United States antitrust law


United States antitrust law is a collection of federal and state government laws that regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers The concept is called competition law in other English-speaking countries The main statutes are the Sherman Act 1890, the Clayton Act 1914 and the Federal Trade Commission Act 1914 These Acts, first, restrict the formation of cartels and prohibit other collusive practices regarded as being in restraint of trade Second, they restrict the mergers and acquisitions of organizations that could substantially lessen competition Third, they prohibit the creation of a monopoly and the abuse of monopoly power

The Federal Trade Commission, the US Department of Justice, state governments and private parties who are sufficiently affected may all bring actions in the courts to enforce the antitrust laws The scope of antitrust laws, and the degree to which they should interfere in an enterprise's freedom to conduct business, or to protect smaller businesses, communities and consumers, are strongly debated One view, mostly closely associated with the "Chicago School of economics" suggests that antitrust laws should focus solely on the benefits to consumers and overall efficiency, while a broad range of legal and economic theory sees the role of antitrust laws as also controlling economic power in the public interest1

Contents

  • 1 History
  • 2 Cartels and collusion
    • 21 Restrictive practices
    • 22 Rule of reason
    • 23 Tacit collusion and oligopoly
    • 24 Vertical restraints
  • 3 Mergers
    • 31 Horizontal mergers
    • 32 Vertical mergers
    • 33 Conglomerate mergers
  • 4 Monopoly and power
    • 41 Monopolization
    • 42 Exclusive dealing
    • 43 Price discrimination
    • 44 Essential facilities
    • 45 Tying products
    • 46 Predatory pricing
    • 47 Intellectual property
  • 5 Scope of antitrust law
  • 6 Remedies and enforcement
    • 61 Federal government
    • 62 State governments
    • 63 Private suits
  • 7 Theory
  • 8 See also
  • 9 Notes
  • 10 References
  • 11 External links

Historyedit

Main articles: History of United States antitrust law and History of competition law "The Bosses of the Senate", a cartoon by Joseph Keppler depicting corporate interests–from steel, copper, oil, iron, sugar, tin, and coal to paper bags, envelopes, and salt–as giant money bags looming over the tiny senators at their desks in the Chamber of the United States Senate2

Although "trust" has a specific legal meaning where one person holds property for the benefit of another, in the late 19th century the word was commonly used to denote big business, because that legal instrument was frequently used to effect a combination of companies3 Large manufacturing conglomerates emerged in great numbers in the 1880s and 1890s, and were perceived to have excessive economic power4 The Interstate Commerce Act of 1887 began a shift towards federal rather than state regulation of big business5 It was followed by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914 and the Federal Trade Commission Act of 1914, the Robinson-Patman Act of 1936, and the Celler-Kefauver Act of 1950

Indeed, at this time hundreds of small short-line railroads were being bought up and consolidated into giant systems Separate laws and policies emerged regarding railroads and financial concerns such as banks and insurance companies People for strong antitrust laws argued the American economy to be successful requires free competition and the opportunity for individual Americans to build their own businesses As Senator John Sherman put it, "If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life" Congress passed the Sherman Antitrust Act almost unanimously in 1890, and it remains the core of antitrust policy The Act prohibits agreements in restraint of trade and abuse of monopoly power It gives the Justice Department the mandate to go to federal court for orders to stop illegal behavior or to impose remedies6

Public officials during the Progressive Era put passing and enforcing strong antitrust high on their agenda President Theodore Roosevelt sued 45 companies under the Sherman Act, while William Howard Taft sued 75 In 1902, Roosevelt stopped the formation of the Northern Securities Company, which threatened to monopolize transportation in the Northwest see Northern Securities Co v United States

Standard Oil Refinery No 1 in Cleveland, Ohio, pictured was a major company broken up under United States antitrust laws

One of the more well known trusts was the Standard Oil Company; John D Rockefeller in the 1870s and 1880s had used economic threats against competitors and secret rebate deals with railroads to build what was called a monopoly in the oil business, though some minor competitors remained in business In 1911 the Supreme Court agreed that in recent years 1900–1904 Standard had violated the Sherman Act see Standard Oil Co of New Jersey v United States It broke the monopoly into three dozen separate companies that competed with one another, including Standard Oil of New Jersey later known as Exxon and now ExxonMobil, Standard Oil of Indiana Amoco, Standard Oil Company of New York Mobil, again, later merged with Exxon to form ExxonMobil, of California Chevron, and so on In approving the breakup the Supreme Court added the "rule of reason": not all big companies, and not all monopolies, are evil; and the courts not the executive branch are to make that decision To be harmful, a trust had to somehow damage the economic environment of its competitors United States Steel Corporation, which was much larger than Standard Oil, won its antitrust suit in 1920 despite never having delivered the benefits to consumers that Standard Oil did In fact, it lobbied for tariff protection that reduced competition, and so contending that it was one of the "good trusts" that benefited the economy is somewhat doubtful Likewise International Harvester survived its court test, while other monopolies were broken up in tobacco, meatpacking, and bathtub fixtures Over the years hundreds of executives of competing companies who met together illegally to fix prices went to federal prison

One problem some perceived with the Sherman Act was that it was not entirely clear what practices were prohibited, leading to businessmen not knowing what they were permitted to do, and government antitrust authorities not sure what business practices they could challenge In the words of one critic, Isabel Paterson, "As freak legislation, the antitrust laws stand alone Nobody knows what it is they forbid" In 1914 Congress passed the Clayton Act, which prohibited specific business actions such as price discrimination and tying if they substantially lessened competition At the same time Congress established the Federal Trade Commission FTC, whose legal and business experts could force business to agree to "consent decrees", which provided an alternative mechanism to police antitrust

American hostility to big business began to decrease after the Progressive Era For example, Ford Motor Company dominated auto manufacturing, built millions of cheap cars that put America on wheels, and at the same time lowered prices, raised wages, and promoted manufacturing efficiency Ford became as much of a popular hero as Rockefeller had been a villain Welfare capitalism made large companies an attractive place to work; new career paths opened up in middle management; local suppliers discovered that big corporations were big purchasers Talk of trust busting faded away Under the leadership of Herbert Hoover, the government in the 1920s promoted business cooperation, fostered the creation of self-policing trade associations, and made the FTC an ally of "respectable business"

The printing equipment company ATF explicitly states in its 1923 manual that its goal is to 'discourage unhealthy competition' in the printing industry

During the New Deal, likewise, attempts were made to stop cutthroat competition, attempts that appeared very similar to cartelization, which would be illegal under antitrust laws if attempted by someone other than government The National Industrial Recovery Act NIRA was a short-lived program in 1933–35 designed to strengthen trade associations, and raise prices, profits and wages at the same time The Robinson-Patman Act of 1936 sought to protect local retailers against the onslaught of the more efficient chain stores, by making it illegal to discount prices To control big business, the New Deal policymakers federal and state regulation—controlling the rates and telephone services provided by American Telephone & Telegraph Company AT&T, for example—and by building up countervailing power in the form of labor unions

By the 1970s, fears of "cutthroat" competition had been displaced by confidence that a fully competitive marketplace produced fair returns to everyone The fear was that monopoly made for higher prices, less production, inefficiency and less prosperity for all As unions faded in strength, the government paid much more attention to the damages that unfair competition could cause to consumers, especially in terms of higher prices, poorer service, and restricted choice In 1982 the Reagan administration used the Sherman Act to break up AT&T into one long-distance company and seven regional "Baby Bells", arguing that competition should replace monopoly for the benefit of consumers and the economy as a whole The pace of business takeovers quickened in the 1990s, but whenever one large corporation sought to acquire another, it first had to obtain the approval of either the FTC or the Justice Department Often the government demanded that certain subsidiaries be sold so that the new company would not monopolize a particular geographical market

