Cleveland State Law Review Volume 56 Issue 4 Article 5 2008 The Antitrust Legacy of Justice William O. Douglas C. Paul Rogers III Dedman School of Law, Southern Methodist University Follow this and additional works at: https://engagedscholarship.csuohio.edu/clevstlrev Part of the Antitrust and Trade Regulation Commons How does access to this work benefit ou?y Let us know! Recommended Citation C. Paul Rogers III, The Antitrust Legacy of Justice William O. Douglas, 56 Clev. St. L. Rev. 895 (2008) available at https://engagedscholarship.csuohio.edu/clevstlrev/vol56/iss4/5 This Article is brought to you for free and open access by the Journals at EngagedScholarship@CSU. It has been accepted for inclusion in Cleveland State Law Review by an authorized editor of EngagedScholarship@CSU. For more information, please contact [email protected]. THE ANTITRUST LEGACY OF JUSTICE WILLIAM 0. DOUGLAS C. PAUL ROGERS III' I. INTRODUCTION .................................................................... 895 II. BIOGRAPHICAL SKETCH ....................................................... 897 III. DOUGLAS AND LEGAL REALISM .......................................... 901 IV. PRICE FIXING ............................................ ··················· ........ 908 v. MONOPOLIZATION ............................................................... 924 VI. THE PATENT/ANTITRUST INTERSECTION ............................. 936 VII. RELEVANT MARKET ISSUES ................................................. 938 VIII. DIVESTITURE ....................................................................... 945 IX. MERGERS AND ACQUISITIONS .............................................. 948 X. BANK MERGERS ................................................................... 954 XI. POTENTIAL COMPETITION .................................................... 957 XII. VERTICAL RESTRAINTS ........................................................ 969 XIII. THE ROBINSON-PATMAN ACT ............................................. 979 XIV. ANTITRUST AND THE REGULATED ECONOMY ...................... 986 XV. LABOR AND ANTITRUST ....................................................... 995 XVI. CONCLUSION .... ················································· ................... 998 l. INTRODUCTION One cannot study the history of antitrust law without running headlong into the opinions of Associate Justice William 0. Douglas. In his thirty-six years on the Supreme Court, he authored thirty-five majority opinions and nearly as many dissenting or concurring opinions in cases involving antitrust questions or issues. It is quite probable that Justice Douglas authored more antitrust opinions, both for the majority and in dissent, than any Supreme Court justice in history. And since antitrust law is largely case law, it seems axiomatic that Douglas, one of the Court's leading liberals, must have had a significant influence on the development of antitrust law. The question remains, however. whether this influence was positive or negative and. given recent doctrinal changes, lasting. In teaching the antitrust course for thirty years, I have annually been surprised by the unevenness of the Douglas antitrust opinions. One, United States v. Socony- "Professor of Law and former Dean. Dedman School of Law. Southem Methodist University. B.A. 1970. J.D. 1973. University of Texas; LL.M. 1977, Columbia University. The author would like to express appreciation to Julie Patterson Forrester for her unwavering support of this project, as well as to a number of very able former research assistants including Mark Hanna, Catherine Bright. Jed Franklin, Lila Johnson. Patrick Hanchey, and Daniel Gomez. Special thanks also to the always professional and timely research support of Greg Ivy and Laura Justice of the Underwood Law Library and to the financial support of the Tucker Law Faculty Research Fund. 895 Published by EngagedScholarship@CSU, 2008 1 896 CLEVELAND STATE LAW REVIEW [Vol. 56:895 Vacuum Oil Co., 1 has stood the test of time and become a bedrock of antitrust law. Many more, however, are quite dated and, dare I suggest, result-oriented.2 Certainly Justice Douglas is thought of as one of the leading antitrust hawks of the Warren Court era, when the government or private plaintiff seemingly always prevailed.3 Antitrust law has evolved and changed dramatically over the thirty-three years since Douglas finally and most reluctantly retired from the Supreme Court. One can almost imagine the good justice's upset as more and more of his opinions are discarded or simply ignored by the present day Court. Justice Douglas' antitrust philosophy can be easily characterized. He firmly believed that "big is bad" and that the Sherman Act was designed to make illegal significant concentrations of