Antitrust and Trade Regulation Commons^™

Evaluating Antitrust Remedies For Platform Monopolies: The Case Of Facebook, Seth G. Benzell, Felix B. Chang

Vanderbilt Law Review

This Article advances a framework to assess antitrust remedies and policy interventions for platform monopolies. As prosecutors and regulators barrel forward against digital platforms, soon it will fall upon courts and administrative agencies to devise remedies. We argue that any sensible solution must include quantification of the welfare effects on a platform’s various constituents. The Benzell-Collis model predicts the effects of proposed solutions on a platform’s profits and the welfare of its users. The model also considers additional aspects of welfare unique to the social media setting, such as digital platforms’ nonmonetary goals, platform addiction, and externalities from platform use. …

A Machete For The Patent Thicket: Using Noerr-Pennington Doctrine’S Sham Exception To Challenge Abusive Patent Tactics By Pharmaceutical Companies, Lisa Orucevic

Vanderbilt Law Review

Outrageous drug prices have dominated news coverage of the American healthcare system for years. Yet despite widespread condemnation of skyrocketing drug prices, nothing seems to change. Pharmaceutical companies can raise drug prices with impunity because they hold patents on their drugs, which give them monopolies. These monopolies are only supposed to last twenty years, and then competing lower-cost drugs like generics can enter the market, driving down the costs of pharmaceuticals for all. But pharmaceutical companies have created “patent thickets,” dense webs of overlapping patents surrounding one drug, which have artificially extended the companies’ monopolies for years or even decades …

Zombie Energy Laws, Joshua C. Macey

Vanderbilt Law Review

This Article traces the development of three legal rules—cost recovery for vertically integrated utilities, the requirement that regulators assess the financial viability of energy projects before issuing a certificate of public convenience and necessity, and the filed rate doctrine—that emerged out of the view that electric power companies should be shielded from market forces. It argues that important elements of these legal rules have become “zombie energy laws.” Zombie energy laws are statutes, regulations, and judicial precedents that continue to apply after their underlying economic and legal bases dissipate. Zombie energy laws were originally designed to protect consumers by, among …

Misaligned Lawmaking, Timothy Meyer

Vanderbilt Law Review

This Article makes three contributions. First, it introduces the Misalignment Thesis in the context of U.S. trade policy. The Misalignment Thesis is a descriptive claim about how the structure of a legislative bargain influences the long-term stability and effectiveness of that bargain. Second, the Article introduces the normative corollary to the Misalignment Thesis: if political stability hinges on respecting the legislative bargain, interdependent policies should be subject to renegotiation on the same timeline and implementation on the same terms. In light of this prescription, I offer three concrete proposals for aligning trade liberalization and trade adjustment assistance in order to …

Antitrust In Digital Markets, John M. Newman

Vanderbilt Law Review

Antitrust law has largely failed to address the challenges posed by digital markets. At the turn of the millennium, the antitrust enterprise engaged in intense debate over whether antitrust doctrine, much of it developed during a bygone era of smokestack industries, could or should evolve to address digital markets. Eventually, a consensus emerged: although the basic doctrine is supple enough to apply to new technologies, courts and enforcers should adopt a defendant-friendly, hands-off approach.

But this pro-defendant position is deeply-and dangerously-flawed. Economic theory, empirical research, and extant judicial and regulatory authority all contradict the prevailing views regarding power, conduct, and …

Hindsight Bias In Antitrust Law, Christopher R. Leslie

Vanderbilt Law Review

The modern field of study into hindsight bias was launched by Baruch Fischhoff. Fischhoff provided his research subjects with a primer on the 1810s conflict between British forces and Nepalese Gurkhas near Northern India. He suggested four possible outcomes: British victory, Gurkha victory, a peace settlement, and a military stalemate with no peace settlement. The subjects were then divided into five groups. One group was given no information about the ultimate outcome of the conflict. Subjects in each of the remaining four groups were told that one of the four outcomes had, in fact, occurred. The subjects were then asked …

