Two decades ago, the differences in our respective approaches—as exemplified by the GE-Honeywell matter—posed challenges for cooperation. But in the nearly 20 years since, the differences between us have narrowed considerably, particularly on the merger front.
Without such close cooperation in criminal enforcement, I firmly believe that our most important prosecutorial tool, our leniency program, would be much less effective in uncovering some of the most harmful cartels.
We may not reach the same conclusion on every merger review, but hopefully our mature relationship and close cooperation make differing conclusions less discordant.
Tuesday, February 27, 2018
Allan Shampine (Compass Lexecon) asks What Is at Stake with Supreme Court Review of United States v. American Express Co.?
ABSTRACT: Over the last few decades there has been a great deal of legislation, litigation, and regulation concerning payment cards in the United States and around the world. 1 Anti-steering or non-discrimination rules imposed by Visa, MasterCard, and American Express have been a prominent, recurring issue in these proceedings. Although the specifics of the rules varied among the payment networks, collectively they prevented merchants from treating customers differently depending on the type, brand, or issuer of credit or debit cards. Merchants could not surcharge a purchaser using a particular high-cost payment card, offer a discount to customers who use a lower cost card, encourage or discourage use of particular cards using other strategies, or even provide information about the costs of different payment methods to their retail customers.
Mark Taylor and Jürgen Schindler ask Intel: Clarification or Contradiction?
ABSTRACT: In the short time since it was published, much has already been written about the European Court of Justice’s (ECJ) Intel judgment,1 both in the mainstream media and specialist antitrust publications. This is no doubt related to Intel’s prominence as a household name, and the sizeable fine involved. Despite the brevity of the judgment, its 25 pages are a rich source of substantive, jurisdictional, and procedural considerations. This article will set out a brief overview of the jurisdictional and procedural issues considered in the judgment, before tackling the heart of the matter— the Commission’s newly emphasized obligation to consider the effects of allegedly anticompetitive conduct.
Norman A. Armstrong Jr. and Christopher C. Yook make A Call for Greater Consistency in the Failing Firm Defense.
ABSTRACT: Earlier this year, the U.S. District Court for the District of Delaware sided with the Department of Justice’s Antitrust Division (DOJ) and blocked Energy Solutions’ attempted $367 million acquisition of Waste Control Solutions (WCS) following a bench trial. The DOJ alleged that the two companies, if consolidated, would have been the sole provider of certain nuclear waste disposal services in 36 states. The parties attempted to defend the acquisition, in part, through the failing firm defense, presenting evidence that WCS had never generated an operating profit and pointing to a series of investments that had yet to yield expected returns. Adding to the line of cases rejecting the defense, Judge Sue L. Robinson held that WCS failed to show that Energy Solutions was “the only available purchaser” despite prior efforts to solicit bids.
The Energy Solutions decision illustrates the challenges of successfully raising the failing firm defense, which is “narrow in scope” and judged against a “strict legal standard.” Although the guidance from the DOJ, the Federal Trade Commission (collectively “the antitrust agencies”), and the courts indicate that the failing firm defense is still viable in theory, Energy Solutions illustrates a critical inconsistency in the application of the failing firm defense. In particular, the antitrust agencies and courts have articulated two different standards regarding the failing firm’s obligation to solicit alternative offers, referred to here as the “alternative purchaser element.” Key court decisions on this issue have held that the acquiring party must be “the only available purchaser” while the antitrust agencies’ guidance explicitly requires “good-faith efforts to elicit reasonable alternative offers.” These two different tests for the alternative purchaser element continue to be inconsistently applied, making it difficult for the merging parties and their advising counsel to realistically rely upon the failing firm defense.
On 19 April 2018 the Graz Institute of Corporate and Commercial Law is hosting the 30th edition of the CLaSF Workshop, on the topic of 'Antitrust at the Intersection of Law and Economics'.
The keynote will be delivered by Theodor Thanner (Director General, Austrian Competition Authority), and confirmed speakers include Ignacio Herrera Anchustegui (University of Bergen), Stefan Holzweber (University of Vienna), Carsten König (University of Cologne), Heinrich Kühnert (DORDA), Justin Lindeboom (University of Groningen), Sandra Marco Colino (Chinese University of Hong Kong), Agustín Reyna (BEUC - The European Consumer Organisation), Thibault Schrepel (Panthéon-Sorbonne), Ryan R. Stones (LSE), Peter Thalmann (Vienna University of Economics and Business), Maria Wasastjerna (University of Helsinki), Anne C. Witt (University of Leicester), and Hans Zenger (DG Competition, European Commission).
