antitrust exam consolidation

8/3/2019 Antitrust Exam Consolidation

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AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions

4 themes of course: history/assumptions of what anti-trust does change ideology drives people differently (laissez faire vs technocrats) economic perspective on impact legal basis (but heavy theory stuff). OVERALL this is a class about the development of case law

Why do we have antitrust law and for whose benefit does this body of law exist? Unlikely to be able toexamine laws for the answer

SCOTUS in the modern erathe antitrust laws exist to promote the welfare of consumers. TheCourt has described the antitrust laws as a consumer welfare prescription.

---HISTORY & LAWS---

Post Civil War: Richard Hofstadter- bigness had come with such a rush that its momentum seemedirresistible

Sherman Act (1890) was answer to abusive/dominant firms that arose (90% is 1/2)

Focused on monopoly power, price fixing, excessive price, misallocation of resources, and lossof dynamic efficiency

o competition decentralizes/distrib power, solves the economic problem impersonallyo CompetitOR or competition focused? Protects from negl/torts (Schoolmaster case?)o Legsl history can support ANYTHING, corp/Repub Congr used this as small step to

prevent communist overreach, used against labor early Just codifying English CL?? Sort of. Use of word trust was super negative, single manager conglomerates

THEMES: codifying CL, hurting anti-consumer groupings of K, Jeffersonian ideasANTI-Trusts- large combo of K in industry, Ks used to consolidate into unified teams, investors

surrendered stock to trust organizers who united management with trust certificates

faded passion during 20s/30s, Reagan, Bush but aggressive during post WW2, Clintono 1- sole combination of conspiracy is illegal, 2- people monopolizing with other

people (combine or conspire) Collusion- ~1, too little competition (agreements?), broader than 2, JOINT action, MULT ppl

o RofR not references but does it exist? Exclusion~2, too dirty (anti-collusion?) MONOPOLIZING predatory acts, SINGLE person

o HIGHER threshold than 1 but whats monopoly? Economic power acquired privatelyWITHOUT GOVT GRANT (baseball, beverage bottlers, insurance)

o Dominant of exclusive control of a sectorClayton Act (1914)- yes private right of action

Post HUGE 1912, Wilson PROGRESSIVENESS, wanted to go beyond Sherman codifying CL 7- Mergers, elimination of compet via final agreements/ultra-collusion type practices?2- no discrim in P if subst lessens competition, tends to create a monopoly in line of commerce3- K exclusive dealing. Heavy 1/2 Sherman overlap.. many hooks if the govt wants to attack4- 3x dmgs, private DIRECT ONLY COA HERE, big post-WW2 (10x more private than public)

o jury cant know about treble or reversible error, atty fees only to winner (HUGE piece ofwhy 75% tossed, 24% settled, 1% jury.. why liab is SO Kd=fear of jury)

6 LABOR EXEMPTION (Norris LGA helped more than this)


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7- no acquisition with restaint of trade if monopolizes one line of commerce- MERGERS ADDED8- dont want overlap with competitors/prophylactic to prevent combos

FTC Act (1914)- 5 commissioners on staggered 7 year terms,


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Exclude social values and political considerations, just focus on efficiency metricso nothing unrelated or antithetical to efficiency, NO WT just DWL

issue with monopoly is its inefficient Bork said Sherman was just codification of CL, thats it

Last 20 years- BROAD consumer welfare proscription, protect competition

1912 election- HUGE reaction to Standard Oil case, republicans giving trusts a loophole

Post-WW2: golden area of anti-trust law (golden w/opp for correction says Chicago school guys)

TWO influences in the correction/new trendo Brandeisianism- new deal-ish view (pre war era), Klors Case!, lawyer-ideology driven

displaced during the war BUT its still an ideological perspective concerned withprotection of small business, leveling the playing fields, concern about theprocess of rivalry for its own sake not as much consumer benefit results

o Structuralism (from economic influences)- Harvard School Old School and New School divide (modern one is more Breyer-type) Original: ONLY economic theory-related, initially driven by technical economics-

50/60s stuff, Areeda-Turner treatise

relation btwn structure/conduct/performance (S.C.P.), empirical focus, usea few key facts about the market and go from there

o Solve structure (deconcentrated, rivalrous, etc)=get C&P Merger policy can be aggressive! Facts show bad P? kill it! Focus is NO FAULT monopoly statutes dont look at

behavior, just look at structure. NO Intent check

NEWER school: less Chicago shift, has belief that structure/apparatus ofAntiT are broken/dangerous, limit antiT enf so doesnt make things worse

o Harvard and Chicago does begin to converge in late 80s-todayo Chicago school- 3 broad claims

Its about consumers/efficiency and dont go beyond that Markets are robust so its not easy to get to monopoly status Efficiency is KEY so focus on killing free rider stuff (posner, stigler, bork)

BIG CASES N Pac Rway v US- Sherman act was a comprehensive charter of economic liberty, premise

that the unrestrained interaction of competitive forces will yield the best allocation of oureconomic resources, lowest prices, highest quality

Brown Shoe Co v US- congressional desire to protect viable small, locally owned businesses

US v Aluminum Co of America- immunity from competition is a narcotic, rivalry is a stimulant **Natl Soc of Prof Engineers- RULE OF REASON, broad mandate of common law tradition, can

look at all elements of the bargain (quality, cost, service, safety, durability) and not just

immediate cost, impact on competitive conditions Berkey Photo v Eastman Kodak- monopoly power is inherently evil BUT cant invoke it

perversely in favor of those who seek protections against the rigors of competition Verizon Comm v Curtis v Trinko- cant unduly expand 2 because of false positive risk


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--MONOPOLY ELEMENTS--

MAJOR focus is downward sloping demand curve with up-sloping P curve (shows WT & DWL) BASIC COURSE GRAPH pg 150- downward sloping demand curve WT- people pay more, transfers consumer to producer , at MC consumers get the gains of the

trade and at MP its regressive/all to producer

DWL- txn are lost because MC -> MP, scarce social resources are misallocated and they are notemployed correctly, BIG CONCERNo Triangle representing allocative ineff

Market power- the ability to profitably reduce Q below competitive level of prod and corresponding power to

raise/maintain P above competitive level

Economic efficiency- satisfies D above cost of Q (allocative eff), minimum cost (production eff) also involves wealth distribution element (in addition to the economic efficiency concerns) Also dynamic efficiency? Degree to which sellers can shift to preferencesDynamic efficiency (eff from changing innov/innov efficiency- pharma/Tech) v static efficiency

(price effects driving efficiency/DWL-type concern)

Monopoly Power injuries

wealth transfer (C to S/H)o Monopoly overcharge- theft? Chicago school says its irrelevant wealth transfer

IN LONG TERM monopoly overcharge is DWL since $ spent on BTEs DWL of consumption benefits reduces economic efficiency of market

o consumers lose benefit of bargain (consumer welfare for Bork), loss of consumersurplus (value above P), loss in prod surplus (loss of profit on units not sold)

o Consumer can mitigate higher P loss by reducing consumption, consumer welfare lossresults (KILLS eff)

Deadweight losses: Some people stop buying, and the loss of their transactions is the paradigmaticinefficiency of monopoly pricing, since it represents a misallocation of social resources.

