The Sherman Act is a No-Fault Monopolization Statute: A Textualist Demonstration

70 Am. U. L. Rev. 497 (2020).

* Venable Professor of Law, University of Baltimore School of Law. The authors especially thank William Kovacic, James May and Alan J. Meese for an extraordinary number of wise and thoughtful suggestions, and also Neil Averitt, John Bessler, Peter Carstensen, Wayne D. Collins, Einer Elhague, Albert Foer, Shubha Ghosh, Warren Grimes, Jay L. Himes, Herbert Hovenkamp, John B. Kirkwood, William H. Page, D. Daniel Sokol, Randy Stutz, Sandeep Vaheesan, Marc Winerman, participants at the University of Pennsylvania Oct. 11, 2019 symposium on “The Post-Chicago Antitrust Revolution,” participants in the Cambridge-Florida Antitrust virtual Antitrust workshop Nov, 5, 2020, and colleagues on the Faculty of the University of Baltimore School of Law, for extremely valuable, wise, and thoughtful suggestions. All of the opinions expressed and mistakes made in this article are solely those of the authors. The authors also thank Beatrice Bremer, Cassandra Brumback, Michael Hart, Michael Hornzell, Nicholas Jordan and Harvey Morrell for excellent research assistance.

^ Daniel J. Evans Distinguished Professor Emeritus, The Evans School, University of Washington; Adjunct Professor Emeritus, The University of Washington Law School.

Abstract

The drafters of the Sherman Act originally designed Section 2 to impose sanctions on all monopolies and attempts to monopolize, regardless whether the firm had engaged in anticompetitive conduct. This conclusion emerges from the first ever textualist analysis of the language in the statute, a form of interpretation originally performed only by Justice Scalia but now increasingly used by the Supreme Court, including in its recent Bostock decision.

Following Scalia’s methodology, this Article analyzes contemporaneous dictionaries, legal treatises, and cases and demonstrates that when the Sherman Act was passed, the word “monopolize” simply meant that someone had acquired a monopoly. The term was not limited to monopolies acquired or preserved through anticompetitive conduct. A textualist analysis accordingly suggests that Section 2 should be applied to impose liability and corrective remedies on all monopolies and attempts to monopolize.

A textualist approach to statutory construction would not imply or create unstated exceptions. Since Section 2 of the Sherman Act contains no explicit exception for a monopoly acquired or preserved without proof of anticompetitive conduct, none should be implied or created. Current case law requiring plaintiffs to prove the corporation involved engaged in improper conduct should be overturned.

This Article also briefly analyzes the practical economic implications likely to follow if the courts adopt a “no-fault” approach to monopolization law. This analysis will demonstrate that the overall economic effects will be uncertain. They will depend upon empirical issues whose net effect is speculative or ambiguous. They nevertheless are likely to be beneficial on the whole, and this provides some support for the no-fault position, and a fortiori demonstrate that the Article’s textualist conclusions should be implemented.

Imposing sanctions on all extremely large monopolies could improve economic welfare in many ways. This should increase innovation and international competitiveness. It should prevent the allocative inefficiency effects of monopoly pricing and the form of exploitation that arises when monopolies acquire wealth from consumers. It would be likely to decrease the inefficiencies that result from monopolies enjoying a “quiet life.” It should avoid the waste that can arise as a firm struggles to attain and protect its monopoly, and some of the time and cost of Section 2 litigation. It should improve privacy and decrease income inequality.

The new standard would admittedly also cause some costs and difficulties. For example, imposing sanctions on all monopolies could sometimes send a confusing or perverse signal to firms engaging in hard but fair competition, especially as a firm’s market share neared the ambiguous level required for a violation. No-fault liability could also enable competitors to file baseless lawsuits. The transaction costs involved in imposing sanctions on monopolies could be significant. It also could lead to difficult remedy issues in cases involving natural and patent monopolies. We believe, however, that the benefits of no-fault are likely to outweigh the costs.

Textualism has been used in more and more Supreme Court analyses in recent years. Moreover, there recently have been many calls, from very different parts of the political spectrum, for imposing sanctions on extremely large monopolies without inquiring into whether the firm engaged in anticompetitive conduct. This issue has not, however, been analyzed seriously either from a legal or an economic perspective in roughly a half century.

The purpose of this Article is not to resolve all of the relevant questions. Its goal is to re-kindle debate about the legal and economic issues involved in imposing sanctions on all monopolies and attempts to monopolize under the Sherman Act and also, a fortiori, under Section 5 of the FTC Act. And to demonstrate that its textualism-derived conclusions constitute reasonable policy options.

Introduction

Section 2 of the Sherman Act¹ originally was designed to impose sanctions on all monopolies and attempts to monopolize, regardless whether the firm engaged in anticompetitive conduct.² This conclusion emerges from the first ever textualist³ analysis of the language in the statute, a form of interpretation originally performed only by Justice Scalia⁴ but now increasingly used by the Supreme Court, including in its recent Bostock v. Clayton County⁵ decision.⁶

Using Scalia’s approach, this Article analyzes contemporaneous dictionaries, legal treatises, and cases,⁷ and demonstrates that when Congress passed the Sherman Act, the word “monopolize” simply meant that someone had acquired a monopoly. The term was not limited to monopolies acquired or preserved through anticompetitive conduct. A textualist analysis accordingly suggests that Section 2 should be applied to impose liability and corrective remedies on all monopolies regardless of “fault.”⁸

This textualist analysis also will show that when courts use the Sherman Act to impose sanctions on firms that “monopolize[] or attempt to monopolize,”⁹ because the statute contained no exceptions for firms that did not engage in anticompetitive conduct,¹⁰ contrary case law should be overturned.¹¹

Recent events have transformed this issue into a timely antitrust topic.¹² Prominent politicians on both the left¹³ and right¹⁴ have called not just for an investigation into whether important alleged large monopolies, including Facebook, Amazon, Apple, and Google, have engaged in anticompetitive conduct. Senators Sanders and Warren, for example, have bluntly said that these “monopolies” should be broken up.¹⁵ They have called for the implementation of no-fault monopolization.¹⁶

This Article will re-examine the appropriateness of the current legal standards for what often is called “no-fault monopolization.”¹⁷ It will demonstrate that Justice Scalia’s opinion in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP,¹⁸ which clarified relevant case law and emphatically held that fault is required for a Section 2 violation,¹⁹ was wrongly decided. This Article will show how Trinko and other cases should have been decided if textualism were applied to Section 2 cases, and that these cases should have had no-fault results.

As background and by contrast, this Article in Part I will first engage in a traditional or “purposivist” analysis of Section 2 of the Sherman Act, relying upon the law’s legislative history. As Part II will then explain, a textualist analysis instead determines the meaning of a law by examining key statutory words and terms as they were used in contemporaneous dictionaries, legal treatises, prior cases, and the earliest cases that followed the enactment of the law.²⁰ Every method of statutory construction starts with the words of the statute, but textualism ignores the legislative debates and committee reports that are central to a traditional approach to statutory analysis.²¹ It does not attempt to discern what Congress “intended to do” other than by examining the words and phrases in the statute.²² Moreover, under a textualist analysis, as Justice Scalia emphasized, no exception can be read into a law unless it is explicitly contained in the statute.²³

Textualism is a relatively new method of statutory analysis. Until relatively recently, it was not even employed by most conservative legal scholars. Perhaps for this reason, before now, no one has undertaken a textualist analysis of Section 2 of the Sherman Act to determine whether it requires anticompetitive conduct.²⁴ This Article undertakes this task in Part III, which demonstrates that Congress intended the Sherman Act to impose sanctions on all monopolies and attempts to monopolize.

Part IV will then discuss the relevant Supreme Court Sherman Act jurisprudence and other cases where the Supreme Court dramatically re-interpreted statutes after a long period. It shows that, despite current case law, the Court should similarly re-interpret the Sherman Act and hold that it imposes sanctions on all monopolies and attempts to monopolize.

Part V will briefly discuss a half-century of evolving economic thinking about the costs and benefits of this issue. This Part shows that the economic effects will be uncertain and dependent upon empirical issues whose net effect is speculative or ambiguous. They nevertheless are likely to be beneficial on the whole, and they provide some support for the no-fault position, and a fortiori demonstrate that the Article’s textualist conclusions should be implemented.²⁵

No-fault could improve economic welfare in many ways. It should increase innovation and international competitiveness.²⁶ It should prevent the allocative inefficiency effects of monopoly pricing and the form of exploitation that arises when monopolies acquire wealth from consumers.²⁷ It would be likely to decrease the inefficiencies that result from monopolies enjoying a “quiet life,”²⁸ and also the waste that arises as firms attain and protect their monopolies.²⁹ It should reduce the time and costs of Section 2 litigation.³⁰ It should improve privacy and decrease income inequality.³¹

The new standard would admittedly also cause some costs and difficulties. For example, imposing sanctions on all monopolies could sometimes send a confusing or perverse signal to firms engaging in hard but fair competition, especially as a firm’s market share neared the ambiguous level required for a violation.³² It could enable competitors to file baseless lawsuits.³³ The transaction costs involved in imposing sanctions on monopolies could be significant.³⁴ It also could lead to difficult remedy issues in cases involving natural and patent monopolies.³⁵ We believe, however, that the benefits of no-fault are likely to outweigh the costs.

Part VI will discuss the effects this article’s conclusions should have on case outcomes under the “monopolize[] or attempt to monopolize” portions of Section 2 of the Sherman Act. It will also very briefly discuss no-fault monopolization as a violation of Section 5 of the Federal Trade Commission (“FTC”) Act.³⁶

The concluding Part of this Article takes into account the rising influence of textualist analysis and calls for a debate into the legal and economic issues likely to arise from a textualist analysis of Section 2 and its no-fault conclusion. This Part argues that because the article’s textualist analysis results in a “non-absurd”—and in fact quite reasonable—policy option, it should be adopted and implemented by the courts.

I. A Traditional or Purposivist Legislative History Approach: Using Congressional Debates and Committee Reports

To better explain and to highlight by contrast this article’s textualist analysis,³⁷ this Part will undertake a traditional (sometimes called “purposivist”³⁸) legislative history analysis of Section 2 of the Sherman Act, one that (as is not the case for a textualist analysis) examines the relevant legislative debates and committee reports.³⁹ This was the most common method of statutory analysis until relatively recently and was universally used by both conservatives and liberals.⁴⁰ Like every method of statutory analysis, it starts with the words and phrases used in the statute, but—crucially—it supplements this with an analysis of the relevant legislative debates and committee reports.⁴¹ As this Part will demonstrate, however, a traditional analysis of Section 2 on the no-fault issue produces an inconclusive result.