Geographic Market Definition in Urban Hospital Mergers: Lessons from the Advocate-NorthShore Litigation
Steven Tenn and Sophia Vandergrift discuss Geographic Market Definition in Urban Hospital Mergers: Lessons from the Advocate-NorthShore Litigation.
ABSTRACT: Geographic market definition has been, and remains today, the key battleground on which hospital merger cases are won or lost. True to this paradigm, geographic market definition was the central issue in the Federal Trade Commission’s recent success in blocking the merger of two Chicago-area health systems: Advocate Health Care Network and NorthShore University Health System. In FTC v. Advocate Health Care, the FTC and the State of Illinois alleged an 11-hospital geographic market that covered much of Chicago’s northern suburbs. The district court was unconvinced, and denied the FTC’s motion for a preliminary injunction based on its finding that the FTC had failed to prove a relevant geographic market. The FTC subsequently appealed to the Seventh Circuit. The Seventh Circuit reversed the district court and remanded the case, deeming the district court’s geographic market findings clearly erroneous. In a robust and detailed opinion, the Seventh Circuit took stock of the evolution of hospital merger geographic market analysis. It assessed the tools that have historically been deployed in this analysis, including Elzinga-Hogarty and the hypothetical monopolist test. In its analysis, the court retired the former and solidified the latter. Ultimately, the Seventh Circuit’s Advocate opinion and the litigation upon which it is based provide litigants on both sides of a deal useful guidance about how to effectively define geographic markets in future hospital merger cases. This article reviews the Advocate litigation, the Seventh Circuit opinion, and the state of hospital merger geographic market definition in the case’s wake
Monday, February 26, 2018
Antara Dutta and Elisa F. Kantor offer A Defense of Using the Hypothetical Monopolist Test in Health Care Provider Mergers.
ABSTRACT: Over the last 20 years, federal hospital merger enforcement cases have turned largely on one issue: the proper definition of the relevant geographic market in which to analyze potential anticompetitive effects. Recent history is no exception; in 2016, the Federal Trade Commission initially lost two preliminary injunction actions—one against Pennsylvania hospital systems Penn State Hershey Medical Center and PinnacleHealth System, 1 and one against Chicago-area systems Advocate Health Care Network and NorthShore University HealthSystem2—primarily because the district courts found that the FTC had failed to properly define a relevant geographic market. The courts of appeals reversed both decisions, ruling that the district courts had erred in formulating and applying the Horizontal Merger Guidelines’ hypothetical monopolist test to establish a relevant geographic market. The FTC won these appeals for good reason
Comment on The Flaws in Using the Hypothetical Monopolist Test from the “Payor Perspective” in Health Care Merger Cases, by Field, Fisher, and Coglianese
Dov Rothman and David Toniatti Comment on The Flaws in Using the Hypothetical Monopolist Test from the “Payor Perspective” in Health Care Merger Cases, by Field, Fisher, and Coglianese.
ABSTRACT: In a recent article, The Flaws in Using the Hypothetical Monopolist Test from the “Payor Perspective” in Health Care Merger Cases, Kenneth Field, Louis Fisher, and William Coglianese (Field et al.) observe that in reviewing mergers of health care providers, courts have concluded that the relevant geographic market should be defined from the perspective of the payor assembling a network of providers for a health plan. Field et al. claim this raises a host of problems when applying the “hypothetical monopolist test” to delineate the relevant geographic market. They argue that applying the hypothetical monopolist test is conceptually straightforward in a setting where sellers post prices and buyers decide whether to pay a seller’s posted price, but more complicated in the health care context because payors (buyers) and providers (sellers) negotiate to set prices for services to patients who are covered by the payors’ plans. According to Field et al., a key question raised by the hypothetical monopolist test is whether a payor could successfully market a network without any providers in the proposed market area, and if the answer is no, then a hypothetical monopolist of providers in the proposed market area would have substantially greater bargaining leverage and be able to raise prices by a small but significant non-transitory increase in price, or a SSNIP. Field et al. then argue that—in practice— applying the hypothetical monopolist test from the payor perspective has a number of problems. In particular, they argue that determining whether the hypothetical monopolization of a candidate market would result in a significant price increase is more difficult in the health care setting where prices are negotiated rather than posted. We agree with Field et al. that whether a payor could successfully market a network without any providers in a proposed market area is a key question for assessing the relevant geographic market. We differ with Field et al. with regard to the implications for market definition.
