Competition vs.

property rights:
American antitrust law, the Freiburg School
and the early years of European competition policy

Nicola Giocoli*
University of Pisa

The goal of the paper is to investigate the extent of the influence of American antitrust tradition on the foundation
and early years of European competition policy. This as part of a wider research program aiming at assessing the
role of economic theory in the development of antitrust law and policy. My argument may be summarized in four
propositions. First, by taking into account what I call the “competition versus property rights” dichotomy, it turns
out that the economists’ contribution to the historical evolution of US antitrust law has been smaller than usually
believed. Second, as far as the foundation of EEC competition policy is concerned, the influence of the American
antitrust tradition has, again, been less than what is commonly claimed. Third, a crucial role on the birth of EEC
antitrust has been played by a law and economics argument based on the constitutional standing of competition
rules, an argument put forward by the highly influential Freiburg School of Ordoliberalism. Fourth, the ordoliberal
origin of EEC competition rules, when combined with the Community’s integration goal, helps explain why the
impact of the “competition versus property rights” dichotomy on European antitrust law has been limited and,
contrary to the US, always solved more favorably to the “competition” pole than to the “property rights” one.

JEL Codes: B13, B21, K21,

Introduction

The goal of the paper is to investigate the extent, if any at all, of the influence of American antitrust
tradition on the foundation and early years (up to the mid-1960s) of European competition policy.
This as part of a wider research program aiming at assessing the role of economic theory in the
development of antitrust law and policy, both in the US and Europe.1 Given the ever increasing
importance that competition issues play in the ordinary functioning of economic systems, it seems
indeed relevant to cast new light on the origin of antitrust law. It is all-too-frequent, in fact, to
register a contrast between the decisions of antitrust authorities and courts and the prescriptions

*
Department of Economics, via Curtatone e Montanara 15, 56126 Pisa, Italy, [email protected] .
1
In the paper the words “antitrust law” and “competition law” will be used as synonymous, though the first term should
properly be used only for the US.
originating from the most up-to-date models of competition economics. The idea underlying my
research is that at least part of this inconsistency is due to a still incomplete understanding of the
history of antitrust law and, in particular, of its relationship with economic theory. Filling this gap is
mostly important in the case of EEC competition law, both because its origin has so far been under-
investigated from the viewpoint of the history of economics and because, as I show in the paper,
acknowledging the peculiar economics underlying this origin may help explain the European Court
of Justice’s first antitrust rulings or the content itself of the EEC Treaty’s competition rules.2
Economists and historians of economics have dedicated several studies to the history of American
antitrust law. The bottom line of most of these is that economic theory has always exercised a
substantial influence on the development of both statutory and case law.3 The canonical narrative
views the latter’s turning points as almost invariably triggered by changes in the economists’ notion
of competition: from classical laissez-faire to neoclassical perfect competition, from 1930s
imperfect competition to Harvard structure-conduct-performance (SCP) approach, from the Chicago
revival of price theory to the modern game-theoretic view. A corollary of such a narrative is that
both the Congress and the Supreme Court would have merely applied along the years the ideas
flowing from the economists’ debates. However, an alternative reading of US antitrust history is
possible, one that gives a more prominent role to strictly legal issues and, in particular, to the
perennial antagonism between two conflicting desires: preserving competition and warranting the
maximum freedom in the exploitation of individual property rights. This reading has several
implications, including that the economists’ influence on the evolution of US antitrust law turns out
to have been far less important than usually believed.
Moving on to Europe, the story looks simpler, but actually isn’t. The standard view is that EEC
competition law and policy was just inherited from the US, via the role played in the early phases of
the European unification process by the American government in general, and the Allied occupation
authorities in particular. Hence, EEC antitrust rules were just a by-product of US postwar debates
on competition law, and therefore, once again, an offspring of the economic theories that elicited
them. However, as soon as we realize that most founding members of both the EEC and its
important forerunner, the European Community for Steel and Carbon (ECSC), already had in their
national legislation some form or another of competition rules, the question arises as to how much
of these national traditions – and of the legal and economic theories that had inspired them –
eventually flowed into the ECSC and EEC antitrust provisions. Moreover, the influence of the
Freiburg School of law and economics (so-called Ordoliberalism) must be taken into account. One

2
In the following I will use the old denominations, like “EEC” or “European Community”, rather than the new ones
(“European Union” and “EU”), as the former were the official ones in the period under scrutiny.
3
In the words of Richard Posner (1999, 229), antitrust is just <<…a branch of applied economics.>>.

2
of the School’s key concepts was the idea of an economic constitution, that is to say, of the formal
set of rules that characterized the nature and the functioning of an economic system. In the case of a
free market economy, one of those rules had necessarily to be competition law. Given the vast
influence that Freiburg scholars exercised, either directly or indirectly, on the process of European
unification in general, and on EEC competition rules in particular, it may well be argued that, yes,
European antitrust law was eventually driven by an economic theory of competition, but, no, such a
theory was neither American nor standard – i.e., either classical or neoclassical or SCP – but rather
the product of a group of German lawyers and economists called Ordoliberals.
This reconstruction of the foundation of European competition policy is tested in the paper against
the actual content of ECSC and EEC antitrust rules, as well as against the “competition versus
property rights” dichotomy. The key insight is to realize that, official claims notwithstanding, the
first and foremost interest of European competition enforcers, at both the Commission and the
Court of Justice, has never been in competition per se, i.e., as an instrument to improve economic
welfare, but rather in competition as a tool to achieve the real EEC goal, namely, the Common
Market. By taking due account of this, we may understand why the ordoliberal recipe for
competition law was welcomed in the Community, as well as why, again in contrast to the
American experience, the above-mentioned dichotomy has never seriously affected European
antitrust policy.
To sum up, the paper offers the following tentative answer to the question raised in the opening
paragraph. Synthesizing my response in four propositions, I claim that: first, by taking into account
the “competition versus property rights” dichotomy, it turns out that the contribution of economists
and economic theory to the historical evolution of US antitrust law has been smaller than usually
believed; second, as far as the foundation of EEC competition policy is concerned, the influence of
the American antitrust tradition has, again, been smaller than usually believed; third, a crucial role
has on the contrary been played by national antitrust traditions and, above all, by a law and
economics argument based on the constitutional standing of competition rules – an argument put
forward by a very original, and highly influential, school of thought, the German Ordoliberals;
fourth, the ordoliberal origin of EEC competition rules, when combined with the Community’s key
integration goal, helps explain why the impact of the “competition versus property rights”
dichotomy on European antitrust law has been quite limited and, in any case, always solved in terms
more favorable to the “competition” side than to the “property rights” one.
The content of the paper is as follows. The first § contains the economists’ canonical narrative of
US antitrust history. Then, §2 offers an alternative reading, based on the “competition versus
property rights” dichotomy. The third § presents what, again, may be considered the standard

3
narrative of the birth of competition law in postwar Europe. In §4 I describe the main ideas of the
Freiburg School. The fifth § shows how these ideas provide the ingredients for a different
reconstruction of European antitrust history. The sixth § presents the Grundig case, i.e., the first
crucial antitrust case in the EEC. A final § concludes.

1. The history of American antitrust: the economists’ cut

Reading the economists’ accounts of US antitrust history, it is customary to find one version or
another of a narrative that identifies five major periods of that history, with only minor differences
as to the starting date and length of each phase.4 The first period goes from the early debates on, and
eventual approval of, the first antitrust legislation, the 1890 Sherman Act, up to the famous
Standard Oil ruling by the US Supreme Court (1911), which established the rule of reason as the
basic method for assessing antitrust cases. The second phase ranges from the approval of the
Clayton and Federal Trade Commission Acts (1914) to Roosevelt’s New Deal: this was an era of
relative neglect of antitrust, as policy-makers became attracted by more direct forms of intervention
in market economies. The third period – from mid-1930s to the late 1960s – was characterized on
the theoretical side by the structure-conduct-performance (SCP) approach, and, on the policy side,
by the aggressive pursuit of antitrust goals, including several Supreme Court’s per se prohibitions
against various business practices. As a reaction, a new phase began in the 1970s and lasted well
into the 1980s, with the rise to dominance of the Chicago approach to antitrust and the consequent
rejection of many of those prohibitions. The fifth and final period started in the late 1980s and is
still continuing: the main feature of the so-called post-Chicago antitrust is the recourse to game-
theoretic methods which have cast new light on most of the third period prohibitions.
The most remarkable feature of the canonical narrative is that it explains all the transitions from
one period to another in terms of either a change in the economists’ attitude towards antitrust or the
rise to dominance of one school of economic thought or the other. Among the keenest supporters of
an economics-driven antitrust history is William Kovacic, who wonders at the “unusual
permeability” of the federal antitrust system to the influence of economics (Kovacic 1992, 295), and
puts forward claims such as: <<…there is considerable evidence indicating that […] the ideas of
economists affect how judges resolve antitrust cases.>> (ibid., 300), or <<Antitrust law and
industrial economics have evolved in tandem, with doctrine and enforcement policy lagging behind
the formation of a consensus among economists...>> (303). But even the leading industrial

4
Note that the same periodization is quite common among law historians too.

4
economists Stephen Martin, who has recently produced some excellent accounts of the history of
antitrust,5 believes that: <<It is impossible to have a full understanding of the evolution of antitrust
policy without taking the contributions of academic scribblers into account.>> (Martin 2007a, 5).
Little doubt as to the kind of academic scribblers Martin is thinking of, since he approvingly quotes
Keynes’s well-known dictum: <<The ideas of economists and political philosophers, both when
they are right and when they are wrong, are more powerful than is commonly believed. Indeed, the
world is ruled by little else.>> (Keynes 1973 [1936], 383). Any alternative reconstruction of US
antitrust history cannot therefore beg the requirement of identifying the gist of the American
economists’ views during each of the five period.
It is well known that US economists had no role in the legislative process leading to the 1890
Sherman Act. Yet, this does not mean that they neglected antitrust issues: quite to the contrary,
these were the subject of fierce debates in late 19th-century economic journals. For the majority of
US economists, antitrust rules were undesirable because trusts were necessary to obtain large scale
economies and efficiency gains.6 This position was fully consistent with the general view, typical of
American Progressives, and thus also of the many prominent economists who shared their creed, of
competition as a wasteful process, as well as with the admiration for Taylorist criteria of industrial
organization, again viewed as an indispensable instrument for improving the efficiency of
production processes (see Leonard 2006). The alternative position was held by those economists,
like John Bates Clark, who believed that competition – that is, price rivalry – was always
beneficial,7 provided it obeyed some rules. Starting from the belief that trusts were often “natural”,
Clark distinguished between actual and potential competition and argued that the latter might
always exist, even with respect to trusts and monopolies.8 Hence, markets had to be regulated in
order to prevent trusts from exploiting their power by implementing some kinds of business conduct
capable of impeding both actual and potential competition. The latter view, which Clark articulated
since the late 19th century (see e.g. Clark 1890, 225-227), was to become one of the leading
principles of modern antitrust law.
As to the Sherman Act itself, several scholars have underlined that many heterogeneous goals led
to its approval.9 Modern economists have learned to consider the Act’s goal as promoting and
preserving competition as conduct – the “promotion” of independent business decisions being

5
Martin 2007; 2007a. But also see Martin 2002, a rare case of a modern handbook in economic theory which is
permeated by a deep knowledge of the discipline’s history.
6
Note that the kind of efficiency they were talking about was productive efficiency, rather than allocative efficiency:
<<Conspicuously absent from late nineteenth-century criticisms of rusts was any emphasis on [the] notion of allocative
efficiency. >> (Scherer 1990, 247).
7
On the various notions of competition of late 19th-century US economists, see Morgan 1993.
8
To Clark’s view, <<…potential competition is that which would develop if monopolies actually used their economic
power to raise prices much above the competitive level.>> (Fiorito & Henry 2005, 5).
9
See e.g. Martin 2007a; Peritz 1996, 13-26; Hazlett 1992; Bradley 1990.

