Black Letter Outline on Antitrust
Author:
Hovenkamp, Herbert
Edition:
7th
Copyright Date:
2021
25 chapters
have results for mergers and acquisitions
Chapter VIII. Horizontal Mergers 210 results (showing 5 best matches)
- Mergers are generally analyzed under § 7 of the Clayton Act, which condemns them if their effect “may be substantially to lessen competition, or to tend to create a monopoly.” In the past some mergers were evaluated as combinations in restraint of trade under § 1 of the Sherman Act. This was so because as originally passed in 1914 § 7 contained several jurisdictional “loopholes.” First of all, as originally drafted the statute applied only to mergers that eliminated competition “between” the merging firms. Since vertical mergers are not concerned with competition between the merging firms, but rather with competition between the post-merger firm and other firms in the market, the original Clayton Act did not apply to them. Second, as it was originally drafted § 7 applied to stock acquisitions but not to asset acquisitions. As a result many mergers avoided scrutiny under § 7 by structuring their union as an asset acquisition which often left only the empty shell of the acquired firm.
- Both of these problems were corrected in 1950, when § 7 was amended by the Celler-Kefauver Act, so as to apply to both vertical and horizontal mergers, and to asset acquisitions as well as stock acquisitions.
- Another danger of horizonal mergers is reduction in innovation competition. The 2010 Horizontal Merger Guidelines, issued by the Department of Justice and Federal Trade Commission, contain a section concerning mergers that threaten competition by limiting “innovation and product variety.” 2010 Guidelines, § 6.4. An emerging problem is platform acquisitions of nascent competitors—Google, Apple, Facebook, Amazon, and Microsoft have acquired hundreds of small startups—where the effect of the merger is to prevent new technology from developing in competition with that of the dominant firm. Closely related is the problem of “killer” acquisitions, which occur when one firm acquires another firm only to shut it down to stifle competition.
- The problem of partial asset acquisitions is somewhat different than the problem of partial stock acquisitions. For example, suppose that Firm A has three plants and Firm B has two plants. Firm B purchases one of A’s plants. The effect of this acquisition is that now A has two plants and B three. Quite possibly the merger has little or no effect on competition. This would certainly not be the case, however, if Firm B had purchased one third of A’s shares.
- If an acquisition is subject to the statute, the parties must ordinarily wait thirty days after notification before the merger can be consummated. However, if the acquisition is by tender offer, the waiting period is only fifteen days.
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Appendix B. Practice Exam 74 results (showing 5 best matches)
- The merger of Blackstone and O’Connor’s is a partial acquisition. However, the two firms are competitors. As a result, the fact that Blackstone’s purchased only a 25% interest of O’Connor’s is not particularly important. Such a partial acquisition clearly has the potential to injure competition, because its gives each company an interest in the well-being of its competitor.
- In order to prevail in a private action for damages, Wright’s book store must show not only that the merger between Blackstone’s and O’Connor’s is illegal, but also that it has suffered injury in fact and “antitrust injury” as a result. The facts of the case suggest two possibilities: 1) that after the merger the Blackstone’s and O’Connor’s stores were better competitors rather than worse ones, because the post-merger firm faced lower costs; 2) that the post-merger firm is engaging in predatory pricing. If a merger appears to a court to facilitate actual predatory pricing, it might be condemned on that ground. However, if Wright’s is merely complaining about the post-merger firm’s increased efficiency, then it is not a victim of antitrust injury as defined by the Supreme Court in the and
- In this particular case, the HHI in the New York City market is 2350, obtained by taking the market shares of the New York City law book stores, squaring them, and then adding them together. This is a moderately concentrated market under the 2010 Guidelines, and the likelihood of challenge increases as the HHI increase from the merger rises above 100. In this particular case the merger adds 600 HHI points (obtained by doubling the product of the market shares of the merging firms). The Justice Department will likely challenge this merger, assuming it finds entry barriers to be sufficiently high.
- Wright’s book store, which is right across the street from Blackstone’s, suffered tremendous losses as a result of the joint advertisement and price reduction initiated by post-merger Blackstone-O’Connor’s. Wright’s also filed a private merger action under section 7, alleging that because of the unlawful merger the two stores had lowered their prices, with the result that Wright’s lost $100,000 in profits. Wright’s asked for that amount, trebled, plus attorney’s fees.
