Antitrust law did not start in 1890. Though judges, scholars, and government officials often describe the Sherman Act as the foundation of antitrust law, its origins and its purpose have much deeper historical roots. The Case of the Monopolies, a British case decided in 1602, confirms that concerns about restraints of trade have long animated jurists and policymakers. And, perhaps most importantly, the Case illustrates that general antitrust concerns were, are, and forever ought to be grounded in a contextual analysis of what distribution of power will best protect individual liberty and advance the public interest and, more broadly, human flourishing.
This essay briefly reviews that decision, argues that Congress intended for the Sherman Act to incorporate common law antirust principles, and examines how a strictly textual reading of the Act may undercut that interpretation. The upshot is that the public interest should animate antitrust doctrine, as has arguably been the case since Job—as Solomon said, "He that withholdeth corn, the people shall curse him; but blessing shall be upon the head of him that selleth it."
The Case of the Monopolies reveals at least two key common law principles. First, that government protection of a narrow set of interests above those of the general public is almost always a red flag. And, second, that the ideal market turns on not just economic factors, but also broader concerns, such as the freedom and well-being of all market participants. These principles jointly embody the idea that the public interest, refined over time rather than defined by a central power, ought to guide antirust doctrine.
Queen Elizabeth I violated the first principle in granting Edward Darcy, a “groom of the queen’s privy chamber,” an exclusive license to import, manufacture, and sell playing cards. Thomas Allein, a haberdasher, took a gamble and launched his own playing card business. Darcy filed suit, seeking damages pursuant to the terms of his license. Sir Edward Coke, representing Darcy, made a compelling argument for upholding and enforcing the license.
First, the Queen wanted professionals to stay in their respective lanes—haberdashers should sell their wares and leave cardmaking to, well, Darcy.
Second, the Queen regarded the license and, by extension, the limited supply as a “healthful police-measure.” In short, she devised her own definition of the public interest, which included a fear that widespread use of cards would reduce the “service and work of servants,” and, as a result, would lead to want—“the Mother of Wo and Destruction.” Continuation of the license would certainly limit the likelihood of that outcome since the license drove the price of cards up to such an extent that only wealthy individuals—those supposedly with morals “beyond reproach”—could afford a deck.
Third, and finally, the Queen claimed a royal prerogative to regulate matters of recreation and pleasure.
Coke’s argument had very little basis in economic analysis. Instead, he centered his points on the aforementioned principles. Restricting the playing card market was defended as necessary for the good of all. Coke attempted to brush aside the preferential treatment of Darcy as a small part of a broader, justifiable scheme. He also doubled-down on the Queen’s conception of the public interest. The Queen’s definition, however, was declared by the relevant powers rather than identified by a survey of the multitude of interests and concerns held by the general public. Put differently, the Queen opted to prioritize her understanding of the public interest above that developed by the people themselves. Allein—and, ultimately, the court—pushed back on the same grounds, though with an emphasis on a broader understanding of what furthers the public interest and thus human flourishing.
On Coke’s concerns about haberdasher productivity, Allein and the court looked to common law protections of liberty to contend that such restraints more generally would result in idleness among laborers writ large, thereby hindering their ability to serve the Queen. Precedent reinforced this position. The court had previously recognized that a limitation on the creation and sale of clothes would restrict liberty by undermining the freedom of users to choose from a variety of clothes makers.
The court also contested the legal authority of the Queen to grant such a license given that it resulted more in private gain than in increased public well-being. This point aligned with a long-established understanding that such grants should be contingent upon the recipient serving the public interest.
On the whole, the court considered the grant to Darcy an “innovation,” which conflicted with another common law principle—incremental development of the law. Following the case, the House of Commons codified the connection between common law protections of liberty and limitations on monopolies.
Though the Case of the Monopolies has long been the subject of study by antitrust students and scholars, its core common law principles have too frequently been forgotten or neglected. This omission is all the more glaring given that the Sherman Act intended to incorporate many of those principles.
The legislative record and early judicial interpretation of the Sherman Act reflected an understanding that the letter and spirit of the Act advanced common law concerns related to monopolies, trusts, and related combinations.
Senator George Edmunds, one of the authors of the Sherman Act, described the legislation’s "fundamental desire and motive" as "the breaking up of great monopolies which get hold of the whole of a particular business or production in the country and are enabled, therefore, to commend everybody, laborer, consumer, producer, and everybody else." He challenged the idea that price reductions made possible by trusts and other combinations justified their existence. For Edmunds, trusts were wrong in principle because of the excessive control they wielded over consumers and producers. He was agnostic as to how a corporate entity acquired sufficient power to oppress, but rather spoke in general terms about preventing "great industrial establishments" from combining, a result he feared would inevitably be "destructive of the public welfare." As they did for Allein, liberty concerns that pervade the common law informed Edmunds’s opposition to the concentration of corporate power.