5
ensured by the Act’s §1 (restraints of trade) and the “preservation” of the possibility of entry being
defended by its §2 (monopolization). Yet, this was hardly the aim of US Congressmen debating the
Act in 1890, and neither was the pure and simple intention to further consumer welfare.10 Their true
goals ranged from the extension to consumers of recent technology gains to the protection of small
business, from the “cover up” of the subsequent McKinley Tariff to the dispersal of excessive
economic (and, possibly, also political) power, and even Sherman’s personal revenge against Russel
Alger, the man who had spoiled his 1888 presidential ambitions and who also happened to be the
head of the match trust! In modern economic jargon, such a multiplicity of intentions followed from
Congress’s failure to distinguish among three different notions of competition: competition as
market structure, as conduct, as performance.11 The very same confusion affected most of late 19th-
century US economists, so much so that it is difficult to understand whether it was cause or effect of
the economists’ absence from the Congressional debate on the Sherman Act .
It was up to the Supreme Court to define more precisely the boundaries of the Sherman Act. In
Northern Securities (1904), the Court formulated what Martin (2005, 21) has called “the principle
of competition”, namely, the idea that with the Sherman Act the Congress has acknowledged that
free competition is the most desirable mechanism for resource allocation in society. The principle’s
immediate implication is that anything directly interfering with the free working of competitive
markets must be considered a restraint of trade and thereby be declared per se illegal. One of the
first applications of the principle was in Dr. Miles (1911), when the Court ruled that resale price
maintenance was per se illegal because it was a direct interference with free competition. As the
canonical narrative goes, the Court’s notion of free competition as best allocation mechanism came
from, or at least mirrored, the big progress achieved by theoretical economics during the two
decades after the Act’s approval. In short, those economists who in 1890 were unready to contribute
to the legislative process because of their lack of a sound theory of competition and allocative
efficiency, did have such a theory in the early years of the new century and could therefore
influence the Supreme Court’s views. The economists’ formal involvement in antitrust issues was
about to begin.
The most important Supreme Court ruling of the early years of the Sherman Act is the Standard
Oil (1911) ruling. This case has had tremendous consequences on antitrust history, among which
the official entry of professional economists in the field. According to Kovacic & Shapiro (2000),
among the enduring marks left by the Supreme Court with this ruling, feature the first application of
the market share criterion to assess the extent of monopoly power and, above all, the establishment

10
As instead is explicitly claimed by Robert Bork: <<The legislative history of the Sherman Act […] displays the clear
and exclusive policy intention of promoting consumer welfare.>> (Bork 1978, 61; also see ibid., 62-66).
11
Indeed, the word “competition” is never mentioned in the Act.

6
of the rule of reason, i.e., of a case-by-case evaluation of business conduct, as the basic method of
antitrust analysis. The crucial passage was where the Court concluded for <<…the prohibition or
treating as illegal of all contracts or acts which were unreasonably restrictive of competitive
conditions…>>, and required that <<…the criteria to be resorted to in any given case for the
purpose of ascertaining whether violations of [the Sherman Act] have been committed is the rule of
reason…>> (221 US 1 at 58 and 62).
The new criterion was immediately viewed as a softening of the antitrust rules sanctioned by the
Sherman Act. This ignited a strong reaction in American politics: antitrust became a major issue in
1912 presidential elections, while Congress approved in 1914 two new statutes, the Clayton Act and
the Federal Trade Commission (FTC) Act, with the specific goal of strengthening competition
policy. Remarkably, economists were to play a major role in the process leading to the new
legislation.
The standard story tells us that the 1910s were the decade when economists eventually got caught
by antitrust issues. The main reason behind the conversion was once again purely theoretical,
namely, the advances in market and price theory which had brought neoclassical economists to
focus on market power, rather than size or technological efficiency (Stigler 1982). A partially
different reconstruction is that by Anne Mayhew, who underlines that this was also the period when
most economists came to share Clark’s early view on the existence of two kinds of trust: those
which were inevitable for efficiency reasons and those which originated from market abuses and
anti-competitive behavior. The policy-maker was called to either prevent, or curtail, the trusts of the
second kind. This might be done through the prohibition, or regulation, of some instances of
business behavior, but how exactly to do that it became the economists’ task to tell (Mayhew 1998,
187 ff.).
A crucial role was played once more by John Bates Clark who, in a famous 1911 testimony in
Congress12 and then in the second edition of The Control of Trusts (1912; written in collaboration
with his son, John Maurice), partially reneged his early views and concluded that, since potential
competition could no longer be trusted as an effective check to monopoly behavior, it was up to the
lawmaker to actively promote actual competition. This should be done by preventing big firms
from interfering with their rivals’ ability to compete, i.e., by either prohibiting or regulating all
forms of anti-competitive behavior. Clark also added that, whenever no such interference existed, it
should be left to the free play of market forces to determine success and failure in the marketplace.
Notably, both the standard and Mayhew’s narrative share the view that economists played a
major role in the process leading to the 1914 approval of the Clayton and FTC Acts. Indeed, the

12
On which see Fiorito & Henry 2005.

7
Clayton Act did reflect Clark’s suggestion that a series of business behavior be listed as illegal: the
Act contains an explicit prohibition of price discrimination (§2), tying, exclusive dealing and
requirement contracts (§3), and merges carried out by financial manipulations (so-called covert
mergers: §7).13 Even more remarkably, with the Clayton Act Congress eventually embraced a more
specific notion of competition and antitrust – specifically, a conduct-based notion. The goal of
antitrust became defending competitive behavior by either limiting or prohibiting all kinds of anti-
competitive conduct.
The end of WWI brought a new attitude towards market processes. The 1920s and early 1930s
were the era of the so-called associationalist vision of business-government relations (see Kovacic
& Shapiro 2000, 46). Competition was once again viewed as a wasteful method of resource
allocation, surely inferior to cartels and trade associations which caused no such waste. In the
aftermath of the 1929 crisis, business agreements between rival firms, especially price agreements,
became even more attractive because curbing competition was a way to contrast price deflation and
thus help a quicker recovery from the depression. In 1933 the National Industry Recovery Act
(NIRA) authorized trade associations to codify “fair” competition rules, thereby implicitly
authorizing price-fixing and other forms of anti-competitive behavior. More generally, it was
claimed from various quarters that US antitrust legislation should be suspended and replaced by a
more European approach to cartels. As will be argued below, this amounted to a combination of
loose controls on cartels and an ex ante vetting of business agreements, both activities being
performed by an administrative body; in short, an antitrust policy based on the bureaucratic control
of abuses, rather than on judicial prohibitions. Finally, the associationalist vision also led to an
infatuation with planning. Though a consensus never arose as to what “planning” exactly entailed, it
became the new catchword for economic policy. Both direct and indirect government intervention
in the economy were deemed necessary for the correct functioning and development of the US
economy (see Balisciano 1998, 155-169). This culminated in the 1931 Swope plan,14 a program
designed to coordinate production and consumption by forcing medium and big firms to join trade
associations which would in turn be empowered to favor price stability and distribute information
on business practices.
It is hardly surprising that even the new piece of antitrust legislation, the 1936 Robinson –
Patnam Act, reflected the new climate towards market processes. The Act’s overall goal was clearly
protectionist, namely, to defend small business – especially, small shops – from the competition of

13
On Clark’s influence on the Clayton Act also see Dorfman 1971.
14
Gerard Swope was the president of General Electric. A similar plan was that by the US Chamber of Commerce, also
in 1931. For more details, see Balisciano 1998, 162-163; Barber 1985.

8
big ones – especially, retail chains.15 By negating the general idea of competition on the merits,
such a goal openly contradicted the Supreme Court’s principle of competition. Indeed, the Court
itself seemed to conform to the new zeitgeist on antitrust. A series of rulings (Board of Trade 1918;
Colgate 1919; Maple Flooring 1925; Standard Oil 1931 and, above all, US Steel 1920 and
Appalachian Coals 1933) significantly restricted the application of the Sherman Act, via either the
acquittal of market leaders enjoying a dominant position or the clearance of explicit inter-firms
agreements aimed at output restriction. To top all that, no real antitrust activity was brought forward
by the FTC in its first two decades of life. Hence, it is easy to understand why the years from 1920
to 1936 are generally considered “the era of neglect” for US antitrust.
What was the US economists’ role in the period? Once more, the canonical narrative claims that
they played a very big part and, remarkably, that they did so by fielding on both sides. Several
leading economists, such as Rexford Tugwell, Paul Homan, Adolph Berle and Gardiner Means,
shared some form or another of the associationalist vision and of its implications, including the
desirability of government planning. They acknowledged the inevitability of big business and thus
supported both a wider use of administrative regulations and a more frequent recourse to concerted
action between rival firms. Significantly, they all believed that traditional antitrust was outmoded,
and possibly even deleterious in that particular economic situation. The latter idea was widespread
in law circles too. Writing in 1927, legal scholar Felix H. Levy could state that:

<<In this country, the principle of competition has been emphasized and enforced solely from the
mistaken standpoint that the interest of consumers are alone to be considered, and that consequently
all co-operative agreements affecting the important elements of prices and production are regarded
as calculated to increase prices to consumers and therefore unlawful. In Great Britain, Australia and
Canada a different principle prevails. In those countries the interest of the public as a whole
constitute the standard by which the subject I governed.>> (Levy 1927, 601).

Yet, the majority of the economics profession did not share those anti-competition, pro-planning
beliefs. Their reaction materialized in 1932, when the American Economic Review published a
statement signed by 127 economists, under the leadership of Frank Fetter. The statement turned the
associationalist argument on its head and claimed that, far from promoting a more rapid economic
recovery, cartels, trade associations and unabashed market power were among the culprit for the
persistence of economic crisis:

15
In particular, the Act reinforced the anti-price discrimination provision of §2 of the Clayton Act by limiting a firm’s
possibility to justify price rebates as quantity discounts.

9
 <<…the most competent economic opinion […] can be cited in support of the view that a strong
contributing cause of the unparalleled severity of the present depression was the greatly increased
extent of monopolistic control of commodity prices.>> (Fetter et al. 1932, 467).

It ensued an explicit appreciation for any policy measure aimed at the restoration of competitive
market conditions, first and foremost antitrust law. Thus, it may well be argued that the US
economists’ attitude towards the Sherman Act became much more sympathetic precisely as a
reaction against all those initiatives (like the Swope plan or the NIRA) which threatened to
undermine the traditional, free-market structure of American economy. That the associationalist
threat was indeed felt as really serious is also demonstrated by the circumstance that even one of the
champions of the old Chicago school, Henry C. Simons, did not refrain from calling the policy-
maker to intervene in the market in order to preserve competitive conditions:

<<The representation of laissez faire as merely do-nothing policy is unfortunate and misleading. It is
an obvious responsibility of the state under this policy to maintain the kind of legal and institutional
framework within which competition can function effectively as an agency of control.>> (Simons
1948 [1934], 42).

Crucially, he believed that the main measure to warrant this outcome had to be an active control
over both business size and industry structure.16 Simons’s emphasis on structural features bears
witness to the strength of the reaction in defense of competition and shows that the pendulum of
antitrust enforcement was about to swing in a different – and tougher – direction with respect to J.B.
Clark’s conduct-based approach.
In 1935, the Supreme Court canceled the NIRA. This event marked a dramatic shift in Roosevelt
administration’s approach to economic matters (so-called Second New Deal). The old agenda of
structural interventions and planning was replaced by one based on macroeconomic policy. At the
same time, competition was rehabilitated as the key process capable of restoring economic
prosperity. The latter idea was epitomized by the appointment in 1938 of Thurman Arnold as head
of the Department of Justice antitrust division, with the clear mandate to pursue an aggressive
antitrust policy (Mayhew 1998, 197). The swing was capped by the Supreme Court’s effective
revitalization of the Sherman Act via the introduction of new per se prohibitions in rulings such as
Interstate Circuit (1939) and Socony Vacuum (1940). In short, starting from the mid-1930s a
favorable combination of events led to the resurgence of antitrust in the US, thereby opening an era
of aggressive contrast against monopolization and restraints of trade that was to last until the 1970s.

16
See e.g. Simons 1948 [1934], 59; 1936, 70-71. On Simons’s antitrust views, see de Long 1990.

10
 Once again, economists and historians of economics can hardly resist the temptation to remark
that the 1930s were the very same years when new models of imperfect and monopolistic
competition were proposed and, above all, the new structure-conduct-performance (SCP) approach
was developed in Edward Mason’s Harvard seminar.17 As is well known, the SCP approach –
which predicted anticompetitive outcomes as an inevitable consequence of non-perfectly
competitive market structures – was to dominate industrial economics from the late 1930s to the
early 1970s. From here it is just a small step to conclude that the remarkable and ever increasing
consistency which for more than thirty years existed on competition matters between judicial
decisions and economic thinking (see Kovacic and Shapiro 2000, 51-52) was achieved through the
latter’s influence on the former. Exactly as dictated by the SCP approach, the focus in antitrust law
shifted from conduct to market structure, while typical SCP notions like market shares and the
various indexes of concentration became the basic tool of judicial analysis. Even Congress seemed
to embrace the new approach. The 1950 Celler-Kefauver Act amended §7 of the Clayton Act by
extending the discipline of merger controls to cases of asset consolidation short of full market
dominance. The goals were straightforward – to fight against market concentration and to defend
small business – and both fitted quite well in a market-share based, structuralist view of
competition. The Act has been considered a true landmark in antitrust history, a perfect
representative of the changed philosophy: no more <<…setting rules for conduct, and relying on
market forces as long as those rules were obeyed…>>, but rather <<…a proactive control of market
structure.>> (Martin 2007a, 39).
The zenith of SCP-style antitrust law came in the 1960s. Three key rulings – Brown Shoe (1962),
Philadelphia National Bank (1963), Von’s Grocery (1966) – testified the Supreme Court’s turn
towards structuralism. At the heart of the Court’s evaluation were market shares, their history and
future, as well as their effect on market structure. As Congress itself had sanctioned with the Celler-
Kefauver Act, the Court needed nothing else than market shares – and only economic analysis could
provide the “technology” to handle them. The measure of success of the structuralist approach is
given by the various dissolution proposals, like the Hart Bill, that were advanced with the goal of
breaking up those industrial giants that had until then eluded antitrust law. Among the supporters of
these deconcentration measures, together with the likes of Carl Kaysen and Donald Turner,18
featured no less than George Stigler (Stigler 1952), a sign of how SCP had conquered the hearts of
even the staunchest Chicago free-marketeers!

