Before Loper Bright, federal regulatory agencies exercised growing discretion in how they interpreted – and inevitably expanded – statutory powers. This came to be known as Chevron deference, meaning deference to agencies’ interpretation of how to administer the law.

Loper Bright brought that freewheeling era to an end by restricting agency actions to the letter of the law. Now, in what will one day be seen as a conservative own goal, Chairman Carr is quietly restoring the power of the administrative state to boss business around.

This is happening through the FCC’s handling of Nexstar’s acquisition of TEGNA’s network of television stations. By law, no owner can control stations that reach more than 39 percent of American households. The Nexstar-TEGNA deal would create ownership of 265 stations serving about 80 percent of American households.

One can argue that this law is antiquated, given the importance of streaming and other internet-based sources for entertainment and news. But it is still the law. Does that mean anything anymore?

Peter Roff, writing in a syndicated piece:

Instead of enforcing the law, the FCC’s Media Bureau – filled with unelected staffers and with no vote of the full Commission – simply waved it.

That move was unlawful and strategic. Bureau actions are not final Commission decisions, meaning the FCC and Nexstar are trying to dodge meaningful judicial review. If they succeed, Loper Bright will stand for very little. Regulatory agencies won’t have to reinterpret statutes because they’ll be free to ignore them.

One unintended consequence is that the FCC’s move has ensnared Nexstar in a morass of litigation. Roff describes what will be the lasting unintended consequence of the Trump Administration’s regulatory overreach:

Conservatives once warned relentlessly about unelected bureaucrats accumulating unchecked power, regardless of whether or not they were on your side. Loper Bright was supposed to bring an end to that. Instead, the FCC is testing a dangerous new theory: that agencies can sidestep Congress and the courts as long as they move fast enough.

Add to this the willingness of Chairman Carr and Federal Trade Commission Chairman Andrew Ferguson to use their regulatory heft to try to police journalism. Carr held up Paramount’s merger with Skydance Media until the latter paid $16 million to the Trump presidential library project over President Trump’s specious, nuisance lawsuit over how Paramount-owned CBS News edited an interview with Kamala Harris during the campaign. Ferguson is threatening Apple News with regulatory action based on the risible claim that its curation of liberal-leaning news sources is actionable as a consumer violation under that outlet’s terms and conditions.

Not even the Biden Administration, which secretly censored conservative content on social media, dared to claim the authority to publicly regulate journalism and First Amendment activity.

On the economic side, the Trump Administration is busy importing China’s approach to state capitalism, with the government taking large stakes in a number of companies and business deals, from Nvidia’s sale of advanced chips to a “golden share” of U.S. Steel.

And now Carr is renewing agencies’ administrative power – in this case, an outright defiance of the law – undermining the Supreme Court’s rollback of Chevron deference.

When progressives one day return to power, they should be pleased at all the new levers of power that the Trump Administration has installed for them. But for conservatives, it won’t be pretty.

For the remaining tribe of free-market, smaller-government conservatives, the legacy of Teddy Roosevelt elicits conflicting impulses.

As the first progressive president, TR inaugurated the era of the nation’s chief executive as an outsized celebrity. Many of TR’s great achievements—in trust-busting, food inspection, and environmental protection—were necessary, but they opened the way for the growth of the regulatory state. In his last campaign for the presidency, the Bull Moose edition of TR ran more or less as an out-and-out socialist, proposing an early version of a comprehensive industrial policy, with government in charge of prices and most business decisions.

In this, TR was prescient. That version of TR would have fit right in with the Biden era of Tim Wu and Lina Khan.

And yet… TR remains one of the most iconic of Republican presidents. And there was that famous grin… and the cowboy duds… and the charge up San Juan Hill. It’s easy to imagine TR in heaven riding happily on a horse alongside Ronald Reagan. On the other hand, Calvin Coolidge, the most reticent of all presidents, may be a small-government conservative’s idea of virtuous modesty, but no child clings to a doll called a Calvin-bear.

