Justice Stevens concurred in the judgment. He suggested that there was no conflict between the securities and antitrust regimes in the case.
In my view, agreements among underwriters on how best to market IPOs, including agreements on price and other terms of sale to initial investors, should be treated as procompetitive joint ventures for purposes of antitrust analysis. In all but the rarest of cases, they cannot be conspiracies in restraint of trade within the meaning of §1 of the Sherman Act, 15 U. S. C. §1.Credit Suisse, supra, slip op. (Stevens, J., concurring in the judgment) at 1. He strongly objected to the presumption against private actions (under the antitrust laws in this case) in the face of the regulatory power of the state. For Stevens there could be no suggestion, "as the Court did in Twombly, and as it does again today, that either the burdens of antitrust litigation or the risk “that antitrust courts are likely to make unusually serious mistakes,” ante, at 16, should play any role in the analysis of the question of law presented in a case such as this. " Credit Suisse, supra, slip op. (Stevens, J., concurring in the judgment) at 3.
Justice Thomas dissented, principally on the grounds that the federal securities statutes themselves compelled application of the antitrust laws to actions otherwise regulated under the federal securities laws which might give rise to actions under the antitrust laws ("The securities statutes are not silent. Both the Securities Act and the Securities Exchange Act contain broad saving clauses that preserve rights and remedies existing outside of the securities laws." Credit Suisse, supra, slip op. (Thomas, J., dissenting) at 1). Justice Tomas suggested that "Given Congress’ demonstrated ability to limit provisions of the securities laws to States and the lack of any such limitation here, the saving clauses cannot be understood as limited only to state-law rights and remedies. Credit Suisse, supra, slip op. (Thomas, J., dissenting) at 3-4. Justice Kennedy did not participate in the decision.
Justice Breyer, for the majority, used the opportunity to affirm and extend a line of prior cases focusing on the relationship between the federal securities and antitrust regimes. But he did much more--he appears to confirm a tendency within American government to institutionalize a hierarchy of governance in which private action is discounted and judicial oversight is deemed prone to error, in favor of administrative regulation and enforcement, which is increasingly privileged as the principal means by which the instrumentalities of the state may be used to regulate private activity in vindication of private rights directly affected by the action of individuals or entities subject to regulation. This is a proclivity that was adopted by the legislature and written into the Sarbanes Oxley Act. See Backer, Larry Catá, "The Duty to Monitor: Emerging Obligations of Outside Lawyers and Auditors to Detect and Report Corporate Wrongdoing Beyond the Securities Laws." St. John's Law Review, Vol. 77, No. 4, p. 919, 2003; Backer, Larry Catá, "Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring After Sarbanes-Oxley" . Michigan State University Law Review 2004:327. Under this regime, the state, and its interests come first, and individuals may maintain actions to vindicate their own (personal and inferior) rights only to the extent that they may be permitted this, and that it does not otherwise affect regulatory policy. It now appears to have been embraced by the judiciary as well. Though, as is usual in these matters, the judiciary reserved to itself the power to determine the circumstances under which such deference to the regulatory state would be manifested:
Where regulatory statutes are silent in respect to antitrust, however, courts must determine whether, and in what respects, they implicitly preclude application of the antitrust laws. Those determinations may vary from statute to statute, depending upon the relation between the anti-trust laws and the regulatory program set forth in the particular statute, and the relation of the specific conduct at issue to both sets of laws.Credit Suisse, supra, slip op. at 5.
Justice Breyer read several prior cases involving the compatibility of the federal securities and antitrust laws (Credit Suisse, supra, slip op. at 5-10) to fashion a standard applicable in these cases:
in finding sufficient incompatibility to warrant an implication of preclusion, have treated the following factors as critical: (1) the existence of regulatory authority under the securities law to supervise the activities in question; (2) evidence that the responsible regulatory entities exercise that authority; and (3) a resulting risk that the securities and antitrust laws, if both applicable, would produce conflicting guidance, requirements, duties, privileges, or standards of conduct. We also note (4) that in Gordon and NASD the possible conflict affected practices that lie squarely within an area of financial market activity that the securities law seeks to regulate.Credit Suisse, supra, slip op. at 10. Justice Breyer then applied to standard thus formulated to maintain that the "the underwriters’ efforts jointly to promote and to sell newly issued securities—is central to the proper functioning of well-regulated capital markets." Credit Suisse, supra, slip op. at 10. He then read the SEC's regulatory power broadly (Credit Suisse, supra, slip op. at 11 ("Indeed, the SEC possesses considerable power to forbid, permit, encourage, discourage, tolerate, limit, and otherwise regulate virtually every aspect of the practices in which underwriters engage.")). He noted, in that regard, that the securities acts also provide a basis for private action against underwriters as well. Having determined that the conduct can be characterized as a subject of the regulation of securities, and that conduct of this character falls squarely within the jurisdiction of a federal regulatory agency (by operation of federal statute), he posited that the SEC had been quite energetic in the use of this regulatory power. Credit Suisse, supra, slip op. at 11. He noted that the SEC "has defined in detail, for example, what underwriters may and may not do and say during their road shows. . . . It has brought actions against underwriters who have violated these SEC regulations. . . . And private litigants, too, have brought securities actions complaining of conduct virtually identical to the conduct at issue here; and they have obtained damages. " Credit Suisse, supra, slip op. at 11. The references to the availability of private action in the opinion, is particularly pointed, given the ultimate object of the opinion.
