IF YOU BOUGHT a Cuisinart food processor between 1973 and 1981, you may be eligible now to buy a Cuisinart saucepan at half list price. If, that is, a federal court in Hartford, Conn., approves a settlement in a private antitrust case brought against Cuisinart by a battery of private antitrust lawyers. That may sound like a good deal, but it's not entirely clear that it's good antitrust policy.
The current suit was brought after the Carter administration's Antitrust Division sued Cuisinart, charging that it forced retailers to charge certain prices for its products. That's called vertical price- fixing, and for years many antitrust experts have considered it illegal. Cuisinart settled in 1980 by paying a $250,000 fine and promising to stop trying to maintain retail prices. If it had known that Ronald Reagan would win the 1980 election, it might have kept fighting. For the Reagan Antitrust Division doesn't regard all vertical price-fixing as illegal, and dropped several pending cases.
The Reagan administration position is not without scholarly support. If the minimum price is too high, consumers won't buy, or competitive manufacturers will make a product that will undercut the original in price. That's exactly what happened to Cuisinart: other manufacturers made food processors that undersold the Cuisinart model. Of course, when a product has a monopoly--like a drug that's based on a patent--then vertical price-fixing is unfair, and should be illegal. But Cuisinart didn't have a monopoly, and its product isn't a necessity. Were people who voluntarily purchased these gadgets really overcharged?
The settlement in the Cuisinart case illustrates the weakness of having the antitrust laws enforced, as they are today, largely through private lawsuits. Cuisinart's competitors don't think it's fair to compensate consumers with Cuisinart products, which are sold at discount anyway in many stores. They'd prefer to see Cuisinart buyers get cash, which they might use to buy competitive products. But competitors aren't represented in the private antitrust case. The lawyers who brought it, unlike the Antitrust Division, are under no obligation to represent a public interest; it's in their interest to propose a settlement Cuisinart will accept rather than fight the case for years. So Cuisinart gets to compensate plaintiffs with its inventory rather than with cash; the lawyers get large fees (already $700,000 has been set aside for them); and consumers, who under the current administration's view of the law were not hurt, get products they may or may not want at a discount that may or may not be a good deal. All this suggests not only that the substance of antitrust law needs to be chopped, sliced or minced a little, but also that the procedure of enforcing antitrust law through private lawsuits brought by profit-motivated lawyers may need a little food-processing too.