- In evaluating the merger, the Justice Department will rely on the 2010 horizontal Merger Guidelines. It would appear that “law books” is a relevant product market for the purpose of analyzing this merger. On the demand side, there are no good substitutes. The question provides very little information about elasticity of supply—that is, whether other book stores could easily enter the law book market in response to an attempt by one of the firms there to charge monopoly prices. If such entry is particularly easy, the merger would be legal under the Guidelines no matter how concentrated the market. Assuming such entry is not easy, however, the Justice Department will analyze market concentration next. Since there are no law book stores outside New York City for fifty miles, we assume that New York City is a relevant geographic market.
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Chapter XII. Enforcement, Procedure and Related Matters 70 results (showing 5 best matches)
- Today the lower courts are divided on the question whether the target of a hostile takeover is a victim of antitrust injury. Suppose A Corp. tries to acquire B Corp., and B Corp.’s directors complain and allege that the resulting merger is illegal. If it is illegal it is because post-merger firm AB will be able to charge prices. As a result, to the extent the merger is anticompetitive B Corp.’s stockholders will be beneficiaries rather than victims of the unlawful acquisition.
- (statute of limitation on merger begins to run from time of acquisition). The limitation period begins to run when the cause of action “accrues,” which generally does not happen until damages are ascertainable. If the violation has already occurred, but the existence of injury and damages is unknown, or the damages are only speculative, then the statute will not run. For example, if a secret cartel is formed in 1978 but is not discovered and broken up until 1983, the statute of limitation will not begin to run until 1983, provided that the plaintiff was not put on inquiry notice earlier. Likewise, distinctive, repeated actions may serve to re-start the statute of limitation. See, e.g., (evidence that price-fixing conspiracy was ongoing sufficient to toll five-year criminal statute of limitation; evidence of ongoing conspiracy included repeated setting of prices). The statute of limitation generally runs on a merger from the date of the transaction. ...of limitation on merger...
- was a merger action brought by a competitor of the acquired firm. Before the merger the plaintiff and the acquired firm had been struggling small bowling alleys in a medium-sized community. However, the acquired firm was in poor financial condition and likely to go out of business. The plaintiff alleged that as a result of the acquisition of its competitor by a large operator of bowling alleys, the firm remained in competition with the plaintiff. In short, the plaintiff would have been a monopolist, or at least had a far larger market share, had the merger not occurred. It sought damages for this loss of additional business.
- , the Supreme Court held that a competitor did not suffer antitrust injury from a merger of rivals, under the theory that the post-merger firm would charge lower, but nonpredatory prices. The Court left open the possibility that a competitor might challenge a merger on the theory that the merger would lead to predatory pricing; but it remains unclear what such a plaintiff would have to show—i.e., whether it must show that predatory pricing is merely possible after the merger, or that the post-merger firm would actually engage in predation.
- The entities usually co-exist amiably and occasionally issue written guidelines outlining enforcement positions on various matters. The Department of Justice and FTC issued joint Horizontal Merger Guidelines in 2010 and joint Vertical Merger Guidelines in 2020. But some interactions are less cooperative. For example, in 2019, the Department of Justice’s Antitrust Division intervened in ongoing litigation brought by the FTC against Qualcomm, the biggest supplier of wireless modem chips. The Division took a position on standard essential patents that is more in line with views in old economy industries, as opposed to the FTC position, which is more in line with modern digital and information technologies. See (granting the Division’s request to stay relief requested by FTC and approved by district court).
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Capsule Summary 350 results (showing 5 best matches)
- Section 7 of the Clayton Act applies to partial as well as total acquisitions. In such cases, the issue is not necessarily whether the acquiring firm obtains “control” of the acquired firm, but rather whether the merger has an adverse impact on competition. As a result partial acquisitions of competitors are closely scrutinized. As a general rule, partial asset acquisitions are less injurious than partial stock acquisitions. In a partial asset acquisition, the asset changes hands. In a partial stock acquisition, on the other hand, one firm acquires an ongoing interest in the other firm’s well-being.
- The Guidelines borrow from the 2010 Horizontal Merger Guidelines concerning questions of market definition, entry barriers, partial acquisitions, treatment of efficiencies, and the failing company defense. But they de-emphasize traditional terminology describing vertical mergers as linking an upstream and downstream market. The Guidelines divide the universe of adverse competitive effects into “unilateral effects” and “coordinated effects.” The discussion of unilateral effects focuses on (1) foreclosure and raising rivals’ costs and (2) access to competitively sensitive information. The Agencies separately examine whether a vertical merger may lead to coordinated interaction or collusion.
