Antitrust Law and Economics in a Nutshell
Authors:
Gellhorn, Ernest / Kovacic, William E. / Calkins, Stephen
Edition:
5th
Copyright Date:
2004
23 chapters
have results for Antitrust Law and Economics in a Nutshell
Chapter III. Antitrust Economics (In a Nutshell) 135 results (showing 5 best matches)
- Current debate about antitrust policy deals less with whether economics is central to antitrust (virtually all concede that it is) and more with which economic ideas offer the soundest analytical framework. Since the late 1970s, industrial organization research has focused chiefly on the related fields of game theory and strategic behavior. In general, the policy implications of this research support more expansive antitrust intervention than Chicago School advocates endorse. As this brief chronology suggests, changes in antitrust doctrine usually lag behind the formation of a consensus among economists about the appropriate content of liability standards. See William E. Kovacic,
- ANTITRUST ECONOMICS (IN A NUTSHELL)
- For the coming years, the outcome of two ongoing debates likely will determine how economics affects antitrust. The first deals with the appropriate role of economics in antitrust analysis. As described in Chapter 2, some commentators argue that the antitrust laws are designed to serve social and political objectives beyond economic efficiency. Where such factors confirm economic goals, these additional arguments further support antitrust efforts to foster economic efficiency. Where they conflict with efficiency, however, the soundness of this approach and the trade-offs involved must be carefully assessed. For example, should the exercise of monopoly power be condemned even though that power was acquired solely by competitive efforts which are otherwise applauded? To condemn monopoly in this circumstance may discourage vigorous competitive effort by large firms nearing monopoly size.
- Chicago School orthodoxy ascended during 1973–91. The years since then have seen an on-going struggle to arrive at a new synthesis See William E. Kovacic & Carl Shapiro,
- Many new developments in economics suggest reasons to scrutinize business conduct more closely. However, not all recent industrial organization research implies the need for more restrictive enforcement. One line of inquiry that has discouraged recourse to expansive antitrust standards is transaction cost economics—the study of how organizational structure and contractual design affect the cost of organizing activity within the firm, and between firms and external parties such as suppliers, distributors, and consumers. See Oliver E. Williamson,
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Outline 65 results (showing 5 best matches)
Chapter XII. The Enforcement and Adjudication Process 60 results (showing 5 best matches)
- The seeds of a major revival were planted in 1976, when the Crime Control Act sent antitrust enforcement seed money to the states and the Hart–Scott–Rodino Act directed the Justice Department to share investigative information with state attorneys general and authorized state attorneys general to enforce the Sherman Act with “parens patriae” treble damages actions on behalf of state residents. 15 U.S.C.A. §§ 15c–15h. Over 20 states enacted new antitrust statutes, and federal grants enabled the states to create new, or expand existing, antitrust offices. See Ralph H. Folsom,
- The fourth way courts control antitrust litigation is through their gatekeeper role with respect to expert testimony evidence. In a trio of cases—Daubert v. Merrell Dow Pharmaceuticals (1993), General Electric Co. v. Joiner (1997), and Kumho Tire Co. v. Carmichael (1999)—the Supreme Court has established the trial judge as a critical arbiter of the relevance and reliability of expert testimony. Although none of those were antitrust cases, the centrality of economics to much of antitrust has made “ motions” a common feature of antitrust litigation. In one striking example, a court excluded the testimony of a distinguished Stanford economics professor because his testimony “did not incorporate all aspects of … economic reality” (and without the testimony, the plaintiff’s jury verdict could not be sustained). Concord Boat Corp. v. Brunswick Corp. (8th Cir. 2000). See also Andrew I. Gavil,
- Clinton Administration antitrust enforcement continued the Bush I Administration’s limited redirection of federal enforcement beyond the Reagan antitrust agenda. See Lawrence White,
- The FTC shares responsibility with the Justice Department for federal civil enforcement of the Clayton Act. The agency is headed by five commissioners appointed by the President and confirmed by the Senate. Commissioners serve seven-year terms, and no more than three commissioners may belong to the same political party. Antitrust cases are developed by the agency’s Bureau of Competition, with assistance from the Bureau of Economics. The FTC exercises its antitrust enforcement authority mainly through investigations and administrative adjudication, but the Commission also uses Section 13(b) of the FTC Act to file civil suits in federal district court for injunctive relief and (rarely in antitrust cases) disgorgement. To avoid duplicative investigations and prosecutions, the FTC and Justice Department use a clearance procedure to notify each other before commencing investigations and to decide which agency will handle specific matters.
