Federal Antitrust Policy, The Law of Competition and Its Practice
Author:
Hovenkamp, Herbert
Edition:
5th
Copyright Date:
2016
36 chapters
have results for Federal Antitrust Policy: The Law of Competition and Its Practice
Preface 4 results
- This fifth edition of
- This book seeks to give a full, although brief, accounting of United States antitrust law. Today the union of antitrust and economics is so complete that one cannot study antitrust seriously without at least minimal exposure to economics.
- Law school antitrust curricula vary considerably, with some classes focusing only on questions of substance, some involving many questions of enforcement and procedure, and some being quite creative in their application of economics. I have tried to accommodate all of these to one degree or another. I have also attempted to provide a level of detail and analysis that makes this book a useful resource for the practitioner, judge or other antitrust scholar.
- I chose the word “policy” for the title, since this book attempts both to state the “black letter” law and to present policy arguments for alternatives. Although I frequently disagree with court decisions, in all cases I have tried to state clearly what the legal rule is, and then give the reasons for my disagreement. Of course, I have my own ideological views. But here I have tried to present alternative views fairly, and to uncover the premises upon which they rely.
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Chapter 15. Public Enforcement of the Federal Antitrust Laws 86 results (showing 5 best matches)
- There are two views about the wisdom of the FTC’s use of § 5 to go beyond the substance of the antitrust laws generally. One view looks to the substance of those laws, with their central concern for competition. If the case law under the antitrust laws defines our concerns for competition correctly, then it is wrong for the FTC to go further. In effect, it would turn antitrust into the regulation of “unfair” rather than anticompetitive trade practices. This suggests that the decisions noted above, condemning tying and exclusive dealing without any showing of harm to competition, are incorrect.
- See also 14 Antitrust Law, Ch. 24 (3d ed. 2012), which surveys and updates state antitrust law and compares it with federal law; ABA Antitrust Section, State Antitrust Practice and Statutes (4th ed. 2009); Herbert Hovenkamp, State Antitrust in the Federal Scheme, 58 Ind. L.J. 375 (1983); ABA Antitrust Section, Monograph No. 15, Antitrust Federalism: the Role of State Law (1988).
- But there is an alternative view, perfectly consistent with the proposition that the FTC’s antitrust concern should be limited to identifying practices that are economically anticompetitive. The FTC is a regulatory agency, which is more specialized than courts and not as bound by strict rules of procedure and evidence. Further, its general remedy, at least in most cases, is a “cease and desist” order. Findings of violations of the FTC Act that are not also antitrust violations will not support subsequent private actions for treble damages. As a result, application of the FTC Act to practices that do not violate the other antitrust laws are appropriate when (1) the practice seems anticompetitive but is not technically covered by the antitrust laws; and (2) the social cost of an error seems to be relatively small.
- The Federal Trade Commission is a regulatory agency established during the Wilson Administration in 1914. The Commission consists of five Commissioners appointed by the President subject to Senate confirmation for seven-year terms. The FTC has authority to enforce the substance of all of the antitrust laws. This includes direct authority with respect to the Clayton Act and the Robinson-Patman Act. With respect to the Sherman Act, the FTC has no direct enforcement authority, but its authority to challenge “unfair methods of competition” under § 5 of the FTC Act has been interpreted to include all practices condemned under the Sherman Act.
- The public enforcement of the federal antitrust laws is largely in the hands of the Antitrust Division of the Department of Justice (“Division”) and the Federal Trade Commission (“FTC”). Technically, only the Division has authority to engage in public enforcement of the Sherman Act. However, the FTC may bring actions challenging unfair methods of competition under § 5 of the Federal Trade Commission Act, which has been interpreted to include everything in the Sherman Act, plus a few practices that are not covered by the Sherman Act. The Division and the FTC have concurrent authority to enforce the Clayton Act. Since the jurisdiction of the two agencies overlaps, they have developed clearance procedures for notifying each other before conducting investigations or filing actions. If both are found to be pursuing the same inquiry, the two agencies decide which will handle it, based generally on considerations of expertise, staff availability, and so on. If the matter involves likely...
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Chapter 16. Private Enforcement 466 results (showing 5 best matches)
- Properly used, the antitrust injury doctrine can serve the useful function of requiring the plaintiff to show at an early stage the precise relationship between its injury (or threatened injury) and the amount of competition in the market. The result may expose those complaining of a rival’s increased efficiency; it may also serve to uncover breach of contract claims or other common law claims disguised as antitrust suits. Although many plaintiffs may have been wronged in some abstract or common law sense, or perhaps even by violation of some other federal statute, they do not have an antitrust claim unless their injury results from a practice designed to increase price, decrease output, or eliminate rivals with monopoly as a goal.
- The plaintiff who is not affected in the right way by an injury to competition must be distinguished from the one who is injured when there is no harm to competition at all. Some decisions seem to confuse “antitrust injury” with the lack of any violation. For example, in denied standing on antitrust injury grounds to a maker of abrasives (such as automobile sand paper) who was ousted from several retailers’ shelves by the aggressive but above cost bidding of a rival. The court concluded that the plaintiff was injured by greater competition rather than less, and that seems to be true. But the proper avenue would then have been to dismiss the complaint for lack of an antitrust violation, not for lack of standing. A rival who is excluded from the market by a dominant firm’s ...clearly have standing. Further, accepting the complaint as true, the plaintiff was clearly injured and the injury was “caused” by the defendant’s aggressive behavior. The problem was that the behavior did...
- This chapter is concerned mainly with enforcement of the federal antitrust laws by private persons. It also includes a few issues, such as statute of limitation, jury trial, summary judgment, use of experts, and collateral estoppel that may be relevant to both public and private enforcement of the antitrust laws. These discussions are placed here for convenience, and because most questions have risen in the context of private antitrust litigation.
- In antitrust litigation as in any other federal litigation a plaintiff seeking to get an antitrust trial must first get over two rather high procedural hurdles. First, the plaintiff must file an antitrust complaint that shows its entitlement to relief; successful resistance to a motion to dismiss entitles the plaintiff to discovery and development of a record. Second, prior to trial today virtually every private antitrust plaintiff must also withstand a motion for summary judgment, which examines the record to that point and determines whether a trial is justified.
- On the relationship between antitrust injury and the efficiency concerns of the antitrust laws, see Maurice E. Stucke, Reconsidering Antitrust’s Goals, 53 B.C.L.Rev. 551 (2012); Andrew I. Gavil, Moving Beyond Caricature and Characterization: the Modern Rule of Reason in Practice, 85 S.Cal.L.Rev. 733 (2012); William H. Page, The Chicago School and the Evolution of Antitrust: Characterization, Antitrust Injury, and Evidentiary Sufficiency, 75 Va.L.Rev. 1221 (1989); William H. Page, The Scope of Liability for Antitrust Violations, 37 Stan.L.Rev. 1445 (1985); Robert D. Blair & Jeffery L. Harrison, Rethinking Antitrust Injury, 42 Vand.L.Rev. 1539 (1989); Herbert Hovenkamp, Merger Actions for Damages, 35 Hastings L.J. 937 (1984).
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Chapter 2. History and Ideology in Antitrust Policy 278 results (showing 5 best matches)
- Antitrust has always been closely tied to prevailing economic doctrine. To be sure, antitrust policy makers sometimes applied economics ineptly, sometimes gravitated toward the fringes of economic theory rather than the center, and sometimes pushed good points too far. But even the common law was driven largely by the then-prevailing rules of classical political economy concerning the nature of competition and the efficiency consequences of various anticompetitive practices. The older common law was quite tolerant of collusion and most vertical practices simply because classical political economy had an extremely robust view of the market, particularly of the role of potential competition and easy entry in disciplining any attempt to raise prices above With the rise of neoclassicism in the 1870’s and 1880’s (best identified with the development of the marginal cost and marginal revenue curves), the analysis became more subtle and economists became increasingly aware of market...
