Unions and Antitrust: Governmental Hypocrisy

Article excerpt

Section 1 of the Sherman Antitrust Act states that "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce ... is hereby declared to be illegal." Notwithstanding that the antitrust laws have been used to favor particular competitors rather than the competitive process, the Act implies that the federal government stands for open markets.

However, on top of its other failings, antitrust law is a particularly egregious example of government hypocrisy because Congress has exempted unions. That is how the U.S. Supreme Court interprets the Clayton Act (1914) and the Norris-LaGuardia Act (1932). Moreover, Congress has gone further with the National Labor Relations Act (NLRA), which promotes and protects unions as combinations of workers in restraint of trade.

Economists define a cartel as an agreement among sellers (or buyers) of a product or service to eliminate or restrict competition among its members. For example, if General Motors, DaimlerChrysler, and Ford attempt to fix prices and assign sales quotas, that organization would be a cartel and illegal under the Sherman Act. (Whether it should be is another story.)

Similarly, if the employees of General Motors, DaimlerChrysler, and Ford organize to fix wages (set a standard union rate) and set up job demarcations (specify who does what work) that organization would be a cartel. Using ordinary English, the worker cartel (union) would be a combination in restraint of trade, but it would not be illegal under the Sherman Act.

The Clayton and Norris-LaGuardia Acts give unions a statutory exemption regarding specific "anticompetitive" activities, including secondary boycotts, picketing, and strikes. Whenever unions undertake other activities that are not specifically exempted, but which are "anticompetitive," they, too, are declared exempt simply because they must be in order to make the NLRA effective.

For example, in the Allen Bradley case (1945) the Court ruled that collusion between unions and employers that restricts competition in labor markets is exempt, but collusion is not exempt when it restricts competition in other markets. Yet restrictions on competition in labor markets necessarily affect other markets. Every collective bargaining contract is the result of joint action of an employer and a union to fix wages and work rules in a labor market, and this necessarily affects the prices and availability of the goods and services produced by that labor. The Court had to make this spurious distinction to avoid contradicting the NLRA.

Ignoring Constitutional Principle

A basic principle of the rule of law under the U.S. Constitution is equal treatment under the law. The statue of Justice wears a blindfold signifying that all courts, including the US. Supreme Court, should apply the same rules to all irrespective of their identities and circumstances. There is not supposed to be one set of rules for some and a different, contradictory set of rules for others. But when it comes to antitrust, courts routinely ignore the rule of law.

Consider Hunt v. Crumboch (1945). A union used its closed-shop contracts (which when forced on employers are anticompetitive) with shippers to drive a trucking firm out of business simply because the union leaders didn't like the owners. All the shippers with whom the target firm might have done business had agreements with the union that they would use only unionized truckers. The target was willing to unionize, but the union refused to accept any of the target's employees into the union or to supply the target with any unionized drivers. …