History of Antitrust Laws

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During the early 20th century, President Theodore Roosevelt earned the title of "Trust-buster," as his administration vigorously pursued large corporations and assailed their anti-competitive behavior. The foundations of antitrust law developed during his presidency. The Gilded Age produced captains of industry, such as railroad barons with unprecedented individual and company wealth. Railroads, steel and banks represented a surging economy, but they acted without restraint until trust-busting. Antitrust remains in effect today, but a successor to Roosevelt's trust-buster title has not yet risen. The field is composed mainly of three laws - The Sherman, Clayton, and Federal Trade Commission Acts - and is enforced by the Department of Justice (DOJ) and Federal Trade Commission (FTC).

The Sherman Act exists as a legal bulwark against monopolization, which is deemed to be anticompetitive and harmful to consumers. Although all contracts require some degree of trade restraint, the Act protects against conspiracies that unreasonably restrain trade and involve interstate commerce. A judicial division has developed in analysis of Sherman violations, either through prima facie violations or rule of reason. A prima facie violation is an action taken that automatically satisfies an unreasonable restraint of trade without further analysis, such as market division and price-fixing. The rule of reason analysis is utilized in situations where a prima facie violation is not apparent, so the effects of the action are weighed and the law is deemed not to be violated if the pro-competitive aspects outweigh the anti-competitive. A recent middle-way analysis has chipped away at prima facie, as the quick look determines whether an action should receive rule of reason treatment or not, essentially through a cursory rule of reason analysis. Famous cases include CA Dental Association v. FTC and Federal Baseball Club v. M.L.B.

The Clayton Act is focused on preventing unfair mergers and acquisitions. Section 7 allows the government the authority to deny mergers deemed anticompetitive. Companies contemplating mergers must notify the FTC and Assistant AG if they meet the FTC's thresholds, as per the Hart-Scott-Rodino Act. The DOJ is responsible for civil and criminal enforcement, and the FTC prosecutes civil cases. Prominent cases implicating the Clayton Act are Standard Oil v. US and US v. Microsoft Corporation.

The Federal Trade Commission Act is only enforceable by the FTC, and it established its namesake agency for the purpose of forcing trusts to cease their unfair practices. Emerging out of the economically progressive Woodrow Wilson presidency, the agency is chaired by a bipartisan commission and focuses on consumer protection against monopolistic behavior.

Antitrust lawsuits have been brought in the airline and healthcare sectors, two industries in which mergers and consolidation dominate. The detrimental effects of trust-like behavior include higher barriers to entry for competition and the ability to charge consumers higher prices. In the airlines industry, the effects on consumers include [PDF] a reduced number of routes, higher fares and fewer airlines choices.

 

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