- Disingenuous or not, all of this was immensely valuable to emergent federal antitrust policy. One of the great accomplishments of Taft’s opinion was to fuse the emerging economic model of competition with the traditional legal doctrine of combinations in restraint of trade. In the process Judge Taft created the illusion that the law of combinations in restraint of trade had always been concerned with competition as defined in neoclassical economics. The result was a Sherman Act whose ideology was much more economic than that reflected in either the common law or the Congressional history. Congress’ own notion that the Sherman Act simply federalized the common law cut the courts free from the Act’s legislative history, but Taft’s decision effectively freed the courts from the substance of the historical common law. From that point on, federal courts forged their own set of antitrust rules through an essentially common law process in which only Sherman (and later Clayton) Act...
- As noted in § 2.1c, the New Deal period saw substantial inroads of economic theory into antitrust policy. But at that time the dominant economic ideology was also quite suspicious of unregulated markets and inclined to believe that government regulation would work better. Beginning after 1935 or so, American antitrust policy became increasingly aggressive against mergers and various vertical practices. Once again, the change did not occur in spite of prevailing economic doctrine. On the contrary, it was driven by economic theories such as those developed in Edward Chamberlin’s theory of monopolistic competition, a New Deal classic that emphasized the role of imperfections such as product differentiation in American markets. Within this framework competition was regarded as a fragile state of affairs that could be maintained only by constant antitrust supervision. The reaction to this New Deal ideology led directly to the concept of “workable competition,” which was extremely...
- The classic, highly factual account is Hans B. Thorelli, The Federal Antitrust Policy: Origination of an American Tradition (1955). A few of the others are Rudolph J.R. Peritz, Competition Policy in America, 1888–1992: History, Rhetoric, Law (1996); William Letwin, Law and Economic Policy in America: The Evolution of the Sherman Antitrust Act (1981); Martin J. Sklar, The Corporate Reconstruction of American Capitalism, 1890–1916: The Market, the Law, and Politics (1988); Herbert Hovenkamp, Enterprise and American Law: 1836–1937 (1991); Tony Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 (1992); Herbert Hovenkamp, The Opening of American Law: Neoclassical Legal Thought, 1870–1970, chs. 11–12 (2015). The legislative history of the antitrust laws is collected in Earl W. Kintner, The Legislative History of the Antitrust Laws (1978).
- The common law approach to antitrust analysis is implicit in Congress’ use of statutory language. Section 1 of the Clayton Act, like the opening sections of many federal statutes, defines the terms used later in the Act. These words include “antitrust laws,” “commerce,” and “person.” Amazingly, the list does not also include “competition,” “monopoly,” or “restraint of trade.” Congress expressly told the courts what kind of “person” could sue or be sued under the statute but it did not define “competition” or “restraint of trade” or even “monopoly”—effectively yielding the meaning of the most essential terms to the courts.
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Chapter 20. Antitrust Federalism and the “State Action” Doctrine 222 results (showing 5 best matches)
- State and local governments are not free to regulate without any restraint whatsoever. Nevertheless, the mere fact that state law is inconsistent with federal antitrust policy is generally not enough to preempt the state or local law. This is often the case where the state or local law regulates more intensively than federal antitrust law does. For example, upheld a state statute forbidding vertical integration by petroleum refiners into retailing, notwithstanding that federal antitrust law generally permits vertical ownership and regards most of it as efficient. state antitrust statute with no effective statute of limitation, even though this may have permitted an antitrust action to survive longer than permitted by the federal four year statute. Finally, state antitrust laws that permit indirect purchasers to sue for damages have been upheld, notwithstanding that federal law limits damage recoveries to direct purchasers. In its ...held that the federal Natural Gas Act did... ...of...
- Questions concerning the relation between state antitrust policy and federal law implicate the Supremacy Clause relatively more often. The easy case concerns the state law that purports to permit something that federal antitrust prohibits. The great railroad case first established that the fact that a merger was legal and had been approved under the law of a particular state had nothing to do with its legality under federal antitrust law—to that extent, state law was preempted.
- On the early use of state law against anticompetitive practices, see Herbert Hovenkamp, Enterprise and American Law: 1836–1937, chs. 20 & 21 (1991); James May, Antitrust Practice and Procedure in the Formative Era: the Constitutional and Conceptual Reach of State Antitrust Law, 1880–1918, 135 Univ. Pa. L. Rev. 495 (1987). On state antitrust law generally, see 14 Antitrust Law Ch. 24 (3d ed. 2012), which develops the most important differences between federal and state law.
- One could take a variety of approaches to the problem of allocating decision making affecting competition between state government and federal antitrust. One approach is an efficiency test: efficient, or competitive state or local regulation should be permitted, but harmful regulation should be found inconsistent with federal antitrust policy. Such a rule has an intuitive appeal. First, it furthers a general federal policy of making efficiency the principal goal of antitrust enforcement. At the same time, it ensures that federal and state policy will be harmonious.
- One situation where state antitrust law may stand “as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress” occurs when a plaintiff maintains a state antitrust action not because the relief offered is superior, but because maintaining a distinct lawsuit has strategic value. Under the liberal consolidation provisions of the Federal Rules of Civil Procedure, numerous federal antitrust suits involving the same defendants and claims will be joined together in a single proceeding, at least at the pretrial stage. Although this procedure is efficient, it is particularly beneficial to a defendant who can now respond to discovery and other requests once rather than a dozen times. One way a plaintiff can avoid transfer is to stay out of federal court altogether. However, the federal courts have exclusive jurisdiction over federal antitrust claims, so the plaintiff will have to proceed under state law. In this situation the “nuisance value” of a...
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Chapter 7. Exclusionary Practices in Monopolization and Attempt Cases 513 results (showing 5 best matches)
- the Federal Circuit held that a firm that acquired but did not use a patent could obtain an injunction shutting down a competitor who infringed the plaintiff’s unused patent but not any patent that the plaintiff actually practiced. decision has generally been interpreted to deny injunctions to non-practicing patentees, the court created an exception for a firm that is actually competing with the infringement defendant, although not infringing any patent that the plaintiff was actually using. This rationale excessively subordinates competition policy to a poorly articulated value in patent law—effectively permitting a dominant firm to acquire patents on competing technologies and thus deny entry to competitors, even if it is not practicing these particular patents itself. The purpose of the Patent Act is to facilitate innovation, not to permit people to withdraw it from the market altogether. The decision highlights an ongoing concern about patent-antitrust policy: antitrust...
- There is no room in this analysis for balancing the benefits or worth of a product improvement against its anticompetitive effects. If a monopolist’s design change is an improvement, it is “necessarily tolerated by antitrust laws,” unless the monopolist abuses or leverages its monopoly power in some other way when introducing the product. To hold otherwise “would be contrary to the very purpose of the antitrust laws, which is, after all, to foster and ensure competition on the merits.” “Antitrust scholars have long recognized the undesirability of having courts oversee product design, and any dampening of technological innovation would be at cross-purposes with antitrust law.”
- More problematically, many of the things that the common law of torts branded as “unfair” were really nothing more than simple competition. That creates a conflict to the extent that the policies of the antitrust laws may be inconsistent with those expressed in other bodies of law, such as trademark or unfair competition. For example, an Internet marketing company might enable pop-up advertisements for a competitor’s goods to appear when the computer user is viewing the competitor’s Web site. search engine firm such as Google might sell “sponsored” links that appear in a search for a competitor’s brand. In many cases the conflicts with competition policy are best met by adhering to a narrow construction of the Lanham Act and requiring a strict trademark “use” requirement that refuses to find infringement simply because information about the competing good is made available to the searcher as well. ...the Second Circuit has observed, “the Lanham Act must be construed in light of a...
- The antitrust law requiring a dominant firm to deal with its rivals must be regarded as a severe exception to the general, and quite competitive rule, that firms should develop their own inputs and expertise and conduct their own innovation. Indeed, forced sharing is inimical to general antitrust goals: it undermines the competitive market process of forcing firms to develop their own sources of supply. Once we have ordered Kodak to sell its film and camera supplies to rival camera supply stores, these stores have lost their main incentive to develop alternative sources for these supplies. That remedy should be offered where the development of alternative sources is feasible; in that case we have used the antitrust laws to undermine rather than foster competition.