- The Antitrust Division and the FTC rely extensively on consent decrees and orders to redress antitrust violations. These measures constitute judicial or agency approval of settlements and are as enforceable as any other court or agency order. As compromises, they are not legally authoritative and do not necessarily reflect the state of the law—but, in the absence of litigated cases, they supply tea leaves that counselors must study in order to provide current guidance. See Richard M. Steuer,
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Chapter XIV. The Changing Balance in Antitrust 22 results (showing 5 best matches)
- In part by conscious design, the federal judiciary’s antitrust views often reflect Chicago School thinking. This is largely a function of Reagan/Bush appointments, including prominent law and economics scholars such as Pasco Bowman, Frank Easterbrook, Douglas Ginsburg, Alex Kozinski, Richard Posner, Antonin Scalia, Harvie Wilkinson, Stephen Williams, and Ralph Winter. In voting in antitrust cases, Reagan and Bush appointees generally adhered more closely to a Chicago School agenda than judges appointed by President Carter. See William Kovacic,
- Justice Ginsburg’s and Justice Breyer’s appointments to the Court, and the Clinton era enforcement record more generally, are both a tacit recognition that antitrust ideas once deemed extreme have become mainstream antitrust views and an indirect acknowledgment that the conservative course of much antitrust doctrine and analysis since the late 1970s involved more than brute force applications of ideology by Reagan and Bush judges. Any doubts about this were resolved by the 9–0 decisions in (agreeing with Clinton antitrust agencies to end per se treatment of maximum RPM), (agreeing with Clinton antitrust agencies to limit the per se boycott rule to horizontal agreements), and (rejecting leveraging and limiting essential facilities and refusal to deal doctrines) (three Justices concurring in judgement based on absence of standing). (FTC).) Developments in economics will continue to stimulate new thinking, as will comparisons with foreign regimes. Regardless of the outcomes of...
- In truth the pendulum did not swing very far—if there is a pendulum at all. See William E. Kovacic, , 71 Antitrust L.J. 377 (2003). Most federal enforcement resources remained focused on the prosecution of large horizontal mergers and horizontal output restrictions such as price-fixing. Indeed, given the merger wave and budget constraints, few resources were available with which to reach far beyond the Reagan agenda. A few vertical matters were pursued that might have gone unchallenged before; several important single-firm conduct cases were brought ( ); and the agencies were receptive to thinking about post-Chicago economic learning dealing with game theory, strategic behavior, and information. But in the main, antitrust enforcement policies were based on economics rather than populism and the agencies readily acknowledged the considerable risks associated with intervention in the market. Moreover, the Clinton Administration’s concern with the competitiveness of American industry...
- The future direction of antitrust seemed less certain in 1994 than in the late 1980s. A then-recent Supreme Court decision ( ) had downplayed Chicago School principles and displayed a receptivity to post-Chicago economic analysis. State governments had brought vertical restraints and merger cases that the Reagan Administration and, to a lesser extent, the Bush Administration declined to pursue. And Bill Clinton, himself a former law professor who taught antitrust, gained the presidency on a platform that criticized Reagan/Bush economic regulatory policies, including antitrust enforcement. How wildly would the pendulum swing?
- Any attempt to promote an antitrust agenda—whether more or less aggressive—would encounter three institutional constraints. The first would be alternative enforcers. As noted in Chapter 12, the state attorneys general have become important players on the antitrust scene. Although currently relations with Washington are harmonious, this could easily change were the states to conclude that major needs were going unaddressed. Outside the U.S., the trend toward globalization of antitrust has reached fruition: today virtually every developed country and many developing ones have antitrust laws and enforcement programs of varying effectiveness and sophistication. “Antitrust compliance” for multinational companies is no longer only about U.S. law. In ...Chapter 13) the Court limited the ability of foreign plaintiffs to base U.S. lawsuits on harms independently suffered abroad in part because it “construes ambiguous statutes to avoid unreasonable interference with the sovereign authority of...
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Chapter VIII. Vertical Restraints 134 results (showing 5 best matches)
- Thus, perhaps more than any other area of antitrust law, the evolution of vertical restraints doctrine displays the influence of economics on legal standards and reveals the collision of rival views about antitrust’s proper goals. The development of standards for vertical practices also illuminates issues that we first encountered in examining horizontal restraints in Chapters 5 and 6 above—particularly the tension between per se and rule of reason tests, the content of a reasonableness inquiry, and the Supreme Court’s recent tendency to adjust evidentiary and antitrust injury requirements to moderate the effect of nominally potent liability standards.
- rule ignores relevant efficiency considerations and, in effect, treats vertical price-fixing more harshly than modern antitrust doctrine evaluates horizontal price collaboration, which is seen as posing greater competitive dangers than RPM agreements. The Supreme Court’s decision in (see Chapter 5) suggests how the Court might end this anomaly and extricate RPM from the rigid approach of
- Antitrust principles governing vertical arrangements have undergone extraordinary adjustment in the past thirty years. In 1966, as Assistant Attorney General for Antitrust, Donald Turner remarked that he approached vertical “territorial and customer restrictions not hospitably in the common law tradition, but inhospitably in the tradition of antitrust law.” Donald F. Turner,
- The past decade has seen renewed interest in exclusive dealing law and disagreement over the path of its development. See Jonathan M. Jacobson,
- Sylvania Economics—A Critique
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Chapter II. The Antitrust Statutes 105 results (showing 5 best matches)
- . Canada passed the first national antitrust law in 1899, but enforcement was ineffective.