Wealth transfers: Some people keep buying, but pay a higher price. Most economists dont consider

these transfers of wealth from consumers to producers necessarily inefficient, but they are politicallyunpopular.

AntiTrust and English Common Law (used to attack Guild System)

Sherman just extending CL tradition but it wasnt always CL that monopolies were bad!o

First opposition was end of 16th

C, not strong until 18th

Co Sir Edward Coke argued Magna Carta, civil law, Edward 3 unified in oppositiono 17th C Parliament curtailed king/crowns power to arbitrarily grant monopoly

Can find WHATEVER you want in English CL, all pay lip service to consumerism though Case of Monopolies (Darcy v Allen)- patent is void, restrained ability of others to carry on trades

o Malum prohibitum- something REALLY bad,o Counter to mercantilist system that was too widespread to attack with only lawsuits


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o Queen wants revenue source, grants monopolies but parliament takes the job (tho itdoes so by saying she was deceived here)

Post case- Parliament takes power w/Statute of Monopolies, sep of pwr issue First major objection to profiteering

o *Pg 21- monopolies P rise, qual down, kills competition/hurt workers Trades that prevent idleness, keep men in labour should be promoted and cant berestricted to one person of its against common law

EARLY: Suppressing competition is bad, helping it is goodo Dyer Case- couldnt use art in area for 1 year, void against common law (1415), K case

Suppression of competition is a public wrong, not just privateo The Schoolmaster Case- cant open school in area, received less per child, writ of trespass

court split since it promoted competition, damnum absque injuria or tort suit P down, number of schools up competition is a good thing!

Mitchell v Reynolds- FIRST rule of reason (Stnd Oil codifies) (1711), K caseo Baker restraint for a period of one year, non-compete, cartel restriction?o Voluntary restraint (ok) or general (VOID)? THIS is voluntary- has proportional

consideration, goodwill at issue in bakehouse (want him to lease then compete??) Circumstance shows honest K, not like 1 cartel with naked/no consid agreement Reasonable non-compete (like employment- limited in time and scope)

o Similar cases Mogul Steamship Co v McGregor- void K for restraining shipping, no public COA Norfeldt v Maxim- reasonableness is in reference to the interest of the parties

concerned AND the interests of the public

US v Trans Missouri Freight Assoc (SCOTUS 1897)- OVERTURNED/ANTIprecedent18 carriers set rates, 30 day withdraw, couldnt change w/o penalty being levied by assoc, cartel

o trusts/combinations are driven by motives of aggrandizement against public interestso purpose in combining is to control the manufacture of any particular article in the

market and dictate price at which it shall be sold, make the public subject to the groupsprice level, make the independent businessman without any business policy powers

not in substantial interests of the country, driving out small dealers/worthy menWITHIN the statutes reach regardless of whether they are unreasonable or not (D says P down!!)

o Supported by plain language of the Sherman, CL allowed? NOT relevant, goes beyond CL!o Want to grant vendor freest opp to maximize his return but cant let everything get away

TAKEAWAY: rejects of RofR, Peckham: where is it in 1 language, literal reading of Shermano Naked and ancillary restraints are CFd (maybe OK?) and clearly NO naked restraints,

court focus on long term potential of centralized power, not just current impact P reas in short run? Might go up in long run though! No CL RofR in Sherman!!

o First MAJOR ruinious competition argument failureUS v Joint Traffic Assn- SCOTUS 1898, retreat from TransMissouri (RofR may exist)

ancillary isnt in purview of Sherman, if made for business interest/doesntDIRECTLY/immediately restrain trade its good to go

Hopkins v US- SCOTUS 1898, voluntary assoc of livestock ppl entering into this tobetter their business, they kept in full competition with each other so its OK!


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STND Oil- CODIFIED RofR, puts into law that context matters- 1 Sherman has RofRo ChiBOT case in 1918 is first exposition of that idea though

US v Addyston Pipe- 6th C (but basically SCOTUS since Taft opinion b4 Pres) 19896 corps in cast iron pipe manuf conspiracy, fake bidding submitted (market div, P fixing argmnts)

o this is goods, TransMO was common carrier=Taft gets wiggle room in logic (RofR inancillary is OK he says, he WANTS it but this is direct so NO RofR) Mitchell v Reynolds use shows ancillary could be ok, post manuf could be ok

RUINOUS COMP ARG: would have been destructive if had competed w/others so restraints=reaso Competition is a first principle, shouldnt hurt it. NO economic analysis review

*** courts should no set sail on the sea of doubt into an area of naked restraintson competition RofR use would mandate that sea of doubt

PARADIGM that cant use RofR analysis where courts are the ones refereeingwhats an acceptable level of competition/profit/price

o Argument that marginalism will result in people not making fixed costs rejectedNOTE: marginalist revolution during Addyston Pipe times people priced forward looking

Ruinous to hurt people who were pushing P towards MC since that destroys investments in KFoundation for RofR and Per Se and RofR is enshrined in Standard Oil and American Tobacco

Early Case ThemesN Securities (1904)- Sherman apply to corp mergers before Clayton (which was actually passed

to strengthen Sherman)? Court says yes, Holmes dissent says hard cases makes bad lawsEC Knight- SCOTUS 1895- manufacturing isnt enjoinable/commerce, incidental/indirect onlySwift & Co- SCOTUS 1905- current of commerce of stockyards, killed direct/indirect/EC Knight

--MARKET DEFINITION(Alcoa, Grinnell, DuPont Cellophane case)Market definition cases are mostly 2 cases, sometimes 1 reqs it, 7 Clayton rarely***Two major concepts: restraint of trade & monopoly power

o Market power and monopoly power are NOT the same thing3 Questions to ask:

o what is the proper technique for measuring market share?o What size do you have to be to get monopoly power?o What kind of business conduct will antitrust laws tolerate?

Demand side issues: substitutable by users? Spatial/geogr substitutability?Supply side issues: Entrance barriers, ability to control competition

Market definition- usually REQ for 2/1/7 cases (competitive effects can replace this & vice versa)PRODUCT and GEOGRAPHIC components used to determine what will subst lessen competiton

o Careful not to get into niche analysis, kills data results/substitutiono ALSO allows the agencies to measure market shares and market concentration generally

Better to over-exclude distant substitutes since thats a more accurate gauge of merger effecto Too narrow a view if competition from outside mrkt so ample that no in-group competition

wont harm consumers clearly needed to include those outsiders in your first market review!

