Early Foundations of Antitrust
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ANTITRUST LAW Unit 2: Early Foundations ANTITRUST LAW Dale Collins Yale Law School Fall 2014 Unit 2 EARLY FOUNDATIONS TABLE OF CONTENTS Notable Antitrust Events ........................................................................................... 1 Restraints of Trade and the Common Law .............................................................. 3 Common law and public monopolies...................................................................... 3 Contracts in restraint of trade ................................................................................ 10 Combinations and conspiracies in restraint of trade ............................................. 15 The Trust Movement ................................................................................................ 22 Changing economic conditions ............................................................................. 22 Contractual combinations ..................................................................................... 28 Corporations .......................................................................................................... 29 Trusts proper ......................................................................................................... 30 The liberalization of incorporation law ................................................................. 34 The Legislative Response ......................................................................................... 36 State Antitrust Legislation .................................................................................... 37 Federal Antitrust Legislation ................................................................................ 38 The Sherman Act ...................................................................................................... 50 As original enacted in 1890 Ch. 647, 26 Stat. 209 ................................................ 50 Current version (marked for changes against the 1890 version) ........................... 54 History of Sherman Act Amendments .................................................................. 56 Early Enforcement ................................................................................................... 57 The Seminal Price-Fixing Cases .............................................................................. 60 E.C. Knight Co. v. United States, 156 U.S. 1 (1895). ........................................... 60 Notes ................................................................................................................ 63 United States v. Trans-Missouri Freight Ass’n (1897). ........................................ 65 Notes ................................................................................................................ 69 United States v. Joint Traffic Ass’n (1898) .......................................................... 71 Notes ................................................................................................................ 73 United States v. Addyston Pipe & Steel Co. (1898-1899). ................................... 74 Notes ................................................................................................................ 80 The Roosevelt reforms .......................................................................................... 84 The Bureau of Corporations. ........................................................................... 84 Creation of the DOJ Antitrust Division ........................................................... 86 The Expediting Act (1903) ............................................................................... 87 Antitrust prosecutions ...................................................................................... 88 i Unit 2 EARLY FOUNDATIONS Northern Securities Co. v. United States (1904). .................................................. 89 Notes ................................................................................................................ 95 Standard Oil Co. v. United States (1911) .............................................................. 99 Notes .............................................................................................................. 105 United States v. American Tobacco Co. (1911) ................................................. 109 Notes .............................................................................................................. 114 ii Unit 2 EARLY FOUNDATIONS NOTABLE ANTITRUST EVENTS < 1890 State common law regulates microeconomic activity 1888- Pre-Sherman Act statute statutes 1890 1879 Creation of the Standard Oil Trust 1890 Sherman Act 1895 United States v. E.C. Knight Co., 156 U.S. 1 (1895) 1898 United States v. Addyston Pipe & Steel Co., 85 F. 271 (6th Cir. 1898), aff’d, 175 U.S. 211 (1899) 1903 Creation of the Antitrust Division in the Department of Justice Expediting Act, ch. 544, 32 Stat. 823 (1903) 1904 Northern Sec. Co. v. United States, 193 U.S. 197 (1904) 1905 Swift & Co. v. United States, 196 U.S. 375 (1905) 1911 Standard Oil Co. v. United States, 221 U.S. 1 (1911) United States v. American Tobacco Co., 221 U.S. 106 (1911) Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911) 1914 Clayton Act Federal Trade Commission Act Eastern States Retail Lumbers Dealers Ass’n v. United States, 234 U.S. 600 (1914) 1918 Chicago Bd. of Trade v. United States, 246 U.S. 231 (1918) 1919 United States v. Colgate & Co., 250 U.S. 300 (1919) 1920 United States v. United States Steel Co., 251 U.S. 417 (1920) 1936 Robinson-Patman Act 1939 Interstate Circuit, Inc. v. United States, 306 U.S. 208 (1939) 1940 United States v. Socony Vacuum Oil Co., 310 U.S. 150 (1940) 1945 United States v. Aluminum Co. of America, 148 F.2d 416 (2d Cir. 1945) Associated Press v. United States, 326 U.S. 1 (1945) 1947 International Salt Co. v. United States, 332 U.S. 392 (1947) 1950 Celler-Kefauver Act (amending Section 7 of the Clayton Act) 1951 Lorain Journal Co. v. United States, 342 U.S. 143 (1951) 1957 United States v. E.I. duPont de Nemours & Co., 353 U.S. 586 (1957) 1959 Klor’s, Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207 (1959) 1960 United States v. Parke, Davis & Co., 362 U.S. 29 (1960) 1962 Brown Shoe Co. v. United States, 370 U.S. 294 (1962) 1963 United States v. Philadelphia Nat’l Bank, 374 U.S. 321 (1963) 1966 United States v. General Motors Corp., 384 U.S. 127 (1966) United States v. Von’s Grocery Co., 384 U.S. 270 (1966) 1 Unit 2 EARLY FOUNDATIONS 1967 United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967) 1968 Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968) 1971 Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971) 1972 United States v. Topco Assocs., Inc., 405 U.S. 596 (1972) 1973 United States v. Falstaff Brewing Co., 410 U.S. 526 (1973) 1974 United States v. General Dynamics Corp., 415 U.S. 486 (1974) Antitrust Procedures and Penalties Act, Pub. L. 93-528, 88 Stat. 1706 (1974) 1976 Hart-Scott-Rodino Antitrust Improvements Act, Pub. L. 94-435, 90 Stat. 1383 (1976) 1977 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) Continental T.V., Inc. v. GTE Sylvania, 433 U.S. 36 (1977) 1978 National Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679 (1978) 1979 Broadcast Music, Inc. v. CBS, 441 U.S. 1 (1979) 1980 Antitrust Improvements Act of 1980, Pub. L. 96-349, 94 Stat. 1154 (1980) 1981 J. Truett Payne Co. v. Chrysler Motors Corp., 451 U.S. 557 (1981) 1982 1982 DOJ Merger Guidelines 1984 Monsanto Co. v. Spray Rite Service Corp., 465 U.S. 752 (1984) Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984) Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984) NCAA v. Board of Regents, 468 U.S. 85 (1984) 1985 Northwest Wholesale Stationers, Inc. v. Pacific Stationery & Printing Co., 472 U.S. 284 (1985) Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) 1986 Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) FTC v. Indiana Fed’n of Dentists, 476 U.S. 447 (1986) Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104 (1986) 1992 1992 DOJ/FTC Horizontal Merger Guidelines Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (1992) 1993 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993) 1999 California Dental Ass’n v. FTC, 526 U.S. 756 (1999) 2004 Verizon Commc’ns Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) 2007 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) Leegin Creative Leather Prods, Inc. v. PSKS, Inc., 551 U.S. 877 (2007) 2010 2010 DOJ/FTC Horizontal Merger Guidelines 2 Unit 2 EARLY FOUNDATIONS RESTRAINTS OF TRADE AND THE COMMON LAW1 Competition, and the freedom of trade inherent in competitive markets, have been central to American economic and political thinking throughout the Nation’s history. The first American colonies were founded about the same time that Europe began to turn away from a highly regimented economy dominated by royal prerogative, parliamentary and mayoral regulation, guilds, patentees and other state granted monopolies, to a system that emphasized and protected free trade in the domestic economy. In the new system, freedom of trade meant not only the absence of state constraints on competitive opportunities, but also the right of businessmen to enter into enforceable contracts to regulate their relationships with each other. This change in economic approach was reflected in the continually