The Customer Is Not Always Right: Balancing Worker And Customer Welfare In Antitrust Law, Clayton J. Masterman

Vanderbilt Law Review

This Note analyzes how courts' leniency affects a particular category of anticompetitive buyer conduct: agreements between employers that restrict competition in labor markets. If, as courts and commentators generally agree, the goal of antitrust law is to promote the welfare of consumers, how should courts balance the welfare of workers and customers under antitrust analysis? Arguably, worker welfare should be included in consumer welfare. If so, anticompetitive agreements between employers benefit one subset of consumers (customers), while hurting another subset (workers). The persistent procustomer and antiworker effect of such complicates a court's choice to find conduct per se unreasonable or …

The Commensurability Myth In Antitrust, Rebecca H. Allensworth

Vanderbilt Law Review

Modern antitrust law pursues a seemingly unitary goal: competition. In fact, competition-whether defined as a process or as a set of outcomes associated with competitive markets-is multifaceted. What are offered in antitrust cases as procompetitive and anticompetitive effects are typically qualitatively different, and trading them off is as much an exercise in judgment as mathematics. But despite the inevitability of value judgments in antitrust cases, courts have perpetuated a commensurability myth, claiming to evaluate "net" competitive effect as if the pros and cons of a restraint of trade are in the same unit of measure. The myth is attractive to …

A Laboratory Of Regulation: The Untapped Potential Of The Hhs Advisory Opinion Power, Christopher J. Climo

Vanderbilt Law Review

Of late, the federal government's approach to regulation of hospitals and other healthcare providers asks them to do more with less. Both the government and private insurers have increasingly assigned hospitals and other providers with financial responsibility for the quality of the care they provide to federal beneficiaries.' At the same time, experts predict that reimbursement rates by both the government and private insurers will fall as a result of the Affordable Care Act's recent efforts to increase access to healthcare. Facing a widening gap between expectations of quality and availability of financial resources, healthcare providers will need to pursue …

Identifying A Maverick: When Antitrust Law Should Protect A Low-Cost Competitor, Taylor M. Owings

Vanderbilt Law Review

Shortly after taking office, President Barack Obama announced that his Administration would pursue a policy of vigorous antitrust enforcement in order to ensure healthy competition in the economy.' In two of the highest-profile antitrust cases that have followed, the United States Department of Justice ("DOJ") sought to block two proposed mergers in which the target companies were low-cost competitors in their industries. The DOJ won a judgment in November 2011 that blocked retail-tax giant H&R Block from acquiring 2nd Story Software, maker of the low-cost digital tax- preparation program TaxACT. A month later, the DOJ scored another "victory" when AT&T …

The Firm As Cartel Manager, Herbert Hovenkamp, Christopher R. Leslie

Vanderbilt Law Review

Antitrust law is the primary legal obstacle to price fixing, which is condemned by Section One of the Sherman Act. Section One condemns only concerted action between separate entities, not unilateral conduct by a single entity. Firms that engage in price fixing may try to reduce the risk of antitrust liability by structuring their actions to appear to be those of a unified single entity that is beyond the reach of Section One.

In this Article, Professors Hovenkamp and Leslie examine how price-fixing cartels govern themselves and maximize their profits by cooperating and colluding, instead of competing. They then use …

Optimizing Private Antitrust Enforcement, Daniel A. Crane

Vanderbilt Law Review

Private litigation is the predominant means of antitrust enforcement in the United States. Other jurisdictions around the world are increasingly implementing private enforcement models. Private enforcement is usually justified on either compensation or deterrence grounds. While the choice between these two goals matters, private litigation is not very effective at advancing either one. Compensation fails because the true economic victims of most antitrust violations are usually downstream consumers who are too numerous and remote to locate and compensate. Deterrence is ineffective because the time lag between the planning of the violation and the legal judgment day is usually so long …

The Dragon In The Room: China's Anti-Monopoly Law And International Merger Review, Christopher Hamp-Lyons

