Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, October 13, 2007

Physician Ownership of Hospitals and Other Health Facilities: Antitrust and Policy Issues

Posted by D. Daniel Sokol

On October 25, 2007,  Saint Louis University School of Law and the Antitrust Section of the ABA will co-sponsor a symposium concerning the antitrust and policy issues posed by physician-sponsored hospitals and other health facilities.  The problems presented by these organizations fall squarely at the intersection of antitrust and regulatory policy.  Physician-sponsored hospitals are developing in states that do not restrict entry by certificate of need regulation and may supply a valuable source of competition in concentrated hospital markets.  (A series of losses by the government in federal court in the 1990s permitted a wave of hospital mergers around the country that significantly increased market concentration). At the same time, studies show physician owners have been able to steer healthier and better insured patients to the facilities they own than are left behind at the community hospitals in which they formerly practiced.  Lacking obligations to serve the uninsured, these facilities also benefit from lower costs. Not surprisingly, a number of cases have been filed alleging anticompetitive activities by hospitals seeking to curtail entry or deny specialty hospitals access to third party payors or services they need to compete.

Speakers will include representatives of the physician, acute care hospital and specialty hospital sectors, an economist, and a representative from the Antitrust Division of the Department of Justice.  See the attached brochure for registration information if you wish to attend.  In addition the program with be available in podcast and video formats in November.

Download slu_conference.pdf   

October 13, 2007 | Permalink | Comments (0) | TrackBack (0)

Friday, October 12, 2007

Canadian Competition Bureau Seeks Comments on Predatory Pricing Enforcement Guidelines

Posted by D. Daniel Sokol

The Canadian Competition Bureau seeks comments on its predatory pricing guidelines.  The new guidelines will update the guidelines originally created in 1992.  See here for more details.

October 12, 2007 | Permalink | Comments (0) | TrackBack (0)

Franklin Fisher on Economic Analysis and "Bright Line" Tests

Posted by D. Daniel Sokol

Franklin Fisher of MIT's Department of Economics has some important thoughts the limitations of bright lined tests in antitrust in the latest issue of the Journal of Competition law and Economics titled Economic Analysis and "Bright Line" Tests.

ABSTRACT: Economists testifying in antitrust cases often encounter the demand by attorneys and judges for "bright-line" tests – simple rules supposedly based on economic analysis. This paper argues that, although such tests can have their uses, they are very likely to lead to error without a clear understanding of the purposes of the tests and the economics behind them. Issues discussed include: market definition, market share, the role of profits, and, especially, anti-competitive conduct (including the Areeda-Turner) test for predatory pricing. Examples are drawn from actual court cases (mostly in the U.S.), in many of which the author was an expert witness. The best known of these was the U.S. case against Microsoft, but there are many others.

October 12, 2007 | Permalink | Comments (0) | TrackBack (0)

Abuse Below the Threshold of Dominance? Market Power, Market Dominance, and Abuse of Economic Dependence

Posted by D. Daniel Sokol

Pranvera Këllezi of the University of Geneva - Faculty of Law focuses a new paper on the concept of dominant position in connection with dependency relationships in Abuse Below the Threshold of Dominance? Market Power, Market Dominance, and Abuse of Economic Dependence.

ABSTRACT: This article discusses the case law in the European Union as it relates to the concept of dominant position in connection with dependency relationships. To answer the question whether the concept of economic dependence is covered by Article 82 EC, this article discusses first the economic definition of market power and the relation to market shares. It follows with the concept of economic dependence in competition laws of some European countries. It shows that economic dependence relates to market power that does not result from a paramount market position. Other factors and forms of market power are responsible for the dependence of particular customers to their suppliers or buyers. Then the concept of economic dependence is compared with the definition of dominant position under European competition law, focusing on the relevant case law. We conclude that economic dependence of customers on the dominant undertaking constitutes one of the factors that can be taken into account for the assessment of the dominant position. In relation to market shares, economic dependence is an additional element that could complete the analysis of the dominant position, in particular when the undertaking under investigation has low market shares. Finally, the article examines the abusive conduct and remedies. It concludes that while the extension of the concept of the dominant position may allow for the covering of more types of market power and reducing in that way the importance of market shares, the wide interpretation of abuses and the regulatory nature of remedies in cases of economic dependence increase the risk of over-intervention.

October 12, 2007 | Permalink | Comments (0) | TrackBack (0)

Thursday, October 11, 2007

Whither Dr. Miles?

