Law Commons^™

Reviving Antitrust Enforcement In The Airline Industry, Jonathan Edelman

Michigan Law Review

The Department of Transportation (DOT) has broad but oft overlooked power to address antitrust issues among airlines through section 411 of the Federal Aviation Act. However, the DOT’s unwillingness to enforce antitrust more aggressively may be translating into higher fares and fees for airline travelers.

More aggressive antitrust enforcement is urgently needed. Recent research has revealed a widespread practice of common ownership in the airline industry, whereby investment firms own large portions of rival airline companies. Although this practice leads to higher prices and reduced competition, antitrust regulators, from the DOT to the Department of Justice and the Federal Trade …

Standing In The Way Of The Ftaia: Exceptional Applications Of Illinois Brick, Jennifer Fischell

Michigan Law Review

In 1982, Congress enacted the Foreign Antitrust Trade Improvements Act (FTAIA) to resolve uncertainties about the international reach and effect of U.S. antitrust laws. Unfortunately, the FTAIA has provided more questions than answers. It has been ten years since the Supreme Court most recently interpreted the FTAIA, and crucial questions and circuit splits abound. One of these questions is how to understand the convergence of the direct purchaser rule (frequently referred to as the Illinois Brick doctrine) and the FTAIA. Under the direct purchaser rule, only those who purchase directly from antitrust violators are typically permitted to sue under section …

The Report Of The Attorney General's National Committee To Study The Antitrust Laws: A Retrospective, Thomas E. Kauper

Michigan Law Review

In 1955, the third year of the Eisenhower administration, the Michigan Law Review published what I believe to be the only symposium on antitrust law ever to appear in its pages. The occasion was the release in March of that year of a Report of the Attorney General's National Committee to Study the Antitrust Laws,2 a nearly fourhundred- page examination of virtually all facets of federal antitrust doctrine and enforcement. The pages of the symposium led me of course to revisit the Report itself, a visit a little like seeing an old high school friend long forgotten some forty years …

The Anticompetitive Effect Of Passive Investment, David Gilo

Michigan Law Review

There are many cases in which a firm passively invests in its competitor. For example, Microsoft passively invested in $150 million worth of the nonvoting stock of Apple, its historic rival in the operating systems market. Also, in November 1998, Northwest Airlines, the nation's fourth-largest airline, purchased 14% of the common stock of Continental Airlines Inc., the nation's fifth-largest (and fastest growing) airline. Northwest competes with Continental on seven routes, serving 3.6 million passengers per year. In another example, TCI, the nation's largest cable operator, became a passive investor with a 9% stake (which can be increased, under the terms …

Antitrust Beyond Competition: Market Failures, Total Welfare, And The Challenge Of Intramarket Second-Best Tradeoffs, Peter J. Hammer

Michigan Law Review

Should antitrust law ever sanction the accumulation of market power or permit other restraints of trade if such conduct would increase social welfare? This is the challenge raised by intramarket second- best tradeoffs. The lesson of second-best analysis is that one market failure can sometimes counteract the effects of another market failure. In the presence of multiple market failures, it is conceivable that mergers or other restraints traditionally viewed as anticompetitive may be welfare-enhancing. A social planner, given the mandate of maximizing total welfare, would permit such restraints. Could an antitrust judge come to the same result under a defensible …

Fraudulent Concealment, Self-Concealing Conspiracies, And The Clayton Act, Richard F. Schwed

Michigan Law Review

This Note argues that courts should apply a self-concealment standard to section 4B of the Clayton Act rather than require a showing of additional affirmative acts. Part I examines the history of the fraudulent concealment doctrine and its application to antitrust cases. It identifies three different standards used by courts to satisfy the concealment element and finds that courts apply the doctrine inconsistently. Part II analyzes the relationship between the fraudulent concealment doctrine and the self-concealment standard in antitrust cases by examining the judicial development of the doctrine and Congress' intent in enacting section 4B. Part II concludes that the …