- The failing company defense can make it legal for a firm to acquire a qualifying “failing company” even though market structure and other indicators suggest that the merger is illegal. In the case the Supreme Court held that before the defense can be used the defendant must show 1) that the acquired firm was almost certain to go bankrupt and unlikely to be reorganized; and 2) that no less anticompetitive acquisition was available. The Merger Guidelines generally assess the same requirement.
- A merger is “horizontal” when it involves the union of two firms that manufacture the same product and sell it in the same geographic market—that is, the firms were competitors before the merger occurred. After the merger the market contains one fewer firm than it did before the merger, and the post-merger firm is usually larger than either of the pre-merger firms. This means that horizontal mergers raise the concentration level in the market.
- Section 7 contains an exception for acquisitions that are “solely for investment.” Today, however, the exception is almost meaningless. If a merger has any adverse impact on competition, the exception will not apply.
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Appendix C. Glossary 60 results (showing 5 best matches)
- Asset Acquisition.
- Merger.
- The second federal antitrust law, passed in 1914. § 1 of the Clayton Act defines relevant antitrust terms; § 2, as amended by the Robinson-Patman Act, prohibits certain instances of differential pricing (called “price discrimination” in the Act); § 3 prohibits certain tying arrangements and exclusive dealing contracts; § 4 creates a private action for treble damages; § 5 provides for the relationship between public antitrust suits and subsequent private suits and governs several procedural matters; § 6 grants labor a partial exemption from the antitrust laws; § 7 prohibits certain mergers and acquisitions; § 8 prohibits certain interlocking directorates; § 16 provides for injunctive relief from an antitrust violation; § 20 augments the labor exemption.
- Conglomerate Merger.
- The 1950 Amendments to § 7 of the Clayton Act, which expanded the statute to apply to vertical as well as horizontal mergers, and which revealed Congress’ concern for the protection of small businesses from larger, more efficient competitors, particularly if those larger firms were the products of one or more mergers.
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Chapter IV. Vertical Integration and Vertical Mergers 73 results (showing 5 best matches)
- The 2020 Vertical Guidelines borrow from the 2010 Horizontal Merger Guidelines concerning questions of market definition, entry barriers, partial acquisitions, treatment of efficiencies, and the failing company defense. But the Vertical Guidelines de-emphasize traditional terminology describing vertical mergers as linking an upstream market and a downstream market. Instead, the Vertical Guidelines use the term “relevant market” to address the market that is of competitive concern, and the term “related product” to refer to some product, service, or grouping of sales that is either upstream or downstream from this market.
- For years, antitrust enforcers, scholars, and judges complained that enforcement agencies needed new guidelines for vertical mergers. For over three decades, the 1984 Guidelines, issued at the height of Chicago School hostility toward antitrust treatment of vertical restraints, served as the operating set of vertical merger principles. Those Guidelines virtually abandoned the foreclosure theory as a rationale for condemning vertical mergers. They also gave the impression that the Justice Department believed that most vertical acquisitions are efficient and should be legal, though the Guidelines did cite three dangers to competition: increased barriers to entry, collusion, and rate regulation avoidance.
- Today vertical mergers are commonly analyzed under both the foreclosure and entry barrier theories. In both cases, today courts generally hold that the vertical acquisition is illegal if the transactions between the merging firms account for 15% or more of the market. High entry barriers in a particular market will generally warrant condemnation at somewhat lower percentages. Unfortunately, there is little consistency among the circuit courts, and they disagree widely over the relevant percentages. The Supreme Court has not decided a vertical merger case since the
- Initially, the Supreme Court analyzed vertical mergers by looking at the “intent” of the acquiring party. If it found an intent to monopolize some part of trade or commerce, or to raise the price of a certain commodity or service, the merger was usually condemned. This was the rationale of , which eventually approved a taxicab manufacturer’s acquisition of several taxicab operating companies, many of which were monopolists in their respective cities, because the defendant did not have the requisite anticompetitive intent.
- As the example suggests, such economies in production generally cannot be achieved by vertical merger, for the integration results from the fact that steel production and steel rolling are conducted in the same plant. A merger would result merely in two separate plants coming under the control of the same owner. The creation of an integrated steel production and rolling plant would probably have to occur by new entry.
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Chapter IX. Conglomerate and Potential Competition Mergers 80 results (showing 5 best matches)
- The potential competition merger is really a variation of the horizontal merger. That is, the merger is analyzed for the likelihood that it will diminish competition the merging firms and result in higher market concentration in some particular market. Vertical mergers and most of the other conglomerate mergers described above do not eliminate competition between the merger partners. Rather, they allegedly injure competition between the post-merger firm and firms in other markets.
