The Antitrust Dividend

The problem

A monopoly is a tax. Not metaphorically. A firm with durable market power raises price above the competitive level and the difference is collected from customers, involuntarily, with no vote and no appropriation. Cartel studies going back decades put the median overcharge somewhere around 15 to 20 percent of the affected commerce.

The whole public pays it. That is what "the consumer welfare standard" is actually about, underneath the economics.

Now consider what happens on the rare occasion the government wins.

The penalty is paid, and it goes into the general fund of the Treasury, where it becomes an undifferentiated dollar among roughly seven trillion of them. It funds nothing in particular. It is announced in a press release, absorbed without trace, and forgotten within a news cycle.

So the sequence is: the public is overcharged for a decade, the government litigates for another decade, and at the end the public gets a press conference.

This is a strange way to close the loop. The injury was diffuse and universal. The remedy is diffuse to the point of invisibility, which is not the same thing at all. Diffuse and universal would be everyone getting a share. Invisible is everyone getting nothing they can point to.

There is also a deterrence problem sitting underneath. Criminal fines under the Sherman Act are capped at $100 million for a corporation, or twice the gain or loss where that is greater. Against the profits available from a genuinely dominant position over ten or fifteen years, a fine of that order can be a cost of doing business, and the firms in question can compute that as well as we can.

The proposal

Every dollar of antitrust penalty and disgorgement that is not returned to identifiable victims goes to the American Permanent Fund as principal. Monopoly profits become national capital.

How it would work

1. Victims first, always. Where injured parties are identifiable and the money can actually reach them, it does. Consumer redress is the superior remedy and this proposal never displaces it. What is at issue is the large residual that cannot be traced to individuals, which today defaults to general revenue.

1. The residual is principal. Civil penalties, criminal fines, and disgorgement of unlawful gains in federal antitrust matters flow to the Fund under the two locks of № 023: never spendable, never borrowed against.

1. Disgorgement restored by statute. The FTC's ability to obtain monetary relief was substantially narrowed by AMG Capital Management v. FTC in 2021, which held that Section 13(b) does not authorize equitable monetary awards. Congress should restore that authority explicitly. Without it, the largest lever discussed here is missing its handle.

1. Penalties scaled to the gain, not to a fixed cap. Replace the flat statutory maximum with a presumption of disgorgement of the full monopoly overcharge over the period of the violation, estimated by the same statistical agency that runs the Automation Ledger in № 025, and rebuttable by the defendant. A fine smaller than the profit is not a penalty, it is a licence fee.

1. A wall between the collector and the beneficiary. The enforcement agencies' budgets are appropriated exactly as they are today and are formally severed from collections. No agency, office, or official gains a dollar of budget, headcount, or bonus from winning a bigger number. This is the load-bearing safeguard and it is treated as such below.

The numbers

Antitrust collections are lumpy by nature, and honesty requires leading with that rather than burying it.

Criminal antitrust fines in a typical year run in the hundreds of millions. Extraordinary years, driven by a single cartel, have run into the billions. Private settlements are much larger, though those already flow to plaintiffs: the payment-card interchange litigation alone settled in the billions.

The comparison worth making is jurisdictional. The European Commission has issued single-firm decisions against one American technology company totalling more than €8 billion, and those receipts go to the EU budget, where they reduce what member states must contribute. Europe collects more from American monopolists than America does, and routes it more visibly.

Call the American steady state, with restored disgorgement authority and gain-based penalties, $2 to $5 billion a year, averaged across fat years and thin ones. Take the low end.

$2 billion a year at a 5 percent real return compounds to roughly $26 billion of corpus in a decade, yielding about $1.3 billion a year permanently. Per citizen, roughly $4 a year.

Four dollars, and we are going to make the same concession we made in № 031 and № 032, because it keeps being true: the first-year cheque is trivial. What is not trivial is the principle, which here is unusually clean. Money extracted from the public by market power is returned to the public as an ownership stake, permanently, rather than being quietly folded into the general fund. A citizen can look at the Fund and see that the last monopoly is now working for them.

That is a story the public can follow, and antitrust enforcement has spent forty years failing to give the public a story it can follow.

The honest objections

"You are giving the government a financial motive to prosecute. This is civil forfeiture with a nicer suit." The most serious objection here by a wide margin, and it deserves to be treated as potentially fatal rather than waved off. The history is genuinely bad: when police departments keep seizure proceeds, seizures rise, and the incentive corrupts the judgment. Item 5 is the answer and it must be absolute. Not "agencies mostly do not benefit" but a statutory prohibition on any collection-linked appropriation, staffing, or performance metric, with the Fund's receipts invisible to the enforcers' budget line. If Congress will not accept that severance, this proposal should not pass, because the diffuse benefit of a compounding endowment is not worth a distorted prosecutor.

"Fines should compensate victims, not build a sovereign wealth fund." Agreed, and item 1 concedes it entirely. The question is only what happens to money that cannot reach victims, which in large antitrust matters is most of it: the overcharge was spread across millions of transactions by people who kept no receipts and often did not know they were injured. Today that residual goes to general revenue, which is not compensation either. Between two forms of non-compensation, a permanent public asset beats a rounding error in a $7 trillion budget.

"Gain-based penalties will produce enormous, arbitrary numbers and chill legitimate competition." A real hazard. Estimating "the monopoly overcharge over the period of the violation" is contested econometrics, and a firm facing a ruinous and speculative estimate will settle regardless of the merits, which is its own injustice. Hence the rebuttable presumption and the independent statistical agency rather than the prosecuting office. It remains the part of this design most likely to be got wrong in drafting, and we would rather flag that now than discover it in a courtroom.

"Enforcement is lumpy, so the Fund gets a volatile trickle. This is not a serious revenue stream." Correct on the volatility and it does not matter. A permanent fund is the one institution that is indifferent to timing, because principal is never spent and the payout is smoothed off the corpus. Lumpy deposits into a perpetual endowment are exactly what an endowment is built to absorb. This would be a bad basis for annual appropriations and a fine basis for capital.

"This changes nothing. The money already goes to the Treasury, which is already the public." Formally true and practically hollow. A dollar in the general fund is spent this year and gone; a dollar of principal is owned forever and pays out forever. The difference between spending and owning is the entire premise of № 001. If it does not matter here, it does not matter anywhere.

Sources

• Sherman Act criminal penalties: 15 U.S.C. § 1; alternative fine provision at 18 U.S.C. § 3571(d) (twice the gross gain or loss)
• AMG Capital Management, LLC v. FTC, 593 U.S. ___ (2021), narrowing monetary relief under FTC Act § 13(b)
• Cartel overcharge estimates; Connor and Lande, surveys of median cartel overcharges in the 15–20% range
• European Commission competition decisions against Google (Shopping, Android, AdSense), cumulatively exceeding €8 billion; fines accrue to the EU budget (ec.europa.eu)
• US Department of Justice Antitrust Division, annual criminal fine collections (justice.gov/atr)
• Proposals № 001 (The American Dividend); № 023 (The Debt Covenant); № 025 (The Automation Ledger); № 031 (The Machine Dividend)