Antitrust's Protected Classes, Herbert Hovenkamp

Michigan Law Review

For purposes of argument, this essay assumes that efficiency ought to be the exclusive goal of antitrust enforcement. That premise is controversial. Nonetheless, several economic and legal theorists, primarily among the Chicago School of economics and antitrust scholarship, have developed an Optimal Deterrence Model based on this assumption. The Model is designed to achieve the optimum, or ideal, amount of antitrust enforcement. The Model's originators generally believe that there is too much antitrust enforcement, particularly enforcement initiated by private plaintiffs. I intend to show that, even if efficiency is the only antitrust policy goal, a broader array of lawsuits should …

Divestiture As A Remedy In Private Actions Brought Under Section 16 Of The Clayton Act, Paul V. Timmins

Michigan Law Review

This Note argues that private parties should be permitted to bring suits for divestiture under section 16 of the Clayton Act. Part I analyzes the language of section 16 and the relevant legislative history of the Clayton Act and concludes that Congress did not intend to limit the injunctive relief available to private parties. Part II argues that courts should be free to exercise their broad equity powers to grant the most appropriate and effective relief, including divestiture, to an injured plaintiff. Finally, Part III contends that policy considerations disfavor omitting divestiture from the types of equitable remedies that a …

Redefining The "Cost Of Suit" Under Section Four Of The Clayton Act, Michigan Law Review

Michigan Law Review

This Note explores the possible interpretations of the "cost of suit" provision and the policies which it implicates. It concludes that the Copper Liquor interpretation best advances the goals of the antitrust laws set forth by Congress and the courts. Part I examines the development of the present controversy among the circuits. Part II analyzes and refutes the arguments which have been set forth in support of the traditional rule. Part III explores the policy considerations which underlie private treble damage actions and concludes that the Copper Liquor interpretation of the "cost of suit" provision serves them better than does …

Employee Standing Under Section 4 Of The Clayton Act, Michigan Law Review

Michigan Law Review

This Note will focus on the confusion that plagues one category of antitrust standing cases, those in which an employee alleges wrongful discharge for his refusal to participate in a scheme that violates the antitrust laws. Conflicts among the circuits in their analysis and resolution of these employee standing cases have not been definitively settled by the Supreme Court's recent pronouncements on the right to seek recovery under section 4. This Note argues that these recent Supreme Court decisions, as well as the policies behind the antitrust laws, weigh in favor of permitting an employee to maintain a section 4 …

Disclosure Of Grand Jury Materials Under Clayton Act Section 4f(B), Michigan Law Review

Michigan Law Review

This Note analyzes the controversy and concludes that the latter courts are correct: Congress never intended to abrogate or modify rule 6(e)'s "particularized need" standard when it enacted section4F(b). Part I discusses whether Congress intended section 4F(b) to require the Attorney General to disclose grand jury materials to state attorneys general upon request, thereby abrogating rule 6(e)'s explicit prohibition against such disclosure. Part II examines the statutory language and legislative history of section). 4F(b) to determine whether Congress intended section 4F(b) to modify rule 6(e)'s "particularized need" standard. Finally, Part III evaluates the policies affected by liberalized disclosure of grand …

Bribery And Brokerage: An Analysis Of Bribery In Domestic And Foreign Commerce Under Section 2 ( C ) Of The Robinson-Patman Act, Michigan Law Review

Michigan Law Review

This Note first analyzes the substantive and jurisdictional criteria of section 2(c) to evaluate the possible and the desirable scope of its applicability to commercial bribery. The Note next asks whether this statute reaches bribery of domestic and foreign government officials and concludes that where the requirements of section 2(c) are otherwise met and where the person accepting the bribe is acting administratively rather than politically, the statute could be applied to bribery of agents of domestic governments. However, a wholesale application of section 2( c) to bribery of foreign government agents would leave American competitors in foreign commerce defenseless …