- , the Supreme Court condemned a food wholesaler’s acquisition of a manufacturer of dehydrated onion and garlic because after the acquisition, the food wholesaler frequently urged the food processors which supplied it to purchase their dehydrated onion and garlic from its new subsidiary. The Supreme Court held that
- The economies produced by conglomerate mergers are generally not as substantial as some of the economies produced by vertical and horizontal mergers. First of all, in a conglomerate merger the firms do not stand in a buyer-seller relationship, so such mergers do not yield the kinds of transactional or distributional economies that vertical mergers yield (see Chapter IV above). Secondly, the firms are not actual competitors, so there may not be as much opportunity for the economies of scale or multi-plant economies that can be achieved by horizontal mergers.
- The framers of § 7 of the Clayton Act were not particularly concerned about conglomerate mergers, and there is little evidence in the legislative history that they even intended for § 7 to apply to conglomerate mergers. There is some indication, however, that the framers of the 1950 Celler-Kefauver Amendments to § 7 were concerned about large firm size, and a conglomerate merger makes a firm larger, just as much as a vertical or horizontal merger does. See Hovenkamp § 13.1.
- condemns mergers that facilitate reciprocity, before the reciprocity occurs, and importantly, before it is known whether the reciprocity will be efficient if it does occur. Today the enforcement agencies have virtually abandoned reciprocity as a rationale for condemning conglomerate mergers, and there have been few such cases in recent years. See Hovenkamp § 13.3a.
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Appendix A. Answers to Review Questions 48 results (showing 5 best matches)
- While Firm P’s behavior certainty warrants scrutiny, such acquisition practices do not fall within current merger law since the merged firms are considered too small or complements (rather than true competitors) to the acquiring platform. It is not clear whether § 2 is the proper tool to remedy these dangerous systematic acquisitions because § 2 requires either a monopoly or a dangerous probability that one will be generated. Today, § 7 of the Clayton Act condemns most horizontal mergers involving firms with sufficient market power to be found guilty of illegal monopolization. Accordingly, courts have come to rely less on the Sherman Act.
- Although conglomerate mergers can create efficiencies, their potential to do so is less than that of horizontal or vertical mergers. This is so because firms involved in conglomerate mergers do not operate in the same market, so many transactional and production economies are not available. Furthermore, such firms do not stand in a buyer-seller relationship before the merger; so they cannot use the merger to eliminate the transaction costs of using the market.
- Competition—or the degree to which firms bid for the same sales—is a critical factor in determining whether to characterize a merger as “horizontal.” One should be wary of the conclusion in the case that the only thing that can compete with a two-sided platform is another two-sided platform. That assertion is incorrect and can mistakenly mean that a merger between a two-sided platform and a traditional firm is per se legal because, per , it is not a merger of competitors. One court has already decided that a merger of a two-side airline reservation platform and a traditional airline service could not be a merger of competitors.
- The CR4 is 90. The CR8 is 100 (any market with fewer than eight firms has a CR8 of 100). The HHI is 2488. The market is moderately concentrated, although very near to the high concentration threshold, which is 2500. A merger between Firm B and Firm E would increase the HHI by 300 points, and would probably be challenged, depending on the presence or absence of other factors. A merger between Firm E and Firm G would increase the HHI by 20 points and would probably not be challenged.
- The lower the number of perceived potential entrants, the more anticompetitive the acquisition will be. If a market has six perceived potential entrants, then an acquisition by one of them will have little or no effect on pricing. There will still be five perceived potential entrants left to restrain pricing in the target market.
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Chapter III. Monopolization, Attempt to Monopolize and Predatory Pricing 147 results (showing 5 best matches)
- One practice that requires further antitrust attention is large platforms, such as Google, Amazon or Facebook, acquiring nascent rivals. Most of these acquisitions do not fall within current merger law because the acquired firms are either too small or are considered complements—rather than competitors—of the acquiring firm. But by systematically purchasing small firms, acquiring entities prevent the emergence of viable future competitors. It is not clear, however, that § 2 is the appropriate remedy, since it requires either a monopoly or a dangerous probability that one will be created. A variation of the buy-and-shut-down strategy is the “killer acquisition,” which occurs when a firm acquires an innovative young firm not to integrate its innovation, but rather to remove its productive capacity or research projects from the market.
