Antitrust and Trade Regulation Commons^™

Horizontal Mergers, Market Structure, And Burdens Of Proof, Herbert J. Hovenkamp, Carl Shapiro

All Faculty Scholarship

Since the Supreme Court’s landmark 1963 decision in Philadelphia National Bank, antitrust challengers have mounted prima facie cases against horizontal mergers that rested on the level and increase in market concentration caused by the merger, with proponents of the merger then permitted to rebut by providing evidence that the merger will not have the feared anticompetitive effects. Although the way that concentration is measured and the triggering levels have changed over the last half century, the basic approach has remained intact. This longstanding structural presumption, which is well supported by economic theory and evidence, has been critical to effective …

Reasonable Patent Exhaustion, Herbert J. Hovenkamp

All Faculty Scholarship

A lengthy tug of war between the Supreme Court and the Federal Circuit Court of Appeals may have ended when the Supreme Court held that the sale of a patented article exhausts the patentee seller’s rights to enforce restrictions on that article through patent infringement suits. Further, reversing the Federal Circuit, the parties cannot bargain around this rule through the seller’s specification of conditions stated at the time of sale, no matter how clear. No inquiry need be made into the patentee’s market power, anticompetitive effects, or other types of harms, whether enforcement of the condition is socially costly or …

Balancing Effects Across Markets, Daniel A. Crane

Articles

In Philadelphia National Bank (PNB), the Supreme Court held that it is improper to weigh a merger's procompetitive effects in one market against the merger's anticompetitive effects in another. The merger in question, which ostensibly reduced retail competition in the Philadelphia area, could not be justified on the grounds that it increased competition against New York banks and hence perhaps enhanced competition in business banking in the mid-Atlantic region. I will refer to the Supreme Court's prohibition on balancing effects across markets as a "market-specificity" rule. Under this rule, efficiencies that may counterbalance anticompetitive aspects must be specific to …

Predatory Pricing Under The Areeda-Turner Test, Herbert J. Hovenkamp

All Faculty Scholarship

Few works of legal scholarship have had the impact enjoyed by Areeda and Turner's 1975 article on predatory pricing. Proof of predatory pricing under the Areeda-Turner test requires two things. The plaintiff must show a market structure such that the predator could rationally foresee "recouping the losses through higher profits earned in the absence of competition." This requirement, typically called "recoupment," requires the plaintiff to show that, looking from the beginning of the predation campaign, the predator can reasonably anticipate that the costs of predation will be more than offset by the present value of a future period of monopoly …

Market Power Without Market Definition, Daniel A. Crane

Articles

Antitrust law has traditionally required proof of market power in most cases and has analyzed market power through a market definition/market share lens. In recent years, this indirect or structural approach to proving market power has come under attack as misguided in practice and intellectually incoherent. If market definition collapses in the courts and antitrust agencies, as it seems poised to do, this will rupture antitrust analysis and create urgent pressures for an alternative approach to proving market power through direct evidence. None of the leading theoretic approaches—such as the Lerner Index or a search for supracompetitive profits—provides a robust …

E-Books, Collusion, And Antitrust Policy: Protecting A Dominant Firm At The Cost Of Innovation, Nicholas Timchalk

Seattle University Law Review

Amazon’s main rival, Apple, went to great lengths and took major risks to enter the e-book market. Why did Apple simply choose not to compete on the merits of its product and brand equity (the iPad and iBookstore) as it does with its other products? Why did Apple decide not to continue to rely on its earlier success of situating its products differently in the market than other electronics and working hard to be different and cutting-edge with its e-book delivery? This Note argues that the combination of Amazon’s 90% market share, network externalities, and an innovative technology market creates …

Complementary Products And Processes - The Law Of Tying, Herbert J. Hovenkamp

All Faculty Scholarship

This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Competition Policy And The Scope Of Intellectual Property Protection, Herbert J. Hovenkamp

All Faculty Scholarship

This book of CASES AND MATERIALS ON INNOVATION AND COMPETITION POLICY is intended for educational use. The book is free for all to use subject to an open source license agreement. It differs from IP/antitrust casebooks in that it considers numerous sources of competition policy in addition to antitrust, including those that emanate from the intellectual property laws themselves, and also related issues such as the relationship between market structure and innovation, the competitive consequences of regulatory rules governing technology competition such as net neutrality and interconnection, misuse, the first sale doctrine, and the Digital Millennium Copyright Act (DMCA). Chapters …

Unfit For Prime Time: Why Cable Television Regulations Cannot Perform Trinko's 'Antitrust Function', Keith Klovers

Michigan Law Review

Until recently, regulation and antitrust law operated in tandem to safeguard competition in regulated industries. In three recent decisions-Trinko, Credit Suisse, and Linkline-the Supreme Court limited the operation of the antitrust laws when regulation "performs the antitrust function." This Note argues that cable programming regulations-which are in some respects factually similar to the telecommunications regulations at issue in Trinko and Linkline-do not perform the antitrust function because they cannot deter anticompetitive conduct. As a result, Trinko and its siblings should not foreclose antitrust claims for damages that arise out of certain cable programming disputes.

