Antitrust & Competition Policy Blog

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

A Member of the Law Professor Blogs Network

Saturday, July 4, 2009

TOP 10 Papers for Antitrust & Regulated Industries Journals

Posted by D. Daniel Sokol

TOP 10 Papers for Antitrust & Regulated Industries Journals
May 5, 2009 to July 4, 2009

Rank Downloads Paper Title
1 123 The Overcharge as a Measure for Antitrust Damages
Martijn A. Han, Maarten Pieter Schinkel, Jan Tuinstra,
University of Amsterdam - Amsterdam Center for Law & Economics (ACLE), University of Amsterdam - Amsterdam Center for Law & Economics (ACLE), University of Amsterdam - Department of Quantitative Economics (KE),
Date posted to database: April 16, 2009
Last Revised: April 16, 2009
2 123 Antitrust and 'Free Movement' Risks of Expanding U.S. Professional Sports Leagues into Europe
Marc Edelman, Brian Doyle,
Rutgers School of Law-Camden, Seton Hall University,
Date posted to database: April 30, 2009
Last Revised: May 3, 2009
3 119 Two-Sided Market Definition
David S. Evans,
University College, London,
Date posted to database: April 29, 2009
Last Revised: April 29, 2009
4 110 Loyalty/Requirement Rebates and the Antitrust Modernization Commission: What is the Appropriate Liability Standard?
Nicholas Economides,
New York University - Stern School of Business,
Date posted to database: April 1, 2009
Last Revised: June 30, 2009
5 110 The Google Book Search Settlement: Ends, Means, and the Future of Books
James Grimmelmann,
New York Law School,
Date posted to database: April 17, 2009
Last Revised: May 19, 2009
6 94 Health Care Fragmentation: We Get What We Pay For
David A. Hyman,
University of Illinois - College of Law,
Date posted to database: April 13, 2009
Last Revised: April 30, 2009
7 84 Antitrust, Patents and Developing Nations
John H. Barton,
Stanford Law School,
Date posted to database: May 17, 2009
Last Revised: May 19, 2009
8 75 Harmonizing Essential Facilities and Refusals to Deal
Spencer Weber Waller, William Tasch,
Loyola University of Chicago - School of Law, Loyola University of Chicago - Loyola University Chicago School of Law - Student,
Date posted to database: June 12, 2009
Last Revised: June 26, 2009
9 73 The Theory of Regulatory Competition and Competition Law
Wolfgang Kerber,
Philipps University Marburg - Department of Business Administration and Economics,
Date posted to database: April 20, 2009
Last Revised: April 20, 2009
9 73 Competition Law and Policy in Latin America
Eleanor M. Fox, D. Daniel Sokol,
New York University School of Law, University of Florida - Levin College of Law,
Date posted to database: June 10, 2009
Last Revised: June 10, 2009

July 4, 2009 | Permalink | Comments (0) | TrackBack (0)

GCR Review of the Vertical Restraints Regime

Posted by D. Daniel Sokol

GCR Review of the Vertical Restraints Regime
Thursday 17 September
Radisson Blu Hotel, Brussels

Chairmen and speakers include:

Andrzej Kmiecik
Partner, Van Bael & Bellis
Fiona Carlin
Partner, Baker & McKenzie LLP
Luc Peeperkorn
Senior Administrator, DG Competition European Commission
Frank Wijckmans
Partner, Contrast Law
Edvard Carleson
Senior Vice President and General Counsel,
Volvo CE
Stephen Kinsella OBE
Partner, Sidley Austin LLP
Fabrizio Mecozzi
Legal Counsel, Nike Europe
Paul Lugard
Head of Antitrust, Philips International B.V.
Joseph Vogel
Partner, Vogel & Vogel
 
Markus Wirtz
Partner, Glade Michel Wirtz
Joanna Goyder
Barrister, Freshfields Bruckhaus Deringer LLP
Fabien Zivy
Chief of Staff of the President
Autorité de la Concurrence
Jackie Holland
Director of Competition Policy, Office of Fair Trading
Susan Hinchliffe
Partner, Arnold & Porter LLP
Adrian Majumdar
Partner, RBB Economics
Jean Yves Art
Director Competition Law, Microsoft
Peter Vanderghinste
Competition Counsel, Nestlé SA


Topics include:

  • Overview of the current rules and their application to the main forms of distribution
  • View from the Commission - the revised Regulation and Guidelines
  • Exclusive distribution - how much more exclusivity will manufacturers be able to grant under the new rules?
  • Selective distribution - what interests should selective distribution protect and where the real dangers lie?
  • Are there still stricter national rules to take into account ?
  • Resale price maintenance - will there be a sea change?
  • Buyer Power and other topical retailer issues
  • What forms of distribution may dominant suppliers use?
 Register here.





