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U.S. antitrust policy is not based on any single, coherent objective or rationale. There are two reasons for this. One is the diversity of its sources; the other stems from ideological confusions about competitive markets and the realities that provoked antitrust legislation.

The diverse sources include the policy's origins in the English common law, the Sherman Act of 1890 based on that common law, the legislation of 1914--the Clayton and FTC Acts--which recognized some tendencies for free competition to break down, the judicial gloss put on the legislation, which has taken on a life of its own, and most recently, the intrusion of economic theory that has come to dominate enforcement policy. This diversity of origins brings with it ideological conflicts between its legislative, judicial, bureaucratic, and academic authors.

The confluence of these diverse sources and conflicts has resulted in three distinct rationales for antitrust policy: (1) that it is a moral issue involving behavioral wrongdoing. This is reflected in the criminal penalties of the Sherman Act and the prosecutorial zeal of the Antitrust Division of the Department of justice that sees its mission as putting "bad guys" in jail; (2) that antitrust is a consumer welfare measure. This viewpoint stems from two distinct, unrelated sources, though their ultimate conclusion is essentially the same. One is the perception of judges and legislators reacting against trade restrictions that in addition to the harm to the business interest, consumers are also disadvantaged. The second is a theoretical conception of economists thinking in terms of an idealistically efficient system, which benefits consumers through unfettered price competition. This second rationale may thus be characterized as the consumer welfare/efficiency theory. (3) Finally there is what may be characterized as the "game theory" rationale. The objective is to keep the game going, through governmental intervention, to preserve a competitive context as an end in itself--and this regardless of wrongdoing and even at some possible cost to consumers. This perspective is reflected in the Clayton and FTC Acts of 1914 and in the Sherman Act ban on monopolization.

On different occasions the courts have embraced all three of these rationales, though in recent years there has been an increasing tendency to emphasize the second, consumer welfare/efficiency. The prevailing tendencies in the law, however, have been significantly influenced by two institutional factors: the nature of the judicial process and the institutional separation of the Federal Trade Commission and the Department of justice.

The judiciary's function is to decide cases, not make economic policy. The Sherman Act, however, carries a substantial economic policy content with wide latitude for judicial discretion. With notable exceptions, the Supreme Court has not welcomed this latitude, preferring clear rules that facilitate decision making. The Sherman Act did not provide such, so the Court proceeded to invent its own, in the form of per se rules. The Court's enthusiasm for this approach lasted for 50 years, from 1927 to 1977, when the Court itself acknowledged that it had been carried too far. Since then the policy vacuum has only worsened.

The second institutional factor is the separation of the Federal Trade Commission and the Department of Justice. The Justice Department's focus is primarily on the Sherman Act and only partly on the legislation of 1914. Because the Sherman Act contains no substantive rules that intervene in the conduct of business such as the Clayton Act's rules on price discrimination and tying agreements, it is logically consistent with the idea of faith in self-regulating free markets, and this is the way the Justice Department has always viewed it. Because of this the Division is institutionally justified in viewing the world though the limited perspective of the Sherman Act, unqualified by the market failure perceptions of the 1914 legislation.

Unlike the Sherman Act, both of the 1914 acts were permeated with perceptions of how various types of business practices could tend to break down the competitive process. This cannot be interpreted as a declaration of faith in self-regulating free markets. . .

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