EL DIRECTOR GENERAL TÉCNICO ADMINISTRATIVO Y LEGAL DEL MINISTERIO DE AMBIENTE ESPACIO PÚBLICO

On January 21, 1888 during the first session of the 50th Congress, a resolution was suggested in order to ask the House Committee on Manufactures to start an investigation and to recommend legislation for the control of the trusts. Following the investigation on trust operations, the House Committee on Manufacture produced an interim report based on the information uncovered in relation to the trust. This led to John Sherman (R. Ohio) and other Senators putting forward antitrust bills. For 15 months after the introduction of the Sherman bill, the Senate was involved in serious negotiations and debates. The bill was later referred to the Committee on the Judiciary which returned it in an unrecognisable form introducing drastic changes to the statutory language of the bill. Senator George Edmunds stated that “without amendment it would not afford a remedy to the real parties injured”.110

In any case, despite all the disputes and difficulties around the bill, the Sherman Act was successfully passed and, up until now, its realm covers many aspects of anticompetitive behaviour which go beyond the formation and operation of trusts. In the 1890s, the Sherman Act was considered to be a “dead letter”;111

therefore, it took it many years of development and interpretation before getting a strong hold over antitrust violations in the US markets.

The Sherman Act was an innovation created with a particular purpose in mind. At the time of the negotiation, there was no single piece of legislation which covered various antitrust points. Several states already had similar rules regulating monopolistic movements which were only applicable to intrastate commerce. The Sherman Act, on the contrary, has a direct link with Congress’ power to regulate interstate commerce and commerce with foreign nations as provided in the US Constitution.112 However, it was argued that “the Sherman law, [...], is not a law to regulate interstate commerce, but is a law to prevent certain private regulations of or interferences with interstate commerce which anticipate

110 _{Libert, D., J., “John Sherman’s Legacy: 100 Years of the Sherman Act” [1990] 4 Ohio Law. 6 at p. 9.} 111 _{Ibid. at p.34.}

112

27

the action of Congress, leaving all others untouched”.113

Therefore, some stakeholders perceived the Sherman Act as simply Congress’ way to obtain more control over interstate commerce and to create legal basis in order to punish disobedience. It could be argued that at the initial stage of the Sherman Act’s existence, Congress’ intentions could have been interpreted as aiming at tighter control over interstate commerce; rather than of trusts. In any case, the Sherman Act was very much needed as it did give the government a legal framework for a tighter and more harmonised control over antitrust violations in domestic and foreign markets.

It was, therefore, argued that the Sherman Act was a necessary tool required to control the monopolistic tendency created by trusts and corporations. In Apex Hosiery Co,114 it was held that:

“The end sought was the prevention of restraints to free competition in business and commercial transactions which tended to restrict production, raise prices or otherwise control the market to the detriment of purchasers or consumers of goods and services, all of which had to come to be regarded as a special form of public injury”.115

It was recognised early on that the Sherman Act was not created for the benefit of individual competitors, but rather, for the protection of the public interest as a whole.116 Bork, for instance, argued that ‘consumer welfare’ was a primary legislative intent behind the Sherman Act and that “[...] in case of conflict, other values were to give way before it”.117

The fact that Congress made consumer welfare as the primary goal of the Sherman Act is not surprising as it was consumers and public that drew government’s attention to the spread of monopoly.

Furthermore, Congress was concerned with a relationship between law and business efficiency. Congress was of the opinion that law should not become an obstacle to business efficiency. This led Congress to decide that “monopoly itself was lawful if it was gained

113

Pagan, O., E., “What the Sherman Law is, and What it is Not” [1923-1924] 12 Geo. L. J. 79 at p. 80. 114 _{Apex Hosiery Co v Leader Et al., 310 US 469 (1940).}

115 _{Ibid at p. 490.}

116 _{Spectrum Sports v McQuillan (9-10), 506 US 447 (1993) 458.} 117

28

and maintained only by superior efficiency”.118

This leads to the above argument in relation to appropriate remedies on the control of trusts. Congress did not prohibit monopoly; rather it prohibited certain methods of the attainment of monopoly.