Shutting The Black Door: Using American Needle To Cure The Problem Of Improper Product Definition, Daniel A. Schwartz

Michigan Law Review

Section 1 of the Sherman Act is designed to protect competition by making illegal any agreement that has the effect of limiting consumer choice. To make this determination, courts first define the product at issue and then consider the challenged restraint's impact on the market in which that product competes. When considering § 1 allegations against sports leagues, courts have tended to define products according to the structure of the leagues. The result of this tendency is that harm to competition between the leagues' teams is not properly accounted for in the courts' analyses. This, in turn, grants leagues a …

Quantification Of Harm In Private Antitrust Actions In The United States, Herbert J. Hovenkamp

All Faculty Scholarship

This paper discusses the theory and experience of United States courts concerning the quantification of harm in antitrust cases. This treatment pertains to both the social cost of antitrust violations, and to the private damage mechanisms that United States antitrust law has developed. It is submitted for the Roundtable on the Quantification of Harm to Competition by National Courts and Competition Agencies, Organization for Economic Cooperation and Development (OECD), Feb., 2011.

In a typical year more than 90% of antitrust complaints filed in the United States are by private plaintiffs rather than the federal government. Further, when the individual states …

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 …

Does Monopoly Broth Make Bad Soup?, Daniel A. Crane

Articles

There is an oft-repeated maxim in U.S. antitrust law that a monopolist's conduct must be examined in its totality in order to determine its legality. Judges admonish that plaintiffs "should be given the full benefit of their proof without tightly compartmentalizating the various factual components and wiping the slate clean after scrutiny of each." As the U.S. Court of Appeals for the Seventh Circuit stated in much-quoted language, "It is the mix of various ingredients ... in a monopoly broth that produces the unsavory flavor."' In this article, I examine the use and misuse of monopoly broth theories. Reflecting a …

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 …

Trolling For Trolls: The Pitfalls Of The Emerging Market Competition Requirement For Permanent Injunctions In Patent Cases Post-Ebay, Benjamin H. Diessel

Michigan Law Review

In eBay v. MercExchange, a unanimous Supreme Court announced that a new four-factor test should be employed by district courts in determining whether to award an injunction or damages to an aggrieved party whose intellectual property has been infringed. In the context of permanent injunctions in patent cases, district courts have distorted the four-factor test resulting in a "market competition requirement." Under the new market competition requirement, success at obtaining an injunction is contingent upon a party demonstrating that it is a market competitor After consistent application in the first twenty-five district court cases post-eBay, the market competition requirement …

Reading Too Much Into Reeder-Simco?, Jeremy M. Suhr

Michigan Law Review

This Note argues that a careful analysis of the Supreme Court's opinion in Volvo Trucks North America, Inc. v. Reeder-Simco GMC, Inc. demonstrates that, despite the expansive dicta appearing in part IV of that opinion, the Court did not intend to reshape the course of its Robinson-Patman Act jurisprudence in any significant way. The Court's opinion operated well within the confines of established Robinson-Patman Act doctrine, even if its searching review of the evidence presented at trial represented a rare foray into the arena of factual error correction. After Reeder-Simco, however, many commentators emphasized the dicta in part IV …

Gaining Momentum: A Review Of Recent Developments Surrounding The Expansion Of The Copyright Misuse Doctrine And Analylsis Of The Doctrine In Its Current Form, Neal Hartzog

Michigan Telecommunications & Technology Law Review

The United States intellectual property ("IP") system is the foundation for incentives for authors and inventors to create and invent so that their work will be distributed to the public for the betterment of society. These incentives, in the form of limited monopolies over creations via patents, copyrights, and trademarks, are becoming increasingly important as the United States depends upon intellectual property to sustain its economy. As the intellectual property industry grows, it becomes vital to preserve the impetus behind its creation: the public good, or more specifically, the public's ability to make use of and enjoy new ideas and …

Failing Companies And The Antitrust Laws, Janet L. Mcdavid

University of Michigan Journal of Law Reform

This article will examine two areas in which the courts have given financially-troubled companies special treatment under the antitrust laws. Part I discusses the acquisition of a failing company, which may constitute a judicially-created exemption from section 7 of the Clayton Act. Part II considers certain cases involving failing companies whose conduct is challenged under section 1 of the Sherman Act.

Attempts And Monopolization: A Mildly Expansionary Answer To The Prophylactic Riddle Of Section Two, Edward H. Cooper

Articles

The efforts of activist antitrust lawyers to redefine the contours of attempted monopolization under section 2 of the Sherman Act1 have again forced the courts to wrestle with the classic antitrust dilemma: How far must single-firm competitive behavior be restrained to make competition free? The answer given by the majority of current decisions is that, absent some other established offense, single-firm behavior should be prohibited as an attempt to monopolize only when there is a specific intent to monopolize and the firm has come dangerously near to unlawful monopolization. A contemporary challenge to this orthodox answer is rapidly gaining force. …

Collective Bargaining And The Antitrust Laws, Theodore J. St. Antoine

Other Publications

A central aim of the antitrust laws is the promotion of competition. A central aim of collective bargaining is the elimination of competition-according to classical trade union theory, the elimination of wage competition among all employees doing the same job in the same industry. Given these disparate aims, the antitrust laws and collective bargaining will almost inevitably tend to clash. To harmonize them, the type of competition which the law is intended to foster must be carefully distinguished from the type of competition which union-employer bargaining can properly displace. The Supreme Court's last major effort to draw the demarcation line …

Unfair Competition, Edward S. Rogers

Michigan Law Review

In the recent case of Internationd Newes Seraice v. The Associated Press (U. S. Sup. Ct. Dec. 23, i918), suit was brought by the Associated Press to restrain the defendant from its systematic appropriation of complainant's news, first, by bribing employes; second, by inducing' Associated Press members to violate its by-laws and permit defendant to obtain news from publication; and third, by copying news from bulletin boards and from early editions of complainant's members' newspaper and selling this, bodily or after re-writing it, to defendant's customers. The question as to the right of complainant to relief against the third of …