- Courts have consistently held that a merger that creates a monopoly may be condemned as illegal monopolization.
- It is settled law that this offense requires, in addition to the possession of monopoly power in the relevant market, “the willful acquisition or maintenance of that power. . . .” The mere possession of monopoly power, and the concomitant charging of monopoly prices, is not only not unlawful; it is an important element of the free-market system.
- One characteristic of raising rivals’ costs is that the cost-increasing strategies in question depend on assumptions about bargaining behavior that can be complex. Nevertheless, the ideas have gained traction and have been incorporated into the 2020 Vertical Merger Guidelines.
- Any purchase of a rival’s plant would be treated as a merger today.
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Table of Contents 149 results (showing 5 best matches)
- 7.Partial Acquisitions and Acquisitions “Solely for Investment”
- 3.Merger Standards Under the 2010 Horizontal Merger Guidelines—Market Share Thresholds
- 5.The Problem of Characterization in Merger Law: When Is a Merger “Horizontal”?
- e.Potential Competition Mergers Under the 1984 DOJ Merger Guidelines
- b.Partial Acquisitions and Corporate “Control”
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Index 71 results (showing 5 best matches)
Chapter I. Antitrust Economics: Price Theory and Industrial Organization 59 results (showing 5 best matches)
- Transaction costs are the costs of using the marketplace. The perfect competition model outlined above assumes that transaction costs are nonexistent. In the real world, however, transaction costs can be substantial, and they can explain many aspects of business behavior, particularly vertical mergers, tying arrangements, exclusive dealing, and restrictions on distribution.
- It can help us understand why firms engage in certain practices, such as vertical integration or mergers, and what are the consequences of such practices for competition.
- In economic models of competitive behavior we generally assume that entry by competitors will occur instantly when price rises above marginal cost. In the real world, however, various barriers to entry may prevent or delay such entry. In general, an entry barrier is some factor that makes the cost of doing business higher for the newcomer than for the incumbents. Certain parts of antitrust analysis, particular of mergers and monopolization by predatory pricing, begin with the premise that anticompetitive results are likely only if entry barriers into the market at issue are high.
- In order to understand modern antitrust policy, you need at least a nodding acquaintance with two basic areas of economics: price theory and industrial organization. Price theory is the theory of firm decision making about how much to produce and what price to charge. Industrial organization is the theory of how the structure of the business firm and the market are determined.
- Assume that the plastic supplier asked whiffle ball manufacturers to pay 50 cents per unit for plastic, and artificial heart manufacturers $1000 per unit. The whiffle ball manufacturers would respond by purchasing more plastic than they needed and reselling it to the artificial heart manufacturers at some price between 50 cents per unit and $1000 per unit.
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Chapter II. Cartels, Tacit Collusion, Joint Ventures and Other Combinations of Competitors 131 results (showing 5 best matches)
- Joint Ventures and Mergers
- Joint Ventures and Mergers
- A contractual joint venture that completely unites the operations of two firms, eliminating their competing contact outside the venture is typically treated as a merger at the time it is formed, but may be treated virtually as a single actor thereafter. In , the Supreme Court held that a joint venture that completely united the gasoline production facilities of two companies did not violate § 1 by fixing the price at which the gasoline it product would be sold back to the two joint venture partners. The Supreme Court found that this was “little more than price setting by a single entity—albeit within the context of a joint venture—and not a pricing agreement between competing entities with respect to their competing products.
- Cartels work best of all in auction markets, in which a seller asks for bids and the cartel members “bid” against each other for the sale. In such a market, the cartel members can agree in advance who will submit the winning bid, and all other firms will submit higher bids. If a firm cheats and wins the bid, the other firms will know immediately.
- Price fixing works much better in some markets than in others, and in some it probably cannot work at all.
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Summary of Contents 34 results (showing 5 best matches)
Chapter V. Tie-Ins, Reciprocity, Exclusive Dealing and the Franchise Contract 111 results (showing 5 best matches)
- Exclusive dealing has traditionally been regarded as anticompetitive under the same “foreclosure” theory that the courts apply in cases involving vertical mergers. (See Chapter IV above.) The theory is that a long-term requirements contract, or exclusive dealing contract, “ties up” one or both levels of a market, so that remaining participants or potential entrants do not have adequate sources of supply or outlets. At the extreme, exclusive dealing might foreclose a market so much that one level of the market is completely inaccessible to participants at the other level. This will generally occur only if one level of the market is controlled by a monopolist, or perhaps if it is controlled by a small number of firms and
- Suppose that bolts and nuts are used by consumers in pairs (one bolt and one nut). A bolt manufacturer has a monopoly in bolts, but nuts are sold in a competitive market. The cost (and competitive price) of bolts is 10 cents, but they are sold for 16 cents, which is the bolt manufacturer’s profit-maximizing price. The cost of nuts is 7 cents, which is also their price.