So TR nostalgia will always remain seductive. But when some of the new right use TR as branding for today’s most progressive policies in economics and antitrust, alarm bells should go off for true conservatives.

Case in point is the speech that Federal Trade Commissioner Mark Meador gave last week to the Bull Moose Institute. It was a well-crafted speech, rooted in a strong sense of history. Recounting Roosevelt’s “New Nationalism” speech, Meador harks back to what seems to him to be the timeless principles of antitrust enforcement – a very American sense of wanting to cut large, unaccountable organizations down to size.

What often gets lost in the nostalgia is that the trusts of TR’s day were nothing like any large business today. When historians write of the trusts’ “ruthless” tactics, they often involved criminal and thuggish acts—from bribery to threats to slaughtering men, women, and children in suppressing strikes. Even the business strategies of trusts in those days, from price-fixing to horizontal conspiracies, are acts that would be plainly illegal today.

Still, Meador sees TR as relevant to antitrust today. He said of the 26th president:

He did not oppose the great trusts of his era merely because paid consultants told him that consumer prices would fall if he did so. He opposed them because they acted in ways that corrupted free markets: by replacing competition with coercion, earned success with entrenched privilege, and open markets with corporatism. He drew a line, and the line was legal and moral before it was economic. As he stated, with characteristic directness: ‘[w]e draw the line against misconduct, not against wealth.’

And with these words, Meador takes TR’s sheriff’s badge and pins it on his own chest. But does this approach make sense today? Let me enumerate the flaws of TR antitrust revivalism.

Replacing the Consumer Welfare Standard

Meador implies that big corporations today skate by obvious antitrust violations because “paid consultants” are telling policymakers that the efficient production of large enterprises often means cheaper goods. But it isn’t consultants who are instilling this message. It is federal judges and their Consumer Welfare Standard doctrine, which has been in place for almost half a century, since it was adopted by liberals and conservatives on the U.S. Supreme Court in 1979. And the goal of that standard is not just cheaper goods, but more choices and innovation to the benefit of consumers.

While the Biden regulators jettisoned the Consumer Welfare Standard in their merger guidelines—and the Trump antitrust regulators at the Department of Justice and Federal Trade Commission did nothing to restore it—that standard remains the governing principle of the federal judiciary today.

Without that standard, firmly anchored to the consumer, we would return to arbitrary antitrust in which the whims, biases, and ideology of the regulator and the judge would determine outcomes. This is a recipe for politicized antitrust enforcement and actual censorship, whether it’s Lina Khan going after Twitter, or Trump regulators going after liberal news organizations that offend them.

In harking back to progressive-era antitrust, Mark Meador would abandon antitrust’s only coherent limiting principle.

A Return to “Big Is Bad”

Mark Meador argues that conservatives should embrace aggressive enforcement, with underenforcement as the greater risk. He emphasizes decentralization and automatic suspicion of large firms.

This was the thinking several decades ago that put Walmart in the crosshairs of progressive criticism. But economists countered that they could track a clear “Walmart effect” in declining prices and rising choices for consumers. Today, it is the FTC that is trying to break up Amazon, another action consumers absolutely do not want.

The reason is that large firms often reflect efficiency and economies of scale to the benefit of consumers. Meador’s framework would regress to this “big is bad” doctrine in antitrust, making efficiency potential evidence of a crime.

Undermining the Rule of Reason

The “rule of reason,” popularized in the late 19th century by a federal judge named William Howard Taft, evaluates conduct based on the economic effects of a business practice on competition – and by implication, on consumers. Meador kicked off his tenure with an attack on “fetishized economic analysis” in his essay on “Antitrust Policy for the Conservative.”

It is easy to dismiss “efficiency” as a heartless irrelevancy. But a regulator who governs by what his heart tells him rather than by what the market reveals is like a surgeon who has a great bedside manner, but is incompetent with a scalpel in his hand. A good surgeon may have a poor bedside manner, but he shows fidelity to the patient by being good at his job.

Without the rule of reason, courts lose any way to distinguish procompetitive from anticompetitive conduct. When the sheriff of antitrust acts from intuition and ideology over economics, enforcement becomes political and error-prone.

