Results tagged “antitrust” from PlanetGreen.org

Conscious Commitment: The New Deal and a New Start

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NewDealheader.jpgPart 4 of 5 in a series, "The History of Antitrust"

Nearly all historians agree that the crash that took place on October 29th, 1929, was inevitable. The noninterference of the Harding, Coolidge and Hoover administrations, combined with a trend of reckless investing choices, formed an environment in which national prosperity was unprecedented but not sustainable. However, it was not speculation itself that led to the Great Depression - it was the rampant consolidation in the market. Investors poured their resources into companies such as U.S. Steel, General Electric, the Union Pacific, and other organizations which did not face substantial competition; if the one of these corporations wavered, as they began to do in September of 1929, the market was not balanced out by gains in the value of others in the same industry. This lack of choice increased the risk to stockholders and was a major catalyst of the economic collapse.

When President Roosevelt began his revolutionary New Deal program upon assuming office, however, his focus was primarily upon raising prices and wages. He accomplished this goal partially by federal subsidies and large government purchases of commodities from grain to gold, and partially by enabling and encouraging businesses to promulgate agreements of "fair practices," which artificially inflated prices, limited manufacturing, and operatively curtailed competition. For a time these programs proved effective, but when the government began to scale back its spending in 1937 the economy slumped again. By the following year two million laborers had lost their jobs, production had come to a virtual standstill, and the stock market had precipitously declined, undoing much of the progress of the past four years. Clearly, despite the appearance of progress that the first phase of reforms had generated, some important ingredient was missing in the "alphabet soup" of the New Deal agencies.

On April 29th, 1938, Roosevelt delivered his fifty-ninth message to Congress. This time, he recognized that stringent regulation and massive spending could only serve as temporary fixes for the underlying economic problem; in order for a free economy to begin supporting itself again, it would have to be a truly free economy. In his address he announced a renewed commitment to the core principles of antitrust, suggested revision of the relevant statutes, authorized a massive study of current conditions, and declared that anticompetitive conduct would no longer be tolerated: 

"It is a program to preserve private enterprise for profit by keeping it free enough to be able to utilize all our resources of capital and labor at a profit... It is a program whose basic thesis is not that the system of free private enterprise for profit has failed in this generation, but that it has not yet been tried. Once it is realized that business monopoly in America paralyzes the system of free enterprise on which it is grafter, and is as fatal to those who manipulate it as to the people who suffer beneath its impositions, action by the government to eliminate these artificial restraints will be welcomed by industry throughout the nation."

TArnold.jpgThe main writers of the speech were also the men tasked with honoring this pledge over the next months. Thurman Arnold, a plainspoken professor from Wyoming whose approach to the antitrust laws focused almost solely on the interests of the consumer, and Robert Jackson, a former prosecutor who had recently concluded the celebrated tax evasion case against multimillionaire Andrew Mellon, quickly began acting to enforce the Sherman Act. They established an unprecedented pattern of instituting criminal proceedings, procuring indictments against both companies and individuals, and settling the majority of cases with nolo contendere pleas and stringent but fair consent decrees. In May a suit was commenced against Ford, Chrysler, and General Motors: a grand jury investigation into the coercive practices of these three titans returned eighty-six indictments, and while the other two companies quickly consented to cease their unlawful conduct, General Motors was criminally convicted. The dairy industry, which for years had kept milk off the shelves of retail stores and hiked the price of door-to-door deliveries by over two-fifths in the preceding years, came under scrutiny the following month: this investigation broadened until collusion was demonstrated between farm cooperatives, suppliers and jobbers, labor unions, and even local government officials. The construction conglomerate came next, and a massive effort ensued to ensure competition at all levels and lower both the cost of labor and the prices of commodities such as lumber, windows, gravel, sand, roofing, pipes, and even paint - by Arnold's estimate, this flurry of litigation saved individual Americans a total of $300,000,000. Chemical companies DuPont and Monsanto were accused of inflating the prices of various compounds sold to industries, researchers, and the government. The American Medical Association was sued for illicitly attempting to curb the availability of group health plans, duly convicted and fined, and defeated unanimously upon appeal to the Supreme Court. Under Jackson's direction, the primary players in the energy industry were indicted for a conspiracy to buy up all oil entering the market and reselling it at prohibitive rates to any companies attempting to compete with this cartel; the case made its way to the Court and resulted in another resounding antitrust decision. Several major pharmaceutical companies were prosecuted for restraining sales of antitrustradio.jpggeneric medicines. Prioritizing free competition above the possibility of negative publicity, the DOJ under the leadership of Arnold and Jackson filed complaints and criminal charges against major Hollywood producers for unfairly restricting showings of movies. The Associated Press was accused of geographical market division, and though it responded by denouncing Arnold as, among other things, an "idiot in a powder mill" (a term of opprobrium he proudly repeated at every opportunity for the next thirty years), on final appeal this case was also decided unequivocally in favor of the government. The record of this administration reflects an attempt to protect competition in industries receiving little public attention as well as those impacting nearly all Americans - tobacco cartels, meatpackers, tire makers, clothing fabricators, owners of petroleum pipelines, cheese companies, nearly every major railroad, optical equipment patent holders, produce distributors, shoe manufacturers, trucking conglomerates, gas station chains, glassware manufacturers, the radio broadcasting oligopoly, and even a popsicle stick monopoly were among the defendants in antitrust suits brought by Jackson and Arnold. Additionally, the renowned Alcoa prosecution was ongoing throughout these years.

Initially brought in 1937, the Alcoa case had been undertaken by Jackson to test whether "a 100 percent monopoly with the absolute power to exclude others constitutes an illegal monopoly per se under Section 2 of the Sherman Act." Although Roosevelt was dubious at the time, suggesting that a case of this magnitude could shift focus away from the central programs of the New Deal and hinting that a solution could be worked out in other ways, the Division persisted, and the following year the aluminum giant was brought to trial. The trial was the longest in American history at the time, lasting from June 1st of 1938 to August 14, 1940, and though heavily covered by the press in its first days, quickly dropped out of the public's eye. Over these twenty-five months, the government introduced over five thousand pages of exhibits and successfully proved that Alcoa had unlawfully restrained trade by entirely monopolizing commerce in pure aluminum ingot; slowly gaining control over the supply of raw ore until competition became impossible; entering into a conspiracy with a shady entity known only as "Limited" to restrict imports of raw aluminum and bauxite; selling selectively to two manufacturing companies in which it owned a large stake; and unlawfully pooling patents until it owned the rights to every automobile piston design in the nation. During the course of the case the DOJ not only presented the factual basis of their case, but also the  social and political importance of unhindered competition. As Jackson declared in December of 1937:

"The trend toward concentration is also a very real threat against the individual competitive system. This private socialism, this private regimentation of industry, finance and commerce, if not stopped, is the forerunner of political socialism. Our democratic forms of government offer a periodical chance at election time to check and change political administrations. But there is no practical way on earth to regulate the economic oligarchy of autocratic, self-constituted and self-perpetuating groups. With all their resources of interlocking directors,... with all their power to giver or withhold millions of dollars worth of business, with their power to contribute to campaign funds, they are as dangerous a menace to political as they are to economic freedom."

The government's vision of economic freedom was eventually rewarded. Though the federal district judge before whom the case was tried rejected their arguments and the Supreme Court could not muster a quorum to hear a direct appeal, the Second Circuit Court of Appeals reversed the lower decision and enjoined Alcoa from any future anticompetitive practices in an enduring decision authored by Judge Learned Hand. United States v. Aluminum Co. of America, 148 F. 2d 416. One seemingly unexceptional case had redefined our body of antitrust law to read not only that "unreasonable" trusts were illicit, but that any deliberate attempt, action, or conspiracy to restrain trade was impermissible. For the first time since the beginning of the antitrust movement, more than sixty years before, the goal of a truly free market seemed within reach.