17
Mason 1939 is traditionally considered the manifesto of the SCP approach.
18
Authors of the leading antitrust textbook of the time (Kaysen & Turner 1959) and keen supporters of dissolution
proposals.

11
 As it had already happened in the 1930s, the antitrust pendulum had swung too much. The time
was ripe for its coming back to a more balanced position. The reaction against the excesses of
structuralism came – so the standard story goes – once again from the economists’ community, or,
better, from one of its most influential sub-groups, the Chicago school. The Chicago
counterrevolution in antitrust was founded on four pillars. First of all, a theoretical pillar, the so-
called tight prior equilibrium, or “good approximation”, hypothesis (Reder 1982), that is to say, the
idea that any economic system exhibits a spontaneous tendency to reach a situation of Pareto-
optimal equilibrium provided it is not disturbed by exogenous interferences, like those by
government, antitrust authorities or courts (Reder 1982). Secondly, an empirical pillar. According to
Chicago economists, the data and observations used to found and validate the SCP approach were
simply wrong: for example, the structuralist claim that the causation went from the number of firms
in a market to the amount of profits each firm could earn had actually to be reversed since only the
most efficient, i.e., most profitable, firms were those capable of surviving competition. The third
pillar had to do with the viewpoint from which to evaluate competition and explain business
conduct. Given that Pareto-optimality was the “natural” situation of markets (see first pillar),
efficiency explanations of business behavior had to be privileged with respect to market power
ones. Two corollaries followed. First, the focus of antitrust analysis should be on market
performance, as well as on the conduct determining it, while the structuralist viewpoint had to be
abandoned. Second, the measure of market performance had to be consumer welfare (<<…the only
legitimate goal of antitrust…>> in the words of Bork 1978, 7), though it is easy to show that what
Chicagoans really had in mind was not consumer welfare but total welfare, inclusive, that is to say,
of producer surplus.19 The fourth and final pillar was pragmatic (one might say, rhetoric), but
perhaps even more important than the previous three. I refer to the special ability of Chicago
scholars to translate their economic arguments into operational principles that courts and lawyers
might easily understand and apply.20
The combination of the four pillars proved irresistible. Starting from the early 1970s, and
reaching their maximum influence about a decade later, Chicago arguments conquered US courts
and, eventually, the Supreme Court. The pivotal event was the 1977 GTE Sylvania ruling,21 when
the Court rigorously applied a Chicago-style economic argument to overrule the 1967 per se
prohibition of restrictive distribution practices of Schwinn and bring non-price vertical restraints
back to the rule-of-reason realm. The general lesson of GTE Sylvania was simple, but epoch-

19
See Martin 2007a, 45-46, who quite effectively calls Bork’s criterion for evaluating market performance “consumer
welfare with a wink”.
20
On the crucial role of legal scholars as intermediaries for the application of economists’ insights to legal problems in
terms that courts can readily comprehend, see Kovacic 1992, 297.
21
Continental T.V. Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977).

12
making: reliance on competition (read: a competitive market structure) to deliver good market
performance had to be abandoned and replaced by a case-by-case evaluation of the net welfare
impact of every single business practice. Many other rulings, covering the other areas of antitrust,
from collusion to dominance, from mergers (General Dynamics 1974) to predatory pricing
(Matsushita 1986), followed and consolidated this crucial principle.
At the end of the 1980s Chicago economists could be satisfied with their achievement: several
business conducts had been declared per se legal, while a case-by-case evaluation was warranted
for almost all the remaining types of behavior. Once again, a revolution in economic thought had
caused a major swing in antitrust law. But: was it really a revolution, in the first place? Indeed, the
extent of Chicago success in the field of antitrust is puzzling if we only consider that Chicago views
have never achieved the same success in economics. It is fair to say, in fact, that economists in
general, and industrial economists in particular, have never accepted Chicago tight prior equilibrium
method and its implication, the static, non-strategic approach to competition. Chicago economists
may have been able to “sell” the idea to legal scholars, but the truth remains that, contrary to their
claims, their approach has never constituted “Economic Theory”, but only a highly peculiar version
of the neoclassical theory of perfectly competitive markets, of hardly any utility for the analysis of
imperfect competition.22 Since the mid-1980s, the advent and quick rise to dominance in industrial
economics of game-theoretic methods has further clarified the situation in the marketplace of ideas,
so much so that it is now customary to speak of a post-Chicago approach. However, the fact
remains that for the last three decades legal scholars have considered Chicago views as
representative of the whole economists’ community – and they still do, as is testified by the several
US courts which continue to endorse a static, non-strategic view of markets.23 How to explain this?
A possible answer – which is clearly linked to the fourth pillar – is that Chicago has been first
and foremost a school of antitrust analysis, rather than of industrial economics. Thus, while it is
indisputable that game-theoretic arguments have showed that, Chicago claims notwithstanding,
several SCP-style antitrust prescriptions do make good economic sense24 because the behavior
underlying them may well be explained in market-power, rather than efficiency, terms,25 it is also
true that game theory outcomes often lack the general predictive power that is required to support

22
This point is forcefully made by Martin 2007, 2007a. On the various versions of neoclassical theory in the US see
Mirowski & Hands 1998.
23
For a couple of instances (like Kodak 1992) where the Supreme Court has followed a post-Chicago rationale in its
decisions see Page 2007, 24-25, who whoever underlines that these rulings have had limited effects on lower courts and
that the Court itself has quickly returned to a Chicago-style way of reasoning.
24
This is somehow ironic since, theoretically speaking, the SCP approach was born out of the explicit dismissal of
classic oligopoly models, that is to say, of the very same models that form the backbone of modern, strategic analysis.
25
The archetypal example is predatory pricing: while Chicago showed that it rarely makes business sense, game theory
has showed that the opposite is true. This by calling into play the market leader’s desire to achieve a reputation of
toughness against rivals and potential entrants.

13
legal decisions, thereby making almost inevitable the recourse to a case-by-case, rule of reason
analysis. Note that this is a kind of answer that still looks at the characters of the various economic
methods and approaches in order to explain a phenomenon – the enduring popularity of Chicago
economics – going on only in legal quarters. An alternative answer is what we suggest in the next
section, namely, that the endorsement by US courts and legal scholars of Chicago economic theory
has been just instrumental to the prevalence, and consolidation, of one of the two contrasting views
of antitrust that have been facing each other since 1890 within the American legal community.
Remarkably, the very same answer may also help explain the other periods, and the swings between
them, of US antitrust history.
The goal of the present section has been to sketch the economists’ canonical narrative of
American antitrust law and policy. This story bears strong support to the opinion which considers
economic ideas – some would say, ideology26 – the main engine behind antitrust steady evolution
and occasional U-turns. Those sharing a more Whiggish inclination in historical reconstructions
might even ignore all the ebbs and flows of the almost twelve decades of US antitrust and draw the
general conclusion that such a history offers a perfect, handbook example of an economics-driven
progress from darkness to light, from ignorance to science.27 However, a different narrative is
possible, one that places more emphasis on strictly legal arguments (and their ideological
underpinnings, too) and on the temporary prevalence of one or the other of the two general – i.e.,
not strictly economic – meanings of the word “competition”.

§2. A counter-history of US antitrust

The principle of competition, affirmed by the Supreme Court in Northern Securities (1904), states
that free competition is the most desirable mechanism for resource allocation. The principle has
been the leading light for the next 100 years of US antritrust. Yet, we can follow Peritz (1990, 264)
and ask what is “free competition”. More specifically, “free” from what? Two answers are possible:
either that competition should be set free from government power or that it should be freed from

26
Cf. Martin 2007, 45-46; Page 2007.
27
Somehow more extremely, it has even been claimed that much of recent industrial economics is demand-driven – the
demand being that of the parties involved in antitrust litigations for theories supporting the favored court outcomes
(Kovacic 1992, 296). Hence, <<[t]he economist’s research and publications become vehicles for advertising positions
that the economist will endorse for litigants in antitrust cases.>> (ibid., 297, fn.9). In such a view courts (and Congress
as well) are confined to the improbable role of passive recipients of à la carte economic theories.

14
market power. These solutions mirror what Page (2007, 2-3) has called the two ideologies of the
market.28
The first is the evolutionary vision: the market is a mechanism, framed by legal rules of property
and contract, for facilitating free exchanges among individuals, each pursuing her best interest. The
outcome of market processes – any outcome – is basically legitimate and unintended by any
individual agent. Monopolies do exist, but they are rare and, provided they are not created and
sustained by some form of legal privilege, they tend to be eliminated by market forces. Hence,
government interference in the market should only be of a negative kind, namely, be limited to
removing obstructions to the unfettered working of market forces, in particular the freedom to
contract. The second is the intentional vision: the market is a mechanism almost always affected by
the presence of powerful interests which may coerce powerless agents, such as consumers, workers
and small business. Monopolies are the inevitable outcome of real world market structures. Hence,
the outcome of market processes can and should be corrected by government interventions, which
may take the form of regulation, prohibitions and even forced divestures.
This dichotomy effectively captures the US economists’ different attitudes towards antitrust law
and policy, Chicago being closer to the pure evolutionary vision and Harvard being sympathetic
with the intentional one. Such an easy matching would naturally lead to the same narrative of
antitrust history contained in the previous §, that is to say, one focusing almost exclusively on the
chronology of economic theories, on the latter’s influence upon competition law and on the
normative implications thereof. In short, a history of how economics has affected, either directly or
indirectly, both the legislative and the judiciary, by swinging the pendulum between the two poles
of per se prohibitions and the rule of reason, i.e., between a stricter and a looser application of the
“principle of competition”.
It is precisely here that Rudolph Peritz’s counter-history of antitrust comes into play.29 According
to Peritz, the standard, economics-centered narrative of antitrust history suffers from several
limitations on account of its relative neglect of purely legal issues. For example, the fact that the
rule of reason has always represented an open-ended and basically inconsistent notion in Supreme
Court’s jurisprudence is a very well-known feature for legal scholars like Peritz which however has
been overlooked by antitrust historians. Indeed, a full comprehension of the Court’s application of
the rule of reason often requires that secondary policy goals and implications, different from those
related to the principle of competition, be taken into account. As a second example, Peritz mentions
the customary, but historically groundless, idea that free competition has always represented the

28
Where by the term “ideology” we mean any non-scientific <<…system of beliefs that shapes perceptions of social
policy…>> (Page 2007, 2).
29
See Peritz 1990; 1996.