A Bias Toward More False Positives

In antitrust, a false positive is an act that blocks conduct that would have been beneficial to the economy and the consumer, while a false negative would be a missed antitrust violation.

My father, Robert Bork, famously argued that the errors of overenforcement are far worse because they establish binding legal precedents that stymie innovation across markets. False negatives, on the other hand, may miss a temporary, unfair advantage. But the market has a way of demolishing such advantages much more effectively—and often faster—than the law can.

Remember when Blackberry, Toys “R” Us, and AOL seemed unstoppable?

“Competition is an evolutionary process,” Robert Bork and Ward Bowman wrote in 1965. “Evolution requires the extinction of some species as well as the survival of others. The business equivalent of the dodoes, the dinosaurs, and the great ground sloths are in for a bad time—and they should be. It is fortunate for us all that there was no Federal Biological Commission around when the first small furry mammals appeared and began eating dinosaur eggs. The commission would undoubtedly have perceived a ‘competitive advantage,’ labeled it an ‘unfair method of evolution,’ and stopped the whole process right there.”

The Fatal Vagueness of Moral Framing

America First Antitrust rhetoric is resplendent with rousing phrases like “human flourishing” and the “common good.” To read a speech from Meador or from his former colleague, Justice Department antitrust chief Gail Slater, is to be flooded with the imagery of real Americans buttering their corn and digging into steaks cooked on the backyard grill under an American flag.

The reality of the new right’s TR-inspired adoption is a move away from a very American approach to antitrust and closer to the hyperactive statism of the European Union. America First Antitrust jettisons the anchor of economics and consumer welfare in favor of the progressive ideas of Lina Khan, allowing big government to wield antitrust enforcement as a weapon, rather than as a tool for economic (and thus, social) advancement.

The new right may think it is reviving Roosevelt. In reality, it is reviving the very progressive project conservatives once opposed—replacing markets with mandates, and economics with politics.

A revived TR antitrust policy for the 21st century would mean the replacement of economics with politics, which can only end in tears for conservatives.

TR is a good role model for human achievement. There are better models for policy.

“Don’t expect to build up the weak by tearing down the strong,” said the 30th president of the United States, Calvin Coolidge. “It is more important to kill bad bills than to pass good ones.”

A version of this article also appeared in RealClearMarkets

The Robinson-Patman Act of 1936 is the black sheep in America’s family of antitrust laws. The Sherman Act of 1890 and the original Clayton Act of 1914 have long been read to promote efficient competition, not to protect small firms from the rigors of competition. But the RPA has always been different. Its convoluted text seems to require protecting the profit margins of small retailers even at the risk of raising consumer prices. Fifty years ago, the federal antitrust agencies soured on that project and gradually stopped enforcing the RPA.

Those days of considered neglect are now over. The RPA has regained a surprising degree of bipartisan support (see here, here, and here), and the FTC is actively litigating its first RPA case in decades. What explains the new enthusiasm for this Depression-era statute, and what are the consequences for consumers?

Some history

Let’s go back to the beginning—to the economic history that originally motivated this legislation. A hundred years ago, a single company’s business plan radically disrupted the U.S. retail sector and created important political enemies along the way. That company was a vertically integrated supermarket chain named A&P, which eclipsed traditional grocery stores and rapidly became America’s largest retailer by far.

How did A&P do it? Because of its scale, A&P negotiated lower wholesale prices from food producers than smaller grocers could bargain for. And A&P had vertically integrated into warehousing and distribution, so it could avoid paying the traditional wholesale middlemen who served the smaller grocers. A&P passed these upstream savings on to consumers in the form of lower retail prices that corner grocers could not match. This benefited consumers but harmed the corner grocers and the independent wholesalers who served them.

The RPA was enacted in large measure to curb A&P’s successful business model and—no surprise—was originally entitled “the Wholesale Grocer’s Protection Act.” Let’s quickly review the RPA’s working parts as they relate to so-called “secondary-line” price discrimination.

