Labor and the Antitrust Laws

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LABOR AND THE ANTITRUST LAWS

Problems relating to the application of antitrust law to labor result from a basic incompatibility between two public policies: the first, embodied in the sherman act of 1890, prohibits efforts by anyone to monopolize or restrain competition in the product market; the second, embodied in the norris-laguardia act of 1932 and the wagner act of 1935, permits workers to combine into unions in order to bargain collectively with employers. collective bargaining necessarily assumes, however, the elimination of competition between employees in dealings with their employers; hence the unions' need to achieve a monopoly of the labor market. The ultimate goal of every union is to remove wages, hours, and working conditions as factors in the competition between employers.

The hotly debated question whether Congress intended to include unions within the coverage of the Sherman Act was resolved by the Supreme Court in loewe v. lawlor (1908), which held a union liable for violation of the Act. Efforts to reverse this result in the clayton act of 1914, which declared that the "labor of a human being is not a commodity or article of commerce," and which forbade federal courts from granting injunctions against specified kinds of peaceful conduct in labor disputes, were frustrated by extremely narrow constructions of the statutory language by the Supreme Court.

United States v. Hutcheson (1941), which held that the Sherman Act does not reach acts by a union in its own self-interest that do not involve combination with nonlabor groups, marked the beginning of a new period of virtual immunity for unions under the antitrust laws. And in Allen Bradley v. Local 3, International Brotherhood of Electrical Workers (1945) the Court, while holding that a conspiracy between the union and electrical parts manufacturers and contractors to monopolize the industry in New York City violated the Sherman Act, declared that if the union had achieved the same result through parallel but separate agreements with each employer, the arrangement would not have been illegal. Thus, Norris-LaGuardia's comprehensive prohibition against the issuance by federal courts of injunctions in labor disputes, the Wagner Act's authorization of the granting by the National Labor Relations Board of "official patents of monopoly" through its certification procedures, and the rise of industry-wide bargaining combined to create a doctrine of "licit monopoly" of the labor market by unions, while the Sherman Act continued to prevent similar domination of the product market by business enterprises.

By the mid-1960s, however, the pendulum had begun to swing back. In United Mine Workers v. Pennington (1965) a badly divided Supreme Court held that a union's conspiracy with large mine operators to drive small operators out of the market by establishing wage scales that the latter could not afford to pay violated the antitrust laws. Ten years later, in Connell Construction Company v. Plumbers & Steamfitters Local 100 (1975), the Supreme Court distinguished union activity that eliminates competition over wages and working conditions—immune under the antitrust laws, even though it affects price competition among employers, because such restriction is the inevitable consequence of collective bargaining—from union activity restricting competition in the product market—unprotected because (in this case) its effect was to drive all nonunion employers, including the more efficient ones, out of the market, whether or not they met union standards for wages and working conditions. The Court's 5–4 decision also held that even though the union's conduct violated the secondary boycott and "hot cargo" provisions of the taft-hartley act of 1947, for which express penalties are prescribed in that statute, the union was not shielded from additional liability under the Sherman Act.

The critics of the Court's decisions in Pennington and Connell point out that in both cases the issues involved were mandatory subjects of bargaining under the labor laws. They contend that the legislative history of those laws makes clear that Congress intended to provide specific and exclusive remedies for violations of their substantive provisions (e.g., illegal "secondary boycotts" and "hot cargo" clauses) and rejected the proposed revival of remedies such as injunctions at the request of private parties, as well as punitive damages, which are available under the antitrust laws.

Unquestionably, judicial application of the antitrust laws to labor not only has seriously hampered union efforts to impose uniform wages, hours, and working conditions in the labor market but also has created considerable confusion in the administration of laws governing labor-management relations. It is also true, however, that unrestricted union efforts to monopolize labor markets adversely affect product markets in respect of the cost and availability of products. The question is whether antitrust laws are the proper mechanism for striking a proper balance between the right of workers to organize and to bargain collectively and the right of employers and the general public to be free of union coercive practices that raise prices, restrict output, or otherwise control the product to the detriment of consumers.

Inasmuch as unions derive their coercive powers from industry-wide and market-wide organizations, it is often proposed that they should be precluded from organizing more than one employer in an industry, and that collusion between separate unions should be proscribed. This proposal for "fragmented bargaining" probably is not politically feasible; moreover, it would have its least effect in oligopolistic industries, where, presumably, it is needed the most, and would have its greatest impact in atomized industries, where it is needed the least. Finally, fragmented bargaining would so weaken union organizations as to undermine completely the national labor policy favoring collective bargaining.

It appears that no satisfactory way has been found to reconcile free-market competitive policies with those permitting workers to combine and to engage in peaceful concerted activities for their mutual aid and protection. The preferable way to establish the necessarily shifting equilibrium between them would seem to be through legislation dealing with specific problems rather than through the application by the judiciary of antitrust laws designed primarily for other purposes.

Benjamin Aaron
(1986)