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Antitrust
University of San Diego School of Law
Mogin, Daniel Jay

ANTITRUST LAW OUTLINE SPRING 2007

– Sherman act is the main statute in antitrust law but it’s very short for a statute & wording isn’t clear
o Sec. 1 seems to make contracts illegal – it’s basically wrong as written
o Sec. 2 means what it says but doesn’t define terms it uses
– Antitrust law is common law b/c precedent defines what the law is

Competition v. Monopoly
– The goal of antitrust is to foster competition – why?
o Drives down prices b/c firms compete for sales
o More goods are sold b/c at lower prices consumers buy more & sellers need to sell more to turn profit
o Prevents monopoly pricing
§ Want to stop people from being excluded from market b/c prices too high but also want to protect people still in market from paying too much
o Creates better quality, services, etc. for products
o Allows consumers to have better info about products b/c info sharing (thru ads) occurs
o Increases efficiency thru competitive pressure
o Greater distribution of wealth – profit lost by monopolist is shifted to consumers
§ Antitrust populism – monopolies concentrate economic power in few hands which is bad b/c creates concentrated political power
§ This is no longer in favor
o If good is socially valuable don’t want one to control it
o Allows market access for small businesses
o Encourages investment in research & development/ innovation
§ Counter-argument to this is that monopolies actually encourage innovation b/c they have more money to spend on R & D – competition doesn’t have a lot of profits – also if monopoly allowed it’s a big incentive to innovate
§ L thinks competition-innovation is more likely
o More products/brands to choose from
– Antitrust is more concerned w/ economic benefits of competition than w/ public interest/policy benefits like employment
– Antitrust doesn’t set prices or regulate just make sure there is competition assumes the rest will follow
– On supply and demand curve efficient point is where supply intersects demand – this produces qc (competitive quantity) & pc (

re controlled by trusts
§ Consumers hurt b/c prices artificially high
§ Producers hurt – ex. acted as middlemen
§ Convinced Congress to make high tariffs for imported goods to protect selves from foreign comp.
– Sentiment against trusts gathered such steam that it was a major theme in 1888 political election
– Antitrust legislation passed in 1890 – Sherman wanted this to be his legacy – no hearings b/c he just wants bill passed thru
o On debate no one wants to speak up for trusts even tho they are benefactors
o Debate is mostly on constitutionality of doing this
o Sherman created stronger Sec. 1 – judiciary committee vastly changes Sec. 1 and adds Sec. 2
o Passed w/o much comment by either House or Pres.
o No one seems to have known what it means – they leave it to the courts – thus the case law is the law