- The second aim in creating the FTC was to improve the development and implementation of antitrust policy. Unlike the typical lawyer-dominated prosecutor’s office, the Commission would have a professional staff drawn from a wide range of disciplines, including accounting, economics, and law. As a foundation for the agency’s multidisciplinary expertise, Congress transferred the well-respected Bureau of Corporations from the Department of Commerce to the The Commission also would exercise broad investigating and reporting powers that could be exercised independent of any specific law enforcement inquiry. Rather than try cases before the generalist judges of the federal courts, the Commission and its expert commissioners would use the agency’s administrative adjudication process to develop and apply antitrust principles, subject to review in the courts of appeals. Limited to civil jurisdiction and issuing prospective equitable decrees only, the Commission would enjoy greater... ...as an...
- Philip Clarke & Stephen Corones, Competition Law and Policy: Cases and Materials 8–16 (1999) (describing reform of Australia’s competition system); Paul Collins & D. Jeffrey Brown,
- The antitrust system’s permeability influences the direction of antitrust doctrine and analysis over time. The openness of the adjudication process means that today’s orthodoxy will face periodic challenges by rival theories that may become prevailing analytical approaches. Because the system is susceptible to new ideas, changing political and economic conditions coupled with ferment in economic learning impart instability to existing doctrine and analysis. See William E. Kovacic,
- At first, the proliferation of antitrust regimes was chiefly a subject of curiosity within the U.S. antitrust community, as the addition of new national antitrust laws initially had few practical implications for most business activity. The operation of the older Western systems in Europe and North America seldom created international friction, and most transition economy antitrust mechanisms were feeble. The operation of national antitrust systems sometimes sparked trans-Atlantic disputes in the 1970s and 1980s, but such conflicts were rare. As we will examine more closely in Chapters 13 and 14, the trend toward global economic integration, played out against a backdrop of multiple national antitrust regimes of dissimilar process, purpose, and substance, has generated tension. In particular, the trend toward extraterritorial application of national antitrust laws to mergers involving foreign companies means that the decisions of individual national enforcement authorities, such as...
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Chapter VII. The Oligopoly Problem 40 results (showing 5 best matches)
- A final strategy that periodically has commanded close attention is to enact new legislation to deconcentrate oligopolies or directly attack instances of persistent monopoly power (see Chapter 4). Modern consideration of proposals to deconcentrate oligopolies originated in Carl Kaysen’s and Donald Turner’s
- Since the work of Chamberlin and Simons, economists have been instrumental in shaping antitrust’s treatment of oligopolies. The past fifty years embrace three distinct phases in economic thinking about oligopoly. See Jonathan B. Baker,
- Since the early 1980s, many economists have reexamined Chicago-oriented assumptions about tacit coordination among oligopolists. See Dennis A. Yao & Susan S. DeSanti,
- In advancing his position, Posner enjoyed two advantages over Turner—longevity and a judicial appointment. Posner has now advanced some variation of his position in the 1969 law review article cited above, in his 1976 book (Antitrust Law), and in the 2001 second edition of that book. Moreover, from the bench he has observed that Section 1’s “language is broad enough … to encompass a purely tacit agreement to fix prices.… If a firm raises prices in the expectation that its competitors will do likewise, and they do, the firm’s behavior can be conceptualized as the offer of a unilateral contract that the offerees accept by raising their prices.”
- . Turner joined Professor Areeda in advocating a form of “no-fault” monopolization in their influential treatise, a position that has been preserved in the current edition of that work even though the current lead author rejects it. See III Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ ¶ 630–38 (2002).
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Preface 18 results (showing 5 best matches)
- The Fifth Edition continues its predecessors’ focus on economics in introducing the doctrinal framework and operation of the antitrust system. The notion that economic analysis should be integral to devising and applying antitrust legal standards commands broad acceptance and is so pervasive in adjudication and policymaking that familiarity with basic industrial organization concepts is essential to antitrust literacy. Our presentation of the economic foundations for antitrust analysis does not espouse exotic new ideas or theories. Instead, we emphasize generally accepted economic principles and apply widely accepted concepts to antitrust. Where significant differing or emerging views appear in thoughtful antitrust cases or commentary, we present those positions with clarifying observations. Our goal is to acquaint the reader with economic ideas that now have wide currency in courts and enforcement agencies or promise to have a major impact in the coming years.
- The inherently evolutionary and interdisciplinary qualities of most antitrust systems place special demands on those who study and practice competition policy. Mastery of antitrust demands the skills not only of the expert legal technician but also of the economist, the historian, the political scientist, and the specialist in international relations. (It also helps to be comfortable doing research on the internet, which now offers a wealth of material, see
- In this Fifth Edition we pursue the goal that guided its predecessors—to provide a basic understanding of the economic and legal principles and doctrine that govern modern antitrust law and to offer a reliable guide to the future of antitrust doctrine and policy. When the Fourth Edition appeared in 1994, a major question facing the U.S. antitrust system was how much President Bill Clinton’s appointees would alter the competition policy equilibrium established by Republican Presidents Ronald Reagan and George Bush. Republican appointees to the Department of Justice and the Federal Trade Commission (FTC) generally had embraced a Chicago School enforcement agenda focused primarily on cartels and large horizontal mergers.