- . The defendant newspaper publisher was accused of forcing buyers who wanted to advertise in one of its newspapers to advertise in the other one as well. One paper came out in the morning and the other in the evening. Justice Clark and the Court concluded that the relevant product in this case was “readership,” and held that readership covered readers of both the morning and evening papers. However, Justice Clark was also impressed by the fact that when the sale of morning and evening advertising was combined into a single transaction many of the costs of advertising were reduced, including the costs of soliciting and billing and, most importantly, the costs of setting type. Under the joint advertising practice the morning and evening classified sections were identical and could be produced far more cheaply than if type for each were set separately. The result was that the
- Exclusive dealing arrangements can enable both buyers and suppliers to avoid many of the uncertainties that accompany use of the market. The result is a reduction in the risk that the buyer will not be able to find an adequate source of supply and that the seller will not be able to find suitable outlets. When risks are reduced costs are reduced, and eventually consumers will reap the benefits.
- Exclusive Dealing and the Foreclosure and Entry Barrier Theories
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Chapter VII. Refusals to Deal 68 results (showing 5 best matches)
- Many complaints alleging such refusals really allege that the defendants were involved in illegal monopolization, tying, price fixing, resale price maintenance or vertical nonprice restraints, or sometimes even in an illegal merger.
- Firms A, B, C, D and several others produce computers, a market characterized by a high degree of expensive technological innovation. A, B and C decide to pool their resources and jointly develop a new memory device that will greatly enhance the capabilities of computers. However, the technology in which the research will be done is merely promising; it is far from a sure thing. Furthermore, the research will be very expensive. By engaging in the joint venture, however, the firms will each have to bear only one third of the developmental costs, and will suffer only one third of the losses should the project fail. The firms invite D to participate in the joint venture as well, but D refuses. Two years later the joint venture has proved successful and yields a patented, low cost memory device much better than anything on the market. Now D asks to “buy in,” and obtain a license to manufacture the device for itself. A, B, and C refuse.
- A significant part of the American economy is subject to self-regulation. This means that the persons and firms providing goods and services in those markets make and enforce rules governing product and service quality. In many professions, such as medicine, the quality of medical services is regulated by “peer review boards”—groups of doctors, often specialists, who evaluate the work of others in the same specialty. Likewise, in manufacturing industries the testing of products for performance and safety is often undertaken in laboratories controlled by associations of the manufacturers themselves.
- Suppose that a supplier has imposed vertical territorial restraints on dealers A, B, and C. C continually cheats on the restraints, however, by making unauthorized sales in the territories assigned to A and B. A and B jointly complain to the supplier, and the supplier agrees to terminate its relationship with C. The decisions in , and
- involved an association of several railroad companies, bridge operators and freight transfer companies into a great railroad transfer and terminal system in St. Louis, Missouri, at the union of the Mississippi River and several railroad lines. The joint venture itself was a natural monopoly, and anyone with access to it could process freight through St. Louis at a lower cost than an outsider could. However, the venture had by-laws which permitted it to exclude nonmembers. Any railroad who wanted to join the venture needed the unanimous vote of all members. A nonmember also needed the unanimous consent of members in order to use the facilities of the terminal and transfer association.
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Chapter XI. Jurisdictional, Public Policy and Regulatory Limitations on the Domain of Antitrust 79 results (showing 5 best matches)
- (hospital’s corporate authority to acquire other facilities did not serve to authorize an anticompetitive merger to monopoly).
- The Supreme Court construes exemptions from the antitrust laws narrowly, however, and creates exemptions only when Congressional intent is clear. The Court has noted that “repeals of the antitrust laws by implication from a regulatory statute are strongly disfavored, and have only been found in cases of plain repugnancy between the antitrust laws and regulatory provisions. . . .”
- The import and export of goods to and from the United States is clearly “foreign commerce” within the jurisdictional reach of the antitrust laws. However, the federal antitrust laws have also been held to reach activities abroad that do not involve imports to or exports from the United States, but which have an adverse effect on American foreign commerce.
