Both the United States government and the governments of the fifty states use antitrust principles to regulate firms. A collection of federal statutes, first and foremost the Sherman Act,1 outlaws anticompetitive behavior under federal law. The federal executive branch, through the Federal Trade Commission (FTC) and the Department of Justice’s Antitrust Division (DOJ), enforces the federal statutes.2 Meanwhile, each state has its own antitrust statutes outlawing anticompetitive behavior.3 The states’ agencies enforce their own antitrust laws, and they can enforce federal antitrust law as parens patriae4 for full treble damages thanks to the Hart-Scott-Rodino Antitrust Improvements Act of 19765 (Hart-Scott-Rodino). However, when state legislation itself produces anticompetitive effects that seem to violate federal antitrust principles, the state gets a free pass: “[A]nticompetitive restraints are immune from antitrust scrutiny if they are attributable to an act of ‘the State as sovereign.’”6
Wherever the federal and state governments share regulatory authority, federalism concerns naturally follow. Federalism refers to the division, overlap, and balance of power between the federal and state governments in our federal system.7 The emergence of a strong national government since the New Deal has turned federalism into a state-centric concept about protecting the states’ role in that balance.8 This state-centric federalism is partially baked into the Constitution: for example, the Tenth Amendment confirms that the Constitution reserves powers not delegated to the United States for the fifty states,9 and some scholars have attributed a state-centric view of federalism to the Guarantee Clause.10 However, when, as with antitrust, the federal and state governments share concurrent regulatory authority, the Constitution alone cannot resolve the federalism-nationalism balancing act.
Even when it is not a constitutional hurdle, federalism is still a relevant constitutional value. The Framers embraced federalism for its policy virtues,11 and contemporary judges and scholars laud federalism for its modern-day policy perks.12 The Supreme Court often invokes federalism in the form of a presumption that Congress does not lightly intrude on state sovereignty.13 One example is the Court’s presumption against preemption: a party alleging federal preemption of state law faces a judicial presumption that Congress did not intend to make that choice.14 That presumption is validated by Congress’s choice to refrain from preempting state law in the antitrust arena: state and federal antitrust laws have coexisted since the federal government’s first steps into the arena in 1890.15
This congressional restraint is controversial, and likely to grow more so. Some scholars have argued powerfully that Congress should preempt state antitrust laws.16 These arguments may gain renewed prominence, as antitrust as a whole has recently achieved greater political salience than it has enjoyed in a century.17 In the state context, attorneys general have increasingly taken antitrust action in high-profile matters the federal government has declined to pursue. In 2019, states opposed the merger between Sprint and T-Mobile,18 and many began to investigate potential antitrust violations in Big Tech.19 While some recent, high-profile state antitrust actions have been brought under federal antitrust laws,20 others have been brought under state law.21 Moreover, a number of the current state antitrust actions are at the investigatory stage22 — states could potentially bring federal claims, state claims, or both. Newsworthy state involvement in antitrust policing is bringing attention to the states’ antitrust role more generally, and that attention will likely bring scrutiny to the oddity of America’s competing antitrust systems.
This Note argues that, in considering its position within this debate, Congress should grapple with federal antitrust law’s peculiar status as a largely judicially created regulatory regime. Congress should be wary of allowing federal judge-made law to preempt state legislative power. Even when the federal government preempts state legislation, the federalism balance is partially preserved by democratic checks on federal power. Yet, when a nondemocratic branch is making the law, those checks disappear. Moreover, the federal judiciary is a uniquely poor policymaking body; its lack of policymaking chops does not support overriding states’ policy choices. These factors highlight the need for Congress to account for the degree to which current antitrust law is largely judge made.
Part I outlines the general landscape of antitrust federalism. It first describes antitrust federalism’s three components and then surveys arguments for and against maintaining one of those components: the coexistence of state and federal antitrust laws. Following this survey, Part II offers a new defense of the current system: federal antitrust law’s judge-made status makes it particularly unsuitable to preemption. Finally, Part III compares antitrust’s judge-made law to other preemptive federal common law, concluding that federal antitrust preemption would be uniquely susceptible to Part II’s criticism.
