Antitrust Governance

In this article, the author argues that antitrust law has entered a new phase of its controversial existence. The role of antitrust in moderating inter-firm relationships depends both on the problems of the underlying market regime and the institutional capacity of antitrust decision-makers to respond to those challenges. For much of the 20th century, the model firm was hierarchical: vertical integration within the business organization was a way of achieving transaction cost efficiencies and delivering higher levels of output at lower prices. Recognition of this fact transformed antitrust from its traditional focus on concentrated power, to a policy focused on economic efficiency. This new emphasis necessarily led to a more modest antitrust policy, since courts were not institutionally well-suited to promoting efficiency. However, in the past two decades the model firm itself has also been transformed both by changes in technology and due to greater volatility of market conditions. Production is increasingly decentralized, and characterized by a profusion of deeply collaborative relationships, with innovation as a key aspect of firm success. This article brings together the emerging literature that describes the changes in firm organization, the governance problems of the new forms of joint development and the antitrust responses to those changes. The author argues that antitrust can play an important role in governing collaborative production relationships and identifies the institutional and remedial mechanisms of the new antitrust policy