Eduardo Caminati Anders and Guilherme Teno Castilho Missali investigate Third Parties under Merger Review in Brazil.
ABSTRACT: Overall, the corporate environment has been becoming more sophisticated when it comes to the structuring of corporate deals and transactions, many of which depicting significative interfaces with the competition realm. Indeed, complex transactions that require notification before the Administrative Council for Economic Defense (CADE) involving competitively sensitive markets may give rise to an opportune context for third parties with interests/rights affected by the future decision to seek the competition authority to submit counterpoints to the arguments of the parties, underlining the concerns arising from the case. Lately, one could see a gradual increase in the intervention of third parties before CADE in Brazil; this year, in particular, one could notice some high-profile transactions reviewed by CADE that counted with third parties’ interventions, whose manifestations were important for the final outcome. In essence, what may help explain the greater interest of third parties within CADE relates to the institutional strengthening of this antitrust authority since the advent of Law No. 12,529/2011, which, in turn, introduced the pre-merger review system and set forth the third interested party's institute in light of a democratic and collaborative spirit, to ensure, fundamentally, greater quality and legitimacy to CADE’s decision.
Baojun Jiang, Washington University in Saint Louis - John M. Olin Business School and Hongyan Shi, Nanyang Technological University (NTU) - Division of Marketing and International Business examine Inter-Competitor Licensing and Product Innovation.
ABSTRACT: This paper studies how licensing of non-core technology between an incumbent and an entrant affects market competition and the entrant's optimal product quality. We show that a royalty licensing contract between the incumbent and the entrant will soften competition. More importantly, the effect of such licensing on the entrant’s optimal quality depends on whether the entrant’s core technology can significantly or only incrementally increase its quality over the incumbent’s product. The royalty contract will tend to increase the entrant’s optimal quality when the entrant’s core technology can allow for a significant quality improvement over the incumbent. By contrast, if the entrant’s technology can raise its product quality only incrementally over the incumbent’s product, the royalty licensing contract will tend to reduce the entrant’s optimal quality. A wide range of royalty contracts are mutually acceptable; the incumbent (entrant) can benefit from a licensing contract even when the entrant pays a total royalty fee that is lower (higher) than its alternative R&D cost. These results hold even when the incumbent endogenously chooses its royalty licensing fee. We show that our main results are robust to several alternative modeling assumptions, e.g., alternative game sequence, endogenous quality decision by the incumbent, and alternative licensing contract.
Saturday, February 24, 2018
Deputy Assistant Attorney General Roger Alford Delivers Remarks at King's College in London. See here.
Of note (given Makan Delrahim's speech earlier this week):
Let me touch briefly on innovation in the context of digitalization and online platforms. There is no doubt that digitalization, including the aggregation and commercial use of large quantities of data, has created a multitude of dynamic product offerings that deliver incredible benefits to consumers. And there also is no doubt that these products are technologically complex and rapidly evolving. But there is no reason to think that the lessons we have learned over the past several decades about the role of antitrust enforcement in protecting and respecting innovation do not apply to the digital marketplace. Quite the opposite: there is a strong case to be made that years of consistent application of antitrust law, with innovation as a key concern, fueled the growth of digital companies in the first place.
As in other contexts, when evolving technology is involved, evidence-based investigations are better than static, one-size-fits-all solutions. It is for this reason that we do not employ the term “Big Data.” We view that term as ill-defined and vague, and too blunt to capture the nuances of the modern information-based marketplace. It is not even clear in the taxonomy of markets whether Magnus Notitia is a species, genus, or family. As Commissioner Margrethe Vestager has stated, it is important to keep the conversation complicated, because when you oversimplify the term “Big Data” you miss some of the real benefits and opportunities that it may have to offer.
With respect to a firm’s unilateral business conduct, if we abandon the approach of carefully assessing the facts on a case-by-case basis in favor of a one-size-fits-all approach that presumes anticompetitive effects simply because of the nature of the industry, there is a genuine risk of reaching the wrong conclusion. When a major antitrust agency rushes to judgment in challenging a digital market competitor, one can be confident that other agencies will follow in its footsteps. The price of a poor enforcement decision is not borne only by the companies under investigation, it is also borne by consumers, who suffer when incentives to innovate are diminished. So it is critical that we are careful in how we proceed in analyzing digital markets.
