Antitrust & Competition Policy Blog

A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance

Posted by D. Daniel Sokol

Thom Lambert of the University of Missouri School of Law discusses A Decision-Theoretic Rule of Reason for Minimum Resale Price Maintenance.

ABSTRACT: In its 2007 Leegin decision, the U.S. Supreme Court reversed a 96 year-old precedent declaring vertical minimum resale price maintenance (RPM) to be per se illegal. The Court held that RPM should henceforward be evaluated under antitrust’s more lenient rule of reason, and it directed the lower courts to craft a structured liability analysis that will separate pro- from anticompetitive instances of the practice. Thus far, courts, regulators, and commentators have proposed four types of approaches for evaluative approach that would minimize the sum of decision and error costs, thereby maximizing the net social benefits of RPM regulation.

Seventeen Years Later: Thoughts on Revising the Horizontal Merger Guidelines

Posted by D. Daniel Sokol

Darren S. Tucker, Federal Trade Commission addresses Seventeen Years Later: Thoughts on Revising the Horizontal Merger Guidelines.

ABSTRACT: In September 2009, the Federal Trade Commission and the Department of Justice announced plans to explore the possibility of updating the Horizontal Merger Guidelines. The agencies plan to solicit comments on particular topics and to hold a series of public workshops, with a goal of completing the review in mid-2010.

The agencies’ announcement was a welcome development. In the seventeen years since the last major revision to the Guidelines, there have been significant advancements in agency practice, merger economics, and federal court case law. This article describes twelve ways that the Guidelines should be revised to better reflect current agency practice, to incorporate aspects of merger analysis absent from the 1992 Guidelines, and to clarify certain aspects of the 1992 Guidelines.

Competition Commission's Autumn Lecture

Posted by D. Daniel Sokol

A limited number of places are available for the Competition Commission's Autumn Lecture which takes place on Wednesday 2 December

2009 at Victoria House, Southampton Row, London  WC1B 4AD.

Speaker: Professor Carl Baudenbacher, EFTA Court, President will give a lecture entitled 'Characteristics of a Good Competition Regime'

Discussant: Professor Stephen Wilks, University of Exeter, Professor of Politics

Chair: Peter Freeman, Competition Commission, Chairman

If you are interested in attending, please email Autumn.Lecture@cc.gsi.gov.uk.

The Section 2 Debate: Should Lenity Play a Role?

Posted by D. Daniel Sokol

Mark S. Popofsky, Georgetown University Law Center asks The Section 2 Debate: Should Lenity Play a Role?

ABSTRACT: The Supreme Court’s recent decision in Illinois Tool Works, by invoking the Rule of Lenity in enforcing the Sherman Act in a civil setting, raises a fundamental question concerning that statute: Should the theoretical possibility of criminal sanctions for monopolization offenses (Section 2 of the Sherman Act) narrow the Sherman Act in civil actions? Commentators have suggested that the answer might be yes. This Essay disagrees, and argues that Lenity properly plays no role in judicial elaboration of the Sherman Act. Although the Supreme Court’s insistence that a statute with both civil and criminal applications must mean the same thing regardless of enforcement setting appears to preclude different constructions of the Sherman Act depending on the selected enforcement tool, that merely raises the more fundamental issue of whether the Sherman Act is ambiguous in a lenity-triggering sense. The Essay demonstrates both that the Sherman Act’s underlying Rule of Reason standard does not trigger the Rule of Lenity and that applying lenity to narrow the Sherman Act would not serve any of the Rule of Lenity’s asserted purposes.

Third-Degree Price Discrimination and Consumer Surplus

Posted by D. Daniel Sokol

Simon Cowan analyzes Third-Degree Price Discrimination and Consumer Surplus.

ABSTRACT: This paper presents simple conditions for monopoly third-degree price discrimination to have negative or positive effects on aggregate consumer surplus. Consumer surplus is often reduced by discrimination, for example when total welfare (consumer surplus and profits) falls. Surplus increases with discrimination, however, in two cases: first, when the marginal revenues without discrimination are close together and inverse demand in the market where the price will fall with discrimination is more convex; second, when inverse demand functions are highly convex and the discriminatory prices are close together.

