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MONOPOLIES

MONOPOLIES. Since 1845 the Constitution of Texas has declared that "monopolies are contrary to the genius of a free government, and shall never be allowed." The first Texas legislation against monopolies and trusts was the Anti-Trust Act of 1889, the second of its kind in the United States. The act was aimed primarily at railroad traffic associations that were controlling rates and at organizations that were cornering the market in cotton bagging. The act declared that monopolies, trusts, and conspiracies that restrained trade, fixed prices, or prevented or lessened competition were illegal, and contracts in restraint of trade were void. In 1895 the act was amended to include insurance companies. The act made absolute prohibitions without regard to the immediate or actual effect of the restrictions on trade; this is unlike the federal Sherman Act of 1895 and Clayton Act of 1914, which regulate restrictions on trade in interstate commerce, and which have been interpreted to prohibit only unreasonable restraints on trade. The Texas laws did not attempt to prevent mergers of business organizations. The attorney general was authorized to seek civil penalties, forfeiture of articles of incorporation, and injunctions against foreign corporations' doing business in Texas; the level of enforcement activities depended on the inclination of the officeholder and the fiscal support from the legislature. Criminal penalties could be sought by local district attorneys, but prosecutions were almost never brought. Private lawsuits were not mentioned in the statute, but the Texas courts held that a person injured by a violation could sue for actual damages. Private litigants preferred to sue under federal antitrust statutes, which permitted them to recover treble damages and attorneys fees, whenever there was any interstate component of the transaction. The most frequent use of the Texas statute was as a defense in suits for breach of contract, when a party would claim that the contract was void as a restraint of trade even when he was responsible for putting the illegal provision in the contract.

A new era of antitrust regulation in Texas began with the enactment of the Texas Free Enterprise and Antitrust Act of 1983 (Texas Business & Commerce Code, ch. 15), which is based on federal antitrust law. Unlawful practices, defined as in the federal statutes, include: "every contract, combination, or conspiracy in restraint of trade or commerce;" to monopolize, or to attempt or conspire to monopolize, "any part of trade or commerce;" and tying arrangements and acquisition of stock or assets that lessen competition substantially. Activities that are exempted from the federal antitrust statutes are also exempted from the Texas act.

The legislature expressed its intent to exercise its full constitutional powers and made it clear that the act would apply to Texas activities and conduct even if they also affect interstate commerce. The act specifies that it should be construed in harmony with "federal Judicial interpretations of comparable federal antitrust statutes." This indicates that it is intended to incorporate the federal interpretation that only unreasonable restraints on trade are unlawful. It also should mean that a violation will only rarely be useful as a defense in a suit for contract violation. The 1983 act differs from federal law by including a "right to work" provision: it is an antitrust violation for an employer and a labor union or other organization to require membership in the union or organization as a condition for employment. Under the 1983 act persons injured by unlawful conduct may recover damages and attorneys fees and may recover treble damages if the conduct was willful or flagrant. Plaintiffs are required to serve copies of their complaints on the attorney general, who may seek to intervene on behalf of the state. The attorney general may sue for civil fines of up to $1,000,000 against a corporation or up to $100,000 against other forms of businesses and for injunctions against violations of the act. District attorneys may bring felony prosecutions against persons who enter into a contract, combination, or conspiracy in restraint of trade or commerce, or who monopolize, or attempt or conspire to monopolize, any part of trade or commerce. A successful civil suit by the attorney general or prosecution by a district attorney may be used in a private lawsuit to prove a violation. The attorney general was given authority to issue civil investigative demands before bringing a lawsuit; these demands are like subpoenas that require persons to produce documents or information relevant to a civil antitrust investigation. The attorney general also was authorized to bring civil suits under federal antitrust laws.

BIBLIOGRAPHY: 

William V. Dorsaneo III and Peter Winship, Texas Litigation Guide, Vol. 8 (New York: Matthew Bender, 1995).

Paul Womack

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Paul Womack, "MONOPOLIES," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/jtmqu), accessed April 17, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.

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