Friday, February 23, 2018
Mahdiyeh Entezarkheir, University of Western Ontario - Huron University College and Saeed Moshiri, University of Saskatchewan - Saint Thomas More College analyze Innovation Spillover and Merger Decisions.
ABSTRACT: Merger activities in innovative industries point to a relation between mergers and innovation. Firms' innovative ideas may spillover to other firms dis-incentivizing innovation activities, but merger may be a way to capture innovation spillover. The merger-innovation nexus has been well studied in the theoretical literature and recently in the empirical papers, but empirical evidence on merger and innovation spillover is limited. In this paper, we investigate the impact of innovation spillovers on firms' merger likelihood using a panel data set of mergers among publicly traded U.S. manufacturing firms from 1980 to 2003. In our empirical model, we also control for business cycles and proxies of neoclassical, behavioural and Q theories of mergers. Innovation is measured using R&D investments and citation-weighted patents, and innovation spillover is proxied using technological proximity of firms. As a source of R&D spillover (outward spillover), a firm can internalize its spillover effects by acquiring the targets that benefit from the spillover. As a receiver of an R&D spillover (inward spillover), a firm may want to merge to control the negative impact of other's innovation on its competitive edge. We find that innovative firms are on average more likely to merge. These findings are robust to using a measure of patent fragmentation as our instrumental variable. Our results also show that within industry inward R&D spillovers increase mergers but between industry inward R&D spillovers do not influence the merger decisions significantly. Our main results are robust to alternative measures of spillovers and different estimation methods.
Peter Whelan, Leeds explains European Cartel Criminalisation and Regulation 1/2003: Avoiding Potential Problems.
ABSTRACT: There is a growing tendency within the EU to criminalise ‘hard core’ cartel activity. It is frequently argued that this type of enforcement is superior to administrative enforcement in achieving the deterrence of ‘hard core’ cartel activity. While the criminalisation of cartels has some merit in theory, it also engenders significant practical problems that need to be overcome if criminalisation is to be as effective as claimed. One of the major challenges in this context is the challenge of respecting the dictates of EU, in particular those contained within Regulation 1/2003. Indeed, that particular implementing Regulation, if applicable to cartel criminalisation within an EU Member State, can arguably have a significant impact on the content and operation of the national criminal cartel offence.
This chapter will analyse this particular challenge of EU cartel criminalisation. Specifically, it will analyse:
(i) the potential (negative) impact that Regulation 1/2003 can have upon cartel criminalisation within the EU Member States; and
(ii) what can be done to eliminate or reduce any potential (negative) impact identified.
In so doing, this chapter will provide concrete advice to those European legislators that wish to implement a successful policy of cartel criminalisation while respecting the dictates of EU law.
Nicolas Petit, University of Liege offers thoughts on The Judgment of the EU Court of Justice in Intel and the Rule of Reason in Abuse of Dominance Cases.
ABSTRACT: This paper discusses the judgment of the EU Court of Justice of 06 September 2017 in the Intel case. It argues that the case-law of the Court of Justice has now embraced the rule of reason for the assessment of the legality of dominant undertakings exclusivity rebate systems in particular, and for the analysis of exclusionary practices in general. The judgment also establishes that efficiency is the public policy behind abuse of dominance law. This evolution of the case-law is likely to produce consequences in competition enforcement, by increasing reliance on tools like the "As Efficient Competitor" test, if not to make recourse to it unavoidable when the competition agency has publicly expressed a policy preference for this framework of analysis.
Thursday, February 22, 2018
The Implications of Public Interest Considerations on the Interpretation and Application of the Failing Firm Doctrine in South African Merger Analysis
Ignatious Nzero, Chinhoyi University of Technology hs written on The Implications of Public Interest Considerations on the Interpretation and Application of the Failing Firm Doctrine in South African Merger Analysis.
ABSTRACT: In 1998 South Africa adopted a comprehensive new competition statute, the Competition Act. However, prior thereto, other statutes had existed which were all effectively repealed on the basis of either material deficiencies or not being in sync with the changing socio-economic and political environment.