There appears to be only one reference in the Sherman Act legislative debates or committee reports that is relevant to the question of whether Section 2 requires anticompetitive conduct.⁴² It is part of an exchange that took place at the very end of the debates. Senator John Kenna asked:

Is it intended by the committee, as the section seems to indicate, that if an individual . . . by his own skill and energy, . . . shall pursue his calling in such a way as to monopolize a trade, his action shall be a crime under this proposed act? . . . Suppose a citizen of Kentucky is dealing in shorthorn cattle and by virtue of his superior skill in that particular product it turns out that . . . he is conceded to have a monopoly of that trade with Mexico; is it intended by the committee that the bill shall make that man a culprit?⁴³

Senator George Edmunds gave a direct response to Senator Kenna’s hypothetical:

[I]n the case stated the gentleman has not any monopoly at all . . . . He has not got the possession of all the horned cattle in the United States. He has not done anything but compete with his adversaries in trade, if he had any, to furnish the commodity for the lowest price. So I assure my friend he need not be disturbed upon that subject.⁴⁴

Senator Edmund’s response indicates that he believed that no monopolization was involved in the hypothetical, so he did not really consider the need for an exception for a firm that achieved its monopoly solely by superior skill. Senator George Hoar then gave his answer:

[I]n the case put by [Senator Kenna, if] a man who merely by superior skill and intelligence . . . got the whole business because nobody could do it as well as he could was not a monopolist, [unless] it involved something like the use . . . [of unfair] competition like the engrossing, the buying up of all [rivals].⁴⁵

Senator Edmunds then provided the final answer to Senator Kenna’s question:

I have only to say . . . that this subject was not lightly considered in the committee, and that we studied it with whatever little ability we had, and the best answer I can make to both my friends is to read from Webster’s Dictionary the definition of the verb “to monopolize”: 1. To purchase or obtain possession of the whole of, as a commodity or goods in market, with the view to appropriate or control the exclusive sale of; as, to monopolize sugar or tea. Like the sugar trust. One man, if he had capital enough, could do it just as well as two. 2. To engross or obtain by any means the exclusive right of, especially the right of trading to any place, or with any country or district; as, to monopolize the India or Levant trade . . . . [W]e were not blind to the very suggestions which have been made, and we thought we had done the right thing in providing, in the very phrase we did, that if one person instead of two, by a combination, of one person alone, as we have heard about the wheat market in Chicago, for instance, did it, it was just as offensive and injurious to the public interest as if two had combined to do it.⁴⁶

The Sherman Act, making it illegal to “monopolize” or “attempt to monopolize,” was then passed by the Senate.⁴⁷

It is difficult to reconcile the statements of Senators Edmunds and Hoar. They appear to have been defining the markets differently.⁴⁸ Senator Edmunds was discussing a large cattle sale to Mexico while Senator Hoar was discussing all of the cattle in the U.S.⁴⁹

Alternatively, Senators Edmunds and Hoar may have provided different answers to Senator Kenna’s question. Senator Hoar did not consider a firm to be guilty of “monopolization” if it “got the whole business” by skill and efficiency alone.⁵⁰ Senator Edmunds, however, defined “to monopolize” as merely “[t]o engross or obtain by any means.”⁵¹ Senator Edmunds believed that “if one person . . . did it, it was just as offensive and injurious to the public interest as if two had combined to do it.”⁵² Edmunds clearly condemned every monopoly, although by his first response he did not consider the hypothetical situation given to describe a monopoly.⁵³

These contradictory statements should be construed as offsetting one another, and Edmunds’s statement shows the issue was considered but did not result in a change in statutory language.⁵⁴ Thus, there is no evidence of a clear intent of Congress that anticompetitive conduct is required for a Section 2 violation. Nevertheless, if a judgment had to be made, since Senator Edmunds spoke last and he was one of the main drafters and sponsors of the bill,⁵⁵ his statements could carry greater weight. Perhaps this dialogue may constitute some support for the no-fault interpretation. Moreover, the fact that this discussion took place at the very end of the Sherman Act debate also could very well mean that it embodied Congress’s final view on the subject. Perhaps Senator Edmunds’s opinion, for this reason also, should be given even more weight. Alternatively, one could conclude that because these remarks were given so late in the debates, these statements by Senator Sherman or other legislators were less able to correct or oppose these statements, so perhaps they should carry less weight.

In summary, a conventional legislative history analysis of the issue does not give a clear indication of congressional intent.

II. A Textualist Analysis⁵⁶

A. Defining a Textualist Analysis: What Would Justice Scalia Do?

Justice Scalia long was the chief advocate of a method of interpreting legislation known as the “textualist,” fair meaning, ordinary meaning, or plain meaning approach.⁵⁷ He often was joined in this methodology by other Supreme Court Justices,⁵⁸ and Justice Neil Gorsuch recently told the Federalist Society he has become Scalia’s successor:

[A] person can be both a publicly committed originalist and textualist and be confirmed to the Supreme Court of the United States. Originalism has regained its place at the table of constitutional interpretation, and textualism in the reading of statutes has triumphed. And neither one is going anywhere on my watch.⁵⁹

Justice Scalia expressly rejected the use of such traditional legislative history sources as the debates in Congress and the reports of congressional committees.⁶⁰ He explained:

In any major piece of legislation, the legislative history is extensive, and there is something for everybody. As Judge Harold Leventhal used to say, the trick is to look over the heads of the crowd and pick out your friends. The variety and specificity of result that legislative history can achieve is unparalleled.⁶¹

He explained further:

Why would you think this [material—the legislative debates and committee reports—] is an expression of the legislature’s intent? And the more you use that garbage, the less accurate it is . . . . [O]ne of . . . the major[] functions of . . . hot shot Washington lawyers is drafting legislative history. You send it up to the [H]ill, and get a friendly Senator to read it into the record or something else, to change the meaning of the text that’s adopted. So, you know, . . . it’s crazy.⁶²

Instead, Justice Scalia attempted to ascertain the “fair meaning” of the text of statutes by making extensive use of such material as roughly contemporaneous dictionaries and legal decisions to define key terms.⁶³ Justice Scalia also examined the country’s history at approximately the time of the legislation and the legislation’s societal context to help define the particular words or phrases in the statutes.⁶⁴

If Justice Scalia’s textualist analysis were applied to the Sherman Act, neither its congressional debates nor the committee reports would be analyzed.⁶⁵ A textualist analysis would, by contrast, undertake a number of inquiries to ascertain what the statute “originally” and “fairly” meant.⁶⁶ To do this, the inquiry would examine:

The definitions of the key terms in dictionaries (Justice Scalia seems especially interested in the definitions of key words in contemporary dictionaries⁶⁷), legal dictionaries, and legal treatises that existed when these laws were passed. Ideally, we would find and analyze sources defining these terms as close as possible to when the Sherman Act was passed.⁶⁸
English common law cases from before 1890 to determine whether the federal antitrust statutes borrowed key terms from the common law and, if so, what they meant in common law decisions.⁶⁹ We could also make inferences from state antitrust statutes that existed when the federal antitrust laws were passed, and their interpretations in courts, in case the federal laws borrowed key terms from a state statute.⁷⁰
The use of key terms in federal antitrust cases from the 1890s to help determine “what people thought [the statute] meant immediately after its enactment.”⁷¹
The “history of the times.”⁷² It would use the history of the period producing the antitrust laws to help ascertain what Congress meant when it used terms like “monopolize” or “attempt to monopolize” in the Sherman Act.
A textualist analysis would not imply or invent any exemptions that are not plainly evident in the words of the statutes.⁷³ If an antitrust law contains an explicit exemption then of course that exemption would be respected. But no non-explicit exemptions would be inferred in order to achieve some overall goal or purpose of the statute.⁷⁴
A textualist interprets language fairly, ordinarily and reasonably, but not “literally.” Justice Scalia said that “the good textualist is not a literalist.”⁷⁵ Scalia and Garner explain that the “notion that words should be strictly construed” is untrue.⁷⁶ They quote Justice Frankfurter: “Literalness may strangle meaning.”⁷⁷ As Justice Brett Kavanaugh observed in Bostock, “courts must follow ordinary meaning, not literal meaning.”⁷⁸
A textualist tries very hard not to reach an “absurd” conclusion. The “absurdity doctrine” means that no statute should be interpreted in an absurd manner.⁷⁹ Justice Scalia adopted a narrow version of this doctrine that would limit it to technical or drafting errors.⁸⁰

These textualist rules of statutory interpretation do not, of course, mean every textualist will always interpret key words and terms identically. Indeed, as Jonathan Skrmetti observed, “the three [Supreme Court] Bostock opinions are a master class in defining and applying textualism.”⁸¹

B. Neither Justice Scalia Nor Anyone Else Has Performed a Textualist Analysis of the Relevant Sherman Act Terms

Unfortunately, neither Justice Scalia nor anyone else has ever performed a textualist analysis of any of the antitrust laws on the no-fault issue. Justice Scalia authored five antitrust opinions,⁸² three concurrences,⁸³ and three dissenting⁸⁴ opinions in antitrust cases. Most do not even come close to undertaking a textualist analysis of the no-fault issue.⁸⁵ Nevertheless, some are instructive illustrations of textualist analysis.

For example, in Hartford Fire Insurance Co. v. California,⁸⁶ Justice Scalia, writing for the majority in part and dissenting in part, performed a textualist analysis of the term “boycott” as it was used in the McCarran-Ferguson Act⁸⁷ exception to the antitrust laws:

Determining proper application of [section] 3(b) of the McCarran–Ferguson Act to the present cases requires precise definition of the word “boycott.” It is a relatively new word, little more than a century old. It was first used in 1880, to describe the collective action taken against Captain Charles Boycott, an English agent managing various estates in Ireland . . . . Thus, the verb made from the unfortunate Captain’s name has had from the outset the meaning it continues to carry today. To “boycott” means “[t]o combine in refusing to hold relations of any kind, social or commercial, public or private, with (a neighbour), on account of political or other differences, so as to punish him for the position he has taken up, or coerce him into abandoning it.”⁸⁸

Justice Scalia then used the Webster’s Dictionary definition to resolve a key legal dispute.⁸⁹ This is significant because it illustrates Justice Scalia’s use of a roughly contemporaneous dictionary definitions (he used a 1950 dictionary to define a term in a 1946 law), a technique that will be discussed below.

The Scalia opinion that would have been most likely to have undertaken the relevant textualist analysis was Trinko because the case involved the core meaning of Section 2 of the Sherman Act.⁹⁰ Unfortunately, Justice Scalia’s opinion did not undertake a textualist analysis of the overall meaning of Section 2. He instead simply cited precedent—the United States v. Grinnell Corp.⁹¹ case—for his assertion that the Sherman Act contains an exception for a monopolist that gains its monopoly through historical accident or superior efficiency.⁹²

Justice Scalia extensively analyzed the term “restraint of trade” in Business Electronics Corp. v. Sharp Electronics Corp.⁹³ using a common-law based textualist analysis,⁹⁴ but he was not examining the no-fault issue. Rather, he distinguished the idea of a “restraint of trade” from the understanding of which specific business practices restrained trade.⁹⁵ His opinion considered the common law antecedents of modern antitrust law but did not involve the no-fault issue.⁹⁶

Finally, although it did not discuss the issue of no-fault monopoly, it is instructive that in a concurring opinion in Texaco Inc. v. Hasbrouck,⁹⁷ a Robinson-Patman Act⁹⁸ case, Justice Scalia wrote:

The language of the Act is straightforward: Any price discrimination whose effect “may be substantially . . . to injure, destroy, or prevent competition” is prohibited, unless it is immunized by the “cost justification” defense, i.e., unless it “make[s] only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which [the] commodities are . . . sold or delivered.” There is no exception for “reasonable” functional discounts that do not meet this requirement.⁹⁹

This textualist discussion is noteworthy because it affirms the “fair or ordinary reading” conclusion that no exception should be implied in the law unless it is explicitly a part of the statute. This will be important infra Section II.B.3 during the discussion of whether Section 2 of the Sherman Act actually contains an “exception” for monopolies attained by superior efficiency.

Justice Gorsuch has written one Supreme Court opinion¹⁰⁰ and three Circuit Court opinions that substantively address Section 2 of the Sherman Act.¹⁰¹ None perform a textualist analysis of the no-fault issue. The majority opinion in Apple Inc. v. Pepper¹⁰² does include a textualist analysis by Justice Kavanaugh, but it concerns the statute’s language concerning a plaintiff’s right to sue, not the issue of no-fault monopoly.¹⁰³

III. A Textualist Analysis of Section 2 Demonstrates It Does Not Require Fault

A. A Textualist Analysis of “Monopolize”

A Justice Scalia-inspired textualist analysis of the Sherman Act’s approach to the no-fault issue leads to a startling result: courts should interpret Section 2 to impose sanctions on all monopolies, not just monopolies acquired by anticompetitive conduct. The Sherman Act should not contain an exception for efficient monopolists.

Section 2 of the Sherman Act prohibits anyone who shall “monopolize[] or attempt to monopolize.”¹⁰⁴ The statute never defines “monopolize,”¹⁰⁵ and uses it in place of the more straightforward term “monopoly.” Did Congress intend “monopolize” to mean the same thing as “monopoly,” or was it meant to be a broader or narrower term, or simply to be different?

The Act’s preamble does use the term “monopolies,” calling the statute “[a]n act to protect trade and commerce against unlawful restraints and monopolies.”¹⁰⁶ It is unclear, however, whether “unlawful” modifies only “restraints,” in which case the words of the preamble would tend to condemn all monopolies, or whether “unlawful” also modifies “monopolies,” which would be ambiguous. It could mean that all monopolies are illegal, or that some monopolies are legal.