I. The Antitrust Federalism Landscape
Antitrust federalism, meaning the space carved out for the states in the more generally federal antitrust arena, can be thought of as made up of two “swords” — the first the states’ ability to bring suit under federal antitrust law and the second their ability to enact and enforce their own state antitrust laws — and one “shield” — immunity from federal antitrust law for state actions.23 The swords allow states to attack antitrust offenders, while the shield allows states to defend against federal antitrust action.
All three elements of antitrust federalism find their roots in con-gressional action or the courts’ interpretation of congressional inaction. The power to enforce federal antitrust law as parens patriae for full treble damages — the first sword — was granted to the states by Congress in Hart-Scott-Rodino.24 On the judicial front, the Supreme Court acknowledged state immunity from federal antitrust actions — the shield — in Parker v. Brown,25 noting that the Sherman Act did not explicitly mention its application to state action.26 Finally, when the Court confirmed that states’ ability to make their own antitrust laws — the second sword and the one discussed in this Note — was not preempted in California v. ARC America Corp.,27 it considered the same Sherman Act silence.28
This is all to say that antitrust’s federalism tools are congressionally, not constitutionally, given rights and are therefore congressionally rescindable. Congress could amend Hart-Scott-Rodino or make explicit that the Sherman Act applies to state action.29 And, crucially for this Note’s discussion, although state antitrust law is not judicially preempted, Congress could choose to expressly preempt it in the future.30
There are strong policy arguments for express congressional preemption of state antitrust law. The remainder of this Part attempts to outline the general pros and cons of congressional antitrust preemption but is not meant to be exhaustive or to cover new ground. The intent is to situate Part II’s argument about federalism and preemption by judge-made law within the broader policy landscape.
A. The Patchwork Regime Problem
First, critics of the status quo argue that a patchwork regime of state antitrust laws can make it expensive for companies that operate across state borders to comply. State and federal regimes share similar philosophies regarding most of antitrust law.31 But state antitrust laws do not perfectly mirror their federal counterparts — and the antitrust laws of the different states are heterogeneous themselves.32 Disputes are concentrated in a few areas of the doctrine, like vertical restraints and mergers.33 For example, states often focus on damage to intrabrand competition when enforcing limits on vertical restraints, whereas federal antitrust law focuses primarily on interbrand competition.34 Additionally, state merger guidelines often materially differ from federal guidelines,35 and states are likelier to define markets “more narrowly,” “refus[e] to consider efficiencies” favored by federal agencies, and show a concern for local jobs and competitors that does not “enter . . . the [federal] calculus.”36 An inconsistent antitrust regime that may conflict between states could cause economic inefficiency, for example by discouraging companies from undertaking what might otherwise be an economically efficient merger.37
This critique relies in part on the federal government having a better approach to vertical restraints and mergers, and that is anything but clear. The classic federalism argument that states function as laboratories of democracy38 applies here: antitrust law is far from settled, and having multiple regimes allows for testing different theories. For example, some scholars argue that the states are correct to consider intrabrand competition’s effects on price, especially in certain markets.39 Similarly, in the merger context, there is support for both the states’ refusal to consider only economic efficiency40 and their push for heightened antimerger enforcement.41 Of course, the laboratories of democracy might not work so well in the antitrust context: because of the interwoven economic effects of federal and state antitrust laws and enforcement in an interconnected national economy, determining the effects of one state’s slightly different antitrust regime would be difficult.42 But federalism can still offer benefits by breaking the antitrust orthodoxy: by putting different policies on the table, a multilevel regime reminds us both that there are different possible “best” antitrust policies and that antitrust law has a variety of potential goals.43
B. The One-State Dominator Problem
Closely related to the patchwork regime problem is the one-state dominator problem: because national firms may not always be able to maintain different business practices in each state, firms could be forced to follow the law of whichever state has the strictest antitrust policy nationwide. For example, a single state could use its own antitrust laws to “challenge the largest nationwide transactions so long as it can show that the state itself, its citizens, or its economy is affected in a way that provides standing.”44 If a nationwide merger is illegal under one state’s laws, it may not be worth it for the firm to restructure the transaction in order to merge in all but one jurisdiction. This reality could allow for the state with the strictest antitrust policy to dominate the policy decisions of every other state and of the federal government.45
The one-state dominator problem is exacerbated by unrecognized interstate externalities: in making its antitrust laws, a state is not forced to consider the harm or benefit to businesses based outside of its borders.46 These uninternalized externalities make it more likely that a state will overregulate. The laboratory-of-democracy defenses to the patchwork regime problem, with their variety-is-the-spice-of-life flair, fail to explain why an individual state’s antitrust regime should be allowed to dominate the policy of the entire nation.
