Antitrust Law and Economics in a Nutshell
Authors: Gellhorn, Ernest / Kovacic, William E. / Calkins, Stephen
Copyright Date: 2004
20 chapters have results for antitrust
Chapter II. The Antitrust Statutes 62 results (showing 5 best matches)
- A third constraining force consists of modern commentary that doubts the antitrust system’s capacity to distinguish effectively between procompetitive and anticompetitive conduct and warns of antitrust’s potential to reduce consumer welfare. See Fred S. McChesney,
- 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...
- Antitrust Casebooks: Ideology or Pedagogy?
- National Antitrust Laws in a Continental Economy: A Comparison of Canadian and American Antitrust Laws
- The major substantive provisions of the U.S. antitrust laws are few and brief. The Sherman Antitrust Act of 1890, 15 U.S.C.A. §§ 1–7, is no exception. Its two main sections are:
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Chapter XII. The Enforcement and Adjudication Process 50 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,
- Perhaps recognizing these adverse possibilities, courts have established limits on the ability of private plaintiffs to obtain relief under the Clayton Act. One group of restrictions, treated immediately below, narrows the set of plaintiffs who may attack antitrust violations. These devices screen claims according to the type of injury alleged (requirements that the plaintiff suffer harm to her business or property and allege antitrust injury) and the plaintiff’s proximity to the source of harm (limits on standing and recovery by indirect purchasers). See William H. Page,
- Antitrust is the only area in which two substantial federal government agencies—the Justice Department’s Antitrust Division and the FTC—share enforcement responsibility for an economic regulatory scheme. The Antitrust ...Sherman and Clayton Acts. The Antitrust Division is headed by an Assistant Attorney General, who is nominated by the President and confirmed by the Senate. The Division exercises its enforcement authority through civil and criminal actions. All of the Division’s lawsuits are brought in the federal courts. When it proceeds through civil suits, the Division can obtain equitable relief (e.g., an injunction forbidding specific conduct) or it can collect treble damages in the rare instance when it sues on behalf of the United States as a purchaser of goods and services. Section 4B of the Clayton Act creates a four-year statute of limitations from the time the claim for monetary relief “accrues.” No statute of limitations governs civil suits for injunctive relief, and (...
- The FTC has exclusive authority to enforce Section 5 of the FTC Act and its prohibition of “unfair methods of competition.” At least in theory, this permits coverage of something more than is reached by the antitrust statutes, and especially older case law recognized the right of the Commission to prohibit conduct that violated the spirit as well as the letter of antitrust law. FTC efforts to apply Section 5 expansively yielded few lasting contributions to antitrust jurisprudence, however, see Ernest Gellhorn,
- Clinton Administration antitrust enforcement continued the Bush I Administration’s limited redirection of federal enforcement beyond the Reagan antitrust agenda. See Lawrence White,
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Chapter XIV. The Changing Balance in Antitrust 17 results (showing 5 best matches)
- Commentators often attribute the retrenchment of antitrust doctrine since the mid–1970s to the appointment of conservative judges, but the Chicago-oriented retrenchment in antitrust would not have been so strong or widespread without the support of many judges not ordinarily associated with hostility to government intervention. Consider the antitrust votes of two of the Supreme Court’s more liberal members in the post-World War II era—William Brennan and Thurgood Marshall. From 1977 onward, these jurists were instrumental in imposing severe restrictions on private antitrust plaintiffs. Justice Marshall introduced the “antitrust injury” requirement in his . Modern, judicially-led efforts to curtail the private antitrust suit could not have been so broad and effective if liberals on the Supreme Court and in the lower courts had not given their support.
- 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
- A third institutional determinant of change is the federal courts. Next to persuading Congress to amend the antitrust statutes, a president’s best means for durably adjusting antitrust policy is to select judges who share the president’s general policy vision, including competition policy. Elections may alter public enforcement policy, scholars may propose new rationales for antitrust intervention, and private litigants may propose novel theories of liability, but it is life-tenured judges who control the gate through which most doctrinal innovations must pass.