- The fact that a market is a network does not entail that it be controlled by a monopolist. Some networks, such as the local electric power grid, are price regulated by the government. Others, such as the telecommunications network, were once regulated monopolies but have now been opened to competition. Yet other networks, such as bank ATMs, sports leagues, and real estate multiple listing services, contain significant amounts of competition. A distinctive achievement of competition policy in recent decades has been throwing networked markets open to competition. Perhaps the most famous example is the telephone company monopoly, which was broken up by antitrust litigation and eventually opened to even wider competition by the 1996 Telecommunications Act. to open the computer platform market to substantial competition, notwithstanding a significant antitrust victory on the merits, must be regarded as one of the bigger disappointments of recent United States antitrust policy.
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Chapter 14. Price Discrimination and the Robinson-Patman Act 158 results (showing 5 best matches)
- Secondly, while the Robinson-Patman Act is quite hostile toward economic competition, it is nevertheless disguised as an antitrust law. Furthermore, its inconsistencies with the other antitrust laws are so substantial that businesses have often complained that they can comply with the Robinson-Patman Act only by violating the other antitrust laws, or vice-versa. The Supreme Court has responded by trying to interpret the Act so as to make it consistent with the other antitrust laws. The result, however, has done some violence to the Robinson-Patman Act and to its legislative history.
- See §§ 8.9b and 10.6e. In United States v. United Shoe Machinery Corp., 110 F.Supp. 295, 340, 341 (D.Mass.1953), affirmed per curiam, 347 U.S. 521, 74 S.Ct. 699 (1954), Judge Wyzansk condemned price discrimination between different machine “types” as discriminatory. He acknowledged that there was no discrimination among customers. Rather, defendant USM was charging lower markups on machines in which it faced greater amounts of competition. But that is perfectly rational behavior consistent with competition. For example, a tiny home builder might bid with high or low margins depending on the amount of competition. See also 3A Antitrust Law ¶ 721 (4th ed. 2015); and Richard A. Posner, Antitrust Law 202–205 (2d ed. 2001) (somewhat agnostic conclusion that price discrimination as an exclusionary practice should generally be permitted for the time being, but might be condemned when more is known about it).
- The theory of injury embodied in the Robinson-Patman Act is an intellectually hostile, impenetrable swamp. On the one hand, the Supreme Court has held that the “antitrust injury” requirement for antitrust standing applies to the Act. This suggests a requirement of some kind of injury to “competition.” Courts have assessed such a requirement in “primary-line” Robinson-Patman cases, which involve a form of predatory pricing. In its the Supreme Court emphasized that the “may substantially lessen competition” language of the Act required a showing that competition was or would likely be injured by the defendant’s practices. This required a showing that the practice would create or perpetuate either monopoly or oligopoly. The Court then crafted a set of rigorous substantive rules designed to weed out cases where these threats were not sufficiently apparent.
- Interbrand competition, our opinions affirm, is the “primary concern of antitrust law. The Robinson-Patman Act signals no large departure from that main concern. Even if the Act’s text could be construed in the manner urged by Reeder and embraced by the Court of Appeals, we would resist interpretation geared more to the protection of existing than to the stimulation of competition. In the case before us, there is no evidence that any favored purchaser possesses market power, the allegedly favored purchasers are dealers with little resemblance to large independent department stores or chain operations, and the supplier’s selective price discounting fosters competition among suppliers of different brands. By declining to extend Robinson-Patman’s governance to such cases, we continue to construe the Act consistently with broader policies of the antitrust laws.”
- The question is more complex if economic efficiency is the exclusive goal of the federal antitrust laws. Some commentators have argued that price discrimination should not be an antitrust concern because it does not produce losses in output as other monopolistic practices do.
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Chapter 8. Predatory and Other Exclusionary Pricing 320 results (showing 5 best matches)
- Even an act of pure malice by one business competitor against another does not, without more, state a claim under the federal antitrust laws; those laws do not create a federal law of unfair competition or “purport to afford remedies for all torts committed by or against persons engaged in interstate commerce.”
- Further, the Court observed, the two practices were not merely formally similar. They were also similar in ways that bore on risk and likelihood of success, and the antitrust policy’s concerns with overdeterrence. Both predatory selling and predatory purchasing are high risk-low payoff strategies. Further, both price cutting by the seller and aggressive bidding by the buyer are the “very essence of competition,”
- In its most traditional form, “predatory pricing” refers to a practice of driving rivals out of business by selling at a price below cost. The predator’s intent—and the only intent that can make predatory pricing rational, profit-maximizing behavior—is to charge monopoly prices after rivals have been dispatched or disciplined. Predatory pricing is analyzed under the antitrust laws as illegal monopolization or attempt to monopolize under § 2 of the Sherman Act, or sometimes as a violation of Clayton Act § 2, generally called the Robinson-Patman Act.
- , 127 S.Ct. at 1075–1076, citing Herbert Hovenkamp, The Law of Exclusionary Pricing, 2 Competition Policy Intl., No. 1, pp. 21, 35 (Spring 2006); John B. Kirkwood, Buyer Power and Exclusionary Conduct, 72 Antitrust L.J. 625, 652 (2005); Roger D. Blair & Jeffrey Harrison, Antitrust Policy and Monopsony, 76 Cornell L. Rev. 297 (1991); and Thomas A. Piraino, Jr., A Proposed Antitrust Approach to Buyers’ Competitive Conduct, 56 Hastings L.J. 1121, 1125 (2005).
- Phillip Areeda & Donald Turner, Predatory Pricing and Related Practices Under Section 2 of the Sherman Act, 88 Harv.L.Rev. 697 (1975). The current formulation of the Areeda-Turner test is contained in 3A Antitrust Law Ch. 7C–3 (4th ed. 2015). “Short-run” marginal cost is the appropriate standard because the evaluation of a firm’s pricing behavior must be based on its existing plant and durable equipment, not on the most efficient possible plant and equipment. Long-run marginal cost, just as long-run average cost, measures a firm’s costs when it is in a position to choose plant size as well as rate of output. See § 1.4 above.
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Chapter 19. Antitrust and Federal Regulatory Policy 213 results (showing 5 best matches)
- Government regulation is ubiquitous and takes many different forms, many of which have little to do with antitrust policy or even with competition as such. For example, OSHA regulates job safety, Title VII regulates race discrimination and sexual harassment in employment relations, and various agencies regulate product quality and safety. None of these regulatory regimes is on an obvious collision course with the antitrust laws. The relationship between antitrust and regulation generally becomes problematic when the regulatory regime (a) controls price; (b) restricts entry or gives incumbent firms an advantage over new or potential entrants; or (c) requires or permits some practice that antitrust law ordinarily prohibits.
- This chapter is concerned with the relationship between federal antitrust policy and other forms of federal regulation. Then chapter 20 on the “state action” doctrine considers the relation between federal antitrust and the regulatory policies of state and local government. At first glance, the questions raised in these two chapters seem quite different from one another. After all, federal regulation and the federal antitrust laws are passed by the same level of government, and Congress has the authority to repeal, amend or create exceptions to the antitrust laws any time it wishes. By contrast, the relationship between federal statutes and state and local government regulation is governed by the Supremacy Clause of the Constitution, which demands that state and local law give way to valid, inconsistent federal law.
- For more detailed analysis, see 1A Antitrust Law ¶¶ 249–251 (4th ed. 2013). In addition to the immunities discussed in the text, see the Charitable Donation Antitrust Immunity Act of 1997, which provides that “the antitrust laws, and any State law similar to any of the antitrust laws, shall not apply to charitable gift annuities or charitable remainder trusts.” 15 U.S.C.A. § 37(a). And see Ozee v. American Council on Gift Annuities, 143 F.3d 937 (5th Cir. 1998), cert. denied, 526 U.S. 1064, 119 S.Ct. 1454 (1999) (provision immunized an agreement among universities and other charities suppressing competition in such annuities); Jung v. Association of Am. Medical Colleges, 339 F.Supp.2d 26 (D.D.C. 2004) (upholding “Confirmation of Antitrust Status of Graduate Medical Resident Matching Programs” Act, codified at 15 U.S.C.A. § 37b, which creates a state and federal antitrust immunity for medical school matching programs that match prospective resident interns to hospitals).
