“As other zombies, Brown Shoe should be put back in its coffin,” writes Prof. Herb Hovenkamp at ProMarket.
Herb Hovenkamp, James G. Dinan University Professor at the University of Pennsylvania Carey Law School, recently explored whether subsequent Supreme Court decisions rendered its 1962 Brown Shoe decision obsolete.
Hovenkamp holds a joint appointment in the Wharton School and is a Fellow of the American Academy of Arts and Sciences. In 2008, he won the Justice Department’s John Sherman Award for his lifetime contributions to antitrust law, and in 2012, he served on the ABA’s Committee to advise the President-elect on antitrust matters.
The Supreme Court’s 1962 Brown Shoe decision, which found a merger to be anticompetitive even though it would have reduced prices for consumers, remains one of the most controversial precedents in merger case law. However, Herbert Hovenkamp writes that subsequent Supreme Court decisions enervated the 1962 decision, rendering Brown Shoe obsolete.
The Supreme Court’s 1962 Brown Shoe decision is sharply at odds with what courts do today in merger cases. Its troublesome doctrine was that antitrust law should be concerned about market concentration without regard to prices. It even indicated approval for the district court’s conclusion that the merger was harmful because it resulted “in lower prices or in higher quality for the same price….” Under that rationale, the principal beneficiaries of merger enforcement are not consumers or labor. The main benefits accrue to firms who are not integrated or are dedicated to older technologies.
Today, by contrast, merger policy is heavily focused on mergers that threaten price increases or sometimes reduced innovation. Brown Shoe is indefensible if antitrust is concerned about competitive market performance and innovation. It retains vitality only to the extent that it is dictated by precedent. To be sure, Brown Shoe has never been explicitly overruled, but neither have any of the decisions discussed below… .