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Title: Antitrust Law
United States antitrust law is a collection of federal and state government laws, which regulates the conduct and organization of business corporations, generally to promote fair competition for the benefit of consumers. 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 which 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 they should interfere in business freedom, or 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 interest.[1]
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. Large manufacturing conglomerates emerged in great numbers in the 1880s and 1890s, and were perceived to have excessive economic power. The Interstate Commerce Act of 1887 began a shift towards federal rather than state regulation of big business.[3] It was followed by the Sherman Antitrust Act of 1890, the Clayton Antitrust Act 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.) Advocates of 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 makes it illegal to try to restrain trade or to form a monopoly. It gives the Justice Department the mandate to go to federal court for orders to stop illegal behavior or to impose remedies.[4]
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 trusts 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".
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 preferred 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 browser. In 2000, the trial court ordered Microsoft split in two to punish it, and prevent it from future misbehavior, however the Court of Appeals reversed the decision, removed the judge from the case for improperly discussing the case while it was still pending with the media. 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 challenged. 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.
Main articles: Cartel, Restrictive practices and US corporate law
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 "[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce."[5] 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 Corp.[6] 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 entity.[7] 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. Dagher[8] 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."[9] 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."[10] 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".
Template:Slist illegal per se
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 categorised 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 price fixing
Appalachian Coals, Inc. v. United States, 288 344 (1933)
United States v. Socony-Vacuum Oil Co., Inc., 310 150 (1940)
Bid rigging is 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 States[11] 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 S.Ct. 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.
Fashion Originators' Guild of America v. FTC, 312 U.S. 457 (1941) the FOGA, a combination of clothes designers, agreed not to sell their clothes to shop which stocked replicas of their designs, and employed their own inspectors. Held to violate the Sherman Act §1
Associated Press v. United States, 326 U.S. 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 defence, nor was the absence of a total monopoly
Northwest Wholesale Stationers v. Pacific Stationery, 472 U.S. 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 be adjudged under the rule of reason.
Template:Slist 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".[12] 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,[13] 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 trade.[14] 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,
Broadcast Music v. Columbia Broadcasting System, 441 1 (1979) blanket licenses did not necessarily count as price fixing under a relaxed rule of reason test.
Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979)
Template:Slist tacit collusion
Main articles: Vertical restraints, Resale price maintenance and Unilateral policy
Dr. Miles Medical Co. v. John D. Park and Sons, 220 U.S. 373 (1911)
United States v. Colgate & Co., 250 300 (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 29 (1960) under Sherman Act §4
Monsanto Co. v. Spray-Rite Service Corp., 465 752 (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, Inc. v. Sharp Electronics, Inc., 485 717 (1988) electronic calculators
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 recognised 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 corporations.[15] 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 would "substantially lessen competition".
Citizen Publishing Co. v. United States, 394 131 (1969) failing company defense
Cargill, Inc. v. Monfort of Colorado, Inc, 479 104 (1986) private enforcement
Template:Slist mergers
197 (1904) horizontal merger under the Sherman Act
United States v. Philadelphia National Bank, 374 321 (1963) the second and third largest of 42 banks in the Philadelphia area would lead to a 30% market control, 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. Columbia Steel Co., 334 495 (1948)
United States v. E.I. Du Pont De Nemours & Co., 351 377 (1956)
United States v. Sidney W. Winslow, 227 202 (1913)
441 (1964) concerning the definition of the market segments in which the Continental Can Co was performing a merger.
FTC v. Proctor & Gamble Co., 386 568 (1967)
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, or massive penalties may be imposed the people involved can be sentenced to jail. Under §2 of the Sherman Act 1890 every "person who shall monopolize, or attempt to monopolize... any part of the trade or commerce among the several States" commits an offence.[16] The courts have interpreted this to mean that monopoly is not unlawful per se, but only if acquired through prohibited conduct.[17] 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.
Lorain Journal Co. v. United States, 342 U.S. 143 (1951) attempted monpolization
Standard Oil Co. v. United States, 337 U.S. 293 (1949) oil supply contracts affected a gross business of $58,000,000, comprising 6.7% of the total in a seven-state area, held to be contrary to Clayton Act §3
Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 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, that this did not affect competition sufficiently.
Template:Slist tying
International Business Machines Corp. v. United States, 298 131 (1936) requiring a leased machine to be operated only with supplies from IBM was contrary to Clayton Act §3.
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
Jefferson Parish Hospital District No. 2 v. Hyde, 466 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 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.
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).
Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U.S. 405 (1908) 8 to 1, concerning a self opening paper bag, it was not an unlawful use of a monopoly position to refuse to licence 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 U.S. 241 (1942) once a business sold its patented lenses, it was not allowed to lawfully control the use of the lense, by fixing a price for resale. This was the exhaustion 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 action).[18] 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,[19] 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 provisions.[20]
Second, professional sports leagues enjoy a number of exemptions. Mergers and joint agreements of professional football, hockey, baseball, and basketball leagues are exempt.[21] Major League Baseball was held to be broadly exempt from antitrust law in Federal Baseball Club v. National League.[22] 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,[23] and then again in 1972 Flood v. Kuhn,[24] 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,[25] it was held that, unlike baseball, boxing was not exempt, and in Radovich v. National Football League (NFL),[26] 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 football.[27] 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 1970.[28] 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 doctrine.[29]
Fourth, the government may grant monopolies in certain industries such as utilities and infrastructure where multiple players are seen as unfeasible or impractical.[30]
Fifth, insurance is allowed limited antitrust exemptions as provided by the McCarran-Ferguson Act of 1945.[31]
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.
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 laws.[32] 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 1980s[33] 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 merger.[34] 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 share.[34] The government looks to avoid allowing a company to develop market power, which if left unchecked could lead to monopoly power.[34]
Federal Trade Commission v. Sperry & Hutchinson Trading Stamp Co., 405 U.S. 233 (1972) the FTC is entitled to bring enforcement action for businesses that act unfairly, as where supermarket trading stamps and coupons were prohibited from being traded among the holders. The FTC could prevent the restrictive practice as unfair, even though there was no specific antitrust violation.
Pfizer Inc. v. Government of India, 434 U.S. 308 (1978) foreign governments have standing to sue in private actions in the US courts.
The Supreme Court calls the Sherman Antitrust Act a "charter of freedom", designed to protect free enterprise in America.[35] 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 marketplace.[36]
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 good.[37] Thomas Sowell argues that, even if a superior business drives out a competitor, it does not follow that competition has ended:
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 consumers.[38]
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 all.[39] 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 expectations.[40] 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 U.S. 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 practices.[33]
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AA Berle, ‘Corporate Powers as Powers in Trust’ (1931) 44 Harvard Law Review 1049
19(4) University of Chicago Law Review 639
65 Columbia Law Review 1
B Orbach and G Campbell, , Southern California Law Review (2012).
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
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
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
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.
Antitrust Law: Affirmative Action for Uncompetitive Businesses by Mark Schmidt, National Taxpayers Union Foundation, Policy Paper 132, 11 December 2000.
by Fred S. McChesney
The Antitrust Monitor, a law blog (password needed)
Thomas DiLorenzo, June 1, 2000
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