Then, in 1941, the United States entered World War II. Almost all the products and commodities in which the Division had finally ensured fair trade practices were suddenly in short supply, and the need for a constant flow of manufactures to aid the Allied powers was prioritized above the economic rights of citizens and small businesses. As Arnold observed in 1943, "the war is being used as an excuse to soften provisions of the antitrust laws to pave the way for domination of industry after the war." The same year Roosevelt offered him a judgeship on the D.C. Circuit, and though many suspected this maneuver was less to reward Arnold for his work at the Division than to remove him from his post when rigorous implementation of the Sherman Act was no longer politically exigent, he did accept. His judicial career lasted only three years before he left to form a partnership with his trusted friend (and future Justice) Abe Fortas. Together, Arnold and Fortas pioneered the private civil suit as a tool of antitrust enforcement, as well as taking on several important civil liberties cases such as Gideon v. Wainwright, 372 U.S. 335 (1963). Jackson had long since left the DOJ for a seat on the Supreme Court, where he served for eleven years. Though the blueprint of successful prosecution which the pair had pioneered is still followed to this day, Arnold's departure still marked the end of any serious attempt to prevent unhealthy consolidation and coercion in American industry. The temporary suspension of free competition beginning with the war would not be fully lifted until the Eisenhower administration ended our involvement in Korea; and by then, politicians and the public had all but forgotten about the existence and importance of the Sherman Act.

Read the last part of the series, "The Golden Age of Antitrust"

Conscious Commitment: The Golden Age of Antitrust

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Part 3 of 5 in a series, "The History of Antitrust"

No mollycoddling.jpgFor the first ten years of its legal life, the Sherman Antitrust Act did not receive much attention from regulators or from the public. The two presidents of the 1890s, Grover Cleveland and William McKinley, emphasized sound tariff policy as a means of lowering prices and promoting competition and did not attempt to utilize the Sherman Act as a major tool to attain those same goals. However, their efforts proved highly ineffective, and at the turn of the century the country was conscious of the need for antitrust enforcement as it has never been before or since.

The activists of the day, commonly known as the Progressives, espoused an economic reform plan fundamentally dissimilar to the liberalism of today in several important respects. For example, though the Socialist party did gain some traction in these turbulent years under the leadership of dynamic, persuasive labor organizer Eugene Debs, the core of the movement sought to protect rather than overthrow the system of free market capitalism. Most prominent agitators of the day emphasized the responsibilities of corporations to offer fair wages to employees and fair choices to consumers, but did not contend that government ought to assume those responsibilities. As a result, attention centered on monopolization and its injurious effects. Reform magazines such as McClure's and LaFollette's stirred public sentiment against the trusts by highlighting individual cases of wrongdoing and by bringing complex economic debates directly to the public forum. Though this "muckraking" journalistic genre could include factually inaccurate or overly sensational serials, it also comprised works as enduring as Ida Tarbell's History of the Standard Oil Company, a meticulously detailed study of the methods used to restrain trade, and Louis Brandeis' Other People's Money, a scathing look at the banking industry that demonstrated how "The fetters that bind the people are forged of the people's own gold." The literary sphere contributed pioneering novels such as Upton Sinclair's The Jungle, the tale of an immigrant laborer who experiences firsthand the duplicitous practices of the meatpacking industry, and Frank Norris' The Octopus, a scathing indictment of the Central Pacific Railroad. The ringing words of Theodore Roosevelt's first State of the Union recognized this tide of public sentiment and epitomized the principles underlying it:

"There are real and grave evils, one of the chief being over-capitalization because of its many baleful consequences; and a resolute and practical effort must be made to correct these evils. There is a widespread conviction in the minds of the American people that the great corporations known as trusts are in certain of their features and tendencies hurtful to the general welfare... It should be as much the aim of those who seek social betterment to rid the business world of crimes of cunning as to rid the entire body politic of crimes of violence. Great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."

The central tenets of antitrust policy were as much a part of popular culture as of law; and this, in turn, spurred the authorities to take further action at almost every level. The federal Department of Commerce and Labor, Interstate Commerce Commission, and Federal Trade Commission were all creatures of this period, as was the Antitrust Division of the Justice Department. In 1904, the Supreme Court declared that the Sherman Act was a lawful measure designed to preserve and not encumber freedom of contract, in a landmark decision that compelled the Northern Securities railway conglomerate to dissolve: "If, in the judgment of Congress, the public convenience or the general welfare will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, that must be, for all, the end of the matter if this is to remain a government of laws, and not of men." Northern Securities v. United States, 193 U.S. 197 (1904). Additionally, the lawmakers of the several states repeatedly endeavored to address the problem of interstate monopolies affecting commerce within their borders. One commission report from the New York state legislature succinctly summarizes the importance of maintaining free commerce:

"1. Competition between buyers of the raw material enhances the price to the producer.
2. Competition between sellers of the manufactured article reduces its price to the consumer.
3. Reduction of price multiplies the number of consumers.
4. Increase of consumption stimulates production to supply the increased demand.
5. Increase of production implies an increase in the employment of labour.
6. Competition between the employers of labour enhances the wages of labour.
7. Enhancement of the wages of labour involves the material and moral amelioration of the condition of the labouring class.
8. Competition to sell stimulates to improvements in the quality of the article offered.
9. Competition to sell urging reduction in the cost of the article, ingenuity is quickened to the invention of expense-saving and labour-saving machinery, and so a stimulus is applied to the progress of the useful arts and sciences. In short, competition ministers to the welfare of all classes of the community, and augments the resources and power of the state." 


Roosevelt Taft.jpgThe first decade of the twentieth century was the zenith of antitrust enforcement in the United States. Citizens' mounting discontent with untrammeled oligopoly had finally found its voice in the progressivism of the Roosevelt administration, and the rare harmony between official policy and public beliefs led to real change in many cases. Yet these conditions could not last indefinitely. The special interests had been unable to maintain their hold over the popular presses and had even suffered major defeats in the courts such as that in Northern Securities - yet they did not quietly acquiesce to the societal shifts threatening their prominence. In 1912, they succeeded in wresting the Republican nomination away from Roosevelt, who had a majority of the popular vote, and instead supporting William H. Taft, whose record showed only unsuccessful, indifferent attempts to enforce the Sherman Act - and the resulting schism in the Republican party caused the election of little-known New Jersey governor Woodrow Wilson. He had made vague promises about economic liberty during the campaign, but did not actively protect that right once in office and failed to effectively enforce the Clayton Act of 1914. As Roosevelt complained from the stump, "The chapter describing what Mr. Wilson has done about trusts... would read precisely like a chapter describing snakes in Ireland, which ran: 'There are no snakes in Ireland.' Mr. Wilson has done precisely and exactly nothing about the trusts." 

The so-called golden age of the free market had clearly ended. Three years later America entered World War I, and the resulting shortages of many commodities enabled corporations to justify all manner of monopolistic actions in the name of the war effort. A decade of laissez-faire tolerance of the trusts followed, when the lack of competition was justified by an unsustainable illusion of prosperity. As subsequent events would prove, nothing short of complete economic collapse could reawaken the United States to the importance of antitrust enforcement.

Read the second part of this series, "Against Public Policy, Unlawful and Void"

Conscious Commitment: "Against Public Policy, Unlawful and Void"

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Buccaneers.jpgPart 2 of 5 in a series of posts, "The History of Antitrust"

Much of the social and economic landscape of our modern nation was shaped during the latter half of the nineteenth century. The Civil War had ended, and sectional interests and prejudices gave way to a growing consciousness of the United States as a unified world power. The continent grew progressively smaller as the East and West were linked by rail and by telegraph wire, enabling news, ideas and commerce to flow unhindered through established metropolises and territorial outposts alike. All these factors led to the centralization of industry: changes which initially increased national efficiency and opportunity, but which quickly resulted in monopolization and oppression. By 1888, this unprecedented trend of consolidation had led to widespread calls for drastic reform and governmental regulation of American business.

Ohio icicle.jpgThat same year, U.S. Senator John Sherman introduced a bill that addressed these worsening conditions. Reserved and diffident to the extent that he was commonly referred to as the "Ohio Icicle," moderate in most of his policies - the perfect antithesis to his gregarious, aggressive brother William Tecumseh Sherman (of the notorious March to the Sea) - Sherman was an unlikely trustbuster. However, twenty-three years before members of the Senate were even elected by the popular vote of their constituents, he was one of the few politicians with both the willingness and the authority to attempt to rectify the situation. The bill itself, with its clear wording and unequivocal prohibition of all forms of oligarchy, met with determined resistance from conservatives claiming by turns that Congress had no constitutional authority to prohibit monopoly, that protective tariffs and not corporate wrongdoing was culpable for the lack of healthy competition, that no such problem currently existed, and that the proposed legislation would infringe upon and not help to secure the civil liberties enumerated in the Bill of Rights. After lengthy debates on the issue, Sherman's opponents succeeded in postponing any action on his bill for two full sessions. When the merits of the measure finally reached the floor in 1890, the Senator offered an eloquent exposition on the evils of monopolization: "The sole object of such a combination is to make competition impossible... If anything is wrong this is wrong. If we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life. If we would not submit to an emperor we should not submit to an autocrat of trade, with power to prevent competition." This appeal proved ineffective, however, and the bill was referred to the Senate Judiciary Committee for revision.

