Presidential Power: Enforcing Antitrust Laws Without Congress

While the president can enforce laws passed by Congress, they cannot make or interpret laws. Antitrust laws are enforced by the Federal Trade Commission (FTC) and the Department of Justice (DOJ), with the agencies focusing on areas of the economy that receive significant consumer spending, such as technology, healthcare, pharmaceuticals, and communications. The key laws that set the groundwork for antitrust regulation are the Sherman Act, the Federal Trade Commission Act, and the Clayton Act.

The role of the President

The President's role in enforcing antitrust laws is primarily as the enforcer of laws passed by Congress. The President can also make suggestions about new laws and has the power to veto or approve bills passed by Congress.

The President's role in antitrust law enforcement is also carried out by the Executive Branch, which includes the Department of Justice (DOJ) and the Federal Trade Commission (FTC). The DOJ and the FTC enforce federal antitrust laws, with the FTC taking the lead on most investigations and the DOJ having sole antitrust jurisdiction in certain sectors, such as telecommunications, banks, railroads, and airlines. The DOJ also has the power to impose criminal sanctions for antitrust violations. The FTC and the DOJ work together to enforce federal antitrust laws, and in some cases, they may also collaborate with other regulatory agencies to ensure that mergers are in the public interest. The FTC focuses on areas of the economy with significant consumer spending, such as technology, healthcare, pharmaceuticals, and communications.

The President can also influence antitrust law enforcement through the appointment of Cabinet members and Supreme Court Justices, who may interpret antitrust laws and hear cases related to antitrust violations. Additionally, the President can make treaties with the approval of the Senate, which could include agreements with other countries on antitrust cooperation and enforcement.

It is important to note that the President cannot make or interpret laws, including antitrust laws. The power to create laws lies solely with Congress, and the interpretation of laws is often carried out by the courts. However, the President can influence the enforcement of antitrust laws through the agencies and officials within the Executive Branch, as well as through the power to veto or approve bills related to antitrust enforcement.

Antitrust laws and their history

The history of antitrust laws in the United States is generally considered to have begun with the Sherman Antitrust Act of 1890, which was passed by Congress to preserve "free and unfettered competition" as the rule of trade. The term "antitrust" originated from the 19th-century practice of using "corporate trusts" to consolidate separate companies into large conglomerates. The Sherman Act was prompted by the emergence of large manufacturing conglomerates in the 1880s and 1890s, as well as the consolidation of hundreds of small short-line railroads into giant systems. The Act makes it illegal to restrain trade or form a monopoly, and it empowers the Justice Department to take legal action against such behaviour.

In the years following the Sherman Act's passage, several presidents actively enforced antitrust laws. For example, President Theodore Roosevelt sued 45 companies under the Act, while his successor, William Howard Taft, sued 75. Roosevelt notably prevented the formation of the Northern Securities Company, which would have monopolised transportation in the Northwest.

In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which established the Federal Trade Commission (FTC) as an independent agency with shared jurisdiction over federal civil antitrust enforcement; and the Clayton Act, which specifically targeted mergers and acquisitions that could substantially reduce competition or lead to monopolies. These three laws, with some revisions, remain the core federal antitrust laws in effect today.

Over the years, the Supreme Court has played a significant role in interpreting and applying antitrust laws. For instance, in the case of Standard Oil, the Court introduced the "rule of reason", asserting that not all large companies or monopolies are inherently harmful, and that courts, not the executive branch, should make this determination. The Court has also clarified that the Sherman Act does not prohibit all restraints of trade, only those that are unreasonable and harmful to competition, such as price-fixing, bid-rigging, and market allocation.

While federal antitrust laws form the core of antitrust policy, most states have their own antitrust laws, which are enforced by state attorneys general or private plaintiffs. These laws provide for treble (triple) damages against antitrust violators to encourage private lawsuit enforcement.

The Federal Trade Commission (FTC)

The FTC shares jurisdiction over federal civil antitrust law enforcement with the Department of Justice Antitrust Division. It has enforced the provisions of the Clayton Act, a key U.S. antitrust statute, and the provisions of the FTC Act, 15 U.S.C. § 41 et seq. The Clayton Act, passed in 1914, outlawed using mergers and acquisitions to achieve monopolies and created an antitrust law exemption for collective bargaining. The FTC Act bans "unfair methods of competition" and "unfair or deceptive acts or practices". The FTC has been delegated with the enforcement of additional business regulation statutes and has promulgated a number of regulations (codified in Title 16 of the Code of Federal Regulations).

The FTC serves as a federal repository for individual consumer complaints regarding identity theft. Although the FTC does not resolve individual complaints, it uses the aggregated information to determine where federal action might be taken. The FTC also provides information to help consumers spot, stop, and avoid scams and fraud. The FTC has been involved in the oversight of the online advertising industry and its practice of behavioural targeting. In 2011, the FTC proposed a "Do Not Track" mechanism to allow Internet users to opt out of behavioural targeting.

In numerous cases, the FTC employs its authority to combat serious consumer deception or fraud. The FTC has the rulemaking power to address concerns regarding industry-wide practices. Rules promulgated under this authority are known as Trade Rules. Traditionally, an administrative complaint is heard in front of an independent administrative law judge (ALJ) with FTC staff acting as prosecutors. The case is reviewed de novo by the full FTC commission, which may then be appealed to the U.S. Court of Appeals and finally to the Supreme Court.

The Sherman Act

The Act outlaws "every contract, combination, or conspiracy in restraint of trade," including agreements among competitors to fix prices or wages, rig bids, or allocate customers, workers, or markets. Certain acts are considered so harmful to competition that they are almost always illegal and are deemed "per se" violations of the Sherman Act, with no defense or justification allowed. These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids.

The penalties for violating the Sherman Act can be severe, with criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. The Act also provides for treble damages against antitrust violators, encouraging private lawsuit enforcement.

The Supreme Court has clarified that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. This means that while certain agreements may technically restrain trade, they may not do so unreasonably and thus may be lawful under the antitrust laws. The Federal Trade Commission Act (FTC Act) also addresses practices that harm competition but may not fall neatly into categories of conduct formally prohibited by the Sherman Act. The Clayton Act, passed in 1914 along with the FTC Act, further addresses specific practices that the Sherman Act does not clearly prohibit, such as mergers and interlocking directorates.

The Clayton Act

There are 27 sections in the Clayton Act, with some of the most notable ones being:

• Section 2: Deals with the unlawfulness of price discrimination, price cutting, and predatory pricing. It prohibits companies from monopolizing or attempting to monopolize any part of interstate commerce and engages in anti-competitive practices.
• Section 3: Addresses tying arrangements, which occur when one party enters into a contract with another, with the condition that the other party does not conduct business with a specific third party (exclusive dealings).
• Section 6: Exempts labour unions and agricultural organizations, stating that "the labour of a human being is not a commodity or article of commerce". This section permits boycotts, peaceful strikes, peaceful picketing, and collective bargaining.
• Section 7: Prohibits mergers and acquisitions that may substantially lessen competition or lead to the creation of a monopoly. This section also requires companies to notify the FTC and the Assistant Attorney General of the DOJ Antitrust Division of any contemplated mergers or acquisitions that meet certain thresholds.
• Section 8: Prohibits directors, officers, or executives of a company from serving on multiple boards of competing firms simultaneously.

Frequently asked questions