Katrianna Brisack: May 2017 Archives

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.
Gerrymander.jpgYesterday, the Supreme Court affirmed the Middle District of North Carolina in Cooper v. Harris, 15-1262, deciding that the 1st Congressional District and controversial 12th District were impermissibly drawn for the purposes of political and racial gerrymandering. The 1st District encapsulates a comparatively contiguous expanse of territory in the northeast of the state, but also includes several highly irregular strips of land designed to contain predominantly Democratic and minority communities. The other zone before the Court in Cooper is the N.C. 12th, a chronically contorted district that is, according to the majority opinion, "making its fifth(!) appearance before this Court" (emphasis in original). The 12th is an extraordinarily narrow corridor one hundred and twenty miles in length, though no more than twenty miles wide at its broadest point in the vicinity of the city of Charlotte - its singular design has been varyingly described during its long career in the courts as "questionable" (Easley v. Cromartie, 532 U.S. 234 (2001)), "serpentine" (as it was in Shaw v. Hunt, 517 U.S. 899 (1996)),"snakelike" with "knobs" (the new and improved version before the Court today), "tortured," (appellees' brief in Cooper), and simply "bizarre" (Hunt v. Cromartie, 526 U.S. 541 (1999)).


In declaring the deliberate dilution of minority votes evinced in Districts 1 and 12 unconstitutional, the Court may be returning to its long history of protecting voters' right to cast a meaningful ballot. Prior to 1962, the judiciary was inclined to view such inequities as political and not legal problems, but as Justice Brennan expostulated in Baker v. Carr: "Of course the mere fact that the suit seeks protection of a political right does not mean it presents a political question." 369 U.S. 186. Two years later, the Court per Chief Justice Warren conclusively established that "Legislators represent people, not trees or acres. Legislators are elected by voters, not farms or cities or economic interests. As long as ours is a representative form of government, the right to elect legislators in a free and unimpaired fashion is a bedrock of our political system." Reynolds v. Sims, 377 U.S. 533 (1964), see also Miller v. Johnson, 515 U.S. 900 (1995). The Court has also long maintained that the Constitution was designed to "withdraw certain subjects from the vicissitudes of political controversy, to place them beyond the reach of majorities and officials, and to establish them as legal principles." West Virginia v. Barnette, 319 U.S. 624 (1943). In 2013, the Court notoriously departed from this tradition of protecting the integrity of Americans' voting rights in Shelby County v. Holder, in which it invalidated a key section of the Voting Rights Act. However, its holding yesterday may signal a restoration of its prior jurisprudence.


In a meticulously detailed, lively decision authored by Justice Elena Kagan, the Court unilaterally rejects the North Carolina redistricting system as unjustifiably discriminatory. The opinion begins with a clear standard by which the plan is to be judged: "The Constitution entrusts States with the job of designing congressional districts. But it also imposes an important constraint: A State may not use race as the predominant factor in drawing lines unless it has a compelling reason." It goes on to eliminate the State's contention that the plaintiffs, local voters David Harris and Christine Bowser, lack standing due to an earlier lawsuit in state court by the local NAACP. The merits of the case were then clearly dealt with. In striking down the new lines of District 1, Justice Kagan denounced North Carolina's unlawful scheme and unequivocally held that the Court will not "approve a racial gerrymander whose necessity is supported by no evidence and whose raison d'etre is a legal mistake." The final portion of the opinion clarifies the meaning of Easley v. Cromartie, which the State interpreted as requiring plaintiffs in redistricting cases not only to prove that a contested plan dilutes the votes of minority citizens, but also to propose an alternative plan achieving greater balance. Cooper concisely debunks that notion: "The reasoning of Cromartie II belies that reading. The Court's opinion nowhere attempts to explicate or justify the categorical rule that the State seems to find there... And given the strangeness of that rule - which would treat a mere form of evidence as the very substance of a constitutional claim... - we cannot think that the Court adopted it without any explanation. Still more, the entire thrust of Cromartie II runs counter to an inflexible counter-map requirement." By renewing the Court's commitment to ensuring the preservation of fundamental voting rights and clearly expounding the elements of a gerrymandering claim, Cooper appears to mark a return to the tradition of Reynolds and its progeny.

