8. Opportunity for Abuse?

8. Opportunityfor Abuse Many businessmen complain that the government lawyers are now attacking American businesses merely because they are big. They say that bigness in business is in itself being made a crime. They point to suits recently brought by the Antitrust Division for some form of breakup of the leading meat-packers, of the American Telephone and its manufacturing subsidiary Western Electric, of du Pont, General Motors and United States Rubber, of General Electric's Lamp Department, and of the New York Great Atlantic & Pacific Tea Company. "The Department of Justice, "they say, "wants to 'atom ize' big business." Justice Department officials deny this,over and over. As Attorney-General, the Present Justice Tom Clark told a Congressional Committee, "We have not attacked bigness-although we have been accused of it-because of bigness itself." 1 And former Assistant Attorney General Herbert A. Bergson has said: We have never brought a case· attacking bigness. . . .

There is no case that we have filed, no position that we have taken . . . which provides any foundation for (the) belief . . . that our present antitrust enforcement program is a threat to mere size. . .. On the contrary, on numerous oc casions as head of the Antitrust Division I have publicly stated that bigness is not an antitrust crime and that I will not bring a case predicated on bigness alone. . . . 2 S9 60 OPPORTUNITY FOR ABUSE Strictly and legally speaking, the Justice officials are quite correct. They speak, in fact, by the book. The Supreme Court has specifically said that mere corporate size is not an offence against the Sherman Antitrust Act.3 And this is one of its explicit findings which it has never explicitly reversed. Thus the Justice Department offi cials not only are safe in saying this, but they have to say it. If they said otherwise they would be called, promptly enough, by any number of members of the antitrust law bar.

But today the word of the law and the spirit of the law (as now interpreted) are not always the same. And in this case the businessmen who complain of the attack on bigness have something. The safety of a big com pany against antitrust prosecution today is something like what the geometry professors call a "variable ap proaching zero." What the Supreme Court has had to say about bigness can best be spelled out in its own words. They are the law, after all. Over 30 years ago the Supreme Court stated cate gorically that mere bigness was not in itself a violation of the antitrust laws.4 Twelve years later, however, the Court began chipping at this statement, or, so to speak, beating a path round it. Justice Cardozo, in the Swift case,5 quoted the earlier opinion, but then added what lawyers call a "gloss" to it. Professional writers might call it a "throw-away line." He said: Mere size, according to the holding of this court, is not an offense against the Sherman Act unless magnifiedto the point at which it amounts to a monopoly . . . but size carries vvith it an opportunity for abuse [italics added] that is not to be ignored when the opportunity is proved to have been utilized,in the past.

This language was used by Judge Learned Hand in the Alcoa case as a springboard from which to jump to OPPORTUNITY FOR ABUSE 61 the· conclusion that Alcoa, because it controlled 90 per cent of the ingot market,. was an unlawful monopoly. And he added the thought, Throughout the history of these statutes it has been con stantly assumed that one of their purposes was to perpetuate and preserve, for its own sake and in' spite of the possible cost, an organization of industry in small units \vhich can effectiVielycompete with each other. The Court showed its feelings a little more in the Tobacco case.6 It said, without adverse criticism of it, comparative size on this great scale inevitably increased the power of these three [tobacco companies] to dominate all phases of their industry. "Size carries with it an opportunity for abuse that is not to be ignored when the opportunity is proved to have been utilized in the past."

By now the Court was moving steadily toward the idea that the Sherman Antitrust Act is one law for the big and one for the small. Two years later it said, "In determin ing what constitutes unreasonable restraint (of trade) . . . we look . . . to the percentage of business con trolled. . .. Size has significance also. . . ." 7 But it was the minority's opinion in this case that sent the shudders through the antitrust bar in New York. It was signed by four judges. And it said, or almost shrieked, "We have here the problem of bigness. Its lesson should by now have been burned into our memory by Brandeis. 'The Curse of Bigness' shows how size can become a menace -both industrial and social. It can be an industrial menace when it creates gross inequalities against existing or putative competitors. It can be a social menace because of its con trol of prices. . .. Size in steel . . . is the measure of the power of a handful of men over our economy. . .. The philosophy of the Sherman Act is that it should not exist.... "

62 OPPORTUNITY FOR ABUSE The trap was pulled, however, in one of the so-called "Inotion picture cases." Here the majority said, in the words of Justice Douglas (who also wrote the Columbia Steel dissent): "It was said in United States v. United States Steel Corporation that mere size is not outlawed. . .. But size is, of course, an earmark of nlonopoly power." 8 (italics added) Now in this brief remark, Justice Douglas "said a mouthful." For he focussed here on something that the Supreme Court and the government lawyers have been doing in the last ten years, which many businessmen seem to have overlooked. These businessmen have been worrying about an alleged "attack on bigness." But they have been looking in the wrong direction, or using or listening for the wrong words. The Supreme Court has not condemned bigness as a "per se" or in-itself violation of the law at all. But it has meantime developed a vastly larger violation of the law, called "monopoly power."