Antitrust and Rebates: A Study in Analogies

Posted by D. Daniel Sokol

Sean Gates, Morrison & Foerster LLP explains Antitrust and Rebates: A Study in Analogies.

ABSTRACT: Cases involving rebates (both loyalty and bundled) present a unique opportunity to observe the development of antitrust law. With little direct precedent to rely upon, courts have sought to analyze the antitrust implications of rebate schemes through analogies to other, better known, types of conduct. These efforts provide profound insight not only into the antitrust analysis of rebates, but also into the means by which antitrust law is developed.

The development of antitrust law has largely followed (or lagged) economic inquiry into competitive practices. For instance, in Leegin the Supreme Court abandoned the per se rule for minimum resale price maintenance after noting that “respected authorities in the economics literature suggest the per se rule is inappropriate, and there is now widespread agreement that resale price maintenance can have procompetitive effects.” Similarly, in State Oil, after chronicling the development of the antitrust treatment of vertical restraints, the Court concluded “that there is insufficient economic justification for per se invalidation of vertical maximum price fixing.”

Rebates are different. The Court has never considered this type of conduct. Nor, in fact, have many lower courts. There is no established framework of analysis for conduct involving rebates. There is no long line of cases. There is no “great weight of scholarly opinion” presenting a consensus view. While we have LePage’s and PeaceHealth, the antitrust analysis for rebate schemes therefore starts with a relatively clean slate. We are thus afforded an opportunity to witness the development of a new body of antitrust law and to examine the means by which it comes about.

Why the iPhone Won't Last Forever and What the Government Should Do to Promote its Successor

Posted by D. Daniel Sokol

Robert W. Hahn, University of Oxford, Smith School, Georgetown University and Hal J. Singer, Empiris LLC explain Why the iPhone Won't Last Forever and What the Government Should Do to Promote its Successor.

ABSTRACT:Because of the overwhelming, positive response to the

iPhone

as compared to other smart phones, exclusive agreements between handset makers and wireless carriers have come under increasing scrutiny by regulators and lawmakers. In this paper, we document the myriad revolutions that have occurred in the mobile handset market over the past twenty years. Although casual observers have often claimed that a particular innovation was here to stay, they commonly are proven wrong by unforeseen developments in this fast-changing marketplace. We argue that exclusive agreements can play an important role in helping to ensure that another must-have device will soon come along that will supplant the

iPhone

, and generate large benefits for consumers. These agreements, which encourage risk taking, increase choice, and frequently lower prices, should be applauded by the government. In contrast, government regulation that would require forced sharing of a successful break-through technology is likely to stifle innovation and hurt consumer welfare.

EU and US Tech Companies (Again)

Posted by D. Daniel Sokol

Can US tech companies under investigation by the EU catch a break?  Apparently they can if they have the right lawyers.  In a little noticed development this past week, the European Commission closed its proceeding against Qualcomm.  For the first time, a US high-tech company comes back alive. Qualcomm did not give them any commitment - nothing. Congrats to the Howrey Brussels team for their excellent legal work.  See their press release here.  Another upside - with the inverstigationh behind him, Damien Geradin can write even more articles.  For a full time partner AND a law professor, Damien publishes at a Posner level of output and leads all law profs around the world in terms of antitrust download per year.

Effect of Economic Crisis on Antitrust Policy

Posted by D. Daniel Sokol

Speaking at the AALS Annual Meeting held in New Orleans this January at the Antitrust and Trade Regulation Section on the Effect of Economic Crisis on Antitrust Policy are:   Speaker: Jonathan B. Baker, American University Speaker: Darren D. Bush, University of Houston Speaker: Keith Norman Hylton, Boston University Moderator: Marina L. Lao, Seton Hall University Speaker: Howard A. Shelanski, Georgetown University Speaker: Maurice E. Stucke, University of Tennessee

Date & Time Start Date: 01/09/2010, 1:30 pm End Date: 01/09/2010, 3:15 pm   The papers will appear in a forthcoming issue of the Antitrust Law Journal.