Competition Policy in America: 1888-1992, History, Rhetoric, Law.
In his Competition Policy in America 1888-1992,(1) New York Law School Professor Rudolph J. R. Peritz has created a tour de force in which he has managed to view antitrust law in the context of its changing relations to the larger political and legal milieu, subjects that are themselves continually in flux. Reading this book is to take a grand tour of the currents of politics, economics and law that have accompanied American growth over the last 100 years. Peritz is both informative and provocative. He has given us a book that is a joy to read and a major contribution to the intellectual life of our time.
Peritz brings us into the tumultuous political and legal conflicts that have racked the nation over the last one hundred plus years. Differences in approaches toward antitrust are related to analogous differences in approaches toward constitutional law.(2) Indeed the importance and meaning that their supporters placed upon rights to property and to liberty of contract under the Fifth and Fourteenth Amendments were part and parcel of a gestalt that determined their approaches toward interpreting the Sherman Act. As Peritz tells the story, the antitrust battle lines formed in the Trans-Missouri case.(3) There the prevailing literalist camp was led by Justice Peckham who (following Senator Sherman) adopted an individualist image of competition and who saw a threat to liberty posed by private economic power. The opposing camp, led by Justice White, emphasized the importance of property and liberty of contract.(4) In the dominant contemporary view, property and contractual liberty were bulwarks of individual freedom against a potentially overbearing government. When the Court invalidated New York legislation regulating the hours and wages of bakers in the infamous Lochner case,(5) Justice Peckham justified the Court's result as protecting the bakers' liberty of contract. In Peckham's mind, he and the Court majority were protecting "small dealers and worthy men" from private economic power in Trans-Missouri(6) just as they were protecting workers from an overzealous paternalistic state in Lochner.(7)
The dilemma emerging from these early cases is whether the threat to, liberty stems more from powerful government or from powerful private interests. This dilemma has continued and has been a major source of political and legal controversy throughout the past century. Indeed, these conflicting approaches are often captured in the respective rhetorics of liberty and property. As Peritz observes, these different rhetorics continue to reflect, in our current society, differing attitudes toward private power and governmental power. Peritz uses two cases involving union handbilling activities to illustrate these differences in a current configuration:(8) In DeBartolo Corp.(9) the Court ruled that handbilling in the parking lot outside of a shopping mall was not an unfair labor practice, thus preferencing liberty of expression over property, while in Lechmere, Inc.,(10) the Court later reversed these relative preferences by holding that union organizers have no general right of access to the employer's property. He further develops this theme in a critique of the Court's approach to campaign financing and First Amendment protection of commercial advertising.
Although Peritz's winding tour of the interweaving strands of antitrust and constitutional law is a marvelously engaging one, I nonetheless have repeated disagreements with his interpretations of historical events and with his evaluations of them. Much of my disagreement with Peritz relates to his apparent sympathy for a vision of an industrial society modeled upon the egalitarian-but agrarian--society associated with Thomas Jefferson and described by Alexis de Toqueville.(11) As I point out below, Peritz's rhetoric advances a quasi-Jeffersonian industrial model of society as an ideal but he fails to face the ramifications of such an ideal. An even more serious criticism, however, is Peritz's failure to bring within the scope of his study a wide range of legal and political matters embodying competition policy or its absence: these include the relation between antitrust and international trade; the relation between antitrust and economic regulation; and the relation between antitrust and labor policy. Indeed, it may be Peritz's preoccupation with a "small is better" approach(12) to antitrust that is responsible for his failure to identify these other areas as intimately connected with antitrust developments.
It is, of course, unfair to criticize an author for the book that he did not write. But I read Peritz's intellectual history of the relations between antitrust and constitutional law as an invitation to view antitrust from a wider perspective than is commonly employed by scholars and practitioners. Accordingly, I accept his invitation to take a broad view of the subject. Taking this broad view I look for the historical and intellectual ties between antitrust and these other areas of economic regulation that are closely related to its concerns.
II. The challenge revised: the need for a coherent competition policy contained within a set of coherent economic policies
As I point out below, the United States lacks a coherent approach to its economic policies,(13) of which competition policy is an important constituent. Our antitrust policy itself is replete with contradictions and inconsistencies.(14) Much of the Supreme Court case law--case law that formally governs lower-court decisionmaking--is obsolete and misleading. A long series of Supreme Court decisions governing the evaluation of mergers and acquisitions(15) provides a distorted statement of the law that a court would apply today. Indeed, the actual law is better stated in the Merger Guidelines of the Department of Justice and the Federal Trade Commission.(16) The Court itself has failed in its responsibility to provide adequate guidance to the lower courts and to business. Indeed, the Court has actively interjected contradictory messages into its own case law. Thus it has repeatedly stated that per se rules should apply only to practices that facially appear to be those "that would always or almost always tend to restrict competition and decrease output."(17) Yet the Court continues to apply a per se rule to tying arrangements, despite almost universal recognition that tying arrangements are not inherently anticompetitive in their consequences.(18) Similarly, the Court has allowed the per se rule contained in its 1911 Dr. Miles decision(19) to govern the lawfulness of vertical price maintenance agreements, despite widespread belief that these agreements, in some circumstances, can enhance interbrand competition.(20)
Besides the problematic state of the case law governing mergers and acquisitions, tying arrangements, and vertical price maintenance agreements, the Court's failure to correct obsolete decisions has undermined the case law in other areas as well. Thus for over a quarter century, the Supreme Court allowed the Utah Pie(21) decision to state the law governing primary-line injury under the Robinson-Patman Act, although the anticompetitive ramifications of that decision were apparent and the decision had been almost universally condemned.(22) Indeed the anticompetitive consequences of the decision had been so widely recognized that the lower courts effectively revolted against it,(23) a situation that had caused Judge Easterbrook of the Seventh Circuit significant unease.(24) Utah Pie had been decided in 1967; yet the Court permitted Utah Pie to stand as a formally governing precedent until its 1992 decision in Brooke Group.(25) The Court also allowed the law of attempted monopolization to be distorted for almost 30 years, by failing to correct the patent deficiencies of the Ninth Circuit's 1964 Lessig decision.(26) Lessig had caused immense confusion, especially in the Ninth Circuit(27) where it had needlessly complicated antitrust litigation and had imposed vast amounts of unnecessary costs upon litigants. Only in its 1993 decision, in Spectrum Sports(28) did the Court finally put Lessig to rest.
Outside of antitrust proper, the United States follows a melange of economic policies whose objectives are themselves inconsistent and contradictory.(29) The United States not only pursues conflicting economic policies, but it often embeds these conflicting policies institutionally in its governmental structure, isolating the officials charged with fostering one set of policies from their governmental colleagues who pursue conflicting policies in another department, bureau or agency. Our economic policies tend to reflect the pressures exerted by organized interest groups who press for permanent official institutional embodiment of their policies. Professor Theodore J. Lowi pointed out these tendencies when he wrote his now classic description of liberalism and its end during the 1960s and 1970s.(30)
Thus while the Antitrust Division of the Department of Justice normally pursues competitive-market goals, the Commerce Department and the United States International Trade Commission, which administer the antidumping laws, are actively engaged in protecting American industry from competition from abroad. Yet even the protectionist policies of the Commerce Department are pursued only halfheartedly. The antidumping laws and the voluntary restraint agreements (VRAs), which often follow the invocation of antidumping machinery, are designed to protect viable or potentially viable American industries from mortal assaults from abroad. The intent of the antidumping machinery and of the VRAs that they engender is not perpetual protection, but the restoration of efficiency to a temporarily troubled industry.
Nonetheless, the United States--alone among the major trading nations--follows the protectionist part of the scenario but fails to take steps to insure that temporarily protected industries are restored to health: When the European synthetic fiber industry required revitalization, the European Economic Commission over-saw a producer agreement that allocated capacity reductions and modernization of equipment.(31) Similarly the Japanese have over-seen capacity reduction and modernization under their Law on Temporary Measures for the Stabilization of Specified Industries.(32) Perhaps the most egregious failure by the United States to insure that the protection afforded a troubled industry was minimized and that the industry used the period of protection to restore its competitiveness occurred with steel. That industry was protected for a quarter century.(33)
In addition to our failure to coordinate our trade law and antitrust policies, the United States has participated in a variety of international agreements allocating production and sales: the Cotton Textiles Agreement,(34) the Multi-Fiber Agreement,(35) the Memorandum of Understanding on Aluminum Capacity Reduction(36) all cry out for justification in the light of a coherent formulation of U.S. economic welfare. The semiconductor agreements between the United States and Japan(37) might be the easiest to justify in the light of U.S. free-market rhetoric,(38) but we do not, as a nation, often attempt to reconcile government intervention with our normative commitments to the free market. The U.S. government has not attempted to reconcile the economic policies underlying any of these arrangements with the economic policies underlying the antitrust laws.
