Robert Bork was the target of much well-deserved animus during his lifetime. His reactionary judicial views made him anathema to liberals, who saw to it that his nomination to the Supreme Court was defeated. The guy didn’t exactly mellow with age, either, becoming even more cranky and dyspeptic after his defeat than he’d been before it. Those late-career books bearing such fetching titles as Slouching Towards Gomorrah: Modern Liberalism and American Decline and A Country I Do Not Recognize: The Legal Assault On American Values are not exactly beach reads, let me tell you!
But one thing even his enemies tended to grant him was the quality of his allegedly rock-solid scholarship. There’s no question that his major scholarly work The Antitrust Paradox, had a dramatic impact on antitrust law in this country. The book has been cited by over one hundred courts. Given the book’s influence, it’s important to ask whether the theories Bork proposed there have proved to be correct.
A new study strongly suggests that the policies Bork supported have not had the effects he predicted. “Did Robert Bork Understate the Competitive Impact of Mergers? Evidence from Consummated Mergers” is a recently published working paper by economists Orley C. Ashenfelter, Daniel Hosken, Matthew C. Weinberg. The authors investigate one of Bork’s most important claims: that horizontal mergers (mergers between firms producing the same good or service) in oligopolistic markets are unlikely to increase prices. They find overwhelming evidence contradicting this claim.
Bork’s theory was that horizontal mergers generate economic efficiencies and are therefore unlikely to create competitive harm. He predicted that even in oligopolistic markets, mergers would not lead to increased prices.
Guess what? He was wrong. Here’s a summary of the authors’ findings:
The empirical evidence that mergers can cause economically significant increases in price is overwhelming. Of the 49 studies surveyed, 36 find evidence of merger induced price
Overall, the results from the merger retrospective literature show that mergers in oligopolistic markets can result in economically meaningful price increases.
To be sure, some important caveats should be kept in mind. First of all, this study is still in the working paper stage and hasn’t yet been vetted by a scholarly journal. That said, the paper has been published under the auspices of the highly respected National Bureau of Economic Research and its authors are a team of well-regarded economists, including Princeton’s Orley Ashenfelter.
Secondly, the authors still do accept many aspects of Bork’s basic approach. They say that they “agree with some of Bork’s critique of merger enforcement circa 1970.” Bork had argued that the government was too aggressive in preventing mergers and made decisions based on a “vague sense” that mergers would make things worse, rather than direct evidence. Finally, the authors point out that since merger enforcement is far more permissive these days than it was when Bork wrote his book, the impact of the marginal merger (which is the data on which their study is based) is far more likely to be negative today than it was then.
Still, the authors’ most important finding is that Bork’s fundamental prediction — that mergers wouldn’t cause price increases in oligopolistic markets — is wrong. Moreover, Ashenfelter and company aren’t alone in finding results that aren’t consistent with Bork’s ideas; in their paper, they cite other research with findings that contradict his antitrust thesis. Their study is certainly something to think about the next time you click the “pay” button for your outrageous cable TV and internet bills.