Senate Judiciary Committee video
Ana Reyes, as nominee to the U.S. District Court for the District of Columbia, appears before the Senate Judiciary Committee, June 22, 2022.
President Biden has received praise for outpacing previous Republican and Democratic administrations in appointing judges to the federal bench, as well as picking nominees from more diverse backgrounds, including a record number of public defenders.
But the withdrawn nomination of Michael Delaney last month was a flashpoint in the limitations of Biden’s judicial appointments, which have far less consistently supported a diversity of worldview when it comes to the issue of corporate power.
Delaney’s nomination came under fire from a range of progressive groups for his prior legal work undermining abortion rights and the regulatory state. This coalition argued that Delaney’s record, including his work on the board of a conservative legal foundation, contradicted numerous policy goals set by the administration. But in one key issue area flagged by his critics, Delaney is far from an outlier among other Biden-nominated judges to reach the bench: how to evaluate monopolization cases.
“We’ve had concerns with Biden’s judicial selection on corporate power and how their previous legal work may color the way they rule in court on monopolization cases,” said Katie Van Dyck, senior legal counsel for the American Economic Liberties Project (AELP).
In a letter to the Senate opposing Delaney’s nomination, AELP pointed to the nominee’s suspect response in questions for the record asked by the Senate Judiciary Committee about what market share a firm must control in order to be considered a monopoly. Delaney wrote that he would support Supreme Court precedent, which could reach as high as 90 percent, and then cited a separate case, Eastman Kodak Co. v. Image Tech. Servs. from 1992, which set the bar at an 80 percent market share.
As it turns out, that specific question about market share has been asked repeatedly of virtually all Biden judicial nominees. And Delaney’s answer has been the status quo response for the majority of Biden’s picks, according to a review of judicial documents conducted by the Prospect. The vast majority of Biden’s nominees have selectively cited the same case law supporting an exceptionally high bar for monopolization cases, which would preclude numerous antitrust cases that have won at the Supreme Court in the past. In fact, it would even pronounce pending antitrust cases filed by Biden’s Department of Justice dead on arrival and undermine the administration’s policy objectives to rein in monopoly power.
Though concerning, the judges’ responses overall are not a wholesale rejection of the administration’s competition agenda. Rather, they lack a nuanced understanding of the legal issues surrounding antitrust, which could present problems down the line for the anti-monopoly revival the White House has attempted to undertake.
SINCE THE WHITE HOUSE BEGAN nominating judges, Sen. Josh Hawley (R-MO) has been the only member of the Senate Judiciary Committee consistently submitting questions for the record on antitrust law. Specifically, he has been asking judges one question: whether they agree with a famous pronouncement by Judge Learned Hand in the landmark 1945 case U.S. v. Aluminum Co. of America (Alcoa) that 90 percent of market share “is enough to constitute a monopoly; it is doubtful whether sixty or sixty-four percent would be enough; and certainly thirty-three per cent is not.”
The judges’ responses are not a wholesale rejection of the administration’s competition agenda, but they lack a nuanced understanding of the legal issues surrounding antitrust.
Though Sen. Hawley certainly has a partisan interest to press Biden’s picks, the senator is also a long-standing critic of corporate concentration, who routinely joins Democrats in sponsoring new antitrust legislation and bucked his own party by voting for Lina Khan’s confirmation as chair of the Federal Trade Commission.
The Alcoa ruling referenced by Hawley is a charged case that requires some historical context. First, although the case was decided by the Second Circuit Court of Appeals, it holds the weight of a Supreme Court ruling because of a backlog of cases put on hold during World War II. Many judges deflect Hawley’s question by vaguely saying they will uphold Supreme Court precedent, apparently unaware that the case is a Supreme Court ruling, for all intents and purposes.
The Alcoa ruling actually delivered a major victory to anti-monopoly reformers by undoing a legal straitjacket put on antitrust which required plaintiffs to prove that a firm specifically intended to monopolize an industry—a nearly impossible standard to prove in court. But the question posed to judges isn’t asking about the Alcoa case as a whole. The line by Judge Hand about 90 percent market share, though mostly a passing observation and not central to the deciding of the case, was later retrofitted by the Chicago school’s approach to antitrust. Led by Robert Bork, this transformation beginning in the 1970s sought to make economic measurements about market share the modus operandi for the entire body of law.
“Market definitions became the most important question in courts, so if you control the economic measurements you can determine litigation,” said Daniel Hanley, a legal analyst at the Open Markets Institute.
