Law Commons^™

Comments On Federal Trade Commission Non-Compete Ban Proposed Rule, Matter No. P201200, Chaz D. Brooks

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Within signed law professors and law students submitted this letter to the Federal Trade Commission, writing in their individual capacities, not as agents of their affiliated institutions, in support of the Federal Trade Commission’s proposed rule to ban most non-compete clauses (the “Proposal”) as an unfair method of competition.

This letter offers comments in response to areas where the FTC has requested public comment. To make our views clear, this letter contains the following sections: I. Summary of the Proposal; II. The Commission Should Consider Expanding Its Definition of Non-Compete Clauses to Prevent Employers from Requiring Workers to Quit Before …

On The Misuse Of Regressions Of Price On The Hhi In Merger Review, Jonathan Baker

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The article explains why regressions of price on HHI should not be used in merger review. Both price and HHI are equilibrium outcomes determined by demand, supply, and the factors that drive them. Thus, a regression of price on the HHI does not recover a causal effect that could inform the likely competitive effects of a merger. Nonetheless, economic theory is consistent with the legal presumption that a merger is likely to have adverse competitive effects if it occurs in a concentrated market and makes that market more concentrated.

Protecting And Fostering Online Platform Competition: The Role Of Antitrust Law, Jonathan Baker

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This essay provides a perspective on the role of antitrust law in protecting and fostering competition in the digital economy, with particular attention to online platforms. It highlights the danger of anticompetitive exclusionary conduct by dominant online platforms and describes ways that antitrust law can challenge and deter such conduct. The essay also identifies a number of difficulties that U.S. courts and enforcers face in challenging harmful exclusionary conduct by dominant platforms, and discusses some ways that regulation can supplement antitrust law in fostering competition.

Hacking Antitrust: Competition Policy And The Computer Fraud And Abuse Act, Charles Duan

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The Computer Fraud and Abuse Act, a federal computer trespass statute that prohibits accessing a computer "without authorization or exceeding authorized access," has often been criticized for clashing with online norms, over-criminalizing common behavior, and infringing freedom-of-expression interests. These controversies over the CFAA have raised difficult questions about how the statute is to be interpreted, with courts of appeals split on the proper construction and the Supreme Courtset to consider the law in its current October Term 2020.

This article considers the CFAA in a new light, namely its effects on competition. Rather than merely preventing injurious trespass upon computers, …

Oligopoly Coordination, Economic Analysis, And The Prophylactic Role Of Horizontal Merger Enforcement, Jonathan Baker

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For decades, the major United States airlines have raised passenger fares through coordinated fare-setting when their route networks overlap, according to the United States Department of Justice. Through its review of company documents and testimony, the Justice Department found that when major airlines have overlapping route networks, they respond to rivals’ price changes across multiple routes and thereby discourage competition from their rivals. A recent empirical study reached a similar conclusion: It found that fares have increased for this reason on more than 1000 routes nationwide and even that American and Delta, two airlines with substantial route overlaps, have come …

Five Principles For Vertical Merger Enforcement Policy, Jonathan Baker, Nancy Rose, Steven Salop, Fiona Scott Morton

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There seems to be consensus that the Department of Justice’s 1984 Vertical Merger Guidelines do not reflect either modern theoretical and empirical economic analysis or current agency enforcement policy. Yet widely divergent views of preferred enforcement policies have been expressed among agency enforcers and commentators. Based on our review of the relevant economic literature and our experience analyzing vertical mergers, we recommend that the enforcement agencies adopt five principles: (i) The agencies should consider and investigate the full range of potential anticompetitive harms when evaluating vertical mergers; (ii) The agencies should decline to presume that vertical mergers benefit competition on …

The New Social Contracts In International Supply Chains, David Snyder

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This Article considers, from legal, practical, moral, and policy perspectives, Model Contract Clauses (MCCs) to protect the human rights of workers in international supply chains. The product of the ABA Business Law Section Working Group to Draft Human Rights Protections in International Supply Contracts, the MCCs are an effort to provide companies with carefully researched and well-drafted clauses to incorporate human rights policies into supply contracts (purchase orders, master vendor agreements, and the like). The Article discusses the impetus, goals, and strategies of the MCCs and explains the paradigm of the corporate, operational, and political landscape for which they are …

