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Jurisdiction Beyond Our Borders: United States V. Alcoa And The Extraterritorial Reach Of American Antitrust, 1909–1945, Laura Phillips Sawyer

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Chapter in the book Antimonopoly and American Democracy by Daniel A. Crane and William J. Novak, eds., Oxford University Press, 2023.

In 1945, Judge Learned Hand wrote one of the most influential opinions in modern antitrust law. In declaring that the Aluminum Company of America (Alcoa) had illegally monopolized the industry for virgin aluminum and had participated in an illegal international cartel, Hand both revived and extended American antitrust law. The ruling is famous for several reasons: it narrowly defined the relevant market in favor of the government; it expanded the category of impermissible dominant firm conduct; it interpreted congressional …

Race-Ing Antitrust, Bennett Capers, Greg Day

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Antitrust law has a race problem. To spot an antitrust violation, courts inquire into whether an act has degraded consumer welfare. Since anticompetitive practices are often assumed to enhance consumer welfare, antitrust offenses are rarely found. Key to this framework is that antitrust treats all consumers monolithically; that consumers are differently situated, especially along lines of race, simply is ignored.

We argue that antitrust law must disaggregate the term “consumer” to include those who disproportionately suffer from anticompetitive practices via a community welfare standard. As a starting point, we demonstrate that anticompetitive conduct has specifically been used as a tool …

Recovering Contingency Within American Antimonopoly And Democracy, Laura Phillips-Sawyer

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*This is the fourth post in a symposium on William Novak’s New Democracy: The Creation of the Modern American State. For other posts in the series, click here.

In his chapter on antitrust law and the American antimonopoly tradition, the penultimate substantive chapter of the book, Novak covers much familiar ground. Yet, he is not focused on the conventional areas of debate in antitrust history, which have included recovering the congressional intent behind the Sherman Antitrust Act of 1890, recreating the economic logic of early antitrust jurisprudence, or surveying the doctrinal shift from “literalism” to the rule of …

Voting Trusts And Antitrust: Rethinking The Role Of Shareholder Litigation In Public Regulation, From The 1880s To The 1930s, Laura Phillips Sawyer, Naomi R. Lamoreaux

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In 1903 the American Telephone and Telegraph Company (AT&T) bought a majority interest in the Kellogg Switchboard and Supply Company, allegedly with the aim of eliminating competition in the telephone business. Perhaps it is not remarkable that the Illinois Supreme Court ruled this acquisition of an Illinois corporation to be illegal. What is noteworthy, however, is that the court took this step at the behest of a group of Kellogg’s minority shareholders who had filed suit to block the deal. Judges had long responded skeptically to such actions, worried that shareholders would clog the courts with challenges to managers’ decisions …

Speech, Innovation, And Competition, Greg Day

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Critics contend that concentrated power in digital markets has generated threats to free speech. For a variety of reasons, market power is naturally thought to concentrate in digital markets. The consequence is that “big tech” is said to face little competition; Facebook controls 72 percent of the social media market while the parent of YouTube (72 percent of the video market) is Google (92 percent of the search market). This landscape has potentially vested private companies with unprecedented power over the flow of information. If Facebook, for example, decides to ban certain types of speech or ideas, it would potentially …

Monopolizing Free Speech, Greg Day

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The First Amendment prevents the government from suppressing speech, though individuals can ban, chill, or abridge free expression without offending the Constitution. Hardly an unintended consequence, Justice Oliver Wendell Holmes famously likened free speech to a marketplace where the responsibility of rejecting dangerous, repugnant, or worthless speech lies with the people. This is supposed to maximize social welfare since the market is believed to promote good ideas and condemn bad ones better than the state. Nevertheless, anxiety is mounting that large technology corporations exercise unreasonable power in the marketplace of ideas.