The overriding question is of course whether the statute’s prohibition against firms that “monopolize” or “attempt to monopolize” was intended to encompass only the subset of cases that created a monopoly through anticompetitive means—the current legal requirement for a Section 2 violation.¹⁰⁷ As the next Sections will demonstrate, a “fair meaning” or textualist approach to Section 2 leads to a simple conclusion: a firm illegally “monopolizes” if it was a monopoly at the time of the suit, and it engages in an illegal “attempt to monopolize” if it was in the process of seriously attempting to acquire a monopoly. The statute contains no exception for a monopoly acquired through superior efficiency.¹⁰⁸

1. Roughly contemporaneous dictionaries

As noted earlier, Justice Scalia was especially interested in the definitions of key terms in contemporary dictionaries.¹⁰⁹ Scalia and Garner believe that six dictionaries of the 1851 to 1900 period are “useful and authoritative.”¹¹⁰ We have checked all six for definitions of “monopolize” and have also checked other dictionaries, including the Oxford English Dictionary, which Scalia and Garner believe to be useful and authoritative even though it is from 1908. As will be seen, the principle definition of each for “monopolize” was simply that a firm had acquired a monopoly. None require anticompetitive conduct for a firm to “monopolize” a market.

The then-highly esteemed¹¹¹ 1897 edition of Century Dictionary and Cyclopedia¹¹² defined “monopolize” as: “1. To obtain a monopoly of; have an exclusive right of trading in: as, to monopolize all the corn in a district . . . . 2. To obtain or engross the whole of; obtain exclusive possession of. ‘As if this age had monopolized all goodness to itself.’”¹¹³

Serendipitously, a definition of “monopolize” was given in a dictionary that Scalia and Garner believed to be useful and authoritative that was cited during the Sherman Act’s legislative debates, just before the final vote on the Bill.¹¹⁴ As noted in Part I above, Senator Edmunds cited a dictionary to define the term “monopolize.” Although normally a textualist would not care about anything uttered during a congressional debate, Senator Edmund’s remarks surely should be significant to a textualist because his remarks help a textualist do exactly what Justice Scalia said we should do: use a dictionary to define and demonstrate what Congress was doing when it decided to use the term “monopolize” in the Sherman Act. When Senator Edmunds noted the meaning of “monopolize” as it was used in a contemporary Webster’s Dictionary his remarks should be examined not as legislative history, but rather as a piece of evidence as to common linguistic usage in 1890:

[T]he best answer I can make to both my friends is to read from Webster’s Dictionary the definition of the verb “to monopolize”: 1. To purchase or obtain possession of the whole of, as a commodity or goods in market, with the view to appropriate or control the exclusive sale of; as, to monopolize sugar or tea . . . . 2. To engross or obtain by any means the exclusive right of, especially the right of trading to any place, or with any country or district . . . .¹¹⁵

This again shows that “monopolize” primarily and fairly meant to acquire a monopoly.¹¹⁶ The definition was not restricted to acquisitions of monopoly through anticompetitive conduct.¹¹⁷ It was, moreover, essentially the same as the definitions in the 1828,¹¹⁸ 1898,¹¹⁹ and 1913¹²⁰ editions of Webster’s Dictionary.

The first edition of the Oxford English Dictionary¹²¹ containing the definition of “monopolize” was published in 1908 (not too long after 1890 and which therefore might be an accurate guide to usage when the Sherman Act was passed): “1 . . . . To get into one’s hands the whole stock of (a particular commodity); to gain or hold exclusive possession of (a trade); to engross . . . . To have a monopoly. . . . 2 . . . . To obtain exclusive possession or control of; to get or keep entirely to oneself.”¹²² Not only does the Oxford English Dictionary equate “monopolize” with “monopoly,” but nowhere does this definition mention a requirement that a monopolist must have engaged in anticompetitive conduct.¹²³

These definitions are in relevant part identical to the definitions in four other dictionaries of the period considered reliable by Scalia and Garner¹²⁴ and in five other roughly contemporaneous dictionaries as well.¹²⁵ In sum, all of the surveyed roughly contemporaneous dictionaries define “monopolize” as simply to gain a monopoly.¹²⁶ Some definitions included “with a view of” selling the goods at a higher price—language that could perhaps create an exception for an accidental monopolist (assuming they ever exist).¹²⁷

Since many of these dictionaries gave “engross” as one of the ways in which a firm could become a monopoly, it is worth noting that this term had a similar, but more specific, meaning than “monopolize”. For example, the 1897 Century Dictionary and Cyclopedia defined “engross” as:

To monopolize the supply of, or the supplies in; get entire possession or control of, for the purpose of raising prices and enhancing profits: as, to engross the importations of tea; to engross the market for wheat . . . . To occupy wholly; take up or employ entirely, to the exclusion of other things: as, business engrosses his attention or thoughts; to be engrossed in study.¹²⁸

Indeed, the five other dictionaries of the period that Scalia and Garner considered useful and authoritative defined “engross” similarly—as simply to obtain a monopoly. None of these dictionaries required otherwise anticompetitive conduct as a part of engrossing (except of course for the very act of obtaining a monopoly).¹²⁹ By analogy, to “engross” is similar to the modern idea of acquiring a monopoly through merger. If one meaning of “monopolize” in Section 2 is to “engross,” then the statute specifically prohibited attaining a monopoly through merger.

Crucially, none of the definitions of “monopolize” specifically require any conduct that we would today characterize as anticompetitive. A few definitions did give specific examples of how a firm might become a monopoly by anticompetitive means, or by engrossing (which is similar to merging), and some used a phrase like “controlling the market” which is ambiguous as to whether anticompetitive conduct must be involved.¹³⁰ Crucially, however, none of these dictionaries exempted efficient monopolists from the term “monopolize” or specifically restricted the definition of “monopolize” to a monopoly gained by anticompetitive conduct. All of the dictionary definitions of the period therefore support a no-fault characterization of Section 2.

2. Roughly contemporaneous legal dictionaries and legal treatises

We did not find “monopolize” defined in any of the eight 1851 to 1900 legal dictionaries and treatises characterized by Scalia and Garner as “useful and authoritative.”¹³¹ The only available contemporary legal treatise that define “monopolize” contain virtually the same definition of the term as was found in the dictionaries of the period. This can be seen in Green’s legal treatise from 1889, which itself cited Webster’s dictionary:

To monopolize, as defined by Webster, is, 1. To purchase or obtain possession of the whole of any commodity or goods in the market, with the view of selling them at advanced prices, and of having the power to command the prices. 2. To engross or obtain by any means the exclusive right of trading to any place, and the sole power of vending any commodity or goods in a particular place or country.¹³²

See also the “useful and authoritative” 1897 edition of Bouvier’s Law Dictionary, which did not directly define “monopolize” but effectively defined the term when it discussed a related term, “forestalling the market” in a manner that did not require anticompetitive conduct:

In the United States forestalling the market takes the form of “corners” or of “trusts,” which are attempts by one person or a conspiracy or combination of persons to monopolize an article of trade or commerce, or to control or regulate, or to restrict its manufacture or production in such a manner as to enhance the price.¹³³

Other roughly contemporaneous legal dictionaries such as Black’s Law Dictionary defined “engrossing”¹³⁴ and “monopoly,” but not “monopolize.”¹³⁵ None of these definitions required a monopoly to have been formed in part or in whole through the use of anticompetitive conduct.

3. Roughly contemporaneous antitrust cases

Pre-Sherman Act common law antitrust cases must be interpreted with caution because the legal standards were changing. As Professor Letwin concluded:

[A]s a federal judge observed . . . [in 1892,] the English common law on monopolies had for some years been drifting toward greater leniency while “in the United States there is a tendency to revive, with the aid of legislation, the strict rules of the common law against all forms of monopoly or engrossing.”¹³⁶

Moreover, the pre-Sherman Act common law antitrust cases are of limited relevance because we found only one that used the term “monopolize” (it did so in a manner consistent with a no-fault approach).¹³⁷ Some common law cases stated that if entry was easy, a firm could not be a “monopoly,”¹³⁸ but others did not.¹³⁹

The Supreme Court decided six Sherman Act cases in the decade after the law went into effect.¹⁴⁰ The overriding lesson of these cases is that these opinions are not helpful in determining whether “monopolize” in Section 2 requires anticompetitive conduct. The lower court decisions of the period sometimes did, however, require anticompetitive conduct.¹⁴¹

It should, however, be instructive that these very early Supreme Court cases sometimes used the terms “monopolize” and “monopoly” interchangeably.¹⁴² Although none of the early Supreme Court cases explicitly said that Section 2 did not require anticompetitive conduct, by equating these two terms, they implicitly support a no-fault approach.

For example, United States v. E.C. Knight Co.¹⁴³ was concerned with firms that became a “monopoly” and implied that the Sherman Act regulated every monopoly.¹⁴⁴ Significantly, the Court characterized the defendant as a “monopoly” that had “monopolized,” even though it only had 98% of the market.¹⁴⁵ The Court also held that “all the authorities agree that in order to vitiate a contract or combination it is not essential that its result should be a complete monopoly, it is sufficient if it really tends to that end and to deprive the public of the advantages which flow from free competition.”¹⁴⁶ In this expansive holding, the Court thus held that a company violated Section 2 by simply being a monopoly, and that it did not need to have 100% of the relevant market.¹⁴⁷

Most of the other early Supreme Court cases, such as United States v. Trans-Missouri Freight Ass’n,¹⁴⁸ Anderson v. United States,¹⁴⁹ and Addyston Pipe & Steel Co. v. United States,¹⁵⁰ also appeared to use the terms “monopolize” and “monopoly” interchangeably.¹⁵¹ The remaining early cases, United States v. Joint Traffic Ass’n¹⁵² and Hopkins v. United States,¹⁵³ were silent on the issue. In addition, Standard Oil Co. of New Jersey v. United States¹⁵⁴ and the cases it cited, like E.C. Knight, seemed to use the term “monopoly” to even include markets where the defendant did not possess 100% of the market.¹⁵⁵

If these very early Supreme Court cases had clearly stated that a monopolization violation required anticompetitive conduct (if they had stated, for example, that, “It is well established that the word ‘monopolize’ in Section 2 of the Sherman Act requires anticompetitive conduct for a violation”) we would have to reconcile these statements with the absence of an anticompetitive conduct requirement in the contemporary dictionary definitions of “monopolize.” But as Section IV.A below demonstrates, not until 1966 did the Supreme Court state in a relatively clear manner that Section 2 requires anticompetitive conduct.¹⁵⁶ All of this suggests or is at least consistent with a no-fault interpretation of Section 2 as it was drafted.

It might seem astonishing to many 21st century observers that in 1890, Congress passed a law that fairly should be read as being designed to impose sanctions on monopolies without inquiring into whether they engaged in anticompetitive conduct. This sentiment can, however, be seen today in the views of Senators Sanders, Warren, and others, who have called for the break-up of a large number of alleged monopolies, including Facebook, Google, and Amazon, without inquiring into whether they have engaged in anticompetitive conduct.¹⁵⁷ It should not be surprising that the no-fault sentiment existed at other points in our nation’s history as well.

B. A Textualist Analysis of “Attempt” To Monopolize

A textualist interpretation of Section 2 also should analyze the word “attempt” as it was used during the 1890 period to gain understanding as to what Congress meant by the “attempt to monopolize” offense. However, no unexpected or counterintuitive result comes from this examination. Around 1890 “attempt” had its colloquial 21st Century meaning. There was no requirement that an “attempt” to monopolize needed anticompetitive conduct.

