Law Commons^™

Scrutinizing Anticompetitive State Regulations Through Constitutional And Antitrust Lenses, Daniel A. Crane

Articles

State and local regulations that anticompetitively favor certain producers to the detriment of consumers are a pervasive problem in our economy. Their existence is explicable by a variety of structural features—including asymmetry between consumer and producer interests, cost externalization, and institutional and political factors entrenching incumbent technologies. Formulating legal tools to combat such economic parochialism is challenging in the post-Lochner world, where any move toward heightened judicial review of economic regulation poses the perceived threat of a return to economic substantive due process. This Article considers and compares two potential tools for reviewing such regulations—a constitutional principle against anticompetitive parochialism …

State-Action Immunity And Section 5 Of The Ftc Act, Daniel A. Crane, Adam Hester

Michigan Law Review

The state-action immunity doctrine of Parker v. Brown immunizes anticompetitive state regulations from preemption by federal antitrust law so long as the state takes conspicuous ownership of its anticompetitive policy. In its 1943 Parker decision, the Supreme Court justified this doctrine, observing that no evidence of a congressional will to preempt state law appears in the Sherman Act’s legislative history or context. In addition, commentators generally assume that the New Deal court was anxious to avoid re-entangling the federal judiciary in Lochner-style substantive due process analysis. The Supreme Court has observed, without deciding, that the Federal Trade Commission might …

The New Road To Serfdom: The Curse Of Bigness And The Failure Of Antitrust, Carl T. Bogus

University of Michigan Journal of Law Reform

This Article argues for a paradigm shift in modern antitrust policy. Rather than being concerned exclusively with consumer welfare, antitrust law should also be concerned with consolidated corporate power. Regulators and courts should consider the social and political, as well as the economic, consequences of corporate mergers. The vision that antitrust must be a key tool for limiting consolidated corporate power has a venerable legacy, extending back to the origins of antitrust law in early seventeenth century England, running throughout American history, and influencing the enactment of U.S. antitrust laws. However, the Chicago School’s view that antitrust law should be …

After Search Neutrality: Drawing A Line Between Promotion And Demotion, Daniel A. Crane

Articles

The Federal Trade Commission's (“FTC” or “the commission”) January 3, 2013 decision to close its longstanding investigation of Google1 brings to a close a flurry of discussion over the possibility that Google could become subject to a “search neutrality” principle in the United States. Although the Commission found against Google on several grounds, it rejected petitions from Google's critics to create a search neutrality principle as a matter of antitrust law. This essay briefly analyzes what remains of U.S. antitrust scrutiny of Internet search bias after the Google settlement. In particular, it suggests that a sensible line can be drawn …

Bargaining Over Loyalty, Daniel A. Crane

Articles

Contracts between suppliers and customers frequently contain provisions rewarding the customer for exhibiting loyalty to the seller. For example, suppliers may offer customers preferential pricing for buying a specified percentage of their requirements from the supplier or buying minimum numbers of products across multiple product lines. Such loyalty-inducing contracts have come under attack on antitrust grounds because of their potential to foreclose competitors or soften competition by enabling tacit collusion among suppliers. This Article defends loyalty inducement as a commercial practice. Although it can be anticompetitive under some circumstances, rewarding loyal customers is usually procompetitive and price reducing. The two …

Section 5 And The Innovation Curve, Daniel A. Crane

Book Chapters

the ftc’s authority to use Section 5 of the FTC Act to reach anticompetitive conduct that would not be illegal under the Sherman or Clayton Acts has been much discussed in recent years, particularly in conjunction with the FTC’s enforcement action against Intel. As of this writing, a Section 5 action against Google seems imminent.

The Institutions Of Antitrust Law: How Structure Shapes Substance, William E. Kovacic

Michigan Law Review

Daniel Crane's The Institutional Structure of Antitrust Enforcement ("Institutional Structure") may do for antitrust law what Essence of Decision did for public administration. Unlike most literature on antitrust law, this superb volume does not address pressing issues of substantive analysis (e.g., when can dominant firms offer loyalty discounts?). Instead, Institutional Structure studies the design and operation of the institutions of U.S. antitrust enforcement. Professor Crane skillfully advances a basic and powerful proposition: to master analytical principles without deep knowledge of the policy implementation mechanism is dangerously incomplete preparation for understanding the U.S. antitrust system, or any body of competition law. …

Antitrust Rulemaking As A Solution To Abuse On The Standard-Setting Process, Adam Speegle

