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Antitrust laws protect trade and commerce from monopolies and unfair business practices. The U.S. Federal government is empowered to pursue antitrust and competition law violations through the Sherman and Clayton Act, yet the political preferences of law makers, judges, and the U.S. Supreme Court ultimately defines the strength of antitrust laws, and if they can be wielded at all.
From its inception, the Sherman Act was considered vague. Common law and court precedent, specifically U.S. Supreme Court decisions, have sculpted what we know as “antitrust jurisprudence.” SCOTUS rarely takes antitrust cases, and when they do, those decisions are binding for what could be years until the next antitrust case. If the Court heightens the government’s burden of proof for antitrust cases, that precedent is unlikely to see change in the near future. The Court has gradually moved away from per se illegality in antitrust enforcement.
The Sherman Act makes “every contract, combination, or conspiracy in restraint of trade” illegal. (emphasis added). The Court interpreted the Sherman Act as an unreasonable restraint of trade, however, not as a complete bar to every antitrust restraint. In Broadcast Music, Inc. v. Columbia Broadcasting System Inc., 441 U.S. 1, 9 (1979), the issue was whether a blanket licensing fee for an entire market should count as a per se violation because of its effect of price fixing, an agreement between competitors to “raise, fix, or otherwise maintain the price at which their goods or services are sold.” In Broadcast Music, the Court held that price fixing per se illegality only applies if the Court has considerable experience with the particular business relationship to classify them as per se violations. Moreover, although the effect of a blanket license is a price fix, it promotes competition and increased market efficiencies, instituting a case-by-case, reasonableness approach. This is a grand departure from United States v. Container Corp. of America, 393 U.S. 333, 337 (1969), where only ten years earlier, the Court held, “...interference with the setting of price by free market forces is unlawful per se… in terms of market operations stabilization is but one form of manipulation.” The Supreme Court has steadily moved away from strict adherence to the Sherman Act and eased its enforcement of the antitrust laws.
Antitrust jurisprudence is a particularly important legal, societal, and capitalist marketplace discussion; it is shaped both by judges and political beliefs. The government and other private actors endure significant obstacles when deciding to pursue antitrust litigation. The majority of the public believe that government intervention is unnecessary to keep markets competitive, the economic elite hold significant influence on public policy, lawmakers hold suppressed animosity between themselves, and that a historic bench of judges rallies against antitrust broadly. The public fears legal inconsistencies between judges who hold antitrust opinions and companies lobbying for less legislation.
While antitrust jurisprudence is a tool for preserving the American market’s competition and restraint of powerful companies, it also exemplifies the politically partisan views on the government’s role in the marketplace and its business interactions.
Public Opinion is Split on the Level of Government Intervention in the American Marketplace
The American principle, that the free market model is fundamental in keeping our markets competitive and innovative, guides our relationships between the economy and our antitrust jurisprudence. Crucially, company size alone is not an indicator that it has engaged in unfair competition, yet it is a key factor when enforcement agencies or private parties look for antitrust violations. The “big is bad” theory as applied to corporations is not necessarily accurate in the U.S. Moreover, American marketplace values support the conglomerate, anticompetitive conduct in our market we see today.
In light of our dependance on marketplace conglomerates and Big Tech’s commercial success, such as those of Google, Amazon, Microsoft, Meta, and Apple, our market could soon be obstructed by stricter government intervention. Where antitrust has largely lived in the public’s peripheral, the success of Big Tech has brought renewed interest in antitrust and a polarizing discussion: how much government intervention do we want in our markets? The answer to antitrust intervention changes with each political leaders’ affiliations and objectives, stripping the momentum from the U.S. antitrust movement.
The Argument for More Government Intervention
More government intervention could mean more protections to the everyday consumer, potentially at the cost of innovation and competition. We are forced to ponder on our subjective values: consumer protection or economic independence from the government. The history of antitrust has always been protectionist, a critical analysis of trusts and large businesses. Both trusts and large businesses have historically wielded significant market and political power. More government intrusion in the marketplace may be the only way to retain Congress’ original protectionist intent. In 2023, the political and economic landscape has significantly evolved with Big Tech’s success and its consumer dependency.
The potential for stricter antitrust laws in the U.S. is reflected in the EU. In the EU, for example, strict competition laws and government inquiry have provided for consumers: the ability for Apple users to download third party software, protection from non-public data and preferential product treatment used by Amazon, protection from Meta coercing users to accept third party advertisement data and purposefully disadvantaging competitive ad services, and, perhaps most tangibly, a new requirement for common electronics chargers to be equipped with compatible charging ports.
