On Monday, the Senate Judiciary Committee will begin hearings on the nomination of Neil Gorsuch to the Supreme Court. In the coming weeks, the judge will be questioned about his views on a range of social and political issues—abortion, gun control, and voting rights among them. Senate Democrats should add another issue to the top of the list: antitrust law.
Federal antitrust law controls monopolies, cartels, and mergers. It restricts what companies, in particular large companies, can do—for example, buying their rivals, fixing prices, or engaging in below-cost pricing to drive competitors out of the market.
It used to, anyway. Historically, the goal of antitrust law was to preserve competitive markets. Starting in the 1970s, however, judges influenced by the Chicago School of law and economics began limiting the scope of the federal antitrust statutes by redefining the objective of these laws. The only proper goal of antitrust law, according to this perspective, was to promote “efficiency” and “consumer welfare.” In other words, as long as they kept prices low in the short term, mergers and monopolies were fine. Further, this school of thought assumed that mergers and monopolies could realize “economies of scale” and thereby lower prices to consumers. Under this theoretical framework, mergers and monopolies are generally a good thing. As president, Ronald Reagan appointed Supreme Court justices and federal antitrust officials who advanced and institutionalized this narrow antitrust ideology, leading to multiple merger waves over the past four decades and the staggering level of market concentration in America today.
The growth of modern monopoly and oligopoly power has been disastrous for Americans. It means higher prices for consumers, lower wages for workers, and massive regional inequality. Gorsuch’s decisions in antitrust cases suggest that he will help the Supreme Court continue to weaken the laws protecting Americans from corporate power.
Consider his opinion in Four Corners Nephrology Associates v. Mercy Medical. In an effort to develop its own nephrology practice, Mercy Medical, a hospital, agreed to an exclusive arrangement with one particular group of doctors. An unaffiliated doctor sued for the right to practice nephrology at the hospital as well, claiming that by barring him, the hospital was behaving as an unfair monopoly. A federal district court ruled against him, and Gorsuch, writing for the Tenth Circuit Court of Appeals, affirmed that ruling. He reasoned that the hospital was perfectly entitled to exclude other nephrologists in order to protect its investment in the favored practice. “Without some confidence that they can control access to their own property real or intellectual, how many firms would be deterred from undertaking the risks associated with, say, a significant new endeavor or facility?” he asked rhetorically. Revealing his view of monopoly, Gorsuch quoted an opinion by the justice whom he has been nominated to replace, Antonin Scalia: “The opportunity to charge monopoly prices—at least for a short period—is what attracts ‘business acumen’ in the first place.”
This approach is highly troubling. For one thing, it flips the historical purpose of antitrust law— protecting market players (consumers, rivals, and sellers) from the threat of a monopoly that crushes competition—on its head. The Congresses that enacted the antitrust laws expressed three central purposes for these statutes: protecting consumers and producers from powerful corporations, maintaining open markets, and dispersing private economic and political power. Gorsuch’s opinion in Four Corners replaces these purposes with the goal of luring people into business with the promise of establishing a monopoly.
Another problem with that reasoning is that it flies in the face of reality: The vast majority of businesses undertake productive investment with little or no hope of ever obtaining a monopoly. The future prospect of monopoly plays at best a modest role in driving investment, and is largely confined to certain products entitled to patent protection, such as breakthrough pharmaceutical drugs.
Gorsuch’s antitrust philosophy is exemplified in his opinion in another case, Novell v. Microsoft. Novell sued Microsoft, alleging that the software giant broke a promise to share the technology necessary for Novell to produce a word processing program compatible with Windows 95. Novell claimed Microsoft did so in order to favor its own software, Microsoft Word.
Not only did Gorsuch rule against Novell, but he went on to impose a near-impossible burden on antitrust plaintiffs. He held that Microsoft could not be found liable unless it was proved to have sacrificed short-term profits in its exclusionary campaign against Novell. That decision created a remarkably lenient standard that essentially allows monopolists to use their power to marginalize competitors so long as they can show they made money in the process.
At a time when the public has serious and growing concerns about the power of platform monopolists such as Amazon, Facebook, and Google, Gorsuch’s decision in Novell gives these titans broad power to squelch rivals and to extend their existing monopolies into adjacent markets. In his opinions, Gorsuch goes further than most of his judicial peers in his deference to monopoly and disregard for Congress’s original goals.
Another issue that the Senate should investigate further is Gorsuch’s position on the so-called state action doctrine, which protects states and private parties acting subject to state authorization and supervision, from lawsuits alleging anticompetitive behavior. For instance, a state optometry association that is authorized by law to establish credentialing requirements for optometrists, and supervised by state regulators, would likely be immune from antitrust attack.
Gorsuch has only issued one opinion on the state-action doctrine, and in that case, he reached the right result. The Senate should find out, however, whether he intends to limit the doctrine, which could allow antitrust law to be used to target occupational licensing rules that protect consumers and promote higher wages and stable employment for workers. There is precedent for just such a legal strategy. At the turn of the 20th century, the judiciary limited the use of the antitrust laws against monopoly and mergers, while permitting these laws to be used against workers and farmers organizing for fairer wages and prices and safer working conditions. In response, Congress in 1914 passed the Clayton Antitrust Act and established the Federal Trade Commission to give the federal government the power to check concentrated private power and preserve competitive markets.
In fact, the founders of the modern antitrust regime in America went even further, and made clear that they saw monopoly and oligopoly as a direct threat to democracy and personal liberty. In 1914, in language that should resound widely in today’s era of Google and Amazon, Senator Albert Cummins of Iowa said that the goal of creating the FTC was to avoid “the surrender of the individual [and] the subjugation of a great mass of people to a single master mind.”
Gorsuch’s record on antitrust law is limited but discouraging. Thus far, he has displayed no awareness of how concentrated economic power concentrates political power. He ignores the effects of monopoly on competitors and open markets. If a monopolist uses its muscle to exclude smaller rivals, this marginalization concerns the courts only if consumers are hurt in the short term by, for instance, higher prices—and even then under only very limited circumstances.
The power of large corporations is systemic and extends beyond a particular market at a particular point in time. Monopolistic and oligopolistic businesses have the power to manipulate our politics and shape our society through campaign contributions, control of the media, funding of higher education and research, and lobbying. Judge Gorsuch’s opinions suggest that he is not worried about these manifestations of corporate supremacy.
At a moment of historic economic and political inequality in America, it would be a grave mistake to ignore Gorsuch’s pro-monopoly views. There is increasing awareness of economic concentration, the link between corporate power and inequality, and the deficiencies of the antitrust status quo. In light of these concerns, Senators should make it a priority to demand that he fully explain his views on how antitrust and competition policy intersect with American democracy. In particular, they should learn whether Gorsuch, like Justice Scalia, would push the law in a direction that further concentrates power and wealth among a few, rather than protecting and restoring competitive markets that spread affluence and opportunity broadly.