In 1999 a coalition of 19 states and the federal Justice Department sued Microsoft A highly publicized trial found that Microsoft had strong-armed many companies in an attempt to prevent competition from the Netscape browser7 In 2000, the trial court ordered Microsoft to split in two, preventing it from future misbehavior8 The Court of Appeals affirmed in part and reversed in part In addition, it removed the judge from the case for improperly discussing the case while it was still pending, with the media9 With the case in front of a new judge, Microsoft and the government settled, with the government dropping the case in return for Microsoft agreeing to cease many of the practices the government challenged10 In his defense, CEO Bill Gates argued that Microsoft always worked on behalf of the consumer and that splitting the company would diminish efficiency and slow the pace of software development

Cartels and collusionedit

Main articles: Cartel, Restrictive practices, and US corporate law

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court"

Sherman Act 1890 §1

Preventing collusion and cartels that act in restraint of trade is an essential task of antitrust law It reflects the view that each business has a duty to act independently on the market, and so earn its profits solely by providing better priced and quality products than its competitors The Sherman Act §1 prohibits "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce"11 This targets two or more distinct enterprises acting together in a way that harms third parties It does not capture the decisions of a single enterprise, or a single economic entity, even though the form of an entity may be two or more separate legal persons or companies In Copperweld Corp v Independence Tube Corp12 it was held an agreement between a parent company and a wholly owned subsidiary could not be subject to antitrust law, because the decision took place within a single economic entity13 This reflects the view that if the enterprise as an economic entity has not acquired a monopoly position, or has significant market power, then no harm is done The same rationale has been extended to joint ventures, where corporate shareholders make a decision through a new company they form In Texaco Inc v Dagher14 the Supreme Court held unanimously that a price set by a joint venture between Texaco and Shell Oil did not count as making an unlawful agreement Thus the law draws a "basic distinction between concerted and independent action"15 Multi-firm conduct tends to be seen as more likely than single-firm conduct to have an unambiguously negative effect and "is judged more sternly"16 Generally the law identifies four main categories of agreement First, some agreements such as price fixing or sharing markets are automatically unlawful, or illegal per se Second, because the law does not seek to prohibit every kind of agreement that hinders freedom of contract, it developed a "rule of reason" where a practice might restrict trade in a way that is seen as positive or beneficial for consumers or society Third, significant problems of proof and identification of wrongdoing arise where businesses make no overt contact, or simply share information, but appear to act in concert Tacit collusion, particularly in concentrated markets with a small number of competitors or oligopolists, have led to significant controversy over whether or not antitrust authorities should intervene Fourth, vertical agreements between a business and a supplier or purchaser "up" or "downstream" raise concerns about the exercise of market power, however they are generally subject to a more relaxed standard under the "rule of reason"

Restrictive practicesedit

Main articles: Illegal per se, Price fixing, Bid rigging, Market sharing, and Group boycott

Some practices are deemed by the courts to be so obviously detrimental that they are categorized as being automatically unlawful, or illegal per se The simplest and central case of this is price fixing This involves an agreement by businesses to set the price or consideration of a good or service which they buy or sell from others at a specific level If the agreement is durable, the general term for these businesses is a cartel It is irrelevant whether or not the businesses succeed in increasing their profits, or whether together they reach the level of having market power as might a monopoly Such collusion is illegal per se

  • United States v Trenton Potteries Co, 273 US 392 1927 per se illegality of price fixing
  • Appalachian Coals, Inc v United States, 288 US 344 1933
  • United States v Socony-Vacuum Oil Co, 310 US 150 1940

Bid rigging is a form of price fixing and market allocation that involves an agreement in which one party of a group of bidders will be designated to win the bid Geographic market allocation is an agreement between competitors not to compete within each other's geographic territories

  • Addyston Pipe and Steel Co v United States17 pipe manufacturers had agreed among themselves to designate one lowest bidder for government contracts This was held to be an unlawful restraint of trade contrary to the Sherman Act However, following the reasoning of Justice Taft in the Court of Appeals, the Supreme Court held that implicit in the Sherman Act §1 there was a rule of reason, so that not every agreement which restrained the freedom of contract of the parties would count as an anti-competitive violation
  • Hartford Fire Insurance Co v California, 113 SCt 2891 1993 5 to 4, a group of reinsurance companies acting in London were successfully sued by California for conspiring to make US insurance companies abandon policies beneficial to consumers, but costly to reinsure The Sherman Act was held to have extraterritorial application, to agreements outside US territory
Group boycotts of competitors, customers or distributors
  • Fashion Originators' Guild of America v FTC, 312 US 457 1941 the FOGA, a combination of clothes designers, agreed not to sell their clothes to shops which stocked replicas of their designs, and employed their own inspectors Held to violate the Sherman Act §1
  • Klor's, Inc v Broadway-Hale Stores, Inc, 359 US 207 1959 a group boycott is per se unlawful, even if it may be connected with a private dispute, and will have little effect upon the markets
  • American Medical Association v United States, 317 US 519 1943
  • Molinas v National Basketball Association, 190 F Supp 241 SDNY 1961
  • Associated Press v United States, 326 US 1 1945 6 to 3, a prohibition on members selling "spontaneous news" violated the Sherman Act, as well as making membership difficult, and freedom of speech among newspapers was no defense, nor was the absence of a total monopoly
  • Northwest Wholesale Stationers v Pacific Stationery, 472 US 284 1985 it was not per se unlawful for the Northwest Wholesale Stationers, a purchasing co-operative where Pacific Stationery had been a member, to expel Pacific Stationery without any procedure or hearing or reason Whether there were competitive effects would have to be adjudged under the rule of reason
  • NYNEX Corp v Discon, Inc, 525 US 128 1998 the per se group boycott prohibition does not apply to a buyer's decision to purchase goods from one seller or another

Rule of reasonedit

Main article: Rule of reason

If an antitrust claim does not fall within a per se illegal category, the plaintiff must show the conduct causes harm in "restraint of trade" under the Sherman Act §1 according to "the facts peculiar to the business to which the restraint is applied"18 This essentially means that unless a plaintiff can point to a clear precedent, to which the situation is analogous, proof of an anti-competitive effect is more difficult The reason for this is that the courts have endeavoured to draw a line between practices that restrain trade in a "good" compared to a "bad" way In the first case, United States v Trans-Missouri Freight Association,19 the Supreme Court found that railroad companies had acted unlawfully by setting up an organisation to fix transport prices The railroads had protested that their intention was to keep prices low, not high The court found that this was not true, but stated that not every "restraint of trade" in a literal sense could be unlawful Just as under the common law, the restraint of trade had to be "unreasonable" In Chicago Board of Trade v United States the Supreme Court found a "good" restraint of trade20 The Chicago Board of Trade had a rule that commodities traders were not allowed to privately agree to sell or buy after the market's closing time and then finalise the deals when it opened the next day The reason for the Board of Trade having this rule was to ensure that all traders had an equal chance to trade at a transparent market price It plainly restricted trading, but the Chicago Board of Trade argued this was beneficial Brandeis J, giving judgment for a unanimous Supreme Court, held the rule to be pro-competitive, and comply with the rule of reason It did not violate the Sherman Act §1 As he put it,

Every agreement concerning trade, every regulation of trade, restrains To bind, to restrain, is of their very essence The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition To determine that question, the court must ordinarily consider the facts peculiar to the business to which the restraint is applied, its condition before and after the restraint was imposed, the nature of the restraint, and its effect, actual or probable21

