Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Saturday, January 20, 2007

Antitrust and Patent Settlements

Posted by D. Daniel Sokol

A number of recent law review articles have covered patent settlement, for example here, here and here. This week, the FTC released its FY2006 report on pharmaceutical patent settlements.  In FY2006, a generic received a payment from a branded pharmaceutical in 14 of 28 final settlements.  This figure is up from 3 of 11 final settlements in FY 2005 and 0 of 14 final settlements in FY 2004.  To put in context, all of the FY2006 settlements occurred after the 11th Circuit Court of Appeals’ decision in F.T.C. v. Schering-Plough Corp., 402 F.3d 1056 (11th Cir. 2005).  In Schering-Plough, the 11th Circuit reversed an FTC decision that two settlements between generics and branded pharmaceuticals were a violation under the FTC Act.

 

January 20, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, January 19, 2007

Superprecedent....and Kryptonite

Posted by Shubha Ghosh

Wonderful thread at Truth on the Market sparked by my comments on the status of Dr Miles as superprecedent.  Two issues still floating: superprecedents in antitrust and the per se treatment of minimum RPM. 

As far as superprecedent goes,  there is an argument that the term applies only to constitutional precedents.  Justice Roberts, as far as I know, has not explicitly said so, but the examples he gives are constitutional.  Precedents on statutory interpretation may be more flexible and may  never become invincible.  On the other hand, Justice Roberts may have been talking about the integrity of the Court and that there are some precedents, whether constitutional or statutory, that are so well established and accepted, that the Court will lose credibility if they are reversed.  So was Justice Roberts using the concept of superprecedents to apply solely to the integrity of the Constitution or the institution that interprets it?  Discuss.

Let me assume that the Chief Justice was concerned with the integrity of the Court. His recent interview in The Atlantic Monthly seems consistent with that assumption.  What are the implications for antitrust?  I would argue that Socony-Vacuum, and its condemnation of price fixing and its broader statement that price competition is the central nervous system of the economy, constitute a superprecedent.  The promotion of price competition that leads to lower prices for consumers would arguably be a basic principle, a grundnorm, for antitrust law.  Under this view, reversing Dr Miles is not as simple as my colleagues at Truth on the Market suggest.  While my colleagues are correct that there are output expanding justifications for minimum RPM, there are other contractual measures to increase output that will resolve the free riding problems and increase output (territorial restrictons, requirements of minimum expenditures on service and quality, trademark law and policing).  So the question becomes: should the court countenance restrictions on price competition--establishing a floor on price--that have benefits which can be realized through non-price restrictions?

I can anticipate two objections.  First, Socony-Vacuum is about price fixing among competitors rather than price fixing imposed by a manufacturer on a retailer.   But there are output expanding benfits from so-called horizontal price fixing.  Price supports can have economic benefits but not as pronounced, admittedly, as those from minimum RPM.   Appalachian Coals is still good precedent for allowing price fixing in times of crisis, whatever that means.  Despite these potential benefits from horizontal price fixing,  the per se rule still stands with good reason.   A similar logic should apply to minimum RPM.  There may be output expanding benefits, but the question is whether these benefits could just as readily be realized through non-price restrictions.

Second,  the current asymmetry between the treatment of maximum RPM (rule of reason) and minimum RPM (per se) may , with its superficial inconsistency, seem to show a chink in the armor of the Court's integrity.   But a foolish consistency is the hobgoglin of little minds, with the emphasis on foolish.  Maximum RPM serves to check market power among retailers, market power that may in part be the product of territorial restrictions and intellectual property law.   Therefore, there is strong economic justification for RPM and more importantly, an output expanding result that cannot readily be obtained through non-price restrictions.  As noted above, minimum RPM has a different justification and can be mimicked through non-price mechanisms.

Now perhaps economics is the kryptonite for antitrust superprecedents.  Where appropriate,  fields outside of law should provide the kryptonite.  Remember the role of social science data in Brown to reverse Plessy.  But even when you expose Dr. Miles to the kryptonite of economics, I think it does still fly, perhaps not at the pace of a speeding bullet, but up, up and away nonetheless.

January 19, 2007 | Permalink | Comments (4) | TrackBack (0)

Thursday, January 18, 2007

Truth on minimum RPM?

Posted by Shubha Ghosh

Great discussion on Truth on the Market about minimum RPM, in response to my original post last week.

January 18, 2007 | Permalink | Comments (0) | TrackBack (0)

Colorado repealing antitrust laws?