The “useful and authoritative” 1897 Century Dictionary and Cyclopedia’s defines “attempt” thusly: “1. To make an effort to effect or do; endeavor to perform; undertake; essay: as, to attempt a bold flight . . . . 2. To venture upon: as, to attempt the sea.— 3. To make trial of; prove; test . . . . 4. To try with afflictions. 5. To endeavor to obtain or attract.”¹⁵⁸

The 1898 Webster’s Dictionary gives a similar definition:

Attempt . . . 1. To make trial or experiment of; to try. 2. To try to move, subdue, or overcome, as by entreaty. 3. To attack; to make an effort or attack upon . . . .’ An essay, trial, or endeavor; an undertaking; an attack, or an effort to gain a point.¹⁵⁹

The 1913 edition of Webster contains a similar definition.¹⁶⁰ These definitions are essentially identical to its modern definition of “attempt”.¹⁶¹ The 1888 Oxford English Dictionary similarly reads: “1. A putting forth of effort to accomplish what is uncertain or difficult; a trial, essay, endeavour; effort, enterprise, undertaking”.¹⁶²

However, the word “attempt” in a statute had a specific meaning under the common law circa 1890. It meant “an intent to do a particular criminal thing, with an act toward it falling short of the thing intended.”¹⁶³ Although one definition stated that the act needed to be “sufficient both in magnitude and in proximity to the fact intended, to be taken cognizance of by the law that does not concern itself with things trivial and small.”¹⁶⁴ None defined the magnitude or nature of the necessary acts with great specificity (indeed, this task might well be impossible). However, it is noteworthy that in 1881 Oliver Wendell Holmes wrote about the attempt doctrine in his celebrated treatise, The Common Law:

Eminent judges have been puzzled where to draw the line . . . the considerations being, in this case, the nearness of the danger, the greatness of the harm, and the degree of apprehension felt. When a man buys matches to fire a haystack . . . there is still a considerable chance that he will change his mind before he comes to the point. But when he has struck the match . . . there is very little chance that he will not persist to the end . . . .¹⁶⁵

It was clear, however, that acts constituting mere preparation or planning were insufficient.¹⁶⁶

Congress’s choice of the phrase “attempt to monopolize” surely built upon the existing common definitions of an “attempt” to commit robbery and other crimes.¹⁶⁷ It implies that Congress intended a meaning of “attempt to monopolize” different from the current requirements of the offense. Although the meaning of a criminal “attempt” to violate a law may have evolved since the common law formulations presented above,¹⁶⁸ a textualist approach to the “attempt to monopolize” prong of Section 2 would move it a considerable way back towards the common law approach to the “attempt” doctrine. Attempted monopolization should require the intent to take over a market, planning and preparation, and at least one serious act in furtherance of this plan. But attempted monopolization should not require anticompetitive conduct.

C. No Exceptions Should Be Implied for Monopolization or Attempts to Monopolize Not Accompanied by Anticompetitive Conduct

These definitions of “monopolize” and “attempt to monopolize” include all monopolies, even those acquired by luck or superior efficiency. Like the actual text of Section 2 of the Sherman Act, the definitions contain no exceptions.

Moreover, as Justice Scalia reminded us in Texaco Inc., no exception should be read into a statute unless, of course, it is explicitly contained in the statute.¹⁶⁹ Justice Gorsuch similarly noted in Bostock, “[U]nexpected applications of broad language reflect only Congress’s ‘presumed point [to] produce general coverage—not to leave room for courts to recognize ad hoc exceptions.’”¹⁷⁰ Moreover, one of the earliest antitrust cases, Trans-Missouri Freight Ass’n, explicitly held that no exceptions to the antitrust statutes should be implied:

[W]e are asked to read into the act by way of judicial legislation an exception that is not placed there by the lawmaking branch of the Government, and this is to be done upon the theory that the impolicy of such legislation is so clear that it cannot be supposed Congress intended the natural import of the language it used. This we cannot and ought not to do . . . . If the act ought to read as contended for by defendants, Congress is the body to amend it and not this [C]ourt, by a process of judicial legislation wholly unjustifiable.¹⁷¹

Since the text of Section 2 of the Sherman Act does not contain an express exemption for monopolies and attempts to monopolies unaccompanied by anticompetitive conduct, none should be implied or imposed by courts today.

IV. Cases Where the Supreme Court Has Dramatically Re-Interpreted a Statute After a Long Period

A. The Vagueness of Pre-Trinko Section 2 Law

There is no doubt that in 2004 the Supreme Court in Trinko clearly interpreted Section 2 of the Sherman Act as requiring that a firm engage in anticompetitive conduct to violate Section 2.¹⁷² Scalia’s majority opinion also contained much more praise for monopolies than had ever before appeared in a Supreme Court decision.¹⁷³ Moreover, many agree with Justice Scalia that clear opinions deserve more stare decisis deference than ambiguous opinions.¹⁷⁴

Trinko was different in tone and clarity, and arguably even in its overall holding, from not only the Section 2 cases decided during the 1890s and analyzed above in Section III.A.3, but also from the then-existing monopolization standard from the 1966 decision in the United States v. Grinnell Corp. case.¹⁷⁵ Grinnell merely held that a willfully acquired or maintained or “consciously acquired” monopoly should be condemned “as distinguished from [a monopoly acquired] as a consequence of a superior product, business acumen, or historic accident.”¹⁷⁶ Grinnell usually is read to require anticompetitive conduct,¹⁷⁷ and the Court in Grinnell found that the defendant in that case had engaged in “unlawful and exclusionary” behavior.¹⁷⁸ The Grinnell Court, however, never explicitly held that a Section 2 violation always requires anticompetitive conduct.

Indeed, Professor Donald Turner interpreted Grinnell to be ambiguous on the no-fault issue because it failed to properly “distinguish between ‘exclusionary’ conduct and ‘skill, foresight and industry.’”¹⁷⁹ Turner found the Court’s formulation unhelpful because “[a]ny highly successful competitive strategy tends to confer market power and tends to ‘exclude’ competitors, and everyone who engages in such strategy knows this; thus, power obtained and maintained by any highly successful competitive strategy is ‘will[]fully’ acquired.”¹⁸⁰ Turner stated: “I have come to believe . . . that courts can fairly be asked to extend the scope of the Sherman Act’s application . . . to single-firm monopoly beyond what past precedents, except possibly Alcoa, have reached.”¹⁸¹ Ultimately, however, Turner concluded Grinnell suggested that monopoly “solely attributable to accident” should not be an offense.¹⁸² This approach was included in the 1978 Areeda-Turner treatise, which advocated monopolization without a demonstration of fault, with important qualifications that made their proposal closer to a presumption of illegality than to true no-fault.¹⁸³

Similarly, the immediately prior relevant Supreme Court decision, United States v. Griffith,¹⁸⁴ was also somewhat ambiguous on the fault issue:

It is, however, not always necessary to find a specific intent to restrain trade or to build a monopoly in order to find that the anti-trust laws have been violated. It is sufficient that a restraint of trade or monopoly results as the consequence of a defendant’s conduct or business arrangements. To require a greater showing would cripple the [Sherman] Act.¹⁸⁵

The Court then continued with an ambiguous quote from Swift & Co. v. United States¹⁸⁶:

Where acts are not sufficient in themselves to produce a result which the law seeks to prevent—for instance, the monopoly—but require further acts in addition to the mere forces of nature to bring that result to pass, an intent to bring it to pass is necessary in order to produce a dangerous probability that it will happen.¹⁸⁷

Similarly, in American Tobacco Co. v. United States,¹⁸⁸ a conspiracy to monopolize case, the Court held that “[n]either proof of exertion of the power to exclude nor proof of actual exclusion of existing or potential competitors is essential to sustain a charge of monopolization under the Sherman Act.”¹⁸⁹ Two years later, the Court in Schine Chain Theatres, Inc. v. United States¹⁹⁰ read United States v. Aluminum Co. of America¹⁹¹ (Alcoa) as holding that “[t]he mere existence of the power to monopolize, together with the purpose or intent to do so, constitutes an evil at which the Act is aimed.”¹⁹²

One could reasonably conclude that the Grinnell and Griffith Courts—in opinions written by Justice Douglas, certainly no fan of monopolies—were being deliberately vague and arguably self-contradictory.¹⁹²See supra notes 176–87 and accompanying text. Perhaps Justice Douglas was knowingly and deliberately preserving the ambiguity of the then-prevailing Alcoa standard,¹⁹³ which could be read either as requiring fault, as not requiring fault, or as a cleverly disguised no-fault standard.¹⁹⁴

As noted earlier, when Justice Scalia authored the opinion in Trinko, he did not undertake a textualist analysis of Section 2.¹⁹⁵ He simply cited precedent for his assertion that the Sherman Act contains an exception for a monopolist that gained its monopoly through superior efficiency.¹⁹⁶

Nevertheless, the pro-monopoly tone of Justice Scalia’s language in Trinko went much further than that of any other Supreme Court monopolization opinion.¹⁹⁷ Elsewhere Justice Scalia has denounced the type of expansion of precedent he undertook in Trinko.¹⁹⁸ We can only speculate why Justice Scalia avoided undertaking a textualist analysis in Trinko, but instead used the opportunity to move the law of monopolization even further away from the result that should follow from a textualist approach.

B. Overturning Old Statutory Precedent

Justice Brandeis articulated the general criteria courts employ to guide their use of the doctrine of stare decisis:

Stare decisis is not[] . . . [an] inexorable command . . . . Stare decisis is usually the wise policy, because in most matters it is more important that the applicable rule of law be settled than that it be settled right . . . . , even where the error is a matter of serious concern, provided correction can be had by legislation.¹⁹⁹

More recently, the Court noted a specific complexity relating to antitrust: “[S]tare decisis [has] less-than-usual force in cases involving the Sherman Act,”²⁰⁰ which gives courts “exceptional law-shaping authority.”²⁰¹ The Court explained: “We have [ ] felt relatively free to revise our legal analysis as economic understanding evolves and . . . to reverse antitrust precedents that misperceived a practice’s competitive consequences.”²⁰² This is consistent with an explanation in State Oil Co. v. Khan²⁰³ as to why stare decisis matters less in antitrust cases:

[T]he general presumption that legislative changes should be left to Congress has less force with respect to the Sherman Act in light of the accepted view that Congress “expected the courts to give shape to the statute’s broad mandate by drawing on common-law tradition.” . . . [This] Court [ ] reconsider[s] its decisions construing the Sherman Act when the theoretical underpinnings of those decisions are called into serious question.²⁰⁴

Leegin Creative Leather Products, Inc. v. PSKS, Inc.²⁰⁵ might have gone even a step further, stating that “[s]tare decisis is not as significant . . . because the issue before us is the scope of the Sherman Act.”²⁰⁶ Moreover, though the Supreme Court had twice declined to overturn the 1911 precedent implicated in Leegin,²⁰⁷ Justice Scalia—despite joining the Court in those instances—ultimately ignored that history in Leegin, where he joined Justice Kennedy in the Court’s rebuke of stare decisis.²⁰⁸

Supreme Court precedent, even sixteen years old—such as the opinion by Justice Scalia in Trinko, which unequivocally held that Section 2 requires anticompetitive conduct—certainly deserves deference, and should not be overturned lightly. A fortiori, a precedent fifty-four years old, such as Grinnell, deserves even more respect under stare decisis. However, Grinnell deserves less deference because it is ambiguous.²⁰⁹

The longest period after which the Supreme Court dramatically re-interpreted the Sherman Act apparently was ninety-six years, when Leegin overturned the holding in the 1911 case, Dr. Miles Medical Co. v. John D. Park & Sons Co.²¹⁰ decision concerning the legal status of resale price maintenance (“RPM”).²¹¹ Dr. Miles has been interpreted by the Court as making RPM per se illegal,²¹² but in 2007, the Court changed the legal standard to rule of reason.²¹³

The Court did not make this change, however, because it acknowledged it had misread the Sherman Act. Rather, the basis of its reasoning concerned evolving or changing economic learning surrounding how often RPM is anticompetitive.²¹⁴ In dissent, four justices cited the importance of ninety-six years of precedent as an important reason for keeping the Dr. Miles standard.²¹⁵ Stare decisis was not enough, however, for the Court’s majority.²¹⁶

Surely the changing state of knowledge or the Court’s views as to the economics profession’s changing opinion over time concerning the issue of how often, or what percentage of the time, a practice is anticompetitive, should count for less than the fair reading of the relevant statutory language. Surely the foremost task of the Supreme Court should be to determine the fair meaning of the statutes the legislative branch enacts.