- The fragmentation of domestic enforcement authority has an important global counterpart. The preface to the 1994 edition of this text anticipated a dramatic expansion in the number of national competition laws and the enhancement of existing antitrust regimes in jurisdictions such as Canada and the European Union. Today over 90 nations have antitrust laws, and as many as thirty other countries are likely to adopt such statutes by 2010. Despite similarities, the world’s antitrust systems present important differences in both procedure and substantive standards which directly affect the growing number of companies operating on the global stage. Several recent matters, such as the European Union’s 2001 intervention to block General Electric’s acquisition of Honeywell despite the Justice Department’s decision to allow the transaction to proceed with minor adjustments and its 2004 findings that Microsoft abused a dominant position and must, among other things, disclose interfaces to...
- Like the antitrust system it attempts to describe, the Fifth Edition of this text features elements of continuity and change. In the style of its predecessor, the Fifth Edition reconstructs the essential architecture of modern antitrust policy and examines how the intersection of substantive standards, evidentiary tests, and procedural rules shape the obligations of business operators under the law. To indicate how recent case law and commentary are likely to affect the future equilibrium of antitrust doctrine, we place current trends in law and policy in their historical context. Where cases and other sources of policy display important ambiguities or conflicts in analysis, we have proposed approaches or criteria for resolving them.
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Chapter XIII. Limits on The Scope of The Antitrust System 67 results (showing 5 best matches)
- Antitrust exemptions that result from federal intervention in the market arise in two basic ways. The first is where Congress expressly declares that the antitrust laws do not apply, or apply only in a modified form, to specific conduct. Express statutory exemptions of varying scope exist for a number of industries, including agriculture, communications, energy, financial services, and insurance. See ABA Section of Antitrust Law, Antitrust Law Developments ch. XIV (5th ed. 2002); see also National Cooperative Research and Production Act of 1993, 15 U.S.C. §§ 4301–05 (research and development joint ventures must be judged under the rule of reason and, if properly notified to the antitrust agencies, may result in the payment only of single, rather than treble, damages). In a second (and small) set of cases, immunity arises by implication. Where Congress establishes a pervasive regulatory scheme that the application of the antitrust laws would disrupt, courts sometimes hold that the...
- The power to exempt conduct from antitrust attack resides with Congress—not individual federal officials. Without authority from Congress, federal officials have no power to exempt conduct from the antitrust laws. See Otter Tail Power Co. v. United States (1973). Firms usually cannot avoid antitrust liability by arguing that federal officials endorsed conduct that otherwise violated the antitrust laws unless the federal officials had actual authority to immunize the behavior. See a defendant’s reasonable, good faith reliance on the approval of a federal official arguably should weigh against a finding of criminal intent in an antitrust case and might count in favor of applying a rule of reason (rather than a per se test) in a civil action.
- The operation of the American antitrust system is not unbounded. Congress, state governments and their political subdivisions, and foreign nations have adopted numerous policies that displace free markets and frequently collide with the antitrust system. Moreover, by statute and case law, the jurisdiction of the antitrust statutes does not reach all commercial activity. This chapter considers how jurisdictional restrictions and competition-suppressing actions by government institutions confine the application of the U.S. antitrust laws. As will be seen, this is an area of considerable current ferment.
- In Hartford Fire Insurance Co. v. California (1993), the Supreme Court considered whether principles of international comity should preclude the exercise of jurisdiction over British reinsurance companies which were alleged to have conspired with American insurance companies to limit certain forms of insurance coverage. After noting that Congress in the FTAIA had expressed no view about whether an American court should decline to exercise Sherman Act jurisdiction on comity grounds, the Court stated that American courts should refrain from exercising jurisdiction only where American law and foreign law truly conflict. The British reinsurance firms argued that such a conflict existed because their activities were legal under British law. Stating that “[n]o conflict exists, for these purposes, ‘where a person subject to regulation by two states can comply with the laws of both’ ” (quoting Restatement (Third) Foreign Relations Law § 403, Comment e), the Court ruled that a conflict would...
- Among the most important antitrust exemptions are those granted to labor unions and collective bargaining agreements. The Clayton Act sought to exempt unions from the antitrust laws, and this position was fortified by the Norris–LaGuardia Act of 1932. See Daniel J. Gifford,
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Chapter X. Patent and Intellectual Property Issues 68 results (showing 5 best matches)
- . The role of the Federal Circuit in antitrust intellectual property law cannot be overestimated. See Symposium: The Federal Circuit and Antitrust, 69 Antitrust L.J. Issue 3 (2002). The court, created in 1982, has exclusive jurisdiction in appeal of patent cases. 28 U.S.C.A. § 1295; see Holmes Group v. Vornado Air Circulation Systems, Inc. (2002) (no jurisdiction over cases not alleging patent claims even if counterclaims do). Whereas most antitrust law develops through a process of multiple courts of appeal applying the law and learning from each other with the Supreme Court resolving disputes, patent-antitrust law is increasingly the province of a single court with special concern for the patent system and only occasional Supreme Court review. See Ronald S. Katz & Adam J. Safer,
- That the property right represented by a patent, like other property rights, may be used in a scheme violative of the antitrust laws creates no “conflict” between laws establishing any of those property rights and the antitrust laws.