When it came back to the floor, both its text and its meaning had been eviscerated. The original text of the proposed legislation, designed to protect farmers' cooperatives and labor unions while specifically and unmistakeably banning corporate restraint of trade, read:

"That all arrangements, contracts, agreements, trusts, or combinations between two or more citizens or corporations, or both, of different Sates, or between two or more citizens, or corporations, or both, of the United States and foreign states or citizens or corporations thereof, made with a view or which tend to prevent full and free competition in articles of growth, production, or manufacture of any State or Territory of the United States with similar articles of the growth, production, or manufacture of other State or Territory, or in the transportation or sale of like articles, the production of any State or Territory of the United States, into or within any other State or Territory of the United States: and all arrangements, trusts, or combinations between such citizens or corporations, made with a view or which tend to advance the cost to the consumer of any such article, are hereby declared to be against public policy, unlawful, and void."

When directly contrasted with the forceful, unambiguous terms of the original statute, the impact of the familiar first section of the revised version, commonly known now as the Sherman Antitrust Act - "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal" - is considerably lessened. Sherman himself was acutely aware that his landmark legislation had survived two long years of inaction and conflict only to be entirely vitiated a week before its passage. Perhaps he foresaw the disputes that would arise over the meaning of this vague sentence and the numerous court decisions that would deprive the law of much of its remaining force of the law in coming years; for, when a reporter asked him about the legislation bearing his name, he deprecated it as "totally ineffective in dealing with combinations and Trusts. All corporations can ride through it or over it without fear of punishment or detection." The first prosecutions brought under it illustrated the accuracy of his misgivings.

However, even though it was far from ideal, the Sherman Act was the law of the land and would now have to be enforced. The effort to do so would permanently transform American industry and do much to shape politics and law as the twentieth century approached.

Read the first part of this series, "The Trusts Take Control"

Conscious Commitment: The Trusts Take Control

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Grange Awakening the Sleepers.jpgPart 1 of 5 in a series of posts, "The History of Antitrust"

Economic liberty - the unfettered ability to maintain one's own property and earn one's own living by pursuing any lawful calling - has always been a vital part of American political tradition. It can be argued that the Revolutionary War itself was waged primarily to preserve this freedom, and the Fifth and Fourteenth Amendments to our Constitution inextricably wove it into our legal framework. However, although property rights are mostly safe from governmental despotism in this nation, we continue to face the complex problems arising when a private individual or corporation infringes on the rights of another. The history of antitrust legislation and litigation is the story of countless attempts to solve these problems.

Long before the populist movement of the late nineteenth century galvanized public sentiment in favor of regulating commerce to promote competition, the common law recognized monopolization as inherently illegal and immoral. Contracts "in restraint of trade," such as those in which parties agreed not to engage in a certain industry within a certain area or pledged not to directly compete with each other for customers while both remaining in business, have traditionally been held to be against public policy and therefore void. In England in 1689, it was concisely declared: "The law now is, that total restraints of trade are absolutely bad, and that all restraints, though only partial... are presumed to be bad: therefore if there be simply a stipulation, though in an instrument under seal, that a trade or profession shall not be carried on in a particular place, without any averments shewing circumstances which rendered such a contract reasonable, the instrument is void." Hunlocke v. Blacklowe, 2 Wm. Saund. 156. American courts also consistently enforced this rule well into the nineteenth century: in Jerome v. Bigelow, 66 Ill. 452 (1872), an acquisition deal between two physicians was voided as an unreasonable impediment to free competition; in Callahan v. Donnolly, 45 Cal. 152, a contract providing that a yeast manufacturer refrain from entering the yeast market for eight years was struck down; and in Harkinson's Appeal, 78 Penn. 196 (1875), a mother who sold a bakery and promised as part of the transaction not to "engage in the same business directly or indirectly" - and thereafter opened another bakery with her son in the same area - was not liable to the second owners of the establishment because the clause in question was unconscionable. This principle effectively protected consumers and small businessmen as long as trade was conducted on a largely local scale, but as nationwide and eventually worldwide commerce burgeoned, stronger prohibitions of anticompetitive conduct would clearly be needed.

The transcontinental railroads were probably more responsible for these societal shifts than any other industry. Built using millions of dollars of government subsidies and land cessions instead of private financing, the newly laid tracks were almost immediately profitable, as rail shipping between opposite coasts quickly proved far more efficient than previously used ocean routes. However, not content with the highly lucrative traffic that naturally fell to them, the railway corporations resorted to various forms of oligarchy and chicanery in the attempt to extract every last cent from the nation their lines now spanned. Partisanship and discrimination became rampant. In order to ensure that all direct and incidental profit was collected directly by railroad executives, freight and passenger rates to "company towns" was often drastically cheaper than to independent settlements, even when the latter were fifty miles nearer to a given starting point. Ticket costs plummeted whenever a new competitor emerged and rose again when the threat to the large roads' monopoly was either acquired or bankrupted. In some instances, packages were routed to major rail terminals such as St. Louis, San Francisco, or Omaha, and then sent on to their true destinations - which were often the same stations the incoming train had already stopped at. The public was understandably umbrageous, and several attempts to regulate this untrammeled extortion, including the repeated introduction of antitrust bills in federal and state legislatures, were mounted over the next decades. As one reformer, inveighing against the unjust practices of the Central Pacific, proclaimed twelve years before the passage of the Sherman Act: "I assert that discrimination against one place and in favor of another, or against one man and in favor of another, or against one corporation and in favor of another, is unjust upon the face of it, and not to be justified under any possible contingency." Countless editorials, orations, and exposes reiterated these sentiments, but while the railroad corporations continued to profit they were impervious to common opinion.

Similarly heedless of the rising clamor against monopolization, other companies were quick to follow its example. One of the most flagrant instances of such monopolization occurred in Nevada during the heyday of the Comstock Lode, when an enterprising engineer named Adolph Sutro proposed to construct a tunnel under the lode to adequately ventilate the mines and extract ore in a manner that would be both safer and cheaper than the current method hauling it up the shafts to the surface. Due to its obvious benefits, Sutro's plan initially enjoyed the backing of both the workers themselves and many of the mines. Yet he lost this support when prominent businessman and U.S. Senator William Sharon, who controlled virtually all of the region's ore mills and was an important shareholder in many of the mines, realized that the completed tunnel would allow new mills to spring up at the mouth of the tunnel and compete with his current cartel. Almost immediately the funding that had been promised to Sutro was withdrawn, he was denounced in local newspapers heavily influenced by Sharon, the state legislature even came close to revoking his easement, and he was bankrupted in his efforts to push ahead with construction in the face of these obstacles. Senator Sharon's monopoly continued unchallenged and it looked as though the tunnel project was defeated - until the early morning hours of an uneventful spring day four years later, when a wholly preventable tragedy occurred. The first shift of the day had just descended into the Yellow Jacket mine when it suddenly erupted in uncontrollable flames, killing forty-eight men and injuring hundreds who breathed the toxic smoke. It later emerged that the inferno could have been forestalled simply by providing better airflow in the subterranean passages, precisely what Sutro's tunnel would have done. Though Sharon continued his opposition to the undertaking, many recognized his partial responsibility for the fire, and excavation of the tunnel slowly but steadily continued. In 1878 it was finally completed.