July 4, 2009 | Permalink | Comments (0) | TrackBack (0)

Friday, July 3, 2009

Integration and Competition between Transport and Logistics Businesses

Posted by D. Daniel Sokol

The OECD has released Integration and Competition between Transport and Logistics Businesses.

ABSTRACT: The Round Table, chaired by Russell Pittman of the US Department of Justice, reviewed trends in horizontal and vertical integration in logistics businesses, maritime shipping, ports and rail freight transport and examined the circumstances in which integration might reduce the efficiency of the transport system. There are likely to be net benefits to society from such integration in competitive markets but if integration eliminates competition, market power might result in excessive prices, suboptimal investment and lower than optimal levels of service for the users of transport services. Options for sector specific regulators and competition authorities to manage the risks of market abuse were discussed and the adequacy of antitrust law and competition authorities to take remedial action should businesses exploit market power were assessed.

July 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Measuring Market Power in the French Comté Cheese Market

Posted by D. Daniel Sokol

In a delicious analysis, Pierre R. Mérel, University of California, Davis - Department of Agricultural and Resource Economics undertakes Measuring Market Power in the French Comté Cheese Market.

ABSTRACT: A new empirical industrial organisation approach is used to measure seller market power in the French Comté cheese market, characterised by government-approved supply control. The estimation is performed on quarterly data at the wholesale stage over the period 1985-2005. Three different elasticity shifters are included in the demand specification, and the supply equation accounts for the existence of the European dairy quota policy. The market power estimate is small and statistically insignificant. Monopoly is clearly rejected. Results appear to be robust to the choice of functional form and suggest little effect of the supply control scheme on consumer prices.

July 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Google Under Inquiry by DOJ

Posted by D. Daniel Sokol

Today's NY Times reports that the DOJ was reviewing the Google book settlement.  The Wall Street Journal has a similar article.

July 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Finance, Competition and Governance: Priorities for Reform and Strategies to Phase-Out Emergency Measures

Posted by D. Daniel Sokol

The OECD has published Finance, Competition and Governance: Priorities for Reform and Strategies to Phase-Out Emergency Measures.

ABSTRACT: This report describes issues that must be addressed to restore public confidence in financial markets and to put incentives in place to encourage a prudent balance between risk and the search for return in (broadly-defined) banking.

July 3, 2009 | Permalink | Comments (0) | TrackBack (0)

Thursday, July 2, 2009

Global Cartels Redux: The Amino Acid Lysine Antitrust Litigation 1996

Posted by D. Daniel Sokol

John Connor of Purdue University Applied and Agricultural Economics tells the always interesting story of Global Cartels Redux: The Amino Acid Lysine Antitrust Litigation 1996.

ABSTRACT: This paper tells the story of the global lysine cartel of 1992-1995 and the subsequent U.S. federal prosecutions that followed. It focuses on how estimates of the cartel?s U.S. overcharges varied widely in the months prior to settlement with most of the smaller members of the class of plaintiffs and how additional data gathering and improved analytical techniques later arrived at a more accurate estimate of injuries to direct buyers. The detection and convictions of the lysine cartel in 1995-98 was the first criminal victory over an international cartel by the Antitrust Division of the Department of Justice in more than 40 years. They signaled a watershed in the anti-cartel campaigns of governments and private plaintiffs worldwide in the years since.

July 2, 2009 | Permalink | Comments (0) | TrackBack (0)

A Comment on the Intel Fine

Posted by D. Daniel Sokol

Keith Hylton (BU Law) provides A Comment on the Intel Fine.

ABSTRACT: On May 13th the European Commission levied a fine of $1.45 billion on Intel for violating its competition law rules by offering volume-based rebates to dealers and to computer manufacturers. The rebates were deemed to have excluded Intel’s rival, AMD, from the market for computer chips. Intel is also alleged to have pressured dealers and manufacturers to set limits on the quantity of AMD chips that they would purchase.

The case raises troubling issues when compared to American antitrust law, with respect to procedure and with respect to its impact on the competitive incentives of large firms.