- The case for limiting the role of antitrust in the regulated industries is strongest when the federal regulatory statute exempts firms from antitrust liability. For example, the Shipping Act of 1984 contains a set of antitrust-like provisions that apply to common carriers regulated by the Federal Maritime Commission, and expressly prohibits private antitrust actions based on activities within the jurisdiction of that agency. Likewise, federal statutes regulating railroads and trucking permit firms to engage in joint rate making without running afoul of the antitrust policy against collusion. By contrast, in other cases, the federal regulatory statute may contemplate concurrent federal or even state authority. For example, in the Supreme Court concluded that provisions of the Natural Gas Act had been “meticulously“ drafted in order to protect the authority of individual states to engage in regulation of natural gas transactions within their territory. Further, this included... ...of...
- In other cases, a federal agency has the authority to grant antitrust immunity as an administrative decision, although such authority will not generally be presumed. As a general matter, such “exemptions from antitrust laws are strictly construed,” and an antitrust court can, under appropriate circumstances, second guess both the agency’s interpretation of the law as well as its fact determinations.
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Chapter 5. Joint Ventures of Competitors, Concerted Refusals, Patent Licensing, and the Rule of Reason 676 results (showing 5 best matches)
- reason for applying a more aggressive antitrust standard to joint activity than unilateral conduct harkens back to the “restraint of trade” standard stated in § 1 of the Sherman Act. Conduct restrains trade when it results in lower market output—measured by quantity or quality—and thus higher prices than competition would produce. By contrast, efficient conduct results in higher output and thus lower prices. Antitrust tries to determine the classification in which a particular venture rule belongs. By contrast, the antitrust laws do not recognize an offense of merely “being a monopoly.” A firm with monopoly power is free to set its monopoly price, and is thus also free to reduce its output accordingly. Because most dominant firms are the result of either historical accident or a long period of growth resulting from efficiency, we ordinarily leave the dominant firm alone as long as it does not engage in anticompetitive exclusionary practices designed to perpetuate or strengthen its...
- Claims of patent misuse might initially be tested by antitrust principles, but that cannot be the end of the story. After all, “misuse” is a creature of IP law, which protects values that are distinct from the competition values protected by antitrust. One value is protection of access to the public domain. Another is protection against practices that serve to restrain rather than promote innovation, even though they may not be technical antitrust violations.
- “Misuse” typically arises because, in the court’s view, the patent is being used inconsistently with the policy of the IP laws or competition policy. This naturally invites the question of what the source of law is, given that most of these practices are not explicitly forbidden by the IP laws themselves. As a general matter the courts have readily found misuse in the case of well established antitrust violations. Many, but not all, instances of patent misuse are practices analogous to unlawful tying arrangements, which are taken up in chapter 10. Clayton Act § 2, which was intended to be applied to tying and exclusive dealing, applies its proscriptions to all goods and commodities, “whether patented or unpatented.” In general, a “tie” of two products, or refusal to sell separately, is unlawful only if the seller has market power in the tying ...effects result from the requirement. Indirectly, by admitting various defenses, many courts effectively assess both of these...
- On the interest rate claim, an injunction against American Express would not be able simply to order AmEx to set a “competitive” interest rate. Rather, it would have to develop some criteria by which the competitive interest rate is determined, and this rate might change as the inflation rate changes. An interest rate order directed against a single firm effectively regulates its prices—an activity for which federal courts are not well suited and which in any event seems quite contrary to the general antitrust goal of facilitating competition rather than regulation. By contrast, an interest rate injunction against the Visa venture requires no more than is required in any cartel case: an order prohibiting the Visa members from fixing an interest rate. After that, competition among the 6000 Visa issuing banks would probably produce the appropriate rate. Thus, for example, a court order forbidding the NCAA from fixing the maximum price of basketball coaches need do no more than enjoin...
- The analogy between price fixing and division of markets is compelling. It would be a strange interpretation of antitrust law that forbade competitors to agree on what price to charge, thus eliminating price competition among them but allowing them to divide markets, thus eliminating all competition among them.
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Chapter 13. Conglomerate Mergers 120 results (showing 5 best matches)
- Rather, antitrust law searches for ways to identify those mergers that threaten competition. These are condemned, even though they may produce significant economies. Mergers that are unlikely to increase the market power of the post-merger firm and that will probably not facilitate collusion, oligopoly behavior or inefficient exclusionary practices are generally left alone.
- Potential competition doctrines have greater vitality in European competition law. See Jeffrey Church, Conglomerate Mergers, 2 Issues in Competition Law and Policy 1503 (ABA Section of Antitrust Law 2008); Damien J. Neven, Analysis of Conglomerate Effects in EU Merger Control, in Handbook of Antitrust Economics 183 (Paolo Buccirossi ed., 2008); Jeremy Grant & Damien J. Neven, The Attempted merger Between General Electric and Honeywell: A Case Study of Transatlantic Conflict, 1 J. Competition L. & Econ. 595 (2005).
- The separate standard for potential competition mergers developed at a time when antitrust policy makers equated “competition” with a large number of firms in a market. Within that paradigm, “competition” did not exist in a market with only one producer, even though the producer had absolutely no power to raise price above marginal cost without causing substantial new entry. Today antitrust law has generally adopted the economist’s more useful definition of competition as that set of market conditions that drives prices toward marginal cost. In this sense, the “potential competition” doctrine survives as a relic of an earlier era.
- the Supreme Court condemned a merger under § 7 on the theory that the merger facilitated reciprocity with third parties. Consolidated Foods operated food processing plants as well as wholesale and retail food stores. It acquired Gentry Inc., which manufactured dehydrated onion and garlic that were commonly used in processed food. During the ten years following the acquisition, Consolidated frequently urged its suppliers of processed food to purchase their dehydrated onion and garlic from Gentry. The Court found “that the ‘reciprocity’ made possible by such an acquisition is one of the congeries of anticompetitive practices at which the antitrust laws are aimed.”
- The 1984 Antitrust Division’s Merger Guidelines are significant for conglomerate merger law for several reasons. First, they reiterate that the government still regards certain product extension and market extension mergers as theoretically anticompetitive, notwithstanding the fact that few such mergers are being challenged. Second, the Guidelines offer simplified standards for evaluating potential competition mergers. Third, they ignore virtually all rationales for condemning conglomerate mergers except potential competition. Reciprocity is never mentioned.
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Chapter 21. The Reach of the Federal Antitrust Laws 170 results (showing 5 best matches)
- This section is concerned with the power of the federal courts to use the federal antitrust laws to reach activities that occur abroad, that contain a measure of foreign government involvement, or that raise actual or potential conflicts with the law of a foreign sovereign. Such conflicts pose significant problems for United States antitrust , American antitrust policy is more aggressive than the policy of many other countries, often condemning activities that other sovereigns regard as legal. That aggressiveness also applies to its system of remedies; in other countries treble damages are virtually unheard of and United States law is far more tolerant of private actions. , where antitrust is concerned, American enforcers and courts have been quite willing to assert American authority over activities occurring abroad, and not particularly accommodating of the conflicting policies of foreign nations. As a result, scholars of conflict of laws and international law sometimes find...
- For more detailed coverage, see 1B Antitrust Law Ch. 2F (4th ed. 2013); Spencer W. Waller, Antitrust and American Business Abroad (2003). See also U.S. Dept. of Justice and Federal Trade Commission, Antitrust Enforcement Guidelines for International Operations (1995), available at http://www.justice.gov/atr/public/guidelines/internat.htm; and reprinted in Antitrust Law (current supp.).
- United States v. E.C. Knight Co., 156 U.S. 1, 33, 15 S.Ct. 249, 262 (1895). For further analysis of this case and its role in early federal antitrust policy, see Herbert Hovenkamp, Enterprise and American Law, 1836–1937 at ch. 20 (1991); Charles McCurdy, The Knight Sugar Decision of 1895 and the Modernization of American Corporation Law, 1869–1903, 55 Bus. Hist. Rev. 304 (1979).