Targeted Customer Analysis of Market definition


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o If indiv negotiated P, sometimes an indiv customer is the narrow market (RARE though) Geographic Market definition

o transport costs, language, regul, tariff/non-tariff barriers, custom/familiarity, service availo When define by suppliers- customer location doesnt matter

Factors: cost of transport, supplier change cost, downstream competition effects oncustomers, past and predicted shifting of customers

o When defined by customers- supplier location doesnt matterAlcoa- 2nd C 1945- mrkt def, power, monop case (not Post-Chi/current Scotus but its Hand)

Virgin aluminum ingot, cartels binding people not to compete, manuf of aluminum restrictedo Virgin ingot or all ingot? Global or domestic markets only?? MRKT DEFINITION KEY

Market definition has product and geographic componentso Q: do they have a monopoly? Did they get there in viol of 2?

Alleged restraint of trade, unlawful exclusion in market- PROCESS IS FOCUSo Whats the power level? FOOTNOTE 4 30% isnt, 2/3rds might be, 90% def is monopoly

Market share is key to 2 Sherman analysis- today 70-80% is problematicpotential imports here put a ceiling on the prices but that doesnt mean its not monopoly

o they could also let competition in but crush it laterThe Sherman Act has WIDER purposes than allowing Co to getfair P (beyond Chicago school)

Best profits of a monopolist are a quiet life, skimming off the topo **It deadens initiative, discourages thrift, depresses energy, narcotic vs stimulanto Sherman Act didnt have good and bad trusts, it FORBADE ALL

Possible to prefer system of small providers instead of a mass being directed bythe few.. that could be purpose of act

o Restrictive contracts are forbidden, division of territory is forbidden (Addyston Pipe),price fixing is forbidden (Trenton Potteries)

Existence of a monopoly is ok only as long as downstream effects are temp- PROCESS/VERBo INTENT=key, if its there its bad, monopolistic menacewithout intent, hurtsuccessfulo anticipating and forestalling competition and holding the field is the issue

TAKEAWAY: reas profits? Still can be violator. ACTION is key (skill/foresight/good mousetrap)or building capacity as a hammer?

POST-Judgment: remediation was an issue, post-WW2 govt production was sold off to non-alcoaDuPont Cellophane case- 1956 SCOTUS

Cellophane market, 20% packing material market (Majority), 75% cellophane market (dissent)o Control of prices and exclusion of competition are the two ELEMENTS- MRKT DEF KEY!

Market power is like monopoly power, reqs cross-elasticity reviewBURDEN of proof on government but their lack of substitute or like price isnt good

o By-product of general efficient market competition, modern demando DuPont had no power to prevent the use of other wrapping materials

How far will buyers go to substitute? That is a consideration reasinterchangeability still present in the market?

What tool do you use to guage this? CROSS ELAST OF D (data drive)o Use or uses to which product is put that drives the market

High degree of functional interchangeability? Enough here


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o BUT Cellophane Fallacy- already at max P, downslope D=false subst Shape of the curve is key to the analysis of substit/mrkt pwr

DISSENT- behavior showed there was no substitutability so there WAS market power!o Cheaper things werent growing like cellophane, if were substit, they would!o DuPont didnt acknowledge competition in survey done in 1950 so how can the court?o Stock repo @15x price, they had clear stranglehold on production, value shown in repoo DuPont could not bear the burden that it owes its monopoly power SOLEY to its

superior skill (US v United Shoe Machinery Corp)

Cellophane fallacy- LAW today but it doesnt deal in merger context an its only bad in the falsenegative direction (ie- including substitutes that really arentso violator gets off)

o Made worse w/better econ: probably pricing at the rational profit maximizingmonopolist level so obviously any increase in $ will drop unit sales show false substit

What level is sufficient to drive purchasing power? Hard to sayDuPont is statistical data based, Grinnell is subjective preferences at lower level- DIFFERENT

Grinnelldoesnt 100% follow DuPont(diff analysis!!)- NEED MORE HEREFire and safety services District court uses accredited central service station

o Grinnel ties to Split fire and burglary services apart/include unaccredited services ineach of those two relative markets. NARROW on one pt, BROADEN on another

TWO main Qso Does grinnel have power to raise the P to attack unaccredited or would clients leave?o Can Grinnell P discrim against the part of the market they dont have to get them??

Doesnt that show that they wouldnt be substitutes??Court uses substitutability: realistic alternative analysis, reas interchangeability, low degree of

differentiation analysis to uphold district court viewo Prevalence/size of groups serviced by substitutes is key to Grinnell analysis

NOT cross elasticity of demand People arent using them as substitutes so they must not be=Court logic What about idiosyncratic pref? Dont letsmall group define market with

their inelastic demand/preferenceo NEED RIGOROUS review, not just niche review/idiosyncracies=distort enforcement

Price discrimination elements KEY to relevant mrkt segmentso 1) Ability to ID subset of people/market with idiosyncratic D prefs, raise P on them?o 2) Prevent arb of customers with higher P from taking advantage of the lower P

Opportunistic buyers who are not in the idiosyncratic buyers group

Arbitrage cant be executed in all markets but is it possible here? Not really Hard to buy services and sell to someone else, much easier with

commoditieso P discrim=WT up since everyone paying reservation price, no consumer surplus

GEOGRAPHIC Market definition questiono Court gets it more wrong here, whats the relevant markets? National market because the

planning decisions are made on a national basis uhmmmm

Dissent- gerrymandering! you decided Grinnell is bad and you're working backwards


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o Ask how buyer perceives Geogr market CLEARLY a local market (tho $ at corp level) Supply side, not demand side perspective/organization of decision making

HORIZONTAL MERGER GUIDELINES & Hypothetical Monopolist Test-- how do they regul mrkt def?

Uses SSNIP- small but significant non-transitory increase in price (5% is standard)o

Methodological tool for hypothetical monopolist test, NOT tolerance level for $ increase Q: can you raise prices profitably and not lose market share??

PROCESS: find what would be substituted to, add it to market, then redo overand over until you have your market list/no more profitable SSNIP

o Can also do with Geogr markets to get selling area (matters in retail?)o MIGHT identify mrkt where customers will go outside market in response to P increaseo Might also include 3rdproduct if its something close to product A but not prod As

competitor prod Bo DOESNT generally lead to single relevant market (GOAL: ID competitors in merger)

Share of sales/units can be misleading, distant competitor effect more accurate hereo SSNIP benchmark (P w/o merger) of P can be higher, lower, the same

P effects are quantifiable, not more important than non-price effectso Hypothetical monopolist incentive to raise prices depends on customers substituting away

and companys ability to increase price/profit margins on product FACTORS: past substitution, predicted subst, sellers business decisions documented,

industry participant behaviors, cost of subst, recaptuce %-age (if prod A loses $$when they raise prices but others in that group get that %age it means hypotheticalmonopolist has power)

Critical Loss (number of units lost that would leave profits unchanged) and predictedloss (units that will be lost due to price increase) are key metrics