There are questions of interpretation and evidence here, as in any other case. Intel disputes the claims that they set limits on AMD chips and that they acted with an intention to exclude AMD. From Intel’s perspective, this is just a case of price competition. The EC has pitched the case as one of exclusionary dealing involving several anticompetitive strategies.

Questions of interpretation and evidence are best left to the courts. As a commentator looking at the case from a distance, I have little worthwhile to offer on the substance of these issues. However, one point I think is worth noting is that there is a process for evaluating questions of evidence and interpretation in the EU that appears to be quite different from that in the United States.

July 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Contestability, Technology and Banking

Posted by D. Daniel Sokol

Sandrine Corvoisier (European Central Bank) and Reint Eberhard Gropp (European Business School) explain Contestability, Technology and Banking.

ABSTRACT: We estimate the effect of internet penetration on retail bank margins in the euro area. Based on an adapted Baumol [1982] type contestability model, we argue that the internet has reduced sunk costs and therefore increased contestability in retail banking. We test this conjecture by estimating the model using semi-aggregated data for a panel of euro area countries. We utilise time series and cross-sectional variation in internet penetration. We find support for an increase in contestability in deposit markets, and no effect for loan markets. The paper suggests that for time and savings deposits, the presence of brick and mortar bank branches may no longer be of first order importance for the assessment of the competitive structure of the market.

July 2, 2009 | Permalink | Comments (1) | TrackBack (0)

Criminalising Serious Cartel Conduct: Issues of Law and Policy

Posted by D. Daniel Sokol

Caron Beaton-Wells and Brent Fisse (both University of Melbourne Law School) have posted Criminalising Serious Cartel Conduct: Issues of Law and Policy.

ABSTRACT: In January 2008 the government released an Exposure Draft Bill and associated materials relating to the long-promised introduction of criminal penalties for serious cartel conduct in Australia. These materials reflect the work of the previous government and are not endorsed necessarily by the new government. If enacted in the form released for public comment, the legislation would be the most significant reform of cartel regulation, if not competition regulation generally, since the Trade Practices Act 1974 (Cth) was introduced. The Exposure Draft Bill proposes not only to criminalise certain forms of collusion (with consequences for immunity policy, investiga-tory powers, corporate liability, concurrent proceedings, mode of trials and many other aspects of enforcement) but also to broaden substantially, and controversially, the scope of the civil prohibitions against arrangements between competitors. These reforms would involve a major shift in competition policy and approach to regulatory enforcement and would have important practical consequences for the Australian business sector and its advisors, as well as for the agencies charged with administering the new regime and the judiciary. In addition to their national impact, the reforms would have international significance given the recent campaign of regulators world-wide to combat cartel activity with harsher penalties and greater co-operation between foreign agencies. The Exposure Draft Bill contains numerous amendments to the Trade Practices Act. The proposed amend-ments are far-reaching - they touch on every aspect of the law, policy and practice relating to cartel regulation in Australia. Many are complex. Several are highly controversial. Some are surprising because they go far beyond the proposals foreshadowed by the Report of the Dawson Committee in 2003 and the former Treasurer's Press Release in 2005. Few would dispute the merits of criminalising serious cartel conduct in principle. However, the specific means of implementation proposed in the Exposure Draft Materials raise many questions. This article outlines the key features of the Exposure Draft Materials and provides a basic explanation of the proposed amend-ments. It draws attention to the main legal and policy issues and highlights areas in which changes should be made or further work needs to be done. Finally, it identifies and makes recommendations regarding the options for the government and Treasury going forward. The authors urge the government to tackle at least the most serious issues identified in their analysis in order to make the new law work.

July 2, 2009 | Permalink | Comments (0) | TrackBack (0)

Wednesday, July 1, 2009

Strategic Leniency and Cartel Enforcement

Posted by D. Daniel Sokol

A new article in this month's American Economics Review worth reading is Nathan H. Miller (DOJ), Strategic Leniency and Cartel Enforcement.  Ken Heyer, this was a good hire for DOJ - kudos to you and your interview team. 

What remains un-answered for me is whether there are any studies that show the impact of leniency on cartel formation.  Email me if I have missed something in the literature.

ABSTRACT: The cornerstone of cartel enforcement in the United States and elsewhere is a commitment to the lenient prosecution of early confessors. A burgeoning game theoretical literature is ambiguous regarding the impacts of leniency. I develop a theoretical model of cartel behavior that provides empirical predictions and moment conditions, and apply the model to the complete set of indictments and information reports issued over a 20-year span. Statistical tests are consistent with the notion that leniency enhances deterrence and detection capabilities. The results have implications for market efficiency and enforcement efforts against cartels and other forms of organized crime.