15
sole normative benchmark for competition law. This is related to a third limitation of the traditional
narrative, namely, the habit of conflating competition with neoclassical price theory, and,
consequently, competition policy with the latter’s logical structure and results. As noted above with
respect to the Chicago school, this is too restricted a representation of 20th-century economics.
Indeed, Peritz shows that an alternative logical structure and normative ground have always existed
in US antitrust and, what matters most, that they have always been highly influential on both the
Congress and the Supreme Court.
Let’s go back to the dichotomy between two kinds of freedom: freedom from government power
and freedom from market power. It is customary to read the principle of competition as
synonymous of the latter. The underlying logical structure is that of the market as ideally atomistic
and anonymous, were it not for the presence of agglomerates of power, i.e., monopolies and
oligopolies. In Page’s terms, this corresponds to the intentional vision of the market. It follows that
the normative impulse behind antitrust law must be towards the promotion and preservation of
atomistic competition among powerless agents, that is to say, towards the implementation of
equality in the marketplace. Alternatively, it is possible to read the principle of competition as
freedom from government power. This requires that we modify both the logical structure and the
normative impulse. In the new logical structure the market is characterized by the agents’ freedom
to contract and to exploit their property rights. Such a freedom would be complete were it not for
government interferences. This is what Page calls the evolutionary vision of the market. It follows
that the normative impulse behind antitrust law must be towards the promotion and preservation of
individual property rights, that is to say, towards the implementation of individual liberty in the
marketplace. The traditional narrative of US antitrust history has conflated the principle of
competition with freedom from market power. Peritz argues instead that such a history may be more
satisfactorily described in terms of a permanent tension between the two logical catchwords of
power and contract, or, equivalently, between the two normative goals of atomistic competition and
property rights, or, as he prefers to say, between the two rhetorics of equality and liberty (Peritz
1990, 265).
The tension between an intentional competition policy and an evolutionary defense of property
rights is indeed perennial in US antitrust history. Each of the different phases into which such a
history is usually divided (see above, §1) may in fact be explained – especially as far as the
Supreme Court’s jurisprudence is concerned – in terms of this tension, of the ensuing disagreement
over the goals and the limits of antitrust law, and of the temporary prevalence of one vision or the
other. And while there seemingly is no real conflict between the two normative goals – the defense

16
of property rights being the obvious necessary condition for the existence of competitive markets –
it is quite easy to show that such a conflict did, and does, exist.
Consider for instance the theme of “fair profit”. Looking at the Congressional debate on the
Sherman Act (1888-1890), Peritz shows that the idea that competition might eventually destroy a
very specific individual right, namely, the common-law-based “right to earn a profit” from one’s
own business, was a winning argument that led to the eventual correction of the Act’s actual
wording – in particular, to the otherwise inexplicable elimination of Senator Sherman’s original
reference to “full and free competition” (see above, fn.11). Almost 90 years later, the same tension
would arise in the Supreme Court’s assessment of GTE Sylvania. Rather than representing the
triumph of Chicago-style efficiency economics, the anti-free-riding rationale of such a landmark
ruling descended from the Court’s acknowledgment of the retailer’s “right to earn a profit” from its
promotional activity and after-sale services, and, consequently, of the legitimacy of the
manufacturer’s efforts to protect such a right via the imposition of vertical restraints aimed at
avoiding its infringement by the retailer’s free-riding rivals. More generally, Peritz remarks that the
“fair profit” theme underlies much of the antitrust jurisprudence on merger cases. There the tension
is between the willingness to avoid the creation of powerful market players and the need to respect
an entrepreneur’s right to earn a profit by selling her own business to the terms and conditions that
she prefers.
Reading antitrust history through the lenses of Peritz’s “competition versus property rights”
dichotomy has momentous consequences. First, there is no need anymore to look almost
exclusively at the evolution of neoclassical price theory, or at the various degrees of application of
the welfare maximization logic, in order to explain the different phases of antitrust law and policy.
Second, we can reach a different perspective of those so-called “anti-competitive” impulses – such
as the concern for scale economies or for distributional issues or for the survival of small business –
which have always been present in antitrust debates, but which have also been almost invariably
considered undeserving of real attention by antitrust historians on account of their being based on
non-economic, that is to say, non-price theoretical, arguments. It turns out that several of those
impulses have just been the outcome of the permanent tension between promoting competition and
defending property rights.
Note that Peritz’s dichotomy is not entirely alien to some of the best narratives of US antitrust
history. Take e.g. Martin’s 2005 survey. The author explicitly considers the possibility that the
Sherman Act be just a codification of ordinary common law principles against contracts in restraint
of trade (Martin 2007a, 20); then he quotes the late 1890s judicial opinion according to which
courts could make exception to the general illegality of restraints of trade, but only for those

17
agreements which, though restraining trade, should still be warranted enforcement because of their
being ancillary to lawful contracts (ibid.); finally, he underlines that it was such a strictly legal,
rather than economic, argument that eventually led the Supreme Court, first, to declare price fixing
per se illegal (Addyston Pipe, 1899) and, then, a few years later, to prohibit resale price maintenance
(Dr. Miles, 1911), two rulings that basically still hold today (ibid., 22). Martin also recognizes that
the idea that the freedom to contract (more exactly, the freedom from restraints on the right to
contract) be the most efficient way to prevent monopolization provided the legal cornerstone for
Standard Oil’s rule of reason (ibid., 25). Furthermore, he remarks how Justice Holmes’s famous
dissenting opinion to the principle of competition in Northern Securities (1904)30 was embodied a
decade later in the Clayton Act’s philosophy, namely, in the idea that antitrust law should eliminate
any interference to the free play of market forces, but, absent any such interference, should leave to
the market the selection of winners. Thus, while emphasizing J.B. Clark’s role in the process
leading to the Clayton Act, Martin also seems to recognize that the new Congressional approach to
antitrust was founded on a legal, rather than economic, argument that turned upon the necessity to
reconcile the two contrasting goals of protecting property rights and dissolving market power.
Among the modern cases proposed by Peritz as exemplary of the “competition versus property
rights” dichotomy, one seems particularly noteworthy in view of what will be said in the following
§§ concerning EEC antitrust because of its close resemblance with Grundig, the very first big
antitrust case dealt with by the European Court of Justice. In Broadcast Music Inc. (BMI, 1979)31
the Supreme Court applied a property rights rhetoric to absolve the defendants of one of antitrust’s
gravest sins, i.e., price-fixing among competitors. The plaintiff CBS had argued that the bundling of
copyrighted musical compositions into indivisible blocks (so-called blanket licenses) by BMI and
ASCAP, the two dominant firms in the business of music licensing, constituted illegal price fixing.
Applying the rule of reason, rather than a per se logic, to a price-fixing case, the Court’s majority
referred to a classic antitrust case, Appalachian Coals (1933), where the acquittal verdict had been
motivated on the grounds that, in a situation of industry distress like that following the Depression,
the preservation of the economic value of the defendants’ business (i.e., the value of their property
rights) deserved to prevail over the defense of free competition. In BMI the Court followed a similar
reasoning and held that blanket licenses did not constitute an unreasonable restraint of trade because
they enabled the copyright holders to enforce their property rights under the 1976 Copyright Act.

30
According to Holmes, common law required that a distinction be made between contracts in restraint of trade and
combinations in restraint of trade – the former aiming at limiting the action of a party to the contract, the latter at
keeping rivals out of business – and warranted protection to both whenever they were the outcome of the free exercise
of the parties’ property rights, while it imposed illegitimacy of both whenever they interfered with an outsider’s ability
to compete. See Martin 2007a, 23-24; Peritz 1996, 38-45.
31
Broadcast Music Inc. v. CBS, 441 U.S. 1 (1979). Here I follow Peritz 1996, 255-256.

18
Absent the license system, the rights would be subject to multiple use even without the owner’s
knowledge and this would clearly deprive her of the possibility to earn a remuneration from the use
of her property.
The property rights logic also supported a second argument in favor of the blanket license system.
The Court characterized the repertoire of music created by the blanket license as an entirely
different product, of which the individual compositions were just the inputs. This gave rise to a
brand new property right independent of, and additional to, the statutory copyright entitlements.
Hence, no restraint among competing composers originated from the license agreement in the first
place, since the bundled music was new property owned by a new owner, the licensing agencies
BMI and ASCAP.
The tension between these arguments and the traditional competition rhetoric is testified by
Justice Stevens’s dissenting opinion. Stevens claimed that the blanket license created neither a new
product nor new owners, as it was nothing but the tying together of old products augmented by an
agreement illegally restraining competition among the products’ individual owners. Yet, even the
dissenter agreed that this form of price fixing should not be treated as per se illegal and deserved a
rule of reason scrutiny. Hence, the whole Court believed that in such a case only the rule of reason
might warrant the required balancing of the two opposing commitments to competition and property
rights. Of course, Stevens insisted that competition law required that the Court strictly limit the
value of copyrights to nothing more than the statutory monopoly privileges, i.e., what the individual
holder might obtain under the Copyright Act. The bottom line of this reasoning was that the
statutory entitlement of copyright holders need be viewed as embedded into the larger context of
competition policy. The holders’ freedom to contract could therefore be limited in view of the
superior benefits of avoiding anti-competitive agreements. This was exactly the case with blanket
licenses which, according to Stevens, produced so large a negative effect, in terms of higher prices
and harms to non-participating composers, that it far exceeded the value of the statutory privileges
granted to copyright owners.
Two lessons may be drawn from BMI. First, both opinions turned on the allocation and extent of
property rights, rather than on some more or less refined price-theoretical model. This is a feature
that is usually neglected in economists’ analysis of antitrust cases, and even more so in historical
reconstructions. Second, no clear cut conclusion may be drawn by merely looking at the allocation
and extent of property rights since both answers, the Court’s majority and Stevens’s dissent, were
plausible and convincing. Hence, a second element must be called into play and this cannot be other
than an “ideological” feature, that is to say, each Justice’s inclination towards one or the other of the

19
two poles of Peritz’s dichotomy. It is now time to ask whether these two lessons and, more
generally, the same dichotomy may apply to the history of European antitrust law.

§3. Importing a legal tradition: the canonical narrative of postwar European antitrust

The received version of the history of antitrust law in Europe goes as follows.32 Before WWII,
European economists and policy-makers shared two common wisdoms. First, that, due to the Old
Continent’s tradition of government interference in the economy, the main goal of competition and
free trade policies had to be the protection of business from government, rather than market, power.
Second, that competition itself was a wasteful and chaotic process and that there existed other, more
efficient systems of resource allocation in society, such as cartels, government-driven business
coordination and planning (the latter having been partially adopted by several European countries
during WWI). The combination of these two, seemingly inconsistent, beliefs produced a specific
European approach to competition law, which began to spread during the interwar years, following
intense legal and academic debates on the pros and cons of cartelization, and then rose to
dominance immediately after WWII, when several of the same scholars involved in prewar
discussions came to occupy key positions in European governments, judicial systems or
administrations. The approach consisted of the two pillars of publicity and administrative controls.
Cartels and trade-restraining agreements were not per se illegal; indeed, they could well be allowed,
provided, first, that they had been made public and, second, that the government bureaucrats in the
Cartel Office monitoring their effect on market performance detected no abuse of market power –
where the term “abuse” was taken quite loosely as synonymous with “contrary to public interest”
and concretely applied in different ways depending on the given circumstances.
The gap between the European system and US antitrust law could hardly be wider. As we know
(see §1), post-1914 competition law in the US had somehow overcome the ambiguity of the
Sherman Act by clearly embracing an ex-ante, judicially-enforced, conduct-based, prohibition
approach. No European country followed the US either before or after WWII. Indeed, with the only
remarkable exception of Germany (see next §), they all embraced some form or another of an ex-
post, administratively-enforced, performance-based, abuse approach. In view of the movable
definition of the key notion of “abuse”, the European system granted a large amount of discretion to
its enforcers, including, as it turned out to be the case, the possibility of a very soft, politically-
negotiated application of anti-abuse rules.

32
See e.g. Martin 2004, 2006; Djelic 2002, 2005; Gerber 1998; Thorelli 1959.

20
 That this was the approach most compatible with Europe’s zeitgeist may be appreciated by
looking at the 1930 resolution on the control of international trusts and cartels adopted by the Inter-
Parliamentary Union (IPU). In the resolution we read that <<…cartels, trusts and other analogous
combines are natural phenomena of economic life towards which it is impossible to adopt an
entirely negative attitude.>> However, since <<…those combines may have a harmful effect both
as regards public interests and those of the State…>>, it is deemed <<…necessary that they should
be controlled.>>. Yet the control should just seek to <<…establish a supervision over possible
abuses and to prevent those abuses.>>. As a means to fighting the abuses and allowing control, a
publicity regime should be adopted, requiring <<…cartels and similar combines to announce their
existence and to register in the books of the State.>>. For the supervision of registered cartels each
State should create <<…a Committee on Trusts and Cartels…>> which <<should be entitled to
institute proceedings for the punishment of abuses and in certain cases obtain that treaties should be
declared void before the competent courts.>> (IPU 1931). This was precisely what most European
countries did or had already done, as the combination of vague rules, discretionary use of
administrative power and soft enforcement envisioned by the IPU resolution suited Europe’s taste
for competition.
While there is a consensus among historians that such a reconstruction faithfully describes the
evolution of European competition law in the first half of the 20th-century, a key, though very
simple, question remains unanswered. Given that European countries followed an abuse-based
approach to competition, how could it happen that in their first institutional experience of economic
integration, namely, the European Community for Steel and Carbon (ECSC), the founding countries
adopted a prohibition-based antitrust law? As is well known, the ECSC, established with the 1951
Treaty of Paris, has been the forerunner of the European Community, which was born just six years
later. The previous question gains therefore even more importance on account of the fact that the
ECSC rules on competition have been the blueprint for the antitrust articles of the 1957 Treaty of
Rome, that is to say, for the very rules that for the last half century have been governing European
competition policy at both the Community and, since the mid-1980s, the national level.
There is indeed a standard answer also to this question. It might well be dubbed “the
Americanization of European antitrust”. According to it, the prohibition approach to competition
first entered Europe with the 1947 law imposed by the US Military Government to achieve the
decartelization and deconcentration of German industry. The law reflected the tradition of
American antitrust, at least as far as the prohibition of cartels, trusts and restrictive practices was
concerned. The new approach gained further strength with the beginning of the Cold War, as the US
government changed its plans about the future of the German economy. In view of the Communist