Part of the problem in coordinating competition and trade policies is that American government is unaccustomed to using coherent formulations of national welfare as guiding rationales for behavior. Instead we often paper over policy inconsistencies using free-market rhetoric where it does not quite fit. Thus, when the Justice Department itself was present at the formation of a world aluminum cartel, it was at a loss to explain its participation.(39) It felt constrained to justify its behavior in free-market language, but that language was not elastic enough to describe its participation in a coordinated reduction of world aluminum capacity.
Not only does United States antitrust policy conflict with much of its trade policy, antitrust policy--understood as reliance on the free market--conflicts (or has conflicted) with much of our regulatory law, with our labor laws, and with the continuous attempts of states and municipalities to confer local monopolies, either as means of financing government services off-budget or as political payoffs to important constituencies.
III. The unintelligibility of the "Jeffersonian" strand in antitrust policy
Throughout his book Peritz describes various dimensions of an unending struggle between those who perceive private economic power as a threat and those who perceive government as the principal threat to liberty. Peritz surely is on sound ground when he identifies this conflict in beliefs as underlying much of American politics, including its extensions into law and the judicial system. Peritz makes no attempt to hide his sympathies for those who fear private economic power and who look to government for protection. Indeed, Peritz's apprehension of private economic power underlies his sympathy for (and identification with) what he refers to as the Jeffersonian strand in American antitrust law: a view that antitrust should be employed to foster an economic system composed of small, locally-owned business firms. Peritz is, of course, correct to highlight this strand of antitrust law. Where he fails is adequately to criticize it. Indeed, for reasons that are apparent to any observer of the intensely competitive global marketplace, a model of an industrial society that trades off scale economies for the coziness of smallness does not fit the contemporary world.
Peritz accurately identifies this Jeffersonian strand in the antitrust tradition with the "small dealers and worthy men" referred to in Justice Peckham's opinion for the Court in the troublesome Trans-Missouri opinion.(40) Antitrust case law has indeed exhibited a concern with the protection of small businesses over the years. Judge Learned Hand, in his Aloca opinion,(41) asserted that concern. Later, Chief Justice Earl Warren writing for the Court in Brown Shoe,(42) employed similar language. In Alcoa, Hand suggested that, in enacting the antitrust laws, the Congress had sought to favor a system of small producers:
It is possible, because of its indirect social or moral effect, to
prefer a system of small producers, each dependent for his success
upon his own skill and character, to one in which the great mass of those
engaged must accept the direction of a few.(43)
Continuing on this theme of smallness, Hand asserted that the Congress wanted to entrench an industrial system of small producers, regardless of the costs that such a system would impose.
Throughout the history of these [antitrust and related] statutes it has
been constantly assumed that one of their purposes was to perpetuate
and preserve, for its own sake and in spite of possible cost, an
organization of industry in small units which can effectively compete
with each other.(44)
This is a remarkable statement. Under what rationale did Judge Hand believe that the antitrust laws should be used to impose upon the American people a high-cost industry structure, an industry structure whose principal benefits apparently consist in the smallness of the productive units composing it? Hand supplied that rationale. He told us that a system of small producers would produce "indirect social or moral effects" from which the rest of us would apparently benefit. In Hand's vision, the attainment of scale economies ought to be deliberately neglected in the interest of smallness. The American public, of course, would pay the higher costs generated by this inefficient structure. In economic terms, they would be the losers. Who would be the winners? The economic winners apparently would be the owners of these inefficient productive enterprises. They would be supported by the high-cost, high-price industrial structure, apparently in return for their social and moral contributions. As Hand saw it, the public--although economic losers under this arrangement--would benefit morally and' socially, their moral and social benefits compensating them for their economic losses. Yet Hand's remarks about the virtues and desirability of industrial smallness are all dicta. Hand found other grounds for condemning Alcoa. Hand's ultimate condemnation of Alcoa rested in principal part upon a bizarre evaluation of Alcoa's expansion as "exclusionary":
We can think of no more effective exclusion than progressively to
embrace each new opportunity as it opened, and to face every
newcomer with new capacity already geared into a great organization,
having the advantage of experience, trade connections and the elite of
Thus, after outlining a vision of an industrial society based upon an ethic of smallness, Hand did not act upon that vision. Moreover, in the very Alcoa opinion in which he suggested that Congress had opted for an industrial structure based on smallness despite its inefficiencies, Hand went on to assert that efficiency would nonetheless justify an otherwise objectionable monopoly:
A market may . . . be so limited that it is impossible to produce at all
and meet the cost of production except by a plant large enough to
supply the whole demand. . . . A single producer may be the survivor
out of a group of active competitors, merely by virtue of his superior
skill, foresight and industry.(46)
The Alcoa opinion is very slippery. Yet Alcoa is one of the major case law embodiments of the quasi-Jeffersonian view that the antitrust laws should foster smallness.
The Supreme Court took up this Jeffersonian vision in Brown Shoe.(47) In that case, the Court went significantly beyond the views articulated by Judge Hand in Alcoa. Writing for the Court in Brown Shoe, Chief Justice Warren asserted that a corporate acquisition should be disallowed because it produced efficiencies that were unavailable to smaller rivals of the combining firms:
A significant aspect of this merger is that it creates a large national
chain which is integrated with a manufacturing operation. The retail
outlets of integrated companies, by eliminating wholesalers and by
increasing the volume of purchases from the manufacturing division of
the enterprise, can market their own brands at prices below those of
competing independent retailers.... [W]e cannot fail to recognize
Congress' desire to promote competition through the protection of
viable, small, locally owned businesses. Congress appreciated that
occasional higher costs and prices might result from the maintenance
of fragmented industries and markets. It resolved these competing
considerations in favor of decentralization."(48)
Here again is a judicial assertion that Congress wanted to preserve small business firms, even in circumstances in which these firms incurred higher costs, costs that presumably would be passed on to the public.
A few years after Brown Shoe, professors Robert Bork and Ward Bowman took up the challenge of this strand of antitrust case law. Focusing initially on Judge Hand's remarks in Alcoa, they leveled a devastating criticism of those remarks:
It would be hard to demonstrate that the independent druggist or
groceryman is any more solid and virtuous a citizen than the local
manager of a chain operation. The notion that such persons are entitled
to special consideration by the state is an ugly demand for class
Even professors Harlan Blake and Ken Jones, who, in their dialogue with Bork and Bowman, defended the incorporation of noneconomic goals into Sherman Act jurisprudence, rejected favoritism toward small business as a proper antitrust goal:
. . . [I]t is plainly improper to discriminate in favor of small businessmen
simply because they are small. If some businessmen cannot compete because they are inefficient--as a consequence of their small size or for any other reason--they do not deserve to be treated as a privileged class and given special protection. The kind of protection afforded small business by fair trade legislation and by certain aspects of the Robinson-Patman Act enforcement is of this variety, and is, therefore, incompatible with sound antitrust policy.(50)
Thus, even during the very period in which antitrust case law evidenced its greatest concern for protecting small businesses, both the Court's critics and its defenders were condemning a policy that would provide special antitrust protection for small business. In this famous debate, all of the debaters rejected the treatment of small business persons as "a privileged class."
The most telling point in rejecting a special concern for small business as an aspect of antitrust policy, however, is one articulated by Bork: neither such a concern nor any other noneconomic concern can be objectively administered by the judiciary, because there are no standards for determining when "smallness" (or other noneconomic concern) counts and when it does not.(51) In the end, the debates over whether efficiency would be the sole goal of antitrust, which raged from the 1960s through the 1980s, appear to have been effectively largely resolved on this latter basis. There just are no standards for determining when noneconomic goals enter and when they are decisive. Moreover, as I point out below, the vision of a society composed of small and high-cost producers is impossible for other reasons as well.
IV. The relation of the Jeffersonian strand to international competition
In the wake of the devastation produced by World War II, the United States had--for a decade and one-half following the end of the war--the luxury of deciding (if it so chose) to sacrifice economic efficiency for other values, such as greater distributional equity in incomes or a decentralized industrial organization.
Although the United States continues to be a wealthy society, it no longer possesses the luxury to adjust the structure of its own economy without regard to the consequences in the global marketplace. As inefficiencies are introduced (or retained) in the American economy, American industries become increasingly vulnerable to challenges from efficient rivals from abroad.
The increasing significance of international trade, however, presents the United States with opportunities as well as challenges. Although American industries can tolerate inefficiencies only at the cost of losing market share to foreign rivals, the expansion of trade vastly broadens their markets. And it is economic success in the world marketplace that holds the key to resolving this nation's principal social problems: improving the schools, raising the standards of the poor, revitalizing the inner cities, providing needed healthcare, reforming social security and other benefit programs. As the United States was able, in the post-World War II years, to transform potential class conflict into a shared focus upon improving economic performance,(52) so the coexistence in the present era of significant domestic social problems, the discipline of international competition, and enormous economic opportunities for growth in the world markets provide a similar opportunity. But this is an opportunity that is critically dependent upon efficiency.