July 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Preview Now Online for Lysine Cartel Movie Starring Matt Damon

Posted by D. Daniel Sokol

I just watched the preview of The Informant! directed by Steven Soderbergh and starring Matt Damon.  The preview looks great.  The movie is about ADM informant Mark Whitacre of the famous lysine cartel.  Antitrust has finally made it to the big screen (and I don't count the 2001 movie Antitrust starring Ryan Phillippe).

Update 1: The release date is scheduled for 10/9/09 according to IMDB. (HT: Ihan Kim)

July 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Mergers of Nonprofit Hospitals: Rectifying a (Serious) Failure of Antitrust Enforcement

Posted by D. Daniel Sokol

Clark C. Havighurst, Duke University School of Law Barak D. Richman, Duke University - School of Law write on Mergers of Nonprofit Hospitals: Rectifying a (Serious) Failure of Antitrust Enforcement.

ABSTRACT: Although federal judges have resisted giving due effect to standard antitrust principles in scrutinizing mergers of nonprofit hospitals, the presence of health insurance makes it especially important to oppose monopoly in health services markets. U.S.-style health insurance gives monopolist providers extraordinary pricing freedom, thus exacerbating monopoly?s usual redistributive effects. Significant allocative inefficiencies - albeit not the kind generally associated with monopoly - also result when the monopolist is a nonprofit hospital. Because it is probably impossible to undo past hospital mergers creating undue market power, we suggest another remedy: the application of antitrust rules against "tying" arrangements so that purchasers can more easily frustrate hospitals' profit-enhancing practice of overcharging for large bundles of services rather than separately exploiting each monopoly they possess.

July 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Criminalising Cartels: Australia's Slow Conversion

Posted by D. Daniel Sokol

Caron Beaton-Wells (University of Melbourne Law School) has posted Criminalising Cartels: Australia's Slow Conversion.

ABSTRACT: Australia is set to become the latest in a growing number of countries to join the United States' "coalition of the willing" with respect to the criminalisation of serious cartel conduct. However, there are emerging questions as to whether criminalisation has sufficient support amongst key stakeholders in countries outside of the United States so as to guarantee its effective implementation. This article argues that for any new criminal regime to be successful in deterring serious cartel conduct such support, from the regulator, government, business sector, general public, judiciary and academia, will be vital. It considers the extent to which cartel criminalistion enjoys the support of each of these groups currently in Australia and finds that with the exception of the regulator and the new government, it may be questionable, at best. The findings reported in the article provide insight into the impetus for, and process of, the criminalistion initiative in Australia and have important practical consequences for the effectiveness of the future regime. Of international concern, they also suggest the need for caution in assuming the successful exportation of the American model of anti-cartel law enforcement.

July 1, 2009 | Permalink | Comments (0) | TrackBack (0)

Tuesday, June 30, 2009

Fordham 36th Annual Conference on International Antitrust Law and Policy

Posted by D. Daniel Sokol

The Fordham 36th Annual Conference on International Antitrust Law and Policy is now open for registration.

Dates for the 36th Annual Conference on International Antitrust Law and Policy:

Thursday & Friday, September 24 & 25, 2009.

THURSDAY MORNING

Welcome --- Dean William Treanor, Fordham School of Law

International Antitrust: Recent Developments and Trends 

Jon Leibowitz, Chairman, Federal Trade Commission, Washington
Philip Lowe, Director-General, DG Competition, European Commission, Brussels
Christine Varney, Assistant Attorney General, Antitrust Division, Department of Justice, Washington

Discussion

A. Paul Victor, Presider, Dewey & LeBoeuf, New York
Bernhard Heitzer, President, Federal Cartel Office, Bonn
Ronit Kan, Director General, Israel Antitrust Authority, Jerusalem
Graeme Samuel, Chairman, Australian Competition and Consumer Commission, Canberra


THURSDAY AFTERNOON

State Aids and EU Competition Law and Policy
         Neelie Kroes, Commissioner for Competition, European Commission, Brussels

Government Aid and Competition Conditions

Frederic Jenny, Presider, Judge, Cour de cassation, Paris
Seth Bloom, General Counsel, Senate Antitrust Subcommittee, Judiciary Committee,    Washington
Alberto Heimler, Professor, School of Public Administration, Rome
Philip Lowe, Director-General, DG Competition, European Commission, Brussels  
Simon Polito, Lovells, London
James F.Rill, Howrey, Washington
Ulrich Soltesz, Gleiss Lutz, Brussels
Bernard Spitz, Chairman of the French Federation of Insurance Companies, Paris