Higher pre-merger margin=low P sensitivity, smaller predicted/critical loss Higher pre-merger margin =need smaller recapture % to satisfy the test

o Hart-Scott merger analysis is before the merger has occurred so you're going to avoidthe Cellophane Fallacy because you havent GOTTEN to the monopolistic situation wherethe profit maximizing monopoly price has been arrived at

Horizontal Merger Guidelines Completely overhauled in 2010, NOT law/regul but persuasiveo Relevant mrkt deffocuses on D substitution & NOT supply substitution (anti-Grinnell)

Supply helps to ID who is in market but thats AFTER ID the relevant market If no, it seems there would be substitution away from the widget

**Summation of Market definition/approach** MRKT DEF IS ONLY 1 PT MRKT POWER!!Courts generally approach it inductively than deductively (facts and then theory to facts)Reasonable substitutability from consumer perspective is importantCross elasticity (+ or -) is BIG butdont commit the cellophane fallacy

omake sure there is some pre-merger/anti-competitive conduct data (baseline to ensureyou can recognized profit maximizing monopolization thats already occurred)

Grinnell Approach- direct evid of idiosyncratic subst, buy behavior, goods physical propertieso Tech constraints, buyer stmnt, research studies, transport costs (which = BTEs)o Brown Shoe case- everyone in the trade understands mens/womens/kids shoes are diff

so market should be looked at that way, general line of commerce

Can you use cross elasticity data +direct consumer/Grinnell evidence? That strengthens storyo But where the approaches point in different directions, find tie breakers that supports


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the more coherent narrative

--CARTEL BEHAVIOR-- 1 conspiracy cases

Market division agreements, JV agreements, boycotts (anything that P up so D down & DWL)o price by committee, etc or exclusionary behaviors to kill competitiono MRKT div=Each group gets quota to maintain (but incentive is to cheat and raise Q)

Also ways to police cheating3 conditions: high degree of market concentration (few sellers, big mrkt=coordination), low

elasticity (P up=no subst), high BTEs (nobody can assail cartel model if outside of it)

PRICE FIXING & Per Se (Addyston pipe is case #1 here)

Socony Vacuum and CBOT are the two polesChi BOT v US- 1918 Brandeis (heyday of 20th C, out of favor today)

Chi agreed to basic open/close market calls (the Call Rule- horizontal restraint, anything en route)o Govt says per se (like Addyston and TransMO), no showing of mrkt power/effects vs. CBOT

showing ALL good effects Brandeis accepts one-sided record (pro-little buy, more open)EVERY agreement binds/restrains trade, that doesnt make it bad! (CBOT uses RofR defense)

oThis created a public mrkt, more trading, direct buyer/seller relations, more dealers, no private

market risks anymore

Pro v Anti-Competitive: the true test of legality is such that it merely regulates and therebypromotes competition or whether it is such that it suppresses and even destroys competition

o pro-competitive is to strengthen the COMPETITIVE process, not just bring P downo Does the Call Rule regulate and promote OR suppress? MORE competition is key metric

TAKEAWAY: more competitors? Doesnt matter unless more competitive marketo LIST OF FACTORS for RofR- pg 190 Court reviews: Nature, scope, Effects! (facts of

business, condition before and after restraint, nature/effect is probable/actual)

Appalachian Coals v US (1933)- impliclty killed by Socony (but shows diff depression era logic!!)

137 providers agree on 10% commission to help kill destructive post WW2 (glut/bad of coal)o initially enjoined by 1 after pre-deal analysis by DOJ- not tech horizontal more P fixing

INDUSTRY spec conditions means they were making honest effort to remove abuses, makecompetition fairer, promote essential interests of commerce so IT WAS FINE

o a cooperative enterprise otherwise free from objection which carries with it nomonopolistic menace is not to be condemned merely because it may effect a change inmarket conditions where the change would be in mitigation of recognized evils and wouldnot impair, but rather foster, fair competitive opps

NOTE: EU Treaty of Rome makes P fixing rules inapplicable if will improve production/distrib ofgoods or promote technical/econ progress while allowing consumers a fair share of the benefitCHANGE in coalitions between Appalachian coal and SOCONY

3 coalitions within new deal:o business commonwealthers- progressive industrialists, fault of depression was chiselers

(violators of collective norm/well being, competed to hard and drove prices down) great men in cooperation w/govt to make general agreements/P/acts/output


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o cooperative democracy- suspicious of capitalist class/blamed them for depression central-type planning to replace over-competition BUT they wanted the

competition to be accountable committee-type structure with reps from all overo atavistic competition (Brandeisian)- blames capitalists, wants robust, small scale compet

New Deal periodso 1933-35 is coop democracy (Early new deal, NIRA=local committees planningprices/allocation with limited Fed supervisionabject failure)

BUT Schechter gave FDR an out from upopular NIRAo 1935-42- atavistic competitionists get SCOTUS/DOJ power and 5 SCOTUS appts are

Brandeis appointments in 5 yrs before 1940 without this, Socony is not as strong per se rule of competition

o 1942 (Pearl Harbor)- industrialist attack, Perryman indictment=commonwealthersSOCONY Contest: Refiners dump hot oil onto the spot market, kills P, hurts indies

o 33-35 it was MAJOR priority to stop hot oil sale, indies collab-ing w/majors to stopo Ickes (SecofInt) is given job to stop hot oil, told them to plan together! Blessed by FDR

Charles Arnaut (SOCONY vp) came up with Dancing Partner Programo Fine under NIRA but then 35-42 period comes and Schechter/Panama Refining come

down and kill NIRA but the collaboration continued Then Brandeis group comes along and says this is a huge problem! They say

reasonableness doesnt matter because Per Se is the stnd!!!

US v Standard Oil of NY (SOCONY)- SCOTUS 1940- supreme recitation of 1 Per Se illegality, depression-ish

Horizontally integrated oil people who were fixing prices for bad oil- 83% of oil in market!o CF- App Coal: not fix prices on consuming market, that was production side

PER SE restraint if price fixing is involved- RULE, no intent/effects showing needed, evils gone? tougho Ruinous competition, financial disaster, evils of price cutting are still not price fixing

justifications they are always alleged!

Sherman protects vital part of our economy against any degree of interference.o Legsl didnt give us power to say if P-fixing schemes are wise/unwise, healthy/destructive

Proof that the combination was formed for purse of price fixing? Thats enougho Even if incapable (US v Rabinowich), couldnt accomplish it? Whatever

BROAD tampering with market structures language = amorphousArnold/Brandeis group undercuts the whole reasonable, necc restraint administration set up

o Cfs App Coal by saying (pg 199)- unlike this case, that was just wholesale and had noretail impact (even though it was)PLUS that was injunction (not active yet

But today the level doesnt matter, its all bad if conduct is wrong PLUS verb oftrying to agree shouldnt matter that is not active yet

TAKEAWAY- P fixing? dont need anti-competitive effects or power AND reasness isnt a defenseo WHY NOT Joint selling agent in App Coal, price fixing during hours in CBOT??