Posted by D. Daniel Sokol

Is Dr. Miles really the end for RPM?  Mark Bauer of Stetson Law School explores the implication of Leegin in his essay Whither Dr. Miles?

ABSTRACT: This essay analyzes the June 2007 Supreme Court decision of Leegin v. PSKS. That case overruled a 96 year old Supreme Court case, Dr. Miles v. Park & Sons. The Leegin case eliminated Dr. Miles' per se rule in antitrust for minimum resale price maintenance between manufacturers and retailers. The essay examines the history and controversy of Dr. Miles, acts of Congress to circumvent and then restore Dr. Miles, the controversy over the Leegin case, and likely outcomes in the future.

October 11, 2007 | Permalink | Comments (0) | TrackBack (0)

In Memorium - Lawrence A. Sullivan

Posted by D. Daniel Sokol

Sullivan It is with sadness that I recently read of the passing of Lawrence A. Sullivan at the age of 84.  Though I never met Larry in person, I was well acquainted with his large body of work and his important contributions to antitrust.  Southwestern Law School has a tribute page to Larry that offers evidence of how one person can make an impact in this field.  It is worth reading the entire posting.  I have excerpted some of the background paragraphs:

Professor Sullivan first began teaching law as a visiting associate professor of law at the University of California, Berkeley, upon completion of a judicial clerkship with Chief Judge Calvert Magruder of the U.S. Court of Appeals. He spent the following decade and a half in private practice with the Boston firm of Foley, Hoag & Eliot where he became a partner. Returning to Berkeley in 1967, Professor Sullivan went on to serve as Acting Dean of the law school, Director of the Earl Warren Legal Institute, and in 1979 was named as the first Earl Warren Professor of Public Law.

After becoming professor emeritus at Berkeley in 1991, he joined the Southwestern faculty where he was honored as the Irwin R. Buchalter Professor of Law in 1997 and received an honorary Doctor of Laws degree in 2002. He taught antitrust, intellectual property, regulation and deregulation in the telecommunications industries, European Union, and software and internet law, among other courses, and played a key role in the development of Southwestern's Biederman Entertainment and Media Law Institute. He took emeritus status in 2005.

A magna cum laude graduate of the University of California, Los Angeles where he received his B.A. in Economics in 1948, Professor Sullivan earned his J.D. in 1951 at Harvard Law School where he served on Law Review. In 1978, he was a Guggenheim Fellow and in 1984, he was a Fellow of the Max Planck Institut fur Auslandisches und Rechtsvergleichung in Hamburg, Germany.

Professor Sullivan wrote several books and chapters and dozens of articles on antitrust. Along with his colleague, Southwestern Professor Warren Grimes, he recently published a revised and expanded edition of The Law Of Antitrust: An Integrated Handbook, considered a standard reference for students, practitioners and the judiciary. In May 2007, both professors were named winners of the Fifth Annual Jerry S. Cohen Memorial Fund Writing Award for the second edition (2006) of their treatise. Professor Sullivan's casebook, with E. Fox, Cases and Materials on Antitrust, is also used in law school antitrust courses around the country.


October 11, 2007 | Permalink | Comments (0) | TrackBack (0)

Wednesday, October 10, 2007

The Necessity of Pleading Elements in Private Antitrust Conspiracy Claims

Posted by D. Daniel Sokol

Max Huffman of the University of West Virginia Law School addresses The Necessity of Pleading Elements in Private Antitrust Conspiracy Claims in the wake of Twombly.

ABSTRACT: The interplay between Rule 8 and the requirements for proving a conspiracy under Sherman One came before the federal courts in the context of a private antitrust suit, brought by end-user consumers, alleging a conspiracy among providers of local telephone and Internet services. The plaintiffs alleged the defendants conspired both (1) to prevent entry by other competitors into their respective service areas and (2) not to enter into each others' service areas in competition with one another. The result, according to plaintiffs, was that the petitioners maintained monopolies in their geographic markets, causing injury to consumers. The allegations made in Bell Atlantic Corp. v. Twombly, if they could be proved, would represent hard-core, per se violations of Sherman One, giving rise to treble damages liability in a civil suit and jail time and criminal fines in a criminal proceeding.