The extensive discussion of the small-business strand of antitrust law fails to confront the obvious fact that in a global marketplace, inefficiencies introduced into the American economic system are likely to have the primary effect of diverting business from American producers to foreign producers. The vision of Hand and Warren of an economy of small high-cost local producers is not a viable vision, unless the authorities that would impose such a structure in the United States are able to impose similarly inefficient structures throughout the world. When the domestic American economy was largely insulated from foreign competition, the high-cost decentralized vision might have been implemented, however unwise that would have been. Today that option is not possible.
As previously observed, the quasi-Jeffersonian model of antitrust policy cannot survive Bork's criticism that it is inadministrable. Bork, Bowman, Blake and Jones also showed that it is inconsistent with democratic values. The discussion here (in section IV) shows it incompatible with global competition. All of these critiques combine to reveal that model as an unworkable paradigm for antitrust law.(53)
V. Antitrust and international trade
One of the major omissions from this book is a discussion of the relation between antitrust and international trade, and the evolution of that relationship over time. During the formative period of antitrust jurisprudence, Congress viewed international trade, in significant part, through the lens of antitrust. The Wilson Tariff Act of 1894(54) was drafted in antitrust language as was the Antidumping Act of 1916.(55) Indeed, one of the most fascinating historical aspects of the developments in antitrust and trade law is the relationship between the original section two of the Clayton Act and the 1916 Antidumping Act. Both acts deal with price discrimination. The legislative history of section two indicates that congressional attention was focused upon pricing behavior which, in today's language, we would call "predatory."(56) There, however, the congressional focus was upon the domestic market. Similarly, the 1916 legislation was also directed against predatory pricing, but this time against predatory pricing in international trade. That predatory pricing was targeted in the 1916 legislation is even more clear than under the analogous provision of the Clayton Act because Congress included an explicit predatory intent component in the offense: plaintiffs under the 1916 Act were required to prove that the defendant intended to destroy or injure or prevent the establishment of an American industry.(57)
Shortly after the end of World War I, the Congress enacted new trade legislation, including the Antidumping Act of 1921.(58) In the 1921 legislation Congress followed the earlier act's concept of "dumping" behavior as sales in the United States below their fair value, but modified the approach of the 1916 Act in two important ways. First, the 1921 Act omitted the (predatory) intent requirement of the earlier act(59) and it entrusted its administration to a Cabinet officer (the Secretary of the Treasury)(60) rather than to the courts, as the earlier legislation had done. In context, these are both interesting changes in approach. The 1916 Act's intent requirement had been criticized as imposing a burden that plaintiffs were unable to carry.(61) Yet the 1921 Act carried an actual injury requirement in language that largely tracks the intent-to-injure requirement of the 1916 Act. Under the 1921 Act, the Treasury Secretary was required to find, prior to imposing antidumping duties, that "an industry in the United States is being or is likely to be injured, or is prevented from being established ...."(62) Thus the substantive language of the 1921 legislation resembles that of the 1916 legislation, but differs in substituting a requirement of actual effects for an intent requirement and in substituting administrative for judicial enforcement. These factors suggest that Congress intended the 1921 Act to address the same or similar problems as the 1916 Act, but altered the procedural mechanics in order to mitigate enforcement problems. The removal of the intent requirement would eliminate the problem of proving intent. The replacement of the intent requirement with an effects requirement would still pose a significant enforcement burden, but it would be one that could be carried by a major government department. And the substitution of administrative enforcement would insure that the government, by controlling the selection of cases, would be able to prevent abuse of the now less stringent burden.(63)
The 1921 legislation was the culmination of a series of bills in the Congress, most of which were couched in antitrust language. The 1916 Act employed antitrust language. When Congress addressed import competition in these Acts or in the bills leading up to them, it spoke in antitrust language. When most Congressmen thought about "dumping," they envisioned foreign cartels selling at monopoly prices in their home markets and at below-cost prices in the United States. In the mind-set of Congress, this was an aspect of monopoly behavior.
For all of these reasons, there is ground for concluding that the 1921 Act could have been construed as targeting predatory behavior.(64) It was modeled upon the 1916 Act, which was explicitly directed against predatory behavior (and was itself, in turn, an international version of section two of the Clayton Act). Yet the 1921 Act developed into highly protectionist legislation, which--in contrast to the antitrust laws--protects competitors rather than competition.
The 1921 Act established the core of United States antidumping legislation, a core that continues to this day. The 1921 Act was repealed in the Trade Agreements Act of 1979.(65) but its provisions were substantially reenacted in an amendment adding title VII to the Tariff Act of 1930.(66) Yet despite this history, the provisions that originated in the 1921 legislation have been interpreted in a purely protectionist way. When, during the Reagan administration, then vice chair of the United States International Trade Commission, Susan Liebler, developed a five-factor test for assessing antidumping cases on purely predatory pricing grounds,(67) she was rebuffed by the courts.(68)
The formation of the General Agreement on Tariffs and Trade (GATT)(69) in the years following World War II is another marker in the complex relation between antitrust and international trade. The GATT was the surviving remnant of the abortive Havana Charter,(70) an ambitious agreement that would have established an International Trade Organization. Anticipating that private cartels might interfere with its objectives of promoting international trade, the Charter's drafters included a chapter (chapter V, articles 46-54) designed to prevent private cartels from interfering with trade. But when it appeared that the Charter would not be accepted by the U.S. COngress, the United States and other nations proposed the GATT as a means of salvaging part of the Charter.(71)
The anticipation in the Havana Charter that anticompetitive activities by private cartels might frustrate international agreements designed to lower trade barriers was prescient. Although the international community has not yet committed itself to the adoption or enforcement of competitive norms,(72) many of the recent trade disputes involving the United States concern relationships between private anticompetitive behavior and government obligations to open markets. Indeed, the Justice Department has explicitly announced its intention of using the United States antitrust laws against foreign cartels that attempt to exclude American producers from foreign markets.(73) And an important goal of the United States in its negotiations with Japan has been to obtain a heightened enforcement of the Japanese Anti-Monopoly Law on behalf of American and other foreign suppliers to the Japanese market.(74) It is widely believed that the United States will eventually attempt to seek amendments to the new World Trade Organization Agreement that will impose upon adhering states an obligation to enact or maintain a competition law and to insure its enforcement on behalf of foreign companies.
The difficulties of securing widespread international agreement upon the terms of competition laws to be applied in their respective domestic economies are staggering. The American Bar Association's Special Committee on International Antitrust, after investigating the possibility of worldwide competition law standards, concluded that no such standards are feasible.(75) By contrast, a group of antitrust scholars, meeting in Munich, Germany in 1993, produced a draft International Antitrust Code, which they proposed as a GATT-MTO-Plurilateral Trade Agreement.(76) While a laudable effort, the draft International Antitrust Code does not appear to meet the standards of widespread acceptability.(77) Indeed, it would be unacceptable in the United States because of its prohibitory overbreadth.(78)
VI. The relation of antitrust to economic regulation
A. Transport regulation
In 1887, just 3 years before enacting the Sherman Act, Congress enacted the Interstate Commerce Act.(79) The Interstate Commerce Act then became a model for federal regulation over the next century. Through successive amendments of the Act, railroads(80)--and later motor carriers(81)--were subjected to increasing government supervision over rates and routes. Carriers were required to file their rates in advance. Unless objected to by the Commission or private party (competitor or shipper), the rates would go into effect. Should objection be made, however, the rates would be suspended while the Commission investigated their reasonableness.(82) The burden would then be upon the carrier to justify the rate. Conversely, if the rate was allowed to go into effect without objection, the burden would be on the Commission or other challenger to prove its unlawfulness. New routes were subject to Commission approval as was abandonment of existing service. This type of regulation was imposed upon air transportation in the Civil Aeronautics Act(83) and was used as a model for price and entry regulation of natural gas transmission under the Natural Gas Act.(84)
Yet congressional imposition of detailed regulation upon all forms of carriage was ultimately recognized as misguided. From the late 1970s into the 1980s, Congress deregulated most forms of transportation. The airlines were deregulated in 1978.(85) Motor carriage deregulation was begun in 1980;(86) and the railroads were essentially deregulated in the same year.(87) The deregulation trend was led by Alfred Kahn,(88) Roger Noll,(89) Stephen Breyer(90) and others who argued forcefully that regulation had converted the airline industry into a high cost/high price government-supervised cartel that benefited the carriers at public expense.(91) They argued airline regulation diverted rivalry among the airlines into the provision of more flights on aircraft that were only partially filled, with the result that the cost-per-passenger was unnecessarily high. But because the airlines were essentially guaranteed rates that covered these inflated costs, the public was forced to pay rates that supported them. On the rationale that a competitive market would provide the public with more of the kind of service that it wanted and at lower rates, the Congress substituted a free market in air transport for a regulated one, thus implicitly admitting that 50 years of regulation had been a mistake.
