Commodity Exchanges and Antitrust


Historically, commodity exchanges have been viewed as natural monopolies, not subject to competitive forces. But in recent years, both technology and regulatory changes have allowed for competition between rival exchanges in various contracts. With competition comes the regulation of competition. The traditional method of regulating competition is through court adjudication of the Sherman Antitrust Act. But in regulated industries, antitrust authority must be shared in some way with the regulatory authority. Then, it must be implemented by the relevant government entity.

This article will explore the impact of competition on this industry and how the exchanges are dealing with the resulting antitrust issues. Not surprisingly, there have been several allegations of anticompetitive activity in violation of the antitrust laws of the United States. Indeed, at least two lawsuits have been filed, and one complaint has been brought to the Commodity Futures Trading Commission (“CFTC”).

Here we review the economics of commodity exchanges, and the nature of competition between exchanges. We then examine the new forces for competition in exchanges offering commodity contracts. After this introduction to commodity exchanges, we review the basic economic and legal foundations of antitrust law. We then provide an analysis of antitrust mandate of the CFTC and examine the legal doctrine of implied immunity as it applies to the CFTC. Finally, we discuss various types of antitrust cases, and applies these legal and economic theories to recent cases


Antitrust and Trade Regulation

Date of this Version

August 2006