By then, the antitrust movement was gaining traction in the political arena. Just one year before the completion of the tunnel, the Supreme Court decided in Munn v. Illinois, that corporations possessing a "virtual monopoly" over their given markets were subject to more stringent regulation than other businesses. By depriving consumers of other options, reasoned the Court, the owner of such a company "devotes his property to a use in which the public has an interest, [and] he, in effect, grants to the public an interest in that use, and must submit to be controlled by the public for the common good." 94 U.S. 113 (1877). Organized labor was becoming a major national force, and Terence Powderly, president of the Knights of Labor, defended Americans' right to a free market both by defending his position in speeches and debates and by pressuring the legislature to act on the matter before democracy itself was irreparably injured. In Congress, the Interstate Commerce Act was introduced, debated at length, and finally passed: the first significant national attempt to restrict railroads' discretion in setting fares and freight charges. On the lecturing circuit, renowned populist Mary Elizabeth Lease was declaring: "Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master." Across the U.S., citizens were beginning to realize that oligopoly had palpable and highly harmful consequences to them personally and collectively, and it was apparent that the present economic oppression could not continue for much longer. The only question remaining was precisely how it would be curtailed.

Conscious Commitment: My Response to Monsanto's Mendacity

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Earlier today, I posted Monsanto's response to a consumer complaint I filed with the Arkansas Attorney General's office, to report their routine practice of fraudulently overstating the protections they enjoy under United States patent law. Here is my reply to their arguments.

On July 29th, I received Monsanto Technologies, LLC's response to my consumer complaint, docketed #16-04415, alleging that Monsanto has engaged in a routine pattern and practice of misleading growers of its genetically modified, patented seeds as to the protections it enjoys under these patents. The gravamen of its answer appeared to be that Bowman v. Monsanto, 133 S.Ct. 1761 (2013), and J.E.M. Ag. Supply (dba Farm Advantage) v. Pioneer Hi-Bred, 534 U.S. 124 (2001), settled this matter by unilaterally granting Monsanto the right to prevent others from reproducing these patented seeds. However, even a cursory reading of those opinions reveals that those holdings have no significant relation to the controversy at hand, and Monsanto's entire contention therefore rests on obiter dicta and its own erroneously loose construction of the patent laws.


STATEMENT OF FACTS


Monsanto Technology, LLC, is a corporation organized under the laws of the state of Missouri. Monsanto is engaged in the development, licensing, and conditional sale of genetically modified agricultural seeds in interstate commerce. The natural biological and chemical makeup of these seeds has been tampered with in several ways, primarily to increase resistance to insect pests and Monsanto-made herbicides, and these changes have been patented. Monsanto routinely compels growers of the seeds to sign a uniform Technology/Stewardship Agreement ("MT/SA," the full text of which is appended below). In the MT/SA, the farmer agrees (among other things) to limit his use of the seeds to a single planting, to use only Monsanto herbicides on his crops, to allow Monsanto unbridled access to his property and Internet records, to use only Monsanto-approved cotton gins, and not to conduct or allow any independent studies of the safety or properties of the genetically modified technology. The MT/SA does not mention the applicable patent statutes, and there is no indication that signers are made aware in any way of the content of those laws. Monsanto holds hundreds of these contracts, nationwide and in Arkansas.


I. AN ASEXUALLY REPRODUCED PLANT, BY ANY OTHER NAME...


Over the past decades, Monsanto has fabricated several new varieties of genetically modified seeds. These are initially produced by an asexual process known as genetic recombination, in which DNA segments responsible for certain characteristics are isolated from widely varying organisms. These exogenous genes are subsequently injected into the DNA of a common agricultural crop such as corn, soybeans, or cotton. Monsanto has attained several U.S. patents on these mutated organisms, and under color of those patents asserts that it retains the right to prohibit growers from saving and replanting seeds or beans descended from the modified plants.


However, the relevant federal statute does not unilaterally grant Monsanto power to impose these restrictions. 35 U.S.C. §161 conclusively indicates the manner in which the United States Congress intended to protect the inventors of asexually created plant varieties:


"Whoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, may obtain a patent therefor, subject to the conditions and requirements of this title." (Emphasis supplied).


The position of this provision provides an important insight into how Congress envisioned asexually reproduced plants could be patented. Placement of a statute within a certain title or chapter of a federal law, though not necessarily dispositive, is a valid indicator of the legislature's intent in enacting certain measures and employing certain phrases. See Kansas v. Hendricks, 521 U.S. 346 (1997), Kellogg, Brown & Root v. United States ex rel. Carter, 575 U.S. ___ (2015). This law is located at the beginning of Chapter 15, which pertains to patents on asexually reproduced plants, indicating that the "conditions and requirements" imposed on holders of patents for these asexually reproduced plants are those contained in the sections immediately following in the same chapter. The relevant "condition and requirement" is found in 35 U.S.C. §163, which dictates that patents on these materials "shall include the right to exclude others from asexually reproducing the plant, and from using, offering for sale, or selling the plant so reproduced, or any of its parts, throughout the United States."


Monsanto contends that this chapter is inapplicable, since its patents are formally classified as "utility" patents and not "plant" patents. However, the plain text of §161 and §163 states that Congress intended all patents on plant varieties produced by asexual means to be issued within the parameters it unequivocally set up in this chapter. That unambiguous purpose, supported by decades of established case law, must not be frustrated by Monsanto's misplaced confidence - as evinced in its response to my initial complaint - that the mere denomination of its patents as "utility" patents completely immunizes it from the clearly enunciated will of the legislature. As the Supreme Court has continually held since 1819, "It would be dangerous in the extreme to infer... that a case for which the words of an instrument expressly provide, shall be exempted from its operation." Sturges v. Crowninshield, 4 Wheat. 122 (1819). There can be no question that the plants were asexually reproduced, and their nomenclature cannot be prioritized above their nature in an attempt to subvert the law.


II. MONSANTO'S LEGAL LEGERDEMAIN, CONTRASTED WITH ESTABLISHED INTERPRETATION


Not only is Monsanto's crafty construction of this clear, concise statute a transparently deliberate misunderstanding designed to enlarge its profits while unlawfully curtailing traditional farming practices, it is blatantly inconsistent with accepted interpretation of American law. As Justice Brewer once wrote for a unanimous Court:


"The primary and general rule of statutory construction is that the intent of the lawmaker is to be found in the language that he has used. He is presumed to know the meaning of words and the rules of grammar. The courts have no function of legislation, and simply seek to ascertain the will of the legislator... No mere omission, no mere failure to provide for contingencies, which it may seem wise to have specifically provided for, justify any judicial addition to the language of the statute." United States v. Goldenberg, 168 U.S. 95 (1897)


That enduring dictate has been postulated in the past by almost every court, and reaffirmed consistently up to the present. In United States v. Public Utilities Comm'n, Justice Frankfurter noted that courts should not "extrapolate meaning from surmises and speculation and free-wheeling utterances, especially... in disregard of the terms in which Congress has chosen to express its purpose." 345 U.S. 295 (1953). The decision of Alexander v. Worthington conclusively held: "We are not at liberty to imagine an intent and bind the letter of the act to that intent; much less can we indulge in the license of striking out and inserting, and remodeling, with the view of making the letter express an intent which the statute in its native form does not evidence." 5 Md. 485. Here as in Bidwell v. Whitaker, "In the statute before us, the language admits of but one construction. No doubt can arise as to its meaning. It must, therefore, be its own interpreter." 1 Mich. 469 (1850). Since 1874, it has been universally accepted that:


"The rule in pari materia does not, however, go to the extent of controlling the language of a statute by the supposed policy of previous enactments. Goodrich v. Russell, 42 N. Y. 177; nor can other statutes in pari materia be resorted to where the language of the one under consideration is plain and explicit. Ingalls v. Cole, 47 Me. 530." T. Sedgwick, Treatise on the Rules which Govern the Interpretation and Construction of Statutory and Constitutional Law 210 (2nd ed. 1874).


