Gavin Howe
Labor unions are exempt from antitrust laws in the United States, which otherwise prevent groups from working together to restrain competition. This exemption was created by Congress in the Clayton Act of 1914, following the Sherman Antitrust Act of 1890, which had made union activities prosecutable. The antitrust exemption allows unions to engage in collective bargaining and gives them the right to strike, enhancing their negotiating power with employers. While the exemption remains in place, unions are facing a decline in influence due to economic factors and the passage of right-to-work laws in several states.
| Characteristics | Values |
|---|---|
| Reason for exemption | To balance the negotiating process between employers and employees |
| Legislation | Clayton Act of 1914, Section 6 |
| Quote | "The labor of a human being is not a commodity or article of commerce." |
| Statutory exemption | "Long as a union acts in its self-interest and does not combine with non-labor groups." |
| Non-statutory exemption | Collective-employer action during collective-bargaining negotiations |
| Antitrust laws | Sherman Antitrust Act of 1890 |
| Union membership | Declining |
| Right-to-work laws | Passed in a number of states |
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What You'll Learn
The Clayton Act of 1914
The Clayton Act made both substantive and procedural modifications to federal antitrust law. Substantively, it prohibits specific types of conduct deemed contrary to a competitive market, including price discrimination, exclusive sales arrangements, and discriminatory pricing. The Act also addresses unethical business practices such as price fixing and monopolization, preventing operations intended to lead to monopolies. Section 7 of the Act elaborates on the concept of a "holding company", which the government viewed as a means to promote monopolies, and prohibits acquisitions that may substantially lessen competition or create a monopoly.
Procedurally, the Act empowers private parties injured by violations to sue for treble damages under Section 4 and seek injunctive relief under Section 16. The Clayton Act is primarily enforced by the Department of Justice's Antitrust Division and, in some cases, the Federal Trade Commission (FTC). These entities can investigate and prosecute alleged violations, taking legal action to stop anticompetitive conduct and seek compensation for any harm suffered.
The Clayton Act also included a provision exempting organized labor from antitrust enforcement, allowing unions to engage in collective bargaining and peaceful strikes without fear of prosecution under antitrust laws. This exemption was necessary to protect unions' ability to negotiate with employers on behalf of their members and balance the bargaining power between workers and employers.
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Collective bargaining
Unions are exempt from antitrust laws, which otherwise prevent restraints on competition. This exemption allows unions to negotiate with one voice for all their members, a process known as collective bargaining. Collective bargaining is a process of negotiation between employers and a group of employees, with the interests of the employees typically presented by representatives of a trade union. The aim is to reach agreements on working salaries, conditions, benefits, and other aspects of workers' compensation and rights.
The term "collective bargaining" was first used in 1891 by Beatrice Webb, a founder of the field of industrial relations in Britain. It refers to the collective negotiations and agreements that have existed since the rise of trade unions in the 18th century. The process of collective bargaining results in a collective bargaining agreement (CBA) or a collective employment agreement (CEA).
The Freedom of Association and Protection of the Right to Organise Convention, 1948 (C087), and several other conventions specifically protect collective bargaining. This is achieved by creating international labour standards that discourage countries from violating workers' rights to associate and collectively bargain.
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Right to strike
The right to strike is a fundamental right under the National Labor Relations Act (NLRA). Section 7 of the NLRA states that employees have the right to engage in "concerted activities" for the purpose of "collective bargaining or other mutual aid or protection". Strikes are included in these concerted activities.
The lawfulness of a strike depends on its object or purpose, timing, and the conduct of the strikers. A strike may be deemed unlawful if its purpose is to support an unfair labor practice committed by a union or if it would cause an employer to commit an unfair labor practice. For example, a strike to compel an employer to discharge an employee for failing to make certain lawful payments to the union when there is no union-security agreement in place would be considered unlawful. Section 8(b)(4) of the Act prohibits strikes aimed at forcing an employer to cease doing business with another employer, although it is not unlawful for a union to request this. Strikes that violate a no-strike provision in a contract are also not protected by the Act, and employees can be disciplined or discharged unless the strike is called to protest unfair labor practices.