As in airline regulation, regulation of surface transport generates high-cost operations. In motor-carrier regulation the ICC required rates to be sufficiently high to cover the costs of truck transport to a destination with an empty return. Since costs were programmed into the rate structure, the transport carriers had a diminished incentive to resist unionization or to bargain hard in labor negotiations. Competing motor transport carriers were the principal objectors to filed rates. And a new entrant carried the burden of showing why its service was needed.(92) Again a government-supervised cartel provided the public with high-cost/high-priced service. Eventually railroad transport itself entered the deregulation scenario. In an interesting turnaround, the competition of the now-unregulated motor carriers were relied upon in part to insure that the railroads would operate competitively. Rates for all forms of transport have fallen significantly since the beginning of deregulation.
Transport regulation was imposed because of a failure of vision. Transport was (and is) an area for the application of competition policy. Today, the public welfare has been improved because a policy of competition has been substituted for a policy of regulation.
B. Telecommunications regulation
The comprehensive telecommunications regulation established under the Communications Act of 1934(93) is rapidly being supplanted by a free-market policy. The Telecommunications Act of 199694 has dramatically pushed telephone and television industries into a newly freed regulatory environment. In these industries also, experience has shown that government regulation reduces, rather than enhances, the public welfare. Years of Federal Communications Commission attempts to foster local television and radio programming by broadcasters have given us a culturally vapid wasteland.(95) As my colleague Jim Chen has shown, the Commission attempted to control the content of broadcast programming through a series of rules governing ownership of local stations and their relations with networks. The Commission wanted "(1) local ownership and control, (2) viewpoint diversity in programming, (3) public service, and (4) competitive market structure."(96) Yet these rules succeeded only in fostering programming of a dulling mediocrity and sameness while discouraging the entry of new networks that might have helped to diversify programming. The Commission's so-called Prime Time Access Rules (limiting network programming during early evening hours) encouraged stations to run game shows.(97) The Commission's financial syndication rules (which barred networks from financial involvement in program production) raised barriers to entry in programming and thereby probably helped to deter the programming diversity that the Commission itself wanted.(98) As Chen has pointed out, only when the Commission relaxed its regulatory heavy hand to permit the entry of Fox Broadcasting Company as a fourth commercial network did the broadcast programming diversify sufficiently to meet the entertainment needs of black audiences.(99)
Just as the Interstate Commerce Commission sought to regulate motor transport to preserve its control over rail transport, the Federal Communications Commission asserted authority over cable television carriers in order to safeguard its regulation over broadcasters.(100) Despite the fact that its regulatory moves were undermining its overt objective of diverse programming, the Commission--in the typical mode of regulators--had persistently sought to limit cable as a competitive alternative to broadcast television, thereby again retarding the development of diverse programming.(101)
Today much of broadcast regulation is obsolete. It rests upon an assumption that broadcast is the prime method for bringing programming to viewers and that broadcast frequencies are scarce. Technology has changed all that. Cable is widely available and cable itself is now under attack from satellite broadcasters. Telephone companies are considering entry into cable service, and the cable companies themselves are contemplating expansion into areas previously served by telephone companies, such as enhanced Internet connections. It is the combination of technological developments and regulatory change that is changing the structure of communications. Technology has compelled us to recognize the obsolescence of the old regulatory paradigm underlying the Communications Act of 1934. Congressional action was nonetheless required to embrace the new competitive paradigm underlying the Telecommunications Act of 1996.
Yet the fluidity in today's telecommunications industry is the result, as well, of the 1981 AT&T divestiture decree.(102) It was the breakup of the old Bell system that gave new impetus to competition in long-distance telephone service, competition that had been growing since MCI had entered the long-distance telecommunications market many years earlier with microwave transmission.(103) The dissolution of the Bell system had a catalytic effect on the telecommunications industry. It engendered intense competition in long-distance service; and continuous efforts by the regional Bell companies to expand the scope of their communications services both within their original markets and elsewhere, thus preparing the way for the Telecommunications Act, the possible integration of television and telephone industries, and the replacement of regulation with competition.
VII. The relation of antitrust law to local governments
One of Peritz's major themes is the difference between those who want protection from private economic power and those who want protection from government. This difference in perspective, of course, is today, and has been in the past, at the core of American politics and public law. Yet like all great principles, it is not universally helpful. This particular differentiating principle breaks down at the point where antitrust law impinges upon local government prerogatives.
Peritz expresses amazement that antitrust law, whose principal purpose is the protection of citizens from corporate conspiracies, could be used against local governments.(104) Yet Peritz fails to recognize that local governments probably are the source of most of the remaining market restraints in the United States economy. Peritz nowhere acknowledges that local governments are especially likely to impose restraints that burden disenfranchised outsiders for the benefit of their own citizens, as did the local government in the Hallie case.(105) Perhaps worse, local governments often burden their own poor and disadvantaged--as well as disenfranchised outsiders--in order to benefit groups organized to exert political pressure. Thus the cartel-like limitation of the number of taxicabs in cities like Minneapolis and New Orleans imposes economic burdens upon the poor (who must take taxis to the grocery store) and upon visitors at the behest of the taxi owners. When, in the early 1980s, the FTC was about to challenge these two cities on this issue,(106) the Minneapolis Congressman temporarily persuaded Congress to cut off funds to the FTC for that purpose.(107) Surely this behavior raises the specter of people being victimized by their politicians in the manner suggested by public-choice theory.
Although Peritz relates antitrust and constitutional law at other places in his book, he neglects to do so in dealing with local government restraints. This is an unfortunate omission, because the parallels between the dormant commerce clause and the Sherman Act are striking.(108) The focus of the dormant commerce clause is upon free trade among the states, an objective that the Supreme Court often refers to as an American "common market."(109) These free-trade objectives incorporated in the dormant commerce clause coincide with the free-trade objectives of the Sherman Act: both provisions further the efficient allocation of resources within the United States. The focus of the constitutional provision is upon market barriers raised by state and local governments while the focus of the Sherman Act is primarily on market restraints and monopolies erected by private business firms.(110) Yet there are wide areas of overlapping concern.
Neither the states nor local governments can opt out of the Sherman Act. When these governments impose market restraints, the question necessarily arises as to whether their action is consistent with the Sherman Act. The difficult task of differentiating legitimate acts of governance from illegitimate attempts to legislate Sherman Act exemptions was first addressed by the Supreme Court in 1943 in its Parker v. Brown(111) decision, where the Court upheld a cartel of raisin growers organized under California law against the contention that it was banned under the Sherman Act. Subsequent decisions have shown that the dimensions of the state-action exemption have been difficult for the Court to craft.(112) Following Parker v. Brown, the Court invalidated the nonsigner provision of the Louisiana fair trade law in 1951(113) and thereafter, in 1975, invalidated the price-fixing rules of Virginia's integrated bar association.(114) After its decision in Virginia State Bar,(115) the Court addressed the state-action exemption repeatedly. During the late 1970s into the early 1980s, the Court whittled away the applicability of the exemption to local governments, a course of decisions that modern public-choice analysis would be likely to characterize as pro-Jeffersonian.(116)
The vulnerability of local government decisionmaking to Sherman Act review reached its peak under the Court's 1982 decision in Community Communications Co. v. City of Boulder.(117) Boulder raised the prospect not only that local government legislation might be subjected to Sherman Act review, but that local governments themselves might be subjected to treble damages. Congress responded to the latter contingency by enacting the Local Government Antitrust Act of 1984,(118) immunizing local governments and their officials from monetary liability for antitrust offenses. But Congress left the substantive standards of antitrust law intact. It was the Court's hasty retreat in Hallie that effectively removed local government legislation from antitrust scrutiny.
Yet the Court's broadening of the state-action exemption rests uneasily with the Court's growing assertiveness under the dormant commerce clause. Many of the same kinds of restraints fall within the scope of both the dormant commerce clause and the Sherman Act. Yet even though the creation of municipal monopolies may fall within the scope of both provisions, they are treated differently in practice because of the expansion of the state-action exemption since Hallie. The municipal trash-disposal cases illustrate the point. In recent years, municipalities have sometimes enacted so-called flow control ordinances, requiring that all trash generated within their boundaries be disposed of at a common site, thus bestowing a monopoly upon that site. Besides imposing a monopoly on the public, these ordinances carry the additional vice that they employ the monopoly franchise as a financing device: by imposing premium user charges, the facility is funded off-budget, obscuring its cost to the taxpayers and avoiding state-imposed fiscal controls.(119) Under Boulder such municipally-conferred monopolies would have been vulnerable to challenge under the Sherman Act. Under Hallie, however, these municipally-created monopolies are immunized from antitrust challenge.(120) Yet as the Supreme Court has held,(121) they are also subject to invalidation under the dormant commerce clause when the municipally-granted monopoly blocks owners of out-of-state disposal sites from the municipal market.