Edmunds was not alone in regarding the Sherman Act as a means to codify and extend common law concerns. Senator John Sherman repeatedly and explicitly made this point. Sherman stressed that the Act “does not announce a new principle of law, but applies old and well-recognized principles of the common law to the complicated jurisdiction of our state and federal government.” Public policy was intended to serve as the basis for determining which contracts would be null and void under the Act, according to Sherman. Enforcement of this broad mandate was not intended to concentrate power in the federal government, but instead to "arm the federal courts . . . [to] cooperate with the state courts in checking, curbing, and controlling the more dangerous combinations." Sherman anticipated that this approach would bolster state efforts to deal with "combinations that affect injuriously the industrial liberty of the citizens."
In the years immediately following passage of the Act, courts generally accepted Edmunds’ framing. Adherence to the letter and spirit of the law waned when courts later opted to narrowly rely on the Act’s text. This pushed businesses to manipulate their practices and corporate structures to comport with a hyper-textualist interpretation. In other words, to avoid running afoul of textually-prohibited actions, businesses looked for and found loopholes created by this interpretation. As summarized by Gilbert Montague in the Yale Law Journal in 1909:
The immediate result of this decision was a rush to consolidation in every branch of industry. If contracts, associations and loose combinations restraining trade in the slightest degree were illegal . . .[,] then contracts, associations and loose combinations should be abandoned for consolidation under single ownership in “holding corporations.”
Discovery of a supposed safe harbor by businesses had disastrous results for the industrial liberty of citizens. Montague explains:
Gigantic "holding corporations," designed to concentrate in single control power which previously had been diffused among groups of concerns, were formed on every hand. Before 1897 there existed scarcely sixty concerns that were dominant in their respective trades. During the next three years 183 such corporations were organized—seventy-nine in the year 1899 alone.
The Supreme Court arguably closed this apparent loophole in Northern Securities Co. v. United States, but it has so far failed to fully revive the concern for individual liberty and the public welfare that motivated Edmunds and others.
An increasing number of scholars, however, are rediscovering antitrust’s anchor in common law principles. Sanjukta Paul, Professor of Law at Michigan, has explored the “common-law tradition,” which “generally viewed markets as socially and legally constituted, rather than self-regulating,” as a part of her antitrust scholarship. Other scholars such as Zephyr Teachout, Daniel Crane, and Ariel Katz are exploring similar questions.
This return to the roots of antitrust is long overdue and warrants continued attention. Antitrust was always about much more than the price of a deck of cards; it was about broader concerns over corporate power and the well-being of consumers, laborers, and the public writ large. These latter interests evade definition and evolve over time, which makes them especially vulnerable if left unattended, as is the case under an unduly rigid and fixed understanding of antitrust laws. Modern corporations, though efficient and profitable, have achieved a scope and scale that allow them to limit individual liberty and hinder the public welfare with little oversight and minimal accountability. Too narrow an understanding of antitrust laws might suggest that such corporations have done no wrong. This approach to antitrust law obviously furthers predictability and stability in the law but may undermine the aforementioned principles that empowered Allein and motivated Edmunds and Sherman. Antitrust doctrine should not dodge the difficult questions of identifying when corporations have crossed a line, but, as intended, should rather incrementally work out when certain behaviors and actions conflict with the public interest and human flourishing.
Application of this evolutionary approach might sound, to skeptics, like an uncertain, unstable approach. Here again history suggests that full embrace of an approach grounded in common law principles may provide more predictability than expected. Back in 1903, Professor Bruce Wyman opined, “In this time of peril to our industrial organization faith in our common law may show the way out. It cannot be that this law has guided our destinies from age to age through the countless dangers of society, only to fail us now.” This cautious, yet persistent approach to detecting when concentrations of power render the rest of us unacceptably powerless may not immediately result in bright lines that guide conduct, but it is more desirable than ad hoc regulations that appear to further partisan ends more than the general welfare.
Corporations are also not without guideposts. The common law is full of signals as to when a large corporation morphs into a monopoly in practice, when tremendous corporate resources are employed to coerce rather than compete, and when corporate control over supply and production threaten upstarts. These signals will become clearer as scholars and others act on an increasingly clear call from both sides of the aisle for more scholarship on these and related questions.
The importance of scholarship on the common law roots of antitrust law is amplified in the post-Chevron era. In Loper Bright v. Raimondo, the Supreme Court asserted the authority of the courts to interpret the law, leaving agencies with the power to persuade, but not to control, judges as to why the agency’s interpretation is proper. Courts, freed from Chevron, will now look to more sources for interpretative guidance. Scholars should make that search as easy as possible when it comes to interpreting the Sherman Act, the Clayton Act, and related antitrust statutes and provisions.
Note from the Editor: The Federalist Society takes no positions on particular legal and public policy matters. Any expressions of opinion are those of the author. We welcome responses to the views presented here. To join the debate, please email us at [email protected].