economic power, no matter how attained. As a result, he has been characterized as an economic conservative in apparent contrast to his political liberalism.4 He believed in the expansive power of the federal government to regulate the economi and thought that the Sherman and Clayton Acts gave effect to that authority. There is also significant evidence that Douglas believed that a principal aim of antitrust was to protect the viability of small businesses, even at the expense of the consumer." Those ideals have arguably all been discarded by contemporary antitrust policy. Justice Douglas did have a lasting impact on antitrust law, however. He understood the havoc that competitor collaboration could wreak on a competitive 1Unitcd States v. Socony-Vacuum Oil Co .. 310 U.S. 150 (1940). 2 0thers have come to the same conclusion looking at Justice Douglas' opinions in other areas of the law. See, e.g., G. Edward White, The Anti-Judge: William 0. Douglas and the Ambiguities of Individuality, 74 VA. L. REV. 17, 46 (1988) (''The doctrinal dimensions of judging, for Douglas, were relatively insignificant; what counted were the results in cases and the political philosophies that those results signified."). See also Melvin I. Urofsky, William 0. Douglas as a Common Law Judge, 41 DUKE L.J. 133, 134 (1991); Robert J. McKeever, The Fall and Rise of' Judicial Activism in the United States: The Case of Justice William 0. Douglas, II J. OF LEGAL HIST. 437, 442-45 ( 1990). 3 See, e.g., United States v. Von's Grocery Co., 384 U.S. 270, 301 (1966) (Stewart, J., dissenting) ("The sole consistency that I can tind is that in litigation under [Section] 7, the [g]overnment always wins."). See also United States v. Grinnell Corp., 384 U.S. 563, 585 ( 1966) (Fortas, J., dissenting). 4 See Alden Whitman. William 0. Douglas is Dead at 81: Served 36 Years on Supreme Court, N.Y. TIMES, Jan. 20, 1980, at I. 28. 5 This was in stark contrast to his "vittually uncompromising stand in behalf of protection for civil liberties against usurpations by federal and state governments ...." G. EDWARD WHITE, THE AMERICAN JUDICIAL TRADITION: PROFILES OF LEADING AMERICAN JUDGES 246 (1976). "See. e.g., Standard Oil Co. of Cal. v. United States, 337 U.S. 293, 320-21 (1949) (Douglas, J., dissenting) ("[W]c can expect that the oil companies will move in to supplant [independent stations] with their own stations. There will still be competition between the oil companies. But there will be a tragic loss to the nation. The small, independent business man will be supplanted by clerks."). https://engagedscholarship.csuohio.edu/clevstlrev/vol56/iss4/5 2 20081 THE ANTITRUST LEGACY OF JUSTICE WILLIAM 0. DOUGLAS 897 economy, even if he did sometimes take that notion too far. 7 He was a staunch advocate of the so-called "price mechanism," believing that the free and open market should determine output and price. He authored the seminal opinion on the issue8 shortly after taking his seat on the Supreme Court and never wavered from the idea that any collective interference with the setting of price was illegal. With this background, this Article will attempt to further define and refine Justice Douglas' antitrust philosophy by examining his written opinions and writings. It will then attempt to measure that philosophy's effect on the Supreme Court during his tenure and its contemporary impact in the context of the rapidly shifting antitrust doctrine of the last thirty years or so. II. BIOGRAPHICAL SKETCH William 0. Douglas was appointed to the Supreme Court from the chairmanship of the Securities Exchange Commission in 1939 by President Franklin Delano Roosevelt. He was, at forty years of age, the second youngest person ever appointed to our highest court. 9 He would become the longest serving justice upon his retirement in 197 5. Raised in very humble circumstances in Yakima, Washington, he lost his father at the age of six. He then contracted polio before working his way through Whitman College in nearby Walia Walia by holding three jobs so he could send money home. He headed east for law school at Columbia virtually penniless where, after working his way through law school, he claimed, to his chagrin, to have graduated only number two in his class. 10 He was bitterly disappointed when Supreme Court Justice Harlan F. Stone, who each year selected a Columbia law graduate as his law clerk, picked the person who had finished first in the class, AI McCormack. 11 While in law school he worked as a research assistant for Professor Underhill Moore who had been commissioned to write a treatise by the trade association for the cement industries, one of many trade associations under antitrust attack by the 7 See, e.g., United States v. Container Corp. of Am., 393 U.S. 333, 338 n.4