  • Broadcast Music v Columbia Broadcasting System, 441 US 1 1979 blanket licenses did not necessarily count as price fixing under a relaxed rule of reason test
  • Arizona v Maricopa County Medical Society, 457 US 332 1982 4 to 3 held that a maximum price agreement for doctors was per se unlawful under the Sherman Act section 1
  • Wilk v American Medical Association, 895 F2d 352 7th Cir 1990 the American Medical Association's boycott of chiropractors violated the Sherman Act §1 because there was insufficient proof that it was unscientific
  • United States v Topco Assocs, Inc, 405 US 596 1972
  • Palmer v BRG of Georgia, Inc, 498 US 46 1990
  • National Soc'y of Prof Engineers v United States, 435 US 679 1978; ¶¶219-220 -
  • NCAA v Board of Regents of the University of Oklahoma, 468 US 85 1984 7 to 2, held that the National College Athletics Association's restriction of television of games, to encourage live attendance, was restricting supply, and therefore unlawful
  • California Dental Assn v FTC, 526 US 756 1999
  • FTC v Indiana Fed'n of Dentists, 476 US 447 1986

Tacit collusion and oligopolyedit

Main articles: Oligopoly and Tacit collusion
  • Matsushita Electric Industrial Co, Ltd v Zenith Radio Corp, 475 US 574 1986 held that the evidence needed to show unlawful collusion, contrary to the Sherman Act, must be enough to exclude the possibility of individual behavior
  • Bell Atlantic Corp v Twombly, 550 US 544 2007 5 to 2, while Bell Atlantic and other major telephone companies were alleged to have acted in concert to share markets, and not compete in each other's territory to the detriment of small businesses, it was held that in absence of evidence of an agreement, parallel conduct is not enough to ground a case under the Sherman Act §1
  • Interstate Circuit, Inc v United States, 306 US 208 1939
  • Theatre Enterprises v Paramount Distributing, 346 US 537 1954, no evidence of illegal agreement, however film distributors gave first film releases to downtown Baltimore theatres, and suburban theatres were forced to wait longer Held, there needed to be evidence of conspiracy to injure
  • United States v American Tobacco Company, 221 US 106 1911 found to have monopolized the trade
  • American Tobacco Co v United States, 328 US 781 1946 after American Tobacco Co was broken up, the four entities were found to have achieved a collectively dominant position, which still amounted to monopolization of the market contrary to the Sherman Act §2
  • American Column & Lumber Co v United States, 257 US 377 1921 information sharing
  • Maple Flooring Manufacturers' Assn v United States, 268 US 563 1925
  • United States v Container Corp, 393 US 333 1969
  • Airline Tariff Publishing Company, settlement with the US Department of Justice

Vertical restraintsedit

Main articles: Vertical restraints, Resale price maintenance, and Unilateral policy Resale price maintenance
  • Dr Miles Medical Co v John D Park and Sons, 220 US 373 1911 affirmed a lower court's holding that a massive minimum resale price maintenance scheme was unreasonable and thus offended Section 1 of the Sherman Antitrust Act
  • Kiefer-Stewart Co v Seagram & Sons, Inc, 340 US 211 1951 it was unlawful for private liquor dealers to require that their products only be resold up to a maximum price It unduly restrained the freedom of businesses and was per se illegal
  • Albrecht v Herald Co, 390 US 145 1968 setting a fixed price, minimum or maximum, held to violate section 1 of the Sherman Act
  • State Oil Co v Khan, 522 US 3 1997 vertical maximum price fixing had to be adjudged according to a rule of reason
  • Leegin Creative Leather Products, Inc v PSKS, Inc 551 US 877 2007 5 to 4 decision that vertical price restraints were not per se illegal A leather manufacturer therefore did not violate the Sherman Act by stopping delivery of goods to a retailer after the retailer refused to raise its prices to the leather manufacturer's standards
Outlet, territory or customer limitations
  • Packard Motor Car Co v Webster Motor Car Co, 243 F2d 418, 420 DC Cir, cert, denied, 355 US 822 1957
  • Continental Television v GTE Sylvania, 433 US 36 1977 6 to 2, held that it was not an antitrust violation, and it fell within the rule of reason, for a seller to limit the number of franchises and require the franchisees only sell goods within its area
  • United States v Colgate & Co, 250 US 300 1919 there is no unlawful action by a manufacturer or seller, who publicly announces a price policy, and then refuses to deal with businesses who do not subsequently comply with the policy This is in contrast to agreements to maintain a certain price
  • United States v Parke, Davis & Co, 362 US 29 1960 under Sherman Act §4
  • Monsanto Co v Spray-Rite Service Corp, 465 US 752 1984, stating that, "under Colgate, the manufacturer can announce its re-sale prices in advance and refuse to deal with those who fail to comply, and a distributor is free to acquiesce to the manufacturer's demand in order to avoid termination" Monsanto, an agricultural chemical, terminated its distributorship agreement with Spray-Rite on the ground that it failed to hire trained salesmen and promote sales to dealers adequately Held, not per se illegal, because the restriction related to non-price matters, and so was to be judged under the rule of reason
  • Business Electronics Corp v Sharp Electronics Corp, 485 US 717 1988 electronic calculators; "a vertical restraint is not illegal per se unless it includes some agreement on price or price levels There is a presumption in favor of a rule-of-reason standard; and departure from that standard must be justified by demonstrable economic effect, such as the facilitation of cartelizing"

Mergersedit

See also: Mergers and acquisitions and Merger control

"No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly"

Clayton Act 1914 §7

Although the Sherman Act 1890 initially dealt, in general, with cartels where businesses combined their activities to the detriment of others and monopolies where one business was so large it could use its power to the detriment of others alone it was recognized that this left a gap Instead of forming a cartel, businesses could simply merge into one entity The period between 1895 and 1904 saw a "great merger movement" as business competitors combined into ever more giant corporations22 However upon a literal reading of Sherman Act, no remedy could be granted until a monopoly had already formed The Clayton Act 1914 attempted to fill this gap by giving jurisdiction to prevent mergers in the first place if they would "substantially lessen competition"

Dual antitrust enforcement by the Department of Justice and Federal Trade Commission has long elicited concerns about disparate treatment of mergers In response, in September 2014, the House Judiciary Committee approved the Standard Merger and Acquisition Reviews Through Equal Rules Act “SMARTER Act”23

  • FTC v Dean Foods Co, 384 US 597 1966 5 to 4, the FTC was entitled to get an injunction to prevent the completion of a merger, between milk selling competitors in the Chicago area, before its competitive effects are determined by a court
  • Robertson v National Basketball Association, 556 F2d 682 2d Cir 1977 injunction issued against merger of the NBA with the ABA
  • Citizen Publishing Co v United States, 394 US 131 1969 failing company defense
  • Cargill, Inc v Monfort of Colorado, Inc, 479 US 104 1986 private enforcement
  • Clayton Act 1914 §8, interlocking directorates

Horizontal mergersedit

See also: Horizontal integration
  • Northern Securities Co v United States, 193 US 197 1904 horizontal merger under the Sherman Act
  • United States v Philadelphia National Bank, 374 US 321 1963 the second and third largest of 42 banks in the Philadelphia area would lead to a 30% market control in a concentrated market, and so violated the Clayton Act §7 Banks were not exempt even though there was additional legislation under the Bank Merger Act of 1960
  • United States v Von's Grocery Co, 384 US 270 1966 a merger of two grocery firms in the Los Angeles area did violate the Clayton Act §7, particularly considering the amendment by the Celler–Kefauver Act 1950
  • United States v General Dynamics Corp, 415 US 486 1974 General Dynamics Corp had taken control over, by share purchase, United Electric Coal Companies, a strip-mining coal producer
  • Horizontal Merger Guidelines 2010
  • FTC v Staples, Inc, 970 F Supp 1066 1997
  • Hospital Corp of America v FTC, 807 F 2d 1381 1986
  • Federal Trade Commission v HJ Heinz Co, 246 F3d 708 2001
  • United States v Oracle Corp, 331 F Supp 2d 1098 2004