Reception



FRIDAY MORNING

Pharmaceutical Industry and Competition Law

Luc Gyselen, Presider, Arnold & Porter, Brussels
William E. Kovacic, Commissioner, Federal Trade Commission, Washington
Margaret K.Kyle, Assistant Professor, London Business School, London
Tracy R. Lewis, Professor, Duke Fuqua School of Business, Durham
Caroline B. Manogue, Executive Vice President, Chief Legal Officer and Secretary, Endo Pharmaceuticals Inc., Chadds Ford
Anne N. Nielsen, Vice-President & Assoc. General Counsel, Bristol-Myers Squibb, New York
Dominik Schnichels, Head of Task Force, DG Competition, European Commission, Brussels
  

FRIDAY AFTERNOON

Vertical restraints/RPM and Article 81 (1) analysis

Andreas Reindl, Presider, Fordham Law School, New York
Amelia Fletcher, Chief Economist, Office of Fair Trading, London
Eric Gippini Fourier, Legal Service, European Commission, Brussels
Edurne Navarro Varona, Uria Menendez, Brussels
Damian Neven, Chief Economist, DG Competition, European Commission, Brussels
Tommy Prud'homme, Assistant Attorney General,  Antitrust Division Office. of     Attorney General of Texas, Austin
Nils Wahl, Judge, European Court of First Instance, Luxembourg
Christine Wilson, O'Melveny & Myers, Washington

Closing


June 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Energy Efficiency: Efficiency or Monopsony?

Posted by D. Daniel Sokol

Brennan110 Tim Brennan of the University of Maryland-Baltimore Department of Economics has written Energy Efficiency: Efficiency or Monopsony?

ABSTRACT: The cliche in the electricity sector, the "cheapest power plant is the one we don't build," seems to neglect the benefits of the energy that plant would generate. Those overall benefits could be countered by benefits to consumers if "not building that plant" was the result of monopsony. A regulator acting as a monopsonist may need to avoid rationing demand at monopsony prices. Subsidizing energy efficiency to reduce electricity demand at the margin can solve that problem, if energy efficiency and electricity use are substitutes. We may not observe these effects if the regulator can set price as well as quantity, lacks buyer-side market power, or is legally precluded from denying generators a reasonable return on capital. Nevertheless, the possibility of monopsony remains significant in light of the debate as to whether antitrust enforcement should maximize consumer welfare or total welfare.

June 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Is a Cartel Just an Ordinary Prisoner's Dilemma?

Posted by D. Daniel Sokol

Engel Christoph Engel, Max Planck Institute for Research on Collective Goods has a new paper on Is a Cartel Just an Ordinary Prisoner's Dilemma?

ABSTRACT: Ever since the heyday of the Chicago School, antitrust intervention has been under attack. One of the stronger counter-arguments is behavioural. Models predicting the absence of a social problem rely on the assumption that all agents are prevoyant maximisers of profit. Many experiments have shown that subjects are more likely to collude. However, other experimental findings point to behavioural forces mitigating the social detriment. Subjects collude less if they know they inflict harm on others. And they cooperate more if the structurally identical game is framed neutrally. Arguably this setting does not give them a chance to activate their world knowledge on the undesirability of collusion. The experiment to be presented puts these two forces to the direct test: externalities, and normativity. The main finding is this: only normativity helps. Society cannot dispense of antitrust intervention.

June 30, 2009 | Permalink | Comments (0) | TrackBack (0)

American Needle Cert Granted - Some Initial Thoughts

Posted by Chris Sagers

A very big, possibly game-changing event has occurred in antitrust.  Yesterday, on the last regularly scheduled sitting of its October Term 2008, the Supreme Court granted certiorari to review the Seventh Circuit's decision in American Needle, Inc. v. NFL, 538 F.3d 736 (7th Cir. 2008), /cert. granted,/ 77 U.S.L.W. 3326 (U.S. June 29, 2009) (No. 08-661). The court below offered one of the most dramatic rulings yet in the long-running debate whether sports leagues can be Copperweld "single entities," finding the National Football League a single entity--and therefore immune from section 1 liability as a matter of law--even with respect to the member teams' licensing of their own, individually owned trademarks.  Were it ever in doubt, American Needle should prove that the sports league question is not a curiosity of interest mostly to specialists in sports law.  The decision below, and the current make-up of the Supreme Court that will decide its fate, pose a larger threat to the scope of Section 1 of the Sherman Act than it has faced in many decades.

