I thought the public policy purpose of antitrust law was to protect the little guy against the monopolist giant. Your analysis seems to protect the monopolist giant against the little guy. This just feels all wrong, morally, and in terms of common sense to me.
” . . . was designed to be a comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade. It rests on the premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, the lowest prices, the highest quality and the greatest material progress, while at the same time providing an environment conducive to the preservation of our democratic political and social institutions. But even were that premise open to question, the policy unequivocally laid down by the Act is competition.” (emphasis added) Northern Pac. Ry. Co. v. United States, 356 U.S. 1, 4 (1958).
he firm consensus across the political spectrum is that protecting consumers and consumer interests is the primary purpose of antitrust law. For a good summary of the goals of antitrust enforcement see Looking Forward, a speech by FTC Chairman Timothy J. Muris (Dec., 2002). As Muris states, “Competition policy succeeds when it serves consumer interests – for example, by pressing producers to offer lower prices or to improve product quality. The true measure of our contribution to the economy is our progress in increasing consumer welfare.”
- The Robinson-Patman Act, which was passed in 1936 and prohibits various types of price discrimination by sellers, is the one so-called antitrust law that attempted to protect competitors (e.g., small grocers and other “mom’n’pop” stores) from competition by larger entities (especially discounters). RPA departed from a consumer-oriented focus as a result of a conscious political-policy choice that equated the well-being of individual firms with consumer interests. However, as Chairman Muris describes, almost all economists and antitrust experts agree that enforcing RPA often harmed consumers — by paying insufficient attention to the effect of the challenged conduct on competition, market efficiency, and consumer welfare. The statute is still on the books, but has been virtually abandoned by enforcement agencies.
The joint boycott — “pressuring a party with whom one has a dispute by withholding, or enlisting others to withhold, patronage or services from the target” (the Barry Case, 438 U.S. 531) — has received special attention by antitrust enforcers, because it is particularly able to distort competitive process and to force the target to accept the terms demanded by the conspirators, who would otherwise have to make individual decisions in the marketplace. The Barry Court emphasized that buyers are protected against group boycotts, just as are sellers and competitors of the boycott conspirators.
- “`[T]he city’s purchase of CJA legal services for indigents is based on competition. The price offered by the city is based on competition, because the city must attract a sufficient number of individual lawyers to meet its needs at that price. The city competes with other purchasers of legal services to obtain an adequate supply of lawyers, and the city’s offering price is an element of that competition. Indeed, an acknowledgement of this element of competition is implicit in the respondents’ argument that an increase in the CJA fee was `necessary to attract, and retain, competent lawyers.’ If the offering price had not attracted a sufficient supply of qualified lawyers willing to accept CJA assignments for the city to fulfill its constitutional obligation, then presumably the city would have increased its offering price or otherwise sought to make its offer more attractive. In fact, however, the city’s offering price before the boycott apparently was sufficient to obtain the amount and quality of legal services that it needed.’” 272 U.S. App. D.C., at 278, 856 F.2d, at 232.
Similarly, the SCTLA Court (493 U.S. at 423) favorably quoted the reasoning of the Court of Appeals (emphasis added):
- “The Commission correctly determined that the CJA regulars act as `competitors’ in the only sense that matters for antitrust analysis: They are individual business people supplying the same service to a customer, and as such may be capable, through a concerted restriction on output, of forcing that customer to pay a higher price for their service. That the D. C. government, like the buyers of many other services and commodities, prefers to offer a uniform price to all potential suppliers does not alter in any way the anti-competitive potential of the petitioners’ boycott. The antitrust laws do not protect only purchasers who negotiate each transaction individually, instead of posting a price at which they will trade with all who come forward. Nor should any significance be assigned to the origin of the demand for CJA services; here the District may be compelled by the Sixth Amendment to purchase legal services, there it may be compelled by the voters to purchase street paving services. The reason for the government’s demand for a service is simply irrelevant to the issue of whether the suppliers of it have restrained trade by collectively refusing to satisfy it except upon their own terms. We therefore conclude, as did the Commission, that the petitioners engaged in a `restraint of trade’ within the meaning of Section 1.” Id., at 281, 856 F.2d, at 235 (footnote omitted). [emphases added]
- Just today, as described in this press release, the Federal Trade Commission issued an antitrust complaint against some “little guys” selling professional services — independent competing physicians in Texas — who were acting together to get better terms from some “big guys” who sought to buy their services — insurers, HMO’s, etc. (In re North Texas Specialty Physicians, Dkt. No. 9312).
(1) The State’s schedule of Medicaid fees are considered too low by physicians across State X. Dwindling numbers of doctors are willing to accept Medicaid patients. Due to growing financial distress, the State legislature turns down lobbying efforts by the State Medical Society for increased fees. At their annual meeting, members of the Medical Society vote to refuse to take Medicaid patients if the State has not approved their higher fee schedule within 30 days.
(2) Sadsong Prison is by far the largest purchaser of foodstuffs in an isolated, rural New York county. Due to belt tightening (caused by the public’s lack of interest in the conditions faced by prisoners), the Prison announces that it will pay no more than $2.00 per gallon for milk. The county’s dairy farmers are incensed, saying they can get $3 or more per gallon elsewhere, but many farmers continue to sell to the Prison. The Prison Administrator refuses to budge on the price, despite constant complaints by the farmers, who say they must sell locally and might go out of business. One morning, a majority of dairy farmers in the region meet and agree that they will no longer sell to the Prison for less than $3. They issue a statement condemning both the Prison and any farmer who crosses their picket line.
(3) Sadsong Prison has also announced that, in order to achieve efficiencies and save money, it will hire staff physicians for primary care of the prisoners, but will continue to purchase specialty medical care on a per case, fee-for-service basis. Angry general practitioners meet with their colleagues at the 19th Hole club house and persuade the specialists to refuse to deal with the Prison unless it returns to using fee-for-service private practitioners for all of its medical needs. The specialists go along out of professional courtesy, and also because they fear a loss of referrals from the angry primary care doctors.