Five Principles For Vertical Merger Enforcement Policy, Jonathan Baker, Steven Salop, Fiona M. Scott Morton, Nancy Rose

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There seems to be consensus that the Department of Justice’s 1984 Vertical Merger Guidelines do not reflect either modern theoretical and empirical economic analysis or current agency enforcement policy. Yet widely divergent views of preferred enforcement policies have been expressed among agency enforcers and commentators. Based on our review of the relevant economic literature and our experience analyzing vertical mergers, we recommend that the enforcement agencies adopt five principles: (i) The agencies should consider and investigate the full range of potential anticompetitive harms when evaluating vertical mergers; (ii) The agencies should decline to presume that vertical mergers benefit competition on …

Accommodating Competition: Harmonizing National Economic Commitments, Jonathan Baker

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This article shows how the norm supporting governmental action to protect and foster competitive markets was harmonized with economic rights to contract and property during the 19th century, and with the development of the social safety net during the 20th century. It explains why the Constitution, as understood today, does not check the erosion of the entrenched but threatened national commitment to assuring competitive markets.

Unlocking Antitrust Enforcement, Jonathan Baker

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No abstract provided.

Antitrust Enforcement Against Platform Mfns, Jonathan Baker, Fiona M. Scott Morton

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Antitrust enforcement against anticompetitive platform most favored nations (MFN) provisions (also termed pricing parity provisions) can help protect competition in online markets. An online platform imposes a platform MFN when it requires that providers using its platform not offer their products or services at a lower price on other platforms. These contractual provisions may be employed by online platforms offering hotel and transportation bookings, consumer goods, digital goods, and handmade craft products. They have been the subject of antitrust enforcement in Europe but have drawn only limited antitrust scrutiny in the U.S. Our paper explains why MFNs employed by online …

$=Euro=Bitcoin, Hilary Allen

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Bitcoin (and other virtual currencies) have the potential to revolutionize the way that payments are processed, but only if they become ubiquitous. This Article argues that if virtual currencies are used at that scale, it would pose threats to the stability of the financial system-threats that have been largely unexplored to date. Such threats will arise because the ability of a virtual currency to function as money is very fragile-Bitcoin can remain money only for so long as people have confidence that bitcoins will be readily accepted by others as a means of payment. Unlike the U.S. dollar, which is …

Evaluating Appropriability Defenses For The Exclusionary Conduct Of Dominant Firms In Innovative Industries, Jonathan Baker

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In response to antitrust cases challenging the exclusionary conduct of dominant firms, some dominant firms offer an “appropriability defense.” This defense is the claim that prohibiting the challenged conduct would lessen the dominant firm’s return to investment in research and development (R&D), undermine that firm’s incentive to innovate, and harm the prospects for industry innovation. An appropriability defense should be questioned, and often rejected, if the dominant firm would be expected to increase its own R&D effort in response to increased R&D by its rivals after liability on a dominant firm is imposed. An analytical framework for determining whether a …

Overlapping Financial Investor Ownership, Market Power, And Antitrust Enforcement: My Qualified Agreement With Professor Elhauge, Jonathan Baker

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As is well known among financial economists but not previously recognized within the antitrust community, large and diversified institutional investors such as BlackRock, Fidelity, State Street, and Vanguard collectively own roughly two-thirds of the shares of publicly traded U.S. firms overall, up from about one-third in 1980. Recent economic research involving airlines and banking raises the possibility that overlapping ownership of horizontal rivals by diversified financial institutions facilitates anticompetitive conduct throughout the economy, and that the problem has been growing for decades, unnoticed until now. This response to an article by Professor Einer Elhauge, explains why it may be more …

Exclusionary Conduct Of Dominant Firms, R&D Competition, And Innovation, Jonathan Baker

