The U.S. Courts were sharply criticized this week by a bipartisan subcommittee of the House Judiciary Committee for essentially undermining federal antitrust laws through the use of procedural obstacles and unfair legal doctrines.
The Subcommittee on Antitrust, Commercial and Administrative Law issued a report stating that in the decades since the U.S. Congress enacted antitrust laws “the courts have significantly weakened these laws and made it increasingly difficult for federal antitrust enforcers and private plaintiffs to successfully challenge anticompetitive conduct and mergers.”
By adopting a “narrow” definition of consumer welfare as the sole goal of antitrust laws, the report states, the U.S. Supreme Court “limited the analysis of competitive harm to focus primarily on price and output rather than the competitive process – contravening legislative history and legislative intent.”
An email request for comment sent to the Administrative Office of the U.S. Courts was not acknowledged.
The subcommittee also blasted Congress itself for failing to step in and correct court rulings adverse to the plain language of antitrust laws. In the past, the report states, Congress regularly investigated the rise and abuse of market power but its attention in recent years has “fallen short” in the face of “ferocious opposition” from lobbyists.
The report criticizes a threshold determination by courts “that under-enforcement of the antitrust laws is preferable to over-enforcement, a position at odds with the clear legislative intent of the antitrust laws, as well of as the view of Congress that private monopolies are a ‘menace to republican institutions.'”
The subcommittee specifically recommends that Congress “explore [judicial] presumptions” to disallow mergers “when either of the merging parties is a dominant firm operating in a concentrated market.”
The report singles out the use of mandatory or forced arbitration clauses by monopolistic ventures to deny victims of market abuse access to the courts.
In remarkably plain language, the subcommittee states that forced arbitration permits companies to “hide behind a one-sided process that is tilted in their favor.” Moreover, it states, these companies can avoid accountability in the “public justice system” where plaintiffs have greater protection.
The report noted that only 163 of Amazon’s two million sellers initiated forced arbitration proceedings between 2014 and 2019.
Courts were criticized for having “significantly heightened” the legal standards plaintiffs must overcome to prove monopolization by adopting narrow burdens of proof and special requirements and defenses that are found nowhere in antitrust statutes.
For example, the subcommittee cites Amazon’s willingness to lose $200 million in a single quarter to weaken a rival, Diapers.com.
The report said courts introduced a requirement that plaintiffs must show that losses incurred through below-cost pricing were or could be recouped by the predatory company. The report states that dominant digital markets recoup predatory losses over the long term but “recoupment is difficult for plaintiffs to prove in the short term. Since the recoupment requirement was introduced, successful predatory pricing cases have plummeted.”
The report states that courts have failed to address the illegal practice of leveraging, where the use of monopoly power in one market is used to privilege the monopolist’s position in a second market.
Though leveraging was previously a “widely cognizable theory of harm under antitrust law, the report states, courts now require the use of monopoly power in the first market to “actually monopolize” the secondary market or ‘dangerously threaten to do so.'”
The committee recommends “overriding” the court’s interpretation that a monopoly power must actually monopolize a secondary market to be liable.
The report states the U.S. Department of Justice and the Federal Trade Commission have contributed to the problem of monopolistic trade practices by “taking a narrow view of their legal authorities and issuing guidelines that are highly permissive of market power and abuse. “
In a joint statement, Judiciary Committee Chairman Jerrold Nadler (NY-10) and Antitrust Subcommittee Chairman David N. Cicilline (RI-01) said, “As they exist today, Apple, Amazon, Google, and Facebook each possess significant market power over large swaths of our economy … each company has expanded and exploited their power of the marketplace in anticompetitive ways.” They cite a “clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy.”