More recently, the Supreme Court reiterated: "First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court... must give effect to the unambiguously expressed intent of Congress." Chevron v. National Resources Defense Council, 467 U.S. 837 (1984). Twenty-four years later, it reminded those interpreting a law to "Start, as always, with the language of the statute." Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008), see also Oneale v. Thornton, 6 Cranch 53 (1810). In Lynch v. Alworth-Stephens Co., it was said: "A "plain, obvious, and rational meaning of a statute is always to be preferred to any curious, narrow, hidden sense that nothing but the exigency of a hard case and the ingenuity and study of an acute and powerful intellect would discover." 267 U.S. 364 (1925). And in Connecticut National Bank v. Germain, a unanimous Court famously set forth per Justice Thomas:


"In interpreting a statute a court should always turn first to one, cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there... When the words of a statute are unambiguous, then, this first canon is also the last: 'judicial inquiry is complete.'" 503 U.S. 249 (1992)


This echoed the rule once articulated by Lord Tenterden: "We think it much the safer course to adhere to the words of the statute construed in their ordinary import, than to enter into any inquiry as to the supposed intention of the persons who framed it." The King v. The Inhabitants of Great Bentley, 10 Barn. & Cres. 520, see also Pensacola Telegraph Co. v. Western Union Tel. Co., 96 U. S. 1 (1878), and Landreth Timber Co. v. Landreth, 471 U.S. 681 (1985). In Everett v. Wells, we find it again: "It is the duty of all courts to confine themselves to the words of the Legislature-- nothing adding thereto, nothing diminishing." 2 Scott N.C. 531, see also Waller v. Harris ("Words are to be taken in the natural and obvious sense, and not in a sense unnecessarily... enlarged." 20 Wend. 655). Just last year, it was ingeminated that "even the most formidable argument concerning the statute's purposes could not overcome the clarity of the statute's text." Klockner v. Solis, 568 U.S. ___ (2012), cited in King v. Burwell, 568 U.S. ___, ___ (2015). And in Pennington v. Coxe, Chief Justice Marshall set forth the governing rule in these univocal terms:


"That a law is the best expositor of itself... and that the details of one part may contain regulations restricting the extent of general expressions used in another part of the same act, are among those plain rules laid down by common sense for the exposition of statutes which have been uniformly acknowledged." 2 Cranch 346 (1804).


It is a long-standing principle that "where Congress includes particular language in one section of a statute but omits it in another... it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion," yet Monsanto's interpretation of the patent laws outright ignores their monosemous language. Keene Corp. v. United States, 508 U.S. 200 (1993), see also Russello v. United States, 464 U.S. 15 (1983). We must remember in this case that neither the judiciary nor Monsanto enjoys a "roving license... to disregard clear language simply on the view that... Congress 'must have intended' something broader." Michigan v. Bay Mills Indian Community, 572 U. S. ___ (2014). "As long as the statutory scheme is coherent and consistent, there generally is no need for a court to inquire beyond the plain language of a statute" - and it is therefore beyond the authority of any party involved here to question the wisdom of the statutory system Congress has established for the patenting of asexually reproduced plants, but it remains our obligation nevertheless to ensure that this system is obeyed as written. United States v. Ron Pair Enterprises, 489 U.S. 235 (1989). Similarly, in Wright v. Denn, Justice Story held that "the law does not decide upon conjectures, but upon plain, reasonable, and certain expressions of intention." 10 Wheat. 204 (1825). Nearly two centuries later the Court reaffirmed: "It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Roberts v. Sea-Land Servs., 132 S. Ct. 1350 (2012).


In United States v. Pulaski Co., it was held that "there is a strong presumption that the literal meaning is the true one, especially as against a construction that is not interpretation, but perversion." 243 U.S. 97 (1917). That statement seems equally applicable here. The pellucid provisions of 35 U.S.C., Chapter 15, show that the legislature clearly did not envision the near-absolute control over agricultural development now held by Monsanto. The chapter does not grant free rein to the holders of patents on asexually reproduced plants, a Congressional choice that was clearly intentional and must not be undermined. Instead, it strikes a carefully considered and delicate balance between agribusiness' incentives for new development and citizens' interest in ensuring that essential staple foods would not fall under the exclusive control of a handful of companies or inventors. The fact that Monsanto's patents are classified as "utility" patents cannot change the fact that their subject matter - asexually reproduced plants - are protected "subject to the conditions and requirements" set out in §163. The location of §161 and its transpicuous language both decisively testify to this.


III. MONSANTO'S MISREADING OF THE PLANT VARIETY PROTECTION ACT


7 U.S.C. §2402, part of the Plant Variety Protection Act of 1970 ("PVPA"), dictates that "The breeder of any sexually reproduced or tuber propagated plant variety (other than fungi or bacteria) who has so reproduced the variety, or the successor in interest of the breeder, shall be entitled to plant variety protection for the variety." However, this provision does not pertain to the question at hand for two reasons.


Firstly, the Act only applies to "sexually reproduced" plants, those created by controlled cross-pollination or other techniques to promote desirable characteristics by natural procreation. This description clearly does not cover the complex, synthetic process of manually altering an organism's innate genetic structure. As in the patent laws, the evidence that the legislature intended this logical division is apparent in the words of §2402 itself.


In the context of §2402, "sexually reproduced or tuber propagated" is a highly specific phrase, and its removal would have no effect on the clarity or grammatical structure of the sentence. If its inclusion had been supererogatory, Congress would doubtlessly have removed it during its 1994 or 1996 revisions of the section (found at Pub. L. 103-349 and Pub. L. 104-127, respectively). Instead, it made minor linguistic changes to the section and slightly altered the filing requirements for tuber propagated plants. When these two amendments were passed, asexually reproduced, genetically modified organisms had already existed for years. If Congress had meant these to fall under the PVPA they could simply have deleted the phrase "sexually reproduced or tuber propagated" - or, alternatively, replaced the phrase sexually reproduced" with the phrase "seed" so that the revised section began, "The breeder of any seed or tuber propagated plant variety..." This would have provided Monsanto's asexually reproduced plants lawful PVPA protection. But the legislature chose not to make that change, and therefore the PVPA only offers benefits to "sexually reproduced" plants. Any other reading of these terms would render the word "sexually" in §2402 mere surplusage, and therefore should be rejected. As the Supreme Court stated in Connecticut National Bank v. Germain, "Courts should disfavor interpretations of statutes that render language superfluous." 503 U.S. 249 (1992) (see also Gustafson v. Alloyd Co., 513 U.S. 561 (1995)).


Secondly, even if the PVPA does protect Monsanto's creations to a limited extent, the provision of the MT/SA proscribing farmers from saving and replanting seed still vastly exceeds the PVPA's protections. The vast majority of the soybeans, corn and cotton grown on American farms is not produced for horticultural purposes, and therefore 7 U.S.C. §2543 states:


"It shall not infringe any right hereunder for a person to save seed produced by the person from seed obtained, or descended from seed obtained, by authority of the owner of the variety for seeding purposes and use such saved seed in the production of a crop for use on the farm of the person, or for sale as provided in this section. A bona fide sale for other than reproductive purposes, made in channels usual for such other purposes, of seed produced on a farm either from seed obtained by authority of the owner for seeding purposes or from seed produced by descent on such farm from seed obtained by authority of the owner for seeding purposes shall not constitute an infringement."


This unmistakeably protects the right of Monsanto's customers to continue the traditional propagation of ancient and basic cultivated crops. Yet under this framework of laws, Monsanto would retain its rights as the exclusive seller of seeds containing its genetic traits, and these rights do adequately further "the Progress of Science and the useful Arts" as outlined in the Constitution.


IV. IRRELEVANCE OF J.E.M. AND BOWMAN


In its response to my complaint, Monsanto relies on J.E.M. Ag. Supply v. Pioneer Hi-Bred, 534 U.S. 124 (2001), and Bowman v. Monsanto, 133 S.Ct. 1761 (2013), to support its erroneous belief that it possesses unbridled power to use its patents to prevent its growers from saving and replanting seed. It contends that the core of this complaint is a res adjudicata, but in doing so it blatantly overstates the holding of those two relatively narrow cases. I respectfully submit that a pleading reliant on such irresponsibly loose construction be rejected by Arkansas, as reasonable examination of those opinions demands.


The ruling in J.E.M. does not deal with asexually reproduced plants at all and is clearly insufficient to judicially overrule the provisions of Congress in 35 U.S.C., Chapter 15. That case only establishes that "sexually reproduced plants" are intellectual property and are entitled to some patent benefits, and decides that the unauthorized resale of protected seed "for reproductive purposes" is unlawful. See 7 U.S.C. §2543, supra. Neither of those avouchments are at issue here, and therefore any reference to J.E.M. as though its words settled the contentions of this complaint is a manifest attempt to distract from the actual controversy.


