Friday, August 31, 2012

Carstensen on the Rabbi Cartel

Posted by Peter Carstensen

The Rabbinical Assembly has issued a response to the NY Times article on Barak Richman and the Rabbi cartel. In that response, the RA makes the following legal argument:

Professor Richman incorrectly attempts to apply antitrust concepts intended for the business marketplace to a religious movement. This crucial distinction was best characterized by Senator John Sherman the sponsor and namesake of the Sherman Antitrust Act, who stated that churches are not covered under this nation's antitrust laws: "I do not see any reason for putting in temperance societies any more than churches or school-houses or any other kind of moral or educational associations that may be organized. Such an association is not in any sense a combination or arrangement made to interfere with interstate commerce" (21 Cong.Rec. 2658-59 (1890).).

The challenge is not to the organization as such but to a practice that affects the market. The argument that not for profit organizations whether universities (U.S. v. Brown University, Oklahoma v. NCAA, etc.) or other NGOs(e.g., California Dental Association, American Bar Association, American Association of Law Schools, American Medical Association, etc.) are somehow categorically exempt is belied by the history of antitrust enforcement. Moreover, we all know the history of labor organizations in that period where Sherman and others opined that they would not be covered. Finally, what Senator Sherman said was that: "Such an association is not [in itself] in any sense a combination or arrangement made to interfere with interstate commerce." He was speaking to the basic nature of such entities and not to some specific commercial conduct that affects the market. In fact, I think that there were a couple of antitrust cases involved with the Kosher certification process.

So, the bottom line is that antitrust is concerned with how entities--for profit and not for profit--conduct themselves in the market when they engage in market affecting activities.

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