V. The Evolving Economic Analysis

Most economists at first glance probably think a no-fault monopolist law would be inefficient. With a second glance the inefficiency is by no means clear. The antitrust field has not seriously undertaken an overall economic analysis of the no-fault approach to monopolization law in half a century.²¹⁷ Perhaps this is because the subject has not been taken seriously on a political level during most of this period so that first glances were deemed sufficient. We here take a second glance and find the possibility that no-fault is efficient and in other ways desirable. This is not only in the usual sense of lower prices and higher levels of quality and variety of goods and services for consumers, but also in the possibility of improvements according to other relevant criteria affecting society’s welfare.

Recently, a significant number of prominent politicians have demonstrated an interest in breaking up firms they perceive as being “monopolies”—often without inquiring into whether they engaged in anticompetitive conduct.²¹⁸ It is perhaps unsurprising that breaking up such possible monopolies²¹⁹ like Amazon, Facebook, and Google—without first finding that they engaged in anticompetitive conduct—has been suggested by politicians on the left of the political spectrum, including Senators Warren²²⁰ and Sanders.²²¹ What has perhaps been surprising, in light of conservatives’ traditional deference towards big business, has been harsh criticism from the right, including from President Trump,²²² and even calls for their break-up or regulation from a large number of other leading conservative figures, including Steve Bannon²²³ and Senator Ted Cruz.²²⁴

This Article will not undertake a complete analysis of the economics of no-fault monopolization. This Article’s much more modest goal is to present an overview of many of the most important economic issues involved. Even this brief overview will demonstrate, however, that this is a topic that deserves careful analysis and debate by the antitrust community. It will suggest only that sanctioning all monopolies is a reasonable proposal that is worth considering seriously.

Our analysis begins with a brief historical overview of the evolution of the profession’s scholarship concerning the no-fault issue, and then briefly discusses one of its most important economic facts: the probable effects of a no-fault policy on innovation.²²⁵ The Article then gives an overview of its possible effects on international competitiveness, on allocative inefficiency, and on the prevention of wealth transfers from consumers to monopolies.²²⁶ The Article then briefly discusses its possible effect on income equity and equality, and then on privacy.²²⁷ As a part of these discussions it will note the inefficiencies that can arise as firms attain and protect their monopoly.²²⁸

This Article also will consider the downsides of this approach, including the possibility that it could send a confusing or perverse signal to firms engaging in hard but fair competition.²²⁹ This approach could be especially likely to discourage firms from competing hard when a firm’s size nears the ambiguous market share levels required for a violation. Moreover, at least 90% of antitrust cases are private actions. A relevant question is: what are the effects of no-fault on such actions? Would it increase or decrease the extent to which firms use the Sherman Act for protectionist business purposes? In addition, the transaction costs involved in sanctioning monopolies could be significantly changed under no-fault. No-fault could also lead to special problems for natural monopolies and patent monopolies, so it seems virtually certain they would require conduct remedies rather than structural relief.²³⁰

It must be emphasized that we will not attempt to fully analyze these issues to determine the overall net effects of no-fault on economic welfare. Its modest goal is to encourage the antitrust profession to re-start the analysis and debate over sanctioning all monopolies. The indeterminacy can support arguments for either “no-fault” actions or for a “no-action-at-all” policy as it is easy to marshal economic arguments on both sides. The balance of these arguments necessarily depends upon an evaluation of how effective and efficient antitrust policy is likely to be (including the number and magnitudes of false positive and false negative errors) while also considering litigation and other costs generated by the policy.²³¹ We only suggest that the existing literature contains enough support for a no-fault position so that the doctrine is not a priori unreasonable.²³²

A. Economists’ Evolving Opinions

The Sherman Act initially had broad appeal.²³³ Later surveys suggest that in general, economists continue to favor the Act. In a survey of a random sample of economists, 75% agreed that the antitrust laws should be used aggressively to reduce monopoly power.²³⁴ More than a half-century ago there were, however, plenty of opinions on the subject, but little evidence about the economic effects of monopolies.²³⁵ One of the earliest important attempts to determine the efficacy of antitrust was by Nobel Laureate George Stigler.²³⁶ In 1952, Stigler was a proponent of no-fault monopolization, although later he changed his view.²³⁷ Although we will not attempt to trace the evolution of economists’ analysis since Stigler, we note that quite recently, Thomas Philippon argued that oligopoly is now pervasive in the U.S. and costs the typical American household more than $5,000 per year.²³⁸ The following is a brief survey of a number of possible economic effects of a no-fault monopoly proposal.

B. Overview of Economic Effects Mostly Supporting No-Fault

1. Likely effects on innovation

A trenchant argument in favor of no-fault antitrust actions lies in the evidence that monopoly on average retards innovation.²³⁹ By innovation, we mean both technological invention and better ways of doing things. Carl Shapiro’s review of the literature finds that “[t]he unifying principle . . . is that innovation, broadly defined, is spurred if the market is contestable; that is, if multiple firms are vying to win profitable future sales.”²⁴⁰ In other words, competition is usually good for innovation.

As Whinston notes in his review of Carl Shapiro’s work, the forces determining innovation are complex, but market structure is itself important.²⁴¹ The major thrust of the literature is that the rate of innovation tends to be greatest when a market is competitive.²⁴² This result is consistent with the work of Pakes and McGuire²⁴³ and is illustrated in the following diagram, which shows low levels of innovation with very competitive markets, high research and development (“R&D”) rates for contestable markets, and a leveling off of innovation for markets with little competition, with monopolies innovating the least.

Recent empirical scholarship has also shown that more competitive markets result in more innovation²⁴⁴ and that “market power tends to slow innovation and productivity improvements in the affected markets.”²⁴⁵ Carstensen and Lande note that “[i]t is extremely difficult to determine [a theory that offers an] a priori” “prediction about the effects of competition on innovation that is robust to all of these different market and technological conditions”²⁴⁶ or predict “which innovation will be successful and which will prove a failure.”²⁴⁷ Thus, it is vital to continue to explore and develop many innovative options at the same time.

Recent literature shows some enforcement authorities, concerned with dynamic competition, have implicitly recognized the need to maintain a larger group of competitors in “innovation markets” because “innovation suffers when . . . companies merge.”²⁴⁸ Similarly, Professor John Kwoka, in his review of the merger literature, concludes that:

Overall, the careful economic studies in the literature as well as other relevant evidence do not support the proposition that industry consolidation results in more R&D or greater R&D efficiency. In fact, there is evidence in the best of these studies that suggests that these mergers may adversely affect R&D.²⁴⁹

Nearly all studies found that increases in competition led to increases in industry productivity.²⁵⁰ With greater competition, there is greater fear of innovation by competitors, so investment in innovation is more likely. These cases illustrate another reason why monopoly is bad for investment and innovation: if a firm has no competitors, then its input suppliers have a greater incentive to invest in their own market power and thereby extract surplus from the monopoly.²⁵¹ This indeed appears to be a potent source of monopolistic waste.²⁵²

2. Effects on international competitiveness

Professor Michael Porter finds that the prevalence of domestic rivals tends to lead to an international advantage stimulates improvement and innovation.²⁵³ He further notes that firms that do not innovate will not succeed.²⁵⁴

Porter finds that a key role of the government in advancing the economy is promoting “vigorous domestic rivalry” since the lack of domestic competition tends to hinder international competitiveness.²⁵⁵ Porter, analyzing a number of countries over time, further notes that firms that do not have to compete at home rarely succeed abroad, and that economies of scale, “the most potent determinants of competitiveness,” are best achieved through global sales rather than domestic dominance.²⁵⁶ According to Porter, the practicalities of politics create bad policy in a market of one or two firms as policymakers tend to accord such firms special treatment that reduces the incentive to compete.²⁵⁷

Porter’s work is not alone in finding that domestic competition is central to economic growth.²⁵⁸ In Latin America, where economic growth has been slow, markets are often characterized by highly concentrated industrial sectors, lack of a strong competition policy, large informal economies, and historically close links between business and the political community.²⁵⁹ Stronger competition policy can be part of changes in competition that might help promote economic growth and competition.²⁶⁰

Spurred by increasing globalization, there is increasing interest in international cooperation with respect to antitrust.²⁶¹ Globally, antitrust law is characterized by a striking mixture of promoting competitiveness on the one hand and protection of favored industries and cartel exemptions on the other.²⁶² There are clear attempts of nations to slant antitrust in ways that favor the home country at the expense of others.²⁶³ As each country does this, it would seem to result in harm to each country’s trade and to lower welfare.²⁶⁴ A global no-fault approach could help address this collective action problem.

3. Effects on allocative inefficiency & wealth transfers

In 1954, Economist Arnold Harberger estimated that the costs of monopoly that resulted from misallocation of resources across industries were trivial.²⁶⁵ Harberger’s focus was on the deadweight loss (“DWL”) from monopoly pricing.²⁶⁶ This research led to the near consensus in the economics profession that monopoly’s effects on efficiency are of little significance.²⁶⁷ Economists Scherer and Ross evaluated several empirical estimates of the relative sizes of the DWL to get somewhat higher values (0.5% to 2.0% of GNP).²⁶⁸

In sharp contrast to Harberger’s finding, more recent studies show that the allocative inefficiency (deadweight welfare losses) costs associated with monopoly are large, even quite large.²⁶⁹ Further, since firms can spend resources to convince the government to implement policies that will create or preserve monopoly, there can be competition for these monopoly profits.²⁷⁰ These costs can be pure waste, or income or wealth transfers²⁷¹ without accompanying productive gains: rent-seeking.²⁷² Professor Gordon Tullock introduced the rent-seeking idea in 1967 and Anne Kreuger expanded and labeled it in 1974.²⁷³ In 1975, Richard Posner argued that competition to engage in rent-seeking could raise costs until all monopoly profits were transformed into costs.²⁷⁴

Further development has both attempted to quantify these costs and shown that rent-seeking occurs both within a monopoly firm and outside it.²⁷⁵ These estimates come from examining histories of industries in which a monopoly is destroyed or created.²⁷⁶ Rent-seeking behavior by different divisions within the firm and between the firm and its unions is quite costly, resulting in: (1) lower productivity at each factory and (2) misallocation of resources between high and low productivity plants.²⁷⁷

As economist James Schmitz notes, “[w]hen a monopoly is created, ‘rents’ are created.”²⁷⁸ Schmitz states that “[c]onﬂict emerges among shareholders, managers, and employees of the monopoly as they negotiate how to divide these rents.”²⁷⁹ Stakeholders establish new mechanisms to split these rents in order to reduce competition among members of the monopoly.²⁸⁰ But mechanisms can destroy rents as well—they can reduce productivity and result in misallocation.²⁸¹ The costs due to low productivity alone are large.²⁸² In fact, factory productivity raised significantly when monopolies were broken up in each industry.²⁸³ Schmitz noted that it was common for factory productivity to double within a few years.²⁸⁴ Schmitz calculated that as much as 20% to 30% of industry value to be wasted inputs.²⁸⁵

4. Effects on income equity & equality²⁸⁶

In Capital in the Twenty-First Century, Professor Thomas Piketty notes that between 1980 and the present, there has been an unprecedented increase in income inequality in the United States and Europe, and that it is likely to become much more unequal unless new remedies are applied.²⁸⁷

Research associates higher levels of inequality with social instability and lower growth rates.²⁸⁸ Piketty sees inequality challenging democracy and leading to oligarchy, if left unabated.²⁸⁹ He predicts dire consequences in the absence of remedies.²⁹⁰ Similarly, Professors Jonathan Baker and Steven Salop show how inequality can undermine the legitimacy of our social order, given the wealthiest have a disproportionate influence on public policy and reduce economic growth.²⁹¹

Part of the cause for rising inequality lies in competition policy. An Organisation for Economic Cooperation and Development (“OECD”) paper covering eight OECD countries—Canada, France, Germany, Korea, Japan, Spain, the United Kingdom, and the United States—finds that for the average country in the sample, market power increased the wealth of the richest 10% and by between 12% and 21% for a range of reasonable assumptions about savings behavior, while it reduces the income of the poorest 20% by 11% or more.²⁹² The paper suggests that lack of competition is an important source of economic inequality.²⁹³ Greater equality may then be a byproduct of a strong competition policy.²⁹⁴

5. Effects on consumer and user privacy

Monopolies are less likely to protect the privacy of consumers, users, and affected friends and associates. A recent article by Professors Gregory Day and Abbey Stemler provides several reasons why monopolies are likely to protect privacy suboptimally²⁹⁵: (1) it will be difficult for users, consumers, or third parties to punish monopolies that violate their privacy by switching to other firms; (2) because of the nature of privacy, it will be more difficult for people even to ascertain whether a breach occurred, from where it occurred, or the true costs of preserving their privacy; and (3) other firms will be less likely to compete on the basis of privacy with incumbent monopolists that appear to offer “free” goods or services,²⁹⁶ such as the use of Google, Facebook, etc. It is especially difficult to enter a market for apparently free products, so monopolies of these products are likely to persist.