Consider a recently passed Maryland law regulating wholesale pharmaceutical prices. The law prohibited manufacturers or wholesalers from “price gouging,” defined as “an unconscionable increase in the price of” certain drugs.47 Federal antitrust law does not prevent monopolists from receiving the reward of monopoly prices, under the theory that potential future monopoly profits encourage present investment.48 The Maryland law can be viewed as a limit on this monopolist tolerance in the pharmaceutical space, preventing pharmaceutical companies from taking advantage of their dominant market position in the treatment of certain diseases. Not all states had decided to regulate drug prices, with most hewing more closely to the general rule of monopoly tolerance.49 Based on its drafting, however, Maryland’s law could have had significant implications nationwide: even assuming the law required some sort of connection to an eventual consumer sale in Maryland,50 the law regulated a wholesaler’s initial sale, whether or not that sale occurred in Maryland, so long as the drug was eventually resold in Maryland.51 As such, any manufacturer who sold drugs to a Maryland retailer would have to set their initial prices in consideration of Maryland’s law. Pricing is a core antitrust issue; why should Maryland be able to set the nation’s pricing policy?
Or consider the ability of indirect purchasers to sue under antitrust laws. In Illinois Brick Co. v. Illinois,52 the Supreme Court held that only direct purchasers of a price-fixed good or service, not subsequent indirect purchasers, could sue for treble damages under the Clayton Act.53 In response, twenty-six states passed “‘Illinois Brick–repealer laws’ authorizing indirect purchasers to bring damages suits under state antitrust law.”54 But these twenty-six states have an impact even on the residents of nonrepealer states. In a class action currently on appeal in the Ninth Circuit, a district court applied California antitrust law — including California’s repealer law — to a nationwide class that included class members from nonrepealer states.55 The defendant-appellant has argued that this application undermines the nonrepealer states’ interest in choosing their own consumer-business balance.56
The Maryland and Ninth Circuit examples may be more bogeymen than real threats to federalism. First, alternate doctrines aside from antitrust preemption work to keep individual state interests in check. For example, the Fourth Circuit enjoined enforcement of the Maryland law on dormant commerce clause grounds.57 Where one state intrudes too much on other states’ ability to regulate antitrust — where “[t]he potential for ‘the kind of competing and interlocking local economic regulation that the Commerce Clause was meant to preclude’ is . . . both real and significant”58 — the Constitution, rather than Congress, can prevent the one-state dominator problem’s greatest harms. Dormant commerce clause challenges are not limited to the Maryland case’s facts. In fact, the Fourth Circuit dissent complained that the majority’s logic would invalidate other state antitrust laws, including Illinois Brick–repealer laws.59
Second, the trouncing of federalism in cases like these is often overstated. Take the defendant-appellant’s depiction of the interests in the Ninth Circuit case as an example of exaggerated federalism costs. The district court found that the nonrepealer states had no interest in having their laws applied because the defendant-appellant was a California company; California’s more consumer-friendly law would only help nonrepealer-state residents, not hurt nonrepealer-state businesses.60 If the nonrepealer states have an interest in denying their own consumers access to relief when there is no benefit to their own businesses, it seems tangential to an interest in striking their own consumer-business balances. Instead, a choice to prioritize foreign defendants over in-state consumers appears more like an attempt to govern the national consumer-business balance, a choice imbued with far less federalism oomph than the defendant-appellant portrayed.
Whether exaggerated or not, a worry that antitrust federalism allows one state to dominate national antitrust policy weighs in favor of congressional antitrust preemption. This problem, however, is not unique to antitrust. Any area of law in which states fail to internalize the harms of overregulation, meaning any law that regulates businesses with a national footprint, could be dominated by one state.61 If Congress were to take the one-state dominator problem too seriously, it would swallow up huge swaths of state regulation, excluding states from their traditional role in consumer protection, at least where the largest (and potentially most worrisome) industries are implicated.