- 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 ...with foreign regimes. Regardless of the outcomes of presidential elections, however, consensus antitrust—which accepts (albeit with a critical eye) a healthy dose of Chicago School insights—is likely to continue, guarded by a conservative judiciary that would impede any effort by public...
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Chapter IX. Mergers 54 results (showing 5 best matches)
- 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.
- 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 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, consent...
- , 71 Antitrust L.J. 161 (2003); Michael L. Katz & Carl Shapiro, , Antitrust, Spring 2003, at 49. Several hospital merger cases—the Achilles heel of government merger enforcement—have relied on “critical loss” thinking to broaden geographic markets and reject lawsuits. By definition, whenever profit margins are high the critical loss will be relatively small (since sacrificing sales is so costly)—but such margins may also imply a small actual loss, see Katz & Schapiro, supra. But see David Scheffman & Joseph Simons, , Antitrust Source, Nov. 2003, at 2, http://abanet.org/antitrust/source/nov03/scheffman.pdf (criticizing economic models used by O’Brien–Wickelgren and Katz–Schapiro).
- A third formative condition is the Supreme Court’s silence on merger issues. The absence of a Supreme Court decision on substantive merger doctrine since 1975 has magnified the role of the government enforcement agencies. Merger proceedings are an important departure from the general tendency of the antitrust system to evaluate conduct after the fact. Mainly as a result of the premerger notification process, most mergers are examined in advance, with the government acting essentially like a regulatory body. To a degree unequalled in other areas of antitrust, merger policy is governed by guidelines promulgated by enforcement agencies and through reliance on the ability of the merging parties and the government to negotiate solutions to perceived competitive problems (e.g., “fix it first”) without recourse to litigation. See William J. Baer, , 65 Antitrust L.J. 825 (1997).
- , 9 Vill. L. Rev. 211, 219–20 (1964). For similar later assessments, see IIA Phillip E. Areeda, Herbert Hovenkamp & John L. Solow, Antitrust Law ¶ 533 (2d ed. 2002); Richard A. Posner, Antitrust Law 152 (2d ed. 2001).
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Chapter X. Patent and Intellectual Property Issues 27 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,
- 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.,
- 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.
- The efforts of firms to acquire, use, and enforce intellectual property rights—patents, copyrights, trademarks, and trade secrets—sometimes provoke challenges under the antitrust laws. For many years such rights were viewed suspiciously, but this hostility has moderated; federal enforcement agencies and the courts now recognize that the intellectual property and antitrust laws are not mutually inconsistent but instead and that both are directed at the enhancement of consumer welfare. See, e.g., Atari Games Corp. v. Nintendo of Am., Inc. (Fed. Cir. 1990) (observing that the patent and antitrust laws “are actually complementary, as both are aimed at encouraging innovation, industry and competition”). This Chapter reviews the main antitrust issues that arise as businesses seek to obtain and exploit intellectual property rights—especially the adoption and enforcement of patent licenses.
- Antitrust’s per se approach to price-restricted patent licenses has not extended to market or territorial allocations. Section 261 of the Patent Code declares that the patentee may assign its exclusive right “to the whole or any specified part of the United States.” 35 U.S.C.A. § 261. Courts have upheld patent licenses assigning licensees geographic territories as authorized by Congress. But such restraints are exhausted by the first sale; that is, ordinary antitrust law applies to one who purchases a patented product, even from a restricted licensee. Keeler v. Standard Folding–Bed Co. (1895); see Adams v. Burke (1873). The special patent protection does not apply—but the restraint may or may not be illegal. Cf. § 4.3 (antitrust safety zone for most vertical restraints where collective market share is 20% or less).
