of select ones at the expense of others.