The decision below was so dramatic because it found single entity status even as to a kind of conduct in which the teams most obviously do or could compete in horizontal price competition: the licensing of their trademarks for the making of sports memorabilia.  In late 2000 the teams of the NFL voted collectively to enter into a 10-year exclusive license with Reebok to produce headwear bearing the teams' trademarked logos. 

Thus ended what had been a long period of some competition among headwear manufacturers.  Prior to 1963 the teams had individually licensed their own IP directly to manufacturers or through agents, and
in many cases a team would license more than one manufacturer to make products bearing its mark.  In 1963, some of the teams established a California corporation to act as their licensing agent, but even
thereafter the agent and sometimes the individual teams continued to license more than one maker to use its marks.  Plaintiff American Needle had been a licensee of the various teams' marks and for many years had made headwear bearing their marks in competition with other licensee manufacturers.  But shortly after the exclusive Reebok contract took effect American Needle's contract was allowed to expire, as were those of other outstanding Reebok competitors.  There is some reason to believe the Reebok contract has had bad effects already:  even with no discovery at all as to the question of the exclusive deal's purpose or effect, plaintiff American Needle was able to adduce evidence of substantial and persistent price increases for the products now exclusively made by Reebok.

Still, the Seventh Circuit affirmed an order of summary judgment that found single-entity status after only limited discovery.  Judge Kanne wrote for a unanimous panel that in reaching the exclusive license deal,
the teams acted together as one entity.  Though he marched dutifully through several quotations from Copperweld and a summary of the existing section 1 caselaw on sports leagues, the only actual defenses he offered for the ruling were two. First, he noted that the teams had been collectively licensing their trademarks for a long time (since 1963). 

Though he characterized this point as the "most important[]," since Copperweld characterized section 1's concern as the removal of independent economic forces, it actually seems irrelevant.   As a few of
the parties pointed out in briefing to the Court, that a conspiracy has succeeded for a long time cannot determine its legality. What really seems much more important was Judge Kanne's rejection of the idea that the question should depend to any extent on whether the teams did or *could have* competed with one another.  He wrote first that the panel "[was] not convinced that the NFL's single-entity status . . . turns entirely on whether the league's member teams can compete with one another . . . ."  Then, with virtually no analysis of whether their ability to compete *could* be relevant to their entity status, he wrote
that "with that said, American Needle's assertion that the NFL teams have deprived the market of independent sources of economic power"--seemingly the critical question under Copperweld--"unravels." 
The brief analysis following that claim boils down more or less exclusively to the panel's view that "the NFL teams share a vital economic interest in collectively promoting NFL football."

Importantly, plaintiffs were afforded no discovery as to whether the NFL teams did or could compete with respect to trademark licenses to headwear manufacturers, and in fact the panel ruled against American
Needle on a Rule 56(f) discovery dispute on that point, which was also on appeal.

In other words, a unanimous panel of a federal court of appeals has held the following conduct to be categorically exempt from section 1 liability:  a collection of business firms that happened to share an
"economic interest in collectively promoting" one product could establish a horizontal conspiracy fixing the price of a different product, with quite different economic characteristics and as to which they have competed even in the recent past.  They may also boycotting all but one downstream distributor of that product with the purpose of maximizing its revenue.

Today, the Court granted cert on the following QP:

"Should the National Football League and its member teams be treated as a single entity that is exempt from rule of reason claims under Section 1 of the Sherman Act, which outlaws any "contract, combination ... or conspiracy, in restraint of trade," because they cooperate in joint production of NFL football games, while at the same time they may have competing economic interests, have the ability to control their own economic decisions, and have the ability to compete with each other and the league?"

This all bodes very poorly for the future of section 1.  On the current Court there are probably four solid votes for affirmance (judging from opinion authors and voting in the past several years, one could well
expect Justices Roberts, Scalia, Thomas and Alito to vote to affirm).