C. The Overdeterrence Problem
Third, critics argue that a multilevel antitrust regime threatens to overdeter procompetitive conduct. The policy behind much of preemption is to prevent state law from interfering with detailed, well-balanced federal regulation: obstacle preemption exists to prevent states from “stand[ing] as . . . obstacle[s] to the accomplishment and execution of the full purposes and objectives of Congress,”62 and field preemption exists to prevent state interference where Congress “left no room for lower-level regulation.”63 Although it is not field or obstacle preempted,64 antitrust law exhibits the type of detailed regulatory balance that the preemption doctrines attempt to prevent states from damaging. Much of antitrust law is built on finding the perfect balance of standards and remedies: the law must properly deter anticompetitive acts without deterring healthy competition.65 A state law that shifts remedies or standards can upset this careful balancing, thus overdeterring desirable private action.
Critics can point directly to ARC America as evidence of this overdeterrence threat. The Court’s decision in Illinois Brick, which limited suits by indirect purchasers, relied in large part on a belief that concentrating suits in direct purchasers would avoid overdeterrence.66 By allowing for additional suits, ARC America created extra deterrence not envisioned by the federal antitrust scheme.67
Like the patchwork regime critique, the overdeterrence critique is weakened if the federal regime has failed to achieve proper balancing. Many antitrust regimes around the globe adopt different balances than the United States does. The European Union, for example, differs from the United States on remedial structure, the standard for illegal unilateral conduct, and market definition, among other issues.68 Moreover, many scholars argue that the U.S. antitrust balance is off and that more enforcement is needed.69 Even if U.S. antitrust policies are getting the balance generally right, it is unlikely that the federal regime is so finely tuned that any added deterrence will destroy the balance.
D. The Misaligned Incentives Problem70
Fourth, in the misaligned incentives problem, critics argue that states do not have proper incentives when they enforce state antitrust laws. Although state antitrust laws are supposed to mainly target intrastate antitrust violations, courts have refused to police that limit too strictly.71 In an interconnected economy where seemingly hyperlocal activity can have national implications,72 courts have admitted that limiting state antitrust laws to cases that do not touch the national economy would “fence off” “a very large area . . . in which the States w[ould] be practically helpless to protect their citizens.”73 But, even though suits under state laws may have nationwide consequences, state attorneys general lack nationwide incentives. Critics of the status quo worry that elected attorneys general are more susceptible to lobbying by state interests than are appointed federal enforcers and that a cost-benefit analysis is flawed where a state can attack a company headquartered out of state in order to protect one headquartered in state.74
These fears seem mostly imagined. The idea that elected attorneys general are bringing antitrust suits to hurt competitors of state businesses“appears to [have] little empirical support[,] . . . and none has been provided by the advocates of this position.”75 Past state antitrust enforcers have stated that, while they considered state-specific factors when deciding where to spend their limited resources, those factors would be used only to choose “from among those cases that also made sense on traditional economic grounds.”76
And there is reason to believe that these enforcers are telling the truth. For one thing, states often make antitrust decisions that seem to go against the interests of major state employers. For example, New York antitrust enforcers have taken antitrust positions adverse to both Verizon and IBM, top New York employers.77 For another, a state that is only minutely affected by an antitrust action is unlikely to bring that action alone. If a state is only trivially affected by allegedly anticompetitive conduct, “that state is very unlikely as a practical and political matter to spend the enormous sums of money required to sustain a challenge.”78 If a state is majorly affected but is the only state affected, then the misaligned incentives critique does not apply because there is no competing set of national incentives. And in a case that actually has major impacts in multiple states, it is unlikely that one state could act without other states wanting to join in on the enforcement.79 When states work together on antitrust enforcement, they tend to cooperate closely with one another, especially through the National Association of Attorneys General’s (NAAG) antitrust group.80 Even if an individual state might be swayed by state-specific concerns, it is unlikely that it could convince a multistate coalition to act on those concerns — the group would be forced to evaluate the action on its more national merits.81
E. The Incompetent States Problem