- In addition to antitrust review, competition issues involving intellectual property also attract scrutiny under the “patent misuse” doctrine. Patent misuse is an equitable remedy (analogous to the tort law doctrine of unclean hands) that allows defendants in an infringement action or a contract action to collect unpaid royalties to claim that the patentee has “misused” her patent grant and therefore is not entitled to the requested relief. Cf. Lasercomb Am., Inc. v. Reynolds (4th Cir. 1990) (recognizing “copyright misuse” doctrine); Stephen A. Stack, Jr.,
- The law governing tying—both antitrust and misuse—has changed over time. Early cases first held that a tie-in barred an infringement suit. Thus, in Morton Salt Co. v. G.S. Suppiger Co. (1942), the licensor of a patented salt dispensing machine could not condition its use on the lessee’s purchase of nonpatented salt tablets from the patentee-licensor. This constituted a misuse of the patent, and the patentee was disqualified from enforcing the patent, even against direct infringers. Two years later the Court extended this doctrine of patent misuse to antitrust law in holding that a contributory infringer could not be sued by a patentee who refused to license a combination invention without purchase of key unpatented components. Mercoid Corp. v. Mid–Continent Inv. Co. (1944); Mercoid Corp. v. Minneapolis–Honeywell Regulator Co. (1944). Subsequently, in 1953, Congress added sections 271(c) and (d) to the Patent Code “for the express purpose of reinstating the doctrine of contributory...
- . Intellectual property and antitrust also have attracted considerable attention. See To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, A Report by the Federal Trade Commission (Oct. 2003). For a comprehensive review, see Herbert Hovenkamp et al., IP and Antitrust: An Analysis of Antitrust Principles Applied to Intellectual Property Law (2003). One issue—standard setting—deserves mention even though the law is insufficiently developed to merit textual treatment. In Dell Computer Corp., (FTC 1996) (consent order), the FTC alleged that Dell had falsely assured a standard-setting association that it had no intellectual property rights that would interfere with a proposed standard—and then, after a standard advantageous to Dell was adopted, sought to enforce patents against firms planning to follow it. This was seen by the majority as being an unfair method of competition under Section 5. Two other FTC complaints alleging abuse of standard setting are...
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Chapter VI. Horizontal Restraints: Problems of Proof and Characterization 115 results (showing 5 best matches)
- The Antitrust Economics of Credit Card Networks
- To evaluate these possibilities, antitrust law applies two related inquiries to joint ventures or similar forms of collaboration. The first is whether the act of joining together itself violates the antitrust laws. Detailed consideration of this subject is postponed until Chapter 9, which examines Section 7 of the Clayton Act—the principal anti-merger provision of the federal antitrust laws. Under Section 7, the focus is whether the new “partnership” will create market power or reinforce existing market power by eliminating actual or potential competition among the venturers. Note that joint ventures and mergers both are approaches for integrating the activities of distinct firms. Joint ventures differ from mergers mainly in the scope and duration of the parties’ integration: joint ventures generally involve a less sweeping convergence of the parties’ activities and a shorter unification of efforts. Each method has strengths and weaknesses as a solution to transaction cost problems...
- Antitrust law draws a pivotal distinction between unilateral and collective conduct. Restrictions on unilateral conduct, imposed mainly by the Sherman Act’s ban on monopolization and attempted monopolization, typically apply only when the defendant has attained a dominant position in the market.
- Fourth, even though the market impact of price verification may be ambiguous, it is clear that antitrust concerns are less acute when firms exchange data other than current or future prices. There is growing recognition that information exchanges involving historical costs and production techniques can increase the ability of firms to compete more effectively. For example, the Government’s health care antitrust guidelines explicitly encourage the collection and sharing of information with consumers. The guidelines create a safety zone where a third party collects the information; only three-month old data is supplied to providers; and there is sufficiently wide-spread participation to keep the data secret. See also Kathryn M. Fenton, Antitrust
- [A]ntitrust law limits the range of permissible inferences from ambiguous evidence in a § 1 case. Thus, in …, we held that conduct as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. To survive a motion for summary judgment or for a directed verdict, a plaintiff seeking damages for a violation of § 1 must present evidence “that tends to exclude the possibility” that the alleged conspirators acted independently.
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Title Page 5 results
- ANTITRUST LAW AND ECONOMICS
- IN A NUTSHELL
- General Counsel, Federal Trade Commission andProfessor of LawGeorge Washington University Law School (on leave)
- Professor of Law and Director of Graduate Studies Wayne State University Law School
- Professor of LawGeorge Mason University Law School
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Chapter IV. The Monopoly Problem 183 results (showing 5 best matches)
- in 1920 and Learned Hand’s opinion in in 1945, Section 2 was a dead letter. dramatically shifted the foundation and reach of the anti-monopoly law. Rather than focus on the defendant’s abusive market practices (since none were sufficiently proven), emphasized the defendant’s market power. This moved the law toward an economist’s concept of monopoly, which focuses on the existence of power to maintain prices above costs. treatment of the relationship between market power and conduct shaped Section 2 analysis for much of the post-World War II era and deserves close examination. See Frederick M. Rowe,
- Predatory Pricing and the Sherman Act: A Comment
- The essential facility doctrine has long been controversial. It was colorfully attacked in one of antitrust’s most frequently cited law review articles, Phillip Areeda,
- . In Otter Tail Power Co. v. United States (1973), which found liability where an integrated electric utility refused to “wheel” bulk power to municipally-owned distribution systems, the Supreme Court arguably misapprehended legitimate business justifications arising from the defendant’s efforts to fulfill its obligation (imposed by regulation) to provide universal service. Compare City of Anaheim v. Southern California Edison Co. (9th Cir. 1992) (integrated utility had no duty to wheel power for municipally-owned distribution company where wheeling would simply shift costs from one set of customers to another); see also William E. Kovacic,
- . The Supreme Court recognized conspiracy to monopolize as a separate offense in American Tobacco Co. v. United States (1946). It differs from single firm monopolization by requiring collective action, by dispensing with proof of monopoly power, and by requiring a showing of specific intent (as in attempts). See ABA Antitrust Section, Antitrust Law Developments 308–12 (5th ed. 2002).