The National Labor Relations Board decides on matters of strike lawfulness and can award backpay to strikers who have been unlawfully denied reinstatement by their employer. Most strikes are protected, but employees can be lawfully fired for participating in an unprotected strike. Employees who strike for a lawful object are classified as "economic strikers" or "unfair labor practice strikers", with the latter having greater rights to reinstatement.
While unions have historically been exempt from antitrust laws, their influence has waned due to the expansion of non-union labor and competition from overseas. Despite this, the right to strike remains a powerful bargaining chip for unions during negotiations with management.
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Non-statutory exemptions
Unions are exempt from antitrust laws that would otherwise prevent their activities. The nation's antitrust laws, including the granddaddy of them all, the Sherman Antitrust Act of 1890, were promulgated for the purpose of encouraging competition and protecting consumers from higher prices. However, Congress recognised that unions, by their very nature, involve workers banding together, which could be prosecuted under the Sherman Act. Therefore, Congress passed provisions exempting organised labour from antitrust enforcement, including the Clayton Act of 1914 and the Norris-LaGuardia Act.
The non-statutory labour exemption from antitrust liability, applied by the Supreme Court, incorporates activities that aren't legitimate union labour-dispute activities. This includes activities such as targeting a non-union employer with frivolous lawsuits, permit oppositions, or lobbying efforts. The non-statutory exemption also covers situations where a union acts in its self-interest and does not combine with non-labour groups.
The non-statutory exemption is important because it allows unions to engage in collective bargaining, which is fundamental to their economic strength. Collective bargaining allows unions to negotiate with one voice for all their members on issues such as wages, hours, grievance procedures, and job protection. Without the exemption, unions would be violating antitrust laws by having horizontal competitors work together.
While the antitrust exemption continues to be the law, unions are seeing their influence wane due to the expansion of non-union labour and competition from low-wage workers overseas. Additionally, some states have passed right-to-work laws that prevent closed shops, where employees must join the union as a condition of employment. These factors have contributed to a decline in union membership.
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Antitrust laws and free speech
Some have proposed using antitrust laws to address these speech-related concerns, especially regarding large tech companies and their potential monopoly on the market. The consumer welfare standard has been a key focus of antitrust policy, but the Biden administration has attempted to use antitrust laws to achieve progressive societal goals, such as addressing free speech concerns. However, current antitrust law does not support breaking up tech platforms based solely on free speech concerns, as being a large company or even a monopoly is not inherently a violation of antitrust law. Antitrust law has moved away from the simplistic notion that "big is bad" as this approach was arbitrary and harmful to consumers.
The First Amendment also complicates the use of antitrust laws to regulate speech. The Supreme Court has recognized that even neutral competition policies can be content-based and violate free speech rights if their purpose is to regulate speech because of the message it conveys. This creates a challenge for policymakers who want to address free speech concerns through competition policy or antitrust law. If the goal is to directly regulate platforms' speech, then why use antitrust law at all?
While antitrust laws have been considered in light of First Amendment rights, the two concepts often collide. For example, in Lorain Journal Co. v. United States (1951), the court held that punishing a newspaper for attempting to monopolize interstate commerce did not infringe on the First Amendment freedom of the press. Similarly, in Citizen Publishing Co. v. United States (1969), it was affirmed that two newspapers were not exempt from antitrust laws under the First Amendment. These cases demonstrate the complex interplay between antitrust laws and free speech, where the courts have to balance economic conduct regulation with protecting free speech rights.
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Frequently asked questions
Yes, unions are exempt from antitrust laws.
Unions are exempt from antitrust laws because the act of banding together could be prosecuted under the Sherman Act. Congress passed a provision in the Clayton Act of 1914 to exempt organised labour from antitrust enforcement.
Antitrust laws are laws that prohibit restraints on competition. They were created to encourage competition and prevent market consolidation, which can result in higher prices for consumers.
The antitrust exemption gives unions the legal right to collective bargaining and the right to strike, strengthening their negotiating power. However, union membership is in decline due to the expansion of non-union labour and competition from low-wage workers overseas.