- Speaking more generally about extraterritoriality and comity concerns, the court observed that it is quite common for American products to be assembled from at least some foreign produced components that were subject to price fixing. Further, this price fixing often occurs in nations that either do not have antitrust laws or else where they are underenforced. The court observed that if such cartelists sell directly into the United States, then invocation of the Sherman Act by U.S. plaintiffs is not problematic, but the problem is different when the foreign cartel member sells to a foreign subsidiary, who then incorporates the price-fixed component into a finished product before shipment into the United States. Such situations fell within Supreme Court warnings about unnecessary U.S. interference with “a foreign nation’s ability independently to regulate its own commercial affairs.” ...position would “enormously increase the global reach of the Sherman Act, creating friction with...
- U.S. Dept. of Justice and Federal Trade Commission, Antitrust Enforcement Guidelines for International Operations § 3.34 (1995), available at http://www.justice.gov/atr/public/guidelines/internat.htm; and reprinted in Antitrust Law (current supp.).
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Chapter 1. The Basic Economics of Antitrust 432 results (showing 5 best matches)
- Antitrust law’s concern with this of monopolization, rather than merely with the outcome, is quite apparent from the statutory scheme. The law of monopolization requires not only a monopoly position, but also the commission of one or more anticompetitive “exclusionary practices,” thus signaling that the process by which monopoly is to be created determines its legality. We condemn collusion, attempts and conspiracies to monopolize, tying arrangements, exclusive dealing, mergers and other practices only because we believe that these tend to facilitate the creation of monopoly. We may sometimes be wrong about our underlying facts or even about the economic theories we employ, but the basic premise remains the same: the principal target of the antitrust laws is not static monopoly as such, but rather the manifold mechanisms by which monopoly is created or preserved. Indeed, there is no law of “no fault” monopoly; the innocent monopolist does not violate the antitrust laws simply by...its
- See 11 Herbert Hovenkamp, Antitrust Law ¶ 1807 (3d ed. 2011); Bruce H. Kobayashi, The Economics of Loyalty Discounts and Antitrust Law in the United States, 1 Competition Pol’y Int’l 115 (2005).
- Finally, one of the many costs of resource movement is the administrative cost of the cumbersome and imperfect machinery antitrust uses to analyze and deter anticompetitive practices. To the extent that the goal of competition policy is to increase wealth, administrative costs may counsel that certain practices be left unchallenged because the gains from enforcement will not exceed losses when enforcement costs themselves, including error costs, are included.
- Another important by-product is a broad attack on the traditional perfect competition model and on the model for natural monopoly. This attack, sometimes called the theory of contestable markets, creates a “competition model” for markets, including natural monopolies, where the given wisdom has been that competition will not work. Despite substantial shortcomings in implementation, the theory has opened the way for greater enforcement of the antitrust laws in markets that were once price regulated but are now being deregulated.
- The overall welfare effects of monopoly cannot be known unless we have complete information about every market affected by the change from monopoly to competition, or vice-versa. This fact makes second best problems extraordinarily complex, and its practical consideration in antitrust litigation is generally out of the question.
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Chapter 17. Damages 310 results (showing 5 best matches)
- Many practices alleged to violate the antitrust laws are efficient. Others are inefficient and have few socially redeeming virtues. Still others may simultaneously increase both the efficiency of the participants and their market power. A perfectly designed antitrust policy would exonerate the first set of practices, condemn the second set, and condemn the third set only when the social cost of the restraint exceeds its social value. A theory of damages based on the same principle would make them unprofitable when they are inefficient but leave them alone when they are not.
- Certain complexities in the law of damages limit the contribution of theoretical economics. The economics revolution in antitrust has been concerned chiefly with the “quality” of antitrust injury. It has helped policy makers determine when certain practices, such as vertical integration, are beneficial to society and when they are harmful; or alternatively, whether the plaintiff is complaining about anticompetitiveness or efficiency. But the law of damages has the much more difficult task of injury; the difference between saying that a certain practice is harmful and quantifying the amount of harm can be significant.
- The optimal deterrence model’s application to the law of exclusionary practices is thus a radical departure from the existing law of damages. Under all prevailing antitrust damages rules for exclusionary practices in lawsuits brought by competitors, the measure of damages is based on the plaintiff’s business losses, not on the defendant’s monopoly gains and the size of the deadweight loss. Indeed, there is probably no useful correlation between the amount of an injured competitor’s lost profits and other consequential damages, and the amount of the monopoly overcharge and deadweight loss caused by the defendant. An efficient practice, which produced no monopoly overcharge and deadweight loss at all, and an inefficient, monopolizing practice might both drive a competing firm out of business. The victim’s losses might be precisely the same whether or not the practice was efficient. In one case, however, optimal damages would be zero, in the other very large.
- As Gary Becker once observed, the costs of harmful conduct and the system of preventing it are of three kinds: 1) the costs imposed by the conduct itself; 2) the costs of detecting, apprehending and determining the guilt of alleged violators; 3) the costs of imposing sanctions on condemned violators. An optimal antitrust policy would minimize the sum of these three costs. However, the costs are not independent of each other. Sometimes one cost will rise as another declines. For example, the substantive law of antitrust is calculated so as to minimize costs of the first type: a well-designed antitrust policy will condemn socially costly acts and approve socially beneficial ones. By contrast, the rule is designed to minimize costs of the second type—in this case, the costs of operating the system that determines when the antitrust laws have been violated. Expansive use of rules (either of legality or illegality) might well reduce ...of the second type substantially; however, the...
- Most of the law continues to be based on concepts of justice and compensation that are inconsistent with any notion that the purpose of antitrust enforcement (including private enforcement) is to deter conduct only to the extent that it is inefficient. But the economics revolution in the substantive law of antitrust cannot be ignored in the law of damages, or nearly everything given by one hand will be taken back by the other. The availability and amount of damages determines the amount of antitrust enforcement that exists. More importantly, it affects the cost-benefit calculus any firm undertakes when it considers whether to undertake a risky, probably efficient practice whose legality is uncertain and which is likely to injure certain competitors. The great majority of antitrust cases are filed by private plaintiffs, and most of these include a damage claim. As a result, most antitrust enforcement comes from private parties whose personal motive is not optimal efficiency or the...
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Chapter 18. Antitrust and the Process of Democratic Government 167 results (showing 5 best matches)
- The approach that antitrust takes in these areas is clearly not a solution to the problem of regulatory “capture,” or even an attempt at a solution. The democratic process contains many flaws, but curing them is not antitrust’s assignment. Congress never intended the antitrust laws to be used for this purpose, and they are very poorly designed for it. For example, the antitrust laws are concerned mainly with competition and economic efficiency. Although government policy is also concerned with competition and efficiency, governmental concerns range far wider, and governments constantly balance distributive, moral, and economic concerns. So if Congress wanted to draft “anticapture” legislation it could do so, but one would hardly imagine that this legislation would forbid “monopoly” or “combinations in restraint of trade” while explicitly saying nothing about abuses of governmental process.
- One additional consideration is important. The antitrust laws are concerned mainly with preserving competition and economic efficiency in the production and distribution process. By contrast, economic efficiency is almost never the exclusive goal of government process. Indeed, in many cases it is not even an articulated goal. An antitrust policy that condemned regulation too readily merely because it was inefficient might undermine legitimate, alternative goals of regulation.
- Importantly, antitrust itself is a form of market intervention. So-called , or letting things alone, is never really an option. The sovereign must always make a choice, even if the choice is to develop institutions that will let private decision making determine price, output and quality. Regulating competition is assuredly a form of regulation, just as much as regulating prices. For example, federal prohibition of a merger or a resale price maintenance contract is a form of interference in the market: it prevents a market choice that the participants would otherwise make.