Secondly, even though Monsanto raises Bowman as a defense of the MT/SA against any and all objections to the contract's validity, the patent exhaustion doctrine dealt with there has no bearing on this complaint. However, in its haste to apply this case to these unrelated circumstances, it appears to have wholly forgotten the hornbook rule that the judiciary can rule only on the questions brought properly before it. Neither Bowman nor the Federal Circuit ever questioned the scope of Monsanto's patents in light of §161, and therefore the Court that ruled on his claims was procedurally bound to remain silent on that issue. See, e.g., Duignan v. United States, 274 U. S. 195 (1927); California v. San Pablo & Tulare R. Co, 149 U.S. 308 (1893); Muskrat v. United States, 219 U.S. 346 (1911); United States v. Lovasco, 431 U. S. 783 (1977); Little v. Bowers, 134 U.S. 547 (1890); Ashwander v. TVA, 297 U.S. 288 (1936); Wood-Paper Co. v. Heft, 8 Wall. 333 (1868); United States v. Ortiz, 422 U. S. 891, 898 (1975); or even Monsanto's own contentions in Organic Seed Growers and Trade Ass'n v. Monsanto, 718 F.3d 1350 (2013). Favorable court decisions, even those issued from our nation's highest tribunal, have never been treated as blanket commendations or condonations of all the operations and practices of any corporation. I see no reason why their invocation for that purpose should begin now.


V. MT/SA NOT A VALID OR ENFORCEABLE CONTRACT


In §4(f)-(i) of the MT/SA, all growers of Monsanto seeds must agree:


"f. To use Seed containing Monsanto Technologies solely for a single planting of a commercial crop, except in the case of Genuity® Roundup Ready® Alfalfa where a single planting may be used for multiple cuttings.

g. Not to save or clean any crop produced from Seed for planting, not to supply Seed produced from Seed to anyone for planting, not to plant Seed for production other than for Monsanto or a Monsanto licensed seed company under a seed production contract.

h. Not to transfer any Seed containing patented Monsanto Technologies to any other person or entity for planting.

i. To plant and/or clean Seed for Seed production, if and only if, Grower has entered into a valid, written Seed production agreement with a Seed company that is licensed by Monsanto to produce Seed. Grower must either physically deliver to that licensed Seed Company or must sell for non-seed purposes or use for non-seed purposes all of the Seed produced pursuant to a Seed production agreement." MT/SA at 1.


These terms are grounded in the assertion found in section 5(b) of the MT/SA, infra, that "Monsanto Technologies are protected under U.S. patent law." However, Monsanto's extraordinarily loose construction of these patent laws is plainly repugnant to their actual meaning. This deceptive statement appears highly likely to mislead growers as to the rights they actually retain under the vaguely invoked laws, and defraud them into waiving liberties they are unaware they have.


The mere fact that the growers signed the MT/SA fails to validate its usurious terms. Any threadbare defense that Monsanto enjoyed an unrestrained freedom to contract with its growers has been contradicted by the Supreme Court in its decisions dating back to 1908 (Muller v. Oregon, 208 U.S. 412). In Norman v. Baltimore & Ohio R. Co., it opined that "Parties cannot remove their transactions from the reach of dominant constitutional power by making contracts about them." 294 U.S. 290 (1935). In Nebbia v. New York (291 U.S. 502 (1934)), it wrote that "government cannot exist if the citizen may at will use his property to the detriment of his fellows," thereby sustaining Justice Holmes' 1923 view that


"Contract is not specifically mentioned in the text we have to construe. It is merely an example of doing what you want to do, embodied in the word 'liberty.' But pretty much all law consists of forbidding men to do some things that they want to do, and contract is no more exempt from law than other acts." Adkins v. Children's Hospital, 261 U.S. 525.


In Chicago, Burlington & Quincy R. Co. v. McGuire, it held: "There is no absolute freedom to do as one wills or to contract as one chooses... Liberty implies the absence of arbitrary restraint, not immunity from reasonable regulations and prohibitions imposed in the interests of the community." 219 U.S. 549 (1911). In 1943, it described American law as "a soil in which the laissez-faire concept or principle of noninterference has withered, at least as to economic affairs, and social advancements are increasingly sought through closer integration of society and through expanded and strengthened governmental controls." West Virginia v. Barnette, 319 U.S. 624. And in 1937, it enunciated per Chief Justice Hughes:


"The Constitution does not speak of freedom of contract. It speaks of liberty and prohibits the deprivation of liberty without due process of law. In prohibiting that deprivation, the Constitution does not recognize an absolute and uncontrollable liberty. Liberty in each of its phases has its history and connotation. But the liberty safeguarded is liberty in a social organization which requires the protection of law against the evils which menace the health, safety, morals and welfare of the people." West Coast Hotel Co. v. Parrish, 300 U.S. 379.


See also Holden v. Hardy, 169 U.S. 366, Crowley v. Christensen, 137 U.S. 89, Patterson v. Bark Eudora, 190 U.S. 169, Jacobson v. Massachusetts, 197 U.S. 11, Mondou v. New York, N.H. & H.R. R. Co, 223 U.S. 1, Knoxville Iron Co v. Harbison, 183 U.S. 13, Booth v. Illinois, 184 U.S. 425, and McLean v. Arkansas, 211 U.S. 539.


Not only is freedom of contract a relative concept, its invocation requires a valid contract at the very least - and the MT/SA fails to meet that standard. The requirement that assent to a binding agreement be an informed and rational choice is one of the oldest and basic tenets of contract law. A waiver of any protections or privileges by contract or otherwise, particularly those economic and social liberties secured by the Due Process Clause, must be made "voluntarily, knowingly and intelligently." Miranda v. Arizona, 384 U.S. 436 (1966), see also Culombe v. Connecticut, 367 U.S. 568 (1961). A promise or bargain made in the absence of this mutual educated voluntariness - frequently referred to as consensus ad idem or a "meeting of the minds" - is no contract at all.


This simple rule is not in any way negated by the rise of mass commercial contracts, such as the MT/SA, that corporations enter into with hundreds or even thousands of their consumers. If this new social reality has any effect on established common law at all, it only renders the requirement more essential, lest large entities like Monsanto abuse their inherent advantage in the bargaining process. As was asked in Henningsen v. Bloomfield Motors: "Where can the buyer go to negotiate for better protection? Such control and limitation of his remedies are inimical to the public welfare and, at the very least, call for great care by the courts to avoid injustice through application of common-law principles of freedom of contract." 32 N.J. 358 (1960). See also Siegelman v. Cunard White Star, 221 F.2d 189 (2nd Cir. 1955) ("Standardized contracts have been described as those in which one predominant party will dictate its law to an undetermined multiple rather than to an individual. They are said to resemble a law rather than a meeting of the minds").


These contracts are also deemed unenforceable by Arkansas law, which says that "If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract." Uniform Commercial Code, §2-302. The accompanying official commentary provides a comprehensive definition of "unconscionable:"


"This section is intended to allow the court to pass directly on the unconscionability of the contract or particular clause therein and make a conclusion of law as to its unconscionability. The basic test is whether, in the light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract."


The apposite statutes have remained unchanged since 1998, but Monsanto continues to peddle the MT/SA despite their unambiguous prohibition of such behavior.


The MT/SA clearly does not meet these requirements. In a society where criminal suspects must be diligently educated as to their rights to remain silent and to the advice of counsel - information most Americans already know - any expectation that farmers should be intimately acquainted with the terms of obscure legislation seems inconsistent and unreasonable. As Justice Jackson noted from the bench in Federal Crop Ins. Corp v. Merrill, "No farmer worth his salt would waste any time reading a dreary publication like the Federal Register." 332 U.S. 380 (1947). It is doubtful that most American growers are any more likely to be acquainted with the minutiae of the patent laws.


VI. MONSANTO'S MONOPOLIZATION


Most cases brought under the antitrust laws require arduous discovery and a flurry of subpoenas before a prima facie case of monopolization begins to emerge. However, the evidence of Monsanto's attempts to restrain trade is much more publicly available - simply enlarge the "fine print" of MT/SA from its actual size (at which the font of the contract is less than one-fifth of a centimeter high), and the conspiracy becomes clear.