Because the ability of “big tech” to abridge speech …

Infracompetitive Privacy, Greg Day, Abbey R. Stemler

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One of the chief anticompetitive effects of modern business lies in antitrust’s blind spot. Platform-based companies (“platforms”) have innovated a business model whereby they offer consumers “free" and low-priced services in exchange for their personal information. With this data, platforms can design products, target consumers, and sell such information to third parties. The problem is that platforms can inflict greater costs on users and markets in the form of lost privacy than efficiencies generated from their low prices. Consumers, as examples, spend billions of dollars annually to remedy privacy breaches and, alarmingly, participate unwittingly in experiments designed to manipulate their …

Trade Association, State Building, And The Sherman Act: The U.S. Chamber Of Commerce, 1912-25, Laura Phillips Sawyer

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The U.S. Chamber of Commerce (USCC), and "organization of organizations," was conceived in 1912 in coordination with administrators at the Department of Commerce and Labor to promote the collection of commercially valuable trade information. A critical though often neglected, aspect of administrative state building has been the information-gathering and dissemination practices spearheaded by the Department of Commerce and later the Federal Trade Commission (FTC) in conjunction with the USCC. Rather than a strictly adversarial relationship, in the early twentieth century business-government relations created mutually constitutive administrative capacities in both private trade associations and public administrative agencies.

California Fair Trade: Antitrust And The Politics Of “Fairness” In U.S. Competition Policy, Laura Phillips Sawyer

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In the decades before World War II, U.S. antitrust law was anything but settled. Considerable pressure for antitrust revision came from the states. A perhaps unlikely leader, Edna Gleason, organized California’s retail pharmacists and coordinated trade networks to monitor and enforce Resale Price Maintenance (RPM) contracts, a system of price-fixing, then known as “fair trade.” Progressive jurists, including Louis Brandeis and institutional economist E. R. A. Seligman, supported RPM as a protection to independent proprietors. The breakdown of legal and economic consensus regarding what constituted “unfair competition” allowed businesspeople to act as intermediaries between heterodox economic thought and contested antitrust …

A Comparison Between U.S. And E.U. Antitrust Treatment Of Tying Claims Against Microsoft: When Should The Bundling Of Computer Software Be Permitted?, James F. Ponsoldt, Christopher D. David

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This article will analyze the recent U.S. and E.U. judicial approaches to tying charges which stem from software bundling. Part II reviews U.S. tying jurisprudence both generally and as applied to software bundling. Part III outlines the D.C. Circuit's approach to Microsoft's Windows/Internet Explorer bundle. Part IV briefly covers tying jurisprudence in the European Union. Part V describes the European Commission's (“E.C.”) analysis of Microsoft's Window/Windows Media Player bundle. By comparing the two approaches, Part VI shows that neither approach is ideal: although the U.S. approach offers too little guidance to software manufacturers seeking to avoid liability and unduly discounts …

Patent Ships Sail An Antitrust Sea, Joseph S. Miller

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This brief essay arises from my participation in an April 2006 conference at Seattle University Law School, entitled At the Intersection of Antitrust and Intellectual Property Law: Looking Both Ways to Avoid a Collision. This intersection metaphor is a common one for describing antitrust law's relationship with intellectual property law, among both courts and commentators. This essay explores a different metaphor: patent ships sail an antitrust sea, protecting those aboard from competition's harshest dangers - but only for a time. The nautical metaphor evokes three ideas that the crossroads metaphor does not. First, vigorous competition is the pervasive, baseline reality; …

Balancing Federalism And Free Markets: Toward Renewed Antitrust Policing, Privatization, Or A "State Supervision" Screen For Municipal Market Participant Conduct, James Ponsoldt

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The past decade has witnessed an historic rejection of state control of markets in eastern Europe. Expansion of domestic antitrust immunity policy toward municipal businesses based upon federalism concerns, however, which occurred during the same period, has fostered autonomous governmental control of markets. The judicial application of the Parker doctrine to local government has tended to contradict the premise underlying several generations of U.S. foreign policy designed to support emerging competitive market economies outside the country. Academic analysis of the Parker doctrine during the 1980s was heated and creative. A number of commentators, with varying viewpoints, have addressed the bases …

Judicial Activism, Economic Theory And The Role Of Summary Judgment In Sherman Act Conspiracy Cases: The Illogic Of Matsushita, James F. Ponsoldt, Marc J. Lewyn

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The proper role of neoclassical economic theory in the resolution of antitrust disputes will continue to be debated into the next administration. The Reagan Administration has succeeded in persuading the Supreme Court to incorporate laissez-faire assumptions and goals into Sherman and Clayton Antitrust Acts jurisprudence in at least three major decisions, although the long-range importance of the holdings in two of those cases remains somewhat in doubt.

