Antitrust Laws in the United Term Paper
- Length: 10 pages
- Sources: 7
- Subject: Business - Law
- Type: Term Paper
- Paper: #88277946
Excerpt from Term Paper :
.. are not to be distinguished by any judgment regarding the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end to which the particular union activities are the means.'
The law, however, still bites on situations where trade unions and groups of employers conspire together to suppress or eliminate competition. In other words, businessmen are not entitled to take advantage of the relative immunity of labor and suborn the union, perhaps in consideration of a wage increase, to carry out restrictive schemes that they cannot legally operate themselves. Cases in which collusion between employers and unions is alleged are not infrequent; even so, some commentators believe that a serious loophole is left, since the community of interest between employers and unions may at times be so close that collusion is either unnecessary or of so informal a nature that its occurrence cannot be proved.
Public utilities are largely exempt in practice from the laws. The power, transport and communications industries, though mostly carried on by private business, are subject to supervision by special regulatory commissions such as the Federal Power Commission, Federal Communications Commission, Interstate Commerce Commission, Maritime Commission and Civil Aeronautics Board. It is accepted by the courts that the supervisory powers conferred by statute on these commissions give them prior jurisdiction in matters that might otherwise be litigated under the antitrust laws. Those who complain about discrimination or other restrictive behavior on the part of power or transport concerns must therefore seek a remedy in the first place through administrative action by the appropriate commission. So long as the decisions made by the commissions are within their statutory powers, their prior jurisdiction is in practice controlling. Moreover, rate-fixing agreements between steamship lines, airlines and railroads have been relieved by statute from antitrust action, where the agreements are approved by the appropriate commission. In some situations -- the case-law on this topic is complex -- a residual field for antitrust action may remain open but in general the Congress has not thought it appropriate that there should be free competition in the field of utilities and it is assumed that the commissions will use their statutory powers to safeguard the public interest against undue restrictiveness.
Agricultural marketing over a wide range of products is also substantially insulated from the antitrust laws. 2 the Clayton Act declared that nothing contained in the antitrust laws should be construed to forbid the operation of agricultural or horticultural organizations conducted for mutual help and having legitimate objects. Later legislation -- the Capper-Volstead Act of 1922 and the Co-operative Marketing Act of 1926 -- has extended and elaborated this general exemption for agricultural co-operatives. Growers and even processors may join together to market their products, and it is left to the Secretary of Agriculture to prevent them from unduly enhancing prices. A similar exemption operates for fishermen's co-operatives. Here again a residual field for antitrust action remains open and there have been cases in which predatory activities of co-operatives, directed to excluding the competition of outsiders, have been successfully challenged in the courts. But a complete monopoly in a market may be lawfully built up if the only means adopted are co-operative buying and selling.
Insurance and banking services are in part immune from the laws. For a long time it was supposed that insurance was not within the scope of the Sherman Act on the ground that it was not commerce. In 1944 the Supreme Court upset this idea and held that restrictive agreements between insurance companies could violate the Act. In 1945, however, legislation was passed which granted insurers a moratorium against antitrust action until 1948 and provided that thereafter the antitrust laws should apply only to the extent that the business of insurance was not regulated by state law. Since the several States have in fact introduced regulatory statutes, the scope for federal antitrust action is now very limited: boycotts and other coercive agreements between insurance companies, however, still violate the Sherman Act. Co-operation between banks with respect to lending policies and interest rates is accorded some immunity from antitrust action under the Federal Reserve Act of 1913; but this immunity is by no means complete and cases have been brought by the Government against restrictive commercial practices by banks.
The question whether other services and professions are vulnerable to antitrust action is again a matter of defining the word 'commerce' and is answerable only by reference to the case-law; there is no general exemption for services or professions as such. The Supreme Court confirmed in 1954 a thirty-year-old rule that the business of putting on professional baseball games was sport and not commerce; but in January 1955 the Court decided that boxing and theatrical promotions were commercial ventures and within the scope of the antitrust laws. 4 Contracts entered into by football clubs with respect to the televising of matches have also been held vulnerable to antitrust action. In 1950 real estate brokers were held to be infringing the law by fixing prices for their services, and in United States v. American Medical Association (1943) it was held that action taken by the association to deny the services of doctors and hospital facilities to a group health scheme in Washington, D.C., was a conspiracy in restraint of trade. Rules of conduct of major professional bodies, even though they might have restrictive aspects, would probably not be challenged -- it is not surprising perhaps that the legal profession seems to have been immune -but in general it appears that the business or commercial aspects even of the learned professions may come within the scope of the Sherman Act.
Apart from insulating certain sectors of the economy, such as labor, agriculture and public utilities, from antitrust action, Congress has also passed measures from time to time which exempt certain types of restrictive practice. The outstanding example of this kind of exemption concerns the practice of resale-price maintenance which manufacturers of branded goods are now specifically permitted by statute to enforce on their retailers. The story of the legal vicissitudes affecting this practice over the years will be given in Chapter XI below.
Another example is the Webb-Pomerene Act of 1918 which allows American exporters to act together in export markets in ways that would otherwise violate the Sherman Act, for example, arranging to avoid undercutting one another's prices. This exemption is supervised by the Federal Trade Commission and is subject to the proviso that agreements made under it must not raise prices or otherwise restrain trade in the United States nor injure independent American exporters who prefer not to be parties to them. The exemption does not entitle United States firms to participate in international cartel agreements.
Apart from these specific exemptions, the antitrust policy may sometimes be overborne or modified by other policies with conflicting aims. The outstanding example occurred in the great depression when the legislation embodying President Roosevelt's 'National Recovery Program' involved a virtual suspension of the antitrust policy and industries were brought together under government auspices to devise measures for steadying price movements. While it is worth remembering that the policy was thus abandoned at a time of crisis, it must also be noted that the experiment was short-lived and subsequently much criticized. Less sweeping arrangements have been made when United States industry has had to be mobilized to meet external danger; necessary measures of industrial co-operation have then been indemnified against antitrust action, subject to safeguarding procedures in which the antitrust authorities have been joined.
Even State policies, such as conservation measures, may override antitrust policy. For example, the Texas Railroad Commission, like similar bodies elsewhere, limits the amount of crude oil that may be extracted in any period from the Texas oilfields. This is primarily a conservation measure, since uncontrolled extraction may wastefully exhaust reserves. But within the limits set by the need for conservation, the amounts to be extracted are in practice calculated by reference to estimates of demand at the going price. This practice seems likely to affect the level of crude-oil prices, a result which in an industry not subject to this form of regulation might well be challenged under the Sherman Act.
Antitrust is a federal policy and can apply only to the extent that federal authority will carry. The constitution of the United States enumerates the powers surrendered by the several States to the federal government and the 'commerce clause' applies only to trade between the States and with foreign nations; commerce of a purely local nature must be regulated, if at all, by the government of the State concerned. This limitation is nowadays not as stringent in practice as it may appear. So far as the Sherman Act is concerned, wholly local restraints of trade are actionable so long as some actual or threatened, direct or indirect effect on…