Octopus.jpgFour days ago, the Senate Judiciary committee held a confirmation hearing for Makan Delrahim, President Trump's nominee to head the DOJ Antitrust Division. The varying policies of each incoming administration can profoundly impact both the livelihoods of thousands of American workers and the prices of hundreds of commodities nationwide - and regardless of prevailing political ideology, it remains a vital responsibility of the Justice Department to ensure that the Sherman and Clayton Acts are stringently and equitably enforced.

Despite his earlier work as a Division prosecutor, Delrahim's complete record on the subject is deeply troubling, as he has helped to orchestrate and obtain regulatory approval for several major mergers. Though he has promised to recuse himself from participation in any action on the merger between Anthem and Cigna due to his earlier representation of Anthem, his involvement with many other conglomerates - Blue Cross and Blue Shield, Google, Merck, U.S. Airways, Johnson & Johnson, Pfizer, and Comcast, to name a few - presents a myriad of other conflicts of interest. Furthermore, his comparatively laissez-faire approach to preserving the free market makes him a questionable choice to be charged with that very task. In the past he has criticized European regulators' rigorous enforcement of their antitrust laws and successful prosecution of foreign-based trusts as "protectionist" abuses of power, comments which suggest that he may not be willing to protect the American free market from the threat posed by alien monopolies engaged in widespread commercial activity here. He has also expressed his belief in virtual immunity for the holders of patents, trademarks, and other intellectual property rights, even when such companies are clearly marketing their products in violation of the Sherman Act. In a climate where increasing oligopoly in the pharmaceutical industry restricts the availability of potentially life-saving medications and raises health insurance premiums even further, and where agribusiness mergers such as Bayer's ill-advised acquisition of Monsanto and ChemChina's notorious purchase of Syngenta could further monopolize the seed industry, it is crucial that regulators remain prepared to challenge these deleterious consolidations. Delrahim has shown no proof that he will adequately do so, and therefore Conscious Commitment cannot endorse his nomination.

Monsanto Executives Sell Off Company Stock

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moneyandrun.jpgSomething is evidently astir inside renowned manufacturer of chemical herbicides and purveyor of unconscionable seed contracts Monsanto, judging by the massive sales of company securities by several prominent executives.

Recently, Monsanto CEO Hugh Grant disclosed in an SEC filing that he has sold 149,230 shares of stock at an average price of $116.15 each, raking in a total of 17.3 million dollars from the transaction and lowering his stake in the corporation by roughly twenty-eight percent. Others at Monsanto have also attempted to divest somewhat: vice president Steven Mizell sold off twenty-one percent of his shares for approximately 1.6 million dollars last April, and sales of Monsanto stock by other company officials and employees, in the past three months alone, have exceeded ten million dollars.

Monsanto's financial prospects have been shaky over the course of the past year. Just this week, it was compelled to withdraw from a deal with John Deere providing for the sale of its Precision Planting assets after the Justice Department challenged the acquisition on antitrust grounds. Even before these latest stock sales, the prices of Monsanto securities had fallen considerably since Bayer AG agreed to pay $128 per share in September. There is currently a multi-district class action litigation pending, alleging that Monsanto knowingly falsified scientific data to conceal the cancer-causing properties of its popular herbicide Roundup. Since the filing of this lawsuit, initial steps have been taken by the State of California to label Roundup as a possible human carcinogen. In addition to all these recent developments, Monsanto has engaged for decades in a pattern and practice of deliberate deception as to the extent of its patents on genetically modified agricultural seeds, and the public is slowly becoming aware of this cozenage. It is unknown whether one or all of these factors influenced the extraordinary actions of Grant, Mizell, and other Monsanto employees with detailed knowledge of the corporation's internal affairs. However, their anxiousness to lessen the connection between their personal finances and the fortunes of the company largely speaks for itself.

About this Archive

This page is a archive of recent entries written by Katrianna Brisack in May 2017.

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