Michigan Law Review

While many recognize the critical role that technology plays in modern life, few appreciate the role that standards play in contributing to its success. Devices as prevalent as the modern laptop computer for example, may be governed by over 500 interoperability standards, regulating everything from the USB drive to the memory chip. To facilitate adoption of such standards, firms are increasingly turning to standard-setting organizations. These organizations consist of members of an industry who agree to abide by the organization's bylaws, which typically regard topics such as patent disclosure and reasonable licensing. Problems arise, however, when members violate these bylaws …

A Neo-Chicago Perspective On Antitrust Institutions, Daniel A. Crane

Articles

It has long been fashionable to categorize antitrust by its "schools." From the Sherman Act's passage to World War II, there were (at least) neo-classical marginalism, populism, progressivism, associationalism, business commonwealthism, and Brandeisianism. From World War II to the present, we have seen (at least, and without counting the European Ordo-Liberals) PaleoHarvard structuralism, the Chicago School, Neo-Harvard institutionalism, and Post -Chicagoans. So why not Neo-Chicago? I am already on record as suggesting the possible emergence of such a school, so it is too late for me to dismiss the entire "schools" conversation as window-dressing. This Symposium is dedicated to defining …

Pharmaceutical Patent Litigation Settlements: Balancing Patent & Antitrust Policy Through Institutional Choice, Timothy A. Cook

Michigan Telecommunications & Technology Law Review

Should a branded pharmaceutical company be allowed to pay a generic competitor to stay out of the market for a drug? Antitrust policy implies that such a deal should be prohibited, but the answer becomes less clear when the transaction is packaged as a patent-litigation settlement. Since Congress passed the Hatch-Waxman Act, which encourages generic manufacturers to challenge pharmaceutical patent validity, settlements of this kind have been on the rise. Congress, the Department of Justice, and the Federal Trade Commission have condemned these agreements as anticompetitive and costly to American consumers, but none of these bodies has been able to …

Toward A Unified Theory Of Exclusionary Vertical Restraints, Daniel A. Crane, Graciela Miralles

Articles

The law of exclusionary vertical restraints-contractual or other business relationships between vertically related firms-is deeply confused and inconsistent in both the United States and the European Union. A variety of vertical practices, including predatory pricing, tying, exclusive dealing, price discrimination, and bundling, are treated very differently based on formalistic distinctions that bear no relationship to the practices' exclusionary potential. We propose a comprehensive, unified test for all exclusionary vertical restraints that centers on two factors: foreclosure and substantiality. We then assign economic content to these factors. A restraint forecloses if it denies equally efficient rivals a reasonable opportunity to make …

Reflections On Section 5 Of The Ftc Act And The Ftc's Case Against Intel, Daniel A. Crane

Articles

The Federal Trade Commission’s (“FTC’s”) unprecedented enforcement action against Intel raises profound issues concerning the scope of the FTC’s powers to give a construction to Section 5 of the FTC Act that goes beyond the substantive reach of the Sherman Act. While I have urged the FTC to assert such independence from the Sherman Act, this is the wrong case to make a break. Indeed, if anything, Intel poses a risk of seriously setting back the development of an independent Section 5 power by provoking a hostile appellate court to rebuke the FTC’s effort and cabin the FTC’s powers in …

Linkline's Institutional Suspicions, Daniel A. Crane

Articles

Antitrust scholars are having fun again. Not so long ago, they were the poor, redheaded stepchildren of the legal academy, either pining for the older days of rigorous antitrust enforcement or trying to kill off what was left of the enterprise. Other law professors felt sorry for them, ignored them, or both. But now antitrust is making a comeback of sorts. In one heady week in May of 2009, a front-page story in the New York Times reported the dramatic decision of Christine Varney-the Obama Administration's new Antitrust Division head at the Department of Justice-to jettison the entire report on …

Antitrust Modesty, Daniel A. Crane

Michigan Law Review

Given Hovenkamp's influence and intellect, the publication of The Antitrust Enterprise is a major event, particularly since he sets out, according to the book's jacket, to provide "the first authoritative and compact exposition of antitrust law since Robert Bork's classic The Antitrust Paradox was published more than thirty years ago." Nevertheless, one could quibble with the jacket's claim. Richard Posner substantially updated his own authoritative and compact exposition of antitrust law in 2001. In a 2003 book review, Hovenkamp called Posner's second edition a "marvelous and important book." So, before beginning a review of Hovenkamp's new work, it seems necessary …

Antitrust Enfocement And High-Technology Markets, William J. Baer, David A. Balto

