Law Commons^™

Antitrust: What Counts As Consumer Welfare?, Herbert J. Hovenkamp

All Faculty Scholarship

Antitrust’s consumer welfare principle is accepted in some form by the entire Supreme Court and the majority of other writers. However, it means different things to different people. For example, some members of the Supreme Court can simultaneously acknowledge the antitrust consumer welfare principle even as they approve practices that result in immediate, obvious, and substantial consumer harm. At the same time, however, a properly defined consumer welfare principle is essential if antitrust is to achieve its statutory purpose, which is to pursue practices that injure competition. The wish to make antitrust a more general social justice statute is understandable: …

The Ncaa And The Rule Of Reason, Herbert J. Hovenkamp

All Faculty Scholarship

This brief essay considers the use of antitrust’s rule of reason in assessing challenges to rule making by the NCAA. In particular, it looks at the O’Bannon case, which involved challenges to NCAA rules limiting the compensation of student athletes under the NCAA rubric that protects the “amateur” status of collegiate athletes. Within that rubric, the Ninth Circuit got the right answer.

That outcome leads to a broader question, however: should the NCAA’s long held goal, frequently supported by the courts, of preserving athletic amateurism be jettisoned? Given the dual role that colleges play, that is a complex question, raising …

Promoting Innovation, Matthew Sag, Spencer Weber Waller

Faculty Articles

This Essay proceeds as follows. We briefly introduce the concept of creative destruction and its place in Schumpeter’s work in Part II. In Part III we explain why a truly Schumpeterian competition policy demands more than a laissez faire approach. We explain why the law must preserve opportunities and incentives for creative destruction at all stages of innovation and we review four key policy areas of antitrust law from this innovation-focused perspective: unilateral conduct cases (Part III.A), cases at the intersection of IP and antitrust (Part III.B), Sherman Act section 1 cases (Part III.C), and merger policy (Part III.D). In …

What Do We Worry About When We Worry About Price Discrimination? The Law And Ethics Of Using Personal Information For Pricing, Akiva A. Miller

Akiva A Miller

New information technologies have dramatically increased sellers’ ability to engage in retail price discrimination. Debates over using personal information for price discrimination frequently treat it as a single problem, and are not sufficiently sensitive to the variety of price discrimination practices, the different kinds of information they require in order to succeed, and the different ethical concerns they raise. This paper explores the ethical and legal debate over regulating price discrimination facilitated by consumers’ personal information. Various kinds of “privacy remedies”—self-regulation, technological fixes, state regulation, and legislating private causes of legal action—each have their place. By drawing distinctions between various …

The Ftc's Anticompetitive Pricing Case Against Intel, Herbert J. Hovenkamp

All Faculty Scholarship

The FTC’s wide ranging complaint against Intel Corporation indicates that the FTC intends to rely on the “unfair methods of competition” language in §5 of the FTC Act to reach beyond the proscriptions on unilateral conduct contained in §2 of the Sherman Act. The Supreme Court has expressly authorized such expansion, and statutory text, legislative history and legal policy all support it. While §2 reaches only conduct that threatens to “monopolize” a market, the “unfair methods of competition” language can reach improper abuses of a dominant position that fall short of creating monopoly. Further, the FTC has expertise that courts …

The Neal Report And The Crisis In Antitrust, Herbert J. Hovenkamp

All Faculty Scholarship

The Neal Report, which was commissioned by Lyndon Johnson and published in 1967, is rightfully criticized for representing the past rather than the future of antitrust. Its authors completely embraced a theory of competition and industrial organization that had dominated American economic thinking for forty years, but was just in the process of coming to an end. The structure-conduct-performance (S-C-P) paradigm that the Neal Report embodied had in fact been one of the most elegant and most tested theories of industrial organization. The theory represented the high point of structuralism in industrial organization economics, resting on the proposition that certain …

The Viability Of Antitrust Price Squeeze Claims, Erik Hovenkamp, Herbert J. Hovenkamp

All Faculty Scholarship

A price squeeze occurs when a vertically integrated firm "squeezes' a rival's margins between a high wholesale price for an essential input sold to the rival, and a low output price to consumers for whom the two firms compete. Price squeezes have been a recognized but controversial antitrust violation for two-thirds of a century. We examine the law and economics of the price squeeze, beginning with Judge Hand's famous discussion in the Alcoa case in 1945. While Alcoa has been widely portrayed as creating a "fairness" or "fair profit" test for unlawful price squeezes, Judge Hand actually adopted a cost-based …

Unilateral Refusals To Deal, Vertical Integration, And The Essential Facility Doctrine, Herbert J. Hovenkamp