Affirmance therefore calls only for one more vote.  Presumably Justice Stevens will vote for reversal, given his frequent dissents in the Court's pro-defendant decisions of the past few decades (including, importantly, in Copperweld, though not in Dagher, from which no one dissented).  Justice Ginsburg too seems a likely vote for reversal, as she has joined some Stevens dissents.  I suppose one might expect
Justice Breyer, the Court's strongest antitrust expert, to oppose a decision so logically flawed and so damaging to antitrust enforcement (though one might also have expected him not to join in Twombly, for the same reasons). But Justice Kennedy seems no friend of private antitrust enforcement, having written for the Court in Leegin and Brooke Group, as well as Iqbal's recent and controversial application of the Twombly rule and the pro-defendant ruling in securities litigation, Stoneridge Investment Partners.

And finally, assuming Judge Sotomayor is confirmed to the Court in time, it is a bit hard to predict how her presence might alter the Court's balance with respect to a case like American Needle.  On the one hand, she would replace a Justice whose record in antitrust is often a bit confusing and surely not very friendly to antitrust policy.  Justice Souter, after all, wrote Twombly, and accordingly believed that the benefits of private enforcement are very frequently outweighed by its costs, and the strange metaphysical tightrope he walked in California Dental raises more questions than it answers of his view of antitrust.

So would a Justice Sotomayor much change the Court by replacing the antitrust views of Justice Souter? Like much else about her, it is hard to say.  The few antitrust opinions she authored while on the Second  Circuit, for example, were mostly pro-defendant (e.g., finding a professional football labor dispute to be within the non-statutory labor exemption and ruling against a Robinson-Patman plaintiff, but leaving glimmers of hope for plaintiffs (e.g., reversing 12(b)(6) dismissal for a class of employees against Exxon and a major procedural ruling in credit card litigation, but which didn't reach antitrust merits). 

Another critical fact in trying to read these particular tea leaves is that no Justice dissented in Dagher, a much overlooked decision that happens to be absolutely freighted with dark potential and that bears important affinities with the issues presented in American Needle.  That all of the Justices failed to see the potential that Dagher would ultimately lead to judicial repeal of section 1 does not bode well for how they will view American Needle.

In short, there are probably four pretty solid votes for affirmance, one more (Kennedy) that seems only marginally less solid for defendants, and either of two (Breyer and Sotomayor) that might also sign on for affirmance.

One of the most interesting aspects of this case is that the Solicitor General, weighing in at the Court's request, opposed cert. The Court made the request just one month after the new President's inauguration, just after the confirmation of his new SG, and just before the new AAG's confirmation vote.  That in itself is interesting, as one must wonder exactly why the Court made its request--it only takes four votes, and neither the number of votes nor their identities are made public, but why exactly was the Court interested in the administration's views of this case? 

While one presumes the Court merely offered the administration a courtesy as to this area of enforcement policy that might well change fairly drastically, it is tantalizing to speculate whether there were some more cynical motives surrounding this very bad lower court decision with potentially very broad consequences.  But in any event, what is really interesting is that the SG's brief was substantively quite weak.  The brief begins by stressing that the opinion below is incorrect and could have major, negative consequences, but then works through a handful of quite strained and unpersuasive arguments that the case is not well suited for review under the Court's cert standards.  This was so even though the signatories include a handful of the nation's best appellate lawyers and several absolute powerhouses in antitrust.  A conclusion one might draw is that though the signatories would like very much to see Judge Kanne's decision reversed, they fear as much as I do that this particular Court will get its hands on it.

In any event, for those of us who would like to see federal antitrust survive the Roberts era without sub silentio judicial repeal, there is one bright spot in these affairs.  American Needle's able trial counsel, who developed a strong fact case at the pre-trial stage with only the most limited discovery, has been joined on the Supreme Court appeal by two of Jones Day's best lawyers:  Meir Feder, one of the country's most able Supreme Court advocates, and the head of JD's antitrust group, Joe Sims.  Mr. Sims, in particular, brings not only world-class antitrust expertise to the table, but an important measure of gravitas--he is not exactly a man the Court will perceive as a leftie firebrand or some reckless pro-plaintiff populist, and rather was a top antitrust enforcement official in the Nixon administration and currently one of the country's leading antitrust practitioners.  Their supplemental brief for American Needle in reply to the SG's brief opposing cert is a work of art.  One expects that their merits briefs will be devastating.

June 30, 2009 | Permalink | Comments (3) | TrackBack (0)

A Gap in the Enforcement of Article 82

Posted by D. Daniel Sokol

Ioannis Kokkoris (OFT, Visiting Lecturer at City University Law School and a Visiting Fellow at Durham University) has come out with a new book, A Gap in the Enforcement of Article 82.