Pg 201- harkens back to TransMO-type logic. BROAD description of price fixingPost-Socony: Rule of Reason (broad, flexible, inquiring 1 look) and then there is rigid price

fixing/Per Se inquiry (tampering attack that shuts down defenses)- P is central nerve of econ!NOTE: the category of price fixing over time has changed a bit (to include things that arent

specific price fixing

o Catalano beer case pg 205 is like price fixing and its per se to kill short term credito AZ v Maricopa Co (pg 206)- Drs agree onmaximum fee schedule and thats price fixing


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too formalistic? Max P has same effects as min P (benchmarking, coordination)o JTC Petroleum- channel of distribution price fixing conspiracy was bado Natl Macaroni Manuf- conspired to keep down durum P, intent: ward off price compet=BADo Levine v Cent FL Med Affl- SJ to Insur Co that set max reimbursement because Drs could still

fluctuate/lower their prices and experiment its price fixing but not antitrust kind!

Characterization of joint action (pp. 211-213; 215-229)

Natl Soc of Prof Eng v US- 1978 SCOTUS- Doctrinal Quick Look foundation (~CalDental 5-4 same Crt)

No P talk w/clients until choose an engineer, otherwise will be unethical and grab super low bidsSCOTUS looked at Mitchell v Reynolds RofR and then to development in CBOT and Stnd Oil

o Reluctant to apply per se to professional associations, (antiself-policing blunt instrum)TWO inquiries-

o 1) necc effects are plainly anticompetitive/illegal per seo 2) where the facts of the business must be reviewed for competitive significance

Court said you cant say unethical temptation warrants doing away with it (~ruinous compet)o RofR doesnt supportsaying competition itself=unreaso Price competition = inherently problematic/destructive? holds zero weighto Competition is a beneficial 1stPrin, US industrial policy founded on it, wont hurt safety

NORMATIVE case even if NSPE is correct as a factual matter, this is a predictive case that showsproblem is competition argument doesnt work

Broadcast Music (BMI ASCAP) v CBS- user performance copyright Qs JV that would blanket license copyrights to people, take percentage of revenues

o 1950 decree forced them to offer more than one type blanket licenseo CBS says blanket liscn are bad! If they arent they are still monopolists & kill whole

COURT says NOT Per Se (tho little experience allows them to dig, prevents per se)arrangements are economically beneficial, flex enough so NOT per se framework

o Copyright Act weakened individual bargaining, made it hard for this kind of cost avingefficiency so is this a better arrangement? Necc economically?

NSPE- does this facially seem like it would restrict output? No, might help efficiency and hepoutput

o NOT naked restraint of trade that does anything but stifle compet (White Motor v USBALANCE indeminified access to copyrights with protecting efficient defense of copyrights

o the very terms price fixing should never be taken literally Market needs this, how else would defense efficiently be done?

o Would this affect the central nervous sytem of the economy? (Socony-Vacuum) NOT ALL restraints among actual/potential competitors that have impact on

price are per se Sherman violsThis is a different product from the individual license uses dont analyze like it! Needed reviewTAKEAWAY: No ruinous compet D BUT if you say combo helps output, you might escape per se

o Plausible story up front is KEY, shape efficiencies argument(does good storyundermine Per Se in light of Board of Regents and other Quick Look/RofR cases?)

DISSENT- this isnt per se but it is viol of RofR and it should be anti-trust violo All or nothing system is unique, classic example of economic discrim when you take a

percentage of peoples revenues/sales across the board because that isnt tied to the use


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o Also barrier to entry for someone that wants to enter the market, get air time by pricingLOW and getting someone to buy it via value play

o aggregation of economic power e closely scrutinized. Especially important whenaggregation is composed of statutory monopoloy privileges

Remand: CBS had chance to negotiate and didnt!o Buffalo Broadcasting- even small TV stations dealing with BMI could compete too!

NOTE: CBS tried to get together with other networks to schedule slates of boring but usefulprogramming so that nobody would suffer is that a violation??

RULE today: per se exists and the RofR exists and they do work sometimes

US v US Gypsum Co- interseller price verification is ok if the lower price is being offered in goodfaith (not Robinson Patman violation) NEED MORE

ALSO- criminal cases MUST have anticompetitive INTENT and EFFECTo BUT if there is per se violation alleged, you just need effect because intent is inferred

there

US v Brighton Building and US v AlstonGypsum isnt BMI- this is the kind that facially reduces output, BMI wasnt (PERNICIOUS!)

2 recent cases at other end of the spectrum:Texaco v Dagher (2006)- JV (FTC approved tho like merger) between shell and Texaco to market

petrol on west coast, sued under Per Se (not RofR), SCOTUS says attacking lawful JV? you mustbe using RofR (since Per Se is only for NAKED obvious restraints)

o JVs could be lawful normally and here so no naked restraintAmerican Needle v NFL Properties- excl licensed grant to reebok for apparel branding, NFL says

single entity (defense) so they are incapable of 1, loses 9-0o see Copperweld 1909 where parent & sub cant agreeing under 1 not even subj to

RofR either because there is only 1 party/single firm.. corporate firm boundaries are impregnable for antitrust look at control!

----QUICK LOOK----

NCAA v Board of Regents- 1984 SCOTUS, Quick Look described!

Dont want to apply per se to restr of TV arrangements, education deference hereo Protecting live attendance, amateurism!o But is this classic per se since it wont be responsive to consumer demand? Output down

Exception for leagues in so much that they MUST have some collaboration (BORK) ESCAPE!!o Production function of the league is pretty clear in its requiring collaborationo

NCAA gets deference here (but it dies when burden shifts and they got nothing)NOT full RofR despite not being Per Se shift burden to NCAA to show pro-competitive benefit

o Pg 239- footnote 58: Areeda- not unlawful per se BUT there are places where a rule ofreason analysis in its full breadth doesnt need to apply

Can be done in the twinkling of an eye ie- quick looko BUT there doesnt seem to be a decent reason, this hurts output! No mrkt power? Unnecc

AND there is market power (no substitutes) DuPont Monopoly likeo RofR puts heavy burden on establishing an aff D that justifies dev from free market


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BUT this isnt a BMI-like competitive JV No precompet efficiencies could be marketed without these restrictions!! NCAAMBB

DISSENT- Rhenquist and White say its OK under RofR, MRKT DEF!! entertainment marketTAKEAWAY: REJECT per se if restr are inherently necc (NSPE, caldental, prof assoc generally)

o Novelty here is stopping short or rule of reason analysis (though it does the analysis(sort of) it says they arent fully required)

Twinkling of an eye: further than per se BUT short of RofR Court wants justifications and then proceed to RofR or kill it if bad reasons

Brown v MIT- financial aid price fixing/collusion in Ivies, not competing on price discounts?? Isdiversity an allowable justification for anti competitive effects?

The ruinous compet arg might work when ruinous socially not economically? NO!Cali Dental v FTC- SCOTUS 1999, sort of kills quick look?

