Friday, October 29, 2004
With regards to previous posts on the difference between antitrust in the US and EU, it is interesting to note that Oracle overcame antitrust hurdles in the EU Tuesday October 26 when the European Commission announced it would not block Oracle's attempt to acquire PeopleSoft. The US DoJ's attempt to block the acquisition was given a setback in September of this year when a federal district court judge dismissed the US suit against Oracle. Meanwhile, the PeopleSoft litigation, challenging the acquisition, continues in the courts. Business Week Online reports on the hostile takeover.
Professors Barondes and Lambert ask the provocative question, Should Antitrust Education Be Mandatory (For Law School Administrators? in a recent working paper available at SSRN.
They make the argument that the American Association of Law School's recently adopted Statement of Good Practices on faculty lateral recruitment violates the antitrust laws.
Wednesday, October 27, 2004
The proposed final judgment in the Cingular-AT&T merger, discussed in Tuesday's post, can be found here.
The following links may also be of interest:
The Wall Street Journal reported this morning on a settlement between six motion picture studios and the European Commission on the use of most favored nation clauses in contracts with pay-television providers. These clauses, which required the providers to offer the same terms to all studios for rights to broadcast films in the pay-TV market, were allegedly price fixing. The six studios (Walt Disney Co.'s Buena Vista International, Time Warner Inc.'s Warner Brothers, News Corp.'s 20th Century Fox, Sony Corp., Metro-Goldwyn-Mayer Inc. and DreamWorks SKG) agreed to drop the clauses from their contracts. General Electric Co.'s NBC Universal and Viacom Inc.'s Paramount Pictures Corp. were holdouts from the settlement.
The European version of the Wall Street Journal reports that the settlement demonstrates the aggressive use of settlement rather than litigation by the European Commission. The terms of the settlement, according to the report, also demonstrate the shift in power from studios to pay-television providers in the market for film distribution.
Tuesday, October 26, 2004
Details about Cingular's acquisition of AT&T can be found at the DoJ Antitrust divison website.
The following is a description of the divestiture plan:
"Cingular Wireless and AT&T Wireless are two of six mobile wireless services providers with a national presence, offering mobile wireless telecommunications services, which include both voice and data services provided over a mobile wireless network, in areas throughout the United States. The proposed transaction would reduce competition for mobile wireless telecommunications services in 10 markets, and for mobile wireless broadband services in three additional markets. In nine of the 10 wireless telecommunications services markets, Cingular and AT&T Wireless are, or hold interests in, the two largest incumbent wireless providers, and in all ten markets the merged firm would be the largest. The merging companies are also two of a limited number of mobile wireless services providers who have launched or are likely to launch mobile wireless broadband services, which offer data speeds four to six times faster than existing service.
"Under the terms of the settlement, the merged firm must divest AT&T Wireless's mobile wireless services business, including spectrum and customer contracts, in parts of Connecticut (Litchfield), Kentucky (Fulton), Oklahoma (Oklahoma City and Ponca City), and Texas (Lufkin/Nacogdoches). In Connecticut, Kentucky, and Texas the merged firm may retain some of AT&T Wireless's wireless spectrum. The merged firm must also divest minority equity interests in mobile wireless services providers in FCC licensing areas in Georgia (Athens), Kansas (Topeka), Louisiana (Shreveport, Monroe), Massachusetts (Pittsfield), and Missouri (St. Joseph), although it may retain its minority interests in Kansas, Louisiana, and Missouri if those interests are made irrevocably and entirely passive to the satisfaction of the Department.
"To resolve the Department's competitive concerns related to mobile wireless broadband services, the merged firm must divest 10 MHz of contiguous PCS wireless spectrum in parts of Michigan (Detroit), Tennessee (Knoxville), and Texas (Dallas-Fort Worth). In Knoxville, the merged firm can alternatively restructure AT&T Wireless's existing relationship with another spectrum licensee in the market to the satisfaction of the Department so that the merged firm has no equity, managerial, or other interest in the licensee and the Department's competitive concerns are resolved."
I will post a link to the settlement when published in the Federal Register.
Monday, October 25, 2004
An unidentifiable contributor posted the following comment to my post on Trinko from last week:
"In Europe, we tend to protect potential competition, competitors and consumers, at the risk of creating a competitive disadvantage for the dominant company. The Microsoft and Coca Cola cases are typical of this.
"In both cases, what was at stake was not the protection of consumers interests (I mean, you are free of downloading a free-linux from the net if you really don't want Win XP), but rather of the competitors.
"The EU approach, in my opinion, in wrong and against the rationale of antitrust law."
Let me suggest two explanations for the difference, one institutional, the other methodological/ideological.
In the US, competition policy consists of antitrust law, rooted in the Sherman Act, and the Federal Trade Commission Act (enacted 24 years after the Sherman Act). The first deals with regulation of competition, rather than protection of competitors. The second deals with unfair and deceptive business practices, and is in part, more consumer oriented. Under EU competition law, what is separate in the US are unified, though far from harmonized. One example of the difference is that the type of shelving policies at issue in the Coca Cola case have been addressed as an unfair business practice in the snack food and cereal industries.
The question, as an institutional matter, is whether it is desirable to separate regulation of competition from protection of competitors and consumers. In the US, this institutional divide may just be an artifact of history. The passage of the Sherman Act was largely motivated by trust busting with some of the consumer protection dimensions of the law being developed later. The FTCA was aimed at regulating particular business practices that directly affected consumers and competitors. The divide in the US reflects the influence of different interest groups on the formation of two very different pieces of legislation that fall under the umbrella of competition policy. The argument could be made that the EU provides a more integrated approach to regulating the marketplace that is more pro-consumer and pro-oompetitor oriented.
Another explanation for the difference that the commentator identifies may be methodological/ideological. Economics has perhaps played a greated role in competition policy in the US, both under the Sherman Act and the FTCA. In the neo-classical form, economics lends support to competition law that is more deferential to private orderings, presumably made on the rational pursuit of self-interest. As Justice Scalia's comment in Trinko demonstrates, there is skepticism about judges being given carte blanche to second guess the decisions of private actors, even monopolists.
The problem is that no one seriously is arguing for a "carte blanche." Instead, the counterargument to Justice Scalia is that judges should intervene when the exercise of private orderings lead to third party harms. The challenge is identifying what constitutes harms. Under the antitrust law branch of US competition policy, the relevant harm is that to competition. The problem is that in the case of governmentally established or "natural" monopolies, there is no competition by definition. Justice Scalia's rejection of carte blanche resolves this dilemma by deference to monopolist or, perhaps more accurately, to Congress, which created the monopoly.
Of course, there is another position that does not lead to carte blanche (and also can be understood int erms of economic analysis). If the purpose of competition law is to benefit consumers, then judges may intervene under competition law to strike down business decisions by monopolists that do hurt consumers. That seems to be the approach adopted by the EU, as the original commentator indicates. The approach, however, is not consistent with the pro-competition, rather than pro-consumer, approach of US antitrust law.