Finally, critics argue that state enforcers will make error-ridden antitrust choices due to a lack of resources, experience, and expertise. Whereas federal enforcers have significant budgets for antitrust enforcement, the percentage of funding set aside for antitrust enforcement by state attorneys general is minute.82 Because of this lack of resources, state enforcers have been accused of staffing antitrust cases with senior attorneys who, while experienced in civil litigation generally, are antitrust novices.83 These factors have led critics to argue that state attorneys general handle antitrust suits poorly, clogging the judicial pipeline with questionable suits.84 State attorneys general are accused of acting as free riders on federal actions and of making settlements more difficult rather than undertaking useful enforcement.85
But there is reason to dispute critics’ claims. The critique of individual attorneys general ignores the states’ ability to work in unison. Cooperating through NAAG, states are able to build on each other’s experiences in antitrust enforcement.86 Thus, worries about inexperienced antitrust divisions working alone may be overstated. Although interstate coordination may weaken their point, critics can retort that most state actions are not coordinated: according to NAAG’s State Antitrust Litigation Database, only nineteen of the fifty-six civil antitrust actions brought by states between 2014 and 2019 were brought by multiple states working together,87 although many of the noncooperative suits regarded intrastate anticompetitive conduct.88 This same dataset, however, also undermines the critics’ argument that states act only as free riders: only nineteen of the fifty-six suits included federal participation.89 Finally, much of the criticism leveled at state attorneys general occurred before a renaissance in state law enforcement. Since Judge Posner derided the skill of state attorneys general in 2001,90 lawyers and judges, including Chief Justice Roberts, have recognized a marked improvement in state attorney offices’ advocacy.91 Whether or not Judge Posner’s critiques were valid at the turn of the century, it is unclear that the landscape remains the same today. Finally, this critique undermines the arguments, noted earlier, that state law enforcement is overdeterring competition or creating a patchwork of antitrust law. If states are nothing but free riders, then we need not worry about overdeterrence.
II. Concerns with Preemption by Judge-Made Law
In this jumble of critiques and retorts, it is not obvious that one side wins the day. In addition to the above considerations, Congress should take into account the oddity of preempting state law with federal common law in deciding whether to preempt state antitrust regimes. Even though federal antitrust is based in congressionally passed statutes, the judiciary’s interpretations of those statutes have shaped the law far more than has any statutory text. Unlike a legislature, the federal judiciary is both largely undemocratic and poorly suited to be a policymaker. These two distinctions counsel against the preemption of state antitrust laws by federal judge-made law and should enter Congress’s calculus along with Part I’s considerations.
Federal antitrust is uniquely judicial. For such a complex area of law, antitrust’s statutory grounding is rather simple. The Sherman Act, the backbone of federal antitrust, is shockingly short.92 And both the Sherman Act and the Clayton Act offer only broad, vague legal standards to the courts.93 Courts and scholars have viewed these open-ended statutes as a legislative delegation to the judiciary.94 The judiciary has accepted this delegation fully. For example, section 1 of the Sherman Act’s text explicitly outlaws combinations “in restraint of trade or commerce.”95 Courts have run with this phrase, defining it to include many different types of restraints, including horizontal price-fixing, market divisions, output limitations, refusals to deal, tying, and bundling agreements, all of which are then judged under either a judicially created per se standard or a judicially created rule of reason standard.96 As then-Justice Rehnquist described federal securities law, so too is federal antitrust law “a judicial oak which has grown from little more than a legislative acorn.”97
To be clear, the problem with preemption based on a regulatory regime created through congressional delegation to the judiciary is not that that delegation is unconstitutional. Some scholars do argue that the judicial creation of federal antitrust common law breaches the Constitution’s separation of powers.98 The Supreme Court, however, has not been persuaded by this argument. After all, the Sherman Act still reigns supreme after over a century of fleshing out by the federal judiciary.99