- In Walker Process Equipment v. Food Machinery & Chemical Corp., the Supreme Court held that the wrongful filing of a civil suit could constitute an antitrust violation. Walker, the antitrust plaintiff, had alleged that Food Machinery, the antitrust defendant, had fraudulently obtained a patent by lying in its patent application about Food Machinery then filed a patent infringement suit against Walker, but the suit was ultimately dismissed. Walker counterclaimed that the infringement suit itself violated § 2 of the Sherman Act. The Court held that if Food Machinery had knowingly obtained its patent by fraud and then filed an infringement suit, this suit would be stripped of its “exemption from the antitrust laws.” failed to explore most of the fundamental issues raised by . But implicitly at least, the Court held that certain kinds of lawsuits did not qualify for petitioning immunity—perhaps when the lawsuit was badly motivated from the start because the plaintiff (later the
- This chapter, the following chapter on federal regulation, and chapter 20 on state and local regulation (the “state action” doctrine) all deal with variations of the same question: Given that the democratic process often produces anticompetitive results, when should the federal antitrust laws intervene in either the process or the result itself? Although the technical rules differ from one area to the next, the conclusions in these three chapters converge on the same principle: Antitrust intervention is not appropriate when the wrong being challenged is the policy choice of a sovereign government. Rather, antitrust applies when private parties are able to evade or manipulate the democratic process in such a way as to give themselves effective, unsupervised control over a market. Whether the antitrust dispute arises in the context of petitions to the government (this chapter), federal regulation (chapter 19) or regulation by state and local government (chapter 20), this underlying...
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Chapter 12. Mergers of Competitors 584 results (showing 5 best matches)
- For a more fully developed example, see 4 Antitrust Law ¶ 914a (4th ed. 2016); and see Thomas Campbell, Predation and Competition in Antitrust: the Case of Nonfungible Goods, 87 Col. L.Rev. 1625, 1636 (1987).
- Some empirical studies suggest that likelihood and success of collusion in a market varies with HHI. Howard P. Marvel, Competition and Price Levels in the Retail Gasoline Market, 60 Rev.Econ.Statistics 252 (1978). Others have found that the HHI generally predicts such behavior better than the CR4. Keith Cowling & Michael Waterson, Price-Cost Margins and Market Structure, 43 Economica 267 (1976). However, other studies suggest that the HHI is no more reliable than the CR4. Compare Neil B. Cohen & Charles A. Sullivan, The Herfindahl-Hirschman Index and the New Antitrust Merger Guidelines: Concentrating on Concentration, 62 Texas L.Rev. 453, 490 (1983) (HHI generally no better); John E. Kwoka, The effect of Market Share Distribution on Industry Performance, 61 Rev. Econ. & Statistics 101 (1979) (HHI inferior); John E. Kwoka, The Herfindahl Index in Theory and Practice, 30 Antitrust Bull 915 (1985) (same). Jon Baker more recently concluded that “empirical literature does not provide...
- A second reason for applying a higher standard to merger claims alleging future predation or other exclusionary practices is that the latter practices are illegal and most often readily detectable. As a result, there is less need for the extra margin of deterrence that we apply to mergers facilitating oligopoly coordination or harmful unilateral price increases. We condemn mergers that facilitate oligopoly under a fairly aggressive standard because the oligopoly itself, once it has been achieved, is most generally out of antitrust’s reach. To be sure, this is not a complete answer: the social cost of an anticompetitive practice can be minimized if we can reach the practice before rather than after it occurs. But importantly, the other antitrust laws have their own deterrent effects if they are properly applied. The post-merger firm bent on predation must still compare the anticipated benefits against the risk of detection and prosecution. ...industry is free to set its...
- (B) by virtue of their business and location of operation, competitors, so that the elimination of competition by agreement between them would constitute a violation of any of the antitrust laws. * * * ”
- The antitrust laws are concerned with the effects of certain practices on competition, not with the ownership of corporations. Legal “control” of a corporation should therefore not necessarily be the threshold for considering partial acquisitions under the Clayton Act, and the Supreme Court has said as much. As a general rule a person has legal control of a corporation if he owns and votes 50% or more of its shares. Realistically, however, ownership of far less than 50% will enable someone to have effective control of a corporation. In the case of a large corporation, ownership of 15% to 20% of the shares by one person could make him an enormous shareholder with tremendous influence in the buying, selling, entry and exit decisions of the corporation—particularly if all other shareholders were substantially smaller. The Supreme Court has not wasted much time deciding whether one company owned enough shares to have legal “control” of another company. More often than not, it has...
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Chapter 3. Market Power and Market Definition 534 results (showing 5 best matches)
- This range of concerns quickly shades from “antitrust” to “consumer protection.” As a general premise, the goal of the antitrust laws is competitive pricing and output consistent with the nature and (legal) structure of the market at hand. Competition in concentrated markets for durable goods is inherently imperfect, however, and so the policy question becomes one of degree: how many and what kinds of deviations should be tolerated?
- The policy problem of such single brand “relevant markets” is very real, because such findings have the potential to make a wide range of single firm distribution decisions subject to antitrust challenge. For example, suppose Chrysler is thought to be a “monopolist” in the market for “Chrysler transmissions,” simply because these transmissions have different specifications than the transmissions of other automakers. At that point Chrysler is no longer free to streamline its auto service business, thus displacing some independent service providers, without antitrust challenge. The threat of overdeterrence is particularly severe in concentrated markets because the focus of competition in such markets is often on factors other than price. Firms try to capture customers by having the best or the most responsive service networks, the best warranty protection, the most reliable equipment, and the like. Excessive antitrust scrutiny could penalize firms for engaging in the kind of
- See 2A Antitrust Law, Ch. 5C–2 (4th ed. 2014); William M. Landes & Richard A. Posner, Market Power in Antitrust Cases, 94 Harv.L.Rev. 937, 963–972 (1981); and see Baxley-DeLamar v. American Cemetery Ass’n, 938 F.2d 846, 850 (8th Cir.1991) (geographic market consists of “the geographic area in which the defendant faces competition and to which consumers can practically turn for alternative sources of the product.”).
- Market power is a firm’s ability to increase profits by reducing output and charging more than a competitive price for its product. In the (cellophane) case the Supreme Court defined market power as “the power to control prices or exclude competition.” But that definition is both imprecise and incomplete. Market power itself is not an “exclusionary” practice: in fact, the exercise of market power—the sale of products at a supracompetitive price—generally attracts new sellers into the market. While exclusion of competitors is not market power, it is an important mechanism by which a firm obtains or maintains market power. Further, the power to hold market power for a significant period of time is always important to antitrust policy makers, who must weigh the costs of limiting market power against the potential for gain. The more durable market power appears to be, the greater its social cost, and thus the greater the gains from getting rid of it.
- For example, many monopolization cases involve “exclusionary” practices that are plausible only because the defendant occupies a large portion of the relevant market in question. This is certainly true of predatory pricing, where the relative costs of predation are a function of the predator’s market share. But the same thing is true of the various “foreclosure” offenses, whether under § 2 of the Sherman Act (monopolization and attempt), § 1 of that statute (vertical agreements), § 3 of the Clayton Act (tying and exclusive dealing), or Clayton Act § 7 (vertical and some other mergers). In each of these cases the claimed harm to competition results, not from the defendant’s ability to raise price above marginal cost, but rather from its ability to cut rivals off from sources of supply, distribution outlets and the like. The real “power” basis of the offense, then, is market share, not market power as such. To be sure, antitrust’s central concern is increased market power. But when we...
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Chapter 9. Vertical Integration and Vertical Mergers 189 results (showing 5 best matches)
- Before its 1950 amendments § 7 applied only to mergers that might lessen competition “between” the acquiring and acquired firms. A vertical merger involves firms that were not competitors before the merger. The legislative history of the 1950 Celler-Kefauver Amendments to § 7 is discussed in 4 Antitrust Law ¶¶ 902–903, 1002 (4th ed. 2016); and in Brown Shoe Co. v. United States, 370 U.S. 294, 315–23, 82 S.Ct. 1502, 1518–23 (1962).
