Reconstruction, and the Unfulfilled Promise of Antitrust

By BENNETT CAPERS and GREGORY DAY. Full Text.

Wealth inequality remains as wide, and as troubling, as it was a half-century ago. While scholars have offered various explanations, there is a contributor that has escaped serious scrutiny: state monopoly power. It is not just that there is a long history of states and municipalities using their monopoly power to protect dominant interests, from enacting Black Codes to shuttering Chinese laundries to barring women, immigrants, and minorities from certain professions. It is also that states continue to use their monopoly power in ways that entrench inequality, from zoning restrictions to eminent domain to regulations that, in effect, bar Black women from braiding hair, Latino immigrants from operating food trucks, and more. To raise revenue, states even monopolize markets primarily patronized by vulnerable communities. And yet for the most part, antitrust law—concerned only with efficiency and consumer welfare—has ignored state monopolies. In fact, the Supreme Court has ruled that states are immune from antitrust review even though there is nothing in the Sherman Antitrust Act’s text to support this position.

This Article takes a different tack. It recovers the Sherman Antitrust Act’s neglected connection to anti-state monopolism, and to the Reconstruction Amendments, to show that righting the wrongs of slavery and the Black Codes—both a type of monopoly, a type of price fixing—was a core motivation for the Sherman Antitrust Act. Far from believing states should be able to use their monopoly power with impunity, the Act’s sponsor and namesake saw antitrust as a way to rein in discriminatory state monopolies.

In short, this Article makes the case for bringing Reconstruction to bear on antitrust. Doing so would not only bring antitrust law closer to its original goal of economic opportunity for all. It would also help fulfill the lost promise of Reconstruction. We say this because, given how the courts have weakened the Fourteenth Amendment, enabling antitrust law to scrutinize a state’s discriminatory monopolies would achieve an original purpose of the Reconstruction Amendments.