Antitrust Is Dead – Small Business

Competition is the New Antitrust

What Are the Antitrust Laws?

There are 4 federal antitrust laws of note, the most notable and important of which is the Sherman Antitrust Act (1898). The other 3 statutes are: the Clayton Antitrust Act (1914); the Federal Trade Commission Act (1914); and the Robinson-Patman Act (1936). Each of these laws has been amended from time to time, but they are now largely unenforceable by injured businesses, for reasons that I’ll get into below.

Purpose of the Antitrust Laws

The Sherman Act was enacted (121 years ago) during the populist revolution after the “robber barons” (e.g., Cornelius Vanderbilt and Jay Gould) had become obscenely wealthy through unscrupulous methods apparently now unlawful at the time. For example, according to Wikipedia, “Cornelius Vanderbilt [was] taking money from government-subsidized shippers, in order to not compete on their routes.” Jay Gould’s fortune was created by purchasing railroads, creating and owning the monopolistic elevated rail system in NYC, and owning the most profitable Western Union (which had a monopoly in railroad telegraphy and sending Associated Press articles to AP members throughout the country). See Jay Gould Biography.

It was obvious to all (in 1898) that something had to be done to stop the robber barons, who were gobbling up the expanding nation’s wealth at the expense of everyone else.

The Sherman Act as enacted in 1898 and up to today is quite simple. Businesses are not permitted to engage in any “unreasonable restraint in trade” or to illegally acquire or use a monopoly.

The reason for the prohibition is simple. When a business has an illegal monopoly, the business has no competition to force competition in price (or service, or quality), and the monopolist is going to increase its price and decrease its output (and its labor), causing consumers to pay more and get less. When a business has an unreasonable restraint in trade, competitors are hurt because they have to spend more of their resources to try to obtain sales in light of the unlawful restraint, are less profitable as a result, and more likely to go out of business and/or be absorbed by the monopolizing company.

At one time, during the 1970’s particularly, but diminishing all too rapidly, the antitrust-injured small business could go into federal court in many areas of the U.S. and expect to obtain relief if they had a legitimate grievance under the antitrust laws. I spent most of my time as a lawyer from 1970 to 1990 to commencing and maintaining antitrust lawsuits on behalf of small businesses.

During this period, it was becoming clear to me that it was becoming increasingly difficult if not hopeless for a small business entity or owner to obtain relief in the federal courts for what were clearly (in 1970) antitrust violations. Judges make the decisions, and the federal judges were less and less inclined to grant relief, especially when the U.S. Supreme Court was during this entire period issuing decisions which made it increasingly difficult for a small business (through its attorneys such as the writer of this article) to enforce the antitrust laws. The worst decision came in 2007, in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, which held that a federal judge could dismiss a well-pleaded complaint if the judge merely stated that the plaintiff’s allegations were not plausible. In other words, a federal judge could dismiss an antitrust complaint by stating that “it not plausible that General Motors would conspire with Ford Motor Company” or whatever the gravamen of the complaint pleaded. Thus, even with a well-pleaded antitrust complaint, the federal judges were allowed to dismiss the complaint, and all too often did, so that it was obvious that a small business would be wasting its time and money trying to enforce the nation’s antitrust laws.

I must point out, however, that the courts did not treat the United States Justice Department in the same way, so that if the U.S. sued someone in antitrust, the federal courts would be more apt to listen and grant relief, even if relief would have been denied to a small business complaining about the same thing. Now that the U.S. Supreme Court and many of the Appellate Courts have new judges (or Justices) appointed by Republican presidents, the federal judges at the District Court level recognize that granting relief to a small business would probably be reversed on appeal (which any major corporation could easily afford to bring), so that unless the federal government chooses to sue in antitrust (which we see is now becoming political, if it wasn’t that way already), there is very little likelihood that a small business could enforce any type of violation of the federal antitrust laws.

Without antitrust enforcement, there is going to be (and is) an ever-increasing concentration of the economy, with 99% of the country working harder and longer for less.

40 Years of Destruction of Competition in the

U.S. Cannot Be Changed by Federal Legislation

During a Presidential election campaign, most voters (if they thought about the matter at all) would assume that a newly-elected President in favor of enforcing the antitrust laws would be able to undo the tens or hundreds of thousands of little slices that have been taken out of the economy (and given to the wealthy) over the past 40 years.

This cannot happen. The President needs a willing Congress, and Congress would have to undo 40 years of legislation and agency rules and regulations that gave special privileges to the wealthy. It is not going to happen, no matter who wins the election. The U.S. in 40 years have had too many giveaways to the rich and powerful to pass a statute or statutes requiring, for example, Fox Television and CBS Television to compete for their licenses with others, with the winner paying reasonable royalties to the U.S. government for use of the public’s airwaves for say a 3-year or 5-year period. Nor would we expect tax laws to go back and make changes retroactively, to reduce the present excessive concentration of the economy. Nor can we expect tax laws for the future to be equitable as applied. Nor can we expect subsidies for big business to be eliminated or made fair such as the natural oil and depletion allowance; nor are we going to change the wholly outrageous and unaffordable cost to small business of patent (which are government monopolies) renewals, resulting in loss of the value of inventions for small businesses, which then opens up the markets to big business and higher prices. And of course there is the lack of competition in higher education, which has moved the equity of savings, homes and future services into the hands of banks, market manipulators, investors and others who are dominant in the economy.

We are not going to be able to undo what has been done. It’s too complicated. The only hope that I see to stop the ever-increasing concentration of the economy that has been put in place through our system of government in the U.S. over the past 40 years is (a) from the bottom up; and (b) through small business.