The essay undertakes a positivist justification of the rule announced in Twombly. It begins in Part II by concentrating on the procedural questions that arise at the motion to dismiss stage of litigation. Federal Rule 8 codifies a standard of pleading under which complaints must both provide proper notice to the defendants - a universally accepted basis for the pleading requirement - and show pleaders' entitlement to relief - a much more controversial proposition. The ?notice? requirement is not terribly vigorous. The ?demonstration? requirement is what keeps Rule 8 from being an open door. It also comports with the plain language of Rule 8 and the motion to dismiss construct of Rule 12(b)(6). Rule 8(f) is also relevant. It prescribes, simply, that district courts must use their discretion to do ?substantial justice.?

In Part III, the essay examines the implications of the Rule 8 pleading requirements for the private Sherman One claim. Viewing, as one must, the pleading requirement through the lens of the governing substantive law, properly to plead Sherman One a plaintiff's factual allegations must give rise to an inference of a conspiracy. To survive a motion to dismiss, a plaintiff must plead plus factors, which are facts that ?tend to exclude the possibility? that each defendant acted in its unilateral best interest. Couching plaintiffs' pleading responsibility in this manner makes clear that the Twombly rule is indeed trans-substantive in nature, and it is the substantively complex nature of the Sherman One claim that gives rise to any particular difficulties for private litigants.

October 10, 2007 | Permalink | Comments (0) | TrackBack (0)

Small Economies and Competition Policy - A Fair Deal?

Posted by D. Daniel Sokol

Small Economies and Competition Policy - A Fair Deal?
Conference - Luxembourg - 18/19 October 2007
- www.smalleconomies2007.org

The first ever conference for advisors, companies, policy makers, consumer and business associations, academics, regulators and competition authorities involved in small economies. This conference will address critical issues for small economies and results of discussions between panellists and delegates will be compiled into a report of recommendations for policymakers.

This event brings together a top international line-up of expert panellists, (see programme summary below) and delegates from around the world. Attendees already confirmed include delegations from Iceland, Greenland, Singapore, Croatia, Slovenia, Lithuania, Estonia, Switzerland, and Hungary, as well as Belgium, the UK, Luxembourg and many others.

Topic overview
As the enforcement of competition law increases its global reach and jurisdictions attempt to review mergers, investigate alleged monopolizations and abuses of dominance, or join in the fight against cartels:

- Are the experiences of larger jurisdictions really applicable to small economies, which may be characterised by vastly different market circumstances and legal regimes?

- What differences in enforcement stance and analysis may be required in such economies, for example, due to strong concentration, liberalised or closed sectors, and resource constraints?

A summary of the programme and list of panellists appears below. For further details and to register to attend, visit www.smalleconomies2007.org

The Competition Law Forum is organising this event in collaboration with the Luxembourg Competition Council & Inspectorate and the Luxembourg Chamber of Commerce, and with the support of Allen & Overy Luxembourg, Shearman & Sterling and FIPRA.

Please join us in Luxembourg for this unique event. If you are unable to attend, please refer this invitation to an appropriate colleague, as we would very much appreciate your organisation's participation at the event.

PROGRAMME SUMMARY

Thursday 18 October (Afternoon)

Panel I: The Unique Position of Small Economies
Challenges faced by Competition Authorities in Small Market Economies. The particular situation of Small Economies will be presented followed by a panel discussion including the following topics:

Chairman: William E. Kovacic, Commissioner, Federal Trade Commission, Washington DC
Dr. Michal S. Gal, University of Haifa
Thierry Hoscheit, Competition Council, Conseil de la Concurrence, Luxembourg
Christopher Bright, Member, UK Competition Commission and Director, Jersey Competition Regulatory Authority
Professor Walter Stoffel, President, Swiss Competition Commission
Monique van Oers, Head of Legal Department, The Netherlands Competition Authority (NMa)
David Lawsky, the Anti-trust Correspondent, Reuters
Fod Barnes, Special Adviser, OXERA

Panel II: Public and Private Restraints
Is the fight against cartels tougher than in large economies?

Chairman: Michel Struys, Partner, Allen & Overy
Daniel Becker, Rapporteur General, Inspection de la Concurrence, Luxembourg
Kirtikumar Mehta, Director, Cartels Directorate, DG Competition, EC
Pall Gunnar Palsson, Director General, Icelandic Competition Authority
Gabriel Bleser, Senior Associate, Allen & Overy Luxembourg

Friday 19 October (Morning)

Panel III: Merger Control in Small Economies

Chairman: Christopher Bright, UK Competition Commission and Jersey Competition Regulatory Authority
Carles Esteva Mosso, DG Competition, European Commission
Edward P. Henneburry - Partner, Heller Ehrman
Professor Jacques Steenbergen - Director General of Competition, Competition Directorate, Belgium
Liga Hartmane, Klavins & Slaidins, Latvia