Michigan Telecommunications & Technology Law Review

Although the antitrust laws apply to all industries, the application must be tempered in each case by the myriad ways in which competition can be modified by structural, behavioral, technological, regulatory, and other characteristics. The Commission applies the antitrust laws with sensitivity to the special characteristics of high-tech industries and of intellectual property, but also with the recognition that--as in other industries--competition plays an important role in spurring innovation and in spreading the benefits of that innovation to consumers. This focus is not new. This balanced approach has roots that go back at least to the 1977 Antitrust Guide to …

Abuse Of Trademarks: A Proposal For Ompulsory Licensing, Mara L. Babin

University of Michigan Journal of Law Reform

This article neither deals with the propriety of the Federal Trade Commission's (FTC) proposed order nor evaluates the effectiveness of compulsory trademark licensing as a remedy for unfair trade practices.8 Rather, the pending cereal industry case is used as a point of departure for an examination of the problem of trademark abuse and the responses of the courts, the Congress, and the FTC to it. Acknowledging the legality of compulsory licensing of trademarks, the article suggests legislation which will incorporate licensing and standards for its application. Such legislation would make licensing an accessible remedy for trademark abuse while accommodating both …

Restraint Of Trade--Trading Stamps--The Federal Trade Commission And The Green Stamp: The Effect Upon Competition Of Restrictions On Distribution And Redemption Of Trading Stamps, Michigan Law Review

Michigan Law Review

Sperry and Hutchinson Company (S & H), the largest trading stamp company in the United States, has maintained two policies throughout its seventy-two years of business. The one-for-ten policy requires retailers licensed by S & H to issue stamps to consumers at the rate of one stamp for every ten cents worth of merchandise purchased. The intent of this policy is to prevent retailers from engaging in "multiple stamping"-the practice of giving more than one stamp for every ten-cent purchase. This restricted rate of issuance is maintained through contractual agreements between the stamp company and its licensees. The second policy …

Cease And Desist: The History, Effect, And Scope Of Clayton Act Orders Of The Federal Trade Commission, Thomas E. Kauper

Michigan Law Review

A cease and desist order is not entered in a vacuum. What an order should say or require depends upon the effect which the order is to have. A substantial portion of the present study is therefore concerned with the array of effects which may result from the order's entry, and with the relationship between those effects and the order itself. Not all of the detailed discussion of enforcement procedures which follows may seem directly relevant to the content of the FTC's orders. There are important unresolved issues within the enforcement procedures themselves which warrant examination for their own sake …

The Ftc's Power To Seek Preliminary Injunctions In Anti-Merger Cases, James H. Cohen

Michigan Law Review

This Comment will examine the bases and the implications of the Supreme Court's holding. It will point out a number of problems raised by granting the FTC this remedial power, and will suggest that the situations in which preliminary injunctions may be obtained from a court of appeals should be strictly limited.

Divestiture Of Illegally Held Assets: Observations On Its Scope, Objective, And Limitations, William T. Kerr

Michigan Law Review

"Divestiture has been called the most important of antitrust remedies. It is simple, relatively easy to administer, and sure." This observation was made with reference to an order requiring divestiture of illegally held stock. In the context of the divestiture of illegally held assets, however, the statement is an oversimplification of myriad complex problems. This Comment will examine the difficulties encountered in eliminating the anticompetitive effects of a fully consummated merger found to have violated section 7 of the Clayton Act. No attempt will be made to assess the substantive doctrine upon which the violation in any instance was based, …

Federal Trade Commission Proceedings And Section 5 Of The Clayton Act: Application And Implications, Michigan Law Review

Michigan Law Review

Although the primary responsibility for the enforcement of the antitrust laws falls upon governmental agencies, Congress has recognized the effectiveness of the private suit for damages as a deterrent and has sought to encourage such actions by providing for the recovery of treble damages by an injured party. To assist the private litigant, whose problem of proof is formidable, Congress enacted section 5(a) of the Clayton Act, which allows the introduction, as prima facie evidence of an antitrust violation, of a prior judgment or decree obtained by the Government. As a further aid to private litigants, section 5(b) provides for …

Ftc V. Jantzen: Blessing, Disaster, Or Tempest In A Teapot?, Thomas E. Kauper

Michigan Law Review

The court concluded that the Finality Act, by repealing the existing provisions for judicial enforcement proceedings in the courts of appeals, deprived it of jurisdiction to act upon the FTC's petition. It also approved earlier decisions holding that the Finality Act procedures were not applicable to orders issued prior to the act's effective date. These two rulings, in combination, indicate that there is no enforcement machinery now applicable to orders issued under the Clayton Act prior to July 23, 1959.