In §4, the farmer agrees to all of the following conditions, without any ability to bargain or negotiate the terms of the pact:


"d. To acquire Seed containing these Monsanto Technologies only from a seed company with technology license(s) from Monsanto for the applicable Monsanto Technology(ies) or from a licensed company's dealer authorized to sell such licensed Seed.

e. To acquire Seed only from authorized seed companies (or their authorized dealers) with the applicable license(s)...

g. Not to save or clean any crop produced from Seed for planting, not to supply Seed produced from Seed to anyone for planting, not to plant Seed for production other than for Monsanto or a Monsanto licensed seed company under a seed production contract.

j. Grower may not plant and may not transfer to others for planting any Seed that the Grower has produced containing patented Monsanto Technologies for crop breeding, research, or generation of herbicide registration data. Grower may not conduct research on Grower's crop produced from Seed other than to make agronomic comparisons and conduct yield testing for Grower's own use. Monsanto makes available separate license agreements to academic institutions for research...

m. Grower agrees... to deliver Genuity® Roundup Ready® Flex Pima cotton to an Arizona, California, New Mexico, or Texas gin that is on Monsanto's approved list...

n. To provide Monsanto copies of any records, receipts, or other documents that could be relevant to Grower's performance of this Agreement... Such records shall be produced following Monsanto's actual (or attempted) oral communication with Grower and not later than seven (7) days after the date of a written request from Monsanto.

o. To identify and to allow Monsanto and its representatives access to land farmed by or at the direction of Grower (including refuge areas) and bins, wagons, or seed storage containers used or under the control or direction of Grower, for purposes of examining and taking samples of crops, crop residue or seeds located therein. Such inspection, examination or sampling shall be available to Monsanto and its representatives only after Monsanto delivers or mails to the Grower a written notice at least seven (7) days in advance, and Monsanto also has reasonably attempted to discuss the visits with the Grower in advance of the visit.

p. To allow Monsanto to obtain Grower's internet service provider ("ISP") records to validate Grower's electronic signature, if applicable. To use on crops containing Roundup Ready®, Roundup Ready® 2 Technology, or Roundup Ready® Flex only a labeled Roundup® agricultural herbicide or other authorized non-selective herbicide which could not be used in the absence of the Roundup Ready® gene."


In light of the actual meaning of 35 U.S.C. §161 and 7 U.S.C. §2402, these terms are a flagrant violation of antitrust law and an infringement of growers' rights to the due enjoyment of their own property. As was said in Federal Trade Commission v. Algowa, "Fair competition is not attained by balancing a gain in money against a misrepresentation of the thing supplied. The courts must set their faces against a conception of business standards so corrupting in its tendency." 291 U.S. 67 (1934). Therefore, Monsanto's routine fraud, harassment, and policy of prosecuting groundless lawsuits on the basis of its thinly disguised chicanery must be terminated.


VI. STANDING


Lastly, in the final paragraph of its answer, Monsanto disputed my standing to file the complaint at the heart of this matter. Their argument on this issue seemingly insists that, in order to properly make the appropriate law enforcement authorities - in this case, those charged with the responsibility of preserving Arkansas growers' economic and social rights - aware of wrongdoing within their jurisdiction, a complainant is required to be a victim of the fraud or crime. I submit that this supposition is so objectively unreasonable that it does not require further refutation. See, generally, 4 W. Blackstone, Commentaries 12, Carpenter v. State, 62 Ark. 286 (1896), State v. Wilson, 80 Vt. 249 (1907), Suell v. Derricott, 161 Ala. 259 (1909), State v. Biddle, 124 Atl. 804 (Del. 1923), 18 U.S.C. §4.


CONCLUSION


The unequivocal wording of 35 U.S.C. §161 admits of no doubt that Congress intended patents on asexually reproduced plants to be issued "subject to the conditions and requirements" found immediately thereunder. The MT/SA, though masquerading as an attempt to ensure the security of Monsanto's scientific innovations, is actually an exorbitant contract that significantly exceeds the protection afforded to the inventors of asexually produced plants under federal law, and therefore should be nullified under the Uniform Commercial Code. As then-Judge Cardozo said in 1928, courts should decide cases "not [on the basis of] what has been done under the statute, but what may reasonably be done under it." In re Richardson, 247 N.Y. 401. Grave injustice would inevitably result from allowing Monsanto to continue mongering their unconscionable "agreements," and therefore Arkansas must act promptly to prevent the perpetuation of Monsanto's patently false claims within its borders.

Conscious Commitment: Monsanto Has Spoken

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Over the past months I have told you about my campaign to end Monsanto Technologies' unlawful monopoly on genetically modified agricultural seed, largely attained through its fraud as to the ambit of its United States patents. This objective has led me, at various stages, to enlightening calls with family farmers, conversations with former plaintiffs, consultations with First Amendment experts, correspondence with journalists, and complaints directed to federal and local antitrust and consumer protection officials. The authorities' response has varied widely - some states, like Missouri (where Monsanto is incorporated), disclaimed any jurisdiction to act over the matter - but Arkansas has acted to protect its growers from this deception, and recently referred my complaint to Monsanto.

Their response:

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I'll share my response - and the actual law of this controversy - with you shortly.

Conscious Commitment: Inmar, Inc.

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coupon.jpgYour wallet speaks for itself. Evidence of Inmar, Inc.'s dominance in the coupon industry is everywhere. Blazoned under the colorful trademarks of everything from breakfast cereal to batteries; stacked beneath the flashing lights of that dispenser on the grocery store aisle shelf; inserted in the newspaper curled up in that mailbox; folded and crumpled in that disorganized folder; printed on glossy vibrant paper and plastered onto the boxes composing that supermarket display.

Just last April, Inmar released a statement announcing that it had taken over coupon processing services for Procter & Gamble brands. This development cements the existing diarchy Inmar and its supposed competitor but actual collaborator, Valassis Communications, enjoy over this industry. In the statement, Inmar asserts that P&G formerly handled its own coupons, but this has not always been the case. A 2006 10-K form Valassis filed with the SEC states that P&G accounted for over 10% of that company's income the previous year, indicating that P&G has merely shuttled its business between the two corporations instead of comprising a third major player in the coupon-clearing market.

In the same 10-K form, Valassis names Inmar as one of its main competitors, but this claim is plainly refuted by the business relations they openly sustain. In its capacity as the owner of RedPlum, a mailing distributing coupons held by various companies directly to consumers, Valassis openly and actively aids Inmar in disseminating its coupons. Clearly this is not the aggressive competition one would expect from two companies which jointly "control approximately ninety-five percent (95%) of the total vendor coupon redemptions" (Compl. §16, 15-4434 (JLL), Dist. NJ (1015)).

The pattern of monopolization does not stop there, however. Though Inmar's coupon redemption and product return business is its most visible enterprise to consumers, it is certainly not its only venture. It is actually the predominant figure in the pharmaceutical returns market as well, and our research into its practices indicates that the leverage it enjoys as a result of its prominence could have far-reaching consequences for citizens compelled to trust it with their health.

It was a minor incident, and never should have been the major controversy it turned into. In November of 2008, Johnson & Johnson and its affiliate, McNeil Consumer Healthcare, noticed that several lots of their product Motrin failed to satisfy their manufacturing standards and were defective. This news immediately followed a string of recalls of other popular Johnson & Johnson products, including widely used cold and allergy medicines. Presumably to avoid the negative publicity that would result from expanding the recall to include the faulty Motrin, Johnson & Johnson decided to keep their findings secret. To do this, they formed a plan to send operatives into retail stores posing as customers, who would then buy back as much Motrin as possible. However, consumers who had already bought the defective Motrin would not be notified in any way of the problems.

Johnson & Johnson then hired Inmar to carry out this clandestine design, rejecting bids from several companies to handle the recall openly. Inmar promptly mobilized its employees and contractors, instructing them:

"You should simply 'act' like a regular customer while making these purchases. THERE MUST BE NO MENTION OF THIS BEING A RECALL OF THE PRODUCT! If asked, simply state that your employer is checking the distribution chain of this product and needs to have some of it purchased for the project."

Approximately five thousand convenience stores were searched in this fashion. The first two hundred and fifty stores yielded 595 vials, but the actual number of defective Motrin remaining on the market was dramatically higher - in one state alone, seven hundred and eighty-seven packages remained missing even after Inmar's feeble attempts to rectify the situation.

The recall was finally made public in February of 2010, over a year after Johnson & Johnson became aware of the problem and over ten months after Inmar became involved in the cover-up. Congressional hearings, civil lawsuits and criminal prosecutions ensued, but though Johnson & Johnson was made to take responsibility for its misconduct, Inmar escaped any meaningful penalty.