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Copyright Page 3 results
- Nutshell Series, In a Nutshell
- Thomson/West have created this publication to provide you with accurate and authoritative information concerning the subject matter covered. However, this publication was not necessarily prepared by persons licensed to practice law in a particular jurisdiction. Thomson/West are not engaged in rendering legal or other professional advice, and this publication is not a substitute for the advice of an attorney. If you require legal or other expert advice, you should seek the services of a competent attorney or other professional.
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Chapter I. Restraints of Trade at Common Law 40 results (showing 5 best matches)
- The second reason to review early common law landmarks is that they offer a valuable perspective on the substance of judicial antitrust analysis. Common law precedents influenced early antitrust decisions and recent antitrust opinions continue to use common law cases to define doctrine. See Business Electronics Corp. v. Sharp Electronics Corp. (1988); National Society of Professional Engineers v. United States (1978). The “rule of reason,” first applied in 1711, remains the basic standard for deciding close antitrust cases. (Its meaning has changed over time and is still changing.) Ancient property law rules against restraints on alienation inspired the Supreme Court in the early 20th Century to interpret the Sherman Act as absolutely forbidding minimum resale price maintenance—a rule that lives to this day. As we will see in Chapter 8, whether such precedent deserves so much honor is unclear.
- Antitrust laws seek to control the exercise of private economic power by preventing monopoly, punishing cartels, and otherwise encouraging competition. Society’s impulse to adopt legal controls against anticompetitive conduct can be traced back for several millenia. See Lambros E. Kotsiris,
- Examining the origins of an antitrust statute helps to understand and interpret it. The historical lineage of the U.S. antitrust laws derives from common law actions which limited restraints of trade and, to some extent, sought to proscribe monopoly power and middleman profits. Many proponents of the Sherman Act viewed the measure as a federal enactment of common law prohibitions against restraints of trade. See Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890–1916, at 105–17 (1988). Thus, Senator John Sherman, the statute’s namesake, said Congress was setting forth “the rule of the common law which prevails in England and in this country.” 20 Cong. Rec. 1167 (1889). The Act’s very terminology drew extensively from the common law’s vocabulary.
- Thus, it is neither instructive nor accurate to reconcile all cases or to force the common law preceding the Sherman Act into any single mold. See Michael J. Trebilcock, The Common Law of Restraint of Trade: A Legal and Economic Analysis (1986). Nevertheless, a review of some leading common law rulings and of the conflicting interests they sought to reconcile is useful for at least two principal reasons. The first is that the common law origins of the Sherman Act illuminate a central methodological feature of the U.S. antitrust system. By anchoring the Sherman Act in a dynamic body of legal principles and the practical realities of business practices, Congress insured that the new antitrust statute would have an evolutionary, pragmatic character.
- In the area of antitrust law, there is a competing interest … in recognizing and adapting to changed circumstances and the lessons of accumulated experience.… As we have explained, the term “restraint of trade,” as used in § 1, also “invokes the common law itself, and not merely the static content that the common law assigned to the term in 1890.” Accordingly, this Court has reconsidered its decisions construing the Sherman Act when the underpinnings of those decisions are called into serious question.
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Chapter V. Horizontal Restraints: The Evolution of Standards 147 results (showing 5 best matches)
- explicitly recognized that there is a role for some kind of mid-level review. It explained that in , and —the cases “which have formed the basis for what has come to be called abbreviated or ‘quick look’ analysis”—“an observer with even a rudimentary understanding of economics could conclude that the arrangements in question would have an anticompetitive effect on customers and markets.” On the other hand, the Court also observed that “our categories of analysis … are less fixed than terms like ‘ ,’ ‘quick look,’ and ‘rule of reason’ tend to make them appear.… ‘There is always something of a sliding scale.… ’ … What is required … is an enquiry meet for the case, looking to the circumstances, details, and logic of a restraint.” (quoting Philip Areeda, Antitrust Law ¶ 1507, at 402 (1986)).