Vanderbilt Law Review

In a world where mergers affect every corner of the planet, any government seeking competitive markets has an interest in ensuring that these mergers are not harmful to competition. As China, the world's most populous country, has committed to a market economy, it has now taken the momentous step of enacting its own Anti- Monopoly Law ("AML"). This effects a dramatic change in the antitrust regulation of multinational mergers. In international antitrust, even subtle legal differences between jurisdictions create significant potential for conflict. For this reason, the advent of antitrust merger review by a country with such massive international economic …

Resolving The Patent-Antitrust Paradox Through Tripartite Innovation, Michael A. Carrier

Vanderbilt Law Review

The issues presented by-the intersection of the patent system and the antitrust laws have never been as pressing as they are today. The number of issued patents is skyrocketing. Companies are more frequently entering into arrangements with competitors not only to recover their investment from creating patented products but also to avoid the patent landmines that line the path of innovation. They form patent pools for laser eye surgery, MPEG-2 video compression technology, and DVD formatting; enter into alliances, mergers, and settlements in the biopharmaceutical industry; refuse to license their patented products in various industries; and cross-license their patents in …

Avoiding Impotence: Rethinking The Standards For Applying State Antitrust Laws To Interstate Commerce, David W. Lamb

Vanderbilt Law Review

State antitrust laws are broadly constructed. With sweeping, general terms, often mirroring the language of the federal anti- trust laws, most state antitrust statutes manifest a legislative design to prevent-and to punish a variety of commercial activities that are anticompetitive in purpose or effect. These statutes, in conjunction with consumer protection statutes, constitute the primary vehicles through which state authorities protect consumers from harmful, anticompetitive behavior. Of course, despite the importance of state antitrust laws in preserving a competitive marketplace, the Constitution confines their reach. Through the Commerce Clause, the Constitution vests in Congress the exclusive power to regulate interstate …

Bargaining Theory And Regulatory Reform: The Political Logic Of Inefficient Regulation, David B. Spence, Lekha Gopalakrishnan

Vanderbilt Law Review

In this Article David Spence and Lekha Gopalakrishnan pro- pose a new understanding of regulatory bargaining. Economists and others have long argued that the American regulatory system is unnecessarily inefficient. Critics charge that the system is both substantively inefficient, in that it sometimes mandates the use of inefficient means for achieving a regulatory goal, and procedurally inefficient, in its over-reliance on rules. These arguments have led to a wave of regulatory reform experiments in the federal bureaucracy, many of which seek to promote positive-sum changes in regulatory policy through bargaining among private- and public-sector stakeholders. As several commentators have noted, …

"Ssc Corp. V. Town Of Smithtown And Usa Recycling, Inc. V. Town Of Babylon:" Reinvigoration Of The Market Participant Exception In The Arena Of Municipal Solid Waste Management, David L. Johnson

Vanderbilt Law Review

Residents and commercial enterprises in the United States generate an enormous amount of solid waste. The responsibility of managing the collection and storage of this waste has traditionally been a municipal function, and disposal of the waste is a dilemma that perpetually confronts the states. With the advent of stricter federal guidelines concerning the disposal of solid waste, state and local governments have been forced to implement creative approaches to handle an ever-increasing supply of garbage.

The two predominant strategies used by local governments to address the dilemma are import restrictions and export restrictions. Import restrictions protect landfills by limiting …

Making Sense Of The Rule Of Reason: A New Standard For Section 1 Of The Sherman Act, Thomas A. Piraino, Jr.