Now, five years after the federal firestorm subsided, Inmar is still in the pharmaceutical returns business, a job mostly composed of disposing waste, juggling returned or expired merchandise, and managing recalls. On its website, it proudly boasts that it provides these services to twenty-four thousand retail pharmacies (out of approximately twenty-eight thousand in the country), giving it control over 86% of the market. As Inmar has proven in the past, this anticompetitive situation could prove injurious to consumers which may never have heard its name, but still entrust it with their well-being every time they purchase the simplest of medications.

My Conscious Commitment to a Free Market

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thosedays.jpgCapitalism.

The word conjures up mental images of vast fields of low-lying factories turning out various commodities at unprecedented speeds. A board of directors, assembled on the fourteenth floor of some glass-and-steel temple of merchandising, discussing annual returns. A network of spidery railroads and ship routes and interstate highways, spun first around the continent and then the globe. A 3D model of the "next big thing," revolving slowly in circles on brightly lit screens. Firm handshakes, locked vaults, and indecipherable numbers and abbreviations whizzing by in a procession of green and red lights. An entire culture built around the acquisition of assets and influence alike, a fast-paced game with few rules and a universally coveted prize of market dominance.

However, this conception - of industries dominated by billion-dollar enterprises - cannot rightly be called by the term "capitalism." That word, in its pure and original context, denotes a free market, an economic environment requiring only ingenuity, efficiency, and hard work for success. That was conceived in a time of greater opportunity and untapped resources, when competition and the human drive to improve products, methods and ideas were essential to continued national expansion. That was reality before the age of consolidation, prior to the protracted decline of interpersonal commerce.

The national struggle to preserve capitalism as it was initially envisioned began in earnest in 1890, with the passage of the landmark Sherman Anti-Trust Act. This officially criminalized "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations" (15 U.S.C. §1), and was the first significant recognition of the right to a free economy. Corporate actions such as price-fixing, collaborating to eliminate competitors, and merging to dominate an entire field were thereafter prosecuted as infringements of this right. In the years following the law's enactment, it was used against railroad titans, banking institutions, manufacturers of overpriced necessities, and those seeking to further augment their inherently unequal bargaining power in the making of employment contracts. In 1914, it was buttressed by the Clayton Act, which protected labor unions from the threat of antitrust suits while strengthening the provisions targeted at corporate offenders and their powerful executives. Since then, the government's vigilance in ensuing compliance has fluctuated based on a number of factors, primarily the political climate and the courts' ideological tendencies.

Even though antitrust has dropped out of the national spotlight in the past decades, fair but uncompromising enforcement remains vital to the collective prosperity of both citizens and businesses, spreading wealth across an industry and its workers that would otherwise be concentrated in the coffers of a solitary company.

I. Monopoly Eliminates Jobs

In twenty-first century America, unemployment and low wages are major obstacles in the effort to restore the economy. Deleterious deals such as NAFTA and the proposed TPP shrink the domestic market by exporting jobs, but they are only part of the problem. Consolidation is another major factor in the stagnation of salaries and the dearth of available employment. 

Monopolization is a relatively simple phenomenon: two separate companies, each engaged in the manufacture of the same materials, separately employ approximately five hundred workers each. Then a merger is agreed on, and the number of workers necessary to operate one process, even if it turns out more products than one of the original two lines at a faster rate, will still be significantly lower than the combined total of the existing two companies' workforce. This reduction in the number of open jobs affects a living wage in two ways. Firstly, it lowers the wage outright by increasing the number of willing candidates for extant positions and denying dissatisfied applicants the opportunity to work for a nonexistent competitor. Secondly, it gives the new conglomerate increased power over the prices of its products, decreasing the purchasing power of the already substandard rate.

Though the political promises of the 2016 campaign have largely revolved around statutory increases in the minimum wage and the expansion of welfare benefits, these measures only serve to shift the costs of unlawful corporate practices onto the government. The monopolies have grown secure in their own dominance and lost all incentive to develop or maintain quality products, fair prices and wages, and accountability for any defects in their services, and these surface symptoms of a fundamentally blighted economic system cannot be remedied by relieving corporations of their core social functions and responsibilities.

II. Competition as a Civil Right

The relation between a free society and a free economy has been trivialized in recent years by the classification of antitrust enforcement as a regulatory matter. Violations of the Sherman Act are treated as mala prohibita - acts which are made illegal by statute, but which are not inherently immoral - and corporate convicts can officially expiate their wrongdoing with insignificant fines, suspended or nonexistent sentences, lenient civil settlements, and a complete lack of censure from their peers. The quiet and comparatively painless resolution of cases in an administrative and private, rather than adversary and public, venue fails to discourage recidivism and prevent similar transgressions by other companies. Therefore, though the streamlining of the process has facilitated secretive and speedy settlement, it has led to grave mistakes in the way monopolization is perceived and prosecuted.

The Due Process Clause of the Fifth and Fourteenth Amendments explicitly safeguards "life, liberty, and property," unequivocally prohibiting unreasonable encroachment on the right to acquire and maintain private assets. This is a double-edged statement, however, and its meaning has varied with the vicissitudes of over two hundred years of social changes. In the past it has been interpreted to preclude any regulation interfering with absolute "liberty of contract," even such essential measures as the minimum wage, the eight-hour day, and the Sherman Act (see Lochner v. New York, 198 U.S. 45 (1905), Morehead v. New York ex rel. Tipaldo (298 U.S. 587 (1936)). After the ensuing corporate lawlessness and rampant monopoly led to the Great Depression, this dogma was re-examined, and it was conclusively established that "the Constitution does not make conspiracy a civil right." Dennis v. United States, 341 U.S. 494 (1952). In its modern meaning, the Due Process Clause simply preserves the right to economic as well as political pluralism.

The liberty to conduct business without interference or intimidation from larger and more powerful private entities remains a vital constitutional right, however. See Vietnamese Fishermen's Ass'n v. Knights, 543 F.Supp. 198 (S.D. Tex 1982). Title 42 U.S.C. §1983, part of the Civil Rights Act of 1964, conclusively provides:  "Every person who... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."  The elimination of racial discrimination, the Act's main purpose, has largely been achieved - but its broader objective, the protection of equality on all fronts, requires a freedom of enterprise incompatible with the industrial oligarchy that defines our current economic landscape. The fight for our fundamental civil rights has resulted in monumental progress on multiple fronts, but it is far from over; our country cannot be truly free as long as this neglected element of due process is violated openly and daily.

Conclusion

To meet the burden of proof in antitrust cases, plaintiffs must "present direct or circumstantial evidence which reasonably tends to prove that the [defendants] and others had a conscious commitment to a common scheme, designed to achieve an unlawful objective." Monsanto Corp. v. Spray-Rite Serv. Corp, 465 U.S. 752 (1984). To honor the provisions of the Sherman Act by showing an equal level of "conscious commitment" towards a lawful and progressive objective, I am hereby launching a series to expose monopoly, explore the statutes that govern it, and examine the enforcement process in this country.

Calling All Commentary on TWC and Charter Merger

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Just yesterday, the Justice Department and Federal Communications Commission moved to allow the merger of Time Warner Cable and Charter, a $78 billion dollar deal that would have far-ranging effects on American telecommunications. The company created by this combination would be known as "New Charter," and would have unprecedented control over the nation's media.

The lawsuit, settled the same day it was filed, alleged that the merger would hurt online video distributors, or OVDs, that rely on their ability to obtain licensing for television materials. The proposed settlement precludes New Charter from "entering into or enforcing any agreement with a programmer that forbids, limits or creates incentives to limit the programmer's provision of content to one or more OVDs," and also disallows usage-based data caps. This serves to protect streaming apps and services dependent on access to video or music content.

However, even though the settlement protects OVDs, it does little to protect the general population from the anticompetitive environment this combination would create. For example, it does not address the effects New Charter's market dominance might have on over-the-air broadcast television or consumer Internet use. This omission could lead to the decreased availability of free, quality programming - but we can work to correct that oversight.

A 60-day public comment period will soon commence as the settlement is published in the Federal Register, and we at PlanetGreen encourage our readers to voice their concerns about the merger. Our opinions do matter, and can effectively preserve the airwaves as a public and free resource. All submitted comments will be posted online and made available to the U.S. District Court considering the settlement, giving regulators and the Court the added perspective of a public that will be deeply affected by their decisions.

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