Antitrust Law and Proof of Consumer Injury

By Joffe, Robert D. | St. John's Law Review, Fall 2001 | Go to article overview

Antitrust Law and Proof of Consumer Injury


Joffe, Robert D., St. John's Law Review


INTRODUCTION

The antitrust laws are intended to protect the market system by preserving competition.1 The two principal antitrust laws are sections one and two of the Sherman Act. Section one is directed against restraints of trade.2 Although section one stipulates that le]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce ... is declared to be illegal,"3 it is evident that this law cannot be read literally. Contract law, "that body of law that establishes the enforceability of commercial agreements and enables competitive markets-- indeed, a competitive economy-to function effectively," would be outlawed if courts read section one literally.4 The statute has been interpreted to prohibit only unreasonable restraints of trade.5 IMAGE FORMULA5

Section two is directed against monopolization, actual or attempted.6 Although the language in the Sherman Act is amenable to a number of interpretations, courts have narrowed the meaning of these statutes considerably. The discussion that follows will demonstrate that two principles guide the courts' application of these laws. First, the objective of the antitrust laws is the prevention of injury to consumers. Second, the antitrust laws are intended to protect competition, not competitors. Requiring some evidence of consumer injury ensures that the antitrust laws are applied in a fashion that is directly consistent with the fundamental objectives.

The consumer injury requirement can be understood as an element to be proved before liability can be found under the antitrust laws. This requirement serves two purposes in addition to the protection of consumers from truly anticompetitive practices. First, the requirement facilitates the expeditious resolution of legal disputes. Second, the requirement establishes clearer guidelines for businesses that are wary of running afoul of the antitrust laws. These effects are particularly important because of the threat of lawsuits by competitors. The Clayton Act permits private plaintiffs to seek monetary and injunctive relief for violations of the antitrust laws. Under section four, any person who has been injured in his business or property by "anything forbidden in the antitrust laws" may recover "threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee."7 Section sixteen of the Clayton Act provides that "[a]ny person, firm, corporation, or association shall be entitled to sue for and have injunctive relief... against threatened loss or damage by a violation of the antitrust laws...."8

Permissive legal standards, which prevent courts from screening out frivolous lawsuits, give rise to conduct and legal rulings that subvert the purpose of the antitrust laws. Requiring proof of injury to consumers furthers the objectives of the antitrust laws by facilitating the dismissal of meritless claims at an earlier stage in the course of legal proceedings.

One can argue that the government should not be required to prove injury to consumers because the anticompetitive motive IMAGE FORMULA8

that is often present in actions brought by private plaintiffs is absent in actions initiated by the Department of Justice (DOJ) and the Federal Trade Commission (FTC). This position overlooks the costs of uncertainty that would be created if the requirements for finding liability under ' the antitrust law depended upon the identity of the party filing suit. A consumer injury requirement provides a clearer benchmark that can be used by decision makers to determine whether a business decision is legal or illegal under the antitrust laws. The existence of a recognized standard for conduct reduces costs associated with uncertainty. More certain knowledge that conduct that injures consumers is illegal under the antitrust laws enables firms to develop business strategies with greater confidence. …

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