The 1998 Competition Act aims at establishing an effective competition regulatory system that address the country’s socio-economic needs. The Act’s stated objectives goes beyond the traditional goal of promoting and maintaining competition through the regulation of anti-competitive market behaviour to encompass broader policy considerations in the form of so-called non-competition factors. This feature mirrors the country’s social and economic historical development and is an acknowledgement of the notion that the law derive its credibility from the environment in which it operates hence must not ignore the practical realities existing in such an environment. It must be noted that this characteristic is not alien to South Africa as it is common in many developing countries’ competition statutes which statutes have been adopted as part of broader economic reform programmes. However, what sets the South African system apart from these other jurisdictions is its demonstrated effectiveness in the application of these public interest considerations in competition matters, especially in merger regulation.
Exploitative Abuse and Abuse of Economic Dependence: What Can We Learn from the Industrial Organization Approach?
Patrice Bougette, Université Côte d'Azur, CNRS, GREDEG, Oliver Budzinski, Ilmenau University of Technology, and Frédéric M. Marty, Research Group on Law, Economics and Management (UMR CNRS 7321 GREDEG) / Université Nice Sophia Antipolis; OFCE ask Exploitative Abuse and Abuse of Economic Dependence: What Can We Learn from the Industrial Organization Approach?
ABSTRACT: This article aims to provide a detailed analysis of the concept of economic dependence and exploitative abuse through their evolution in competition law and economics and in European case law. First, while the theoretical roots of these concepts may be found in economic theory, we show that the issue has long been ignored or only reluctantly considered in competition law enforcement, mainly because of a lack of available and reliable economic criteria. Second, although its primary objective was to measure market power in an oligopoly context, we examine how current empirical industrial organization methodology allows a sophisticated measure of the economic dependence among suppliers and distributors. Third, we discuss the possibility of relying on the industrial organization approach to address these issues.
Levi Marks, University of California Santa Barbara, Charles F. Mason, University of Wyoming - College of Business - Department of Economics, Kristina Mohlin, Environmental Defense Fund, and Matthew Zaragoza-Watkins, Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR) explore Vertical Market Power in Interconnected Natural Gas and Electricity Markets.
ABSTRACT: New England is at the leading edge of an energy transition in which natural gas is playing an increasingly important role in the US electricity generation mix. In recent years, the region’s wholesale natural gas and electricity markets have experienced severe, simultaneous price spikes. While frequently attributed to limited pipeline capacity serving the region, we demonstrate that such price spikes have been exacerbated by some gas distribution firms scheduling deliveries without actually owing gas. This behavior blocks other firms from utilizing pipeline capacity, which artificially limits gas supply to the region and drives up gas and electricity prices. The firms observed to withhold pipeline capacity also own non-gas electricity generation assets in New England that benefit from their gas-fired competitors paying higher fuel input costs. We estimate that capacity withholding increased average gas and electricity prices by 38% and 20%, respectively, over the three-year period we study. As a result, customers paid $3.6 billion more for electricity. While the studied behavior may have been within the firms’ contractual rights, the significant impacts in both the gas and electricity markets show the need to consider improvements to market design and regulation as these two energy markets become increasingly interlinked.
Bronwyn E. Howell, Victoria University of Wellington - School of Management and Petrus H Potgieter, University of South Africa ask Bundles of Trouble: Can Competition Law Adapt to Digital Pricing Innovation?
ABSTRACT: A defining characteristic of the burgeoning digital economy is the extent to which providers offer their products and services to consumers in bundles. This is hardly surprising, as these products typically have a marginal cost of zero. If demand for the digital good is independent of demand for another product, both profit and total welfare will be higher when the goods are bundled and sold at a single price (Bakos & Brynjolfsson, 1999; Liebowitz & Margolis, 2009; Parker & Alstyne, 2005). Another defining characteristic of the digital economy, due in part to the economic properties of digital goods - notably zero margnal cost and the prezence of network effects - is the tendency towards the emergence of highly-concentrated, monopolistically-competitive markets and a pattern of rivalry resulting in competition ‘for the market’ and ‘winner-takes-all’ outcomes (Shapiro & Varian, 1999). What constitutes acceptable competitive behaviour in these markets likely differs substantially from that in markets for goods with standard economic characteristics, leading some to question whether the current tools used to specify and enforce competition laws are no longer suitable for governing commercial activity in a digital economy (Brennan, 2008; Carlton & Perloff, 2005; Evans & Schmalensee, 2013).