Price Discrimination Law And Economic Efficiency, Edward H. Cooper

Michigan Law Review

The Clayton Act, as amended by the Robinson-Patman Act (15 U.S.C. § 13), undertakes to outlaw price "discrimination" upon proof of threatened injury to competition, and subject to specified defenses. Lawyers often bewail the fact that administration of this statute frequently fails to conform to an economist's notion of discrimination. For the most part, the complaints are addressed to the clear fact that, as drafted and interpreted, the statute wreaks unnecessary damage. In the name of protecting competition, competition and economic efficiency are often curtailed.

United States V. Falstaff Brewing Corporation: Potential Competition Re-Examined, Michigan Law Review

Michigan Law Review

This Note will examine and criticize the perceived potential competition doctrine suggested by the Court. Then, it will discuss the questions raised in the concurrences concerning the use of subjective evidence and the role of incipient competitive effects. Finally, an alternative approach that focuses on the acquisition of or the possibility of acquiring small, "toehold" firms will be proposed.

Contracts, Conditions, And The Clayton Act: Causes Of Action Available To A Dealer Injured By An Exclusive-Dealing Arrangement, Michigan Law Review

Michigan Law Review

It is the purpose of this Comment to re-examine two of the three requirements of section 3 of the Clayton Act-with particular emphasis on the sale-or-contract-for-sale requirement-in an attempt to determine whether the formidable obstacle that judicial interpretation has made of these requirements is consistent with either the letter or spirit of the section. In discussing these requirements, this Comment will only consider the rights of parties who have at one time made purchases from a seller who utilizes exclusive-selling arrangements.

Trade Regulation--Price Discrimination--Liability For "Fourth Level" Injury Falls Within The Scope Of Section 2(A) Of The Clayton Act, As Amended By The Robinson-Patman Act--Perkins V. Standard Oil Company Of California, Michigan Law Review

Michigan Law Review

During the mid-1950's Clyde A. Perkins, a major independent wholesaler and retailer operating in the states of Washington and Oregon, bought substantial quantities of gasoline and oil from Standard Oil Company of California. During the same period, Standard also sold gasoline and oil to Signal Oil and Gas Company, a large wholesaler whose subsidiaries operated at wholesale and retail levels in the same area as Perkins. The price Standard charged to Signal, however, was lower than the price it charged to Perkins. Signal passed on the advantages of this lower price to its subsidiary, Western Hyway, which in tum sold …

The "Warren Court" And The Antitrust Laws: Of Economics, Populism, And Cynicism, Thomas` E. Kauper

Michigan Law Review

No one could quarrel with the simple assertion that the so-called "Warren Court" has had a significant, if indeed not extraordinary, impact on the development of the antitrust laws. It could hardly have been otherwise. The fifteen years since 1953 represent virtually one-fourth of the total history of the Clayton and Federal Trade Commission Acts, and one fifth of the time which has elapsed since passage of the Sherman Act. Every Supreme Court decision under the 1950 amendments to section 7 of the Clayton Act, the so-called antimerger law, has come after the accession of Chief Justice Warren to the …

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.

Antitrust-Limitation Of Actions-Clayton Act Statute Of Limitations Tolled On Treble Damage Suits Against Non-Government Defendant Co-Conspirators-- Michigan V. Morton Salt Co., Michigan Law Review

Michigan Law Review

Plaintiffs, several states and smaller governmental units, filed related antitrust treble damage claims against ten rock salt companies that had allegedly conspired to fix prices. These private actions were instituted subsequent to civil and criminal antitrust proceedings brought by the federal government in which four of the ten companies had been named as defendants and five designated as co-conspirators but not prosecuted. Section 5(b) of the Clayton Act provides that when such actions are brought by the government, "the running of the statute of limitations in respect of every private right of action arising under said laws and based in …