This "monopoly power" is something that can be found wherever there is "opportunity for abuse." It is something that can be found in some of the smallest as well as· in the biggest companies. Size is only an "earmark" of it. It can be found, if anyone wants to look for it, in the boy who sells the most and best lemon ade at the fair-grounds for the least money just as easily as in the biggest corporation in the United States. The Department of Justice has just found it in the company that does the biggest businessin live carp in Philadelphia.9 "Monopoly power" appears to be nothing more than legalese for "economic power," which is characteristic of many more companies than have bigness. How it came to be a violation of the Sherman Antitrust Act OPPORTUNITY FOR ABUSE 63 simply to have this "monopoly power" is an amusing story of legal semantics, or double-talk. It has been a fast job, too. It began with the Alcoa case, already described. The reader will remember that up to this case, when the courts said it was illegal to "exclude competitors," they meant tpis only in the sense of using rough stuff or "predatory practices." This meant things like price-fixing agreements,10production control agree ments,11 boycotts,12 division of markets; or allocation of customers.13 In the Alcoa case the Circuit Court (with the later blessing of the Supreme Court) said in effect that it was just as bad to exclude competitors by keeping ahead of them as by "manoeuvres not honestly industrial."

That was Step One. Step Two came in the To bacco case.14 The Tobacco case came up to the Supreme Court on the single question of whether the government lawyers, to prove a Sherman Act violation, had to prove that the defendants had actually excluded competitors. The Court said they didn't have to. It said so in these words: The question squarely presented here . . . is whether actual exclusion of competitors is necessary to the crime of monopolization. . .. Such actual exclusion is not neces sary . . . provided [the defendants] . . . have such power . . . and the intent and purpose to exercise that power. . . . Neither proof of. exertion of the power to exclude, nor proof of actual exclusion, of existing or potential competi tors, is essential to sustain a charge of monopolization under the Sherman Act. . . . The Tobacco decision, on top of the Alcoa decision, gave a heavy jolt· to the antitrust-law fraternity. Al though the Aluminum ruling said that an organization could violate the law by keeping ahead of competitors, this later decision inferred that it might violate the law 64 OPPORTUNITY FOR ABUSE even if it didn't keep ahead, but only, perhaps, in the eyes of the government lawyers, would like to (that is, by having the "intent") . In the Tobacco case the outside competitors, in the period of years under review, had more than tripled their share of the business, from around 9 per cent to around 32 per cent.

But the antitrust fraternity was due for a further jolt and it came soon in the Griffith case.15 In this case the lower court had "found that no competitors were driven out of business, or acquired by appellees, or impeded in their business by threats or coercion." More than that, there was no charge of "intent." The Griffith movie chain people had, according to the· record, merely gone about their business of trying to make more money, to do more business, to make more money, to do more business, without hoping to hurt their competitors, or apparently even caring what happened to them. Here the Court knocked out the requirement of "in tent." Said Justice Douglas, for the majority, "It is ... not always necessary to find a specific intent to restrain trade or to build a monopoly in order to find that the antitrust laws have been violated. It is sufficient that a restraint of trade or monopoly results . . ."

And then he went on to say that "It cannot be doubted that the 'l1Zonopoly power [italics added] of [Griffith] had S01ne [italics added] effect on their competitors. . ." And he sent the case back to the lower court with a pointed suggestion that the Griffith movie circuit be broken up. Thus it seems that a company may now find itself violating the Sherman Act even though (1) it "excludes" competitors only by keeping ahead of them (Alcoa case) ; (2) it doesn't even keep ahead of them (Tobacco case); and (3) it doesn't try to (Griffith case).

OPPORTUNITY FOR ABUSE 65 Or to put it another way: In the old days, to violate the law, you had to have power, use it, and use it wrongly (unreasonable restraint of trade). With the first step of the change, you only had to have it and use it (re straint of trade). But today you need only have it ("monopoly power"). And the Court, with its ultra-sensitive feeling for com petitors who might.be hurt, does not think merely about actual competitors, already in businessand suffering from the "hard competition" of a defendant company with "monopoly power." It thinks of imaginary or pros pective ones. Thus, in the Alcoa case, the Judge said "It can make no difference whether an existing com petition is put an end to or whether prospective com petition is prevented." In the Tobacco case the Court said, "Prevention of all potential competion is the natural program for maintaining a monopoly here, rather than any program of actual exclusion." In the Columbia Steel dissent the minority spoke of "existing or putative com petitors." And in the Griffith case the Court said that "the antitrust laws are as much violated by the prevention of competition as by its destruction."

This phenomenal concern of the Supreme Court about the fate not merely of flesh-and-blood competitors but of competing young companies yet to be born, is remi niscent of its attitude in the Morton Salt and Cement In stitute cases, already discussed, about reasonable "possi bilities" that some competitor, somewhere, sometime, might be hurt. "Monopoly power" appears to have no other meaning than "economic power"-though even this is a vague term. And if this is so, it is a far more sweeping in dictment than mere "bigness." Almost any company of any size can be shown to have some competitive ad66 OPPORTUNITY FOR ABUSE vantage at some particular point or in some particular way. The change in the law violates deep feelings and long established principles of Anglo-Saxon law. For the law now says about business firms much the same as though common law and the statutory law of the States were changed to mean "The power to commit grand larceny may itself constitute an evil and stand condemned even though it remains unexercised." 16 And on such basis, any citizen who possessesthe power to commit treason would be subject to arrest and imprisonment. Any firm with any kind of economic power is now, offhand, in violation of the Sherman Antitrust Act. And if the analogy held, any citizen with so much as a fountain-pen might likewise be fined or jailed. "Intent" need not be shown. The police would have a field day. This is the dissolving of law.