Sherman’s Missing “Supplement”: Prosecutorial Capacity, Agency Incentives, and the False Dawn of Antitrust Federalism

Article by Daniel E. Rauch (March 13, 2020)

When the Sherman Act passed in 1890, it was widely expected that it would operate primarily as a “supplement” to vigorous state-level antitrust enforcement of state antitrust statutes. This did not happen. Instead, confounding the predictions of Congress, the academy, and the trusts themselves, state antitrust enforcement overwhelmingly failed to take root in the years between 1890 and the First World War. To date, many scholars have noted this legal-historical anomaly. None, however, have rigorously or correctly explained what caused it. This Article does.

Using historical and empirical research, this Article establishes that the best explanation for the early failure of state antitrust enforcement was prosecutorial incapacity: state attorneys general and local prosecutors simply lacked the incentives and resources to prosecute antitrust cases. Along the way, the Article also offers a rigorous rejection of each main alternative explanation proposed for the early failure of state antitrust enforcement, including those based on doctrinal constraints, state statutory texts, and contemporary politics. Finally, the Article closes by suggesting implications this historical insight might have for the cutting-edge issues facing today’s state antitrust enforcers, from local efforts to control healthcare costs to multistate actions against Silicon Valley behemoths like Apple and Amazon.

Read the full Article here.