- Transaction cost economics has major antitrust implications. It illustrates that joint production or sales arrangements or other forms of cooperation may serve efficiency instead of fostering cartels. For example, collaboration by rivals may facilitate the development of new products and services. See Thomas M. Jorde & David J. Teece,
- ), has attracted mixed reviews over the years. Compare Robert Bork, The Antitrust Paradox 338–39 (1978) (a “doubtful” case) with Richard Posner, Antitrust Law 241 (2d ed. 2001) (“sound”). In , the Court faced a boycott whose aim was to eliminate troublesome competitors, enhance the group’s general economic interests, and promote compliance with common law (and state) standards of business conduct. Women’s garment manufacturers who claimed to be creators of original dress designs sought to curb “style piracy” by which other manufacturers copied their designs and sold these copies at much lower prices. To stop the practice the Guild’s members agreed to refuse to sell to retailers who also sold garments copied from a Guild member’s designs. The members were trying to prevent an allegedly illegal or tortious act (the copying of original designs); however, the Guild was taking the law into its own hands and, in the process, excluding rivals from the market. “[T]he combination is in reality
- Before returning to the law of price-fixing, it is worth noting that the judicial treatment of the reasonableness defense to a price-fixing charge is typical of the evolution of antitrust law, and similar developments have occurred in most other areas where antitrust concepts have been applied. After attempting to deny the existence of an agreement, defendants will argue that their primary conduct was lawful—here, that price-fixing violates neither the common law nor the Sherman Act. After that contention is categorically dismissed, as in , the defense retreats to a second line of rebuttal. It asserts that the market-rigging in question does not violate the Sherman Act’s prohibition of “undue” restraints because the arrangement (here, the fixed price) is reasonable. Not only is the agreement asserted to be harmless to consumers and competitors, but it is also said to help market participants avoid what are depicted as destructive effects of intense price rivalry.
- These rationales for per se prohibitions place a premium on determining that the forbidden behavior is indeed harmful in the vast majority of cases. Efficiency and justice are undermined when such determinations are not made carefully. Ill-conceived bright-line tests can discourage beneficial conduct. That judges may have trouble evaluating evidence is little excuse for summary prohibition where conduct often yields mixed competitive effects. It merely makes the case more pressing for competent tribunals with expertise in law and economics.
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Chapter IX. Mergers 162 results (showing 5 best matches)
- In seeking to stem a trend toward economic concentration, Congress sought to achieve a variety of objectives. Chief Justice Warren’s majority opinion in Brown Shoe Co. v. United States (1962), the first Supreme Court decision to interpret the amended Section 7, noted that Congress in 1950 sought to retain “ ‘local control’ over industry” and to protect small businesses. Congress evinced “fear not only of accelerated concentration of economic power on economic grounds, but also of the threat to other values a trend toward concentration was thought to pose.” In an influential analysis of Section 7, Derek Bok found that, during congressional consideration of the Celler–Kefauver amendment, “[e]fficiency, expansion, and the like were ignored or simply brushed aside in the deliberations.… [T]here is every reason to believe that Congress preferred the noneconomic advantages of deconcentrated markets to limited reductions in the cost of operations.” Derek Bok,
- The instability generated by these developments is keenly felt by antitrust specialists because merger policy is the most politically sensitive area of antitrust enforcement. Antitrust-relevant behavior usually unfolds in obscurity, but mergers often are front-page news. For competitors, suppliers, customers, and local communities, the announcement of a major transaction is an easily-grasped portent of change in the balance of industry power and in the geographic distribution of employment and company expenditures. Large “deals” quickly focus the attention of rival companies, employees, private citizens, and elected officials on the decisions of public enforcement officials and antitrust courts. When added to the task of analyzing inherently difficult legal and economic issues, coping with this political dimension makes forecasting the outcome of an antitrust merger proceeding as difficult as any assignment an antitrust counselor performs.
- As will be seen below, the agencies and the courts have now largely abandoned the simplistic foreclosure stories once found persuasive. During the 1980s, the agencies brought no vertical merger cases. Even then, however, there was recognition that a rare vertical merger could be problematic—by making entry more difficult, or by facilitating collusion, or by evading rate regulation. For instance, vertical integration may force other firms to integrate vertically in order to compete; and this may delay entry and increase the risk premium for the capital which such entrants need. Firms with market power sometimes may invest in vertical integration to retard entry that might erode supracompetitive profits. Thus, antitrust intervention may be appropriate to discourage vertical mergers where integration entrenches existing market power by impeding new entry. See Roger Blair & David L. Kaserman, Antitrust Economics 314–16 (1985). More recently, post-Chicago economists have questioned some...
- The tension between old case law and new economics is epitomized by FTC v. Staples, Inc. (D.D.C. 1997) (enjoining merger of Staples and Office Depot). The FTC, arguing for an “office supply superstore” market, submitted unusually thorough econometric evidence on prices in markets with only a single superstore, or two, or three. The court relied on this evidence to enjoin the proposed merger—but also relied on the practical indicia and company documents, and couched its finding in terms of a “submarket.”
- Except for considering how antitrust limits the attainment and use of monopoly power, this text has concentrated on contractual or similar arrangements between independent firms. In this Chapter we examine measures by which firms integrate their operations more completely and permanently—usually through the purchase by one company of the stock or assets of another. We use the terms and interchangeably to denote all methods by which firms legally unify ownership of assets formerly subject to separate control. It is difficult to overstate the importance of antimerger policies to the U.S. antitrust system. No area of antitrust activity commands closer scrutiny and or arouses more impassioned debate. At the same time, merger law is particularly difficult to study because the courts visit the subject so rarely (the Supreme Court last issued a merger decision in 1975), leaving antitrust counselors to divine the likely legality of a proposed merger from a changing mix of guidelines,...
