Timely News Reminders on the Importance of Private Antitrust Enforcement
On April 2, I read two news stories that highlighted to me the importance of the trial bar’s continuing dedication to private antitrust enforcement. The fact that these two public announcements were made on the same day simply emphasizes the problem with depending too much on public regulation to secure market integrity.
On April 2, Senator Rand Paul (R-Ky.) introduced legislation that would, by its plain language, completely gut Section 1 of the Sherman Act, various sections of the Clayton Act, and Section 5 of the Federal Trade Commission Act. I wish my description was demagogic hyperbole, but it is not. Senator Paul’s “Anti-Trust Freedom Act,” S. 2269, could not be any clearer:
“The Sherman Act (15 U.S.C. 1 et seq.), the Clayton Act (15 U.S.C. 12 et seq.), and section 5 of the Federal Trade Commission Act (15 U.S.C. 45) shall not be construed to prohibit, ban, or otherwise extend to any voluntary economic coordination, cooperation, agreement, or other association, compact, contract, or covenant entered into by or between any individual or group of individuals.”
The plain language of Senator Paul’s legislation would allow free market competitors to fix prices, allocate markets, group boycott, and agree not to compete. Read more broadly, the legislation could easily apply to conspiracies to monopolize and mergers. Given Senator Paul’s libertarian principles and Tea Party association, it is easy to understand why he supports legislation that seeks to undermine public market protections, but it is hard to fathom legislation more damaging to consumer welfare. Antitrust laws exist to protect the mechanisms of a free market – mechanisms that are completely undermined when competitors come together and agree not to compete. It is difficult to think of any credible defense of the laissez-faire economic principles underlying Senator Paul’s legislation. Do the economic problems facing America really stem from the “fact” that competitors cannot collude enough, or fix prices, due to too much pesky governmental antitrust meddling?
On April 2, the same day Senator Paul’s legislation was introduced, the Federal Trade Commission (“FTC”) refused to intervene to stop a $29 billion merger between two of the three largest Pharmacy Benefit Managers in the nation, Express Scripts and Medco Health Solutions. In dissent, Commissioner Julie Brill, wrote, “[T]his merger is, in fact, a merger to duopoly with few efficiencies in a market with high entry barriers – something no court has ever approved.”
On one hand, we have legislation introduced that seeks to legalize multilateral market abuses on the grounds that governmental antitrust regulation is prohibiting too many collusive activities. On the same day, we see the FTC majority stand by and allow a merger to duopoly in the Health Care industry, an area of commerce that impacts each and every American. These stories make it clear that private antitrust enforcement is more important than ever.