As a policy matter, however, the undemocratic nature of the federal judiciary makes preemption by federal judge-made law more troubling than legislative preemption. In most instances of preemption, state interests are protected through process federalism. Process federalism protects the states from federal encroachment through political and procedural safeguards.100 The states’ political safeguard is that state representatives pervade the federal system: “States are represented in Congress; states participate in the election of the President through the Electoral College;” and, in a cooperative-federalist manner, “state officials may . . . participate in the administration of federal programs.”101 The hope is that the states’ defenders in Washington will prevent the degradation of state interests.102 The states’ procedural safeguards add to their political safeguard: “Even if members of Congress have the will to encroach upon or displace state prerogatives, . . . the legislative gauntlet makes it difficult for Congress to do so.”103 Any attempt at preemption would require that legislation survive bicameralism, presentment, and Congress’s internal rules.104
Preemption by judge-made law, however, avoids these constraints.105 On the political front, it is far easier for a state to lobby Congress than it is for a state to lobby a federal judge. Moreover, it is certain that the Supreme Court will not have representatives from all fifty states. Finally, whereas voters displeased with federal encroachment into the state sphere can vote out their congressional delegation, they are stuck with federal judges for life.106 On the procedural front, a judicial opinion has no checks aside from appeal.107 In fact, the ability of judges to subvert procedural safeguards could encourage Congress to delegate more to the judiciary.108
It is true that, in order to expressly preempt state antitrust law in favor of federal judge-made antitrust law, Congress would first have to overcome process federalism’s dual safeguards. There is reason to believe that the safeguards have worked so far. Even in the face of influential detractors like Judge Posner, Congress has only expanded the states’ antitrust role.109 However, whereas purely legislative preemption would require Congress to pass through the safeguards every time it decided to meddle with state antitrust policies, preemption by judge-made law would require Congress to overcome the safeguards only once. After express preemption passed through, the courts could go about frequently changing federal antitrust law without political or procedural checks, and states would have little recourse.
While these process federalism concerns also apply to federal agency delegation, the concerns are greater in the face of judicial delegation. Agency delegation avoids process federalism’s political safeguards because “[a]gencies are not beholden to states in any politically thick sense.”110 It avoids procedural safeguards because an agency “bypasses the legislative dam.”111 But the executive branch is more democratic than is the judiciary. In the antitrust context, DOJ enforcement policy shifts when a new President takes over.112 States also have more influence on agencies than they do on the judiciary. Federal regulatory regimes often involve state implementation that can “generate dynamics of mutual dependency that may make federal agencies receptive to state interests,”113 a type of relationship that has been labeled “cooperative federalism.”114 States can also affect agency policy by challenging it, a type of federalism known as “uncooperative federalism.”115 Although process federalism’s safeguards are weakened when Congress delegates to agencies, that weakening is at least softened by the above factors — factors that do not help redeem judicial delegation.
The judiciary’s ill fit as policymaker is also a cause for federalism concerns. After all, judiciaries are not built for policymaking, as even Supreme Court Justices regularly admit.116 Although judges are educated, they may not have expertise in antitrust economics117 and they are even less likely than the political branches to be able to gather that expertise through others.118 It may be easy for an antitrust expert like Judge Posner to favor the federal judiciary’s policymaking over that of state legislative and executive branches, but his level of antitrust knowledge is the exception, not the rule.119 Moreover, to the extent that deciding antitrust policy means deciding what values antitrust law should herald,120 judges are poor arbiters of the electorate’s views and may replace society’s values with their own.121 Moreover, because they are limited to adjudicating cases and controversies,122 courts lack the ability to tackle legislative problems head-on and instead must wait for problems to come to them.123 The very purpose of the case-or-controversy requirement was to cement the judicial branch’s judicial, rather than legislative, function.124 This requirement can explain large blind spots in current federal antitrust law. For example, because merging parties will often drop an agency-opposed merger rather than take the issue to court, “the Supreme Court has not decided a case about . . . substantive merger standards since . . . [before] Hart-Scott-Rodino.”125 Especially in comparison to agencies, with their myriad policymaking tools,126 the judiciary has policymaking limitations, making the courts look anemic in that sphere. Where Congress has abdicated its role as policymaker in favor of the ill-equipped judiciary (rather than the better-equipped executive), it would be folly to force the state legislature to abdicate its policymaking role as well.