Vanderbilt Law Review

For most of the twentieth century, the federal courts have assumed that they must choose between two extreme methods of analyzing conduct under Section 1 of the Sherman Act:' a per se rule that deems certain conduct illegal on its face; or, a rule of reason that inquires into all conceivable circumstances before determining the legality of a particular restraint. Until the 1970s, the courts were enamored of the clarity, simplicity, and deterrent effects of per se rules. As they have become more knowledgeable about economic theory in the last fifteen years, however, the courts have grown disillusioned with the …

Albrecht After Arco: Maximum Resale Price Fixing Moves Toward The Rule Of Reason, Roger D. Blair, Gordon L. Lang

Vanderbilt Law Review

For some time, both economic and legal commentators have recognized the economic irrationality of the Supreme Court's ruling in Albrecht v. Herald Co. which prohibited the imposition of maximum resale prices by a supplier on its resellers. Ordinarily, unwise decisions receive critical reviews and eventually lose their force as they are over-ruled explicitly or by implication in subsequent decisions. In order for this evolution to occur, however, the Court must be presented with an opportunity to alter its earlier rulings. Recently, the Supreme Court had just such an opportunity to revisit the Albrecht rule in Atlantic Richfield Co. v. USA …

Retracing The Antitrust Roots Of Section 1972 Of The Bank Holding Company Act, Daniel Aronowitz

Vanderbilt Law Review

In 1956 Congress enacted the Bank Holding Company Act' (BHCA) to provide safeguards against undue concentration in the control of banking activities. Congress intended the regulations to protect the economy from anticompetitive combinations of banking and non- banking enterprises held under singular control. Still concerned with the faded "line" between banking and commerce, in 1970 Congress in- creased the scope' of the BHCA with a series of amendments, including an anti-tying provision.

Specifically, 12 U.S.C. section 1972 prohibits anticompetitive practices that "require bank customers to accept or provide some other service or product or refrain from dealing with other parties" …

Rethinking Antitrust Injury, Roger D. Blair, Jeffrey L. Harrison

Vanderbilt Law Review

Substantive changes in antitrust law since 1977 have had a dramatic impact on the vitality of antitrust enforcement.' Recent "procedural" changes now seem likely to have as great an influence. In the procedural area, the emphasis has been on antitrust standing and anti-trust injury. As a result of recent judicial interpretations of these requirements, antitrust plaintiffs face increasingly formidable hurdles. As courts focus on questions of standing and injury, important discussions about whether a practice should be held to a per se or rule of reason standards frequently are immaterial. If there is no qualified plaintiff,the substantive issue need never …

Contribution, Claim Reduction,And Individual Treble Damage Responsibility: Which Path To Reform Of Antitrust Remedies?, Edward D. Cavanagh

Vanderbilt Law Review

Antitrust violations traditionally have been viewed as statutory torts,' yet tort principles of damage allocation, including contribution and claim reduction, have not been extended by analogy in the federal courts to antitrust cases. Moreover, the principle of joint and several liability, made applicable to antitrust conspirators by judicial fiat some eighty years ago, has gone largely unchallenged. While the federal antitrust laws are nearly a century old, the damage allocation debate is of recent vintage, emerging in the wake of the Electrical Equipment Cases, when the private treble damage remedy came into its own.

The recent emergence of contribution and …

The Antitrust State-Action Doctrine After Fisher V. Berkeley, Daniel J. Gifford

Vanderbilt Law Review

In February 1986 the United States Supreme Court in Fisher v. Berkeley' upheld the validity of a municipal rent control ordinance against a contention that the Sherman Act preempted the ordinance. In an eight-to-one decision, the Court effectively gave the coup de grace to its earlier attempt to apply the federal antitrust laws to municipalities and political subdivisions. It also may have finally ended the remarkable series of disingenuous state-action decisions that had become an almost regular part of the Court's calendar since Goldfarb v. Virginia State Bar' in 1975.Fisher holds a promise of restoring to the state-action exemption a …

Antitrust Comes Full Circle: The Return To The Cartelization Standard, Nolan E. Clark

Vanderbilt Law Review

Antitrust law has been with us since 1890, the year that Congress passed the Sherman Antitrust Act. In the course of this ex-tended period, antitrust law has achieved an exalted status in the pantheon of American jurisprudence.' Nevertheless, for decades,Sherman Act doctrines have been murky and confused. This confusion was not, however, historically inevitable. When enacted, the Sherman Act had a clear focus. Fortunately, as the Sherman Act approaches its centennial, the Supreme Court has given encouraging signs that it is once again returning to the original focus of the statute.