We contend that the increasing use of product bundling in a digital economy poses additional challenges to the effectiveness of competition law as currently applied. The Structure-Conduct-Performance (SCP) approach to analysing market interactions is limited by its narrow focus on individual product markets, defined using tests such as the Small but Significant Non-transitory Increase in Price (SSNIP). It is further restricted by the historic reliance upon quantitative econometric analysis of substitution effects in extant markets, which is ill-suited to capture the complexities in the interrelationshis between the demands for the different products in bundles, and which may become computationally intractable as the own- and cross-elasticities increase exponentially with the number of products in the bundle and providers in the market. Furthermore, classic econometric analysis cannot be used to assess potential competitive effects in markets where the bundles in question have yet to be offered. If competition authorities do not take the complexities of bundling into account in their decision-making, then potentially welfare-enhancing pricing innovations may be incorrectly prevented from proceeding, with consequent implications for the willingness of firms to engage in pricing innovation essential to the full realisation of economic benefits of the digital economy.
We propose a new approach to assist in understanding competition in the digital economy. Simulation and numerical analysis of hypothetical scenarios under different strategic choices by firms and consumer preferences offers a new way of evaluating questions of whether intervention is indicated in specific circumstances. This paper illustrates the potential of such an approach using a model based on the recent proposed merger between Sky Television and Vodafone. It draws extensively on the theoretical arguments and examples in two recent papers (Howell & Potgieter, 2017b, 2017a) and makes recommendations for both theory and practice as to how simulation analysis can be used to complement more conventional competition analyses.
Wednesday, February 21, 2018
Assistant Attorney General Makan Delrahim Delivers Remarks at the College of Europe in Brussels. See here.
Some important excerpts:
Starting with then-Commissioner Mario Monti and continuing with Commissioners Neelie Kroes, Joaquin Almunia, and on to Commissioner Margrethe Vestager today, Commissioners have expressed their commitment to the same consumer welfare standard that guides U.S. competition enforcement. As Commissioner Vestager has stated, “we don’t always do things the same way. But I think our goals are very similar: We want to protect competition and consumers.
This is not to say that we have overcome all of the differences between us. We still do have differences, but we talk about them regularly and respectfully, so that we can understand what motivates them.
For example, we have not yet closed the gap in the area of unilateral conduct. European competition law still imposes a “special duty” on dominant market players, while we in the U.S. do not believe any such duty exists.
With respect to unilateral conduct, we have particular concerns in digital markets. We continue to advocate for an evidence-based approach based on existing theories, which are sufficiently flexible to apply to new forms of doing business in the digital economy. Where there is no demonstrable harm to competition and consumers, we are reluctant to impose special duties on digital platforms, out of our concern that special duties might stifle the very innovation that has created dynamic competition for the benefit of consumers.
I will make every effort to work with our counterparts at DG Competition to narrow any gap between Brussels and Washington in this area. We must maintain our close dialogue on the cutting-edge issues—innovation, intellectual property rights, and digital markets—that will occupy much of our time in the future. Innovators and consumers in both of our unions deserve nothing less.
James Cooper, George Mason offers An Enquiry Meet for Professional Regulation: Lessons from PolyGram.
ABSTRACT: After North Carolina State Board of Dental Examiners v. FTC, it is clear that the antitrust laws have an important role to play in reforming occupational licensing, but the exact framework remains an open question. Under a rule of reason analysis, health and safety rationales are off limits. But if state board cannot draw on these types of consumer protection arguments to defend their actions, as a practical matter, can a state board ever win an antitrust suit? Some have suggested applying a modified rule of reason to incorporate non-competition justifications. But these approaches threaten to summon the ghost of Lochner and raise problems of subjectivity and predictability that are sure to arise when courts and enforcers are called on to weigh losses in competition against purported gains across other dimensions. Rather than expanding the rule of reason to accommodate non-competition concerns, there is a better path that draws from PolyGram Holding, Inc. v. FTC. Given the vast empirical literature pointing to the harms from state regulation of professions, board actions that restrain competition should be treated as inherently suspect as a matter of law. As such, in an antitrust challenge, the burden of persuasion immediately should fall to the board to provide an efficiency rationale that is both cognizable and plausible. If the board cannot muster a story involving cognizable benefits to competition to justify the restraint, it should be condemned as per se illegal, and the authorizing law subject to preemption. If the board is able to offer a justification that sounds in competition, it still must provide a plausible reason why either the restraint offers procompetitive benefits or does not harm competition. If they cannot meet this burden, the restraint should be condemned summarily. If they do, courts will conduct a full-blown rule of reason in inquiry.