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Chapter VI. Horizontal Restraints: Problems of Proof and Characterization 36 results (showing 5 best matches)
- The Antitrust Economics of Credit Card Networks
- 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 ...Antitrust L.J. 17, 19–22 (1992). A second illustration is the practice of “benchmarking,” by which firms compare their production, quality control, and sales techniques with those of successful firms within the same industry or in other...
- Information Sharing, Innovation, and Antitrust
- 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
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Preface 17 results (showing 5 best matches)
- While the past decade has featured a general stability in antitrust liability rules in the United States, three major developments have altered the framework of antitrust enforcement. First, antitrust enforcement has been fragmented at home and abroad. In the United States, state governments have emerged as the powerful third branch in a public enforcement triad that includes the Justice Department and the FTC. Sectoral regulators such as the Federal Communications Commission (telecommunications) and the Federal Energy Regulatory Commission (FERC) exercise concurrent authority with the state and federal antitrust agencies to evaluate the competitive effects of mergers. The private treble damage bar also has experienced major growth in organization and effectiveness. As a result, the federal antitrust agencies have less control over the development of antitrust policy and, most important, less ability to retrench enforcement policy than they did a decade ago.
- 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
- Finally, the Fifth Edition notes steps that courts have taken, under the framework of Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993), to test the reliability of testimony by economists and other experts in antitrust litigation. By invoking to exclude or limit expert testimony, courts in a number of antitrust cases have encumbered plaintiffs’ efforts to establish liability or to prove damages. The popularity of “ challenges” and their acceptance by the courts underscores a key aspect of the U.S. antitrust system—the tendency of courts to develop evidentiary or procedural screens to counteract what judges and other self-correcting features of the U.S. antitrust regime, we highlight how deeply the American antitrust laws rely upon the courts to achieve consistency and promote stability in the development of standards.
- 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.
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Chapter XIII. Limits on The Scope of The Antitrust System 41 results (showing 5 best matches)
- 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.
- 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...
- Enforcement Cooperation among Antitrust Authorities
- 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.
- Private plaintiffs sometimes have argued that cooperation between agencies of the federal government or combinations by federal officials and private actors constituted antitrust violations. Courts consistently have refused to apply the antitrust statutes to the acts of federal agencies or individual federal officials acting within their official capacity. See Rex Systems v. Holiday (4th Cir. 1987).
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Chapter III. Antitrust Economics (In a Nutshell) 43 results (showing 5 best matches)
- The work of Bain and other scholars indicating a strong, positive relationship between concentration and profitability gave considerable support to the “structuralist” school of antitrust, which argued that an industry’s structure largely determined its conduct and performance. See James W. Meehan, Jr. & Robert J. Larner, , in Economics and Antitrust Policy 179 (Robert J. Larner & James W. Meehan, Jr. eds., 1989). Relying on structuralist models, many commentators urged broad antitrust efforts to deconcentrate American industry, including legislation to restructure monopolies and oligopolies. See Carl Kaysen & Donald F. Turner,
- This introduction to basic economic concepts and to several primary and emerging theories is relevant to a study of antitrust because such ideas suggest how antitrust policy can help maximize consumer welfare by controlling the misuse of private economic power. Antitrust enforcement requires an understanding of the competitive market system, how it operates, its limitations, and why it is worth preserving. From this foundation, particular antitrust policies can be assessed by considering whether the business practices they challenge in fact deviate from the competitive norm, or by measuring the costs and benefits of specific enforcement actions.
- . The distinction between productive and allocative efficiency is associated with Judge Bork, see Robert H. Bork, The Antitrust Paradox 91 (1978). For an argument that antitrust also promotes consumer-desired variety, see Thomas B. Leary,
- beginning antitrust students and practitioners to core economic concepts that are critical in antitrust. Actual markets reside between the polar extremes of perfect competition and monopoly and are affected by many forces. Nevertheless, understanding these models is important because they assist in discerning how markets operate, in interpreting judicial antitrust decisions (which often rely on these and related economic concepts), and in evaluating antitrust enforcement.