More government intervention would mean a more robust legislation and a supportive judiciary system. Complaints concerning the general weakness of and inconsistencies with antitrust laws could be resolved by granting the government and private parties opportunity to vindicate antitrust injuries. Furthermore, reform requires preemptive measures, not running behind the wake of damage left by monopolies. Consumers do not benefit from anticompetitive conduct remedies. Unwinding the American dependance on powerful stakeholders in antitrust enforcement requires legal consistency and allowing the government to represent its consumer-society.
The Conservative and Populist view of Antitrust Enforcement
Antitrust enforcement has gone through major polarity over the last two centuries, particularly with conservative justices and legislators. Historically, the Republican party was pro-antitrust. In 1890, Republican Senator John Sherman declared his desire to implement government antitrust legislation and passed the Sherman Act. The Sherman Act made any contract, combination, or conspiracy that restrains trade, as well as any monopoly, or the attempt or conspiracy to form a monopoly, illegal. At the outset, Republicans were anti-monopolists and believed that the people should not be controlled by tyrants in the political or economic sphere. In the 1900s, the Republican Party made antitrust enforcement part of their official platform. William McKinley condemned all conspiracies to restrict trade or create monopolies. Presidents Theodore Roosevelt, Dwight D. Eisenhower and Gerald Ford championed antitrust enforcement, suppressed corporate power, and stifled monopolies. In the late 1970s, however, during the emergence of the Chicago School of Economics, President Reagan oversaw the reduction of antitrust enforcement. During this time, the government refused to challenge mergers. In the Chicago School of Economics, government authorities accepted increased risks from concentrated industries.
Tying arrangements are another evolving area of antitrust enforcement the Court has declined to stringently enforce. In Northern Pacific Railroad Co. v. United States, 356 U.S. 1 (1958), the Court held that a railroad company granting preferential routing options involved a tying arrangement, finding the arrangement and the extent of their market power per se illegal. Jefferson Parish Hospital Dist. No. 2 v. Hyde, 466 U.S. 2 (1984), followed by Eastman Kodak Co. v. Image Tech. Servs. 504 U.S. 451 (1992), modified the per se rule of illegality. In the modified per se approach Jefferson and Eastman Kodak raised the standard for what constitutes illegal tying. Tying arrangements were per se illegal, however, the Court was amenable to accepting instances of illegal tying absent market power in the primary market. The Court embraced the separate products test from Jefferson, reducing the Court’s ability to enforce antitrust tying arrangements. United States v. Microsoft Corp., 253 F.3d 34 (2001) was the final blow to per se illegality of tying arrangements. There, the Court adopted the “rule of reason” approach to tying arrangements: “We hold that the rule of reason, rather than per se analysis, should govern the legality of tying arrangements involving platform software products.” Id. at 84. Thus, since the 19th Century, U.S. Courts have become increasingly lax in antitrust enforcement.
Today, populist candidates in the Republican Party have started revitalizing the antitrust enforcement movement. In his 2016 campaign trail, Former President Trump promised to oppose mergers and support antitrust suits against AT&T for their acquisition of Time Warner. Other notable Republican populists have called for the return of antitrust enforcement. Representative Gaetz has worked with the Freedom Caucus and Democrat Representatives David Cicilline and Pramila Jayapal to bring five new antitrust bills aimed at barring big tech companies from using their dominant market positions to restrict competitors. A few conservatives, including Representative Jim Jordan, however, have been markedly reluctant to join Representative Gaetz. Nevertheless, the political strife has not dissuaded Republican Party populists from encouraging antitrust enforcement. Senator Josh Hawley advocated to ban all mergers and acquisitions by companies with market capitalization over $100 billion, to increase antitrust penalties, to clarify the nonexempt status of vertical mergers, to empower the Federal Trade Commission to restrict digital firms from exercising their market power to keep out competition, to ban big tech companies from prioritizing their own search results over competitors without disclosure, to reform the Sherman and Clayton Acts, and to replace outdated standards for evaluating antitrust cases.
Despite its neglect, antitrust law and regulation retains its relevance. The Republican Party has advocated both for and against antitrust enforcement, yet, as populists enter the Republican Party, they are beginning to cultivate the revitalization of antitrust enforcement.
Why the Antitrust Conversation Matters
Antitrust law has had its history of unsureties and conflict, yet as long as the American marketplace lives, antitrust jurisprudence will be present. Regardless of the differing political views of antitrust law, U.S. history preserves its relevance and marketplace applicability. Antitrust law impacts lawyers and their companies daily, despite its varying enforcement power. Lawyers practicing in the corporate and regulatory sphere who are cognizant of antitrust jurisprudence will find themselves in better positions to successfully defend their clients or choose the best practices to conform with existing regulatory standards to keep their clients out of court. Lastly, antitrust is an unparalleled legal tool used to protect U.S. consumers and all its derivatives while simultaneously ensuring success for anyone who decides to compete in our market.
*The views expressed in this article do not represent the views of Santa Clara University.