One of those decisions, however, reflects more than just a disagreement about application is of the antitrust laws. In Matsushita, the Court, ordering summary judgment for defendants at the urging of the Justice …

Introduction: A Retrospective Examination Of The Reagan Years, James F. Ponsoldt

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The Antitrust Bulletin and its readers are fortunate to receive the views of the distinguished contributors to this two-issue symposium, and to receive those views in 1988, potentially a watershed year in antitrust, rather than several years earlier. Some of the authors focus upon particular antitrust issues, whereas others have chosen to take a broader view of the Reagan Administration's efforts and impact on antitrust. The articles reflect some differences of opinion, of course. The symposium as a whole, however, is marked by the recognition that the most suitable antitrust policy must balance government intervention, on the one hand, with …

Legal Reasoning And The Jurisprudence Of Vertical Restraints: The Limitations Of Neoclassical Economic Analysis In The Resolution Of Antitrust Disputes, John J. Flynn, James F. Ponsoldt

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Cognizant of historical shifts in the methodology and standards applied in antitrust analysis, particularly in the analysis of vertical restraints, this Article first considers the underlying jurisprudential nature of legal reasoning as background for determining what the law of vertical restraints ought to be. The Article then explores the implications of substitution "economic analysis"--in the narrow sense of the economic analysis advocated by the Chicago School of "law and economics"--for legal reasoning in disputes arising under the antitrust laws. A more accurate, multivalued background for antitrust policy is explored. This Article finally proposes a method for analysis of vertical restraints …

Immunity Doctrine, Efficiency Promotion, And The Applicability Of Federal Antitrust Law To State-Approved Hospital Acquisitions, James F. Ponsoldt

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The question whether hospitals should be regarded as private businesses, or alternatively as public utilities, in order to maximize productive and allocative efficiency, remains controversial. In recent years, the ability of American hospitals and doctors to provide excellent health care services has been hindered by rising costs and distribution problems. This combination of rising costs and decreased distribution has prevented medical services from reaching the portion of the American population that has the greatest need for these services.

In response to these problems, Congress in 1974 passed the National Health Planning and Resources Development Act (NHPRDA). The NHPRDA is designed …

The Unreasonableness Of Coerced Cooperation: A Comment Upon The Ncaa Decision's Rejection Of The Chicago School, James F. Ponsoldt

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The Supreme Court's decision in the NCAA case, upholding that the NCAA's mandatory rules controlling the exclusive sale of television rights to intercollegiate football violate section 1 of the Sherman Antitrust Act, is important for several reasons. First, it is among but a few decisions to hold that a restraint of trade although no per se illegal is economically unreasonable under the rule of reason. Second, its implied questions about the goals and relevance of antitrust enforcement coincide with questions about the governmental regulation of business now addressed in law reviews, editorial pages, and by congressional committees. Last, it may …

Contribution In Civil Antitrust Litigation: The Emerging Consensus In Legal Literature, James F. Ponsoldt, Benjamin H. Terry

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The United States Supreme Court recently has agreed to consider the issue of whether contribution among multiple defendants and coconspirators should be allowed in private civil antitrust litigation. Three circuit courts of appeal recently have handed down decisions on the issue of contribution and the result has been disagreement over whether such a right exists or should exist in antitrust law. Legal commentators have responded to these developments with a spate of “solutions” to the problem containing proposals for and against contribution. This article will survey the current status of the literature expressing these opinions. Then, assuming the establishment of …