Politically Motivated Boycotts with Commercial Benefits: A Consolidated Rule of Reason Judicial Standard
The founding documents of the United States provide each citizen with certain inalienable rights, including the right to speak and assemble freely, the right to petition the government, and the right to pursue life, liberty, and happiness. Economic rights, such as the right to maximize one’s individual potential and to participate in our free enterprise system, are not inalienable. Yet, they have historically enjoyed substantial, if now less rigorous, protection by the judiciary from our democratic political process.
The government’s attempt to protect the first amendment rights of its citizens may, however, conflict with its duty to ensure the maintenance of a vigorous, uninhibited free trade system. One such conflict may arise when commercial or economic organizations, legitimately motivated by political reasons, exercise their first amendment rights and refuse to deal with another commercial organization or with the government, thereby resulting in a potential violation of federal antitrust laws under the Sherman Antitrust Act. Although the United States Supreme Court has not determined whether such conduct violates federal antitrust laws, several federal courts have addressed the issue with inconsistent results.
There are three types of boycotts. First, there is the “group” boycott.The group boycott, also known as the “classic” or “naked” boycott, is the concerted refusal by a commercial organization to conduct business with an-other commercial entity, for the purpose of excluding that entity from competition. The second type of boycott, often described as the politically motivated non-commercial boycott, involves the refusal by a non-commercial organization to conduct business with another entity because of political or other non-commercial reasons. The lack of a “commercial objective to achieve an effect traditionally held violative of the Sherman Act, such as monopolizing, raising prices, or excluding competitors from a market, [and the] lack of a significant business interest that might be advanced by the boycotting activity” distinguishes the politically motivated non-commercial boycott from the aforementioned classic commercial group boycott. The third type of boycott, and the subject of this note, is the politically motivated boycott by a commercial organization. This type of boycott contains characteristics of both the group boycott and the politically motivated non-commercial boycott. It involves the concerted refusal of a commercial organization to deal with another commercial, governmental or non-commercial organization. Since incidental commercial benefits usually inure to the boycotters as a result of their protest, both lower federal courts, federal agencies,’ and commentators”‘ have questioned the legality of politically motivated boycotts.
The few cases involving this type of boycott have yielded a wide variety of outcomes. The diverse rationales utilized by the ruling authorities include a reliance upon traditional per se treatment of horizontal restraints, the Noerr-Pennington doctrine, and first amendment expressive speech and conduct considerations. These rationales will be discussed below.
The Supreme Court has yet to provide a concise rule of law that would clarify the legality of politically motivated commercial boycotts and thereby resolve the disharmony among the federal courts. In International Longshoremen’s Association v. Allied International, the Court held that a politically motivated refusal by an American longshoremen’s union to unload cargo shipped from the Soviet Union was an illegal secondary boycott under section 8(b)(4) of the National Labor Relations Act (NLRA). In so doing, theCourt declined the opportunity to determine whether a politically motivated protest boycott violated the antitrust laws under the Sherman Act.
This note addresses the above antitrust issue and proposes a “consolidated rule of reason” analysis as the appropriate judicial standard. Part I discusses antitrust boycott law. Part II discusses various proposals by scholar son the applicability of the federal antitrust laws to boycotts. It also presents four cases decided by lower federal courts involving politically motivated commercially beneficial boycotts. Part III suggests that a “consolidation” of the various judicial standards postulated by lower federal courts and commentators would comprise a fair and equitable rule of reason by which to analyze such boycotts. The final section concludes that a “consolidated rule of reason” is the appropriate judicial standard to be applied when the courts consider the legality of politically motivated, commercially beneficial boycotts.
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