Having thus determined that three of the four conditions for implied preclusion existed, the question for the majority reduced itself to a simple one: is there a conflict between federal securities and antitrust regulatory regimes. Credit Suisse, supra, slip op. at 12. Rejecting a characterization of the complaint as one seeking to undo the current system of securities underwriting, the issue for the majority reduced itself further to an even simpler issue: "the manner in which the underwriters jointly seek to collect “excessive” commissions." Credit Suisse, supra, slip op. at 13. Even assuming that there would be similar results applying the securities and antitrust laws to this narrow issue, the majority rejected the notion that it followed that there was no conflict (even in this case) between the two regulatory regimes. "Rather, several considerations taken together lead us to find that, even on these prorespondent assumptions, securities law and antitrust law are clearly incompatible." Credit Suisse, supra, slip op. at 13. It is in the majority's discussion of this point that it draws some conclusions, and exposes some presumptions, that may have have more far reaching application to constitutional jurisprudence in the United States and in the constitution of democratic governance in general.
Justice Breyer gives several reasons for holding that the two regulatory regimes conflicted here, even though application of either in this case would produce the same result. First, he argued regulatory harm ("to permit antitrust actions such as the present one still threatens serious securities-related harm." Suisse, supra, slip op. at 13. This securities related harm takes a decidedly institutional character. It is institutional in the sense of a focus on the integrity of the regulatory jurisdiction of the SEC. That regulatory authority, in turn, is to be understood here as a monopoly governmental regulatory power, the monopoly power of which it was incumbent on the courts to protect. For Justice Breyer regulatory harm takes several forms. First--the issue of line drawing: "For one thing, an unusually serious legal line-drawing problem remains unabated. " Suisse, supra, slip op. at 13. Only a thin line, Justice Breyer tells us, separates that complex of regulated activity that is lawful from that to be deemed unlawful. Id. Both laddering and tying, the majority reminds us, can be lawful or unlawful, depending on the form it takes. Suisse, supra, slip op. at 14-15. Thus, for example, with respect to "laddering,"
It will often be difficult for someone who is not familiar with accepted syndicate practices to determine with confidence whether an underwriter has insisted that an investor buy more shares in the immediate aftermarket (forbidden), or has simply allocated more shares to an investor willing to purchase additional shares of that issue in the long run (permitted). And who but a securities expert could say whether the present SEC rules set forth a virtually permanent line, unlikely to change in ways that would permit the sorts of “laddering-like” conduct that it now seems to forbid?Suisse, supra, slip op. at 14. The parsing of these complexities is beyond the talents of anyone but a securities expert. It certainly is too much for a court, and would pose great difficulties if courts (enforcing the antitrust acts) were to engage in such parsing at the same time that the SEC (enforcing the securities laws) did the same.
Two issues are implicated--the importance of uniform interpretation and that of efficiency (expertise). But they are oddly applied. The majority imposes a uniformity principle by reference to the consequences of regulation (the IPO conditions). It ignores uniformity focused on the source of regulation (the statutes) on the results. It suggests that uniformity requires privileging rules derived from regulatory systems (the regulation of markets) rather than from statutes prohibiting certain discrete forms of conduct (anti-competitive behavior) and that bureaucracies empowered to construct and enforce regulatory systems are to be privileged over general purpose courts with no statutorily mandated expertise.
But there is more to the regulatory harm issue: "For another thing, evidence tending to show unlawful antitrust activity and evidence tending to show lawful securities marketing activity may overlap, or prove identical." Suisse, supra, slip op. at 15. Again, the uniformity principle (applied against the consequences of securities regulation (by implication privileged in the majority's discussion) suggests that this inconsistency leads not to a bad, but rather to an unacceptable result. The majority suggests that Congress could not have meant to make a particular set of behaviors unlawful under the anti-trust laws at the same time that it vest a regulatory agency with the power to issue regulations that suggest that the same conduct would not violate the securities laws if undertaken by an underwriter. But of course they can--and this court has been eager, at times, to hold Congress to its multi-statute inconsistencies, when it has suited the Court.