The question remains, however, whether enforcement of the Clayton Act has really been hampered, and, if so, whether the pre- …

Words "Civil Or Criminal" In Clayton Act Section 5 Do Not Include Federal Trade Commission Proceedings-Highland Supply Corp. V. Reynolds Metals Co., Michigan Law Review

Michigan Law Review

In a private antitrust action for treble damages filed in 1963, plaintiff referred in its complaint to a Federal Trade Commission proceeding brought against the defendant in 1957, which had resulted in a final divestiture order. Defendant moved to strike these references in the complaint on the ground that section 5(a) of the Clayton Act, which authorizes private parties to utilize a government "judgment or decree . . . rendered in any civil or criminal proceeding" as prima facie evidence in subsequent treble damage suits, does not include a Federal Trade Commission proceeding. Defendant also moved to dismiss the …

Rowe: Price Discrimination Under The Robinson-Patman Act, Glen E. Weston

Michigan Law Review

A Review of Price Discrimination Under the Robinson-Patman Act, By Frederick M. Rowe.

Regulation Of Business-Discriminatory Practices In The Form Of Advertising Allowances, Services, And Facilities Under The Robinson-Patman Act, Rinaldo L. Bianchi

Michigan Law Review

This comment will deal solely with the last two forms of discrimination prohibited by sections 2(d) and (e) of the Robinson-Patman Act, and will attempt to illustrate the present state of the law and offer a possible alternative construction and method of implementation of these sections. A recent ruling of the FTC in a group of cases appears to be significant with respect to controversial aspects of sections 2(d) and (e), and indicative of the present attitude of the Commission in the search for an adequate standard by which honest businessmen may keep within the confines of the law. These …

Federal Antitrust Legislation: Guideposts To A Revised National Antitrust Policy, S. Chesterfield Oppenheim

Michigan Law Review

The year 1952 finds various currents of controversy in the antitrust field converging toward the necessity for a survey and reappraisal of the body of congressional legislation generally known as the "federal antitrust laws." The foundation stone in the trio of principal antitrust statutes is the Sherman Act of 1890. Section 5 of the Federal Trade Commission Act and the Clayton Act of 1914, as amended, are the other two members of this major group of antimonopoly laws. While differing in particulars in its impact upon the American economy, each of these basic statutes is avowedly designed to maintain competition …

A Critique Of The New British Monopoly Act, Gerald M. Meier

Michigan Law Review

In 1948 the British Parliament passed the Monopoly and Restrictive Practices (Inquiry and Control) Act. It is instructive to examine this Act against the background of the criticisms and suggestions for improvement which have emerged with sixty years of American anti-trust legislation. Section one of this paper presents some reasons why the measure has appeared at this time. The next section summarizes the Act's provisions. Section three contrasts the British technique of monopoly control with the American and considers whether the different approach is likely to avoid the debilities which have become evident in the American legislation.

Delivered Prices: Doing Business Under The Present Law, Corwin D. Edwards

Michigan Law Review

What is involved in doing business under the present law concerning delivered prices? Since the ease or difficulty of doing business in accord with the law depends upon what the law permits and prohibits, to answer this question requires an assumption about what the law is. I shall assume that the scope of legally permissible action is that envisaged in the statement which the Federal Trade Commission issued to its staff and released to the public last October 12. This statement says, in effect, that businessmen are not required to sell f.o.b. mill or to adopt any particular form of …

Price Discriminations And Their Justifications Under The Robinson-Patman Act Of 1936, John T. Haslett

Michigan Law Review

The Robinson-Patman Act was approved by the President on June 19, 1936. The purpose of the act was to amend section 2 of the Clayton Act, which prohibited price discriminations in interstate commerce. Congress, by amending section 2 of the Clayton Act, broadened the scope of the section by extending its purposes and prohibitions to price discriminations not formerly covered and by prohibiting other forms of discrimination which give favored purchasers undue cost advantages over their non-favored competitors. It also reduced the extent of requisite competitive injury.

Trade Restraints - Associations Of Manufacturers To Combat Style Piracy - Illegal Restraints Of Trade, Michigan Law Review

Michigan Law Review

In order to combat the practice of "style piracy" among competitors, a large number of producers of women's coats and dresses formed an association, whose membership was composed of designers, manufacturers, and distributors. Producers adjudged copyists by the association were not permitted membership. The clear purpose of the association was primarily to boycott retailers who refused to deal solely with members of the association, and secondarily to boycott, and eliminate competition from, the copyists. In addition there was provided a system of registration for designs made by members, and a judicial type of machinery for protecting the designers' interest therein. …