Vertical mergersedit

See also: Vertical integration
  • United States v Columbia Steel Co, 334 US 495 1948
  • United States v EI Du Pont De Nemours & Co, 351 US 377 1956
  • Brown Shoe Co, Inc v United States, 370 US 294 1962 there is not one single test for whether a merger substantially lessens competition, but a variety of economic and other factors may be considered Two shoe retailers and manufacturers merging was held to substantially lessen competition, given the market in towns over 10,000 people for men's, women's and children's shoes

Conglomerate mergersedit

See also: Conglomerate merger
  • United States v Sidney W Winslow, 227 US 202 1913
  • United States v Continental Can Co, 378 US 441 1964 concerning the definition of the market segments in which the Continental Can Co was performing a merger
  • FTC v Procter & Gamble Co, 386 US 568 1967

Monopoly and poweredit

Main articles: Monopoly and Market power

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court"

Sherman Act 1890 §2

The law's treatment of monopolies is potentially the strongest in the field of antitrust law Judicial remedies can force large organizations to be broken up, be run subject to positive obligations, massive penalties may be imposed, and/or the people involved can be sentenced to jail Under §2 of the Sherman Act 1890 every "person who shall monopolize, or attempt to monopolizeany part of the trade or commerce among the several States" commits an offence24 The courts have interpreted this to mean that monopoly is not unlawful per se, but only if acquired through prohibited conduct25 Historically, where the ability of judicial remedies to combat market power have ended, the legislature of states or the Federal government have still intervened by taking public ownership of an enterprise, or subjecting the industry to sector specific regulation frequently done, for example, in the cases water, education, energy or health care The law on public services and administration goes significantly beyond the realm of antitrust law's treatment of monopolies When enterprises are not under public ownership, and where regulation does not foreclose the application of antitrust law, two requirements must be shown for the offense of monopolization First, the alleged monopolist must possess sufficient power in an accurately defined market for its products or services Second, the monopolist must have used its power in a prohibited way The categories of prohibited conduct are not closed, and are contested in theory Historically they have been held to include exclusive dealing, price discrimination, refusing to supply an essential facility, product tying and predatory pricing

Monopolizationedit

Main articles: Monopolization and Abuse of a dominant position
  • Northern Securities Co v United States, 193 US 197 1904 5 to 4, a railway monopoly, formed through a merger of 3 corporations was ordered to be dissolved The owner, James Jerome Hill was forced to manage his ownership stake in each independently
  • Swift & Co v United States, 196 US 375 1905 the antitrust laws entitled the federal government to regulate monopolies that had a direct impact on commerce
  • Standard Oil Co of New Jersey v United States, 221 US 1 1911 Standard Oil was dismantled into geographical entities given its size, and that it was too much of a monopoly
  • United States v American Tobacco Company, 221 US 106 1911 found to have monopolized the trade
  • United States v Alcoa, 148 F2d 416 2d Cir 1945 a monopoly can be deemed to exist depending on the size of the market It was generally irrelevant how the monopoly was achieved since the fact of being dominant on the market was negative for competition Criticised by Alan Greenspan
  • United States v E I du Pont de Nemours & Co, 351 US 377 1956, illustrates the cellophane paradox of defining the relevant market If a monopolist has set a price very high, there may now be many substitutable goods at similar prices, which could lead to a conclusion that the market share is small, and there is no monopoly However, if a competitive price were charged, there would be a lower price, and so very few substitutes, whereupon the market share would be very high, and a monopoly established
  • United States v Syufy Enterprises, 903 F2d 659 9th Cir 1990 necessity of barriers to entry
  • Lorain Journal Co v United States, 342 US 143 1951 attempted monopolization
  • United States v American Airlines, Inc, 743 F2d 1114 1985
  • Spectrum Sports, Inc v McQuillan, 506 US 447 1993 in order for monopolies to be found to have acted unlawfully, action must have actually been taken The threat of abusive behavior is insufficient
  • Fraser v Major League Soccer, 284 F3d 47 1st Cir 2002 there could be no unlawful monopolization of the soccer market by MLS where no market previously existed
  • United States v Griffith 334 US 100 1948 four cinema corporations secured exclusive rights from distributors, foreclosing competitors Specific intent to monopolize is not required, violating the Sherman Act §§1 and 2
  • United Shoe Machinery Corp v US, 347 US 521 1954 exclusionary behavior
  • United States v Grinnell Corp, 384 US 563 1966 Grinnell made plumbing supplies and fire sprinklers, and with affiliates had 87% of the central station protective service market From this predominant share there was no doubt of monopoly power

Exclusive dealingedit

Main article: Exclusive dealing
  • Standard Oil Co v United States Standard Stations, 337 US 293 1949: oil supply contracts affected a gross business of $58 million, comprising 67% of the total in a seven-state area, in the context of many similar arrangements, held to be contrary to Clayton Act §3
  • Tampa Electric Co v Nashville Coal Co, 365 US 320 1961: Tampa Electric Co contracted to buy coal for 20 years to provide power in Florida, and Nashville Coal Co later attempted to end the contract on the basis that it was an exclusive supply agreement contrary to the Clayton Act § 3 or the Sherman Act §§ 1 or 2 Held, no violation because foreclosed share of market was insignificant this did not affect competition sufficiently
  • US v Delta Dental of Rhode Island, 943 F Supp 172 1996

Price discriminationedit

Main articles: Robinson–Patman Act and Price discrimination
  • Robinson–Patman Act
  • Clayton Act 1914 §2 15 USC §13
  • FTC v Morton Salt Co
  • Volvo Trucks North America, Inc v Reeder-Simco Gmc, Inc
  • J Truett Payne Co v Chrysler Motors Corp
  • FTC v Henry Broch & Co
  • FTC v Borden Co, commodities of like grade and quality
  • United States v Borden Co, the cost justification defense
  • United States v United States Gypsum Co, meeting the competition defense
  • Falls City Industries v Vanco Beverage, Inc
  • Great Atlantic & Pacific Tea Co v FTC

Essential facilitiesedit

Main article: Essential facilities doctrine
  • Aspen Skiing Co v Aspen Highlands Skiing Corp, 472 US 585 1985 the refusal of supply access to ski slopes violated the Sherman Act section 2
  • Eastman Kodak Company v Image Technical Services, Inc, 504 US 451 1992 Kodak has refused to supply replacement parts to small businesses servicing Kodak equipment, which was alleged to violate the Sherman Act §§1 and 2 The Supreme Court held 6 to 3 that the small businesses were entitled to bring the case, and Kodak was not entitled to summary judgment
  • Verizon Communications v Law Offices of Curtis V Trinko, LLP, 540 US 398 2004 no extension of the essential facilities doctrine beyond that set in Aspen
  • Otter Tail Power Co v United States, 410 US 366 1973
  • Berkey Photo, Inc v Eastman Kodak Company, 603 F2d 263 1979
  • United States v AT&T 1982 led to the breakup of AT&T

Tying productsedit

Main article: Tying commerce

"It shall be unlawful for any person engaged in commerce, in the course of such commerce, to lease or make a sale or contract for sale of goods, wares, merchandise, machinery, supplies, or other commodities, whether patented or unpatented, for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, or fix a price charged therefor, or discount from, or rebate upon, such price, on the condition, agreement, or understanding that the lessee or purchaser thereof shall not use or deal in the goods, wares, merchandise, machinery, supplies, or other commodities of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement, or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce"