Although the Sherman Act was passed unanimously in the Congress (save for one vote against in the Senate), it still left some uncertainty in relation to its interpretation. It was founded on the old doctrines derived from the English common law which were dealing with monopoly and various restraints of trade. As Senator Sherman said “it does not announce a new principle of law, but applies old and well-recognised principles of the common law to the complicated jurisdiction of our State and Federal Government”.119

It was argued that the Sherman Act “reflects not only the uncertainty present in every general law because its authors cannot foresee the particular cases that will arise, but also the ambiguity that colours many democratic laws because the authors cannot completely resolve the divergent opinions and cross purposes that call it forth”.120

Initially, the Sherman Act had been subject to many discussions due to the common law terminology used in drafting its antitrust provisions. The principles of the common law on the control of monopolies had always been diverse and contradictory; therefore “many of them obviously irrelevant and even hostile to the policy of fostering competition”.121 This however did not prevent the law makers to use the common law principles in the Sherman Act. The Sherman Act had its own supporters and critics, the latter arguing that antitrust laws “are clear enough, but they have gone beyond the purpose which brought about the enactment of the Sherman Law”.122

This argument stems from the fact that the scope of the Sherman Act extended beyond monopolistic trusts; thereby, ending up covering various antitrust issues.123 For such reasons, it is not surprising that the expanding scope of the Sherman Act was criticised. The Sherman Act was innovative in its sense, despite being entirely consistent of common law principles. Its initial plan was to cover monopolistic trusts; although, it would be completely unimaginable if the Sherman Law did not develop along with the situation. Currently, monopolistic trusts per se no longer exist; therefore, the

118_{Ibid. at p. 12.}

119 _{21 Cong. Rec. 2,458 (1890) as cited in Letwin, W., L., “Congress and the Sherman Antitrust Law: 1887-} 1890” at p. 256.

120

Ibid. at p. 222.

121 _{Bork, R., H., The Antitrust Paradox: A Policy at War with Itself at p.20.}

122 _{Levy, F., H., “The Sherman Law is Outworn. It Should be Amended” [1926-1927] 13 Va. L. Rev. 597at} p.600.

123

29

Sherman Act was meant to be abolished. However, the courts kept developing the Sherman Act by applying various interpretations in order to both clarify its terms and scope, and in order to respond to changing economic understanding, and to changing circumstances.

When the Sherman Act was enacted, various stakeholders tried to delineate those groups that would benefit from the Sherman Act rules. It was, for instance, suggested that the small firms would be the direct beneficiaries of the rules as the Sherman Act was perceived as being “an anti-big business statute”.124

Frankly, such a perception of the Sherman Act was not to be entirely unexpected as the main target of the Sherman Act was clearly the most powerful market players. The monopoly problem became so acute that in 1903 a special division of the Department of Justice (the DOJ) was especially created to deal with antitrust issues. Furthermore, the antitrust system also required good appeals procedures which were established alongside the Department of Commerce and Labour a Bureau of Corporations which was assigned with investigating and gathering information regarding corporate enterprise.

Section 2 of the Sherman Act provides,

“Every person who shall monopolise, or attempt to monopolise, or combine or conspire with any other person or persons, to monopolise any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanour, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court”.

It is clear that section 2 is open to interpretation, i.e. it does not set out very detailed and precise rules on the control of monopolies. It does not dictate the rules on conducting business; employing rather somewhat cursory, simple, legislative language. Due to its broad and open-ended language, it is seen “to possess substantial elasticity, allowing the courts to adjust their [the key words in the Sherman Act] meanings as their experience grows”.125

It is also clear that it does not outlaw the condition of

124 _{Stigler, G., J., “The Origin of the Sherman Act” [1985] 14 J. Legal Stud. 4 at p. 4.}

125 _{Gifford, D., J., & Kudrle, R., T., “European Union Competition Law and Policy: How Much Latitude for} Convergence with the United States?” at p. 769.

30

monopoly; rather, it outlaws the process of monopolisation.126 It was interestingly said that the Sherman Act contained “a broadly written law intended to attain and protect certain broad and fundamental objectives—the maximum of trade and commerce with a minimum of regulation [...], without unnecessarily infringing on the right of individual persons to engage in commerce”.127

The last part of this argument is important as it shows that even if consumer welfare is of paramount importance; a person’s ability to do business without unjustified government intervention is still preserved by the Sherman Act.128