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This paper evaluates the innovation consequences of antitrust enforcement against the exclusionary conduct of dominant firms through a Nash equilibrium model of research and development (R&D) competition to create new products. In the two-firm model, whether one firm regards the other firm’s R&D investment as a strategic complement or strategic substitute turns on an increasing differences condition: whether the first firm’s incremental benefit of increased R&D investment is greater if its rival’s R&D effort succeeds or if its rival’s R&D effort fails. Antitrust prohibitions on pre-innovation exclusion and post-innovation exclusion are found to be effective in different strategic settings: preventing …

Putting The 'Financial Stability' In Financial Stability Oversight Council, Hilary Allen

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For all the ink that has been spilled on the topic of financial regulation since the financial crisis of 2007-2008, there has been little examination of the competing normative goals of financial regulation. Should the financial system be treated as an end in itself such that the efficiency of that system is the primary goal? Or should financial regulation instead treat the financial system as a means to the end of broader economic growth? This Article argues for the latter approach, and stakes out the controversial normative position that financial stability, rather than efficiency, should be the paramount focus of …

Antitrust, Competition Policy, An Inequality, Jonathan Baker, Steven Salop

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Economic inequality recently has entered the political discourse in a highly visible way. This political impact is not a surprise. As the U.S. economy has begun to recover from the Great Recession since mid-2009, economic growth has effectively been appropriated by those already well off, leaving the median household less well off. The serious economic, political and moral issues raised by inequality can be addressed through a panoply of public policies including competition policy, the focus of this article. The article describes the channels through which market power contributes to inequality, and sets forth a range of possible antitrust policy …

Taking The Error Out Of 'Error Cost' Analysis: What's Wrong With Antitrust's Right, Jonathan Baker

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This article catalogues a series of erroneous assumptions about the current competition policy environment made by today’s antitrust conservatives. These errors inappropriately tilt the application of a neutral economic tool, decision theory, toward non-interventionist outcomes.

What Is 'Financial Stability' -The Need For Some Common Language In International Financial Regulation, Hilary Allen

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Post-Crisis international financial regulation is animated by the buzzwords 'financial stability, " but surprisingly little attention has been paid to what these buzzwords actually mean. This Article argues that there are many-largely unexplored- disagreements regarding the meaning of 'financial stability, " and that this lack of consensus has the potential to cause a host of problems. Chief amongst these is that disagreement about the meaning of "financial stability" can thwart harmonized national implementation of international financial stability regulation. To draw attention to this largely-ignored definitional problem, and to start the process of addressing it, this Article proposes a working definition …

Channeling And Contending With Bill Kovacic, Jonathan B. Baker

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No abstract provided.

Patent Dialogue, Jonas Anderson

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This Article examines the unique dialogic relationship that exists between the Supreme Court and Congress concerning patent law. In most areas of the law, Congress and the Supreme Court engage directly with each other to craft legal rules. When it comes to patent law, however, Congress and the Court often interact via an intermediary institution: the U.S. Court of Appeals for the Federal Circuit. In patent law, dialogue often begins when Congress or the Supreme Court acts as a dialogic catalyst, signaling reform priorities to which the Federal Circuit often responds.

Appreciating the unique nature of patent dialogue has important …

Congress As A Catalyst Of Patent Reform At The Federal Circuit, Jonas Anderson

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The U.S. Court of Appeals for the Federal Circuit is the dominant institution in patent law. The court’s control over patent law and policy has led to a host of academic proposals to shift power away from the court and towards other institutions, including the U.S. Supreme Court, the U.S. Patent and Trademark Office, and federal district courts. Surprisingly, however, academics have largely dismissed Congress as a potential institutional check on the Federal Circuit. Congress, it is felt, is too slow, too divided, and too beholden to special interests to effectively monitor changes in innovation and respond with appropriate reforms. …

Antitrust Enforcement And Sectoral Regulation: The Competition Policy Benefits Of Concurrent Enforcement In The Communications Sector, Jonathan Baker