Clayton Act 1914 §3
  • Sherman Act 1890 §1, covers making purchase of goods conditional on purchase of other goods, if there is sufficient market power
  • International Business Machines Corp v United States, 298 US 131 1936 requiring a leased machine to be operated only with supplies from IBM was contrary to Clayton Act §3
  • International Salt Co v United States, 332 US 392 1947 it would be a per se infringement of the Sherman Act §2 for a seller, who has a legal monopoly through a patent, to tie buyers to purchase products over which the seller does not have a patent
  • United States v Paramount Pictures, Inc, 334 US 131 1948 Hollywood studios practice of requiring block booking was unlawful among other things
  • Times-Picayune Publishing Co v United States, 345 US 594 1953 5 to 4, where there was no market dominance in a product market, tying the sale of a morning and an evening newspaper together was not unlawful
  • United States v Loew's Inc, 371 US 38 1962 product bundling and price discrimination The existence of a tie was sufficient to create a presumption of market power
  • Jefferson Parish Hospital District No 2 v Hyde, 466 US 2 1984 reversing Loew's, it was necessary to prove sufficient market power for a tying requirement to be anti-competitive
  • United States v Microsoft Corporation 253 F3d 34 2001 and District Court 1999 Microsoft ordered to be split into two for its monopolistic practices, including tying, but then the ruling was reversed by the Court of Appeals

Predatory pricingedit

Main article: Predatory pricing

In theory, which is hotly contested, predatory pricing happens when large companies with huge cash reserves and large lines of credit can stifle competition by engaging in predatory pricing; that is, by selling their products and services at a loss for a time, in order to force their smaller competitors out of business With no competition, they are then free to consolidate control of the industry and charge whatever prices they wish At this point, there is also little motivation for investing in further technological research, since there are no competitors left to gain an advantage over High barriers to entry such as large upfront investment, notably named sunk costs, requirements in infrastructure and exclusive agreements with distributors, customers, and wholesalers ensure that it will be difficult for any new competitors to enter the market, and that if any do, the trust will have ample advance warning and time in which to either buy the competitor out, or engage in its own research and return to predatory pricing long enough to force the competitor out of business Critics argue that the empirical evidence shows that "predatory pricing" does not work in practice and is better defeated by a truly free market than by antitrust laws see Criticism of the theory of predatory pricing

  • Brooke Group Ltd v Brown & Williamson Tobacco Corp, 509 US 209 1993 to prove predatory pricing the plaintiff must show that changes in market conditions are adverse to its interests, and that 1 prices are below an appropriate measure of its rival's costs, and 2 the competitor had a reasonable prospect or a "dangerous probability" of recouping its investment in the alleged scheme
  • Weyerhaeuser Company v Ross-Simmons Hardwood Lumber Company, 549 US 312 2007 a plaintiff must prove that, to make a claim of predatory buying, the alleged violator is likely to recoup the cost of the alleged predatory activity This involved the saw mill market
  • Barry Wright Corp v ITT Grinnell Corp 724 F2d 227 1983
  • Spirit Airlines, Inc v Northwest Airlines, Inc, 431 F 3d 917 2005
  • United States v E I du Pont de Nemours & Co, 351 US 377 1956

Intellectual propertyedit

Main articles: US patent law and US copyright law
  • Continental Paper Bag Co v Eastern Paper Bag Co, 210 US 405 1908 8 to 1, concerning a self opening paper bag, it was not an unlawful use of a monopoly position to refuse to license a patent's use to others, since the essence of a patent was the freedom not to do so
  • United States v Univis Lens Co, 316 US 241 1942 once a business sold its patented lenses, it was not allowed to lawfully control the use of the lens, by fixing a price for resale This was the exhaustion doctrine
  • International Salt Co v United States, 332 US 392 1947 it would be a per se infringement of the Sherman Act §2 for a seller, who has a legal monopoly through a patent, to tie buyers to purchase products over which the seller does not have a patent
  • Walker Process Equipment, Inc v Food Machinery & Chemical Corp, 382 US 172 1965 illegal monopolization through the maintenance and enforcement of a patent obtained via fraud on the Patent Office case, sometimes called "Walker Process fraud"
  • United States v Glaxo Group Ltd, 410 US 52 1973 the government may challenge a patent where it is involved in a monopoly violation
  • Illinois Tool Works Inc v Independent Ink, Inc, 547 US 28 2006 there is no presumption of market power, in a case on an unlawful tying arrangement, from the mere fact that the defendant has a patented product
  • Apple Inc litigation and United States v Apple Inc

Scope of antitrust lawedit

See also: US labor law, Consumer protection, and Parker immunity doctrine

Antitrust laws do not apply to, or are modified in, several specific categories of enterprise including sports, media, utilities, health care, insurance, banks, and financial markets and for several kinds of actor such as employees or consumers taking collective action26 First, since the Clayton Act 1914 §6, there is no application of antitrust laws to agreements between employees to form or act in labor unions This was seen as the "Bill of Rights" for labor, as the Act laid down that the "labor of a human being is not a commodity or article of commerce" The purpose was to ensure that employees with unequal bargaining power were not prevented from combining in the same way that their employers could combine in corporations,27 subject to the restrictions on mergers that the Clayton Act set out However, sufficiently autonomous workers, such as professional sports players have been held to fall within antitrust provisions28

Since 1922 the courts and Congress have left Major League Baseball, as played at Chicago's Wrigley Field, from antitrust laws

Second, professional sports leagues enjoy a number of exemptions Mergers and joint agreements of professional football, hockey, baseball, and basketball leagues are exempt29 Major League Baseball was held to be broadly exempt from antitrust law in Federal Baseball Club v National League30 Holmes J held that the baseball league's organization meant that there was no commerce between the states taking place, even though teams travelled across state lines to put on the games That travel was merely incidental to a business which took place in each state It was subsequently held in 1952 in Toolson v New York Yankees,31 and then again in 1972 Flood v Kuhn,32 that the baseball league's exemption was an "aberration" However Congress had accepted it, and favoured it, so retroactively overruling the exemption was no longer a matter for the courts, but the legislature In United States v International Boxing Club of New York,33 it was held that, unlike baseball, boxing was not exempt, and in Radovich v National Football League NFL,34 professional football is generally subject to antitrust laws As a result of the AFL-NFL merger, the National Football League was also given exemptions in exchange for certain conditions, such as not directly competing with college or high school football35 However, the 2010 Supreme Court ruling in American Needle Inc v NFL characterised the NFL as a "cartel" of 32 independent businesses subject to antitrust law, not a single entity

Third, antitrust laws are modified where they are perceived to encroach upon the media and free speech, or are not strong enough Newspapers under joint operating agreements are allowed limited antitrust immunity under the Newspaper Preservation Act of 197036 More generally, and partly because of concerns about media cross-ownership in the United States, regulation of media is subject to specific statutes, chiefly the Communications Act of 1934 and the Telecommunications Act of 1996, under the guidance of the Federal Communications Commission The historical policy has been to use the state's licensing powers over the airwaves to promote plurality Antitrust laws do not prevent companies from using the legal system or political process to attempt to reduce competition Most of these activities are considered legal under the Noerr-Pennington doctrine Also, regulations by states may be immune under the Parker immunity doctrine37

  • Professional Real Estate Investors, Inc, v Columbia Pictures, 508 US 49 1993
  • Allied Tube v Indian Head, Inc, 486 US 492 1988
  • FTC v Superior Ct TLA, 493 US 411 1990

Fourth, the government may grant monopolies in certain industries such as utilities and infrastructure where multiple players are seen as unfeasible or impractical38

Fifth, insurance is allowed limited antitrust exemptions as provided by the McCarran-Ferguson Act of 194539

Sixth, M&A transactions in the defense sector are often subject to greater antitrust scrutiny from the Department of Justice and the Federal Trade Commission40

