Antitrust Law

AuthorArthur Rosett
Pages103-107

Page 103

Federal antitrust law comprises a set of acts of Congress, administrative regulations, and court decisions that attempt to regulate market structure and competitive behavior in the national ECONOMY. The substance of this law is found in the first two sections of the SHERMAN ACT (1890), which forbid concerted action in "restraint of trade" and acts that seek to "monopolize" any part of commerce. The COMMERCE CLAUSE is the nexus between antitrust law and constitutional law.

There are several persistent uncertainties concerning the proper meaning of these prohibitions: the extent to which they embody a particular concept of economic efficiency as a primary value; the degree to which they are designed to protect competition by valuing a market composed

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of a large number of small competitors rather than a few large units; and the extent to which they embody specific notions of consumer protection. Despite these disagreements, there is general consensus that the antitrust laws express a preference for free and open markets in which prices and production are set by competitive forces and in which neither restraint of trade nor monopolization determines important market conditions. The three most common forms of restraint of trade are competitor agreements to fix prices, to allocate customers and markets, and to exclude parties from the market by a boycott or group refusal to deal. Monopolization is behavior by a dominant firm in the relevant market designed to give the firm power to fix prices, set market conditions, and exclude potential competitors.

The antitrust laws have ancient roots in the English and American COMMON LAW. Most states have comparable laws which complement the congressional scheme with varying degrees of effectiveness. In addition, Congress has amended the original acts, most notably to deal with corporate mergers and consolidations and with price discrimination in the distribution of goods. After a generation of judicial interpretation of the Sherman Act's general prohibitions, Congress in 1914 adopted the CLAYTON ACT and FEDERAL TRADE COMMISSION ACT to supplement the Sherman Act with more specific prohibitions and to supplement judicial interpretation and enforcement with administrative agency rule-making and enforcement. Nonetheless, these additions are largely derivative; the Sherman Act's prohibitions of "restraints of trade" and "monopolization" remain the core of federal antitrust law.

Antitrust law bears a strong resemblance to constitutional law, both in the broad intentions and organic implications of its substantive law and in the methodology of its enforcement and interpretive growth. These laws have long been seen as more than simple statutes. The delphic demands of the Sherman Act are considered a structural imperative with social and political, as well as economic, implications. Justice HUGO L. BLACK summed up this perspective in Northern Pacific Railroad v. United States (1958): "The Sherman Act was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions."

The Sherman Act was a political response to the threats presented by economic power associated with the industrial revolution in the late nineteenth century. Certainly farmers, industrial workers, and tradespersons suffered from the concentrated economic power of the new order. From their beginning, however, these laws also identified threats presented by concentrated economic power to the social and political fabric. The specifics of the Sherman Act are not demanded by the constitutional text, but they can be seen as the economic corollaries of a constitutional commitment to individual autonomy, free association, and the separation and division of power within society. The antitrust laws seek to prevent economic power from becoming so highly concentrated that political freedom is unworkable.

As units of economic organization have grown in size and markets have become more concentrated over the past century, the antitrust laws have provided one alternative to extensive and detailed governmental...

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