Posted by Shubha Ghosh

The following was sent to me by Andrew Oh-Willeke:

Colorado’s General Assembly is considering a law to repeal a significant chunk of its state anti-trust law.

http://www.leg.state.co.us/clics/clics2007a/csl.nsf/fsbillcont/4FBAC989995887B887257251007B610D?Open&file=1070_01.pdf

The background to this legislation was a 2006 court case that found that Colorado’s anti-trust laws prohibited grocery stores from selling gasoline below cost as an incentive to customers who made sufficient purchases in sufficient time periods.

January 18, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, January 17, 2007

Economic Analysis of Competition Practices in the EU and the US: A View from Chief Economists

Posted by D. Daniel Sokol

In what looks to be an amazing conference, the Jevons Institute for Competition Law and Ecoconomics at  University College London will present "Economic Analysis of Competition Practices in the EU and the US: A View from Chief Economists" on February 21, 2007 from 6pm - 8pm.

Forum Moderator

  • Amelia Fletcher, Chief Economist, Office of Fair Trading

Speakers

  • Damien Neven, Chief Economist, European Commission
  • Dennis Carlton, Chief Economist, U.S. Department of Justice
  • Michael Salinger, Chief Economist, Federal Trade Commission

Given various differences in approaches on a number of substantive issues, this talk should be one of the must see events of the year. 

 

January 17, 2007 | Permalink | Comments (0) | TrackBack (0)

Private Rights of Action in the EU

Posted by D. Daniel Sokol

Private rights of action in antitrust are all the rage in Europe. Few such suits have been brought thus far. However, there are a number of interesting developments that make a shift towards greater use more likely. The European Commission recently put up for tender a study on private rights in antitrust. This follows a 2005 proposal by the European Commission to reform the current legal system to facilitate private antitrust litigation.

Yesterday’s Wall Street Journal reported (subscription required) that US antitrust plaintiff’s firm Cohen, Milstein, Hausfeld & Toll will be opening a London office this month. The WSJ states that other firms are expanding their London based practices in anticipation of more private antitrust litigation.

Out this week on SSRN is a timely paper by Ilya Segal of Stanford and Michael Whinston of Northwestern, entitled Public vs. Private Enforcement of Antitrust Law: A Survey.   This paper adds to the existing literature by providing a discussion of the economic issues regarding public vs. private enforcement and the economic literature that pertains to it.

Also getting in on the debate is Terry Calvani of Freshfields.  Terry is one of the true gems of the antitrust community and along with Bill Kovacic one of the most engaging people to hear live on competition policy issues (does this make them the Bruce Springsteen of the antitrust world?).  Terry will be giving a series of lectures at the Oxford Competition Policy Centre in the UK in April on this and related topics (criminal sanctions for competition offences and private enforcement of antitrust).  This follows a similar set of lectures last year at Oxford for Terry.   

January 17, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, January 16, 2007

SSRN TOP 10 Most Downloaded Papers for Antitrust Law & Policy

Monday, January 15, 2007

Antitrust and the Judiciary: An Israeli Perspective

Posted by D. Daniel Sokol

The judiciary is an often overlooked part of the larger antitrust system. The judiciary is a separate antitrust institution because of its role in the implementation of competition through judicial review of agency determinations, whether those of sector regulators or an antitrust agency. Agencies that have spent significant time and resources in identifying anti-competitive conduct, investigating and prosecuting such conduct can have their actions second guessed by adjudicators. The judiciary therefore has powers to ensure that agency actions are upheld and enforced through the collection of penalties. A system in which the judiciary acts as a bottleneck to enforcement creates a situation in which effectively condones anti-competitive conduct.

In both civil and common law systems, the judiciary plays a key role in implementing laws by providing for the scope and coverage of the antitrust law. It also exercises review of the enforcement actions of the antitrust agency or sector regulator.  In this sense, the judiciary may be the most important institutional capacity in a given country after the antitrust agency itself given the power of the courts to support or stymie antitrust through their review of agency actions.

In an excellent new paper, David Gilo of Tel Aviv University Law School (forthcoming in the Israel Law Review) examines the lack of economic analysis in Israel by courts and agencies in restraint cases. On the topic of Israel and antitrust, this week marks an important conference on the future of Israeli antitrust.

Download israeli_antitrust.pdf

January 15, 2007 | Permalink | Comments (0) | TrackBack (0)