  • United States v South-Eastern Underwriters Association, 322 US 533 1944 the insurance industry was not exempt from antitrust regulation
  • Credit Suisse v Billing, 551 US 264 2007 7 to 1, the industries regulated by the Securities Act 1933 and the Securities and Exchange Act 1934 are exempt from antitrust lawsuits
  • Parker v Brown, 317 US 341 1943 actions by state governments were held to be exempt from antitrust law, given that there was no original legislative intent to cover anything other than business combinations
  • Goldfarb v Virginia State Bar, 421 US 773 1975 the Virginia State Bar, which was delegated power to set price schedules for lawyers fees, was an unlawful price fixing It was no longer exempt from the Sherman Act, and constituted a per se infringement
  • California Retail Liquor Dealers Assn v Midcal Aluminum, Inc, 445 US 97 1980 the state of California acted contrary to the Sherman Act 1890 §1 by setting fair trade wine price schedules
  • Rice v Norman Williams Co, 458 US 654 1982 the Sherman Act did not prohibit a California law which prohibited the importation of goods that were not authorised to be imported by the manufacturer
  • Tritent International Corp v Commonwealth of Kentucky, 467 F3d 547 2006 Kentucky had not acted unlawfully by giving effect to a Tobacco Master Settlement Agreement, because there was no illegal behavior in it
  • United States v Trans-Missouri Freight Association, 166 US 290 1897 the antitrust laws applied to the railroad industry, even though there was a comprehensive scheme of legislation applying to the railroads already No specific exemption had been given
  • Silver v New York Stock Exchange, 373 US 341 1963 the NYSE was not exempt from antitrust regulation, even though many of its activities were regulated by the Securities and Exchange Act 1934
  • American Society of Mechanical Engineers v Hydrolevel Corporation, 456 US 556 1982 6 to 3, that the American Society of Mechanical Engineers, a non profit standard developer had violated the Sherman Act by giving information to one competitor, used against another
  • Banks and agricultural cooperatives

Remedies and enforcementedit

"The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1 to 7 of this title; and it shall be the duty of the several United States attorneys, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises"

Sherman Act 1890 §4

The remedies for violations of US antitrust laws are as broad as any equitable remedy that a court has the power to make, as well as being able to impose penalties When private parties have suffered an actionable loss, they may claim compensation Under the Sherman Act 1890 §7, these may be trebled, a measure to encourage private litigation to enforce the laws and act as a deterrent The courts may award penalties under §§1 and 2, which are measured according to the size of the company or the business In their inherent jurisdiction to prevent violations in future, the courts have additionally exercised the power to break up businesses into competing parts under different owners, although this remedy has rarely been exercised examples include Standard Oil, Northern Securities Company, American Tobacco Company, AT&T Corporation and, although reversed on appeal, Microsoft Three levels of enforcement come from the Federal government, primarily through the Department of Justice and the Federal Trade Commission, the governments of states, and private parties Public enforcement of antitrust laws is seen as important, given the cost, complexity and daunting task for private parties to bring litigation, particularly against large corporations

Federal governmentedit

Along with the Federal Trade Commission the Department of Justice in Washington, DC is the public enforcer of antitrust law Federal Trade Commission building, view from southeast

The federal government, via both the Antitrust Division of the United States Department of Justice and the Federal Trade Commission, can bring civil lawsuits enforcing the laws The United States Department of Justice alone may bring criminal antitrust suits under federal antitrust laws41 Perhaps the most famous antitrust enforcement actions brought by the federal government were the break-up of AT&T's local telephone service monopoly in the early 1980s42 and its actions against Microsoft in the late 1990s

Additionally, the federal government also reviews potential mergers to attempt to prevent market concentration As outlined by the Hart-Scott-Rodino Antitrust Improvements Act, larger companies attempting to merge must first notify the Federal Trade Commission and the Department of Justice's Antitrust Division prior to consummating a merger43 These agencies then review the proposed merger first by defining what the market is and then determining the market concentration using the Herfindahl-Hirschman Index HHI and each company's market share43 The government looks to avoid allowing a company to develop market power, which if left unchecked could lead to monopoly power43

The United States Department of Justice and Federal Trade Commission target nonreportable mergers for enforcement as well Notably, between 2009 and 2013, 20% of all merger investigations conducted by the United States Department of Justice involved nonreportable transactions44

  • Federal Trade Commission v Sperry & Hutchinson Trading Stamp Co, 405 US 233 1972 Case held that the FTC is entitled to bring enforcement action against businesses that act unfairly, as where supermarket trading stamps company injured consumers by prohibiting them from exchanging trading stamps The FTC could prevent the restrictive practice as unfair, even though there was no specific antitrust violation

State governmentsedit

State attorneys general may file suits to enforce both state and federal antitrust laws

  • Parens patriae
  • Hawaii v Standard Oil Co of Cal, 405 US 251 1972 state governments do not have a cause of action to sue for consequential loss for damage to their general economies after an antitrust violation is found

Private suitsedit

Private civil suits may be brought, in both state and federal court, against violators of state and federal antitrust law Federal antitrust laws, as well as most state laws, provide for triple damages against antitrust violators in order to encourage private lawsuit enforcement of antitrust law Thus, if a company is sued for monopolizing a market and the jury concludes the conduct resulted in consumers' being overcharged $200,000, that amount will automatically be tripled, so the injured consumers will receive $600,000 The United States Supreme Court summarized why Congress authorized private antitrust lawsuits in the case Hawaii v Standard Oil Co of Cal, 405 US 251, 262 1972:

Every violation of the antitrust laws is a blow to the free-enterprise system envisaged by Congress This system depends on strong competition for its health and vigor, and strong competition depends, in turn, on compliance with antitrust legislation In enacting these laws, Congress had many means at its disposal to penalize violators It could have, for example, required violators to compensate federal, state, and local governments for the estimated damage to their respective economies caused by the violations But, this remedy was not selected Instead, Congress chose to permit all persons to sue to recover three times their actual damages every time they were injured in their business or property by an antitrust violation By offering potential litigants the prospect of a recovery in three times the amount of their damages, Congress encouraged these persons to serve as "private attorneys general"

  • Pfizer, Inc v Government of India, 434 US 308 1978 foreign governments have standing to sue in private actions in the US courts
  • Bigelow v RKO Radio Pictures, Inc, 327 US 251 1946 treble damages awarded under the Clayton Act §4 needed not to be mathematically precise, but based on a reasonable estimate of loss, and not speculative This meant a jury could set a higher estimate of how much movie theaters lost, when the film distributors conspired with other theaters to let them show films first
  • Illinois Brick Co v Illinois, 431 US 720 1977 indirect purchasers of goods where prices have been raised have no standing to sue Only the direct contractors of cartel members may, to avoid double or multiple recovery
  • Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc, 473 US 614 1985 on arbitration

Theoryedit

Main articles: Antitrust law theory and Competition policy

The Supreme Court calls the Sherman Antitrust Act a "charter of freedom", designed to protect free enterprise in America45 One view of the statutory purpose, urged for example by Justice Douglas, was that the goal was not only to protect consumers, but at least as importantly to prohibit the use of power to control the marketplace46

We have here the problem of bigness Its lesson should by now have been burned into our memory by Brandeis The Curse of Bigness shows how size can become a menace--both industrial and social It can be an industrial menace because it creates gross inequalities against existing or putative competitors It can be a social menaceIn final analysis, size in steel is the measure of the power of a handful of men over our economyThe philosophy of the Sherman Act is that it should not existIndustrial power should be decentralized It should be scattered into many hands so that the fortunes of the people will not be dependent on the whim or caprice, the political prejudices, the emotional stability of a few self-appointed menThat is the philosophy and the command of the Sherman Act It is founded on a theory of hostility to the concentration in private hands of power so great that only a government of the people should have it

