Modern antitrust law is concerned with consumer welfare, that is, the quantity, quality, and variety of present and future consumer goods (”output”). In that concern, antitrust is not alone. A large number of policies and legal regimes directly affect output, and most policies, even those with a primarily distributive bent, are aimed at increasing it. “Growing the economic pie,” after taking all negative externalities into account, is never wrong. Among the other regulatory regimes are the (real and intellectual) property system, taxes, tariffs, subsidies, contract law, tort law, civil procedure, environmental law, labor law, telecommunications law, etc. This basic policy orientation is validated by the significance of productivity and economic growth. (In the long run, economic growth is pretty much all that matters to the wealth of a nation.)

What makes antitrust special is not its ultimate goal, promoting welfare, but its intermediate goal, the overall promotion of competition. Competition is a necessary element of an economy in which the private profit incentive is aligned with the promotion of public welfare. As Mark Lemley put it recently:

The only reason that private decisions produce efficient results is that they are disciplined by the marketplace, so that the many greedy, short-sighted, and just plain stupid decisions businesses make every day end up hurting those businesses but not consumers, who can always turn to a smarter or better-informed rival. It is ironic indeed that advocates of private ordering at all costs have perverted [Adam] Smith’s lesson to argue that we don’t need the discipline of a competitive market. (Lemley, A New Balance Between IP and Antitrust (2007), p.19.)

Only under conditions of competition do we trust the market to provide private incentives to produce more of what people want. Competition is thus a necessary condition for achieving allocative and productive efficiency. In addition, only competitive markets can plausibly be expected to generate fair distributions of benefits from trade between sellers and (infra-marginal) customers, that is, only under conditions of competition can we expect market transactions to fully meet the mutual benefit condition, on which much of the moral justifiability of the free market rests.

Legally relevant anticompetitive practices are those that harm competition to the extent that they reduce output and diminish consumer welfare. The italicized qualification is significant. Markets require a certain minimum level of workable competition to ensure efficient production, allocation, and a plausible expectation of mutual benefits from trade. There is disagreement as to where that level ought to be and whether competition is (always?) a tough weed or a delicate flower. Yet there is widespread agreement (rightfully so) that

1. Antitrust is supposed to step in when markets dip below the necessary minimum level of competition; and that
2. Antitrust does not strive to actively increase competition over and above that minimum level for the sake of encouraging rivalry.

Antitrust, as the Supreme Court put it repeatedly, protects “competition, not competitors.” Which means that antitrust protects competitors if and only to the extent that their continued existence is necessary to maintain a competitive market structure. Losing one out of a dozen of competitors is unlikely to harm the competitiveness of a market. Losing one out of three is a different story. In the first case, antitrust has no business intervening. In the second case, antitrust is likely to step in.

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