21
challenge, Germany’s industrial structure had to be preserved as much as possible. Yet, at the same
time, an institutional framework had to be created to ensure that Germany itself would never again
threaten its Western European neighbors. The solution to reconcile these two conflicting goals was
found in exporting to Europe in general, and to Germany in particular, the American economic
model. This was a model that, under the general belief in the superiority of the free market system,
was concretely based on an oligopolistic, rather perfectly competitive, market structure, with firms
large enough to exploit the gains of size and technological efficiency but, at the same time, unable
to undertake anti-competitive conducts due to the aggressive enforcement of strong antitrust rules.
The combination “oligopoly plus strong antitrust” – which effectively captures the reality of US
postwar economy as shaped by business history, on the one side, and the SCP-style Supreme Court
interpretation of competition law (see above, §1), on the other – was the explicit benchmark for the
German economy set by the US Office of Military Government for Germany (OMGUS).33
The canonical narrative goes on describing the two fights that the US government had to win to
impose this benchmark first in Germany and then in Europe. The German battle ended only in 1957,
after ten years of controversy and resistance,34 with the approval of the Federal Antitrust Law which
basically embraced an American-style, prohibition approach. The European battle was quicker, but
even more complicated. The standard story begins with the 1950 Schuman Plan, whose goal was
the achievement of European integration via the preliminary integration of Europe’s coal and steel
markets. Then it calls into play the role of the few, but very well connected, European individuals,
like Jean Monnet and Ludwig Erhard, who supported an American approach to antitrust. Then we
are asked to recognize that a fundamental congruency existed between the US and France during
the negotiation phase of the ECSC Treaty.35 The former’s intention to decartelize the German
industry suited the latter’s desire to favor French firms by getting rid of Germany’s vertically-
integrated – and highly efficient36 – coal and steel complexes. Moreover, it is remarked that the US
government’s initial reaction to the ECSC project was to fear that it might led to the creation of a
European-wide cartel in such a key, and politically sensible, pair of industries.37 This provided an
additional motive for the Americans to increase the pressure towards the addition of explicit
antitrust measures. The story has a happy end, though, in that we are told that, after months of
33
In an OMGUS document we read that <<…oligopolies, when policed by the vigorous enforcement of antitrust and
anticartel laws as in the United States, yield pretty good results.>> (quoted by Djelic 2005, 59).
34
On which see Gerber 1998, Ch.8.
35
See in particular Lovett 1996.
36
This circumstance raises doubts with respect to the Schuman Plan’s declared goal of promoting the overall efficiency
of the European economy. Indeed, it is by no means clear that market integration in industries with enormous sunk
costs, like coal and steel, may really bring efficiency gains. For these to come true, it is in fact required that the
resources set free by firms unable of sustaining the stronger competitive pressure of an integrated market be reallocated
away from inefficient uses and towards more efficient ones (see Martin 2004, 10).
37
This was indeed the implication of the initial proposal discussed at the ECSC conference, according to which the
prices of coal and steel had to be fixed by national governments and producers’ association: see Witschke 2001, 7.

22
struggles and negotiations, some competition rules were eventually added to the ECSC Treaty.
Indeed, the relevant articles were drafted by Harvard Law School professor and antitrust specialist
Robert Bowie, who had been “borrowed” by Jean Monnet for this task from his job as legal counsel
of John McCloy, the US High Commissioner for Germany.38 Being based on the prohibition
approach, these rules did represent a drastic innovation in European antitrust history, as well as a
clear sign of the American influence on it.
The main provisions were contained in Articles 65 and 66.39 Article 65 prohibited all kinds of
agreements, combines and concerted practices which might allow firms to <<…prevent, restrict or
impede the normal operation of competition within the common market.>> (Treaty of Paris,
Art.65.1). Exceptions were however allowed, conditionally on the agreement being both capable of
and necessary to improve market performance, as well as incapable of conferring excessive power
to its participants (Art.65.2). Article 66 imposed that any merger or other concentration of market
power be authorized by the ECSC High Authority, though the authorization could be denied only
when the merger or concentration led to “excessive” market power. Note that in the language of US
antitrust law, the latter provision may be paraphrased as saying that only “unreasonable” mergers
and concentrations had to be forbidden. Hence, Article 66 effectively established an anti-abuse
principle, rather than a per se prohibition.40 Yet, this was precisely the way US Supreme Court had
until then dealt with merger and concentration cases,41 so much so that even this article looked fully
consistent with American antitrust tradition.
Thus, it seems legitimate to conclude that with the Treaty of Paris a brand new antitrust tradition,
based on the prohibition, rather than the abuse, approach, entered Europe. That it was the outcome
of a political, much more than economic, logic, or that it aimed at a peculiar mix of “oligopoly plus
strong antitrust”, rather than at the neoclassical ideal of perfect competition, should not conceal the
fact that this new tradition, and the EEC antitrust rules which were soon to originate from it, wore
Stars & Stripes on their sleeves.
Against this canonical narrative, David Gerber has proposed an alternative story, which places
much more emphasis on Europe’s interwar tradition of antitrust policy, while at the same time

38
For those of a conspiration-theory penchant, it may be worthwhile to add that Robert Bowie was later to become a
prominent member of the Trilateral Commission, as well as the CIA Deputy Director for National Intelligence (see
www.eisenhowerinstitute.org/programs/globalpartnerships/missiledefense/Bowie.htm).
39
Note however that other articles dealt more or less directly with competition issues, such as Article 60 which forbade
unfair practices, like predatory or discriminatory pricing.
40
For the details of the negotiations leading to the approval of Article 66, including the replacement of an earlier draft,
which included a stricter, per se prohibition rule, with the final, softer, version, see Witschke 2001, 7-18.
41
Bowie had dealt with merger issues since in Law School. His 3rd year paper at Harvard was on “Section 7 of the
Clayton Act”. See lms01.harvard.edu/F/SL37GHS5FL6688UCX6VKCG6F73MSGEAA7TR9U27BGKXTBL83EE-
53925?func=full-set-set&set_number=228811&set_entry=000002&format=999

23
downplaying the American influence.42 A key question that is left unanswered is for instance why
the Germans accepted the ECSC and, later, EEC competition rules. Obviously, they found a big
incentive in the US occupation authorities’ promise to relinquish their regulatory competence over
the German steel industry in case the ECSC did come to life.43 Yet, Gerber underlines that the
common “philosophical” background of the German negotiators and policy-makers must have been
at least as important. Remarkably, this shared background happened to be the Freiburg School’s
Ordoliberalism – a school of thought that, though dating back to the interwar years, became after
1945 the main intellectual force shaping Germany’s economic constitution and policy-making.
The leading figure in the German delegation at the ECSC negotiation was in fact Walter Hallstein,
a keen supporter of ordoliberal ideas and, later, the first President of the European Commission
(Gerber 1998, 340). Moreover, Germany’s Economics Minister at the time was Ludwig Erhard,
who also headed an informal group of lawyers and economists – the so-called “social market
economy group” – which largely shared ordoliberal views on several issues, including competition
policy (ibid., 271-2). And just one year before the beginning of ECSC talks, Erhard had been
presented the first draft of Germany’s competition law, the so-called Josten Draft:44 the proposal by
and large reflected the ordoliberal approach to antitrust. It seems therefore legitimate to argue that
Germany’s official position on the Treaty of Paris was, at least with respect to competition issues,
significantly influenced by Ordoliberalism. It is to this school of thought that we have therefore to
direct our attention in order to grasp the whole picture of the events and motivations leading to EEC
antitrust law.
However, before investigating the ordoliberal approach to competition, a few words may be of
order about the next step in Europe’s antitrust history, namely, the competition rules contained in
the 1957 Treaty of Rome, if only because it is in relation to them that Gerber’s argument on the
decisive role played by the Old Continent’s interwar antitrust tradition may be best appreciated.
Gerber claims that EEC antitrust rules came out as a hardly fought compromise between the
ordoliberal approach – embodied by Germany’s Competition Law, also approved in 1957 – and the
traditional administrative approach, supported by France and the other member countries. One of
the EEC Treaty’s general goals was, and still is, <<…the institution of a system ensuring that
competition in the common market is not distorted.>> (Article 3.f). To accomplish it, the Treaty

42
A third reconstruction is that by Witschke 2001, who has used archival sources to show that the driving force behind
the ECSC competition rules was the struggle between France and Germany to protect national coal and steel industries.
Witschke also agrees that American antitrust tradition – as different from American geo-strategic interests – had little to
do with that struggle, if only because, as far as mergers (the topic of ECSC Article 66) were concerned, US competition
law was at the time still in the pre-Celler-Kefauver Act era. Note however that, while Witschke’s rebuttal of the
canonical narrative is quite convincing, far less so is his quick denial of Gerber’s alternative story (see ibid., 6).
43
On the details of Germany’s position during the ECSC negotiations, see again Lovett 1996.
44
Named after Paul Josten, chairman of the drafting committee. See Gerber 1998, 273.

24
contains a number of provisions: Articles 85 and 86, which pertain to private restrains on
competition, and Article 90, which relates to government interference.45 Hence, the Treaty
explicitly deals with both kinds of interference on competition and freedom to trade, namely,
market power and government power. More importantly, it does so at a “constitutional” level, i.e,
by prescribing a few general principles, with no immediate practical applicability, rather than by
imposing a set of ready-to-use administrative norms. This was another major innovation for
Europe’s antitrust policy, one of even greater import than the already-mentioned shift from abuse to
prohibition. And still, both innovations were fully consistent with, and possibly inspired by,
ordoliberal ideas.
More in detail, Article 85 follows the structure of Article 65 of the ECSC Treaty and forbids all
kinds of agreements and concerted practices <<…which may affect trade between Member States
and which have as their object or effect the prevention, restriction or distortion of competition
within the common market…>>. The Article also contains a list of instances of agreements that
have been singled out as having such an anti-competitive effect. Yet, in the same spirit of ECSC
Article 65.2, the third section of Article 85 allows the exemption from prohibition of those
agreements which meet two criteria, namely, that of being productive of positive effects, in
particular for consumers, as a consequence of the restraint (because, say, it helps exploit scale
economies) and that of causing no unnecessary harm to the competitive process. Article 86
prohibits the abuse of a market-dominating position. No exemption is allowed. Note that this article
is more detailed than the “equivalent” Article 66 of the ECSC: for example, it includes specific
instances of abusive conduct. However, it does not contain anymore an explicit anti-merger
provision. One of the biggest differences between the ECSC and the EEC treaties is in fact that no
rule on merger control features in the latter.46 This circumstance somehow reinforces Gerber’s
argument because, if the canonical, American-centered narrative were correct, it would be quite
curious that the specific area where the influence of US antitrust tradition should have been felt the
most – i.e., the control on mergers and concentration where no European forerunners existed –
would also turn out to be the one which simply disappeared in passing from the ECSC to the EEC.

§4. The Freiburg School and the constitutional dimension of competition law

The main point of the present paper is that the history of European antitrust law is seriously
incomplete if we omit to take into account the influence of Freiburg Ordoliberalism. Indeed, such
45
Again, I keep the articles’ original numeration.
46
The first such rule in the EEC dates to no earlier than 1989.