501c for group of dentists ads but its 75% of dentists in the area high value of membershipQ: is quick look justified here?

o NO, if anticompet effects are far from obvious, the RofR demands more thorough enquiryNO quick look because anticompetitive effects are not comparably/suffobvious, maybe a

potential/ plausible net precompetitive effecto Are professional price and quality advertising sufficiently verifiable destructive to fall

into quick look general rule? NO Rudimentary understanding of econ=fast look, Is it of the kind that usually

produces anti-competitive effects?? Does this type of restraint look fishy??o ALSO want some self-policing of professional associations

Professional context KEY, need empirical evidence of anticompet effects Does limitation/advertising guidelines limit the total delivery of dental services?

THAT should be the question at issuePer se, quick look, RofR arent fixed categories, no bright line separating them since often market

research/conditions will need to be done before or after a conclusiono There is a sliding scale in determining reasness- need quality proof (varies w/circumst)

Need circumstances, details, logic of the restraint. Is experience of the market soclear that confident conclusion that principal tendency will come from quick look

Dissent- Breyer (technocrat! Defer to FTC/agencies here, Not private parties, Harvard School)o Just need 4 qs answered: whats the restraint at issue, what are likely anticompetitive

effects, offsetting precompetitive ones? Sufficient market power to make a difference???o Breyer note- when private parties suing, would rather leave to admins)

FIVE STEPS (Cranes pedagogical steps) quick look v RofR-ish- 1 suits1) P: restraint (ie- contract, combo, restraint of trade), proves existence of agreement

o Substantive and evidentiary killer2) P: likely anticompet effects of #1 (analytical necc to track quick look intersecting with RofR)3) P: Relevant market and market power OR anticompetitive effects in the relevant market4) D gets burden to either:

o Rebuts #3 (NOT AVAIL IN QUICK LOOK)o Shows offsetting procompetitive effects (ONLY viable rebuttal for quick look attack)


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5) P shows less restrictive alternative for those precompetitive benefits (balancing??)o Open Q to what extent this exists/is available after D shows pro-competitive natureo If this is rational basis-like, dont balancequick look/interm scrutiny doesnt really

have it strict scr/per se does have balancing more In RofR the DC Circuit has said its open balancing questions

STEPS FOR QUICK LOOKBased on rudimentary restraint shown in #1, court says we know that, burden immed to #4b (D

show offsetting precompetitive effects)If #4b burden met, it goes back to step #2 and P gets burden, and then progression continues on

Polly Gram- where quick look is moving, DC Circuit 20053 Tenors perform in 2 concerts, 3 Cos have rights, make JV to promote/market 3 tenors 3rd

concert, agreement to market is time restriction on discounting 3 tenors 1&2.o Activities w/in a JV are not per se illegal but this isnt within JV scope

DC Circuit says arent sure there should be a quick look- should be continuum! No 3 testsHere, agreement was inherently suspect, polygram didnt identify any competitive justification

Limits to per se illegality; Market division

Texaco v Dagher- SCOTUS 2006

JV to refine and sell gas, economically integrated JV CANNOT viol 1, cant agree with yourselfo Prior approval from FTC, AGs of stateso JOINT market participation, not competition here price setting is hallmarkJV activity

literal price setting but its not the unlawful/Sherman kind this is core business function so its not ancillary by definition, immune-ish

Timken Roller- 1951

Restrain interstate/foreign commerce by divvying up trade through trademarkprotectiono Allocation of territory, import restriction, market protection go WAY beyond merely

protecting a trademark/affording protection to a nameHorizontal restraint here under the color of trademark licensing BAD

US v GM- 1966Telling dealers not to deal w/wholesalers undercutting price= Eliminating class of competitors

o No ruling on location clauses thoughvertical or horizontal here? CRITICAL is that the dealers get together among themselves

o If horizontal & vert exists, H rules apply & will be judged more harshly than V restraintsUS v Sealy- 1967

Licensees to fix prices of items sold, territorial arrangements by licenseeso Sealy=merely the instrumentality dealers get excl licenses from entity they created

Sellers said V! Court said no tried to make itV-looking but it was just baseline market divisiono Clearly per se case because they maintain prices, prevent competitive incursions

*NOTE: Sealy & GM cases are important when thinking about V & H restraint differences

US v Topco- SCOTUS 1972Private label maintained by tons retailers, VERY restr agreements on zones/resale prices,

approval of competitors BUT done to compete w/majors? Need collab/restr=procompetitiveo District court says intrabrand competition loss is offset by interbrand competition!


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Burger concur said bigs will get bigger an want protection of competitionGovt says its territorial restriction & a restriction on customers who can buy the label

o Main thing D needs to rebut is the territorial carve ups, make Sports League argument??Inability to weigh, in meaningful sense, competition here vs there=why we have per se rules

o dont tolerate naked restraints! Thats for Congress! Sherman is antitrust magna carta got rules for a reason, no rambling through wilds of econ theory ft 97** Sherman is magna carta of free enterprise, single backstop against abuse

Dissent- these are minimally ancillary restraints that we should view as being reasonableo Addyston pipe didnt lay down per se rule, didnt say it was de facto horizontal divisiono Predictability?? We are supposed to struggle with difficult Qs, sholdnt abdicate that role

Horizontal shouldnt be a blanket rule/prohibitionTAKEAWAY: market carve-ups are just like price fixingNOTE: CRUCIAL to Chicago school kick-off post-Topco. FREERIDER PROBLEM is the huge issue

o Without mrktcarve ups ppl sell in areas they dont invest, underinvestment in aparticular function but they reaping market share where they haventinvested!!

Without fiefdoms, there are no incentives to operate/invest in your idea becausethe dude across the street is undercutting you

Ex: Co B sells in Co A territory despite not advertising there at all (or anywhere)want everyone to invest in brand promotion, etc

DOMINANT explanation for vertical restraintso Free riding (on pollygram continuum) might trigger RofR, court familiar w/justification

Like JV? they invest in brand creation, its not naked mrkt division and price fixingPalmer v BRG of GA- SCOTUS 1990

Agreement between 2 BAR Cos to not compete in (a) and outside (b) of GA, P shoots upo DID compete before and then stopped

SCOTUS: absurd to say this=RofR, clearly market division/per se! theres no econ integration hereo Cant just license trade names/agree not to compete, thats end around of antitrusto Socony Vacuum- combo formed to restrain, depress, peg prices is per seo TopCo showed that if you compete at same level of market and divide up, its bad

Remains hardcore price fixing/bid rigging/market division get back of hand per se treatmentToday there is a core of per se illegal but that core has been contracted (IN dentist case, etc dont feel

Socony-esque)

---BOYCOTTS/REFUSAL TO DEAL--- (pp. 307-322) per se illegal??In BMI they said that something new is made possible by collab and that means OKOther Cases

oWM Mantague v Lowry- 1904, restr on who people can buy from, allowed arbitrary apprejection=clearly antitrust! it requires conformity to a condition of doing business

o Paramount Famous Lasky- 1930, 2500 theatre owners dealt with via standard K anddeposit, arb agreement

despite arbitration, it seemed they entered into unusual agreements that unreassuppress normal competition so that makes it illegal

State St Bank and Trust- business methods can be patented so is there some diff degree ofprotection depending on patent protection itself?