— Dissenting opinion of Justice Douglas in United States v Columbia Steel Co46

By contrast, efficiency argue that antitrust legislation should be changed to primarily benefit consumers, and have no other purpose Free market economist Milton Friedman states that he initially agreed with the underlying principles of antitrust laws breaking up monopolies and oligopolies and promoting more competition, but that he came to the conclusion that they do more harm than good47 Thomas Sowell argues that, even if a superior business drives out a competitor, it does not follow that competition has ended:

In short, the financial demise of a competitor is not the same as getting rid of competition The courts have long paid lip service to the distinction that economists make between competition—a set of economic conditions—and existing competitors, though it is hard to see how much difference that has made in judicial decisions Too often, it seems, if you have hurt competitors, then you have hurt competition, as far as the judges are concerned48

Alan Greenspan argues that the very existence of antitrust laws discourages businessmen from some activities that might be socially useful out of fear that their business actions will be determined illegal and dismantled by government In his essay entitled Antitrust, he says: "No one will ever know what new products, processes, machines, and cost-saving mergers failed to come into existence, killed by the Sherman Act before they were born No one can ever compute the price that all of us have paid for that Act which, by inducing less effective use of capital, has kept our standard of living lower than would otherwise have been possible" Those, like Greenspan, who oppose antitrust tend not to support competition as an end in itself but for its results—low prices As long as a monopoly is not a coercive monopoly where a firm is securely insulated from potential competition, it is argued that the firm must keep prices low in order to discourage competition from arising Hence, legal action is uncalled for and wrongly harms the firm and consumers49

Thomas DiLorenzo, an adherent of the Austrian School of economics, found that the "trusts" of the late 19th century were dropping their prices faster than the rest of the economy, and he holds that they were not monopolists at all50 Ayn Rand, the American writer, provides a moral argument against antitrust laws She holds that these laws in principle criminalize any person engaged in making a business successful, and, thus, are gross violations of their individual expectations51 Such laissez faire advocates suggest that only a coercive monopoly should be broken up, that is the persistent, exclusive control of a vitally needed resource, good, or service such that the community is at the mercy of the controller, and where there are no suppliers of the same or substitute goods to which the consumer can turn In such a monopoly, the monopolist is able to make pricing and production decisions without an eye on competitive market forces and is able to curtail production to price-gouge consumers Laissez-faire advocates argue that such a monopoly can only come about through the use of physical coercion or fraudulent means by the corporation or by government intervention and that there is no case of a coercive monopoly ever existing that was not the result of government policies

Judge Robert Bork's writings on antitrust law particularly The Antitrust Paradox, along with those of Richard Posner and other law and economics thinkers, were heavily influential in causing a shift in the US Supreme Court's approach to antitrust laws since the 1970s, to be focused solely on what is best for the consumer rather than the company's practices42

See alsoedit

  • Thurman Arnold
  • Barton–Rush Bill, a proposed franchise competition bill
  • Commissioner Andrew L Harris
  • Contestable market
  • DRAM price fixing
  • Duopoly
  • Economic regulator
  • Government monopoly
  • Limit price
  • Market anomaly
  • Monopsony
  • Ordoliberalism
  • Patent pool
  • SSNIP Test
  • EU competition law
  • Trade Practices Act 1974: Australian antitrust legislation

Notesedit

  1. ^ See generally Herbert Hovenkamp, 'Chicago and Its Alternatives' 1986 6 Duke Law Journal 1014–1029, and RH Bork, The Antitrust Paradox Free Press 1993
  2. ^ Published in Puck 23 January 1889
  3. ^ For example, the Standard Oil Trust was formed in 1882 to combine the Standard Oil Company and a number of other companies that were engaged in producing, refining, and marketing oil Under the Standard Oil Trust Agreement, the companies transferred their stock "in trust" to nine trustees headed by John D Rockefeller and in exchange received a beneficial interest in the trust Eventually, the trustees governed some 40 corporations, of which the trust wholly owned 14 In 1899, however, the trust renamed its New Jersey firm Standard Oil Company New Jersey and incorporated it as a holding company All assets and interests formerly grouped in the trust were then transferred to the New Jersey company Because of Standard Oil's monopolistic conduct, in 1911 the Supreme Court, in Standard Oil Co v United States, ordered the break-up of the business organization The New Jersey company was ordered to divest itself of its major holdings—33 companies in all See Standard Oil Company and Trust, in Encyclopædia Britannica See also Standard Oil#Early years
  4. ^ "The trusts are a kingly prerogative, inconsistent with our form of government, and should be subject to the strong resistance of the State and national authorities" Trusts: Speech of Hon John Sherman, of Ohio, Delivered in the Senate of the United States, Friday, March 21, 1890
  5. ^ Interstate Commerce Act
  6. ^ Since the passage of the Federal Trade Commission Act in 1914, the FTC has had power to enforce section 1 of the Sherman Act administratively, under the rubric of section 5 of the FTC Act, 15 USC sec 45 See generally FTC v Sperry & Hutchinson Trading Stamp Co As that Supreme Court decision explains, the FTC also has authority to act against incipient Sherman Act violations and violations of its "spirit"
  7. ^ United States v Microsoft Corp, 87 F Supp 2d 30 DDC 2000
  8. ^ United States v Microsoft Corp, 97 F Supp 2d 59, 64-65 DDC 2000
  9. ^ United States v Microsoft Corp, 253 F3d 34 DC Cir 2001
  10. ^ United States v Microsoft Corp, 1995 WL 505998 DDC 1995
  11. ^ 15 USC § 1
  12. ^ 467 US 752 1984
  13. ^ cf AA Berle, 'The Theory of Enterprise Entity' 1947 473 Columbia Law Review 343, where the corollary is argued, that an enterprise ought to be responsible for the debts of each separate legal person within the economic group
  14. ^ 547 US 1 2006
  15. ^ PE Areeda, Antitrust Law 1986 § 1436c
  16. ^ Copperweld Corp v Independence Tube Corp, 467 US 752, 768 1984
  17. ^ 175 US 211 1899
  18. ^ Chicago Board of Trade, 246 US 231, 244 1918
  19. ^ 166 US 290 1897
  20. ^ 246 US 231 1918
  21. ^ Board of Trade of the City of Chicago v United States, 246 US 231, 244 1918
  22. ^ See Lamoreaux, N R 1988 The Great Merger Movement in American Business, 1895–1904 New York: Cambridge University Press ISBN 0-521-35765-9 
  23. ^ Morse, Howard; Browdie, Megan; Swain, Sarah "Proposed Legislation to Reconcile DOJ and FTC Merger Standards and Processes" Transaction Advisors ISSN 2329-9134 
  24. ^ 15 USC § 2
  25. ^ cf United States v Aluminum Corp of America, 148 F2d 416, 430 1945 Learned Hand J, the "successful competitor, having been urged to compete, must not be turned on when he wins"
  26. ^ See Areeda 2004 80-92 On consumer boycotts, see Missouri v National Organizationfor Women, Inc 620 F2d 1301 8th Cir 1979, cert denied, 101 S Ct 122 1980 and MA Harris, 'Political, Social and Economic Boycotts by Consumers: Do They Violate the Sherman Act' 1979-1980 17 Houston Law Review 775, discussing the justifications for wholly exempting consumer action
  27. ^ See the National Labor Relations Act 1935 §1
  28. ^ See American Needle, Inc v National Football League, 560 US --- 2010 NFL teams held to fall under the antitrust laws
  29. ^ 15 USC § 1291 et seq
  30. ^ 259 US 200 1922
  31. ^ 346 US 356 1952
  32. ^ 407 US 258 1972
  33. ^ 348 US 236 1955
  34. ^ 352 US 445 1957
  35. ^ 15 USC § 1292, 15 USC § 1293, et seq
  36. ^ 15 USC § 1801, et seq
  37. ^ See Eastern Railroad Presidents Conference v Noerr Motor Freight, Inc, 365 US 127 1961 and United Mine Workers v Pennington, 381 US 657 1965
  38. ^ Areeda, pp 80-92
  39. ^ 15 USC § 1011, et seq
  40. ^ Dubrow, Jon "Leading Antitrust Considerations for Aerospace & Defense M&A Transactions" Transaction Advisors ISSN 2329-9134 
  41. ^ Blumenthal, William 2013 "Models for merging the US antitrust agencies" Journal of Antitrust Enforcement Oxford Journals 1 1: 24–51 doi:101093/jaenfo/jns003 
  42. ^ a b Frum, David 2000 How We Got Here: The '70s New York, New York: Basic Books p 327 ISBN 0-465-04195-7 
  43. ^ a b c Areeda, Phillip; Kaplow, L; Edlin, A S 2004 Antitrust Analysis: Problems, Text, Cases Sixth ed New York: Aspen pp 684–717 ISBN 0-7355-2795-4 
  44. ^ Hendrickson, Matthew; Vandenborre, Ingrid; Motta, Giorgio; Schwartz, Kenneth; Crandall, Charles; Singer, Michael "Antitrust and Competition: Surveying Global M&A Enforcement Trends" Transaction Advisors ISSN 2329-9134 
  45. ^ Appalachian Coals, Inc v United States, 288 US 1933 344 359 "As a charter of freedom, the act has a generality and adaptability comparable to that found to be desirable in constitutional provisions"
  46. ^ a b United States v Columbia Steel Co, 334 US 495, 535-36 1948
  47. ^ The Business Community's Suicidal Impulse by Milton Friedman A criticism of antitrust laws and cases by the Nobel economist
  48. ^ "KeepMedia: Purchase Item" Forbes 1999-03-05 Retrieved 2005-12-23 
  49. ^ "Memo, 6-12-98; Antitrust by Alan Greenspan" Archived from the original on 2005-12-17 Retrieved 2005-12-23 
  50. ^ DiLorenzo, Thomas J 1985 "The Origins of Antitrust: An Interest-Group Perspective" International Review of Law and Economics 5 1: 73–90 doi:101016/0144-81888590019-5 
  51. ^ "Antitrust Laws — Ayn Rand Lexicon" Aynrandlexiconcom 2012-01-24 Retrieved 2012-09-22 

