In 1987, the California Law Review (CLR) published a symposium in advance of the 100th anniversary of the Sherman Antitrust Act.1 That symposium, convened by Professor Milton Handler, brought together leading scholars to address pressing questions in antitrust law and policy. One of those questions concerned the relationship between antitrust and regulation, focusing on the applicability of antitrust law in markets undergoing deregulation. To tackle that issue, the organizers chose their writers well: then-Judge Stephen Breyer wrote the central article, and Alfred Kahn and Louis Schwartz provided commentaries. This Essay will focus on Breyer’s contribution and Kahn’s commentary. In 1987, Breyer was a highly regarded judge and leading scholar of regulatory law. His earlier research as a Harvard law professor and experience as a senior Senate staff member involved in airline deregulation led to his publication of Regulation and Its Reform in 1982. By the 1980s, Kahn had achieved nearly mythical status as the person who deregulated the airline industry while serving as Chair of the Civil Aeronautics Board in the Carter administration. Kahn had previously published his landmark book, The Economics of Regulation: Principles and Institutions, which more than forty years after its initial publication remains a standard in the field.
Now, a quarter century after CLR’s publication of Breyer’s article and the associated commentaries by Kahn and Schwartz, the question of how antitrust and regulation should interrelate remains as critical as it was in 1987. New efforts at both regulation (as in financial services) and deregulation (as in some areas of telecommunications) have led courts and policy makers to rethink the relevance of regulation for the application of antitrust law. As a result, law bearing on the relationship between antitrust and regulation has changed significantly since 1987. Interestingly, Breyer and Kahn, who in their 1987 CLR contributions laid out their respective thoughts regarding antitrust enforcement in regulated industries, both played important roles in this later development of the relevant law and policy. Professor Kahn remained an influential commentator on regulatory matters until his death in 2010. Breyer, as a Supreme Court Justice, has written important decisions in both antitrust and regulation, and has played a key role in Court decisions reformulating the relationship between the two.
Breyer’s 1987 CLR article provides a lens through which to examine and explain that reformulation. As Part II of this Essay will discuss, through Breyer’s opinion in Credit Suisse and the opinion that he joined in Trinko,10 the Supreme Court has redrawn the boundary between antitrust and regulation in a way that reduces the applicability of antitrust law in regulated markets. This retraction of antitrust in favor of regulation seems to create a paradox: although Breyer was and appears to remain a regulatory skeptic with a preference for antitrust, he has authored and voted for rulings that reserve certain claims for regulatory enforcement at the expense of antitrust. A close reading of Breyer’s 1987 CLR article can help explain this apparent paradox. At the same time, Breyer’s article and the accompanying commentaries provide the basis for a critical assessment of the Supreme Court’s evolving stance on the relationship between antitrust and regulation.
This Essay offers such an assessment, and examines the extent to which Justice Breyer’s CLR article, written twenty-five years ago, presaged the Supreme Court’s current jurisprudence on antitrust enforcement in regulated industries. Part I discusses the 1987 article’s implications for antitrust enforcement in regulated industries transitioning toward market-based governance. Part II then explores how the relationship between antitrust and regulation has changed as a result of Supreme Court decisions in which Justice Breyer participated, and examines the extent to which those changes are consistent with the concerns that he and his commentators raised in 1987.