Not only is the Court's current antitrust state-action jurisprudence economically inconsistent with its dormant-commerce case law, but the Court's retreat from Boulder is objectionable on the grounds that this retreat broadens the scope for organized interest groups to skew governmental decisionmaking. Boulder required that in order to bring itself within the state-action exemption, a municipality be able to point to an explicit state policy authorizing the municipal market-restraining legislation. Thus Boulder could be read as a federalization of "Dillon's rule," a canon of construction under which courts construed municipal charters.(122) Under Dillon's rule, a municipal power had to be expressly conferred. In recent decades, Dillon's rule has fallen out of favor as the so-called home rule movement has advanced. Yet there is an underlying rationale for Dillon's rule that scholars have pointed out: the probabilities for corruption at the municipal level are often significant, and Dillon's rule provides a check against municipal corruption.(123)
Because municipal government is vulnerable to manipulation by local interest groups, the Boulder/Dillon's rule approach, which requires explicit authorization in state legislation, offers citizens a degree of protection against local interest groups. Indeed interest groups that are powerful at the municipal level often lack significant power at the state level.(124) By checking the power of interest groups to pressure local government, the Boulder/Dillon's rule approach carries the potential for fostering a more deliberative approach to governmental decisionmaking at the local level, one involving a heightened participation by citizens and a more inclusive public dialogue. When local governments chose to supply services through franchised monopolies, they deemphasize informed public dialogue. They remove the financing of the services from the municipal budget, escape state spending limits and thereby lower the visibility of the policy issues disposed of by municipal officials.
The deliberative model of governance is advocated by the civic republican movement, a movement whose intellectual roots extend back to the concern of the Founding Fathers with the potential for interest groups (or "factions" as Madison called them) for skewing government decisionmaking.(125) Although throughout his book Peritz shows his sympathy with a Jeffersonian model of society, he fails in his discussion of Boulder and the antitrust state-action cases to make the connection between the Jeffersonian ideal of deliberative democracy at the local level and the antitrust approach advocated by Justice Brennan in Lafayette and Boulder. Peritz compounds this omission by failing to bring the dormant commerce clause jurisprudence into his discussion of the antitrust state-action exemption. Indeed, it is in the dormant commerce clause cases in which the Court is now showing its greatest awareness of the interplay between law, public-choice theory and free markets.
VIII. Antitrust and labor policies
Peritz properly tells us about the interaction between antitrust and labor matters during the early years of the Sherman Act. He tells us about how prevailing judicial interpretations of the free-speech provisions of the Constitution have been shaped by shifting views of the relative values and conceptions of liberty and property. In the 1940s picketing in public areas was protected as free speech.(126) More recently attempts by labor unions to distribute leaflets in shopping malls went unprotected as the Court permitted the property interests of the mall owners to trump the speech claims of the pamphleteers.(127)
Yet such a wide-ranging book on antitrust and its relations to other legal currents surely ought to have considered the relation of labor policy represented in the National Labor Relations Act to the antitrust policies of the Sherman and Clayton Acts. Indeed, in its significance for national well-being, this relationship overpowers many of the other relationships between antitrust and other facets of legal and economic policy. When Congress enacted the National Labor Relations Act in 1935, it adopted a labor policy that authorizes, and indeed encourages, the formation of industry-wide unions. During the mid-1950s, 34% of private nonagricultural workers were organized.(128) Today that percentage has fallen to less than 20%. Yet unions still control the workforce of a major share of manufacturing, especially in the traditional mass-production industries.
When labor unions are organized on an industry-wide basis (as they are in the United States), their impact on the national economy is profound. In such circumstances, in each industry the industry-specific labor supply is transformed into an input monopoly. Since input monopolies bargain out terms with final-product producers, the restrictive effects of these input monopolies flow into the final product markets, every industry being transformed into an effective monopoly. Monopolies are widely condemned because they are likely to restrict output and raise prices above the competitive level. Yet for the many decades in which the U.S. domestic market operated in relative isolation, the input monopolies exercised by labor unions in the mass-production industries effectively imposed monopoly restrictions upon the consuming public. Indeed, even today auto workers' compensation includes significant amounts of monopoly rents, impeding their employers in competing with rivals from abroad.
Peritz discusses the uses of antitrust as a tool that employers used to fight labor unions early in the present century. Yet the book is remarkably silent about how antitrust and labor policies should relate today. Indeed, the reconciliation of labor and competition policies is one of the most critical issues facing advanced industrial societies. To point out the inadequacies of the American approach is not necessarily to advocate a purely free-market approach to labor. There are other models of labor relations in the world today than the industry-wide model championed by the CIO in the wake of the enactment of the National Labor Relations Act.(129) Interindustry unions that bargain with associations of employers across industries are the pattern in Germany(130) and Sweden.(131) Enterprise unions are the pattern in Japan.(132) The American practice of industry-wide unions enhances the monopoly effect of labor organization more than do the alternative practices in Germany and Sweden on one hand and in Japan on the other.
Referring, inter alia to the American model of collective bargaining through industry-wide unions, Mancur Olson has argued that such arrangements skew economic behavior and produce rigidities in the economy.(133) Indeed, when changing economic circumstances call for flexible responses, such arrangements produce especially perverse results. The rigidities imposed by contractually-fixed wage levels in unionized industries, for example, prevent producers from responding to falling demand by lowering prices and thereby maintaining employment levels. Rather, they are compelled to maintain wage rates and to respond to the fall in demand with layoffs. The unorganized sectors then bear the burden of the economic adjustments.
Martin Weitzman has written about the advantages of transforming significant amounts of compensation from a fixed hourly-wage-based measure to a more flexible profit-sharing or bonus measure.(134) His recommendations would spread the burden of economic dislocations rather than concentrate them on the portion of the workforce that has the least seniority. Yet proposals like Weitzman's do not fit in the mold of traditional labor-union/ employer relations and would likely be opposed by most unions.(135) Clearly they would sacrifice the entrenched benefits of the most senior core of the unionized workforce. In the auto industry, the Japanese economist Junichi Goto(136) has shown how the monopoly over industry-specific labor exercised by the United Auto Workers has forced the wage rate so high as to impede the ability of U.S. producers to compete with their Japanese rivals, and accounts for substantial losses in market share by the former and resulting loss of employment in that industry.
Labor policy interacts directly with the antitrust laws. In unionized industries, the labor-union monopoly over industry-specific labor; (tolerated and fostered by American labor policy) is necessarily reflected in product market prices, as labor costs are a component of total costs, often a significant component. The law attempts to reconcile the procompetitive policy of the antitrust laws with a labor policy that tolerates and facilitates monopolization of the labor supply by recognizing two "labor exemptions" from the antitrust law: the "statutory exemption" based in sections six and twenty of the Clayton Act(137) and the so-called nonstatutory exemption, an exemption worked out by the courts to insure that the antitrust laws do not frustrate the labor policy enshrined in the National Labor Relations Act.(138) Under the latter exemption, labor union/employer agreements are confined to the labor market, where bargaining is limited to wages, hours and working conditions. Viewed from the perspective of national welfare, the nonstatutory exemption does an exceedingly inadequate job of reconciling conflicting labor and antitrust policies. Indeed, the combination of a labor-union input monopoly over the industry-specific labor supply with a concentrated industrial structural structure may exacerbate the monopoly burden imposed upon the public. Yet the law has turned a blind eye to these effects.
Conflicts between the competing economic policies incorporated in the labor and antitrust laws are resolved doctrinally, without reference to the underlying economics.(139) In Jewel Tea,(140) for example, the Court allowed a collective-bargaining agreement to control the hours in which rival stores could sell, thus tolerating the extension of labor-market power into the product market. Yet Justice White's majority opinion in Jewel Tea is devoid of economic analysis. The vacuity of the antitrust labor exemption is only too well revealed in Allen-Bradley(141) and Pennington(142) where the exemption is made to turn on the issue as to whether restrictive effects in the product market are the result of a labor union/employer conspiracy or whether they are solely the result of the exercise of monopoly power by the labor union entering into a series of parallel agreements with competing industrial firms. Justice Goldberg, a long-time labor lawyer, argued passionately that this distinction was unrealistic in his separate opinions in Jewel Tea and Pennington.(143) Justice Goldberg, however, like his judicial colleagues, did not believe that economic analysis should be relevant to the delineation and application of the antitrust labor exemption.(144)
Labor policy is a pressing issue in all advanced nations. The increasing globalization of trade is presenting new challenges to the high wage structure of the developed world. Creative labor policies must be one part of the response. In the United States, the Dunlop Commission, which was charged with taking a new look at our labor policies, failed to address the need for drastic revisions of U.S. labor policies.(145) The United States today meets world competition with labor policies that were crafted in an insulated domestic market as a response to the Great Depression. As a nation, we have so far failed to address the pressing issues of how labor policies can be reconciled with our policies favoring competition and globalization of trade.