- 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.
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Chapter VIII. Vertical Restraints 55 results (showing 5 best matches)
- 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,
- In Continental T.V., Inc. v. GTE Sylvania, Inc. (1977), the Supreme Court drew the era of acutely “inhospitable” antitrust treatment of vertical restraints to a close. In terms of doctrine, injected price theory into the mainstream of antitrust policy. Justice Lewis Powell’s opinion for the Court drew heavily on recent, economically-oriented literature, observing that “an antitrust policy divorced from market considerations would lack any objective benchmarks.”
- 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 output … or instead one designed to ‘increase economic efficiency and render markets more, rather than less, competitive.’ ” Current antitrust learning generally discourages a conclusion that RPM “facially appears to be one that would always or almost always tend to restrict competition and decrease output.” Under the
- involved several antitrust firsts: it was the first time the Court expressly overruled a major antitrust doctrine; it was the first time the Supreme Court reversed a former colleague sitting as a trial judge for an error of law; and, as noted in Chapter 3, it was the first explicit adoption by the Court of the Chicago School approach for testing business conduct under the antitrust laws.
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Index 16 results (showing 5 best matches)
Chapter IV. The Monopoly Problem 67 results (showing 5 best matches)
- Empirical Methods in Antitrust Litigation: Review and Critique
- 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, , 58 Antitrust L.J. 841 (1989), and the leading treatise continues to call for its abandonment, Areeda & Hovenkamp, supra at ¶ 771c. Even the doctrine’s defenders approvingly note that it is very sparingly applied. See Robert Pitofsky et al.,
- Market shares are antitrust’s chief tool for assessing the competitive significance of firms in the relevant market. The validity of market shares as proxies for market power hinges on how closely the market definition reflects commercial realities. Once the product and geographic market boundaries are determined, market shares can be computed in one of several ways. See ABA Antitrust Section, Monograph No. 12, Horizontal Mergers: Law and Policy 153–61 (1986).
- . 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).
- This sweeping definition is too broad to be useful in antitrust, however. Departures from the perfectly competitive market model are common, indicating that countless firms have at least some quantum of market power. Therefore, the first issue for monopolization analysis is to determine what degree of market power is so significant that its exercise warrants scrutiny and control. See Benjamin Klein,
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Chapter XI. Price Discrimination and The Robinson–Patman Act 13 results (showing 5 best matches)
- 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, , 59 Antitrust L.J. 765, 765–66 (1991).
- 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.” , 62 Antitrust L.J. 127 (1993) (meeting competition defense “may be the most potent device for sellers seeking to minimize Robinson–Patman
- 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”).
- 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...
- The possibility that price discrimination imposed by powerful sellers or elicited by powerful buyers might yield or protect monopoly power has been an enduring antitrust concern. Scholars have identified several ways in which price discrimination may reduce consumer welfare. See Richard A. Posner, The Robinson–Patman Act: Federal Regulation of Price Differences 10–12 (1976); F.M. Scherer & David Ross, Industrial Market Structure and Economic Performance ch. 13 (3d ed. 1990). Among other effects, systematic price discrimination may entrench dominance by enabling large firms to obtain inputs at prices unavailable to their smaller rivals. Systematic discrimination also may
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Chapter I. Restraints of Trade at Common Law 14 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.
- Antitrust in the Formative Era: Political and Economic Theory in Constitutional and Antitrust Analysis
- 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.