The amount of privacy protection a monopoly is likely to provide for consumers and users will often be suboptimal because the technology that collects valuable data can impose more costs on society—in the form of necessary privacy protections and the costs of security breaches and unconsented-to sales of data—than efficiencies.²⁹⁷ These costs are often relatively hidden, so consumers, users and affected third parties often will have a hard time valuing them, and the market often will have a difficult time curing any problems optimally.²⁹⁸ Antitrust, with its traditional focus on consumer prices, will not be as cognizant of the true costs of privacy breaches and misuse as it should be.²⁹⁹

A deeper privacy problem is that firms with a large online presence, such as Google, Amazon, Apple, and Microsoft, gain from collecting customer or user data mainly in order to discover and create preferences.³⁰⁰ Moreover, collecting consumer data is most useful for larger firms than for their smaller counterparts. However, often in doing so, these larger firms potentially implicate consumer privacy.³⁰¹

C. Overview of Economic Arguments That Mostly Weigh Against No-Fault

1. Incentives to compete less vigorously

The effects of incentives on business behavior are complex and sometimes counter-intuitive, so prediction in the case of no-fault is difficult.³⁰² One would think, however, that the possibility of an antitrust action against a firm achieving monopoly without engaging in anticompetitive behavior would have some deterrent effect on monopoly formation.³⁰³ This deterrent effect could send a confusing or perverse signal to firms engaging in hard but fair competition, especially when a firm’s market share nears the minimum required for a Section 2 violation.³⁰⁴ Economist George Bittlingmayer, for example, believes that “whatever the ability of antitrust to lower prices and increase output in theory or in isolated circumstances, one actual effect of antitrust in practice may have been to curtail investment.”³⁰⁵

However, when a monopolist is shielded from hard competition, it may be able to relax and enjoy a quiet life.³⁰⁶ Professor Jonathan Baker, for example, believes there is a positive and large welfare effect from the antitrust deterrence of anticompetitive activity.³⁰⁷ Baker examines the implications of socially beneficial federal antitrust challenges against collusive behaviors like price fixing, mergers likely to adversely affect competition, and monopolists who use anticompetitive exclusionary practices to obtain and maintain their market power.³⁰⁸ He then reviews systematic empirical evidence on the value of antitrust derived from informal experiments involving the behavior of U.S. firms during periods without effective antitrust enforcement, and the behavior of firms across different national antitrust regimes.³⁰⁹ Overall, he finds benefits of antitrust enforcement to consumers and social welfare appear to be far larger than what the government spends on antitrust enforcement and firms spend directly or indirectly on antitrust compliance.³¹⁰

Of course, reduced incentives to compete vigorously are far from no incentives. Even if a monopolist or would-be monopolist’s incentives to compete are reduced, no-fault could also increase incentives for rivals and potential rivals to compete harder as the monopolist is somewhat constrained by no-fault. Similarly, it could serve to reduce the presence of monopoly less expensively than conventional antitrust actions.³¹¹ This would be similar to a firm refraining from establishing a monopoly in the expectation that the rents would all go to elsewhere, e.g., to a union.

2. Incentives to engage in sham litigation

Sham litigation is non-legitimate litigation whose purpose is to raise rivals’ costs relative to those of the firm filing the lawsuit.³¹² It is a type of non-price predatory behavior.³¹³ A study by economist Christopher Klein suggested economic criteria for determining whether such litigation is sham or legitimate.³¹⁴ He examined 117 Sherman Act countersuits alleging sham litigation.³¹⁵ He found that while fewer countersuits were litigated than had been expected according to his criteria, more of the countersuits were allowed to pass summary judgment than his criteria predicted.³¹⁶ The implication for no-fault is that developing and applying economic criteria in rejecting no-fault cases may not result in significant untoward legal costs associated with sham litigation.

3. Increased transaction costs

Another argument against no-fault is the transaction costs that would necessarily be involved in the resulting cases. The cases’ relief could entail significant transaction costs, regardless whether it is structural or conduct-oriented.³¹⁷ Moreover, virtually every antitrust case is expensive for both sides.³¹⁸ No-fault would surely increase the number of Section 2 cases filed. Yet, each case would be simpler, because there would be no need to litigate whether the case involved anticompetitive conduct. Moreover, a major component of how many cases are brought, settled, or move to trial is the clarity of the law.³¹⁹ Thus, a major determinant of the transaction costs involved would be the care with which a violation of the Sherman Act under no-fault would be crafted. The brighter the line, the fewer the cases that would be brought or go to trial.

D. Special Issues Involving Natural Monopolies and Patents

Non-structural relief is the traditional kind of relief ordered in monopolization cases, even in cases not involving natural monopolies or patents.³²⁰ This is because the Supreme Court observed that structural remedies are “more drastic” than injunctive relief.³²¹ For example, in United States v. Microsoft Corp.,³²² the D.C. Circuit said that “structural relief, which is ‘designed to eliminate the monopoly altogether . . . require[s] a clearer indication of a significant causal connection between the conduct and creation or maintenance of the market power.’”³²³ In other words, the standards for a court ordering a structural remedy are higher than they are for conduct-oriented remedies.³²⁴

Indeed, in the monopolization case against it, Microsoft asserted, “[l]eaving aside negotiated consent decrees, no court has ever split apart a unitary company not formed by mergers.”³²⁵ “The fact that no court has ever ordered the breakup of a unitary company like Microsoft demonstrates the extreme nature of the district court’s decree.”³²⁶ Even if Microsoft’s absolutist assertion is, as Professor Kovacic demonstrates, a significant exaggeration,³²⁷ there is no doubt that divestiture is an unusual remedy in a monopolization case.

This would surely mean that if Section 2 of the Sherman Act is interpreted to be a no-fault statute, monopolies convicted under this approach would rarely, if ever, be broken up. No-fault cases surely should not qualify as the highly exceptional cases in which a monopoly should be broken up. Rather, we would expect remedies in no-fault cases to be similar to those under consideration in Europe, which is considering conduct proposals forbidding technology firms, such as Google, to benefit in certain circumstances from using information they collect as part of their normal business.³²⁸ There are in fact a number of suggested remedies short of breakup, such as data sharing, open platforms, and other solutions.³²⁹

1. Natural monopoly

Natural monopolies are those for which economies of scale or scope exceed sustainable market size.³³⁰ A major modern concern relating to natural monopoly is network externalities, which include both scale and scope economies.³³¹ A classic example of a natural monopoly is the type of networks that exist in the telecommunications field.³³² The more people sign up, the cheaper it is for the provider per unit of service.³³³ What would happen if no-fault were applied to natural monopolies?

We address this only to note that there are several possible remedies short of break up for monopolies, both in general and especially for monopolies involving natural monopolies or patents. Natural monopolies strengthen their power by their ability to collect and use information, and can themselves reasonably be tempered by requiring them to share data acquired from customers.³³⁴ Moreover, if plaintiffs were so unwise as to seek the break-up of a natural monopoly under a no-fault theory, it seems likely that the reaction of the court would be to dismiss the case entirely.³³⁵

2. Patents

A no-fault Sherman Act implies that a monopoly legally gained through patents could face prosecution upon expiration of the crucial patent. However, this would mean that the firm had already enjoyed twenty years in which to earn monopoly returns. The monopolist could, moreover, avoid private damages suits by lowering its price to some negotiated level or a level its potential prosecutors or judges are likely to deem competitive. Thus, there would be significant incentives for firms having patent monopoly status to quickly lower their prices. Moreover, Economists Michele Boldrin and David K. Levine find little evidence that patents spur innovation.³³⁶ If they are correct, and we are by no means certain that they are, the current patent system may be misguided.³³⁷ If they are correct, no-fault would not cause any patent-related harms.

E. Micro-Studies of Two Huge Monopolization Cases: AT&T and IBM

One approach to predicting the probable effects of no-fault monopoly would be to systematically study the results of a large number of cases where a defendant had been subjected to a remedy in a Section 2 case. Although this would not address, let alone answer, all the economic questions involved, it would further the analysis considerably. We present two microanalyses of Section 2 remedies only to suggest what type of analysis a court could perform on a much more detailed level and for a much larger number of cases.

The Justice Department filed possibly the two largest Section 2 cases in history against IBM and AT&T.³³⁸ In 1982, the Justice Department announced that they were abandoning the IBM case and that AT&T had capitulated.³³⁹ AT&T lost their case.³⁴⁰ IBM won theirs.³⁴¹

Yet, eleven years later on January 28th, 1993, four days after IBM posted a quarterly loss of $5.46 billion, AT&T reported record quarterly earnings of $1 billion and a yearly profit of $3.8 billion on sales of $65 billion.³⁴² Robert Morris, a telecommunications analyst at Goldman Sachs, correctly predicted that AT&T will be “an awesome multimedia communications giant by the turn of the century.”³⁴³ Robert Allen, the chairman of AT&T, noted, “We were forced by the divestiture to make changes that probably were good for us . . . . We went through some tough years, but it paid off. We may have been more fortunate than I.B.M. in that change was forced on us.”³⁴⁴

Although the decision to break up AT&T was controversial at the time,³⁴⁵ the facts “don’t lie.”³⁴⁶ Since the break-up, the telecommunications field has gone from high-cost, long-distance phone calls and rotary dial phones to smart phones, wireless technology, and the development of the Internet.³⁴⁷ As one account notes of the break-up: “In the aftermath, AT&T reduced long distance rates by 40% over six years, though local carriers added access charges that prevented consumers from seeing all of the cost reduction. The local operating companies . . . also began offering mobile service in the 1980s after it had been developed by Bell Labs.”³⁴⁸

As Professor Wu has noted, “It became apparent, in retrospect, just how much innovation the Bell system monopoly had been holding back. For out of the carcass of AT&T emerged entirely new types of industries unimagined or unimaginable during the reign of AT&T.”³⁴⁹ Michael Porter also concluded that telecommunications services became a hotbed of innovation after that breakup of AT&T.³⁵⁰

Would it have been better for IBM to also have capitulated? Probably! John Shenefield, President Carter’s Assistant Attorney General in charge of antitrust from 1977 to 1979, presided over both cases:

[I]f I.B.M. had gone through the divestiture it would have had to develop new entrepreneurial opportunities. With real competition, who knows what imagination and creativity that process might have invited? Competition theorists think the industry as a whole would have been better off if I.B.M. had been broken up, and if it would have been better for the public I think it would have been better for the shareholders, too.³⁵¹

F. Economic Conclusions: Summary of Probable Gains and Losses

Any summary of probable gains and losses from no-fault or no-action is problematic. It depends upon empirical data that—because no-fault has never before been tried—simply does not exist. The best we can do is to present conclusions from roughly comparable areas and to make inferences from them that might hold true to some extent. This uncertainty is true both in general and especially for the effects of no-fault on particular industries. Thus, the table below is meant as a guide for further discussion—not to provide a definitive answer.

The following Table shows the costs and benefits of three possible policy options: (1) The “Present Status Base Case Costs” column gives the positives and negatives of the current Section 2 regime (which requires anticompetitive conduct for a violation); (2) The “Costs of No Action on Antitrust” column considers what would be likely to happen if no Section 2 cases were brought; (3) The “Costs of No-Fault” column refers to the results if a no-fault policy was implemented. The terms “smaller” and “larger” refer to costs and benefits of no-fault or no action compared to the current situation (the “Base Case”).

