Restoring American Antitrust's Moral Arc

By Horton, Thomas J. | South Dakota Law Review, Spring 2017 | Go to article overview

Restoring American Antitrust's Moral Arc


Horton, Thomas J., South Dakota Law Review


I. INTRODUCTION

As a law professor, my Antitrust & Consumer Protection Law courses begin with the students viewing the American Antitrust Institute's excellent educational film titled Fair Fight in the Marketplace. (1) The film shows actual tapes of top lysine-company executives in hotel rooms in the 1990s, planning and implementing the massive price fixing and output limitation conspiracy that led to their successful prosecution under Section 1 of the Sherman Act. (2) Included in the dialogue is a statement by former Archer Daniel Midland's ("ADM") CEO Michael Andreas: "Our competitors are our friends. Our customers are the enemy." (3) As described by one leading antitrust textbook in its analysis of United States v. Andreas:

Captured in grainy, black and white images were hours of discussions in
which the world's lysine producers set output levels, argued over their
individual quotas, and devised ways to audit compliance with their
pact. In one memorable session in a hotel room in Atlanta, the
competitors joked openly about the possibility that the FBI or the
United States antitrust agencies might detect their behavior. (4)

As the students watch the film and read the Seventh Circuit's 2000 decision, they are inevitably shocked and dismayed by the antitrust violators' brazen lack of business ethics and morality. Nearly universally, they believe that such conduct violates and offends fundamental moral and ethical norms.

As the semester continues, students read additional cases in which businesspersons deliberately set out to destroy competition and subvert the competitive process. For example, in studying invitations to collaborate, students read the following exchange from February, 1982, between Robert Crandall, American Airlines' President, and Howard Putnam, Braniff Airlines' President:

[Putnam]:    Do you have a suggestion for me?
[Crandall]:  Yes. I have a suggestion for you. Raise your goddamn
             fares twenty percent. I'll raise mine the next morning.
[Putnam]:    Robert, we--
[Crandall]:  You'll make more money and I will too.
[Putnam]:    We can't talk about pricing.
[Crandall]:  Oh bullshit, Howard. We can talk about any goddamn thing
             we want to talk about. (5)

Turning to dominant firm behavior and conduct having exclusionary effects, the students read case after case in which a dominant firm or group of firms successfully drives an aggressive competitor out of business by using predatory conduct. Students learn that unethical business tactics routinely have been applauded and blessed by reactionary, interventionist appellate courts determined to protect dominant firms from the wrath of antitrust juries. (6) They also learn that "most antitrust commentators today think that juries are anathema to antitrust." (7) Even though citizen jurors may be "morally outraged" by unethical and immoral business conduct, the courts consistently rule that antitrust liability is inappropriate because no damage to economic competition supposedly has been proven. (8)

As students read the courts' economic justifications for such decisions, they are introduced to the current American economic thinking that antitrust should be amoral, with no moral content. (9) Some commentators have even gone further and posited that "business competition simply may be amoral." (10) As a corollary, students learn that moral norms of fairness are also considered anathema to many antitrust scholars and judges today. (11) As the semester moves along, students must decide for themselves whether America's antitrust laws should include norms of morality and fairness, or continue their current pretense of being amoral and solely driven by economics-based notions of consumer welfare and allocative efficiency. (12)

The current rationale for amorality in antitrust is simple and straightforward. Proponents of amorality believe that "[b]asic microeconomic theory is of course a science. …

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