University of Southern California

Standard Oil as Lochner’s Trojan Horse

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Article by Alan J. Meese
From Volume 85, Number 3 (March, 2012)

Few decisions are as maligned as Lochner v. New York, which struck down a law setting maximum hours for bakers. Innumerable critics assert that Lochner was a paradigmatic example of judicial activism, whereby laissez-faire judges imposed their personal policy preferences under the guise of judicial review. According to this widely shared view, both Lochner and its progeny improperly read the “liberty” of the Fourteenth and Fifth Amendments to include “liberty of contract,” which the Court then protected against substantive abridgment by laws that fell outside of the police power. The police power, in turn, was defined narrowly, so as to preclude, for instance, laws designed to transfer income from one class to another. Thankfully, this school of thought concludes, the Supreme Court abandoned Lochner and its progeny in 1937, thus allowing state legislatures and Congress to have their way and impose redistributive legislation, unfettered by private liberty, throughout the land.

Within antitrust circles, Standard Oil is every bit as beloved as Lochner is maligned. Despite its age, major decisions continue to endorse Standard Oil and its Rule of Reason as an appropriate exposition of the Sherman Act. Indeed, no Supreme Court Justice has (in recent memory) questioned the correctness of Standard Oil or its holding that Section 1 only forbids “unreasonable” restraints. On the contrary, the most “progressive” Justices, while expressly criticizing Lochner, have invoked and relied upon Standard Oil and its Rule of Reason when resolving antitrust controversies.

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