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The US competition agencies – the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC) – often share jurisdiction with sectoral regulators also charged with fostering competition, such as the Federal Communications Commission (FCC). This article highlights how this institutional structure – concurrent jurisdiction – helps protect competition through the lens of recent US experiences involving the communications industry. It argues that concurrent jurisdiction is likely most effective when the communications regulator has independent access to industry information to limit capture, when the communications regulator can take a long-term perspective, when the antitrust agency can …

Exclusion As A Core Competition Concern, Jonathan Baker

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A contemporary consensus in antitrust discourse inappropriately places exclusionary conduct at the periphery of competition policy, while putting collusion at the core. Contrary to that common view, exclusion is as important as collusion as a matter of precedent, the structure of doctrinal rules, economics, and sound competition policy. Courts treat exclusionary violations as serious competitive problems. An emerging doctrinal rule for truncated condemnation of “plain” exclusionary conduct (practices foreclosing rivals that lack a plausible efficiency justification) parallels the evolving judicial approach toward “naked” collusion. Exclusion and collusion can be understood within a common economic framework that emphasizes the close relationship …

The Competitive Consequences Of Most-Favored-Nation Provisions, Jonathan Baker, Judith A. Chevalier

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"Most Favored Nation" contractual provisions have come under scrutiny in recent years by antitrust authorities in both the US and EU. MFNs are a type of vertical agreement between suppliers and buyers. The literature has recognized that there may be efficiency rationales for these arrangements but the literature has also recognized that these arrangements have anticompetitive potential. In this paper, we distill the economics literature on MFNs to explore both possibilities.

Economics And Politics: Perspectives On The Goals And Future Of Antitrust, Jonathan Baker

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This article examines the roles of economics and politics in U.S. antitrust from several perspectives. It explains why the modern debate over the economic welfare standard that enforcers and courts should pursue is unsatisfying. It connects economics and politics by describing antitrust’s economic goals as the product of a mid-20th century political understanding about the nature of economic regulation that has continued in force to this day. To protect that understanding, it explains, antitrust rules should now be implemented using a qualified consumer welfare standard. The article also identifies contemporary political tensions that threaten to create regulatory gridlock, or even …

Evaluating Merger Enforcement During The Obama Administration, Jonathan Baker, Carl Shapiro

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We recently concluded that government merger enforcement statistics "provide clear evidence that the Obama Administration reinvigorated merger enforcement, as it set out to do." Three weeks later, in an article published inthe Stanford Law Review Online, Professor Daniel A. Crane reached the opposite conclusion, claiming that "[t]he merger statistics do not evidence 'reinvigoration' of merger enforcement under Obama."

Cocos Can Drive Markets Cuckoo, Hilary Allen

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Bank-issued contingent-convertible capital instruments (known colloquially as "cocos ") are assumed to be a less costly substitute for common equity that will improve the stability of banks in a crisis situation. However, cocos are new and untested instruments. In a future financial crisis they are likely to incentivize behaviors and trading strategies (notably panic selling short selling, and the use of credit default swaps) that have the potential to harm confidence in banks. Without confidence, banks will have difficulty funding themselves and the likely consequences of bank difficulties (credit crunches and possible bailouts) will be felt by society at large. …

The Perils Of Armchair Analysis: Evaluating Merger Enforcement During The Obama Administration, Jonathan Baker, Carl Shapiro

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This brief comment responds to the analysis of Obama administration merger policy in Daniel A. Crane, Has the Obama Justice Department Reinvigorated Antitrust Enforcement? 65 STAN. L. REV. ONLINE 13 (2012).

Sector-Specific Competition Enforcement At The Fcc, Jonathan Baker

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This comment explains how and why sector-specific enforcement by the Federal Communications Commission (FCC) complements generalist competition enforcement by the Antitrust Division of the Department of Justice (DOJ) and the Federal Trade Commission (FTC), to the benefit of competition in the communications industry. It illustrates ways in which a sector-specific agency such as the FCC can foster competition by comparing merger reviews by the FCC and DOJ in the wake of the 1996 Telecommunications Act.