An Overview of the Principal Federal Antitrust Statutes
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CHAPTER II
AN OVERVIEW OF THE PRINCIPAL FEDERAL
ANTITRUST STATUTES19
A. The Principal Federal Statutes
1. The Sherman Act
The original and most important federal antitrust statute applicable to
the insurance industry is the Sherman Act, enacted in 1890.
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The
Sherman Act is written in succinct and sweeping language that has been
elaborated upon by the courts for over a century, giving rise to an
enormous body of precedent. The key substantive provisions of the
Sherman Act are Sections 1 and 2.
a. Section 1
“Every contract, combination . . . or conspiracy, in restraint of trade or
commerce among the several States, or with foreign nations,
is . . . illegal.
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b. Section 2
“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 misdemeanor . . . .”
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19. This discussion touches only on the hi ghlights of the antitrust case law
as it applies to the insurance industry. For a more thorough analysis of
antitrust law, see ALD (7th ed. 2012).
20. This chapter does not address those federal antitrust la ws that do not apply
to insurance. These princip ally include: (1) the Robinson-Patman Act, 15
U.S.C. §§13, 13a, 13b, and 2la, which prohibits price discrimination
but does not apply to the sale of services, such as insurance; and (2) the
exclusive dealing provisions of the Clayton Act, 15U.S.C. § 14, which
similarly apply only to commodities.
21. 15U.S.C. § 1.
22. 15 U.S.C. §2.
6 Insurance Antitrust Handbook, 3d Ed.
2. The Clayton Act
The Clayton and Federal Trade Commission Acts were enacted in
1914 during the Wilson administration to strengthen perceived weaknesses
in the Sherman Act. The Clayton Act is much more specific than the
Sherman Act, focusing on particular practices such as exclusive dealing
arrangements, price discrimination, acquisitions, and interlocking
directorates. Among the provisions that are or may be applicable to
insurers, the two most important are Section 7, prohibiting mergers and
acquisitions that may substantially lessen competition or tend to create a
monopoly in any line of commerce,
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and Section 8, prohibiting, with
certain exceptions, the directors or officers of one corporation from serving
as directors or officers of competing corporations (“interlocking
directorates”) .
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3. The Federal Trade Commission Act
The Federal Trade Commission Act (FTC Act),25 the fraternal twin of
the Clayton Act, created the Federal Trade Commission (FTC), a five-
member administrative agency. The FTC’s antitrust jurisdiction is
conferred by Section 5(a)(l) of the FTC Act,
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which provides that,
“[u]nfair methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce, are hereby declared
unlawful.”
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Unfair methods of competition include not only violations of the letter
of the antitrust laws,
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but also practices that violate its spirit by exhibiting
the same “central competitive characteristic[s]” as those constituting
Sherman Act violations.
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Section 5 also applies to incipient violations
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23. 15 U.S.C. §18. The Hart-Scott-Rodino Act, Section 7A of the Clayton Act,
15 U.S.C. §18A, requires the parties to certain acquisitions, mergers, and
joint ventures to p rovide advance notice to the Federal Trade Commission
and the U.S. Department of Justice (so-called premerger notification). See
Chapter X for a more in-depth discussion of antitrust scrutiny of mergers
and acquisitions.
24. 15 U.S.C. §19.
25. Act of Sept. 26, 1914, ch. 311, § 5, 38 Stat. 717, 719 (codified as amended
at 15 U.S.C. §§ 41-58).
26. 15 U.S.C. § 45(a)(l).
27. Id.
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