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Chapter XI. Price Discrimination and The Robinson–Patman Act 43 results (showing 5 best matches)
- The meeting competition proviso in Section 2(b) makes discriminatory prices lawful when the seller acts “in good faith to meet an equally low price of a competitor.” This defense is absolute—regardless of other injury to competitors or competition—and has been explained as “the primary means of reconciling the Robinson–Patman Act with the more general purposes of the antitrust laws of encouraging competition between sellers.”
- Notwithstanding such concerns, the history of efforts to devise and enforce antitrust legislation to address price discrimination is a story of almost unrelieved policy failure. First enacted as Section 2 of the Clayton Act in 1914 and later augmented by the Robinson–Patman Act in 1936, enforcement of antitrust’s ban against price discrimination frequently has yielded perverse results by, for example, discouraging oligopolistic sellers from granting selective price concessions that would tend to undermine oligopolistic coordination. On the whole, Robinson–Patman Act enforcement has tended to contradict the procompetitive aims of antitrust’s other statutes. See Terry Calvani & Gilde Breidenbach,
- In practice the Act has been the most criticized antitrust statute, both for its complexity and for its tendency to dampen desirable forms of rivalry. See, e.g., Daniel F. Spulber, Regulation and Markets 544 (1989) (“Repeal of laws against price discrimination appears to be desirable.”). Although aimed principally at large retailers, it has been applied mainly against small sellers who granted discounts to compete against larger sellers and against firms engaging in vigorous competition. As a result, the Robinson–Patman Act has been attacked for discouraging price competition and promoting price uniformity. Consequently, its significance in antitrust enforcement has faded in recent years. Although the statute was once the basis for many actions by the FTC (to whom the Justice Department ceded prosecutorial jurisdiction), government-initiated lawsuits are exceedingly rare today. In 1966 alone, the FTC issued over 70 complaints and consents. By contrast, from the time that Ronald...
- Section 2(a)’s basic prohibition of certain price discrimination is supplemented by Section 2(d) & (e)’s prohibition of furnishing or paying for “services or facilities” in connection with the resale of commodities unless all competing customers are offered “proportionately equal terms.” These complicated provisions are the subject of a host of cases, see Antitrust Law Developments at 505–14, and the FTC’s Guides for Advertising Allowances and Other Merchandising Payments and Services, 16 C.F.R. § 240 (the “ ” Guides, issued initially in response to FTC v. Fred Meyer, Inc. (1968)). See A. Roy Lavik,
- presumption, however, does not obviate the private plaintiffs’s obligation to show not just illegality but also antitrust injury. Compare J. Truett Payne Co. v. Chrysler Motors Corp. (1981) (price discrimination does not result in “automatic damages:” “a plaintiff must make some showing of actual injury attributable to something the antitrust laws were designed to prevent”) with Alan’s of Atlanta, Inc. v. Minolta Corp. (11th Cir. 1990) (enough that plaintiff’s injury flowed from “a competitive advantage bestowed upon a favored purchaser”).
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Index 43 results (showing 5 best matches)
Table of Cases 67 results (showing 5 best matches)
- Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, In re, 906 F.2d 432 (9th Cir.1990),
- Baby Food Antitrust Litigation, In re, 166 F.3d 112 (3rd Cir.1999),
- High Fructose Corn Syrup Antitrust Litigation, In re, 216 F.3d 621 (7th Cir.2002),
- Independent Service Organizations Antitrust Litigation, In re, 203 F.3d 1322 (Fed.Cir.2000),
- Lower Lake Erie Iron Ore Antitrust Litigation, In re, 998 F.2d 1144 (3rd Cir.1993),
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Statutory Appendix 19 results (showing 5 best matches)
- § 2(a) It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: ...shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from...
- the Commission by any of its attorneys designated by it for such purpose may bring suit in a district court of the United States to enjoin any such act or practice. Upon a proper showing that, weighing the equities and considering the Commission’s likelihood of ultimate success, such action would be in the public interest, and after notice to the defendant, a temporary restraining order or a preliminary injunction may be granted without bond: , That if a complaint is not filed within such period (not exceeding 20 days) as may be specified by the court after issuance of the temporary restraining order or preliminary injunction, the order or injunction shall be dissolved by the court and be of no further force and effect: , That in proper cases the Commission may seek, and after proper proof, the court may issue, a permanent injunction.… [15 U.S.C.A. § 53(b)]
- § 5(a)(1). Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful. [15 U.S.C.A. § 45(a)(1)]
- § 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court. [5 U.S.C.A. § 1]
- § 7. No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly. [15 U.S.C. § 18]
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Advisory Board 9 results (showing 5 best matches)
- Publication Date: August 19th, 2004
- ISBN: 9780314257239
- Subject: Antitrust Law
- Series: Nutshells
- Type: Overviews
- Description: Gellhorn, Kovacic, and Calkins’ Antitrust Law and Economics in a Nutshell enhances understanding of antitrust laws, and includes the latest Supreme Court cases. This reliable guide on antitrust law gives special attention to the expanded role of evidentiary standards and the procedural screens in determining litigation outcomes. A look into recent revisions of public enforcement, immunity-related doctrines, and government intervention is also included.