United States competition policy chronically has been the victim of isolated development, a development that neglected the economic currents manifested in other, often conflicting, governmental policies. Competition policy in its relations to trade policy, to labor policy and to regulatory policy generally is a classic illustration of policy fragmentation in response to interest-group pressures. It is also a classic illustration of the petrification of policy fragmentation into governmental administration in the pattern described by Theodore Lowi. Even within antitrust proper, the law is fragmented, often ambiguous, and filled with (at least) superficial conflict.
Professor Peritz has commendably shown us some of the ways that the antitrust dialogue over the years has been intertwined with struggles in the constitutional and other arenas. His insights are both useful and fascinating. He has not, however, attempted to show us that our competition policy is an integral part of a consistent overall approach to our nation's economic problems.
(1) Rudolph J.R. Peritz, Competition Policy in America 1888-1992: History, Rhetoric, Law (1996).
(2) Professor James May had also developed this approach. See James May, Antitrust in the Formative Era: Political and Economic Theory in Constitutional and Antitrust Analysis, 1880-1918, 50 Ohio St. L.J. 257 (1989).
(3) United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290 (1897).
(4) Peritz, supra note 1, at 27.
(5) Lochner v. New York, 198 U.S.45 (1905).
(6) 166 U.S. at 323.
(7) Accord, May, supra note 2, at 303.
(8) Peritz, supra note 1, at 294.
(9) DeBartolo Corp. v. Florida Gulf Coast Bldg. & Constr. Trades Council, 485 U.S. 568 (1988).
(10) Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992).
(11) Alexis de Toqueville, Democracy in America (1993 ed.). See the discussion of the Jeffersonian strand in U.S. antitrust law in E. Thomas Sullivan & Jeffrey L. Harrison, Understanding Antitrust and its Economic Implications 2-5 (2d ed. 1994).
(12) Cf., E.F. Schumacher, Small is Beautiful (1973).
(13) See Laura D'Andrea Tyson, Who's Bashing Whom? Trade Conflict in High Technology Industries 288 (1992); Robert Reich, Tales of a New America 230-31 (1987).
(14) Daniel J. Gifford, The Jurisprudence of Antitrust, 48 SMU L. Rev. 1677 (1995).
(15) Ford Motor Co. v. United States, 405 U.S. 562 (1972); FTC v. Procter & Gamble Co., 386 U.S. 568 (1967); United States v. Pabst Brewing Co., 384 U.S. 546 (1966); United States v. Von's Grocery Co., 384 U.S. 270 (1966); FTC v. Consolidated Foods Corp., 380 U.S. 592 (1965); United States v. Continental Can Co., 378 U.S. 441 (1964); United States v. Penn-Olin Chem. Co., 378 U.S. 158 (1964); United States v. Aluminum Co. of America, 377 U.S. 271 (1964); United States v. First Nat'l Bank of Lexington, 376 U.S. 665 (1964); United States v. El Paso Natural Gas Co., 376 U.S. 651 (1964); United States v. Philadelphia Nat'l Bank, 374 U.S. 321 (1963); United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586 (1957).
(16) U.S. Dep't of Justice & FTC, 1992 Horizontal Merger Guidelines, 4 Trade Reg. Rep. (CCH) [paragraph] 13,104; see also U.S. Dep't of Justice, 1984 Merger Guidelines, 4 Trade Reg. Rep. (CCH) [paragraph] 13,103.
(17) Business Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988); Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284, 289-90 (1985); Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1, 19-20 (1979); NCAA v. Board of Regents of Univ. of Okla., 468 U.S. 85, 100 (1984).
(18) See, e.g., Roger D. Blair & David L. Kaserman, Law and Economics of Vertical Integration and control 168 (1983).
(19) Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911).
(20) See, e.g., Blair & Kaserman, supra note 18, at 168.
(21) Utah Pie Co. v. Continental Baking Co., 386 U.S. 685 (1967).
(22) See, e.g., Ward Bowman, Restraint of Trade by the Supreme Court: The Utah Pie Case, 77 Yale L.J. 70 (1967); Phillip Areeda & Donald F. Turner, Predatory Pricing and Related Practices Under Section 2 of the Sherman Act, 88 Harv. L. Rev. 697, 726-27 (1975).
(23) See Daniel J. Gifford, Predatory Pricing Analysis in the Supreme Court, 39 Antitrust Bull. 431, 451-53 (1994).
(24) See American Academic Suppliers, Inc. v. Beckley-Cardy, Inc., 922 F.2d 1317 (7th Cir. 1991).
(25) Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993).
(26) Lessig v. Tidewater Oil Co., 327 F.2d 459 (9th Cir.), cert. denied, 377 U.S. 993 (1964).
(27) See Daniel J. Gifford, The Role of the Ninth Circuit in the Development of the Law of Attempt to Monopolize, 61 Notre Dame L. Rev. 1021, 1025-39 (1986).
(28) Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447 (1993).
(29) Daniel J. Gifford, Antitrust and Trade Issues: Similarities, Differences, and Relationships, 44 DePaul L. Rev. 1049 (1995).
(30) Theodore J. Lowi, The End of Liberalism (2d ed. 1979).
(31) See Synthetic Fiber Agreement, Commission Decision of July 14, 1984, Com. Mkt. Rep. (CCH) [paragraph] 10,606.
(32) Mitsuo Matsushita, International Trade and Competition Law in Japan 280-85 (1993). Matsushita reports that the Temporary Measures Law has now been replaced by the Specific Industries Reorientation Law that is designed to facilitate the exit of a troubled industry rather than to restore it. See also Takatoshi Ito, The Japanese Economy 204-05 (1992) (discussing depression cartels).
(33) See Gifford, supra note 29, at 1077.
(34) Long-Term Arrangements Regarding International Trade in Cotton Textiles, Feb. 9, 1962, 13 U.S.T. 2672, T.I.A.S. No. 5240, 471 U.N.T.S. 296.
(35) Arrangement Regarding International Trade in Textiles, 25 U.S.T. 1001, T.I.A.S. No. 7840 (entered into force Jan. 1, 1974, except for art. 2, pares. 2, 3, and 4, which entered into force Apr. 1, 1974).
(36) Justice Department Aids in Aluminum Production Cuts, 66 Antitrust & Trade Reg. Rep. (BNA) No. 1649, at 148 (Feb. 3, 1994).
(37) 1986 Semiconductor Trade Agreement; 1991 Semiconductor Trade Agreement.
(38) See Tyson, supra note 13, at 106-10, 130-32; Gifford, supra note 29, at 1079-80.
(39) Erle Norton & Martin du Bois, Foiled Competition: Don't Call It a Cartel, But World Aluminum Has Forged New Order, Wall ST. J., June 9, 1994, at A1 (describing the aluminum agreement).
(40) United States v. Trans-Missouri Freight Ass'n, 166 U.S. 290, 323 (1897) (ruling that the Sherman Act prohibits all contracts in restraint of trade, whether or not the restraints are reasonable).
(41) United States v. Aluminum Co. of America, 148 F.2d 416 (1945).
(42) Brown Shoe Co. v. United States, 370 U.S. 294 (1962).
(43) 148 F.2d at 427.
(44) Id. at 429.
(45) Id. at 431.
(46) Id. at 430.
(47) Brown Shoe Co. v. United States, 370 U.S. 294 (1962).
(48) Id at 344.
(49) Robert H. Bork & Ward S. Bowman, Jr., The Goals of Antitrust: A Dialogue on Policy, 65 Colum. L. Rev. 363, 370 (1965).
(50) Harlan M. Blake & William K. Jones, Toward a Three-Dimensional Antitrust Policy, 65 Colum. L. Rev. 422, 439 (1965).
(51) Robert H. Boric, The Antitrust Paradox 79 (1978). Professor Robert Lande has argued, however, that antitrust laws could be concerned with wealth transfers from consumers to producers "without being swept into a social/political morass." Since such wealth transfers are subject to economic analysis, his proposal wealth transfers criterion is not subject to the criticism leveled by Bork at the inclusion of noneconomic factors in antitrust analysis. Robert H. Lande, Chicago's False Foundation: Wealth Transfers (Not Just Efficiency) Should Guide Antitrust, s8 Antitr. L.J. 631, 640 (1989).
(52) Charles Maier, The Politics of Productivity. Foundations of American International Economic Policy After World War II, 31 Int'l Org. 607 (Autumn 1966).
(53) See generally Thomas S. Kuhn, The Structure of Scientific Revolutions (1962).
(54) Wilson Tariff Act of 1894, ch.349, [subsections] 73-76,28 Stat. 570 (1894) (current version at 15 U.S.C. [subsections] 8-11 (1994)).
(55) Act of Sept. 8,1916, ch.463, [sections] 801,39 Stat. 798 (1916) (current version at 15 U.S.C. [sections] 72 (1994)).
(56) H.R. Rep. No. 627, 63d Cong., 2d Sess., pt. 1, at 8 (1914); S. Rep. No. 698, 63d Cong., 2d Sess. 2-4 (1914).