Referencesedit

Texts
  • ET Sullivan, H Hovenkamp and HA Shlanski, Antitrust Law, Policy and Procedure: Cases, Materials, Problems 6th edn 2009
  • CJ Goetz, FS McChesney and TA Lambert, Antitrust Law, Interpretation and Implementation 5th edn 2012
  • P Areeda and L Kaplow, Antitrust Analysis: Problems, Texts, Cases 1997
Theory
  • W Adams and JW Brock, Antitrust Economics on Trial: Dialogue in New Learning Princeton 1991 ISBN 0-691-00391-2
  • O Black, Conceptual Foundations of Antitrust 2005
  • RH Bork, The Antitrust Paradox Free Press 1993 ISBN 0-02-904456-1
  • Choi, Jay Pil ed 2007 Recent Developments in Antitrust: Theory and Evidence The MIT Press ISBN 978-0-262-03356-5 
  • Antonio Cucinotta, ed Post-Chicago Developments in Antitrust Law 2003
  • David S Evans Microsoft, Antitrust and the New Economy: Selected Essays 2002
  • John E Kwoka and Lawrence J White, eds The Antitrust Revolution: Economics, Competition, and Policy 2003
  • RA Posner, Antitrust Law: An Economic Perspective 1976
Articles
  • AA Berle, ‘Corporate Powers as Powers in Trust’ 1931 44 Harvard Law Review 1049
  • AA Berle, 'The Theory of Enterprise Entity' 1947 473 Columbia Law Review 343
  • AA Berle, 'The Developing Law of Corporate Concentration' 1952 194 University of Chicago Law Review 639
  • AA Berle, 'Property, Production and Revolution' 1965 65 Columbia Law Review 1
  • Herbert Hovenkamp, 'Chicago and Its Alternatives' 1986 6 Duke Law Journal 1014–1029
  • B Orbach and G Campbell, The Antitrust Curse of Bigness, Southern California Law Review 2012
  • R Hofstadter, "What Ever Happened to the Antitrust Movement" in The Paranoid Style in American Politics and Other Essays 1965
  • RJR Peritz, 'Three Visions of Managed Competition, 1920–1950' 1994 391 Antitrust Bulletin 273–287
Historical
  • Adolf Berle and Gardiner Means, The Modern Corporation and Private Property 1932
  • Louis Brandeis, The Curse of Bigness 1934
  • Alfred Chandler, The Visible Hand: The Managerial Revolution in American Business 1977
  • J Dirlam and A Kahn, Fair Competition: The Law and Economics of Antitrust Policy 1954
  • J Dorfman, The Economic Mind in American Civilization 1865–1918 1949
  • T Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 1992
  • W Hamilton & I Till, Antitrust in Action US Government Printing Office, 1940
  • W Letwin, Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act 1965
  • E Rozwenc, ed Roosevelt, Wilson and The Trusts 1950
  • George Stigler, The Organization of Industry 1968
  • G Stocking and M Watkins, Monopoly and Free Enterprise 1951
  • H Thorelli, The Federal Antitrust Policy: Origination of an American Tradition 1955
  • S Webb and B Webb, Industrial Democracy 9th edn 926 Part III, ch 2

External linksedit

Government
  • United States Department of Justice Antitrust Division homepage
  • United States Federal Trade Commission: Antitrust and Competition division
  • Official European Union Antitrust site
  • Canadian Competition Bureau
  • Other
Academic
  • Antitrust Policy As Corporate Welfare by Clyde Wayne Crews Jr—"It is hoped that policymakers will come to recognize that government cannot protect the public from monopoly power, because it is the source of such power"
  • Cornell University review of antitrust law
  • The Protectionist Roots of Antitrust by Donald J Boudreaux and Thomas J DiLorenzo "antitrust was a protectionist institution from the very beginning; there never was a "golden age of antitrust" besieged by rampant cartelization"
  • Institute of Mergers, Acquisitions and Alliances MANDA M&A An academic research institute on mergers & acquisitions, including antitrust issues
  • Consumer Institute for Antitrust Studies, Loyola University Chicago School of Law
Other
  • The Truth About The Robber Barons Criticising antitrust law
  • Antitrust Definition by The Linux Information Project LINFO
  • Antitrust Review, a group blog
  • The American Antitrust Institute
  • International Competition Network
  • OECD Competition Home Page
  • German antitrust law
  • Articles on Austrian antitrust law by Dorda Brugger Jordis
  • Antitrust Laws Should Be Abolished by Edward W Younkins, 19 February 2000
  • Criticism of Antitrust by Alan Greenspan
  • Antitrust Law: Affirmative Action for Uncompetitive Businesses by Mark Schmidt, National Taxpayers Union Foundation, Policy Paper 132, 11 December 2000
  • The Antitrust Source, monthly analysis of antitrust issues by the American Bar Association
  • Antitrust by Fred S McChesney
  • The Antitrust Monitor, a law blog password needed
  • Anti-trust, Anti-truth by Thomas DiLorenzo, June 1, 2000
  • Congress Considers Revoking Health Insurance Industry’s Exemption from Antitrust Laws - video report by Democracy Now!


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