Neil Gorsuch and Antitrust Law

by Daniel Mogin & Jonathan Rubin

As Michelle Obama said, “When they go low, we go high.” Many parties have voiced their concerns about Neil Gorsuch’s Supreme Court nomination for numerous reasons, but law professor Zephyr Teachout’s recent op-ed in the Washington Post, accusing him of a “preference for concentrated wealth and power” and consistent friendliness toward “big business and monopolies at the expense of competition and open markets,” goes low and is not supported by his antitrust record.

Impressed by Ed Whelan’s recent two-part response (Part 1 and Part 2) to Teachout’s claims, we have developed our own commentary with the following intent: In the antitrust arena, Judge Gorsuch, like any nominee, should be judged according to his record, not political dogma.

As American as apple pie, the antitrust/pro-competition laws have usually enjoyed broad bipartisan support. Their purpose is to encourage free competition and open markets. Because we love competition, only bad market conduct that excludes competitors, stifles innovation, limits output or choices, or artificially raises prices is prohibited. We don’t punish companies who grow big because of superior products, prices, or management. For better or worse, antitrust long-ago abandoned the idea that “big is always bad” and determined to examine bigness case-by-case based on scrutiny of market facts.

Professor Teachout alleges that Judge Gorsuch “willfully ignores the realities of how markets and economic power work, . . . has repeatedly blessed actions by big firms to exploit their dominant position,” and as a justice would “subvert our democracy once and for all.” She also says that he “gives monopolists virtual carte blanche to perpetuate their dominance through unfair means, regardless of the consequences for consumers, competitors and citizens.” While provocative, this critique cannot be based on Judge Gorsuch’s actual judicial opinions in antitrust cases or his accomplishments as a practicing lawyer.

Both of Judge Gorsuch’s antitrust opinions Teachout criticizes involved refusals to deal with a rival, which has always been one of the hardest questions in antitrust law. According to the Supreme Court, the general rule is that a business has “no antitrust duty to deal with [] rivals at all.” Although some 30 years ago the Court held that the right to refuse to deal is not unqualified where the defendant terminates a profitable relationship without any economic justification other than an anticompetitive one, it also acknowledged that same finding to be at or near the outer boundaries of antitrust law and it has never repeated the result. Both cases cited by Professor Teachout were competitor cases, where caution is the rule so as not to protect competitors at the expense of the competitive process, not cases where market participants complained that they had been victimized by price-fixing or monopolization. And in both cases, a three-judge panel unanimously affirmed verdicts first entered by a lower court. Judge Gorsuch was not writing on a blank slate; he was required to defer to the lower court’s findings on the evidence unless there was clear error and was not free to ignore Supreme Court precedent, whether or not he agreed with it.

Looking at Novell v. Microsoft: Windows dominated the operating system market and Microsoft also competed in the applications markets. This duality led to a complicated relationship with other applications makers such as Novell, which made WordPerfect, a competing application to Microsoft’s Word. Novell wanted access to Windows’ application-programming interfaces (APIs) and namespace extensions (NSEs) so it could “hook” WordPerfect to the Windows’ OS. Microsoft first promised access but later refused. After an eight-week trial, the jury couldn’t reach a unanimous verdict. The trial judge — not Judge Gorsuch — then decided that Microsoft’s conduct toward Novell did not violate the antitrust laws.

The trial court found that Microsoft’s refusal to grant NSE access resulted from its desire to maximize its own profits, not to harm competition. Thus, Judge Gorsuch’s affirmance based on that evidence can hardly be said to ignore the market facts or to grant monopolists carte blanche. The decision does not rely on formulaic application of Chicago School doctrine as Professor Teachout suggests. (Trust us, it is almost impossible to be a strict Chicagoan while at the same time citing to Einer Elhauge.) The ruling was consistent with existing precedent — blame the Supreme Court for that, not Judge Gorsuch. Judge Gorsuch also began his opinion by expressly acknowledging that Microsoft had been “liable for a rich diversity of antitrust misdeeds in the 1990s,” which hardly fits the charge that he gives monopolists carte blanche.

Judge Gorsuch’s opinion in Four Corners Nephrology v. Mercy Medical is Professor Teachout’s second example of antitrust bias. FCN affirmed a lower court’s decision that a hospital with an in-house nephrologist had no duty to share its facilities with a competitor who had previously declined the position. While the reasoning of Judge Gorsuch’s opinion is very similar to that in Novell, he again rigorously analyzed the market facts in the record. It should also be noted that while physician-privileges-related antitrust cases are not infrequently filed, they are, for a variety of reasons, infrequently successful. This case involved a non-profit hospital in Durango, Colorado (pop. 17,000) and a single physician. Regardless of the outcome, to cite it as evidence of a “preference for concentrated wealth and power” or consistent friendliness toward “big business and monopolies” is baseless.

Matters not cited by Professor Teachout also refute the charge of antitrust bias. Judge Gorsuch’s opinion in Kay Electric Cooperative v. City of Newkirk reversed a trial court’s dismissal of an antitrust case brought by an electric cooperative against a rival municipality that also supplied electricity and refused to grant immunity to the city. As an antitrust trial lawyer, Gorsuch was part of a team that obtained a verdict against U.S. Tobacco Company for monopolization, which at the time was the largest antitrust jury verdict in the history of private enforcement.

All in all, while one may dispute the circumstances of his nomination or his positions on various issues, or may prefer a different view of antitrust law than the last 35 years of Supreme Court rulings, it’s simply a bridge too far to say that Judge Gorsuch’s record shows that he is a strict Chicago Schooler who willfully ignores market realities and has repeatedly backed monopolies against consumers. Professor Teachout went low to make a political point, a point that we might generally be sympathetic to, but which is not borne out by Judge Gorsuch’s antitrust record.

— Daniel Mogin and Jonathan Rubin practice antitrust law in San Diego and Washington, D.C., respectively. Find them at moginrubin.com.

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