Antitrust Suits

Lawsuits arising when competitors engage in prohibited practices like fixing prices, rigging bids, or allocating customers, which causes prices to rise to artificially high levels or reduces competition.
Antitrust laws prohibit practices restraining trade, reducing competition, and promoting or maintaining monopoly power in virtually all industries. The Sherman Anti-Trust Act, the Clayton Anti-Trust Act, and the Federal Trade Commission Act enable the Department of Justice to enforce federal antitrust laws through criminal and civil actions. The Federal Trade Commission (FTC) and private citizens may also sue civilly. Similar laws ratified as early as 1880 in some states are enforced through the offices of state attorneys general. The 1890 Sherman Act outlaws all contracts, combinations, and conspiracies that unreasonably restrain interstate and foreign trade.Violations are usually punished as criminal felonies. The 1914 Clayton Act prohibits mergers or acquisitions likely to lesson competition. The Federal Trade Commission Act, implemented in 1914, empowers the president or Congress to investigate and report facts regarding alleged antitrust violations by any corporation.
Antitrust acts embodied popular political viewpoints in the late nineteenth and early twentieth centuries. Presidents Benjamin Harrison, Theodore Roosevelt, William Taft, and Woodrow Wilson advocated government oversight of large corporations and trust busting. In 1912 Supreme Court Justice Louis Brandeis argued that industrial giants were potentially dangerous forces capable of controlling politicians and undermining consumer interests.
Greater resources bolstered the Justice Department’s antitrust enforcement in the 1930s. Under Chief Thurman Arnold, a Roosevelt appointee, the division’s budget quadrupled within three years. Cartels and monopolies were investigated, and a landmark 1945 case against Alcoa found that the company unlawfully wielded monopoly power over the aluminum industry. In the 1950s and 1960s, the Warren Supreme Court interpreted the Celler-Kefauver Act of 1950 as establishing a presumption of illegality for mergers in concentrated industries between competitors with a combined market share as low as 30 percent. Some mergers with combined market shares below 10 percent were condemned. Historian Richard Hofstadter noted in the mid-1960s that businesspeople are always cognizant of antitrust laws.
The Johnson, Nixon, Ford, and Carter administrations proceeded with vigorous antitrust enforcement. Seed money for state investigations provided by the Ford administration in the mid-1970s established a formidable army of populist state attorneys general under the umbrella of the National Association of Attorneys General (NAAG). They challenged mergers approved by federal agencies and launched parens patraie (the state acting as “the father of the country”) suits against manufacturers guilty of vertical price maintenance. The conservative, antipopulist “Chicago School” of antitrust theory also surfaced in the 1970s. Robert Bork’s 1978 book, The Antitrust Paradox: A Policy at War with Itself, recommended that the sole objective of antitrust law should be maximization of “consumer welfare.” The Chicago School viewed attempts to curtail industrial consolidation as undermining economic efficiency.
The Reagan administration consistently appointed Chicago School scholars to federal courts, and Justice Department Antitrust Division Chief William Baxter disposed of a massive case against IBM and announced the settlement of the historic AT&T; breakup. He also called for “merger guidelines” designed to determine whether prices were unilaterally or collectively raised above competitive levels. Beginning in the early 1990s, antitrust policy shifted toward moderate domestic pursuits and aggressive international protections. Federal and state interaction was encouraged, and United States officials asserted the right to employ federal antitrust laws against anticompetitive foreign conduct, which critics labeled antitrust imperialism. In 1991 the Antitrust Division of the Justice Department, the FTC, and the European Union’s competition authority jointly announced the execution of an Antitrust Enforcement Cooperation Agreement.
Clinton administration appointees advocated the “post- Chicago School”—a movement championing consumer welfare standards to preserve competition rather than unfettered freedom for producers. In the late 1990s the Antitrust Division pursued Microsoft Corporation with the help of state attorneys general, signaling the most significant government legal challenge in more than 20 years.
Issues of intellectual property complicate modern antitrust designations. Although past antitrust attention focused on exorbitant prices and the reduction of competition, scholars in the twenty-first century are investigating whether high-technology mergers result in less innovation. In the early nineteenth century, Standard Oil Company violated antitrust rules by controlling petroleum transportation, refining, and distribution. Conversely, software maker Microsoft protects the source code to its computer operating system and all adjoining application interfaces, leading to claims of predatory abuses. Determining how to assess the consequences of this power and the implications for competitive firms will decide which companies struggle or survive in emerging markets that dominate the domestic and world economies.

References
Brodley, Joseph F. “Post-Chicago Economics and Workable Legal Policy.” Antitrust Law Journal, vol. 63, no. 2 (1995): 683.
Hofstadter, Richard, ed.The Paranoid Style in American Politics and Other Essays. New York: Alfred A. Knopf, 1965.
Roy, William G. Socializing Capital: The Rise of The Large Industrial Corporation in America. Princeton, NJ: Princeton University Press, 1997.
Skitol, Robert A. “The Shifting Sands of Antitrust Policy: Where It Has Been,Where It Is Now,Where It Will Be in Its Third Century.” Cornell Journal of Law and Public Policy, vol. 9, no. 1 (Fall 1999): 239–266.
Sullivan, Lawrence A. “Post-Chicago Economics: Economists, Lawyers, Judges, and Enforcement Officials in a Less Determinate Theoretical World.” Antitrust Law Journal, vol. 63, no. 2 (1995): 669–674.
See also: Clayton Anti-Trust Act; Federal Trade Commission Act; Microsoft; Roosevelt, Theodore; Sherman Anti-Trust Act; Standard Oil; Wilson, Woodrow.