- first, whether the practice has the effect of transferring or spreading a policyholder’s risk; second, whether the practice is an integral part of the policy relationship between the insurer and the insured; and third, whether the practice is limited to entities within the insurance industry. None of these criteria is necessarily determinative in itself. . . .
- . . . the fine securities-related lines separating the permissible from the impermissible; the need for securities-related expertise (particularly to determine whether an SEC rule is likely permanent); the overlapping evidence from which reasonable but contradictory inferences may be drawn; and the risk of inconsistent court results. Together these factors mean there is no practical way to confine antitrust suits so that they challenge only activity of the kind the investors seek to target, activity that is presently unlawful and will likely remain unlawful under the securities law. Rather, these factors suggest that antitrust courts are likely to make unusually serious mistakes in this respect. And the threat of antitrust mistakes, ...seek to set, means that underwriters must act in ways that will avoid not simply conduct that the securities law forbids (and will likely continue to forbid), but also a wide range of joint conduct that the securities law permits or encourages (...
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Dedication 2 results
- holds the James G. Dinan University Professor Chair at the University of Pennsylvania Carey Law School and The Wharton School. He received his Ph.D. and J.D. at the University of Texas. He is a Fellow of the American Academy of Arts and Sciences and the recipient of the Sherman Award from the United States Department of Justice, Antitrust Division, for his lifelong contributions to antitrust. He has written numerous books and articles, including the 21 Volume Antitrust Law treatise (formerly with the late Phillip E. Areeda and the late Donald F. Turner); and
- To Arie, Erik and Mira
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Chapter VI. Resale Price Maintenance and Vertical Nonprice Restraints 65 results (showing 5 best matches)
- Suppose that a manufacturer supplies three different dealers, A, B, and C. A continually sells at a price lower than B and C sell for, perhaps by taking a free ride on point-of-sale services provided by B and C, but not by A. Finally, B and C complain to the manufacturer, and the manufacturer terminates A as a dealer. A sues, claiming the existence of an illegal RPM agreement between the manufacturer on the one hand, and dealers B and C on the other.
- Few areas of antitrust law have provoked more controversy than resale price maintenance and vertical nonprice restraints. In fact, in the last decade courts and commentators have made serious arguments for every possible liability rule for these two practices: illegality, rule of reason analysis, and legality. The reason for this great difference of opinion is twofold. First, historically neither Congress nor the courts has adequately explained exactly what is bad about these two practices—that is, whether they can result in monopoly pricing to consumers, or perhaps whether they should be condemned merely because they deprive dealers and retailers of the power to make individual decisions about how much to charge for a product and how and where to sell it. Secondly, economic analysis of vertical restrictions has been both fairly complex and fairly controversial. We still do not know all we should about the reasons that businesses engage in these two practices, and what their...
- You are in the market for a personal computer. You begin your search by going to Servicestore and you talk for two hours to a trained employee. The employee shows you a half dozen computers and printers, describes their capabilities and analyzes your needs. You and the salesperson finally decide which model is optimal for you, and you record the name and number on a piece of paper. The price for this package is $1995.00. Then you tell the salesperson at Servicestore you will go home and “think about it.” You immediately drive to Bare Bones Computers, show the salesperson the scrap of paper, and she sells you the same package for $1650.00.
- Priestley Chemical Company sells Aardvon, a paint extender, through a group of distributors who are assigned areas of primary responsibility. Three dealers, A, B, and C, have been assigned adjacent territories in Kansas. A, however, continually makes sales of Aardvon in B’s and C’s territories, generally at a lower price than B and C charge there. At the same time, however, A refuses to provide any instruction in the use of Aardvon to customers in territories B and C. When customers ask for such instruction, A informs them that B and C will provide it. B and C complain to Priestley Chemical that A is 1) making sales in their territories; 2) charging a lower price in their territories than they charge; and 3) refusing to provide essential instruction to Aardvon customers. Priestley investigates the charges and then terminates A as an Aardvon distributor. A sues Priestley, alleging a violation of § 1 of the Sherman Act. How should the case be decided?
- In general, RPM is most efficient at controlling free riding problems in markets in which a large number of outlets is quite important. Most small appliances and low priced items probably fall into this category. On the other hand, vertical territorial division works best in markets for “big ticket” items such as automobiles and perhaps personal computers, where a large number of dealers in a community is less important, and where price may be negotiated between the store and individual customers, at least over a relatively narrow range.