All Faculty Scholarship

Where it applies, the essential facility doctrine requires a monopolist to share its "essential facility." Since the only qualifying exclusionary practice is the refusal to share the facility itself, the doctrine comes about as close as antitrust ever does to condemning "no fault" monopolization. There is no independent justification for an essential facility doctrine separate and apart from general Section 2 doctrine governing the vertically integrated monopolist's refusal to deal. In its Trinko decision the Supreme Court placed that doctrine about where it should be. The Court did not categorically reject all unilateral refusal to deal claims, but it placed …

The Antitrust Standard For Unlawful Exclusionary Conduct, Herbert J. Hovenkamp

All Faculty Scholarship

This essay considers the general definition of unlawful exclusionary practices under Section 2 of the Sherman Act as acts that: (1) are reasonably capable of creating, enlarging or prolonging monopoly power by impairing the opportunities of rivals; and (2) that either (2a) do not benefit consumers at all, or (2b) are unnecessary for the particular consumer benefits claimed for them, or (2c) produce harms disproportionate to any resulting benefits. An important purpose of this progression of queries is to permit the court to avoid balancing, although balancing certainly cannot be avoided in some close cases. The given definition is very …

Academic Testimony On Unilateral Conduct Before The U.S. Dept. Of Justice & Federal Trade Commission Hearings, Aaron S. Edlin

Aaron Edlin

No abstract provided.

Restraints On Innovation, Herbert J. Hovenkamp

All Faculty Scholarship

Beginning with the work of Joseph Schumpeter in the 1940s and later elaborated by Robert W. Solow's work on the neoclassical growth model, economics has produced a strong consensus that the economic gains from innovation dwarf those to be had from capital accumulation and increased price competition. An important but sometimes overlooked corollary is that restraints on innovation can do far more harm to the economy than restraints on traditional output or pricing. Many practices that violate the antitrust laws are best understood as restraints on innovation rather than restraints on pricing.

While antitrust models for assessing losses that result …

Holmes And The Bald Man: Why Rule Of Reason Should Be The Standard In Sherman Act Section 2 Cases, William J. Michael

The University of New Hampshire Law Review

[Excerpt] "It has been argued that the antitrust laws’ legislative history supports the notion that the laws were meant to prohibit anticompetitive price cuts – regardless of whether they are below cost. Thus, predatory pricing claims used to turn simply on whether the allegedly predatory price was intended to harm rivals. In fact, liability for predatory price discrimination was found without requiring probable or actual monopolization. Yet some cases brought early under Section 2 suggest that below cost pricing was indicative of, if not proof of, the type of conduct Section 2 prohibits. The results under this old scheme were …

The Evolution Of Sherman Act Jurisdiction: A Roadmap For Competitive Federalism, D. Bruce Johnsen

ExpressO

Recent Supreme Court decisions confirm for the first time in over six decades that federal regulatory authority under the Commerce Clause truly is limited. These decisions coincide with an increasing appreciation among scholars and jurists for the concept of competitive federalism. This paper derives the implications of competitive federalism for the evolution of federal jurisdiction over trade restraints under the Sherman Antitrust Act (1890). It provides a clear and substantively reasoned jurisdictional test based on the analysis of geographic market power familiar to antitrust scholars, practitioners, and regulators in evaluating horizontal mergers. To be subject to federal antitrust jurisdiction under …

Antitrust Policy After Chicago, Herbert J. Hovenkamp

All Faculty Scholarship

This article, which was published in 1985, describes the development of a "Post-Chicago" antitrust policy. The Chicago School of antitrust analysis has made an important and lasting contribution to antitrust policy. The School has placed an emphasis on economic analysis in antitrust jurisprudence that will likely never disappear. At the same time, however, the Chicago School's approach to antitrust is defective for two important reasons. First of all, the notion that public policymaking should be guided exclusively by a notion of efficiency based on the neoclassical market efficiency model is naive. That notion both overstates the ability of the policymaker …

The Supreme Court As The Arbiter Of Economic Affairs Through Interpretation Of The Commerce Clause From 1789 Through 1937, Cloene Biggs

Honors Theses

Under the Articles of Confederation, Congress did not have the power to regulate interstate and foreign commerce. As a result, each state attempted to protect local business at the expense of the other states through the enforcing of trade barriers. Removal of these restrictions on commercial relations imposed by the "sovereign" states became one of the "moving purposes" which brought about the Constitutional Convention in 1787. There seems to be no doubt that the commerce clause was inserted in the Constitution to prevent the states from interfering with the freedom of commercial intercourse.

The constitutional meaning of the commerce …

Oligopoly Power Under The Sherman And Clayton Acts -- From Economic Theory To Legal Policy, Joseph F. Brodley

Articles by Maurer Faculty

No abstract provided.