conference, held in Cape Town, South Africa, in May 2006, was reported to have attracted “nearly 300 representatives from about 70 antitrust agencies.”23 The fourth annual conference, held in Bonn, Germany, in June 2005, was attended by “more than 400 representatives of 80 competition agencies and competition experts from international organizations and the legal, business, consumer, and academic communities.”24
In support of proposed appropriations for fiscal year 2007, the FTC chairperson asserted that her commission “plays a leading role in key multilateral fora” (sic) promoting “cooperation and convergence toward best practices with competition and consumer protection agencies around the world.’’25 Participation in activities of this sort provides members of the antitrust community opportunities for foreign travel, for business development, and for reinforced feelings of self-righteous satisfaction with “spreading the antitrust gospel.”26
3. From “Trust-Busting” to the Present
There is no consistent U.S. policy toward competition. The antitrust community is pro-competition, not just anti-trust. Antitrust believers see competition as the basis of the economy and regard themselves as its guardians. They think that political control of business is necessary. They view “regulated industries” as minor exceptions in a market economy that is supposedly fundamentally free and look at antitrust as the alternative to regulation. Antitrust, they believe, is needed to keep the free market free. Antitrust as umpire sees to it that the game is played fairly and by the rules. Enforcement of the antitrust laws is supposed to protect a competitive system from those who might try to monopolize something the way Standard Oil is believed to have monopolized oil a century ago. Business practices, such as price discrimination (sales at different prices to different purchasers), exclusive dealing (sales on condition that the purchaser not buy from a competitor of the seller) and mergers, must be prevented where they might lessen competition or tend to create a monopoly such as Standard Oil, according to the antitrust community.
The antitrust believer’s view of the economy arrogantly overstates the role of antitrust. The antitrust believer’s assumed free market and concepts from microeconomic theory of “markets” and “market power” do not take account of much that has happened in the past 100 years or of much that now occurs in the real world. The U.S. economy is not free. Government creates barriers and helps favorites. Labor unions fix the price of labor. Government grants monopolies (patents). Government takes large shares of profits that would otherwise be available for investment.
The antitrust community sees antitrust as the main event. Regulated industries are viewed as a sideshow even though the American Bar Association’s Antitrust Law Developments (5th ed.) lists under “regulated industries” the following: agriculture, communications (including broadcasting, common carriers, and cable television), energy (including natural gas, electric power, and federal lands programs), financial institutions and markets, government contracts, health care, insurance, organized labor, sports, and transportation (including motor, rail and air, and ocean shipping). Despite those acknowledged exceptions, a policy in favor of competition is supposed to be fundamental. Harvard professors tell students, “Antitrust … looks to perfect competition for guidance, but the analysis inevitably emphasizes the myriad and complex imperfections of actual markets.’’1
The Sherman Act of 1890, the basic antitrust statute, does not contain the word “competition.” The statute refers to “trade or commerce.” The other antitrust statute, the Clayton Act, adopted in 1914, contains the phrases “substantially to lessen competition” and “injure, destroy, or prevent competition,” but provides no definition of the word “competition.” Congress favors competition but only if it is fair. in the Federal Trade Commission Act,2 adopted in the same year as the Clayton Act, Congress declared unlawful “unfair methods of competition” and created a federal commission to prevent them. Congress left it to the commission to define which methods of competition are unfair. (The Federal Trade Commission Act is not among the acts defined as an “antitrust law” in the Clayton Act.)
in 1922 the Supreme Court ruled that staging baseball games is not interstate commerce and therefore does not involve competition subject to the federal antitrust statutes.3 The antitrust community refers to this as “the baseball exemption.”4 Neither football5 nor basketball6 has a similar exemption. The Curt Flood Act of 19987 added a provision to the Clayton Act revoking baseball’s antitrust exemption insofar as it relates to the employment of major league players. The statute leaves unchanged the exemption from the antitrust laws of the minor leagues (including the player draft) and of matters not involving player-management relations.
In 1933 the Supreme Court concluded that use of a common selling agency by 137 coal producers in four states to fix the price of coal should not be condemned simply because it eliminates “competi-tion” between the sellers.8 The court, with one dissent, did not see the elimination of this sort of competition as forbidden by the antitrust laws. Students at New York University Law School are told in a casebook, “In Appalachian Coals, the Court treated the arrangement as a legitimate joint sales agency (although it might well have seen the joint sales arrangement as a cover for a cartel).”9 One pair of professors writes that the joint selling agency “was upheld on the rationale that it lacked market power.”10 Some today regard that decision as “an aberration of the 1930’s.”11 Students at Georgetown Law School are told in a casebook that “a sophisticated characterization process is necessary” before something can automatically be labeled an illegal cartel.12
Academics acknowledge the existence of the Appalachian Coals decision, but the practicing antitrust community no longer finds it useful and seldom refers to it. Some decisions of the Warren Court are also disregarded. During the days of aggressive government merger prevention, that Court declared illegal every sort of merger, including those that might eliminate “potential” competition.13 Today it can correctly be said, “Antitrust concern with conglomerate mergers seems to have disappeared without a trace.”14 The community is no longer interested in such mergers. Current merger guidelines relate only to “horizontal mergers” (those between parties said to be “competing firms’’). On one hand, the guidelines are more permissive than the Court decisions. On the other hand, with regard to price-stabilization combinations, the antitrust community prefers the more restrictive of two court declarations. in the Appalachian Coals case the Court declined to condemn a combination to fix the price of coal. In the Socony-Vacuum case15 the Court upheld a criminal conviction of a combination to fix the price of oil. The antitrust community has adopted the latter and ignores the former. Those are illustrations of the “dynamic” nature of antitrust free of “what exactly are the words of the statute.”16
Two professors have described an episode illustrating the shallow-ness of the U.S. commitment to competition as follows:
The New Deal’s initial response to the Depression was to abandon enforcement of the antitrust laws. In the pursuit of a national remedy to revive the economy, the antitrust laws were expressly abrogated by the National Industrial Recovery Act of 1933. Contrary to the conventional economic wisdom of the day, which advocated balancing the budget and cutting wages and other costs, the NRA was an attempt to “reflate” the economy by forming cartels in the major sectors of the economy. The NRA administrator ordered former competitors to meet together, to include labor organizations and consumer groups, and jointly to prepare codes governing each industry that restricted or eliminated competition in that industry. The Codes specified every commercial aspect including prices, conditions of work, and the terms of trade for each product and service in the economy.17
During this period the United States had a clear policy as to business competition. The policy was to eliminate as much competition as possible, whether fair or unfair. The Supreme Court held the National Industrial Recovery Act unconstitutional as an improper delegation of power to the president and beyond congressional power to regulate interstate commerce.18 No consistent policy has been developed since.
It is not clear whether corporate