(57) Antidumping Act of 1916, [sections] 801 (current version at 15 U.S.C. [sections] 72 (1994)).
(58) Antidumping Act of 1921, ch. 14, [subsections]201-13, 42 Stat. 11 (1921), repealed by Trade Agreements Act of 1979, Pub. L. No. 96-39, [sections] 106(a), 93 Stat. 193 (1979) (codified as amended at 19 U.S.C. [subsections] 160-71 (1994))
(59) Antidumping Act of 1921, ch. 14, [sections] 201, 42 Stat. 11 (1921).
(61) H.R. Rep. No. 479, 66th Cong., 2d Sess. 2 (1919); see also J. Viner, Dumping: A Problem in International Trade 244-51 (1923); A. Paul Victor, Antidumping and Antitrust: Can the Inconsistencies Be Resolved?, 15 N.Y.U.J. Int'l L. & Pol. 339, 346 (1983), Wesley K. Caine, A Case for Repealing the Antidumping Provisions of The Tariff Act of 1930, 13 L. & Pol'y in Int. Bus. 681, 715 (1981).
(62) Antidumping Act of 1921, ch.14, [sections] 201, 42 Stat. 11 (1921).
(63) Daniel J. Gifford, Rethinking the Relationship Between Antidumping and Antitrust Laws, 6 AM. U. J. Int'l L. & Pol'y 277, 296-97 (1991).
(64) Peter Ehrenhaft, Protection Against International Price Discrimination: United States Countervailing and Antidumping Duties, 58 Colum. L. Rev. 44, 47 (1958); Comment, The Antidumping Act-Tariff or Antitrust Law?, 74 Yale L.J.707, 713-15 (1965).
(65) Trade Agreements Act of 1979, [sections] 106(a), Pub. L. No. 96-39, 93 Stat. 144, 193 (codified as amended at 19 U.S.C. [subsections] 160-71 (1994)).
(66) See 19 U.S.C. [subsections] 1671-1677g (1994).
(67) See Certain Red Raspberries from Canada, USITC Pub. No. 1707, Inv. No. 731-TA-196 (final) (1988) (Leibler, concurring).
(68) USX Corp. v. United States, 682 F. Supp. 60 (Ct. Int'l Trade 1988).
(69) General Agreement on Tariffs and Trade, opened for signature Oct. 30, 1947, 61 Stat. A3, T.I.A.S. No. 1700, 55 U.N.T.S. 187.
(70) United Nations Conference on Trade and Employment held at Havana, Cuba from November 21, 1947 to March 24, 1948, Final Act: Havana Charter for an International Trade Organization, reprinted in Dep't of State Pub. No. 3117, Commercial Policy Series 113 (1948).
(71) See, e.g., Kenneth W. Dam, The Gatt Law and International Economic Organization 10-12 (1970).
(72) The United Nations Economic and Social Council (UNESCO) debated restrictive business practices during the 1950s, but without result. In 1980 the United Nations General Assembly adopted a set of principles on restrictive business practices. UNCTAD, The Set of Multilaterally Agreed Equitable Principles and Rules of the Control of Restrictive Business Practices, UN Doc. TD/RBP/Conf/10 (May 2, 1980), adopted by UN General Assembly on November 12, 1980, UN Doc. A/C.2/35/L.75.
(73) Department of Justice Policy Regarding Anticompetitive Conduct that Restricts U.S. Exports (April 9, 1992).
(74) See, e.g., Interim Reports of U.S. and Japanese Delegations on Talks Under Structural Impediments Initiative, released April 5 , 7 Int'l Trade Rep. (BNA) 527, 536 (1990).
(75) American Bar Association Report of Special Committee on International antitrust 294 (1991).
(76) 64 Antitrust & Trade Reg. Rep. (BNA) No. 1628 (Special Supp.) (1993).
(77) Daniel J. Gifford, The Draft International Antitrust Code Proposed at Munich: Good Intentions Gone Awry, 6 Minn. J. Global Trade 1 (1996).
(78) Id. at 4-5
(79) Ch. 104, 24 Stat. 379 (1887).
(80) See, e.g., Hepburn Act of 1906, ch. 3591, 34 Stat. 584 (1906 (codified as amended in scattered sections of 49 U.S.C.); Elkins Act of 1903, ch. 708, 32 Stat. 847 (1903) (current version at 19 U.S.C. [subsections] 11703, 11902, 11903, 11915, 11916 (1994)).
(81) Motor Carrier Act of 1935, ch. 498, 49 Stat. 543 (1935) (codified as amended in scattered sections of 49 U.S.C.).
(82) See, e.g., Attorney General's Committee on Administration Procedure, Monograph No. 24 (Interstate Commerce Commission) 109-15 (1940); 1 I.L. Sharfman, the Interstate Commerce Commission 58-59 (1931).
(83) Civil Aeronautics Act of 1938, ch. 601, 52 Stat. 973 (repealed).
(84) Ch. 556, 52 Stat. 821 (1938) (codified as amended at 15 U.S.C. [subsections] 717-717w (1994)). On the changing status of regulation in the natural gas industry, see Richard J. Pierce, Regulation and Competition in Natural Gas Distribution (1990); Richard J. Pierce, The State of the Transition to Competitive Markets in Natural Gas and Electricity, 15 Energy L.J. 323 (1994); Stephen Breyer, Regulation and its Reform 242-60 (1982).
(85) Airline Deregulation Act of 1978, Pub. L. No. 95-504, 92 Stat. 1705 (1978) (codified as amended in scattered sections of 42 U.S.C.).
(86) Motor Carrier Act of 1980, Pub. L. No. 96-296, 94 Stat. 793 (1980) (codified as amended at 18 U.S.C. [sections] 1114 (1994) and scattered sections of 49 U.S.C.).
(87) Staggers Rail Act of 1980, Pub. 1. No. 96-448, 94 Stat. 1895 (1980) (codified as amended in scattered sections of 11, 45, and 49 U.S.C.).
(88) Alfred E. Kahn, The Economics of Regulation (1988).
(89) Roger G. Noll & Bruce M. Owen, The Political Economy of Deregulation (1983).
(90) Breyer, supra note 84; Stephen Breyer & Leonard R. Stein, Airline Deregulation: The Anatomy of Reform, in Instead of Regulation 19 (R. Poole Jr. ed., 1982); see also Stephen G. Breyer, Antitrust, Deregulation, and the Newly Liberated Marketplace, 75 Cal. L. Rev. 1005 (1987).
(91) Breyer, supra note 84, at 197-221; see also Daniel J. Gifford, The New Deal Regulatory Model: A History of Criticisms and Refinements, 68 Minn. L. Rev. 299, 330-31 (1983).
(92) See, e.g., May Trucking Co. v. United States, 593 F.2d 1349, 1353 n.14 (D.C. Cir. 1979) (noting that the applicant bears the burden of showing that its prospective service "is or will be required by the present or future public convenience and necessity").
(93) Ch. 652, 48 Stat. 1064 (1934) (codified as amended at 47 U.S.C. [subsections] 151-613 (1994)).
(94) Pub. L. No. 104-104, 110 Stat. 56 (1996) (to be codified in scattered parts of 47 U.S.C.).
(95) Newton Minow, as Chairman of the FCC, first attributed the term "wasteland" to broadcast television during the Kennedy administration. Minow Observes a "Vast Wasteland," Broadcasting Magazine, May 15, 1961, at 58-60 (condensed version of speech by FCC Chairman Newton Minow). See also Newton N. Minow & Craig L. LaMay, Abandoned in the Wasteland: Children, Television, and the First Amendment (1995).
(96) Jim Chen, The Last Picture Show (On the Twilight of Federal Mass Communication Regulation), 80 Minn. L. Rev. 1415, 1443 (1996).
(97) Id. at 1455-56.
(98) Schurz Communications, Inc. v. FCC, 982 F.2d 1043 (7th Cir. 1992).
(99) Chen, supra note 96, at 1493.
(100) See, e.g., United States v. Southwestern Cable Co., 382 U.S. 157 (1968) (upholding the FCC's assertion of authority over cable).
(101) Chen, supra note 96, at 1462.
(102) American Tel. & Tel. Co., 552 F. Supp. at 131 (D.D.C. 1982), aff'd, 460 U.S. 1001 (1983).
(103) Chen, supra note 96, at 1504-05; Jim Chen, Titantic Telecommunications, 25 Sw. U. L. Rev. 535, 560 (1996). Compare Lawrence A. Sullivan, Elusive Goals Under the Telecommunications Act: Preserving Long Distance Competition Upon Baby Bell Entry and Attaining Local Exchange Competition: We'll Not Preserve the One Unless We Attain the Other, 25 Sw. U. L. Rev. 487, 510 (1996).
(104) Peritz, supra note 1, at 273.
(105) Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985).
(106) FTC Attacks Two Cities for Combining with Taxi Operators to Restrict Competition, 46 Antitrust & Trade Reg. Rep. (BNA) 970 (1984).
