Excerpted From: Hiba Hafiz, Antitrust and Race, 100 Washington University Law Review 147 (2023) (261 Footnotes) (Full Document)

ThHibaHanz.jpege legacy and persistence of structural racism has not only shaped the substance and exercise of public rights, but it has also shaped markets of exchange, the rules of competition, and how market participation may selectively frustrate or advance economic opportunity. Antitrust law establishes the core legal infrastructure that regulates the conditions for successful entrepreneurial entry in the marketplace by defining what counts as lawful strategies of competing. As a result, it decides how and when firms can exploit market power--the power to set prices or wages, reduce quality, choice, and innovation, or exclude rivals. Antitrust, like law more generally, is permeated by our history of systemic discrimination against people of color, and its rules contribute to that history. Our current racial reckoning requires that we excavate how the antitrust project has contributed to that history by creating obstacles to nondiscriminatory participation in the marketplace. And it further requires that we dismantle rules of market participation that are systemically rigged to limit the economic success and well-being of people of color.

Unprecedented levels of corporate concentration due to lax antitrust enforcement make that reckoning all the more timely and urgent. Further, mounting empirical evidence--from leasing arrangements that create food deserts to mobility restraints in employment contracts--shows that firms can and have exercised their market power in ways that disproportionately harm minority-owned rivals as well as workers, consumers, and communities of color. While economic theory describes racial discrimination as a market failure that competitive market forces can correct--because “taste” rather than merit-based decision-making can make discriminatory firms less efficient than nondiscriminatory firms--market power immunizes discriminatory firms from those competitive forces, allowing them to profitably pass on inefficiencies to trading partners, workers, and consumers through higher prices, lower pay, or lower quality products and workplace environments. This connection between market power and discrimination reveals how antitrust law--and how it is enforced--can not only entrench racial inequality but also offer a potential remedy.

This Article exposes how courts and enforcers have shaped antitrust doctrine and regulation in ways that have de facto granted firms rights to discriminate against people and communities of color through the acquisition and exercise of market power. By at best proceeding as if color blind and at worst actively perpetuating market structures and rules that bolster systemic racism, antitrust regulators have ignored both the market realities that produce racial inequality and how firm dominance and anticompetitive conduct contribute to that inequality. Courts have used their authority to not only place significant obstacles in the way of ensuring free and fair access to markets but also to elide treatment of racial discrimination as a mechanism by which firms fail to compete on the merits. In doing so, courts have failed to see the role that competition can play in both reinforcing and remedying discrimination.

In the first comprehensive study of its kind, the Article collects and reviews antitrust cases since the Sherman Act's passage in which the parties' race or racial exclusions were mentioned and finds that only 168 federal cases concerned race at all, and in each of those cases, race lacked any salience to the antitrust analysis. The Article contextualizes those cases within the broader antitrust canon to explore the impact of antitrust's color-blindness on the success of claims sourced in racial inequality, identifying five doctrinal requirements that present obstacles to those claims' success. Further, it highlights the ways in which government enforcement of the antitrust laws has been blind to and even reinforced exclusions and anticompetitive harms impacting people of color by simultaneously failing to challenge anticompetitive conduct that disproportionately impacts them and targeting self-help measures and coordination that benefits them.

Making antitrust antiracist will require a profound reexamination and revision of doctrinal requirements and enforcement priorities, but courts and agencies have the power to make significant improvements even without legislative intervention. By restructuring how they define markets to make race salient, antitrust regulators can more accurately assess market power and its anticompetitive effects on people and communities of color for the purposes of reviewing anticompetitive conduct and mergers. Making it easier to prove racist agreements that exclude or discriminate against firms, consumers, and workers of color can help eradicate conduct that restrains economic opportunity in communities of color. Further, by allowing broader defenses to coordination as a form of self-help when people of color organize to further diversity in the market, courts can aid historically-marginalized communities in asserting countervailing power against discriminatory incumbents. Antitrust agencies can marshal their resources to advance racial equality by collecting better demographic data to target anticompetitive conduct that disproportionately impacts people of color, prioritizing enforcement in markets that would be most impactful for communities of color, and designing consent decrees and soliciting feedback from those communities when those decrees are reviewed in judicial proceedings under a public interest standard. But for more far-reaching and systemic reforms, Congress must act to affirmatively ensure fair and equal access to markets by amending the antitrust laws and requiring that antitrust enforcement agencies take a proactive role in achieving racial equality.

In his seminary lectures, Martin Luther King envisioned the market as itself a place of public accommodation. The task of our moment is to reimagine what true marketplace diversity could achieve. While some have argued that “[a]ntitrust policy ... is not the appropriate tool for pursuing particular goals of social equality” and that racial equality goals “are best left to the constitutional and statutory institutions intended to address them,” combatting the effects of consolidated corporate power on people of color cannot be merely a matter of civil rights and antidiscrimination law. Because antitrust law formulates rules that shape access to the marketplace, the conditions of discriminatory price- or wage-setting, and the allocation of bargaining power in negotiating the terms of exchange, it has a central role to play in dismantling structural racism.

This Article provides an accounting of antitrust's complicity in structural racism and a roadmap for its dismantling. It participates in a broader literature seeking to uncover systemic racism in the law, including in policing and criminal law, property and housing law, tax law, banking law, education law, and more. But it also situates itself within the world of administrative law scholarship seeking to unearth administrative agencies' role in perpetuating racial subordination. In expanding this crucial work to the antitrust context, it builds on critical new scholarship exploring how antitrust can apply to racial cartels and discrimination in specific sectors as well as efforts to apply Critical Race Theory to criticize antitrust's consumer welfare standard in favor of a community welfare standard.

The Article contributes to this literature in three ways. First, it lays out the theoretical and empirical case for how corporate concentration, firm dominance, and anticompetitive conduct can and has exacerbated racial inequality by protecting firms from competition when they discriminate or engage in conduct that has discriminatory effects (Part I). Second, it builds a framework for enforcers to better account for the realities of racial discrimination in shaping market realities for rivals, consumers, and workers of color. That framework draws from an original, foundational data set of antitrust case law dealing with race as well as antitrust's broader enforcement apparatus in order to identify how current doctrine and enforcement places obstacles in the way of successful race-salient antitrust challenges (Part II). By flagging these areas of concern, it seeks to initiate a conversation about reforms, proposing an aggressive slate of actions that agencies and courts could pursue without congressional reforms before turning to legislative avenues for improving antitrust regulation that furthers racial equity (Part III).

[. . .]

Antitrust regulation is our collective social project for ensuring that markets function for the public good, as a means of accessing economic opportunity, and to protect winners that compete on the merits rather than through exploiting market failures such as racial discrimination. But for its over century-long history, federal regulation of market competition has been blind to and even reinforced market practices that rigged the rules against people of color, contributing to racial inequality. Under their existing authority, antitrust agencies and the courts can begin to reverse this legacy and target structural impediments to equal market access. Attuning antitrust doctrine and enforcement to the ways in which markets have entrenched incumbents, established conduct rules and administrative priorities that reinforced and even favored racial discrimination, and refusing to ignore the salience of race in how firms and employers compete will be crucial components of a broader project to dismantle systemic racism.

Hiba Hafiz is an Assistant Professor of Law at Boston College Law School; Affiliate Fellow, Thurman Arnold Project, Yale University.