For example, the first item is “Allocative Loss Due to DWL.” “No action” would be likely to produce larger allocative losses, and “no-fault” would be likely to reduce allocative losses substantially. Of course, as we have indicated, a summary such as contained in the table below is speculative. Our goal has been to suggest that a no-fault policy could well be positive and that it certainly would be worthwhile for the antitrust field to consider it seriously, not that it is the obvious choice.

Summary Table of Costs of Present Status, No-Action, and No-Fault Policies

IV. Specific Effects of Textualist Analysis on Antitrust Law

A. Effects on Monopolization Law

Every circa-1890 dictionary and legal treatise cited earlier defined “monopolize” as simply to acquire a monopoly position, and all of the earliest Supreme Court Sherman Act cases that used the terms “monopolize” and “monopoly” equated them.³⁵² None of the early Supreme Court jurisprudence interpreting the Sherman Act required that a “monopoly” or a firm that “monopolized” must have engaged in anticompetitive conduct.³⁵³ Thus, a textualist interpretation of Section 2 is in most respects simple and straightforward.

Nevertheless, a complete analysis of the issue should consider three issues: (1) Must markets be defined and, if so, could less than a 100% market share suffice to make a “monopoly” illegal; (2) Does the possibility of treble damages mean Section 2 is not actually a no-fault statute, and (3) Do the statute’s criminal penalties mean that Section 2 is really not a no-fault statute? All three of these questions should, moreover, be considered in light of textualism’s “absurdity” doctrine, which prevents statutes from being interpreted irrationally.³⁵⁴

1. Could less than a 100% market share suffice to make a monopoly illegal? Applying textualism’s “literalness” doctrine

Would a textualist interpretation of Section 2 require a firm to have captured a 100% share of its relevant market to “monopolize” the market? Or could a lower market share suffice, because a textualist would interpret the term “monopoly” fairly and reasonably, but not literally?

Courts today sometimes find the “monopoly power” required for the offense of “monopolization” when a firm has significantly less than 100% of a market.³⁵⁵ This is because the current requirement is not that the firm have a 100% complete “monopoly,” but rather that the firm have the power to “control prices or exclude competition.”³⁵⁶ This ability can be found in some situations when a firm’s market share is as low as 70%, and possibly even lower.³⁵⁷ Indeed, the vast majority of firms found to have engaged in illegal monopolization had market shares significantly less than 100%.³⁵⁸ If a textualist approach to a “monopolization” violation required a 100% market share, this would dramatically limit Section 2’s reach.

It is likely, however, that a textualist interpretation of Section 2 would not require a “monopolizing” firm to have 100% of the relevant market. As noted earlier, textualism does not call for literalism or for construing words and phrases strictly.³⁵⁹ Rather, textualists interpret statutes “fairly,” the way a “reasonable person” would at the time a law was enacted, and give a statute’s words and phrases their “ordinary” meaning.³⁶⁰

Thus, a textualist would ask how a reasonable person in 1890 would fairly or ordinarily interpret the word “monopolize.” Would interpreting Section 2 as only encompassing firms with a 100% market share be the type of “strict constructionism” or “straightjacketing” that Justice Scalia denounced?³⁶¹ After all, a firm with a 98% market share as a practical matter is usually as likely to have monopoly power as a firm with a 100% share.³⁶² Indeed, the 1895 Supreme Court E.C. Knight case referred to a firm with a 98% market share as a “monopoly.”³⁶³ Standard Oil in 1911 held that something could be deemed a monopoly if it produced “some of its baneful effects,” even if the defendant did not possess a 100% monopoly.³⁶⁴

A “fair reading” of Section 2 should mean that a firm with somewhat less than 100% of a market that otherwise exhibits the characteristics of a monopoly should be included within Section 2’s prohibitions. This is especially true because otherwise a potential defendant usually could render the monopolization offense a nullity by deliberately leaving 2% of a market to others.³⁶⁵ As Justice Scalia noted, “Some outcome-pertinent consequences . . . are relevant to a sound textual decision—specifically, those that: [] cause a private instrument or governmental prescription to[] be ineffective.”³⁶⁶

Moreover, to construe the “monopoly” requirement in a manner that neutralizes the statute would be an arguably absurd result. As Justice Scalia³⁶⁷ and Justice Kavanaugh noted, the absurdity doctrine³⁶⁸ can, in truly extreme situations, prevent statutes from being interpreted irrationally.

Even though the Supreme Court in 1895 was correct to characterize a firm with a 98% market share as a “monopoly,” it is a difficult judgment call as to when a reasonable person in 1890 (or today!) would consider a firm’s market share to be too low to be one. Could a monopolist only have a market share of 88%, the percent of the U.S. oil market possessed by the Standard Oil Trust in 1890?³⁶⁹

Should the 70% minimum that usually suffices today continue to be the benchmark? A minimum or virtually-always minimum line should be drawn, but where? Indeed, would a reasonable person instead just conclude that if a firm had the power to “control prices or exclude competition,”³⁷⁰ then it is for all practical purposes a monopoly? Perhaps the monopoly power standard for Section 2 should not change.

2. Treble damages for a no-fault violation: absurd or appropriate?

Would it be “absurd” to impose treble damages on a firm that was not found to have engaged in anticompetitive conduct? Does the possibility of a private treble damages action mean that Section 2 could not have been intended to be a no-fault statute? Would this be the type of “absurd” result that Justice Scalia cautions should not result from textualism?³⁷¹

Reasonable people certainly can disagree over whether treble damages would be too large for a no-fault violation. It often is believed that treble damages were necessary to give victims the requisite incentive to bring and litigate cases against large and powerful defendants, as well as to deter violations optimally.³⁷² This is especially true because Section 2 antitrust violations and damages often are so difficult to detect and prove.³⁷³ Regardless whether a contemporary judge or justice thought this policy position was wise, should they find it to be absurd?

The “treble damages” remedy should be considered an approach that reasonable policy makers might implement, regardless whether it is considered from a deterrence or a compensation perspective. This is especially true because if antitrust law’s so-called “treble damages” remedy is analyzed empirically, with consideration given to its lack of prejudgment interest, lack of payments for the allocative inefficiency effects or umbrella effects of monopoly pricing, and other factors, even a “treble damages” award is probably on average really only around single damages.³⁷⁴ In other words, a monopolist paying nominal damages of three times its overcharges would probably only be paying one times the actual damages it caused.

Moreover, private antitrust cases rarely produce even nominal treble damages for victims of anticompetitive behavior.³⁷⁵ Even in cartel cases, as a practical matter most private cases settle, and the settlements average only 37% to 66% of single damages.³⁷⁶ Only 20% settled for single damages or more.³⁷⁷

If a court did believe that the prospect of awarding treble damages in a no-fault case was absurd, it could do what courts often do even in routine cases where fault has been established but the court believed it would be unjust to order “excessive” damages. Professor William Kovacic pointed out that in many circumstances,

[A] court might fear that the US statutory requirement that successful private plaintiffs receive treble damages runs a risk of over-deterrence. A court might seek to correct such perceived infirmities in the anti-trust system by recourse to means directly within its control—namely by modifying doctrine governing liability standards or by devising special doctrinal tests to evaluate the worthiness of private claims.³⁷⁸

Using these same techniques, as a practical matter, courts would be extremely unlikely to award even nominal treble damages in a no-fault monopolization case.³⁷⁹ A court which believed this result to be absurd easily could avoid this outcome.

3. Criminal sanctions for a no-fault case? Applying the absurdity doctrine

The Sherman Act of 1890 contained criminal penalties. A violation of Section 1 or 2 could result in a $5,000 fine and a year in prison (a misdemeanor at the time).³⁸⁰ A reasonable person might ask whether the inclusion of possible criminal penalties for a Section 2 violation meant that Congress did not intend for it to be a no-fault statute and thus argue that a no-fault interpretation of Section 2 is “absurd.”

This is incorrect for three reasons: (1) While Congress would have thought it “absurd” to imprison a tiny monopolist that was not believed to affect interstate commerce, Congress might not have thought it absurd to imprison a “robber baron” like John D. Rockefeller; (2) There are many other plausible reasons why Congress could have included criminal penalties in a no-fault statute; and (3) Other antitrust laws could be applied criminally in ways that could lead to absurd results, but this does not mean these laws were not meant to apply at all to the types of conduct in question.

First, one might ask what would have happened during the floor debates if a senator had asked whether a manufacturer achieving a monopoly in a small market by making a better product could be put in prison under Section 2.³⁸¹ Similarly, suppose there were a small town with only two barbers, and one of them died. The surviving barber would be a monopolist. Could this barber have been prosecuted criminally?³⁸² Do these possibilities mean that Section 2 was never intended to be a no-fault statute?

Recall that a textualist analysis should ignore the legislative debates, but that they should consider the “history of the times.”³⁸³ A textualist should use the history of the period producing the antitrust laws to help ascertain what Congress meant when it used a term like “monopolize” and decided to impose sanctions on firms that monopolized.

The absurdity doctrine could be appropriate if either of these two hypotheticals (involving the small innovative company or the last barber in town) actually occurred. A textualist could reason that the types of monopolies that were the target of the Sherman Act were extremely large firms like the Standard Oil Trust.³⁸⁴ This is especially true because the very definition of “interstate commerce” was so restricted in 1890 that the Sherman Act would not have governed the activities of a monopoly-barber in a small town.³⁸⁵

A textualist might also ask whether ordinary Americans in 1890 fairly could have assumed the law could have been used to impose criminal sanctions on small town barbers or small firms that succeeded through innovation. This is especially true due to the belief by Scalia and others that ambiguous statutes should be read in a manner that does not result in a criminal sanction.³⁸⁶

But the absurdity doctrine should not rescue the CEOs of companies like the Standard Oil Trust even if Section 2 was being used on a no-fault basis. During the late 19th and early 20th Centuries many called not just for an investigation into the activities of John D. Rockefeller, in 1890 the head of the Standard Oil Trust, but his imprisonment.³⁸⁷ Would imprisoning Rockefeller even on a no-fault theory really have been “absurd” in the minds of these people, any more “absurd” than what some politicians have called for recently? Some contemporary politicians have not just called for an investigation into whether certain large and powerful high-tech companies engaged in anticompetitive conduct: Bernie Sanders declared he would use the Sherman Act to “jail” CEOs of “monopolistic companies.”³⁸⁸

Some may denounce Senator Sanders’s plan as foolish on policy grounds. And we could speculate about what a politician like Senator Sanders actually would do if he were elected president and could enact legislation he favored. However, his harsh rhetoric reminds us that political views of many Americans towards alleged monopolies at times have been extremely antagonistic.³⁸⁹

Second, Congress might have enacted a law containing criminal penalties with full knowledge that they would be unlikely to be applied vigorously or at all. During the early years of the Sherman Act, corporate executives were not sent to prison for any antitrust offenses. No corporate official was imprisoned, even for price fixing, until more than thirty years after the Sherman Act was passed.³⁹⁰ No corporate official has ever been imprisoned for any Section 2 offense,³⁹¹ and during its early years Section 2 seldom was enforced, even civilly.³⁹² Section 2’s framers might well have included criminal provisions without giving them much thought, or perhaps only as a threat,³⁹³ or only for political reasons.

It certainly is possible that Congress did not give much thought to whether, on policy grounds, Section 2 should contain criminal sanctions. Regardless, all this is speculation that a textualist should not engage in.³⁹⁴ If a judge re-interpreted the words of a statute because they believed it was unwise policy to impose criminal penalties in a no-fault case, this would not be textualism.³⁹⁵

Third, the possibility that a prosecutor would attempt to secure criminal penalties in a no-fault case against a major U.S. corporation like Amazon, Facebook, or Google would be no more “absurd” than three other types of criminal antitrust cases that have been or could be brought under the Sherman Act or Clayton Act³⁹⁶: in tiny collusion cases, RPM cases, and Robinson-Patman Act cases.