In general, the Act forbids suppliers to sell “commodities of like grade and quality” at different prices to different purchasers if doing so gives one purchaser a competitive advantage over another. But that general prohibition on price discrimination comes with a variety of qualifications and defenses that have spawned 90 years of interpretive controversies.

First, the Act applies only to sales of tangible products, not to services, and only if the goods qualify as “interstate” in the sense that they can be said to cross state lines. That requirement has given rise to all sorts of disputes about (for example) how to treat goods that are manufactured in one state, shipped to a warehouse in another state, and only then sold to the latter state’s purchasers.

Second, a supplier that provides special discounts to a given purchaser can escape liability if it proves that it acted in good faith “to meet an equally low price” of a competing supplier. But this affirmative defense permits the supplier only to meet, not to beat, the lower price. It also requires defendants to substantiate their prior knowledge about their own competitors’ prices. That requirement in turn creates perverse incentives for the relevant actors to share otherwise non-public price information, with the potentially anticompetitive effect of stabilizing prices.

Another affirmative defense enables a supplier to escape liability if it proves that its price differences mirror “differences in the cost of manufacture, sale, or delivery” of the relevant goods. In practice, this is a difficult defense to substantiate. Litigation on the issue, in the words of one Yale professor in 1937, “proceeds by the ordeal of cost accountancy,” with opposing experts arguing about such economically intractable issues as the proper way to allocate joint and common costs across different transactions.

Now let’s return to the Act’s core ban on wholesale price differences and the immediate effects on A&P and other chain stores. Before 1936, A&P could bargain aggressively with farmers for company-specific discounts on (say) eggs and pass the savings through to its retail customers. But after 1936, a farmer had to charge A&P the same price per egg that it charged smaller grocers or their wholesale suppliers. This requirement plainly benefited small grocers and wholesalers at the expense of A&P. But what was the likely result for consumers then and today? In the aggregate, does the RPA’s qualified ban on price discrimination raise the wholesale prices charged to grocery stores and ultimately the retail prices charged to consumers?

The consumer effects of restricting wholesale price discrimination.

The answer to that consumer-welfare question is complex and market-dependent (see here, here, and here). As the RPA’s defenders explain, it is too facile to argue that RPA enforcement always leads to higher retail prices. Banning price discrimination does not necessarily cause a supplier to raise wholesale prices for all buyers, including the most powerful ones, to the highest level that the supplier would otherwise charge the smallest buyer with the least bargaining clout. Instead, the new wholesale price equilibrium might well fall somewhere between the highest and lowest wholesale prices that would be charged but for the ban on price discrimination.

Consider the newly uniform wholesale price of eggs after 1936 in our A&P hypothetical. Depending on competitive dynamics, that price might well have been (1) lower than what the smallest grocer would have paid absent the RPA but (2) higher—and perhaps much higher—than the much lower wholesale price that A&P previously negotiated. That outcome would have been a mixed bag for consumers. On the margins, a significant shift in wholesale costs would have enabled small grocers to lower their retail prices while forcing A&P to raise its own retail prices. And the most price-sensitive retail consumers—those with tightest budgets who came to A&P looking for the best bargains—likely paid more for their eggs, all else held equal.

What was true in 1936 remains true today. The RPA likely has similarly regressive effects on low-income households, at least in some contexts. And the statute’s qualified ban on price discrimination might also cause more systemic competitive harms. For example, by mandating wholesale price uniformity, the RPA makes coordination easier and retail prices stickier by increasing each market actor’s visibility into other market actors’ pricing practices.

Much of the recent discussion about the RPA’s competitive effects involves a debate about the so-called “waterbed effect” modeled by some economists and championed by Republican FTC Commissioner Mark Meador. The theory proceeds as follows. Because upstream price discrimination reduces a larger retailer’s wholesale costs and permits it to undersell a smaller retailer, it can lessen the smaller retailer’s market share and thereby reduce the smaller retailer’s bargaining clout with their common supplier. In a worst-case scenario, the feedback loop may lead the smaller retailer to exit the market. And the RPA’s defenders argue that, in some contexts, this effect might result not only in hobbled competitors, but also in higher average retail prices.