25
an omission would impair not only a faithful historical reconstruction, but also, and perhaps even
more importantly, a full understanding of the driving forces behind the concrete application of
competition rules by the EEC Commission and the Court of Justice. In particular, it would be
impossible to tell whether, and to what extent, Peritz’s dichotomy between competition and
property rights – the perennial force pushing the legal pendulum of US antitrust – has also affected
European competition law. This in turn would make it arbitrary any claim as to the relative weight
of economic versus purely legal arguments in EEC antitrust cases, past and present.
So what was Ordoliberalism?47 In brief, it was a school of thought that agreed with earlier
conceptions of liberalism in considering a competitive economic system as necessary for a
prosperous, free, and equitable society. However, its members were convinced that this society
could only come into existence if the market were constrained by a “constitutional” framework
aimed at protecting the process of competition from distortions and abuses, at warranting the
equitable distribution of the benefits of the market, and at minimizing government intervention in
the economy. This intertwining of legal and economic arguments was indeed typical of the Freiburg
School of law and economics, from which Ordoliberalism originated.48
The founding members of the Freiburg School were an economist, Walter Eucken, and two
lawyers, Hans Grossman-Doerth and Franz Böhm.49 Starting from the mid-1930s, the three became
the leaders of a well-defined group of scholars who shared a basic set of objectives, methods and
attitudes, and who constituted one of the few centers of intellectual opposition to the Nazi regime.50
The latter feature proved crucial for the propagation of Freiburg ideas in post-WWII Germany. The
first and foremost of these ideas was the belief that private economic power had been the main
cause of Germany’s economic and political disintegration during the interwar years. Hence, from
the very beginning the ordoliberals’ goal was to revive German people’s faith in the market
mechanism by turning it from a despised source of social division and inequality into a necessary
tool for social integration. Necessary but, as already said, not sufficient. Social integration could

47
The rest of the section follows Gerber 1998, Ch.7.
48
Note that the term “Ordoliberalism” is typically applied to a broader set of ideas than those of the Freiburg School.
For instance, authors like Wilhelm Röpke are usually considered ordoliberals, though they lacked direct connections
with Freiburg. An even broader notion is that of “social market economy”, a term coined in 1946 by Alfred Müller-
Armack (see Goldschmidt 2004). Social market economy supporters – of whom Ludwig Erhard was the most famous –
agreed on most points of ordoliberal economic policies, but placed greater emphasis on equity goals. Vanberg (2004, 2)
argues that social market economy was outcome-oriented, while ordoliberalism was strictly procedural and rule-
oriented. As a consequence, while ordoliberals believed that market order had an ethical value per se – namely, that of
being a privilege-free order – the supporters of the social market economy viewed the market as simply the most
efficient wealth-producing instrument, devoid of any inherent ethical quality. To turn the market into an ethical order,
some supplementary policies were needed, in particular, social policies. The latter need not be constrained by market
order rules. Here, according to Vanberg, lay an important difference with respect to ordoliberals who stressed that no
social provision should ever contradict the privilege-free nature of the market order.
49
The three wrote the manifesto of Ordoliberalism in 1936: see Böhm, Eucken & Grossmann-Doerth 1989 [1936].
50
On this aspect of Ordoliberalism, see Rieter & Schmolz 1993.

26
only be achieved by embedding the economy into a well-defined legal framework. At the center of
such a framework was competition law.
More in detail, Freiburg scholars envisioned a society where democratic institutions warranted
that individuals be free from both government and private power. The latter could be either political
or economic. Hence, the necessity that freedom from government and political interference be
complemented by freedom from private economic power. In other words, competition was deemed
necessary for social well-being as much as democracy itself. While all this was well inside the
classical liberal tradition, a first original element of Ordoliberalism came from the idea that a strong
state be required in order to protect individuals from private economic power. By this expression
ordoliberals meant neither an authoritarian nor a discretionary state, but rather a state which could
resist the pressure of private power and interests. To foster such a resistance, governments’
discretionality had to be constrained by a properly designed legal framework, or constitution,
capable of preventing all kinds of rent-seeking activity (Vanberg 2004, 17). But even more
necessary was the dispersion of private economic power in the first place. The instrument to do that
was competition. As Böhm put it in 1960, <<…competition is by no means only an incentive
mechanism but, first of all, an instrument for the deprivation of power […] the most magnificent
and most ingenious instrument of deprivation of power in history.>>.51 Yet, competition could only
fulfill its promise within a legal framework created and maintained to protect its correct
functioning. The economic and the legal sides were therefore necessarily interrelated in a properly
working, prosperous society. This was the basic intuition behind the ordoliberals’ call for the
integration of legal and economic knowledge: law determined the rules of the economic game, so
much so that it was simply impossible to understand economic processes without a comprehension
of legal rules.
Eucken’s specific methodological innovation was the so-called “thinking in orders” (Denken in
Ordnungen), that is to say, the idea that beneath the complexity and heterogeneity of the various
economic systems some fundamental patterns – or orders – could be identified (Eucken 1992
[1939]). He claimed that recognizing these patterns was the only way to penetrate this complexity
and understand the dynamics of economic phenomena. The two fundamental orders were, as
Eucken called them, the “transaction economy” and the “centrally administered economy” (ibid.).52
In the former, economic activity was driven by the free and independent decisions of private agents,
each guided by her own incentives. In the latter, it was up to the government to organize and direct

51
Quoted by Vanberg 2004, 12. In terms of Page’s distinction (see above, §2) ordoliberals clearly embraced an
intentional vision of the market.
52
Little surprise at that: those were the years of market socialism debates and Eucken himself had close personal and
intellectual ties with Friedrich von Hayek.

27
economic activity. The Freiburg School unanimously believed that, at least in the case of Germany,
the transaction order was the best one for achieving economic prosperity.
A key principle of Eucken’s “thinking in orders” was that all the elements constitutive of an order
were mutually consistent and actually reinforced each other. It followed that “pure” economic
orders could achieve a superior performance than real economic systems which were always
“impure” due to the inevitable mixing of components from both orders. From this the ordoliberals
draw the desirability of making no compromise in the construction of a transaction economy, in
particular as far as the proper functioning of competitive markets was concerned. Indeed,
competition turned out to be the essential element of the transaction order: Freiburg scholars took it
as an axiom that competition be the main engine of economic prosperity and that its intensity be
directly correlated to systemic performance. Eucken actually used the term “complete competition”,
meaning competition without coercive power53 – the kind of competition that exists when no agent
in the marketplace has the possibility to force, or constrain, the behavior of any other agent.
Another original element of ordoliberalism was the constitutional dimension of economic issues.
This was added in order to achieve the required integration between the legal and the economic side
of the analysis. Freiburg scholars claimed that a society’s constitution had also to establish the
characteristics of its economic order. In the definition of the ordoliberal manifesto, the economic
constitution is <<…a general political decision as to how the economic life of the nation is to be
structured.>> (Böhm, Eucken & Grossmann-Doerth 1989, 24). The main idea was that
<<[e]conomic systems did not just “happen”; they were “formed” through political and legal
decision-making. These fundamental choices determined a nation’s economic constitution.>>
(Gerber 1998, 245).54
Yet, the economic constitution could not suffice to warrant the achievement of the desired
economic order. Constitutional choices had in fact to be made effective by a legal system and
government policies specifically designed to implement them. In other words, the principles
enshrined in the economic constitution should represent at the same time the source and the
constraint for the specific decisions made by governments and legislators. The set of policies aimed
at creating and maintaining the order envisioned by a society’s economic constitution represented
what Freiburg scholars called Ordnungspolitik, or order-based policy – the third and last pillar of
Ordoliberalism.

53
See Möschel 1989, 157, fn.16.
54
As remarked by Gerber (1998, 246), this view amounted to turning classical liberalism on its head: rather than
requiring the economy to be independent of the legal and political system, ordoliberals argued that both the
characteristics and the performance of an economy depended on such a system.

28
 In particular, whenever the economic constitution devised a transaction economy, order-based
policies should be such as to configure a legal system capable of creating and maintaining
“complete competition”, i.e., the necessary condition for the most effective functioning of such an
order. From a practical viewpoint, these policies could be implemented only after the economists’
description of the essential features of “complete competition” had been translated into normative
guidelines for legislators and policy-makers. Bridging the information gap between economic
theory and actual law- and policy-making was precisely the task ordoliberals had assigned
themselves.55
As to the objection that they seemingly tributed too large a role to government intervention, with
the risk of generating an excessively regulated an economy, ordoliberals replied that the economic
constitution warranted that policy-makers decisions about the legal environment of the market be
rigidly constrained. The essence of Ordnungspolitik was precisely that constitutionally-bounded
laws should provide the basic principles of economic conduct, while governments should act just to
enforce these principles, with no room left for discretional choices. In other words, Ordnungspolitik
amounted to answering time and again the question: “is this law or government action in conformity
to the economic constitution?”. This shows that ordoliberals had found an original way out from the
classical liberal dilemma of calling for government action to defend competition, on the one side,
and recognizing that government itself may interfere with market processes, on the other. The
constitutional dimension of their analysis, paired with the notion of Ordnungspolitik, allowed them
to reconcile the requirement for the legal foundation and defense of the market economy with the
refusal of government discretionary interventions.
A different way to appreciate the ordoliberal notion of Ordnungspolitik – or “indirect regulation”,
as they also called it – is by referring to Eucken’s distinction between constitutive principles and
regulative principles. The former were the fundamental principles establishing an economy’s order
and upon which indirect regulation had to be based: in a transaction economy, these were the
principles of, say, private property, contractual freedom, open markets or monetary stability.
Regulative principles flowed from constitutive ones and were bound by them. They were more
specific and their main goal was to support indirect regulation and warrant the effectiveness of
constitutive principles. A key example was competition law: a set of regulative principles
descending from the constitutive postulates of contractual freedom and open markets. Ordoliberals
defended an integrated view of economic policy, one were both kinds of principles should be taken
into account. Indeed, Eucken explained the problems of American antitrust precisely in terms of the
failure to integrate competition law in a broader framework of constitutive principles. This critique

55
See Böhm, Eucken & Grossmann-Doerth 1989, 24-25.

29
may also be captured by our “competition versus property rights” dichotomy: lacking a clear
definition of the constitutive principles underlying it, any antitrust law is bound to generate policy
decisions that would inevitably clash with one or the other of such principles.
From what we have said about the transaction order, it is hardly surprising that the keystone of the
ordoliberal program was competition law. History had taught ordoliberals that economic freedom
tended to be self-destructive: competition collapsed, first, because firms always preferred private,
i.e., contractual, regulation of business to market, i.e., competitive, regulation, and, second, because
firms were frequently able to gain so much economic power that they could just get rid of
competition. In both cases, the core problem was private economic power; as we said before, the
primary goal of competition law had to be the elimination of such power or, at least, the prevention
of its harmful effects.
A broad conception of economic power and the idea of employing it as the primary structuring
device of competition rules is one of the features of German and EEC antitrust law that most clearly
distinguish it from its US analogue.56 It is therefore essential to understand that the root of the
distinction may be found in the Freiburg School. Indeed, Eucken’s “complete competition” (i.e.,
absence-of-coercion) standard demanded that competition law be used to prevent the creation of
monopolistic power and to wipe out existing monopolistic power whenever possible, or, when
impossible, to control the way monopolies used their power. Yet, it is important to remark that the
no-coercion standard led ordoliberals to propose a kind of competition law closer to the American
tradition than to the usual European approach. Freiburg scholars, in fact, rejected the administrative
(that is, discretionary) controls on competition abuses which had been popular in various European
countries since the late 1920s and embraced in their stead a prohibition approach. Hence, by
following an independent and highly original intellectual trajectory, ordoliberals came to formulate
an antitrust law whose provisions – though not its enforcement setup: see below – closely
resembled those of US law. This explains why, as detailed in the previous §, several historians have
just conflated the two and concluded that postwar Europe simply “imported” American competition
rules.
Specifically, ordoliberals believed that the legal prohibition of monopoly had to be primarily
directed against cartels and all other kinds of power-creating agreements between competitors.
More controversial was the attitude that competition law should adopt with respect to other, non-
agreement-based forms of monopoly, such as natural monopoly, legal monopoly or monopoly
achieved on the merits. Some ordoliberals, Böhm among them, supported a very aggressive
approach: whenever market power existed, it had to be eliminated by any means, including forced
56
Referring again to Page’s terminology, the intentional vision supporting antitrust law, though always influential, is
more transparent in the German and EEC case than in the American one.

30
divestures. Others preferred a gentler approach to non-agreement-based monopolies, one where law
was called to prescribe a standard of conduct. One such standard was formulated in 1937 by
Leonhard Miksch, who argued that economically powerful firms should be required to behave as if
they were subject to competition, i.e., as if they had no such power.57 By limiting a firm’s behavior
to conduct consistent with “complete competition”, Miksch’s “as if standard” provided an
objectively applicable measure for the control of monopolies.58 The standard was in turn founded
on a distinction already existing in German jurisprudence, namely, that between performance
competition, i.e., conduct directed at achieving quality improvements or lower prices for a firm’s
products, and impediment competition, i.e., conduct designed to hinder a rival’s capacity to perform.
The goal of the “as if standard” was to forbid the latter and allow the former, regardless of the
specific market structure. Hence, it clearly embodied a conduct-based view of antitrust, quite distant
from the structural approach so popular in postwar US competition law. Again, the fact that the very
same distinction between performance and impediment competition would provide one of the
intellectual pillars of modern German antitrust is a tribute to the Freiburg influence, as well as a
good reminder of the limits of the simplistic narrative based on the sheer borrowing of the
American antitrust tradition.
Finally, Freiburg scholars also devised a new institutional framework for the application and
enforcement of competition law. Generally speaking, Ordnungspolitik required that the
constitutional model of “complete competition” dictate the general antitrust principles, that these
principles be turned into enforceable law and that an independent office be in charge of applying
and policing them. More specifically, ordoliberals envisioned a system where:
- The legislative power should enact a competition law based on the economic constitution of a
transaction order. This just required translating into legal terms the constitutive principles embodied
in the “complete competition” model. It followed that legislators had little discretion in writing the
law.
- An independent monopoly office should be responsible of enforcing competition law. The office
should enjoy complete autonomy from the executive power and its status should be quasi-judicial.
Since the office should apply legal norms according to objective standards, again little if any room
remained for discretionary behavior.
- The judiciary should review the decisions of the monopoly office for their conformity to
competition law and the economic constitution. Given the limited discretionary power of the
monopoly office, the reviewing task should pertain to regular courts, rather than administrative
tribunals.
57
See Goldschmidt & Berndt 2003, 2-4.
58
And of oligopolies too: see Gerber 1998, 253.