Of course, state judiciaries often play a role in molding antitrust policy, and one could argue that there would be no problem with federal judge-made law preempting state judge-made law. Key to the benefit of states as laboratories of democracy is the states’ ability to experiment legislatively. To say that states can “experiment” and act as “scientific policymakers”127 or “innovate” through a collective “evolutionary process”128 makes most sense if we are actually referring to state legislatures and agencies. So what is the issue with overriding state courts?
For one thing, much (although not all) of what state judiciaries do in the antitrust arena is actually decided by state legislatures. Some state legislatures, for example, have explicitly directed their courts to apply federal case law to corresponding state statutes.129 Moreover, most state judiciaries are elected.130 As noted above, sensitivity to the electorate is key to the values-based part of policymaking, so state courts may actually be better policymakers than federal courts are.
Even if all state antitrust law were formed by unelected state judges, there would still be a basic sovereignty rationale for preferring state court decisions to federal court decisions. Congress should recognize that the federal judiciary is a poor policymaking body, but whether the states believe their judiciaries are up to the policymaking challenge is for the states to decide. Consider the secondary holding of Erie Railroad Co. v. Tompkins.131 Of course, Justice Brandeis famously and primarily held that the concept of a “transcendental body of law” was a “fallacy” and that, therefore, the federal courts should not create a general federal common law.132 But, secondarily and more relevant here, Justice Brandeis did not prevent the states from continuing to hand down common law from on high: “[W]hether the law of the State shall be declared by its Legislature in a statute or by its highest court in a decision is not a matter of federal concern.”133 Justice Brandeis’s willingness to critique common law’s “fallacy” and yet still allow the states to embrace it came from a concern with state sovereignty, an understanding that the states have the right to structure themselves in a manner that the federal government, a separate sovereign, opposes.134 That same sovereignty rationale should allow states to decide that their judiciaries are sufficiently good at policymaking, even if the federal government should realize that its judiciary is not.
III. Antitrust Preemption Compared
Preemption by federal statutory common law would be especially problematic in the antitrust arena. Antitrust is not unique in its quasi–common law status,135 and Congress has expressly preempted state law in some areas where judge-made law exists. For example, courts have created a large amount of federal common law around the Employee Retirement Income Security Act of 1974136 (ERISA), and Congress expressly preempted certain state laws within ERISA’s purview.137 Unlike federal antitrust law, however, less is left to the courts in ERISA and other federal common law areas.
Two qualities of federal antitrust law make it an extreme case of judicial delegation and therefore more susceptible to federalism critiques in the case of preemption: its statutory brevity and its minimal agency intervention. On the first point, the substantive federal antitrust statutes are exceedingly brief. The Sherman Act, federal antitrust law’s seminal statute, took up two pages of the Statutes at Large.138 The Clayton Act is also relatively brief at eleven pages.139 ERISA, on the other hand, digs into the specifics. At 207 pages, it is less legislative acorn and more legislative oak tree.140 While word count may not be a perfect substitute for thoroughness, the disparity here is too large to be ignored.
The length distinction matters because it helps define how much has really been delegated to the judiciary. When crafting ERISA’s common law, courts can pull from a large source evincing Congress’s intent. Due to the brevity of Congress’s statutory antitrust commands, however, courts have little congressional guidance in their antitrust policy pronouncements. Almost everything is left up to the judiciary.