- See Volker Nocke & Lucy White, Do Vertical Mergers Facilitate Upstream Collusion?, 97 AM. ECON. REV. 1321 (2007); Jeffrey Church, Vertical Mergers, in 2 Issues in Competition Law and Policy 1455, 1489–1490 (ABA Section of Antitrust Law 2008).
- In most of the instances described above vertical integration enlarged a firm’s profits but also benefitted consumers. Sometimes the value of vertical integration to consumers is not so clear, however, and some instances of vertical integration may be anticompetitive. If this were not the case there would be no need for antitrust laws against vertical practices.
- For arguments that the preferred rule for most vertical practices should be legality, see Richard Posner, Antitrust Law 225–228 (2d ed. 2001); F. Easterbrook, Vertical Arrangements and the Rule of Reason, 53 Antitrust L.J. 135 (1984). For an argument that all vertical mergers should be legal, see Robert Bork, The Antitrust Paradox: A Policy At War With Itself 226 (1978; rev. ed. 1993). On Bork’s position, see Herbert Hovenkamp, Robert Bork and Vertical Integration: Leverage, Foreclosure, and Efficiency, 79 Antitrust L.J. 983 (2014).
- Over the history of the antitrust laws vertical integration has not fared particular well, notwithstanding it high potential for reducing costs or improving product quality and its relatively low potential for harm. Under a variety of theories, all three forms of vertical integration have been condemned. Vertical integration by new entry generally raises antitrust issues only when the integrating firm is a monopolist. It is analyzed under § 2 of the Sherman Act. Vertical acquisitions are analyzed as mergers, most often under § 7 of the Clayton Act. Vertical integration by long-term contract is often condemned under § 1 of the Sherman Act if it is found to involve resale price maintenance or some other agreement in restraint of trade. Vertical integration by contract can also be condemned as illegal tying or exclusive dealing under § 3 of the Clayton Act or § 1 of the Sherman Act.
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Chapter 4. Antitrust Policy Toward Collusion and Oligopoly 402 results (showing 5 best matches)
- One reason antitrust law has had so little success with oligopoly is its continued adherence to a common law concept of “agreement” that makes little sense in the context of strategic behavior among competing firms. This agreement requirement frequently targets the wrong set of practices. oligopoly situations are often more stable, and thus more easily sustained, than cooperative ones. For example, in the Cournot oligopoly described in § 4.2a, each firm charges its own profit-maximizing price, determined by equating its own marginal cost and marginal revenue on the assumption that other firms will hold their output constant. Adhering to the oligopoly price is profit-maximizing behavior, given the status quo. As a result, nothing resembling a common law contract or conspiracy will be found in the orthodox noncooperative oligopoly.
- The basic question exposes a tension between the law of § 1 conspiracies and the law of monopolization under § 2. Antitrust is generally more hostile to inter-firm agreements than to alleged exclusionary practices by the single firm. But this extra deterrence gives plaintiffs an incentive to try to turn single-firm conduct into a conspiracy or combination. If Kodak’s practice can be characterized as a conspiracy between its president and vice president; or if General Motors’ policies can be characterized as a conspiracy among Pontiac and Buick (its wholly owned subsidiaries), then the plaintiff can take advantage of § 1’s more expansive reach. He might even be able to turn price setting by the single firm, a completely legal act, into a
- Cf. Louis Kaplow, Competition Policy and Price Fixing (2013) (minimizing traditional conspiracy requirements); and Malcolm B. Coate, Should economic theory Control Price fioxing Analysis (FTC Working Paper April 10, 2014), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2103359. See also 6 In re High Fructose Corn Syrup Antitrust Litigation 295 F. 3d 651, 654 (7th Cir. 2002), where Judge Posner opined that while the Sherman Act was broad enough to cover tacit agreements, the case law was far more resistant. On Posner’s recent modification of his position, see his review of Kaplow, Competition Policy and Price Fixing, 79 Antitrust L.J. 761 (2014); and In re Text Messaging Antitrust Litig.,782 F.3d 867 (7th Cir. 2015).
- A seller must decide on a price; and if tacit collusion is forbidden, how does a seller in a market in which conditions (such as few sellers, many buyers, and a homogeneous product, which may preclude nonprice competition) favor convergence by the sellers on a joint profit-maximizing price without their actually agreeing to charge that price, decide what price to charge? If the seller charges the profit-maximizing price (and its “competitors” do so as well), and tacit collusion is illegal, it is in trouble. But how is it to avoid getting into trouble? Would it have to adopt cost-plus pricing and prove that its price just covered its costs (where cost includes a “reasonable return” to invested capital)? Such a requirement would convert antitrust law into a scheme resembling public utility price regulation, now largely abolished.
- Other courts permit the hospital to be included in the conspiracy as well. For example, Bolt v. Halifax Hosp. Med. Ctr., 891 F.2d 810 (11th Cir.), cert. denied, 495 U.S. 924, 110 S.Ct. 1960 (1990). See also Boczar v. Manatee Hosps. & Health Sys., 993 F.2d 1514 (11th Cir.1993), concluding that the hospital could be a conspirator because the disciplined physician had uncovered numerous hospital deficiencies which, if exposed, would cost the hospital much money to correct. As a result, “the hospital * * * came to view Dr. Boczar’s practice * * * as inconsistent with its interests.” But to infer conspiratorial capacity from such evidence seems precisely wrong. The evidence indicates that the hospital, acting unilaterally, wished to dismiss Dr. Boczar. In that case the hospital’s action was perhaps ill-motivated and even illegal under another body of law; but it was not an antitrust conspiracy. And see Surgical Care Ctr. of Hammond v. Hospital Serv. Dist. No. 1, 309 F.3d 836 (5th Cir....
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Chapter 11. Intrabrand Restraints on Distribution 382 results (showing 5 best matches)
- This potpourri of factors may say something about the degree of competition in the retail market for televisions—but it is a long way from “balancing” injury to intrabrand competition against benefits to interbrand competition. In fact, the Court overlooked the factors that would seem most relevant—that Sylvania never had a significant share of any market relevant to the case, and that its market share increased after the restraints were put into place. Increases in output or market share are not good evidence that a practice is monopolistic, particularly when the increase is in the range from 2% of the market to 5%.
- rule of reason concerns the court’s capacity to measure something as intangible as the balance between interbrand and intrabrand competition. Assuming for argument’s sake that a vertical restriction injures intrabrand “competition,” can any court really balance the reduced competition in one “market” (Sylvania televisions) against the increased competition in a different market (all televisions)? First of all, the Court could not have been defining “competition” as It would be nonsense to say that the intrabrand effect of the restraints permitted individual sellers to price above marginal cost, while the interbrand effect tended to reduce the prices to marginal cost. Restraints may either be pro-competitive or anti-competitive. In either case, kinds of competition (if it is meaningful to speak of two kinds) move in the same direction. If injury to competition is appropriately understood as practices that enable a firm to profit by reducing output and increasing price, then it...
- See Lester Telser, Why Should Manufacturers Want Fair Trade? 3 J.L. & Econ. 86 (1960); Robert Bork, The Rule of Reason and the Per Se Concept: Price Fixing and Market Division (part 2), 75 Yale L.J. 373 (1966); Richard Posner, The Rule of Reason and the Economic Approach: Reflections on The Decision, 45 U.Chi.L.Rev. 1 (1977). See also Joshua D. Wright, Antitrust Law and Competition for Distribution, 23 Yale J. Reg. 169 (2006); Kenneth G. Elzinga and David E. Mills, The Economics of Resale Price Maintenance, in Issues in Competition Law and Policy (Wayne D. Collins, ed., 2006). For far more skeptical conclusions, see Marina Lao, Free Riding: An Overstated, and Unconvincing, Explanation for Resale Price Maintenance, in How the Chicago School Overshot the Mark: The Effect of Conservative Economic Analysis on U.S. Antitrust 196 (Robert Pitosfky, ed. 2008). See also Maurice E. Stucke, Does the Rule of Reason Violate the Rule of Law?, 42 U.C. Davis L. Rev. no. 5 1375 (2009) (... ...of...