31
 Before moving on to assess the extent of ordoliberal influence on EEC antitrust law, a few words
must be added on Freiburg success in homeland Germany. Even without questioning the validity of
the canonical narrative, the previous paragraphs show that ordoliberals had the right plan to
reconcile the two seemingly conflicting goals of the US military administration in postwar
Germany, namely, the dismantlement of industrial cartels and the promotion of market-driven
economic development. If the US really sought to use Germany as a kind of laboratory to prove the
superiority of the free market system, ordoliberals methods, values and ideas were perfectly suited
for such a task. Moreover, it turned out that Freiburg scholars were among the few qualified
Germans who had no ties with the Nazi regime. Thus, it is hardly surprising that ordoliberals
occupied key posts in government or as advisors. Indeed, more than 50% of the members of the
Academic Advisory Council formed in 1947 to support government policy were ordoliberals
(Gerber 1998, 257). Miksch himself joined the “office for the administration of the economy”, the
predecessor of today’s German Ministry for Economic Affairs, where he authored the so-called
“Guiding Principle Law” which was to play a key role in Germany’s economic recovery.59
Ordoliberalism also found support in political parties. Here the main vehicle was the social market
economy program presented by Müller-Armack. Albeit embedded in a language that emphasized
social values and concerns, the program featured some of the central elements of the ordoliberal
view, such as the concepts of economic constitution and Ordnungspolitik and the necessity of a
competition law. Müller-Armack’s program became no less than the political program of the CDU,
that is to say, of the party which was to rule Germany from 1949 to 1966. To cap all that, the
director of the “office for the administration of the economy” was Ludwig Erhard, a CDU member
and ardent supporter of ordoliberal and social market economy ideas. It was Erhard who in 1948, in
violation of instructions from the military administration, decided to use Miksch’s “Guiding
Principle Law” to eliminate almost overnight most rationing and price controls. Economic
historians have later recognized that this brave choice was the kick-off for Germany’s economic
miracle. Hence, it also represented an excellent vehicle for the popularity of the ordoliberal ideas
underlying it.60

59
See Goldschmidt & Berndt 2003, 2.
60
Erhard himself eventually paid tribute to ordoliberal ideas – in particular, those related to competition – in explaining
the reasons for Germany’s extraordinary economic recovery (see Erhard 1958).

32
§5. The influence of Ordoliberalism on European competition law

Outside of Germany, ordoliberal views have spread mainly through the process of European
unification. Freiburg influence in the process emerged at its earliest stages and its highest levels.
The leading German representatives in the founding of the EEC were closely associated with
ordoliberalism. For example, the first European Commission president, Walter Hallstein, had been a
fervent ordoliberal since the 1940s. Also Hans von der Groeben, one of the two main drafters of the
Spaak Report (the document on which the EEC Treaty was based) and later the first competition
Commissioner for the European Commission, had strong ties with Ordoliberalism. The creator of
the social market economy, Müller-Armack, was himself responsible, as a representative of the
German government, of the early stages of the EEC economic policy. But beyond personal
contributions, it was ordoliberal ideas themselves which proved consistent with the goal of
pursuing European integration through the creation of a common market. Two of the central
ingredients of the EEC – its being based on the voluntary agreement of the Member Countries and
its basic faith in the market economy – were in fact perfectly in harmony with the Freiburg notion
of an economic constitution based on the transaction order.
The influence of Ordoliberalism has been particularly important in relation to European
competition law. There are several signs of that. First of all, the Germans were the keenest
supporters of the inclusion of antitrust provisions in the Treaty of Rome. Moreover, the Director
General of the competition office has customarily been German during the first decades of the EEC.
The content itself of Articles 85 and 86 closely reflected ordoliberal thought and its support for a
prohibition approach. In particular, while the cartel prohibition had clear analogues in US antitrust
rules, forbidding the abuse of a market-dominating position was a totally new concept, of apparent
Freiburg derivation (see previous §) and quite alien to American antitrust tradition.
Traces of the ordoliberal influence actually transcend the Articles’ prohibitions. Take for example
the exemptions contained in the third section of Article 85 (so-called “§3-exemptions”). The Article
lists the conditions that have to be met in order for an agreement, or concerted practice, to be
granted an exemption from the general anti-cartel prohibition. The conditions are four, two positive
and two negative. The positive conditions are, first, that the agreement must contribute to improve
either technical efficiency or the production or distribution of goods and, second, that a “fair share”
of the resulting benefits must go to consumers. The negative conditions are, first, that the agreement
must impose no restrictions which are unnecessary from the viewpoint of the mentioned benefits
and, second, that it should not grant firms the power to “substantially” eliminate competition. While
it might be legitimate to interpret “§3-exemptions” as a compromise which eventually turned the

33
per se prohibition of Article 85 into a US-style rule of reason, the truth is that what we have here is
a sort of codified rule of reason,61 that is to say, a rule imposing very specific and detailed standards
in order to tightly constraint the Commission’s decision of granting, or denying, an exemption.
Such a rule is totally unknown to American antitrust tradition, while it fits well with Ordoliberalism
in that, by properly restricting an otherwise too ample discretionary power, it only leaves to the
“monopoly office” the task of applying the principles of competition law.
Yet, the clearest demonstration of the ordoliberal impact on European antitrust may be found in
what happened after the approval of the EEC Treaty, and in particular in the outcome of two crucial
fights. First of all, what was the interpretation to be given to Articles 85 and 86? Were they fully-
fledged law or just guidelines for administrative decision-making? Not surprisingly, the Germans
tended to see the Articles as legal norms that had to be interpreted and applied according to juridical
methods. Their ordoliberal perspective led them to view the Treaty as the EEC economic
constitution, from which more specific regulative principles were to be derived. Delegations from
other Member States, in particular the French one, were on the contrary inclined to view Articles 85
and 86 not as enforceable law, but rather as programmatic policy statements for guiding the
Commission’s administrative behavior. This position was an apparent heritage of the interwar
administrative approach to antitrust.
The second fight was on the actual relevance of competition law. Were the two Articles to be
taken seriously and forcefully enforced by the Commission? The German answered “yes”, but the
other countries disagreed. Following their national tradition, where competition rules had
historically played a very marginal role, these countries tended to believe that the two Articles
should be applied only in exceptional cases, involving very large firms.
The two fights went on for many years, but eventually ordoliberal-inspired Germans won both. In
the end, none disputed anymore that EEC competition law deserved a juridical approach, nor that
such a law should play a central role in the process of European integration. The key to the German
success lay in the circumstance that the EEC first and fundamental goal was the achievement of an
integrated market. Such a goal also affected the construction of the competition law system. Indeed,
an integrated market had two closely related advantages. On the one side, it would allow European
firms to gain sufficient size to fully exploit their scale economies and effectively compete on world
markets. On the other, integration might also be viewed as furthering consumer welfare. This
second point turned out to be crucial for competition law. The idea that more competition would
lead to greater benefits for European consumers might in fact be reworded in integration jargon.
Market integration, that is to say, the elimination of obstacles to the free flow of goods, services and

61
See Fulda 1965, 643.

34
capitals, might actually be seen as instrumental to enhancing competition via the increase in the
number of actual and potential competitors in every European market. Hence, to the extent that
competition law helped eliminate those obstacles, it directly and indirectly served both the cause of
market integration and that of European consumers. The bottom line was that competition law
should be viewed as an essential tool to promote the EEC Holy Grail, market integration.
Remarkably, this reasoning was already present in the 1956 Spaak Report, where price
discrimination was singled out as an instance of a private barrier to trade which would not survive
the tougher competition following market integration (Spaak 1956, 54).62
The piece of legislation that most clearly reveals Germany’s success is the fundamental
Regulation 17 of 1962 (Reg.17/62 henceforth), namely, the text which fixed the institutional
structure and specific procedures for applying the antitrust rules of the Treaty of Rome. The
importance of Reg.17/62 can hardly be overestimated, so much so that it may well be said that the
actual starting date for EEC competition policy was not January 1, 1958, but rather March 13, 1962,
when the Regulation came into effect.63 The Regulation was drafted by – guess whom? – a German
lawyer, professor Arvid Deringer, and the draft was then subjected to intense negotiations.
The so-called Deringer report contained a careful analysis of three possible approaches which the
Commission could adopt for implementing Articles 85 and 86.64 The Articles, being just
constitutive principles, were in fact open to different solutions in terms of their actual enforcement,
that is to say, with respect to the required regulative principles. The Dutch approach prescribed that
all restrictive agreements be notified to the Commission as a necessary and sufficient condition for
their presumptive validity; it should then be up to the Commission to prove that an agreement need
be made void ex nunc because it abused competition. The French approach was even softer in that it
left to firms to decide whether an agreement was legal, while the Commission maintained the power
to challenge each agreement and, in case, make it retroactively void. Finally, the German approach
stuck to Ordoliberalism and coherently called for a system based on preventive controls, a general
prohibition rule and the granting of exemptions only to agreements which had, first, been notified to
the Commission, and, then, explicitly declared by the Commission as deserving a “§3-exemption”.

62
Recall that one of the authors of the Report was the German ordoliberal von der Groeben. Martin (2006, 137)
correctly observes that the argument according to which the goals of integration and efficiency are mutually consistent
should not be taken for granted outside the ideal case of perfectly competitive markets. If, despite integration, a market
remains non-perfectly competitive (as it should if the source of market power is not in the geographical separation of
markets), the possibility of, say, price discrimination would remain intact. Yet, it is also true that it is precisely in non-
perfectly competitive markets that integration may bring the most significant improvement in performance by
increasing the number of competitors, ejecting from market the least efficient firms and allowing the surviving firms to
enjoy scale economies (Martin 2004, 10-11). The point is what the source of market power is. For example, in the case
of coal and steel, i.e., industries with large sunk costs, it was highly questionable that integration might bring the desired
benefits. See also above, fn.36.
63
For a detailed analysis of Reg.17/62, see Goyder 2003, 34-40.
64
See Goyder 2003, 32-33.