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Perspective 6 results (showing 5 best matches)
- One purpose of this Black Letter is to present this rather specialized subject of antitrust in a way that is simple, and that explains the rationales (and sometimes the errors) of federal antitrust policy. The most important purpose of the Black Letter, however, is to tell you what the cases say, how the statues have been interpreted, and what are the enforcement positions of the Department of Justice and the Federal Trade Commission.
- to be, and what the law in fact is. You should try to keep the same distinctions in mind. Today many of the existing judge-made antitrust rules are controversial, not merely among academic professors and economists, but also among private attorneys and those who work for the Federal Trade Commission and the Department of Justice. You can almost be sure that in an analytic antitrust examination you will be asked to offer some criticisms of antitrust law. This Black Letter will prepare you to do that.
- The author recommends that when you study for your antitrust examination you follow the course structure laid down by your own professor. Most antitrust courses are analytic; that is, they require you to study and analyze facts and to make policy arguments, rather than to memorize facts about cases. For this reason the author suggest that you use this outline simply to look up the facts or the holding of a particular case. Rather, read an entire section or chapter from beginning to end. That will give you a feel for how the law works in a particular area and what the special problems are. That will also prepare you best for an analytic antitrust exam.
- Herbert Hovenkamp, Federal Antitrust Policy: the Law of Competition and its Practice (West Hornbook Series, 6th ed. 2020).
- Herbert Hovenkamp, The Antitrust Enterprise: Principle and Execution (Harvard Univ. Press, 2006).
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Chapter X. Price Discrimination and Differential Pricing Under the Robinson-Patman Act 43 results (showing 5 best matches)
- Figure One illustrates the price and output consequences of perfect competition, nondiscriminatory monopoly pricing, and perfect price discrimination. The figure shows the demand curve, marginal cost and marginal revenue curves of a seller with market power. In a perfectly competitive market (in which the demand curve would be the output and sell at price P(c), both of which are determined by the intersection of the marginal cost and market demand curves. In a perfectly competitive market triangle 1–3–6 is consumers’ surplus: that is, the excess value that accrues to consumers because in a competitive market most are able to purchase the product at
- In order to come under the statute the different sales at different prices must be of products of “like grade and quality.” In most cases the high priced product and the low priced product are identical and this requirement is met. If there are physical differences between the products involved in the two different sales, then the requirement is generally not met.
- Price discrimination has appeared in this discussion of the antitrust laws several times—for example, in the treatment of attempt to monopolize, vertical integration, and tying arrangements. Here a more formal and comprehensive analysis of price discrimination is presented.
- A producer of concrete for construction projects serves both large contractors who need a truckload of concrete at a time, and small contractors who need only a few hundred pounds. The small loads cost much more per pound to deliver to the job site than the large loads do, because at least one whole truck is needed for each delivery, even though it might be only 10% filled. For a small job the producer’s costs of purchasing cement (the raw material of concrete), and mixing and delivering the concrete is $3.00 per hundredweight. For a large job the producer’s costs are $2.00 per hundredweight. The producer charges $6.00 per hundredweight for the large jobs and $4.00 for the small jobs.
- That is, under both perfect competition and perfect price discrimination, sales will be made to all customers willing to pay marginal cost or higher, and to no customers unwilling to pay marginal cost.
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Table of Cases 4 results
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- 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.
- is a trademark registered in the U.S. Patent and Trademark Office.
- West, West Academic Publishing, and West Academic are trademarks of West Publishing Corporation, used under license.
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- Publication Date: March 29th, 2021
- ISBN: 9781684674374
- Subject: Antitrust Law
- Series: Black Letter Outlines
- Type: Outlines
- Description: Black Letter Outlines are designed to help a law student recognize and understand the basic principles and issues of law covered in a law school course. Black Letter Outlines can be used both as a study aid when preparing for classes and a review of the subject matter when studying for an examination. This outline covers: Antitrust Economics - Price Theory and Industrial Organization; Cartels, Tacit Collusion, Joint Ventures and Other Combinations of Competitors; Monopolization, Attempt to Monopolize and Predatory Pricing; Vertical Integration and Vertical Mergers; Tie-ins, Reciprocity, Exclusive Dealing and the Franchise Contract; Resale Price Maintenance and Vertical Nonprice Restraints; Refusals to Deal; Horizontal Mergers; Conglomerate and Potential Competition Mergers; Price Discrimination and Differential Pricing Under the Robinson-Patman Act; Jurisdictional, Public Policy and Regulatory Limitations on the Domain of Antitrust; and Enforcement, Procedure and Related Matters.