First, suppose two tiny businesses sell the same products (such as bicycles) and they are on the opposite ends of a large metropolitan area. Assume they fixed prices. Assume interstate commerce was impacted and their agreement did not result in significant efficiencies. If the government charged them with a criminal Section 1 violation, they would not be able to defend on the basis that no prices actually increased, that they competed with internet sales, that entry was easy, etc.³⁹⁷ They would be guilty of a felony.³⁹⁸ Apparently no criminal prosecution of this nature ever has taken place. But if it did, would a court conclude that Section 1 of the Sherman Act does not cover price fixing? Or would it instead act as Professor Kovacic noted, that courts sometimes find a way to exonerate defendants, or at least to subject them to no more than a nominal penalty, in situations where they believe that harsh remedies are inappropriate.³⁹⁹

Second, in 1980, the Department of Justice, followed by fifteen state Attorneys General, prosecuted RPM criminally in United States v. Cuisinarts, Inc.,⁴⁰⁰ and succeeded in obtaining a nolo contendere plea and a $250,000 fine.⁴⁰¹ At the time RPM was per se illegal, but today it is judged under the rule of reason,⁴⁰² and many respected scholars believe it should be taken off the list of antitrust offenses entirely.⁴⁰³ Nevertheless, in theory, RPM could today be prosecuted criminally. If this were to happen, surely the court handling the case would do as Professor Kovacic described and find some way to exonerate the defendant or treat them leniently.⁴⁰⁴ This is precisely what would happen if the Department of Justice tried to prosecute a monopolist criminally under a no-fault theory.⁴⁰⁵

In addition, the Robinson-Patman Act, which prevents certain instances of price discrimination, contains criminal penalties⁴⁰⁶ which were last imposed in the 1950s.⁴⁰⁷ This statute has fallen into severe bipartisan disrepute today, and the government has barely enforced it civilly for a generation.⁴⁰⁸ Nevertheless, like tiny collusion cases and RPM cases, the federal government could today pursue criminal enforcement under the Robinson-Patman Act.

If any of these violations were prosecuted criminally today, not only could the courts do as Professor Kovacic suggested and find some way to exonerate the defendant—there are other methods courts could use to achieve justice. Professor Sokol persuasively argues that any attempt to impose criminal penalties on an alleged antitrust violation after an unduly long period of non-criminal enforcement could result in a successful defense of the doctrine of desuetude (void due to non-use),⁴⁰⁹ or in a due process violation of the U.S. Constitution where the provision would be held void for vagueness and a lack of notice.⁴¹⁰ Under either doctrine, a firm prosecuted by the Department of Justice for a no-fault violation today could argue that it lacked the intent necessary for a criminal violation. Professor Sokol also argues that an “accidental” monopolist (assuming, consistent with Professor Turner, that accidental monopolists exist), would lack the intent necessary for a criminal or even a civil law monopolization violation.⁴¹¹

Even the theoretical possibility of criminal sanctions resulting from a no-fault case is an undesirable feature of Section 2. But as Justice Scalia noted concerning the interpretation of statutes, “[w]hen once the meaning is plain, it is not the province of a court to scan its wisdom or its policy.”⁴¹²

In summary, a textualist interpretation of Section 2 shows that a violation does not require anticompetitive conduct. Nor should the “monopolization” offense be limited to firms with 100% market shares. This is true even though in theory—although not as a practical matter—a no-fault case could result in treble damages or criminal penalties.

B. Effects on “Attempt to Monopolize” Law

A textualist interpretation of the “attempt to monopolize” language in Section 2 should greatly restore the statute’s vigor. Defendants would only be required to engage in a serious and concrete “attempt” to gain a monopoly,⁴¹³ a requirement that should be construed as requiring only the intent to take over a market, planning and preparation, and one concrete, significant act in furtherance of this intent. The act could be required to be “sufficient, both in magnitude and in proximity to the fact intended, to be taken cognizance of by the law that does not concern itself with things trivial and small.”⁴¹⁴

What type of act would be required in which market contexts? This would be as difficult to define precisely as the current requirements for the offense. And the necessary lines would be as difficult to draw.

Would market definition and a “dangerous probability of success” be required under a textualist approach to the attempt to monopolize portion of Section 2? The statute makes it unlawful for any person to “attempt to monopolize . . . any part of the trade or commerce among the several States.”⁴¹⁵ A straightforward textualist reading of the statute therefore could be very similar to Lessig v. Tidewater Oil Co.’s⁴¹⁶ reading of Section 2 in a way that eliminated both the dangerous probability⁴¹⁷ and the market definition requirements⁴¹⁸ in attempted monopolization cases. Alternatively, a court could reason that defendants are only prohibited from attempting to monopolize something, so market definition is required.

Moreover, the attempted monopolization doctrine could be applied only to firms attempting to take over an entire market—or, since a textualist should not construe the word “monopoly” literally or strictly,⁴¹⁹ perhaps a firm attempting to take over virtually all of a market. Suppose, for example, a firm with 50% of a relevant market conceived of and attempted to implement a serious plan that would, if successful, give it 70% of that market.⁴²⁰ This is far short of a 100% market share, and this defendant arguably should not be convicted of attempted monopolization.⁴²¹ Alternatively, since a 70% market share is the minimum that usually suffices today to meet the “monopoly power” prong of monopolization cases,⁴²² perhaps a firm should be guilty of attempted monopolization if its implemented plan would, if successful, give it 70% of a market? Or 90%?

Although the courts would of course have to draw a line, this line should be different from the line courts draw today, which requires defendants to have a “dangerous probability”⁴²³ of acquiring monopoly power. Today, a firm with only 50% of the market could only rarely meet the “dangerous probability” threshold, and a firm with only a 30% market share could never or almost never meet the threshold.⁴²⁴ Today, very few attempted monopolization suits are successful.⁴²⁵ But under a textualist analysis a firm with a 50% market share often should be found to engage in a serious “attempt to monopolize” a market, given certain assumptions like barriers to entry.

In sum, a textualist approach to the “attempt to monopolize” portion of Section 2 should not require defendant to have undertaken anticompetitive conduct. The statute should only require that defendant had the intent to acquire a monopoly (or a near-monopoly) and had taken a serious, significant and concrete step in this direction. A defendant’s market share as low as 50%, and perhaps even 30%, assuming barriers to entry, etc., should sometimes suffice.

The line of illegality would, as a practical matter, be as uncertain as the current “dangerous probability” requirement.⁴²⁶ But the textualist version of the “dangerous probability” requirement should allow more successful cases. And the lack of an anticompetitive conduct element should permit many more successful cases.

C. No-Fault Monopolization as a Violation of Section 5 of the FTC Act

Despite the existence of the Sherman Act, Congress in 1914 decided that additional, more encompassing, legislation was needed, so it enacted Section 5 of the FTC Act, which prohibits “unfair methods of competition.”⁴²⁷ A traditionalist analysis of Section 5 of the FTC Act demonstrates that the statute was intended to prohibit not only every violation of the Sherman Act, but also (1) incipient violations of this law, (2) conduct violating the spirit of the Sherman Act, and (3) conduct violating recognized standards of business behavior.⁴²⁸ The Supreme Court has explicitly adopted this interpretation of the FTC Act,⁴²⁹ although the relevant precedent is more than a generation old.⁴³⁰

Although the task is beyond the scope of this article, the FTC Act should be analyzed in a textualist manner to determine whether the statute would still produce these interpretations of the phrase “unfair methods of competition.” If so, the FTC Act might be an optimal vehicle for no-fault monopolization for several reasons.

Section 5 is a civil statute—its violation cannot result in criminal penalties.⁴³¹ Section 5 actions cannot be brought by private parties, and do not constitute Sherman Act precedent that gives rise to treble damages liability unless the court specifically finds that the practices at issue also violate the Sherman Act.⁴³²

Section 5 could be used as a way to implement no-fault if the Court is willing to undertake a textualist analysis of Section 2 but is reluctant to overturn Trinko and other Section 2 precedent. Another reason for the use of Section 5 to impose sanctions on monopolies would arise if the Court is willing to re-think Section 2 using a textualist approach, but decides to do so in a relatively non-expansive manner because it does not want no-fault cases to be brought by private parties, or for there to be even a theoretical fear that no-fault could lead to criminal penalties.

The FTC Act could be a perfect vehicle for a textualist court that is reluctant for any of these reasons to find that a firm violated Section 2 of the Sherman Act under a no-fault theory. Instead, the Court might hold that defendant had committed an incipient violation of Section 2, or a violation of the spirit of Section 2, and thus that the firm had violated Section 5 of the FTC Act using a no-fault approach. A textualist Court might well find that Section 5, but not Section 2, imposes sanctions on all monopolies and attempts to monopolize.

Conclusion: An Increasingly Textualist Supreme Court Should Implement No-Fault Monopolization

For many years, textualism was only the concern of Justice Scalia and academics not within the antitrust mainstream. Even conservative members of the antitrust community rejected or ignored this method of statutory analysis. But in recent years, textualism increasingly has emerged from the shadows. Indeed, in 2020, all nine justices, in all three opinions in an important Supreme Court case, employed textualism.⁴³³ Bostock certainly increases the hope of the possibility that the Court also will analyze Section 2 of the Sherman Act using textualist principles.⁴³⁴

This possibility is especially true because a textualist approach might even appeal to those justices who normally are not textualists. This is because a traditional or purposivist approach to Section 2 is ambiguous on the no-fault issue.⁴³⁵ If a traditional analysis of Section 2 had found that anticompetitive conduct was required for a violation, but a textual analysis did not, the traditionalists on the court would of course be less likely to embrace textualism. But this tradeoff is not present.

There is an old saying that “th[e] [S]upreme [Cou]rt follows th[e] [ele]ction returns.”⁴³⁶ Is there even a small chance the current conservative—but increasingly textualist—Supreme Court would hold that Section 2 of the Sherman Act does not require anticompetitive conduct? If in the future an election gives our country a President and a Congress that, like some politicians today,⁴³⁷ believe in imposing sanctions on all monopolies, is there even a small chance the Supreme Court (or a future, changed Supreme Court) might be open to the possibility that the Sherman Act (or perhaps the FTC Act⁴³⁸) is a no-fault statute?

Everyone agrees that courts should faithfully interpret and implement the words of statutes when they are clear.⁴³⁹ But whether a statute is “clear” often is in the mind of the judge.⁴⁴⁰ As a practical matter, the Court’s view regarding whether the Sherman Act is a no-fault statute could depend in part upon what particular justices think about the net economic effects of sanctioning all monopolies. As Justice Kavanaugh noted, the “absurdity doctrine”⁴⁴¹ prevents statutes from being interpreted irrationally. If a majority of Supreme Court justices believe that no-fault is, from an economic perspective, “absurd,” they surely won’t find that the Sherman Act embodies a congressional intent to impose sanctions on all monopolies. Although the Court surely would not convict a tiny local monopoly or a modestly sized innovative company of a no-fault violation, a court might not find this doctrine “absurd” if it were applied to such extremely large alleged contemporary monopolies as Google, Facebook, Amazon and Apple.⁴⁴²

The justices may believe, as we do, that reasonable people can disagree over no-fault’s net economic effects. This Article has shown that no-fault’s overall net effects on economic welfare depend upon a number of empirical issues whose effects are unknown and ambiguous from both an overall perspective and in particular contexts. If the justices believe that the net effects of no-fault are close from an economic perspective, and not “absurd,” they should be more likely to implement a “fair reading” of the words of Section 2 and impose sanctions on all monopolies. We wrote this Article because we believe these issues deserve thoughtful analysis and debate.⁴⁴³

In 2016, (then) Judge Gorsuch observed: “[A] judge who likes every result he reaches is very likely a bad judge, reaching for results he prefers rather than those the law compels.”⁴⁴⁴ If the current conservative Supreme Court does not want Section 2 of the Sherman Act to impose sanctions on all monopolies, it should heed the more recent advice of Justice Gorsuch: “If a statute needs repair, there’s a constitutionally prescribed way to do it. It’s called legislation.”⁴⁴⁵

The Sherman Act is a No-Fault Monopolization Statute: A Textualist Demonstration

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