35
 Germany won this battle too. The outcome, i.e., Reg.17/62, canceled any remaining doubt that
competition law be given full juridical status, and at the same time devised a very original
institutional framework fully consistent with the ordoliberal design (Gerber 1998, 349-351).
Antitrust enforcement was centralized in the hands of the Commission and away from those of
national competition authorities. To this aim, the Competition Directorate was granted a high
degree of autonomy, unparalleled by any other Commission directorate. Though the system relied
heavily on the initiatives and decisions of the Commission, the latter’s discretionary power was
nonetheless rigidly constrained within the limits set by the economic constitution (i.e., the relevant
Articles in the Treaty of Rome) and the regulative principles of Reg.17/62.
The other key body in the application of European competition law was the Court of Justice,
whose main task was to review the Commission’s decisions. As remarked by Gerber (1998, 351),
the Court has traditionally played a leadership role in the EEC integration process. Indeed, it did not
take long for the Court to realize that competition law might be an important vehicle towards this
goal. As a consequence, antitrust case law has been developed primarily as a tool to promote
European integration in the form of a Common Market. This is a very important aspect that need be
kept in mind when analyzing the principles contained in the Court’s antitrust rulings. As Gerber
puts it, <<…the Court made teleology the cornerstone of its interpretive strategy […] the Court
interpreted the treaty’s competition law provisions according to its own conceptions of what was
necessary to achieve the integrationist goals…>> (ibid., 353).
Thus, in contrast to national competition laws, whose primary objective is, or should be, the
maximization of the economic benefits generated by a market economy, EEC competition law has
been shaped by the Court according to a very different goal: the elimination of all kinds of private
restraints to trade across national borders. Or, to put it differently, the Court has singled out
integration as the main principle and objective of the EEC economic constitution, and thus has
consistently privileged those interpretations of competition rules which are more conducive to the
Common Market goal. The Court’s behavior has also influenced the Commission’s since
cooperating with the Court and accepting its intellectual leadership with respect to the integration
goal was in the EEC early years the only way a basically weak Commission could ensure that its
own interpretations and applications of antitrust rules be granted authoritativeness.
In the first years of enforcement of EEC competition law, the centrality of the integration goal and
the teleological interpretation endorsed by the Court led to an enormous disparity in the attention
given to vertical restraints, on the one side, and horizontal agreements and abuse of dominance, on
the other. The reason is simple: while vertical restraints constituted an obvious obstacle to
transborder trade, and thus directly impaired integration, horizontal agreements were not so clearly

36
against the Common Market since it could legitimately be argued that transborder cooperation
between rival firms might actually favor integration and, in any case, fostered the other Community
goal of creating European industrial champions capable of competing on world markets. The same
“pro-size” reasoning drove the Court’s and Commission’s enforcement of Article 86, at least until
the Commission issued in 1966 a Memorandum on Concentration which first established a
framework for giving content to the anti-abuse provision. Hence, for about a decade EEC antitrust
policy almost exclusively consisted of a fight against vertical agreements in defense of the
paramount integration objective.
Such a defense also led both the Court and the Commission to give explicit primacy to
competition rules with respect to other crucial provisions of the Treaty of Rome, like the freedom to
contract or the protection of trademarks and other intellectual property rights. Thus, Peritz’s
“competition versus property rights” dichotomy caused far less troubles to European competition
law than to the US one. Indeed, EEC antitrust enforcers have had little doubts in privileging
“competition” over “property rights” whenever such a choice might favor the pursuit of the leading
principle of EEC economic constitution, namely, the Common Market. In short, the eventual
outcome of the ordoliberal influence on European competition law has been a system that, though
largely faithful in its institutional design and actual working to the dictates of the Freiburg School,
is driven by neither the ideal of “complete competition” nor any of the other typical constitutive
principles for a transaction economy (like, say, the principle of private property or freedom to
contract), but rather by an “exogenous” goal such as market integration.

§6. The first EEC antitrust case: the Grundig decision

It is hardly surprising that, in a judicial environment where any kind of contract or business practice
capable of dividing the Common Market into separate zones was viewed as a cardinal offense
against the Treaty’s integration goal, the first truly important antitrust decision by the Commission
and the Court came from a case of vertical restraint, the 1964 Grundig-Consten case.
The German producer of radios and televisions Grundig had stipulated in 1957 an exclusive
distribution agreement with a French firm called Consten. As a Grundig representative, Consten
was committed to bearing the costs of local advertising and to ensuring after-sales services;
moreover, it could neither sell products from Grundig competitors nor export Grundig products to
other European countries. In return, Grundig agreed to sell its products in France only through this
sole distributor, thereby granting Consten absolute territorial protection from the “parallel imports”

37
of Grundig products into France. Moreover, for the duration of the contract Consten was authorized
to use the trademark “Grundig”, though it could not register it in France. However, Consten
registered in its own name the trademark “GINT” (for Grundig International), under the agreement
with Grundig that it would cancel this registration or assign the GINT trademark to Grundig if and
when Consten ceased to be Grundig’s exclusive distributor in France.
Contracts with similar clauses – including the national registration of the GINT trademark – had
been concluded by Grundig with distributors in the other EEC Member States. Yet, despite the
existence of such a contract, several distributors began to deliver Grundig products outside the
distribution zones they had been assigned. In 1961 a French company called UNEF started buying
in Germany from one of those resellers and thus became a “parallel importer” of Grundig products
in France. Consten took legal proceedings in France against UNEF, but the latter brought the case to
the EEC Commission asserting that exclusive distribution rights violated Article 85. Both the
Commission and the Court eventually backed UNEF’s thesis and declared the agreement between
Grundig and Consten void and unenforceable, thereby setting a key precedent for many other
similar cases involving vertical restraints.65
The Court’s decision is particularly telling.66 Despite overruling the Commission on two points
(namely, that exclusivity alone in a distribution system was sufficient to raise artificial barriers to
trade between Member States and that the clauses of the agreement unrelated to restrictions on the
parallel import of goods should also be annulled), the Court supported the Commission’s verdict. In
particular, the Court agreed on the Commission’s interpretation of the words “affecting trade” in
Article 85.1 as meaning “capable of endangering, directly or indirectly, in fact or potentially,
freedom of trade between Member States in a direction contrary to the objective of a single,
integrated market”. Hence, for both the Commission and the Court the article should be read as
prohibiting the exploitation of EEC borders as privately-built barriers to trade. This interpretation
meant that, even if the agreement might favor an increase in Grundig’s trade through Consten, it
still had to be canceled if it prevented other firms, like UNEF, from importing Grundig products
into France or if it impeded re-exportation by Consten. More generally, it meant that invoking the
increase in inter-brand competition between Grundig and other manufacturers could never make for
the lack, or reduction, of intra-brand competition between Grundig dealers caused by this and
similar agreements.

65
Note that no fully-fledged market investigation was conducted by the Commission or required by the Court. Such an
inquiry might have allowed to charge Grundig with abuse of dominant position (see e.g. Fulda 1965, 636). As I said
before, the trend in the first years of European antitrust was to ignore Art.86 and focus only on Art.85 violations.
66
See Goyden 2003, 43-44; Gerber 1998, 355; Fulda 1965, 631-637. For a critical assessment of the Grundig case, see
Neri 2007. The ruling is in EEC JO 161/1964, pp. 2545–2553 (French version).

38
 There is an additional lesson that Grundig may teach us, more directly pertaining to the
“competition versus property rights” dichotomy. The Court in fact also approved the Commission’s
choice to take into account, and condemn, the assignment of the GINT trademark to Consten as an
ancillary restriction reinforcing the exclusionary agreement. According to the Court, trademarks and
other intellectual property rights should never be used to circumvent competition law, even when a
Member State’s domestic law might allow that.
Two articles of the Treaty of Rome might actually be quoted in support of the Grundig-Consten
trademark deal. Article 36 (now Article 30) of the Treaty stated, in fact, that “The provisions of
Articles [28 and 29]67 shall not preclude prohibitions or restrictions on imports, exports or goods in
transit justified on grounds of… […] …the protection of industrial and commercial property”, while
Article 222 (now Article 295) contained the general principle that “This Treaty shall in no way
prejudice the rules in Member States governing the system of property ownership”. A broad
interpretation of the two articles would have led to the clearance of the Grundig-Consten agreement,
at least as far as the trademark clause was concerned. The forced cancellation of the clause would in
fact be viewed as an arbitrary interference in the parties’ freedom to contract and in the full
enjoyment of Grundig’s property rights over its own brand name. Yet, the Court’s choice was to
give a narrow interpretation to Articles 36 and 222. In striking a balance between the opposing
requirements of EEC competition law and of national property rights legislations, the needs of the
Community were given priority. Faced with the tough question of how far should the owner of a
property right be allowed to exercise it, and whether the right’s extension should be such as to admit
the possibility of exercising it as an obstruction to transborder trade, the Court ruled that the EEC
Treaty did not allow the “improper” use of rights under any national trademark law, where
“improper” should be taken to mean “such as to frustrate the Community’s competition law”.68 In
short, the Grundig ruling established the principle that it was the exercise of the right, not its
existence, that might be abusive with respect to the Treaty’s integration goal and that, if this was
actually the case, it deserved no protection at all.
If we recall that in the BMI case the US Supreme Court had concluded that only a rule of reason
assessment might warrant the required balance between the two opposing commitments to
competition and property rights (see above, §2), the contrast with the Grundig case is apparent. In
BMI there was no a priori reason to decide one way or the other: the defense of competition and that
of property rights stood on equal footing and the Supreme Court simply had to carefully ponder the
weights of the two arguments. On the contrary, an a priori criterion did exist in Grundig: the

67
Originally, Articles 30 to 34. These were the articles prohibiting quantitative restrictions between Member States on,
respectively, imports and exports.
68
See Goyder 2003, 249-251.

39
constitutional standing of the Common Market principle constituted a decisive reference point for
both the Commission and the Court of Justice, so much so that the pendulum between competition
and property rights had necessarily to be shifted in the direction more conducive to the integration
goal. Hence, comparing BMI and Grundig highlights a very big difference between the two antitrust
traditions – one whose relevance may hardly be overestimated but which is usually neglected in the
literature.69 It is all the more remarkable that, according to the present reconstruction, such a
difference should be attributed to the decisive role played in the building of EEC competition law
and institutions by the Freiburg school of lawyers and economists.

Conclusion

The stated goal of competition policy – as declared in, say, the Commission’s official brochure
explaining to the general public the activity of the Competition Directorate (European Commission
2004) – is to avoid that harm be caused to consumers by those instances of business behavior
capable of undermining the competitive process. Accordingly, one of the best contemporary
handbooks defined competition policies as: <<…the sets of policies and laws which ensure that
competition in the marketplace is not restricted in such a way as to reduce economic welfare.>>
(Motta 2004, 30). This paper, and more generally the research project of which the present work
constitutes a first step, aims at demonstrating that, historically speaking, the equation “competition
policy = protection of consumer welfare” is at best highly debatable both in Europe and the US.
First of all, the history of US antitrust law shows that several motives, other than the
maximization of consumer welfare, may explain why competition deserves being protected.
Motives such as the defense of small business or the concentration of too much economic, and
possibly political, power in the hands of few firms have been used to justify the introduction of
antitrust provisions. Hence, it is simply false to claim that either the Sherman or the Clayton Act
were approved in the supreme interest of the consumer.
Secondly, it is still the US experience that reveals the limits of an approach to antitrust history too
narrowly focused on the evolution of economists’ thoughts on competition. Indeed, whatever the

69
Think, for example, of the room for a pure efficiency goal in the two traditions. While the American one might well
accommodate it (think e.g. of the Chicago school), this would be much harder for EEC competition law, at least as long
as the paramount goal of Europe’s economic constitution remains integration (or, better, integration guided – some
would say forced – from above). The neglect of such a difference may lead the pro-laissez-faire critics of Grundig and
other similar Court’s decisions to miss the point: it may well be true that, by denying French consumers the opportunity
to get adequate marketing information or enjoy reliable after-sale services (cf. Telser 1960; Motta 2004, 313-315), the
Grundig ruling eventually destroyed social welfare, rather than create it, but as long as the ruling increased the amount
of transborder trade between Germany and France, it fully met its constitutional goal.

40
reason for the legal protection of competition, this motivation has always been contrasted,
especially in courts, by an opposite, and equally strong, impulse to defend property rights and the
freedom to contract – what I called the “competition versus property rights” dichotomy. The ebbs
and flows of twelve decades of American antitrust may thus be explained in terms of the temporary
prevalence of one or the other of these impulses, rather than by the sequence of economic doctrines
that have occasionally risen to dominance in the marketplace of ideas.
Third, and most important, the canonical narrative explaining the birth of EEC antitrust law only
in terms of the postwar importation of the American tradition fails to take into due account two
crucial features of the European experience of clear non-American origin, namely, the constitutional
standing of competition and its rather peculiar goal. That competition and the necessity of its
defense be enshrined in Europe’s “economic constitution” reveals the influence of the Freiburg
School of law and economics, the intellectual background of many key German representatives
during the ECSC and EEC negotiations. By openly shifting the balance of the above-mentioned
dichotomy towards the “competition” pole, this feature has provided European antitrust enforcers
with clear behavioral directions to be followed in controversial cases. These directions have been
reinforced by the second feature, namely, the idea that competition is instrumental to the
achievement of the truly fundamental EEC goal, the Common Market. Though never mentioned in
the Commission’s 2004 brochure, economic integration turns out to be the most important
motivation behind Europe’s defense of competition – surely more important than the simple
maximization of consumer welfare. This entails that, for instance, many of those decisions by either
the Commission or the Court of Justice which seem open to criticism as contrary to the interest of
consumers may well be rescued if we take into account that they may nonetheless promote the
Common Market.
To sum up, EEC antitrust law and policy emerge as the outcome of the highly peculiar
combination between the ordoliberal call for a constitutional foundation of economic policy-making
and the integration goal. Such a combination clearly differentiates the EEC competition tradition
from its American counterpart. Moreover, it shows that some economists did have a significant
influence on the building of that tradition, although not, as it might be expected, via their ever-
improving modeling of imperfect competition, but rather via their devising a very original approach
to the interconnection, and mutual dependence, of law and economics. In a nutshell, as far as
Europe is concerned, it was neither Cambridge nor Columbia nor Chicago, but Freiburg plus (the
Treaty of) Rome.

41
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