Scholars with Thumbscrews: Antitrust’s Predatory Academics

America’s antitrust laws are administered by a flourishing establishment of academics, regulators, lawyers, judges, and think-tank analysts whose mission in life is to torment businessmen. Want to see how they operate? Let’s start with an academic journal article by two antitrust scholars named John Connor and Robert Lande, and see where it leads.

Their article, “Cartels as Rational Business Strategy: Crime Pays,” was published in 2012 in the Cardozo Law Review. It’s a creepily fascinating glimpse into the minds of academics who spend their days dreaming up new ways to inflict pain and anguish on others.

Under the Sherman Act of 1890, it’s illegal for businessmen to set prices for their own goods and services, if they do so in concert with other businesses. There’s a variety of scary-sounding names for it — price-fixing, collusion, conspiracy, restraint of trade, cartel behavior — all designed to make economic cooperation among companies sound like a bad thing.

Connor and Lande’s thesis is that businessmen aren’t being whipped hard enough for such “cartel behavior.” They assert that criminal fines would need to be five times higher in order for businesses to regard the punishment as worse than the “crime.” But because such a quintupling would encounter strong political opposition, the authors offer a doubling of fines as the more feasible way to rack up the pain level. Among their other recommendations:

  • Impose lifetime employment bans on any individual convicted of price-fixing in a particular industry
  • “. . . Require convicted corporations to agree not to pay the fines incurred by their employees, directly or indirectly, or to compensate them for time spent in prison or under house arrest, directly or indirectly. It is unclear how often this occurs, but it should never happen.”
  • Expand the DOJ’s “Wall of Shame” (listing convicted corporations) to include “individuals for several years after their conviction,” in the form of a “web page containing the names and photos of people given sentences of at least 6 months in prison.”
  • Expand the imposition of “corporate monitors” empowered to scrutinize, second-guess, and report questionable decision making in real time
  • Implement a “whistleblower-reward, or bounty system, for individuals who turn in cartels, and perhaps even for corporations.”

If you’re inclined to dismiss this as ivory-tower prattling among impractical academics, think again. Professors like these are regarded by regulators and judges — that is, by the people who wield physical power over businessmen — as a fertile source of new ideas. Indeed, according to the Reuters news agency, the Connor-Lande article is being taken seriously by the United States Sentencing Commission.

The USSC, whose members are mostly judges, exists for the purpose of assisting Congress and the executive branch in developing effective crime-fighting policies. On June 2, the USSC gave public notice of its intent to prioritize study of the fine provisions of the Sentencing Guidelines Manual for “Bid-Rigging, Price-Fixing or Market-Allocation Agreements Among Competitors.” This was apparently in response to a letter written to the USSC last year by the head of the American Antitrust Institute, a non-profit that urges stronger antitrust enforcement. The letter urged increases in criminal fines based on the Connor-Lande research.

We need to stop and translate this into real-life terms. Are you ready for a world in which Steve Jobs is sent to jail and banned from his industry for life, with his picture pasted on a government “Wall of Shame”? As I noted in a recent post, a certain segment of America actually thinks that if Jobs hadn’t died young, he should have been imprisoned for price-fixing and other antitrust offenses committed in the process of making Apple a source of world-shaking innovations. But that would have been a monumental injustice.

A century of antitrust enforcement has nurtured a squalid subculture of very smart people who are dedicated to inflicting pain and suffering on businessmen — by nullifying their contracts, revising their business methods, revamping their corporate cultures, monitoring their decision making, fining their companies, putting them in jail, breaking their spirits. But these businessmen are not criminals. They are the very individuals who produce all the goods and services on which our health and happiness depend.

It’s time to rethink the legitimacy of antitrust from the ground up.