That outcome, however, is likely the exception rather than the rule. Even where price discrimination ends up marginalizing small retailers, competition among large retailers (e.g., Walmart, Target, and Costco) normally induces each such retailer to pass some and perhaps most of its wholesale discounts through to consumers, depending on the extent of the downstream competition. And the waterbed effect should have no effect at all on smaller retailers (such as general stores in remote rural areas) that do not compete with large retailers in the first place. By hypothesis, their market share is unaffected by the large retailers’ competitive offerings, and thus their bargaining power with suppliers is unaffected by whatever discounts those larger retailers receive.

The decline, fall, and sudden rebirth of federal RPA enforcement.

In short, even if the RPA does occasionally have consumer benefits, such benefits are episodic and incidental to the protectionist objectives of the Act. And they are probably more than offset in the aggregate by the Act’s upward retail pricing pressure in other markets.

That, in any event, was the conclusion of an influential 319-page report issued by the Department of Justice in 1977. DOJ placed the Act squarely in its historical context. As it observed, “the Robinson-Patman Act is a piece of depression-era legislation” and resembled the National Industrial Recovery Act, which sought to boost employment by eliminating cut-throat competition and stabilizing prices at inflated levels. DOJ’s report concluded that Robinson-Patman likewise served in many markets to raise consumer prices. DOJ also compared the Act to the Nixon Administration’s then-recent experiment with wage and price controls, noting that “government tampering with the market can lead to unforeseen results which have an adverse effect on workers, businesses, and the consuming public.”

DOJ’s 1977 report was hardly the first comprehensive critique of the Robinson-Patman Act, but it crystallized widespread opposition to the Act in antitrust circles, and the results were immediate and striking. DOJ stopped enforcing the Act altogether. The FTC, which had brought thousands of RPA claims in the 1960s and 1970s, followed suit shortly thereafter. Of course, non-enforcement by the federal government did not mean that the Act itself fell into complete disuse. But it did shift the burden of RPA enforcement to the private plaintiff’s bar, which lacks the federal government’s powers of pre-litigation discovery.

But here’s the breaking news: the federal enforcers have put on their cleats and want back in the game. Lina Khan’s FTC brought two high-profile Robinson-Patman cases towards the end of the Biden administration, and one of them remains alive and kicking with no end in sight. And earlier this year, six Republican Senators publicly urged both the FTC and DOJ to bring more Robinson-Patman cases to support the interests of various business constituencies.

This is unsurprising. Populists on both the right and the left view Robinson-Patman litigation as an important weapon in the fight against what they perceive as excessive market concentration. And when push comes to shove, they are willing to ban price discrimination to prop up small businesses even if doing so harms consumers.

This makes sense as a purely political matter because the resulting consumer harms are more diffuse and obscure than the benefits to small businesses. The constituencies that support aggressive RPA enforcement can realistically hope for reduced competitive pressure and wider profit margins. In contrast, consumers are very unlikely to connect downstream price hikes with an uptick in RPA enforcement and are thus unlikely to pin political blame on the RPA’s champions.

To be sure, this is a ham-fisted way to help Main Street. Even if one believes that the government should support small retailers to preserve their perceived value to local communities, there are more efficient and consumer-friendly means to that end, ranging from tax credits to small-business loans. Nonetheless, the RPA remains the law and says what it says, and enforcers have taken a new shine to it.

* * *

For many years as an antitrust lawyer, I hoped to get away with learning very little about the Robinson-Patman Act. After all, DOJ and the FTC had soured on the RPA and stopped enforcing it. Why should I have to learn the arcane details of this benighted statute?

Alas, as with so much else in antitrust, everything old is cool again. The Robinson-Patman Act is badly drafted, byzantine in its application, and at odds with the consumer-oriented thrust of America’s antitrust laws. But if you’re an antitrust lawyer, you’d better bone up on the doctrinal details because federal RPA enforcers are back in the saddle.