The Magna Carta and the Sherman Act
| Publication year | 2015 |
| Author | By David G. Meyer |
By David G. Meyer1
This year marks the 800th anniversary of the Magna Carta. Recent books and articles discussing the history of the influential document are ubiquitous.2 Those histories typically explore the ways in which the agreement between King John and his nobles in 1215 influenced America's founders and contributed to the development of American Constitutional law. A frequent theme is that the idea of the Magna Carta—especially its perceived status as the seminal document establishing the concept of freedom under the rule of law—has been as influential as the actual content of the document (which primarily addressed a list of feudal rights and obligations).3
In light of its special place in our understanding of legal history, it is no surprise that the Supreme Court has referred to the Magna Carta in more than 200 opinions. As one might expect, many of these references occurred in the context of discussing the origin of fundamental Constitutional rights such as due process.4 However, it is perhaps a surprise that the Supreme Court has also regularly invoked the Magna Carta in deciding antitrust cases.
Of course the Magna Carta did not address agreements in restraint of trade, and was hardly the precursor to the Sherman Act.5 But its image as the seminal charter of freedom has served as an inspiration for the Court's understanding of the importance of antitrust laws.
In United States v. Topco Associates, Inc., 405 U.S. 596, 610 (1972), the Court declared that "[a]ntitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms." That comparison to the Magna Carta in Topco built upon the Court's earlier descriptions of the Sherman Act as a "charter of freedom" (Appalachian Coals, Inc. v. United States, 288 U.S. 344, 359-60 (1933)), and a "comprehensive charter of economic liberty" (Northern Pacific Railway Co. v. United States, 356 U.S. 1, 4 (1958)). These various formulations of the Sherman Act as a charter protecting economic freedom appear in at least fifteen Supreme Court decisions as well as numerous federal circuit court opinions.
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Most recently, the Court reiterated the Topco language in North Carolina State Board of Dental Examiners v. FTC, 135 S. Ct. 1101 (2015), again comparing the role of the antitrust laws in preserving economic freedom to the role of the Bill of Rights in the protection of personal freedom. 135 S. Ct. at 1109. The California Supreme Court has relied upon the analogy as well, citing the U.S. Supreme Court's "charter" language in cases concerning both the Sherman Act and the Cartwright Act. Rice v. Alcoholic Beverage Control Appeals Bd., 21 Cal. 3d 431, 453 (1978); Oakland-Alameda County Builders' Exch. v. F.P. Lathrop Constr. Co., 4 Cal. 3d 354, 361 (1971).
Comparing the Sherman Act to the Magna Carta or the Bill of Rights may seem a curious choice to the modern antitrust lawyer or economist who views antitrust laws solely as a practical instrument to enhance economic efficiency and further consumer welfare. A "charter of freedom" is perhaps not the most obvious title for a body of law that has evolved to focus on the efficient delivery to consumers of the goods and services that they want at a competitive price. It is not immediately apparent what individual freedoms these laws are supposed to address—certainly not the freedom of businesses to act collectively in setting prices or allocating markets. Moreover, a "charter" is typically an instrument that grants particular "rights, liberties or powers" to citizens. See Black's Law Dictionary (2d Ed.). In contrast, the Sherman Act is a statute that proscribes certain conduct by private parties upon pain of criminal punishment. And, unlike the Bill of Rights, antitrust laws restrain the behavior of private actors in the market, not the government in its dealings with citizens. See Mass. Food Ass'n v. Mass. Alcoholic Bev's Control, 197 F.3d 560, 565 (1st Cir. 1999) ("The Sherman Act is a "charter of economic liberty' . . . but only as against private restraints") (emphasis in original).
So what did the Supreme Court mean when it compared the Sherman Act to the Magna Carta? And why do courts continue to refer to antitrust laws as a "charter of freedom?" Not surprisingly, different courts at different times have used the analogy to different ends. The variety of references is an interesting study in itself, but it also provides a helpful window into the evolving purposes of the antitrust laws.
One practical sense in which the courts have compared the Sherman Act to a "charter" concerns its form rather than its function. For example, in Appalachian Coals, the Supreme Court observed that, "[a]s a charter of freedom, the Act has a generality and adaptability comparable to that found to be desirable in constitutional provisions." 288 U.S. at 359-60. In United States v. E.I. DuPont de Nemours & Co., 366 U.S. 316 (1961), the dissenting justices echoed this theme. They quoted the language in Appalachian Coals while noting that the "sweeping generality of the antitrust laws differentiates them from ordinary statutes." They agreed with the proposition that "'[i]n the antitrust field, the courts have been accorded, by common consent, an authority they have in no other branch of enacted law. . . . '" Id. at 363 (quoting United States v. United Shoe Machinery Corp., 110 F. Supp. 295, 348).
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Some judges have also viewed the generality of the Sherman Act's language, like the broad language in the Bill of Rights, as an expression of fundamental values that should be interpreted in light of the nation's experience over time. The Supreme Court's observation in Appalachian Coals about the "generality and adaptability" of the Sherman Act was accompanied by a summary of its purpose that suggests such fundamental values: "The purpose of the Sherman Anti-Trust Act is to prevent undue restraints of interstate commerce, to maintain its appropriate freedom in the public interest, to afford protection from the subversive or coercive influences of monopolistic endeavor." Id. at 359-60.
Occasionally courts have used this...
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