Panel IV: Dominance in Small Economies

Chairman: Peter Carlo Lehrell, FIPRA
Dr. Michal S. Gal, University of Haifa
Charles Webb, Legal Adviser, Jersey Competition Regulatory Authority
Chris Taylor, Director of Regulatory Affairs, Cable & Wireless International
Frank Fine, Director, EC Competition Law Advocates

October 10, 2007 | Permalink | Comments (0) | TrackBack (0)

Ted Banks, My Hero

Posted by D. Daniel Sokol

Yesterday I had the pleasure of welcoming Ted Banks of Kraft Foods to guest lecture in my law and economics class about how regulation shapes business strategy and incentives.  To watch Ted give a presentation is to watch a true master of communication at work.  The students loved his presentation and I learned a few new tricks for how to be a more effective communicator in class.

October 10, 2007 | Permalink | Comments (0) | TrackBack (0)

Tuesday, October 9, 2007

The Legal Periphery of Dominant Firm Conduct

Posted by D. Daniel Sokol

Herb Hovenkamp has posted a new working paper on The Legal Periphery of Dominant Firm Conduct.

ABSTRACT: This essay explores two different but related problems and how U.S. antitrust law and EU competition law approach them. The first is the offense of attempt to monopolize, which concerns the acts that a firm that is not yet dominant might undertake in order to become dominant. The second is the offense of monopoly or dominant firm leveraging, which occurs when a firm uses its dominant position in one market to cause some kind of harm in a different market where it also does business.

October 9, 2007 | Permalink | Comments (0) | TrackBack (0)

Monday, October 8, 2007

Is Antitrust a Religion?

Posted by D. Daniel Sokol

This is not another post on my thoughts on Yom Kipur.  Instead, I want to bring attention to a new book by Edwin Rockefeller has published The Antitrust Religion by CATO.  The book blurb reads:

Many successful American businesses have been accused of anti-competitive practices. Drawing on 50 years of experience with U.S. antitrust laws, attorney and author Edwin S. Rockefeller sheds light on why lawmakers, bureaucrats, academics, and journalists use arbitrary and irrational laws and enforcement mechanisms to punish capitalists rather than promote competition. The Antitrust Religion argues that everything most people know about antitrust is wrong.

The orthodox view is that antitrust was created to protect competition. But Rockefeller’s account is strikingly different. He argues that antitrust in practice has often benefited, not the public, but specific businesses that wanted to take down their competitors. In cases ranging from early antitrust targets like Standard Oil to the more recent IBM and Microsoft cases, he reveals why some companies are punished for being winners in the market.

Rockefeller vividly shows how antitrust has been transformed into a quasi-religious faith. He explains that this “antitrust religion” relies on economic theories that bestow a veneer of objectivity and credibility on law enforcement practices that actually rely on hunch and whim. On issues such as mergers and price fixing, Rockefeller thoroughly examines arbitrary antitrust laws that lead to ill-informed juries and bureaucratic abuse. He concludes that those laws also create a perverse incentive for entrepreneurs to hold down sales volume and avoid improvements in price, quality, and service. Otherwise, such entrepreneurs could become the next targets of the antitrust priests.

October 8, 2007 | Permalink | Comments (0) | TrackBack (0)

Sunday, October 7, 2007

How Airlines Market Work...Or Do They? Regulatory Reform in the Airline Industry

Posted by D. Daniel Sokol

I have had to fly to conferences each of the last two weeks, so airlines are on my mind.  Particularly because of delays out of Chicago O'Hare both times (trips were to Toronto and Chicago respectively), I began to wonder about how airline deregulation has worked out.  To answer this question, I found a recent paper by Severin Borenstein of Berkeley's Haas School of Business and Nancy L. Rose of MIT's Economics Department titled How Airlines Market Work...Or Do They? Regulatory Reform in the Airline Industry.

ABSTRACT: Following a brief review of the U.S. domestic airline industry under regulation (1938-1978), we study the changes that have occurred in pricing, service, and competition in the 28 years since deregulation.  We then examine some of the major public policy issues facing the industry:  (a) the sustainability of competition and volatility of airline profits, (b) possible market power of dominant airlines, and (c) congestion and investment shortfall in the airport and air traffic infrastructure.

October 7, 2007 | Permalink | Comments (0) | TrackBack (0)