Political Impediments Making it Unlikely

that Change Will Occur from the Top Down

Top Down is a reference to having changes imposed at the top (by federal law or, to a lesser extent, by state law) so that they will take place uniformly down through the entire economy. This sounds great, but the changes cannot be expected to be enacted at the Top.

I see many obstacles to being able to enact the federal and state laws needed to reduce the ever-increasing concentration of the U.S. economy (which concentration seems to have virtually no ending point).

Gerrymandering of Congressional areas in most of the 50 States enables a comparatively few voters to control a much larger number of votes, thereby eliminating the desired “One Person, One Vote” rule.

State laws that limit the right of many persons to vote under various pretexts or by pure plain fraud also deprives many States and the U.S. of the One Person, One Vote rule.

Appointment of federal judges allied with increasing the concentration of the economy has resulted in the 2010 Citizens United v. FEC decision of the U.S. Supreme Court, 558 U.S. 310, in which the wealthy corporations are permitted to pour hundreds of millions of dollars into advertising for candidates who will enact laws to return to these corporations 10 to 1,000 times the amount of their contribution, while a candidate for NYC Mayor such as myself was not allowed to accept contributions of more than $4,950 from any one person. Meanwhile, the large corporations are able to back their preferred candidate with tens of millions of dollars or more in PAC money.

I have only mentioned very few of the large number of ways in which politics no longer works. I should have mentioned the 4-year cycle for the Presidential election as another obstacle. Four year intervals may have been appropriate when the Constitution was adopted, but with instantaneous communications and major (sea) changes occurring during short and even shorter periods, the four-year period seems far too long to wait for possible change through the election of candidates for office.

Bottom Up Seems to Be the Only

Way to Achieve Reform – Here is

How the Needed Reform Can Take Place

Because it is wholly unlikely if not impossible for any significant Top Down reform to take place through the process of electing a President (and Vice President), 100 Senators and 435 Congresspersons, we need to look to Bottom Up reform to see what chance that would have to succeed.

Let’s first look at the size of the United States, which is 3,531,905.43 square miles of land. Land Area U.S. 2010 This is just too much for a small group to manage. It takes hundreds of thousands of political workers to participate in the national election process.

But in a city such as Hudson, New York, with a population of 6,239 (in 2017) and a land area of 2.2 square miles, a group of 6 full-time persons would go to each of the 3,000 homes and an estimated 400 small businesses to explain the petition process and encourage half of the registered voters who cast votes to vote in favor of the 3 petitions needed to reform the economy for Hudson.

Ward healers (or precinct captains) were quite successful in doing this in NYC from 1900 to about 1950. The Ward or Precinct was the smallest political unit and the Democratic Party (which controlled politics in NYC) appointed a person to get to know each person living in the ward, and help them with their political problems, and make sure that they voted (Democratic) during the elections. In exchange, the ward healer usually obtained some type of no-show or little-work employment by NYC or one of its agencies.

Using the ward healer as a model, a group of say 6 persons working out of a rented home in the area could visit each of the 3,000 homes during a 4-month period and educate the voters of Hudson on the 3 reforms, and encourage them to sign the needed ballot-initiative petitions to put the reforms on the local ballot (during the next general election, for NYS Governor), and to vote for the reforms during the next general election. There needs to be a map showing the homes, and a plan for meeting and speaking with the voter occupants in each of the homes.

If the 5 persons were paid $400/week, the cost would be $2,000 per week for 17 weeks or $34,000, plus rental of the home, which funds probably could be raised during the meetings.

The three reforms are discussed on the home page.

Small Business Seems to be the

Only Way to Control the Monopolistic

Practices of Market-Dominant Businesses

There is no other way that I can see by which monopolistic forces can be challenged, except through the bottom up support and expansion of small business, to take away customers, income and market share from the monopolies through competition and growing awareness of the residents living within the prosperity area who understand that their economic interests are to support small business, so that they buy from small business and the products and services of small business as a first choice, and avoid buying the products and services of the monopolies as much as possible.

Ripple Effect Expected – To Expand

Prosperity to Communities Surrounding

The Prosperity-Area ZIP Code

Imagine the city boundaries of a 2.2 square mile community in which prosperity is being created for residents and small businesses within the community. The boundary is about 6 miles in length, The residents and smal businesses within this adjacent perimeter are going to see the growing prosperity within the Hudson ZIP Code and demand the same 3 reforms, so they can participate in the prosperity.

It shouldn’t take long for these 3 reforms to sweep the country, from the bottom up, to provide the needed competition for the monopolies and change the political structure of the 19,000 communities (i.e., towns, villages, hamlets, municipalities and smaller cities) and most of the 3,100 counties through the U.S.

This will create a strong middle class, based on the 27 million existing small businesses and the millions of additional small businesses that will be created, and the higher-paying jobs that they will provide (including the very-high paying Assistant to the Owner of a Small Business), in relation to the average pay to the average employees of big business.

All of this can happen, if we can start from the bottom up in just one town in the U.S. and implement the 3 reforms (instead of trying to impose thousands or tens of thousands of reforms at the federal level, from the top down).

I want to help any town in the U.S. create prosperity for itself, and I seek no compensation for my efforts. To do so would make my efforts far more difficult, because you and others would say, Oh attorney Person is just trying to make money out of this idea. No, this is not true. I want to see the three reforms take place and I’m willing to help interested persons for no compensation.

So, please get in touch with me and let’s see what we can do in your community.

Carl E. Person

Revised 3/24/19 9:29 p.m.