Effectively, the Hawley question is testing a judge’s attitudes toward a major pillar of the Borkian turn in antitrust. Though somewhat of a double-barreled question, it tends to elicit revealing responses.
A handful of Biden judges have gone beyond even Delaney’s answer, saying outright that they will abide by the Judge Learned Hand quote provided by Hawley. Those judges include two of Biden’s picks for the Second Circuit Court of Appeals, a crucial bottleneck for antitrust cases.
“The decision quoted appears to be good law in the Second Circuit, and as such I would be bound to follow it,” said one of those Second Circuit nominees, Sarah A.L. Merriam, who was confirmed to the bench last September.
“A decision of the Second Circuit is binding on courts in that circuit … [It] has not been overruled and I am therefore bound to apply its holding regardless of my personal views,” said Alison Nathan, also a judge on the Second Circuit confirmed in November 2021. It’s an example of numerous other answers from judges implying that the ruling is from the Second Circuit, rather than a Supreme Court ruling.
The most common answer from judicial nominees, however, tends to be more ambiguous. In a typical response, judges assert that they will follow the precedent established by the Supreme Court—which again includes the Alcoa case—and the specific district court or court of appeals they’re being nominated to. Then, they cite the relevant case law they’re familiar with that touches on market share.
“The Supreme Court has held that evidence that a party holds more than 80 percent share of the product market was sufficient to support a finding of monopoly power when there were ‘no readily available alternatives,’” said Rachel Bloomekatz, a nominee for the Sixth Circuit who still awaits a confirmation vote.
Some judges offer a broader range for the exact market share required in a case, but with a hard floor well above 50 percent.
“A company’s control of less than 60 percent of the market share is presumptively insufficient to constitute a monopoly,” said Ana C. Reyes, after also citing a case, Eastman Kodak, that posits an 80 percent market share. Confirmed to the D.C. District Court in February, Reyes recently presided over a crucial antitrust case filed by the Justice Department to block a merger between the second- and third-largest companies for residential door locks and digital security equipment. Based on her corporate-friendly lines of questioning during the trial, the government opted for a settlement to avoid the compounded risks of losing the case.
A firm’s power to throttle competition and bend markets to its will is the essential feature of a monopoly.
The uniformity in the case law cited by Biden’s judicial picks is almost more revealing than their individual answers. The most frequently referenced cases are Eastman Kodak, American Tobacco v. U.S., U.S. v. Grinnell Corp., and occasionally the notorious 1990s Microsoft case. According to several antitrust experts, this bundle of cases by and large reflects the conventional cases taught by the legal academy where the Chicago school’s thinking still holds sway. While they’re not all unfavorable rulings for anti-monopolists, they together form a narrow set of the case law that supports a higher market share threshold than necessary.
For example, no judge cites the landmark Sherman Act case against Paramount Pictures from 1948, which was one of four major studios at the time and didn’t have a market share over 50 percent. In a number of successful monopsony cases, filed under the Sherman Act, a firm can have a far smaller overall market share. It’s a clear indication that President Biden hasn’t nominated any judges with backgrounds in antitrust law, despite the fact that his administration has made anti-monopoly policy a priority in its agenda.
The stakes of the responses on market share are not trivial. If Biden’s judges hold to a 60-to-80 percent market share based on cherry-picked cases, a number of ongoing antitrust cases could be blocked in the courts. For example, Facebook and Amazon wouldn’t meet that threshold, and arguably even Google, depending on how its control over digital advertising is calculated.
The point isn’t that there’s necessarily a single correct market share number that judges should be citing. It’s that the actual law in question, the Sherman Act, does not set an exact market share, nor does it even mention that market share must necessarily be a factor. A firm’s power to throttle competition and bend markets to its will is the essential feature of a monopoly.
“Judges should understand market share is only one factor in a monopolization case—and their answers should reflect that,” said Van Dyck.
As both Van Dyck and Hanley explained, a judge doesn’t necessarily have to be an expert in antitrust law to be considered reliable on monopolization cases. What matters more is how judges view power imbalances between the relevant parties in a lawsuit, from monopolization cases to contract disputes between employers and employees.
In this sense, Hawley’s highly technical question about market share isn’t the most important matter to evaluate a judge’s disposition to antitrust. But it’s the only one on the record. No Judiciary Committee Democrats have managed to ask any questions of Biden judicial nominees about antitrust law or policy. The judge’s responses point to a broader conflict in Biden’s judicial selection process, which has failed to properly screen nominees on corporate power. But Senate Democrats have failed to follow up on this as well.
