How do you know if somebody has broken “anti-monopoly law?”
The law-breaking impulse often starts in a corporate boardroom, or perhaps starts as the pipe dream of some headstrong executive.
Many lawyers are brushing up on antitrust law as talk mounts over the case the Justice Department is bringing against Alphabet Inc. — the parent company of Google — over its search-engine dominance. Others are reaching for law books over the power exercised by any of the high-tech giants — Apple, Alphabet, Amazon, Facebook or Netflix — over buyer shopping habits.
Monopoly law embraces the notion the companies should be accountable for activities that illegally “corner the market,” raise prices, restrict competition, or simply kill a competitor.
From there, it just gets complicated. People come up with ways to test monopoly practices faster than the laws can be written. It takes years to become familiar with predatory pricing, duty to deal, the essential facilities doctrine — or plain vanilla price fixing.
Monopoly law touches virtually everyone, whether they know it or not. Free-falling airfares became a national obsession in 1992, touched off by perhaps a single executive’s reaction to a fare war. Monopoly power touched Aspen in a case over Aspen ski pricing that reached the Supreme Court in 1985.
We can only guess the bumps ahead for those arguing the Google case, starting with that firm’s dominant “search” browsers.
Antitrust doctrine has been used to break up huge “combines” — like railroads or banks — in the late 19th century. It hit AT&T when that outfit was ordered broken up into the “baby Bells.”
Antitrust is a part of federal law. It began with a decision by Congress to outlaw any “combination or conspiracy in restraint of trade” in the 1890s.
Here the arguments start. The body of law gets so messy that it develops mostly through progressive court cases defining it over the years.
In the 1970s, Aspen’s four mountains were owned by two competing outfits — one for Aspen Highlands, and one (Aspen Skiing Co.) for the other three. To make it easier on visitors, the two companies got together to sell a joint ticket that allowed skiers to pick. It fell to an infamous pair of surveys each year to sample where each portion skied. That number was used to split the take between companies.
The ski outfits were each run by a headstrong boss — “DRC “Darcy” Brown for SkiCo, and “Whip” Jones at Highlands. As the case alleged, one day Brown and the SkiCo brass decided to do away with the surveys. They told Jones at Highlands he had to accept a flat 15% split to keep the ticket. This was below Highlands’ actual take, and bound to inflict losses, so Jones sued. A jury in federal court in Denver agreed, and threw the book at SkiCo, awarding Highlands “treble damages” under the law.
SkiCo lost an appeal, and pleaded with the Supreme Court to hear its claim that it did not have a legal “duty to deal” with a competitor. The claim was imaginative, and might have won except for a series of “dirty tricks,” SkiCo concocted. It simply “airbrushed” Highlands off some Aspen ski maps causing it to completely disappear — on paper. Monopolies themselves aren’t illegal, but nasty practices can override that rule.
The Supreme Court messed with what might have been a ruling setting new law. It found, 8-0, SkiCo ran afoul of good faith. It had to pay about $11 million — chump change by modern standards. Later, SkiCo solved all future monopoly issues. It simply bought Highlands.
The air fare case ensnared all airlines except Southwest. In the summer of 1992, American Airlines announced a simplified fare scheme, reducing the types of tickets it sold. Northwest saw a fare war looming, and came out with a “Grownups Fly Free” promotion — essentially a half-off summer fare sale. American reacted harshly. It simply cut all fares in half, setting off a frenzy of flying that summer.
Northwest and Continental airlines sued. They claimed that American’s fares amounted to “predatory pricing” — a below-cost sale designed to bleed a competitor or force it out of business.
The jury had to decide which “city pairs” American intended to dominate. The case had taken four weeks, but the jury returned in only a few hours to tell the judge it couldn’t even answer that single question. Another case that sounded like a bell-ringer was lost in the details.
New case law could be made if the Google case reaches high heat. Few can imagine how to regulate “free search,” or if it gives Google an unfair “gateway” advantage over others. All will watch closely, anxious to get hands on the way Amazon charges small businesses, or how Facebook spots the faceless fabrications on the prowl there.
It’s bound to get gnarly.
The writer (email@example.com) is a founder of the Aspen Daily News and appears here Sundays.