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Chapter V. Horizontal Restraints: The Evolution of Standards 36 results (showing 5 best matches)
- Despite these difficulties, cartels can be very profitable. They are most likely to succeed in markets with high levels of seller concentration, substantial product homogeneity, high transaction frequency and visibility, and high entry barriers. See Dennis W. Carlton & Jeffrey M. Perloff, Modern Industrial Organization 124–44 (3d ed. 2000). The Antitrust Division’s criminal cartel program has unearthed cartels that have lasted a decade or more—and ones that have succeeded despite product heterogeneity, seemingly easy entry conditions, and a surprisingly large number of firms. See
- 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, , 61 Antitrust L.J. 579 (1993). There is, in other words, no “right” degree of firm or inter-firm organization in a market. The challenge for antitrust is to discern the objectives and likely effects of joint arrangements and to decide whether their probable benefits outweigh their likely competitive risks.
- Per Se and Rule of Reason Approaches to Antitrust Analysis
- ), is important for two reasons: it provides a much-cited, still influential recitation of the rule of reason’s content and it illustrates the general historical pattern that the application of the rule of reason usually has exculpated the defendant. While the rule of reason no longer governs unadorned price-fixing agreements under the Sherman Act (if it ever truly did), the rule of reason is used widely in antitrust. Its evolution in theory and application must be understood if one is to gain a sure foothold in antitrust.
- 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
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Chapter VII. The Oligopoly Problem 23 results (showing 5 best matches)
- 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, , 38 Antitrust Bull. 143 (1993). From the late 1940s through the 1960s, structuralist perspectives dominated industrial organization economics (see Chapter 4) and guided antitrust policy toward concentrated industries. The structural model viewed supracompetitive pricing in oligopolies as nearly inevitable because the small number of industry members either would expressly agree to raise prices or would achieve the same result solely through interdependent, follow-the-leader reactions to the conduct of rivals. To address the latter phenomenon—often termed “tacit collusion” or “administered pricing”—structuralists proposed a three-pronged antitrust strategy: (1) redefine the concept of “agreement” under the Sherman Act to
- Antitrust Policy
- Recognition of oligopoly’s awkward place in antitrust analysis is more than a half-century old. Intellectual and legal developments in the 1930s and 1940s converged to place the oligopoly question on antitrust’s active agenda. One stimulus was the research of Edward Chamberlin and Henry Simons on firm behavior in concentrated industries. In describing pricing by oligopolists, Chamberlin concluded that “[s]ince the result of a cut by any one is inevitably to decrease his own profits, no one will cut, and, although the sellers are entirely independent, the equilibrium result is the same as though there were a monopolistic agreement between them.” Edward H. Chamberlin, The Theory of
- Since the 1940s, the Sherman Act’s oligopoly gap has commanded considerable attention. This pattern promises to persist. Modern antitrust enforcement trends have made it likely that businesses often will operate in the gray fringe of doctrine that forbids rivals to act jointly to set prices or other terms of trade. Since the late 1970s, the Justice Department has devoted extensive resources to criminal prosecution of price-fixing and other per se illegal horizontal offenses. In the same period Congress raised the maximum Sherman Act fine for individuals from $100,000 to $1 million and for corporations from $3 million to $100 million. Congress also increased the maximum prison term for individuals from one year to 10 years, and guidelines promulgated by the United States Sentencing Commission have ensured that convicted antitrust defendants usually will serve time in prison. As a group, these measures have raised the likelihood that efforts by competitors to coordinate
- Chicago School views had important policy implications and helped recast antitrust doctrine and enforcement policy toward concentrated industries in the late 1970s and throughout the 1980s. Because indirect coordination was deemed problematic and prone to fail, the federal antitrust agencies focused horizontal restraints enforcement on prosecuting direct agreements to restrict output. Courts and enforcement officials increasingly accepted the idea that large corporate size and concentration reflected superior efficiency. This induced caution in pursuing initiatives to disassemble firms in concentrated industries and prompted a relaxation of horizontal merger controls.
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Table of Cases 7 results (showing 5 best matches)
- Baby Food Antitrust Litigation, In re, 166 F.3d 112 (3rd Cir.1999),
- Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litigation, In re, 906 F.2d 432 (9th Cir.1990),
- 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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Outline 11 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.