BOOK ABSTRACT: The European Commission has acknowledged and respected, in Regulation 1/2003, the ability of the Member States to apply stricter rules than Article 82. There are some types of conduct that cannot be addressed by Article 82 because the undertakings involved are not dominant. One relates to conduct by non-dominant firms against other firms in weaker bargaining positions. A second type of conduct, and the focus of this book, relates to the anti-competitive conducts that non-dominant firms may adopt towards consumers (eg price discrimination, excessive pricing). This book focuses on instances where non-dominant firms have the ability to behave independently of customers and competitors and adopt conducts which will induce consumer harm.

The Commission cannot address anti-competitive conduct of non-dominant firms which induce significant consumer harm. This has resulted from the application of the dominance concept and from the dependence of a finding of a dominant firm on the market share of the firm. The aim of this book is to illustrate that applying the concept of dominance in that way means that a non-dominant firm in a differentiated market can adopt anti-competitive conducts and not be deterred by the possible application of Article 82.

June 30, 2009 | Permalink | Comments (0) | TrackBack (0)

Monday, June 29, 2009

American Competitiveness & the State Owned Enterprise Challenge

Posted by D. Daniel Sokol

I will be presenting in DC for a conference hosted by the US Chamber of Commerce on July 7.  It is on a topic of growing importance - state owned enterprises.  My talks will build off of my forthcoming article "Competition Policy and Corporate Governance of State Owned Enterprises" that will appear in the BYU Law Review.

American Competitiveness & the State Owned Enterprise Challenge
Tuesday, July 07, 2009 8:30 am - 12:00 pm (Eastern Time)

U.S. Chamber of Commerce
1615 H Street NW
Washington, DC 20062

Map and Directions

Keynote Remarks:          
Ambassador Demetrios Marantis  
Deputy U.S. Trade Representative 
                                         

Panelists:   

Jennifer Harris, National Intelligence Council 
Dr. Paula Stern, The Stern Group, former ITC Chairwoman
William Blumenthal, Partner, Clifford Chance    
Shanker Singham, Partner, Squire Sanders                  
D. Daniel Sokol, Professor, University of Florida, Levin College of Law
Hans Christiansen, OECD Senior Economist, Secretary of the OECD Working Group on Privitisation and Corporate Governance of State-Owned Enterprises

Program

8:30AM       Registration and Continental Breakfast

9:00 AM      Keynote Address, Ambassador Demetrios Marantis, Deputy USTR

9:30 AM      Panel One:  The SOE Challenge & America’s Competitiveness

In its 2008 report Global Trends 2025: A Transformed World, the National Intelligence Council identified the growing role of the state in economies around the world as a chief national and economic security concern.  This panel will explore the challenges to America’s national economic competitiveness from the rise of state-led development models around the world, including in the United States, that focus on the use of industrial policy and state interference to discriminate against foreign competitors and advantage domestic enterprises, whether state owned or “state influenced".  Panelists will provide an overview of the policies that governments are employing to tilt the playing field in favor of domestic competitors, and will weigh American’s offensive and defensive interests in addressing state-initiated distortions to free market competition around the world.

Panel Discussants:  
                                  Jennifer Harris, National Intelligence Council 
                                  Shanker Singham, Partner, Squire Sanders         
                                  Hans Christiansen, OECD Senior Economist   

10:45 AM    BREAK

11:00 AM    Panel Two:  Policy Solutions to the SOE Challenge

This panel will explore potential policy solutions to the SOE challenges and related market distortions discussed in the previous panel.  It will also address the increasing convergence of trade, investment, and competition/antitrust policies in the global economic and commercial arena.  Discussion will center on the policy tools that are currently available to U.S. trade and investment negotiators to address state-centric development models, the appropriate role of antitrust authorities, and new policy tools that may be needed in order to address challenges going forward.  Speakers will further provide their assessment of the current approach and readiness of U.S. government agencies—the Department of Justice, the Department of Commerce, the USTR, and the Federal Trade Commission—to tackle these growing challenges in a coordinated fashion and the costs to America’s competitiveness if they do not.

Panel Discussants:
                                 Dr. Paula Stern, The Stern Group, former ITC Chairwoman
                                 William Blumenthal, Partner, Clifford Chance    
                                 D. Daniel Sokol, Professor, University of Florida, Levin
                                                             College of Law


Payment Instructions
$25 Members

$40 Non-Members

Government Officials Complimentary
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June 29, 2009 | Permalink | Comments (0) | TrackBack (0)