Hawley: The New Deal And The Monopoly Problem, Arthur D. Austin

Michigan Law Review

A Review of The New Deal and the Monopoly Problem By E. W. Hawley

Antitrust-Venue-Time Of Venue Under Section 12 Of The Clayton Act Refers To Time When Action Accrued-Eastland Construction Co. V. Keasbey & Mattison Co., Michigan Law Review

Michigan Law Review

In 1964, plaintiff brought a treble damage suit under the Clayton Act in the Federal District Court for the Northern District of California, alleging that defendant had violated the antitrust laws while doing business in that district. Defendant, a Pennsylvania corporation which formerly had conducted a portion of its business in California but which had ceased all activities there in 1962, moved for dismissal, arguing that venue was improper because it was not transacting business in the Northern District of California at the time suit was instituted. On appeal from a ruling by the district court granting the motion for …

A Tax Formula To Restore The Historical Effects Of The Antitrust Treble Damage Provisions (An Open Letter To The Senate Antitrust And Monopoly Committee), L. Hart Wright

Michigan Law Review

Following the well-publicized criminal conviction of a major segment of our electrical equipment industry for conspiring to fix and maintain prices, terms, and conditions of sales made to both private industry and the government, almost 2,000 private antitrust treble damage suits were brought against those convicted. In July, 1964, when at least 1,500 of these suits were still pending, the Commissioner of Internal Revenue publicly announced that amounts paid or "incurred" by the defendants in those actions to private plaintiffs, either pursuant to judgment or by way of settlement, together with legal expenses pertaining thereto, were deductible as ordinary and …

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 …

Antitrust And The Consumer Interest, Kenneth S. Carlston, James M. Treece

Michigan Law Review

Public control of business in the United States has proceeded, in most sectors of the economy, on the assumption that free, open competition in the market should be the primary regulator. It is felt that consumer welfare will be maximized by such an organization of the economy. Courts, governmental agencies, and, to a certain extent, private agencies have performed the role of ensuring that free markets are not displaced by other, less desirable alternatives.

Boycotts And Restrictive Marketing Arrangements, Richard M. Buxbaum

Michigan Law Review

It is currently a common if still relatively unheralded practice for a "fired" dealer to bring an antitrust action against his former manufacturer-supplier (and perhaps other dealers), alleging that his termination was the result of a boycott. Boycotts-collective efforts to obtain the exclusion of a party from a market-are illegal per se under section 1 of the Sherman Act. Thus, questions concerning the justification for the boycott or the significance of the offender's market position do not arise.

Service Of Process-Federal Rules Of Civil Procedure-Service Of Process In Italy On Alien Corporate Defendant Permitted In A Federal Antitrust Action-Hoffman Motors Corp. V. Alfa Romeo S.P.A.., Michigan Law Review

Michigan Law Review

Plaintiff, an American automobile distributor, brought suit in a federal court in the Southern District of New York against Alfa Romeo S.p.A., an Italian corporation, for violation of the Robinson- Patman and Auto Dealers' Acts. Service of process was made personally on defendant's general manager in Italy by an Italian attorney appointed for that purpose by the district court, and by registered mail as prescribed by the New York statute for extraterritorial service. Defendant moved to dismiss for lack of personal jurisdiction as to the Robinson-Patman claim on the ground that section 12 of the Clayton Act limits the territorial …

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- …

Antitrust Significance Of Covenants Not To Compete, Michigan Law Review

Michigan Law Review

Covenants not to compete, despite their increasing prevalence and their obvious tendency to restrain competition, have seldom been attacked under either federal or state antitrust laws. In January 1965, however, William H. Orrick, Jr., then Assistant Attorney General in charge of the Antitrust Division, noted that the Division was becoming concerned about one aspect of the problem-the taking of overbroad covenants not to compete in connection with the purchase of a competitor. He suggested that such an agreement might have anticompetitive effects under either the Sherman Act or section 7 of the Clayton Act. This note will explore the present …