- policy is not the only kind of policy that counts in a democracy. Although many people believe that economic efficiency should be the exclusive goal of antitrust, most members of the Congresses that have passed the federal antitrust statutes did not share these views. Although the Supreme Court has cited economic concerns as relevant, it has never said that economic efficiency is all that counts, not even in its interpretation of the antitrust laws. Today
- See 8 Antitrust Law ¶ 1648c (3d ed. 2010); Martin K. Perry & David Besanko, Resale Price Maintenance and Manufacturer Competition for Exclusive Dealerships, 39 J.Indus. Econ. 517 (1991).
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Chapter 10. Tie-Ins, Reciprocity, Exclusive Dealing and Most Favored Nation Agreements 472 results (showing 5 best matches)
- The antitrust world would be a much better place if its per se rule were jettisoned and tying practices subjected to rule of reason treatment. Tying is not even arguably in the category of highly suspicious restraints for which the per se rule is reserved.
- The fifth element of the test for illegality—a “not insubstantial” amount of commerce in the tied product market exception to the federal antitrust laws (perhaps there is such an exception, but it is not unique to tying arrangements). To the extent that tying law is concerned with limits on competition facilitated by foreclosure or increased collusion, of a relevant market foreclosed by the arrangement. The “quantitative substantiality” rule that tying law uses states a minimum dollar amount which generally does not vary with the size of the market.
- Nearly every product or service sold can be divided into components or parts. A coat can be sold without its buttons, a desk without its drawers and a jar of pickles can probably be sold without its lid. The market would come to a standstill, however, if the antitrust laws gave every customer a legal right to atomize his purchases as much as he chose.
- The fourth element, “anticompetitive effects,” is the most ambiguous, with some courts permitting broad-based inquiries into the effect of the arrangement on competition. Others use the term as a synonym for coercion and still others as a synonym for antitrust injury. If a tying arrangement is really a violation of the antitrust laws, as the Supreme Court has often stated, then a separate analysis of anticompetitive effects is peculiar. The whole point of analysis is to avoid expensive individualized inquiries concerning competitive effects of particular arrangements. As a result, the use of an “anticompetitive effects” requirement probably reflects considerable doubt about the wisdom of the
- In antitrust analysis, common law requirements contracts are generally treated as exclusive dealing. For example, Taggart v. Rutledge, 657 F.Supp. 1420, 1443–1445 (D.Mont.1987), affirmed mem., 852 F.2d 1290 (9th Cir.1988). contracts, by contrast, are often treated in antitrust law as exclusive dealerships—or promises by the supplier that its entire output in that area will be sold through a single dealer. See § 11.6d; and see 11 Antitrust Law ¶ 1802 (requirements contracts and exclusive dealing); ¶ 1803 (output contracts) (3d ed. 2011). See also Paddock Pub. v. Chicago Tribune Co., 103 F.3d 42, 47 (7th Cir.1996), cert. denied, 520 U.S. 1265, 117 S.Ct. 2435 (1997) (distinguishing output contract from requirements contract).
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Chapter 6. Exclusionary Practices and the Dominant Firm: The Basic Doctrine of Monopolization and Attempt 190 results (showing 5 best matches)
- Courts generally have not adopted this approach. The whole notion of a “sliding scale” implies that courts are able to measure market power or the effect of alleged exclusionary practices much more precisely than they really can. Rather, courts have developed a compromise. If the evidence suggests a high degree of monopoly power, then the courts have identified a certain set of practices that will condemn the defendant of illegal monopolization. If the evidence suggests a smaller amount of market power, then courts have used the law of attempt to monopolize, which carries stricter and more explicit conduct requirements. In all events, the plaintiff must provide reasonably specific allegations of substantial market power in its complaint—a conclusion required by the Supreme Court’s decision, which tightened up antitrust pleading requirements.
- The monopoly power requirement in monopolization cases helps courts to characterize a firm’s conduct and predict its consequences. Much of the “exclusionary” conduct at issue in litigated monopolization cases is ambiguous when considered alone. For example, in a competitive market a refusal to deal, a dramatic price reduction, or even tortious business practices are absolutely consistent with competition on the merits.
- In antitrust litigation most practices are considered to be analyzed under a rule of reason. A rule is generally appropriate only after judges have had long experience with a certain practice, and have concluded that the practice produces many pernicious results and almost no beneficial ones. The rule of reason was originally formulated by the Supreme Court in a monopoly case as a means of distinguishing permissible from impermissible exclusionary practices. The meaning and scope of the rule of reason in monopolization cases are nevertheless ambiguous.
- The offense of attempt to monopolize is one of the most complex of federal antitrust violations. On the one hand, many acts alleged to be illegal attempts may also be illegal monopolization or violations of another antitrust law. In such cases a separate “attempt” offense is superfluous. On the other, expansive use of the attempt offense to reach conduct not condemned by the other antitrust laws may do more harm than good to the competitive process. If attempt analysis focuses too heavily on unfair conduct and too little on market power the offense can operate to protect inefficient businesses from their more efficient rivals. In the great majority of cases, a firm that is nondominant to begin with cannot create a dominant position by purely unilateral conduct.
- On antitrust remedies, see Peter C. Carstensen, Remedies for Monopolization From Standard Oil to Microsoft and Intel: the Changing Nature of Monpoly Law from Elimination of Market Power to Regulation of its Use, 85 S.Cal.L.Rev. 815 (2012); William E. Kovacic, Designing Antitrust Remedies for Dominant Firm Misconduct, 31 Conn. L. Rev. 1285, 1317 (1999).
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Table of Contents 345 results (showing 5 best matches)
Index 610 results (showing 5 best matches)
Summary of Contents 25 results (showing 5 best matches)
- CHAPTER 15. PUBLIC ENFORCEMENT OF THE FEDERAL ANTITRUST LAWS
- CHAPTER 21. THE REACH OF THE FEDERAL ANTITRUST LAWS
- CHAPTER 19. ANTITRUST AND FEDERAL REGULATORY POLICY
- CHAPTER 18. ANTITRUST AND THE PROCESS OF DEMOCRATIC GOVERNMENT
- CHAPTER 6. EXCLUSIONARY PRACTICES AND THE DOMINANT FIRM: THE BASIC DOCTRINE OF MONOPOLIZATION AND ATTEMPT
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Advisory Board 10 results (showing 5 best matches)
- Professor of Law, Chancellor and Dean Emeritus, University of California, Hastings College of the Law
- Professor of Law and Dean Emeritus, University of California, Berkeley
- Professor of Law Emeritus, University of San Diego Professor of Law Emeritus, University of Michigan
- Professor of Law, Pepperdine University Professor of Law Emeritus, University of California, Los Angeles
- Earle K. Shawe Professor of Law, University of Virginia School of Law
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Table of Cases 280 results (showing 5 best matches)
- Aggrenox Antitrust Litigation, In re......124
- Air Cargo Shipping Services Antitrust Litig., In re...........................................964
- Airport Car Rental Antitrust Litigation, In re..............................................925, 926
- Aluminum Phosphide Antitrust Litigation, In re.......................................................895
- Antibiotic Antitrust Actions, In re..........865
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Table of Rules 12 results (showing 5 best matches)
- Federal Rules of Civil Procedure 4.......1033
- Federal Rules of Civil Procedure 4(c)......................................................1033
- Federal Rules of Civil Procedure 4(e)......................................................1033
- Federal Rules of Civil Procedure 8(a)(2)...........................................244, 245
- Federal Rules of Civil Procedure 11..................................................931, 933
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Copyright Page 4 results
- The publisher is 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.
- West, West Academic Publishing, and West Academic are trademarks of West Publishing Corporation, used under license.
- is a trademark registered in the U.S. Patent and Trademark Office.
- Printed in the United States of America
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- Publication Date: November 2nd, 2015
- ISBN: 9780314290366
- Subject: Antitrust Law
- Series: Hornbooks
- Type: Hornbook Treatises
- Description: Nearly all of the aspects of federal antitrust policy are covered in this treatise. And it’s written so you don’t need a background in economics to understand it. Expert narration states the “black letter” law and presents policy arguments for alternatives. Text also includes an analysis of recent Supreme Court and lower-court decisions.