As originally conceived, the Sherman Act prohibited two related …

Rule 10b-5-Application Of The In Pari Delicto Defense In Suits Brought Against Securities Brokers By Customers Who Have Traded On Inside Information, Mark G. Strauch

Vanderbilt Law Review

This Note advocates that courts should permit tipper defendants to assert the in pari delicto defense in private 10b-5 cases against tippee plaintiffs unless one of the first three exceptions to the analytical framework applies. Part II of this Note discusses the purpose and application of the in pari delicto defense and the four situations in which courts have rejected it. Part II also illustrate show courts analyze the in pari delicto defense in contract, anti-trust, and non-10b-5 securities cases. Part III provides a general background on the purpose of the Securities and Exchange Act of 1934 and rule 10b-5, …

Blanket Licensing Of Music Performing Rights: Possible Solutions To The Copyright-Antitrust Conflict, Mary K. Kennedy

Vanderbilt Law Review

This Recent Development compares Buffalo Broadcasting with other blanket licensing decisions and predicts the reversal of Buffalo Broadcasting on appeal. Part II of this Recent Development discusses the organization and operation of the performing rights societies. Part III focuses on the pertinent antitrust principles and the history of antitrust litigation between the performing rights societies and various licensees. Part IV examines recent decisions addressing blanket licenses in which courts have used similar analyses yet reached differing results. Part V analyzes possible solutions to the conflict between antitrust and copyright laws in the blanket licensing context and concludes that resolution of …

Federal And State Roles In Telecommunications: The Effects Of Deregulation, Eli M. Noam

Vanderbilt Law Review

During the past decade, federal telecommunications regulatory policy has changed its focus from a goal of universally available and affordable residential service to one of economic efficiency. In changing its regulatory focus, the federal government has indirectly deprived the states of the means to accomplish their goal, which remains one of insuring universally available and affordable residential service. In his Article Professor Noam examines the evolution of the traditional federal-state coregulatory system, contrasts the emerging federal regulatory approach with the states' policies, and discusses the reasons for federal predominance in telecommunications regulation.He argues that the reorientation in federal regulatory policy …

Tying Arrangements And Class Actions, Herbert Hovenkamp

Vanderbilt Law Review

This Article does not attempt to identify socially harmful tying arrangements." Rather, it draws upon the vast literature and case law of tying arrangements to suggest possible solutions to a perplexing problem in the law of antitrust class actions: under what circumstances do common questions predominate over individual questions in tying arrangement cases and thereby justify class action treatment? Courts today agree generally that although the amount of damages may vary considerably from one prospective class member to another, certification of a class action requires that the fact of injury be demonstrable by proof common to all members of a …

Baseball's Third Strike: The Triumph Of Collective Bargaining In Professional Baseball, Robert A. Mccormick

Vanderbilt Law Review

Since the inception of professional baseball, team owners have imposed limits on the freedom of players to negotiate contract terms. In this article Professor McCormick traces the history of attempts by professional baseball players to obtain contractual freedoms through the use of the antitrust and labor relations laws, attempts that culminated with the players' strike of 1981. Although players in other team sports successfully have utilized antitrust laws to increase player bargaining power, Professor McCormick argues that labor law has provided baseball players the only effective means to gain increased contractual freedoms. Professor McCormick concludes that player-owner disputes over the …

Municipalities And The Antitrust Laws: Home Rule Authority Is Insufficient To Ensure State Action Immunity, David J. White

Vanderbilt Law Review

This Recent Development first considers the evolution of the Parker doctrine in a variety of contexts-with special attention to the Supreme Court's decision in Lafayette and the Court's rationale in Boulder. After discussing the recent lower federal court decisions that based the availability of the Parker exemption upon the existence of general home rule authority under the respective state's constitution, this Recent Development examines the problems posed by the Boulder decision for cities and states contemplating economic regulation tailored to particular local concerns. This Recent Development then analyzes the competing policy interests in the question of a home rule municipality's …