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Fashion Originators Guild of America v FTC 1941 (still good law post-BMI??)Guild member boycott people that sell style pirates, band together for protection=HORIZ RESTR

o Design registration bureau with enforcement arm ~Socony???FTC said agreements, understandings/conspiracies that lessen/hindered compet btwn retailersHavent achieved it? Not important only matters if they try/want to deprive public ofcompetition benefits

o Hadnt brought qual drop? P rise? irrelv. INCIPIENCY=key, could lead to emBlack concerned about extra-govt agency taking power to regul compet by itself

o What about private self-regulation issues? THIS says want them in public processTortious so it needs protection? Go to state courts!

Klors v Broadway-Hale- 1959

BH (showy) conspired w/3rdP to sell to Klors (small) @ inflated P/unfav terms, HORIZo but there are many merchants around so not bad? 9th C says no public injuryo 9th C says no public injury so not something we care about

SCOTUS: interrupting natural flow IS bad, public injury isnt needed since its clearly bado Group boycotts long in forbidden category, no open mrkt compet? Never too smallo Must stop if tendency is creeping or at a full gallop

Private quarrel or full anti-competitive action? Malice cant convert tort to AntiTInjury to competition or competitors? District court says this is just injury to competitor, not

competition generally (which is courts concern)Does this mean any tort BH does to hurt Klors is a treble damage-ready crim suit? Tort to AntiT??

o Here, concerned w/competitors AND competition NYNEX seems to swing back tocompetition not as much competitors so this case might be a bit different today

Free rider argument in BH? BH informs customers then Klors undercuts BH after educate?o Stores dont want direct manuf

-to-buyer internet selling for same reason?Chicago school likes this free rider thing and then the Ds always win the RofR cases because they

use it, Ps cant show market power and then its a game overo Degree of rest vs danger of free riding =Q. how large can restr be? neighb/city/state??

Whats a reas restraint?? Few cases get there but its outstanding question

Rambus- failure to disclose patents to competitor, wouldve allowed to design the stuff the other wayDC circuit says this isnt an antitrust claim that they didnt share info

o Mayyyyybe if the choice was we would have made other technology but its definitelynot when damn it, you stopped our products!

Is there ground between per se and just non-use? Rambus seems to say that certain categories ofbusiness behavior are just not in antitrust AT ALL

o Rambus shows that without agreement/combination you are NOT going to have anysort of antitrust

NYNEX v Discon- 1998, Breyer- Baby Bell case, shrinks anti-T substance, opp of Klors literalism per se

NYNEX had to remove solo connections, install those adaptable to national carriers, rebatesNYNEX for inflated price (secret kickbacks gets around rate regulation)

o consent decree to comply with this


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ATT: Use Klors and FOGA to say that this is horizontal restraint thats invalid? Ill motive to bechoosing supplier A in order to screw supplier B

o 2nd C says per se illegal, cutting discon out of chain of services BUT SCOTUS reversesQ: per se group boycott where one merchant favors one seller over another? NO!

o P here must allege/prove harm, not just to 1 competitor but to competition/processNOT an anti-trust case AT ALL (????????)Injuring consumers? SCOTUS says injury to consumers not competitiveness down, its fraud

o biz torts to antitrust?? Done for 3x damage only! Use other Aves, everyone would sueSharp (1988 case looked at in vertical restraint section) ?????

Klors does not apply to context where manuf is talked to by retailer other retailer gets screwedo Is this Klors? Dissent says yes, Majority says this is vertical! They say only sell to us AND

there is no horizontal manuf agreement no horizontal group of manufs has said we

will only sell to retailer A (as they did in Klors)Limited to its facts by Chicago school not really overturned necessarily

Post-WW2=golden are of anti-trust law (SEE NOTES IN IDEOLOGY)Harvard and Chicago does begin to converger in late 80s-todayProcedures by which antitrust law enforced becomes MORE than the substance

o What are limitations on the private enforcement?o Georgetown study on private litigation- large sample of 70s-80s cases

V > H rest challenges, competitors/Dealers bring 50%+ cases (less customer) Litigation $$ settlement values high

FTC v Superior Court Trial lawyers (pg 335, used as class hypo)

Pub pol arguments by pro bono lawyers, fixed prices-ish, took no new casesPurely horizontal, ~ NSPE BUT IT DOESNT HAVE NW WHOLESALE attack to rivals

oCustomers/manufs directed,

doesnt meet the NW Wholesale Test!!!!! Also, trial lawyers have zero market power

Court: per se illegal!!! If it wasnt a group boycott what else is it? Output rest like in IN Dentistscase manipulation of the market inputs

Footnote: P fixing & its understood to be a group boycott tho no NW WholsaleClairborne Hardware- 1962, boycott of businesses that wouldnt serve African Americans

1st A protected boycott upheld here, no profit from boycott like Trial Lawyers so diff standard!CABINING PER SE BOYCOTT RULENorthwest Wholesale v Pacific Stationery- SCOTUS 1985 (DC said RofR, 9th C says per se), at odds w/Klors?

Kicked out of wholesale club without reason, no method to challenge/appeal 1? No dmgs showno

CHALLENGE is H boycott, not that group is a viol of antitrust (no Const challenge to DP) Q: Concerted refusal to deal when you just boot someone? Huge cost adv to membership

o Silver v NYSE- 9th C says RofR only if there is a procedural safeguard to review expulsion pernicious, justification-less restraints? Need to narrow self-policing per Silver? no

o 4 Robinson-Patman is very pro-self regulation, no constriction of Sherman thoo Cant hide behind statutory authority (Robinson-Patman exempting co-ops/allowing them to

give rebates/organize themselves) BUT opposite side DOESNT say that you only get Per Se w/o procedural safeguards


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When do you apply Per Se? 342: Per Se can be attacked when persuading/coercing firms or cuttingthem off from supply needed to compete big boys strangle/choke them out

o Does this kill the market power requirement? Maybe yeso MUST have H agreement somewhere between competitors at same level NOT manuf/distribo Meets REQ IF

bunch of mfgs persuaded by one guys competitor not to sell to rival (KLORS

bunch of customers boycott distrib because of rival coercion (FOGA) rivals agree! NW wholesale? NO, that just says firm cant be part of coop, not that

they cant do business with that firm outside of the coop

if it was agreement beyond the coop AND in coop, THATS a boycotto simply denying access if NOT a sufficient boycott

IS THIS JUST A TAILORED FORM OF THE ROFR??o EXTRA BELLS AND WHISTLES ADDED HERE SO MUCH THAT IT CHANGES THE PER SE

RULE? NOT SAME THING? conclusion is focus here, not the mechanism of analysis, no burden/process review

BIG confusion here about how far Per Se goes with group boycotts. Klors used here?o What about Board of Regents at other end? Some things require collusiono What about BMI? Does this increase econEff, make markets more competitive?o SCOTUS rejects/hates Per Se but says they could have used RofR if they wanted

Court doesnt want to check procedures BUT also rejectcoop immunity from antiT BUT are there certain classes of behavior that are subject to non-Antitrust

regulatory scheme? ~Silver v NYSE (NYSE is delegated self-regulation powerby SEC, secur law, not antiT)

Exclusion act itself doesnt mean there is animus and thereby a probable anticompetitive effecto **W/O market power or excl access to key input, expulsion NOT auto anticompeteffect!!