On the second point, the executive branch has played only a small role in fleshing out the antitrust statutes, leaving the lion’s share to judges. The FTC and DOJ are responsible for federal enforcement of antitrust law.141 But, unlike many regulatory areas, antitrust has not seen the promulgation of many binding regulations. Neither the Sherman Act nor the Clayton Act authorizes either agency to promulgate rules defining vague terms. Whether or not the FTC Act authorizes the FTC to promulgate rules defining unfair methods of competition (the presence of such authority is far from clear), the agency has not done so.142
This is not to say that the FTC and DOJ do not have significant impacts on the development of federal antitrust policy. For one thing, the agencies choose when to enforce antitrust laws, thus affecting the kinds of cases and controversies that the judiciary sees.143 But the Sherman Act and the Clayton Act offer private rights of action,144 and states may sue as parens patriae under Hart-Scott-Rodino, so the agencies’ enforcement decisions cannot completely control the law’s development. Many seminal antitrust cases were decided without an agency party.145 Granted, even in suits not brought by an agency, the agencies can have significant sway: the executive branch often acts as amicus curiae,146 and courts sometimes base their decisions directly on the government’s amicus briefs.147 And the FTC and DOJ publish enforcement guidelines that courts have found highly persuasive, even though those guidelines are nonbinding and meant mainly as an expression of enforcement policy.148 For example, the “Merger Guidelines are for all practical purposes the law on merger liability.”149 That being said, other enforcement guidelines have been far less influential — some “have been cited only a handful of times each.”150 In the end, although amicus briefs and guidelines may often win over judges, it is judges who make final decisions, and who sometimes ignore agencies.151
On the other hand, the executive branch plays a larger role in defining ERISA’s intricacies. ERISA invites the Department of Labor (DOL) to promulgate regulations defining many of its terms.152 Unlike the FTC with its (potential) authority to promulgate regulations under the FTC Act, the DOL actively takes advantage of its authority under ERISA: in 2018 and 2019, the Employee Benefits Security Administration, an agency within the DOL, published nine final rules in the Federal Register implementing ERISA.153 Unlike the antitrust guidelines, DOL regulations are binding law that courts must, not might, follow.
Just like the length of the statute, the degree of executive delegation affects the true degree of judicial delegation. Whereas agencies help fill in the gaps of ERISA, thus replacing some judicial delegation with executive delegation, agencies leave all antitrust delegation to the courts. While preemption by agency-made law has some of the same federalism and separation of powers concerns as preemption by judge-made law,154 agencies are more democratically accountable than are courts and are better equipped to make policy. Notwithstanding the influence of the Merger Guidelines, antitrust executive action has not compensated for the deficiencies of preemption by statutory common law to the same extent as have DOL’s regulations. Promulgated regulations, like DOL’s, must go through notice and comment under the Administrative Procedure Act.155 Notice and comment promotes democratic accountability: it “compels the agency to consult each of its stakeholder ‘constituents,’ ensuring that the ultimate agency action will in some way be responsive to the concerns of all interested parties.”156 Additionally, some scholars argue that notice and comment might lead to better policymaking: it could be “a forum for democratic deliberation, in which agencies and citizens alike will change their views in response to reasoning of others.”157 As such, notice and comment can help executive branch action overcome both the (un)democratic and policymaking critiques of judge-made law. The Merger Guidelines, on the other hand, nonbinding as they are, may be created without any public engagement, and often have been.158 So, even where federal antitrust law does have executive branch participation, that participation does not provide as meaningful a democratic check as does DOL participation for ERISA.
None of this is to say that ERISA preemption fails to raise federalism concerns or that the concerns addressed in Part II are unique to antitrust. In its decision to expressly preempt state law in ERISA, a wise Congress should have considered the difficulties of preemption via judge-made law. Part II’s concerns with preemption via judge-made law could be applied to any delegation to the judiciary that overrides the states’ will. But given the brevity of federal antitrust statutes and the relative lack of executive branch involvement, Congress should be even more wary if it decides to preempt state antitrust law.159
There is little doubt that Congress could decide to preempt state antitrust law. However, although the merits of avoiding a patchwork antitrust regime are compelling, Congress would trigger federalism pitfalls if it were to reform antitrust law by expressly preempting state antitrust law. A preempting Congress should weigh any benefits against the complications of federalism’s procedural and political safeguards and of the judiciary’s weak policymaking ability.
Of course, there is reason to believe that if Congress were to expressly preempt state antitrust law, it would do so as part of a more major antitrust reform effort. Recently, federal antitrust policy has been the subject of critique. Fed up with the seeming omnipresence of corporate giants, some scholarly160 and journalistic161 discourse has turned on the federal government’s antitrust policies. As things stand, if Congress decides to preempt state antitrust law with current federal antitrust jurisprudence, it would have to decide that the pros of preemption mentioned in Part I outweigh the federalism cons of Part II. But if Congress were to reform antitrust law by creating a new, detailed antitrust regime for courts to interpret, preemption of state antitrust law could avoid the perils of preemption via judge-made law.