Thus the great problem of regulation, and regulatory authority for the majority, a problem that must produce a hierarchy of power in which the state--through it subsidiary regulatory organs--must prevail over anything else, including the power of Congress to legislate against its own regulatory creation:
Together these factors mean there is no practical way to confine antitrust suits so that they challenge only activity of the kind the investors seek to target, activity that is presently unlawful and will likely remain unlawful under the securities law. Rather, these factors suggest that antitrust courts are likely to make unusually serious mistakes in this respect. And the threat of antitrust mistakes, i.e., results that stray outside the narrow bounds that plaintiffs seek to set, means that underwriters must act in ways that will avoid not simply conduct that the securities law forbids (and will likely continue to forbid), but also a wide range of joint conduct that the securities law permits or encourages (but which they fear could lead to an antitrust lawsuit and the risk of treble damages). And therein lies the problem.Suisse, supra, slip op. at 16-17. And the solution: avoid any action, or the assertion of any non-regulatory (privately asserted) power that might "threaten serious harm to the efficient functioning of the securities markets." Suisse, supra, slip op. at 17.
Not only is the regulatory element privileged, but the value of the private action in antitrust is minimized. So, Justice Breyer tells us that "any enforcement-related need for an antitrust lawsuit is unusually small." Suisse, supra, slip op. at 17. The importance of private enforcement under the antitrust laws is further minimized because the regulatory scheme under the securities laws themselves provide for a private right of action under circumstances that further the aims of the regulatory scheme (rather than work against it under the antitrust laws). Again there is a privileging of the state's interest through a regulatory system overseen by an agency than by individual suit to protect private interests with a a double focus. First, the availability of private rights of action under the securities laws "makes it somewhat less necessary to rely upon antitrust actions to address anti-competitive behavior". Suisse, supra, slip op. at 18. Second, private rights of actio0n under the securities laws are more severely regulated than under the antitrust laws and thus better suited to the regulatroy scheme administered by the SEC. "We also note that Congress, in an effort to weed out unmeritorious securities lawsuits, has recently tightened the procedural requirements that plaintiffs must satisfy when they file those suits. To permit an antitrust lawsuit risks circumventing these requirements by permitting plaintiffs to dress what is essentially a securities complaint in antitrust clothing." Suisse, supra, slip op. at 18.
In sum, the majority determined, that the protection of the securities markets, and the regulatory scheme devised for that purpose, administered through the SEC, must outweigh the rights, even statutorily conferred rights, of individuals under other federal statutory schemes. The regulatory state triumphs over the individual. Individuals must defer to th state for the vindication of private rights--now collectivized. While the Soviets collectivized agriculture in the 1920s, Americans are now collectivizing private rights through great administrative structures increasingly given regulatory power to oversee large sectors of American life. These administrative structures are increasingly vested with the "public interest" and with the power to act collectively on behalf of individuals wronged by others. The "Fair Funds" model of government substituting itself for individual claimants in the securities acts in growing in its appeal. Backer, Larry Catá, "Surveillance and Control: Privatizing and Nationalizing Corporate Monitoring After Sarbanes-Oxley" . Michigan State University Law Review 2004:327.
And in this case, the Solicitor General's fears were exquisitely realized: "The Solicitor General fears that otherwise, we might read the law as totally precluding application of the antitrust law to underwriting syndicate behavior, even were underwriters, say, overtly to divide markets." Suisse, supra, slip op. at 19. There is a lesson here not just for students of securities and antitrust law in the United States. The majority's decision evidences the absorption of a number of important presumptions and principles of modern economic globalization: the presumption of the importance of the protection of markets, the principle that governments functions at their best when they privilege regulatory systems designed to protect markets, that the principle of regulatory efficiency ought to trump virtually all other principles of governance (including fear of tyranny or concentration of power), the privileging of collective expressions of individuals rights through the state or some other entity (privatizing collectivization), and the presumption that general purpose courts ought to give way to specialty tribunals with respect to disputes touching on the objects of regulatory systems.
Expect to see more decisions like this one in the context of the regulation of the political economy of the United States in the coming years. Indeed, in a global context, the Credit Suisse majority is in tune with developments in other parts of the world--developments that have been characterized in some places as a return to the ideals of authoritarian capitalism. Those ideals posit the supremacy of the individual and individual action--but only within the rules (natural, objective, supreme, etc.) that optimize activity for both individual and community. Those rules, and the integrity of the systems optimizing individual action, must be protected by the state--the political community. Individual policing is incidental to the primary function of the state as the preserver of the systems within which optimizing individual action is possible. Under such a set of presumptions, it is possible to support the primacy of individual action in markets and the primacy of state control (or regulation, preservati0on, protection) of those markets. Where the object of optimization is individual welfare, it is possible to construct complex layered systems of regulatory systems; where the object is the maximization of the welfare of a political state, the relationship of these notions to early 20th century fascist, Stalinist or nationalist socialist economic theory is clear.
Credit Suisse reminds us of the sometimes short distances between market oriented democratic globalizing economic-political theory (and the systems built thereon), and the rising authoritarian capitalist system of modern China and (increasingly of Russia), or traditional fascist or Marxist Leninist systems of political economy.