DC was right! Per Se doesnt apply here IN Dentists SCREWS H group boycott descrip

o says NW Wholesale=boycott of suppliers/customers ) but thats WRONG, its rival boycottdiscussion- KEY factor is the coercion/agreement among RIVALS

rival level doesnt even need market power, just need to A group w/market powero Must be directed against the competitor AND it must cut off essential supply AND absence of

plausible efficiency arguments

FTC v IN Federation of Dentists- SCOTUS 1986- case screws everything!!!! Outlier in Quick Look

Group up to prevent participation w/insurance Xray mandates for least $ treatment evalo First move by dentists is to say this is like NW Wholesale they arent part of our groupo oustside of scope of antiT?

Had trade assoc but that was bad, then had union w/ HUGE % dentists in area 7th C: NOT bad but suppressed compet w/dentists whod compete to comply w/Insur companies

o no evid BUT a reas mind could conclude compet for patients had mrkt dislocation!! Court has been slow to apply per se with prof assoc

o when there is no immed obvious econ impact (NSPE, BMI) but here its too much- RofR! CLEAR H agreement that impairs ability of mrkt to adv social welfare, goods mrkt dislocated

o No qual of care (~NSPE/TransMO) arg here in compet mrkt cant say quality will decline No findings of economic impact so its not viol as MOL? Didnt identify a product and geogr market

o Court talking about potentialthere wasnt much technical attention to that buuuutMarket


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power is surrogate for detrimental effects if you can directly prove anti-competitive effects you can use that instead!!!

o Court: concerted effort to withhold info from consumers is likelytodisruptmarketfunctioning and itll be a price fixing mechanism

Last ditch: unauthorized dentistry if insurance employees look at x-rays!!o

antitrust when actively supervised by state (See 10/19 notes on Raisin case!!) TAKEAWAY: skip market def/power steps! D must show procompet effects up front in quick look

o There MUST be SOME quick look being done in IN Dentist case soft, across the board quick look (& Crane says he doesnt know what to do with it)

Reimagining Cal Dental quick look through IN Dentisto Not really H P fixing as such but quick look as done here (no mrkt def/power) is bizarre

---JOINT VENTURES---

What happens in JVs/what their results are- what are purposes of antiT law?? Attack which of belowo Total welfare increaseso Total welfare decreases (JV fails)o Total welfare decrease (JV succeeds)o Prod welfare increase > consumer welfare decrease

Output reductions or wealth transfers? That distinction matterso Consumer welfare decrease > producer welfare increaseo Consumer welfare increase but least restrictive alternative? (Terminal RR)

Net gain despite JV but could they have gained more? Joint venture is amorphous term, lots of (+s) but can also have issues (statis? WT=D down w/P up?)

o But prod eff that means P down? But then maybe BTEs that leads to P up? Eff gain>DWL? Rent seeking- hoarding scarce inputs, pushing costs up as BTE

US v Terminal RR- SCOTUS 1912 (Seminal case for efficient JV but ineff failure to negotiate/deal)

Railroad junctions are MS river owned by same group, great for insiders (cheap!) but thats ito Court: ExtraO collusion cant stand, disallow=arb discrim that was injurious to commerce

Forced to allow access to the terminals, eliminate non-member discrim charges/billing practicesCourt: essential/infrastructure facility thats indispensible, must be opened to all (free riders tho??)

o Obligation of non-discrim like a common carrier-type duty least restr means to increase consumer welfare? Opening this=best way to max consumer welfare

AP v US- SCOTUS 1945

DC said restricted coop access to 1200 AP membership, restrictive no appeal processo cant sell new or AP news to non-members is that anti-competitive?? Its their news!o BYLAW allowing anyone to veto a new member is the issue, not the news item

Rest by law hindered/impeded growth of compet papers- less rest alt to get the eff/protect news?o Net effect is to enter these cities, trade restraints are aimed at destruction of

competition.blocks initiative thats key to the system

do what you want with your property/news but CANT go beyond it by k/combo and hinder orobstruct free/natural flow of commerce

o Here, pooled power to prevent competition, not using their ingenuity to strengthenthemselves as much

o Newspaper w/o AP is at disadvantage, its critical piece of what paper has, weapon for AP!


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Indispensible issue instead of enterprise and sagacity? Yes it is here BUT indispensability test would kill antitrust in fields where not indispensible

Having member criteria safe harbor, Membership exclusivity can be anti-trust mechanismUS v Visa- 7th C 2003

Dual governance (OK) & exclus rules in the dual markets of cards/network services

o Amex and Discover kept on outside, excl by 20k banks is really what screws em (network!)RofR applied - REAL full CBOT-like RofR (not crappy quick look/IN Dentists)

o Mrkt power? YES, subst impacts on commerce? YES, Procompetitive benefit? They try and then if make it, govt must show less rest alt

Market here had no reas subst for network services so there was clear market powero Large % of concentrated market, competition hurt, innovation hurt (Visa CEO)

Visa uses ruinous competition argumento 2 sided market! (2 diff user groups on 2 sides of the platform, here: merchants/consumers)

both groups put in/take out, pay for the service (here in txn costs/interchange feespaid by merchants, interest/fees from card holder)

MUST have some balance in two sided markets so imbalance doesnt force one sideto subsidize the other

also dontwant people to get squeezed so they get inefficient & shift costso free rider argument, it would have been made here

Visa: hurting competitors, NOT competitiono Court: presumptive legal exclusive dealing arrangements that have been upheld before? NO

This is a total block not an excl dealing arrangementVisa: the exclusion if its here is ancillary to a precompetitive business strategy, need it?

o Court: issuing rival cards hasnt been found to torpedo cohesionRELATED CASES

o Visa v Sears: 10th C: RofR, ok for Visa to block Sears from issuing a card using its structure The rates are variable, significant intrasystem competition so no market power!

o Worthen Bank & Trust Co- MasterCharge blocked rival NBI from issuing card on network Group boycott? No, productive capacity here was key and allowing competitor in

would torpedo that (need national network and ok to prevent compet from killing it)

antitrust exam consolidation

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