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A Critique of Noncommercial Justifications for Sherman Act Violations

Nelson O. Fitts
Columbia Law Review
Vol. 99, No. 2 (Mar., 1999), pp. 478-507
DOI: 10.2307/1123584
Stable URL: http://www.jstor.org/stable/1123584
Page Count: 30
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
A Critique of Noncommercial Justifications for Sherman Act Violations
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Abstract

In this Note, the author critiques the development of noncommercial justifications for violations of Section 1 of the Sherman Antitrust Act. As the American and international economies rapidly evolve, the once-bright line between commercial enterprises and not-for-profit organizations blurs, and many profit-seeking businesses today pursue noncommercial as well as commercial ideals. More important, many not-for-profit organizations compete--while exempt from taxation--with traditional businesses for shares of the consumer market. The author argues that a philanthropic or not-for-profit organization should not be able to evade antitrust liability based on that identity. The Sherman Act reaches "trade or commerce"; it does not exempt philanthropically motivated commerce per se. Courts have improperly interpreted the Act in a way that conflates organizations that have no commercial effects with organizations that--despite their distinct commercial actions--allege moral or social "justifications" for those actions. The Note rejects the use of noncommercial justifications in antitrust analysis, and instead proposes that noncommercial justifications are wholly subsumed by the issue of the proper substantive scope of Section 1 of the Act. The author finds no positive indication of congressional intent to allow for noncommercial justifications in the Sherman Act. Distinguishing Congress's desire to exempt certain characters of activity and organization from an imagined intent to balance competitive effects and social welfare justifications, the Note traces the evolution of the latter precept, from its inception in a dictum in Goldfarb v. Virginia State Bar to its fruition in United States v. Brown University. In contrast to those cases, the Note argues that courts should focus not on whether a particular competitive harm is justified by special moral or social policies, but rather on the full and precise definition of the words "trade or commerce" as used in the Sherman Act. In seeking to invigorate the language of Section 1's scope, the Note is critical of the "coextension theory," according to which the Sherman Act is meant to be applied with the same substantive breadth as is the Constitution's Commerce Clause. The Note concludes that defendants should rest their defense on a claim that their actions are without the proper competence of the Act itself. Such a threshold analysis prevents the judiciary from intruding into a properly legislative sphere by making policy-based judgments about noncommercial justifications, and aids courts in enforcing the antitrust laws against those to whom Congress's policies were truly meant to apply.

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