(107) Mark Potts, Antitrust Probe of Taxi Industry Gets Green Light, Washington Post, Oct. 16, 1984, at A7. The funds were restored as part of the compromise resulting in the passage of the Local Government Antitrust Act of 1984, 15 U.S.C. [subsections] 34-36 (1994). Id
(108) See See Daniel J. Gifford, Federalism, Efficiency, the Commerce Clause, and the Sherman Act: Why We Should Follow a Consistent Free-Market Policy, 44 Emory L.J. 1227 (1995).
(109) C & A Carbone, Inc. v. Town of Clarkstown, 511 U.S. 383 (1994); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293 (1980); Hunt v. Washington State Apple Adv. Comm'n, 432 U.S. 333, 350 (1977); Great Atlantic & Pac. Tea Co. v. Cottrell, 424 U.S. 366, 380 (1976); H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 538 (1949).
(110) Parker v. Brown, 317 U.S. 341, 351 (1943) (". . . its purpose was to suppress combinations to restrain competition and attempts to monopolize by individuals and corporations . . . ."). The Sherman Act nonetheless does invalidate some state legislation. See, e.g., 324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987); California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S. 384 (1951).
(111) 317 U.S. 341 (1943).
(112) The complexities of the state-action exemption are revealed in the immense number of cases in which the Court has struggled to find the scope of the Sherman Act's application to state and local legislation and other official acts. See FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992); City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 382 (1991); Patrick v. Burget, 486 U.S. 94 (1988); 324 Liquor Corp. v. Duffy, 479 U.S. 335 (1987); Fisher v. Berkeley, 475 U.S. 260 (1986); Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985); Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48 (1985); Hoover v. Ronwin, 466 U.S. 558 (1984); Rice v. Norman Williams Co., 458 U.S. 654 (1982); Community Communications Co. v. City of Boulder, Colorado, 455 U.S. 40 (1982); California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980); New Motor Vehicle Bd. of California v. Orrin W. Fox Co., 439 U.S. 96 (1978); City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389 (1978); Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975); Bates v. State Bar of Arizona, 433 U.S. 350 (1977); Cantor v. Detroit Edison Co., 428 U.S. 579 (1976); Flood v. Kuhn, 407 U.S. 258 (1972); Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S.384 (1951).
(113) Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S. 384 (1951).
(114) Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975).
(116) Gifford, supra note 108, at 1270-72 & n.95.
(117) 455 U.S. 40 (1982).
(118) 15 U.S.C. [subsections] 34-36 (1994).
(119) Gifford, supra note 108, at 1236-40.
(120) Tri-State Rubbish, Inc. v. Waste Management, Inc., 998 F.2d 1073, 1078-79 (1st Cir. 1993); Kern Tulare Water Dist. v. City of Bakersfield, 828 F.2d 514, 519-20 (9th Cir. 1987); L&H Sanitation, Inc. v. Lake City Sanitation, Inc., 769 F.2d 517, 522 (8th Cir. 1985); Hybud Equipment Corp. v. City of Akron, Ohio, 742 F.2d 949, 962-64 (6th Cir. 1984), reaffirming Hybud Equipment Corp. v. City of Akron, Ohio, 654 F.2d 1187 (6th Cir. 1981); Central Iowa Refuse Sys., Inc. v. Des Moines Metropolitan Solid Waste Agency, 715 F.2d 419, 428 (8th Cir. 1983), cert. denied, 471 U.S. 1003 (1985).
(121) C & A Carbone, Inc. v. Town of Clarkstown, 114 S. Ct. 1677 (1994); accord, Waste Systems Corp. v. County of Martin, Minn., 985 F.2d 1381, 1386-89 (8th Cir. 1993).
(122) See Gifford, supra note 108, at 1248.
(123) See Clayton P. Gillette, In Partial Praise of Dillon's Rule, or, Can Public Choice Theory Justify Local Government Law?, 67 Chi.-Kent L. Rev. 959, 983-85, 990, 997-98 (1991).
(124) See Carol M. Rose, Planning and Dealing: Piecemeal Land Controls as a Problem of Local Legitimacy, 71 Cal. L. Rev. 839, 856 (1983); William H. Page, Interest Groups, Antitrust, and State Regulation: Parker v. Brown in the Economic Theory of Legislation, 1987 Duke L.J. 618, 639; Mathew L. Spitzer, Antitrust Federalism and Rational Choice Political Economy: A Critique of Capture Theory, 61 S. Cal. L. Rev. 1293, 1317 (1988).
(125) See The Federalist No. 10 (James Madison).
(126) Thornhill v. Alabama, 310 U.S. 88 (1940). See also American Federation of Labor v. Swing, 312 U.S. 321 (1941); Bakery and Pastry Drivers and Helpers, Local 802 v. Wohl, 315 U.S. 769 (1942).
(127) Lechmere, Inc. v. NLRB, supra note 10.
(128) Richard B. Freeman & James L. Medoff, What Do Unions Do? 221-22 (1984).
(129) See Melvyn Dubofsky, The State and Labor in Modern America 138-42 (1994).
(130) German labor relations take place in two somewhat parallel formats. In one format, a major interindustry union bargains with an employers' association at a regional or national level over wages and working conditions. In the second format, a scheme of official worker representation is established by law, with worker representatives in works councils at the plant level and with worker representation on company boards. See, e.g., Friedreich Fuerstenberg, Industrial Relations in the Federal Republic of Germany, in International and Comparative Industrial Relations 165, 172 (Gregg J. Bamber & Russell D. Lansbury eds., 1987).
(131) The traditional practice in Sweden has involved one labor organization, the Swedish Confederation of Labor, bargaining over wages for substantially all blue-collar workers with the Swedish Employers' Confederation, an association of private-sector employers. See Robert J. Flanagan, Efficiency and Equality in Swedish Labor Markets, in The Swedish Economy 125, 129 (1987); Olle Hammarstrom, Swedish Industrial Relations, in International and Comparative Industrial Relations 187, 192 (Gregg J. Bamber & Russell D. Lansbury eds., 1987).
(132) Japanese unions tend to be "enterprise" or "company" unions. See William B. Gould, Japan's Reshaping of American Labor Law 7 (1984); Shigeto Tsubu, Japan's Capitalism (1993).
(133) Mancur Olson, The Rise and Decline of Nations 193, 209 (1982).
(134) Martin L. Weitzman, The Share Economy (1984).
(135) See, e.g., Daniel J. Gifford, A Review Essay of Richard Vigilante's Strike: The Daily News War and the Future of American Labor, 72 Notre Dame L. Rev. 255, 257-58 (1996) (describing the limited vision and bounded obligations characterizing the approach of one group of unions toward the employer).
(136) Junichi Goto, Labor in International Trade Theory 48-74, 109-64, 176 (1990). (137) 15 U.S.C. [sections] 17 (1994); 29 U.S.C. [sections] 52 (1994). See also The Norris-LaGuardia Act, 29 U.S.C. [subsections] 101-15 (1994).
(138) See, e.g., Connell Construction Co. v. Plumbers & Steamfitters Local No. 100, 421 U.S. 616 (1975).
(139) Daniel J. Gifford, Redefining the Antitrust Labor Exemption, 72 Minn. L. Rev. 1379, 1406-10 (1988).
(140) Local Union No. 189, Amalgamated Meat Cutters v. Jewel Tea Co., 381 U.S. 657 (1965).
(141) Allen Bradley Co. v. Local Union No. 3, 325 U.S. 797, 810 (1945).
(142) United Mine Workers of America v. Pennington, 381 U.S. 657 (1965).
(143) 381 U.S. at 714-22 (opinion of Goldberg, J.).
(144) Id. at 721.
(145) U.S. Dep't of Labor & U.S. Dep't of Commerce, Report and Recommendations of the Commission on the Future of Worker-Management Relations (1994). In an assessment of needed reform in American labor law written just prior to his appointment to the chairmanship of the National Labor Relations Board, then Professor William Gould also saw a need merely for incremental change. Gould expressed his preference for a prohibition on the hiring of replacements during strikes and for amending the National Labor Relations Act to facilitate employer-employee communication. William B. Gould IV, Agenda for Reform: The Future of Employment Relationships and the Law 140-41, 203 (1993). Compare Daniel J. Gifford, Labor Law and Its Reform, 80 Iowa L. Rev. 201 (1994) (reviewing Gould's book and arguing for drastic reform).
BY DANIEL J. GIFFORD, Robins, Kaplan, Miller & Ciresi Professor of Law, University of Minnesota.
AUTHOR'S NOTE: The author gratefully acknowledges the helpful comments on an earlier draft of this article provided by his colleagues, professors Jim Chen, Daniel A. Farber, Leo Raskind and Dean E. Thomas Sullivan.
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|Author:||Gifford, Daniel J.|
|Article Type:||Book Review|
|Date:||Jun 22, 1997|
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