Law Commons^™

Christianity And Antitrust, Kenneth G. Elzinga, Daniel Crane

Book Chapters

The purpose of this chapter is to consider whether the Christian faith has a nexus with the institution of antitrust. It turns out it doesn’t – and it does. For example, Christianity cannot explain why the Herfindahl–Hirschman Index is superior to the four-firm concentration ratio as a measure of industry concentration. Economics can. On the other hand, economics cannot explain why the per se rule against price-fixing is morally appropriate. The Bible can.

Fascism And Monopoly, Daniel A. Crane

Michigan Law Review

The recent revival of political interest in antitrust has resurfaced a longstanding debate about the role of industrial concentration and monopoly in enabling Hitler’s rise to power and the Third Reich’s wars of aggression. Proponents of stronger antitrust enforcement argue that monopolies and cartels brought the Nazis to power and warn that rising concentration in the American economy could similarly threaten democracy. Skeptics demur, observing that German big business largely opposed Hitler during the crucial years of his ascent. Drawing on business histories and archival material from the U.S. Office of Military Government’s Decartelization Branch, this Article assesses the historical …

Libra: A Concentrate Of "Blockchain Antitrust", Thibault Schrepel

Michigan Law Review Online

Blockchains promise to decentralize the economy, bypassing trusts in favor of decentralized communities. The World Economic Forum predicts that 10 percent of the global gross domestic product will be stored on block-chain by 2027. Gartner further prophesizes that blockchain will create $3.1 trillion worth of business value by 2030. Even if that prediction turns out to be too optimistic, blockchain’s legal implications cannot be neglected.

Tell Me How It Ends: The Path To Nationalizing The U.S. Pharmaceutical Industry, Fran Quigley

University of Michigan Journal of Law Reform

The U.S. medicines system is broken. Millions of Americans suffer and some even die because they cannot afford medicines discovered by government-funded research. At the same time, corporations holding monopoly patent rights to those medicines collect some of the largest profits in modern capitalist history.

It does not have to be this way. The global legacy of treating essential medicines as a public good and the robust U.S. history of government seizure of private property for the public interest reveals a better path: the United States should nationalize its pharmaceutical industry.

U.S. statutory law already provides broad powers for the …

Antitrust's Unconventional Politics, Daniel A. Crane

Articles

Antitrust law stands at its most fluid and negotiable moment in a generation. The bipartisan consensus that antitrust should solely focus on economic efficiency and consumer welfare has quite suddenly come under attack from prominent voices calling for a dramatically enhanced role for antitrust law in mediating a variety of social, economic, and political friction points, including employment, wealth inequality, data privacy and security, and democratic values. To the bewilderment of many observers, the ascendant pressures for antitrust reforms are flowing from both wings of the political spectrum, throwing into confusion a conventional understanding that pro-antitrust sentiment tacked left and …

Further Reflections On Antitrust And Wealth Inequality, Daniel A. Crane

Articles

Since I have already published a lengthy academic article on antitrust and wealth inequality, I have the freedom of using this piece to present the key arguments unvarnished by dense citations or technical details (readers interested in those things should consult my earlier article) and to respond to some of the criticisms of my article that have since been levied. My thesis, before and now, is this: claims that antitrust enforcement advances income or wealth progressivity are overstated and rest on simplistic and unrealistic understandings of how antitrust actually operates. While some enforcement actions may generate progressive results, others will …

Expired Patents, Trade Secrets, And Stymied Competition, W. Nicholson Price Ii

Articles

Patents and trade secrecy have long been considered substitute incentives for innovation. When inventors create a new invention, they traditionally must choose between the two. And if inventors choose to patent their invention, society provides strong legal protection in exchange for disclosure, with the understanding that the protection has a limit: it expires twenty years from the date of filing. At that time, the invention is opened to the public and exposed to competition. This story is incomplete. Patent disclosure is weak and focuses on one technical piece of an invention—but that piece is often only a part of the …

Incentive Regulation, New Business Models, And The Transformation Of The Electric Power Industry, Inara Scott

Michigan Journal of Environmental & Administrative Law

The electric utility sector is in the midst of paradigmatic change. Market forces include decreased load growth, technological advances in distributed energy resources, pressures for decarbonization, and demands for increased efficiency and new utility services. Meanwhile, as the utility monopoly is undermined and profits slow, financial analysts signal increasing risk to potential utility investors. Suggestions for transforming the existing regulatory structure abound. At the broadest level, such proposals reflect an established divide between energy policy, which traditionally focuses on economics and markets, and environmental law, which is based in the protection of natural resources and ecosystems. To marry the two …

Antitrust And Wealth Inequality, Daniel Crane

Articles

In recent years, progressive public intellectuals and prominent scholars have asserted that monopoly power lies at the root of wealth inequality and that increases in antitrust enforcement are necessary to stem its rising tide. This claim is misguided. Exercises of market power have complex, crosscutting effects that undermine the generality of the monopoly regressivity claim. Contrary to what the regressivity critics assume, wealthy shareholders and senior corporate executives do not capture the preponderance of monopoly rents. Such profits are broadly shared within and dissipated outside the firm. Further, many of the subjects of antitrust law are middle-class professionals, sole proprietors, …

The New Road To Serfdom: The Curse Of Bigness And The Failure Of Antitrust, Carl T. Bogus

University of Michigan Journal of Law Reform

This Article argues for a paradigm shift in modern antitrust policy. Rather than being concerned exclusively with consumer welfare, antitrust law should also be concerned with consolidated corporate power. Regulators and courts should consider the social and political, as well as the economic, consequences of corporate mergers. The vision that antitrust must be a key tool for limiting consolidated corporate power has a venerable legacy, extending back to the origins of antitrust law in early seventeenth century England, running throughout American history, and influencing the enactment of U.S. antitrust laws. However, the Chicago School’s view that antitrust law should be …

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 …

All I Really Need To Know About Antitrust I Learned In 1912, Daniel A. Crane

Articles

Herbert Hovenkamp has indisputably earned the deanship of contemporary antitrust scholarship. One could point to many different attributes by which he has earned his laurels: fantastic scholarly productivity; clarity and precision in the craft of writing; analytical depth in both law and economics; moderation in a field apt to polarization; and custodianship of the influential Areeda treatise. In this Essay, I hope to honor another quality that has contributed significantly to Herb’s tremendous success as an antitrust scholar—his engagement with history. Much contemporary antitrust scholarship bursts with excitement at the discovery of new phenomena or theories that in all actuality …

Conditional Pricing And Monopolization: A Reflection On The State Of Play, Daniel A. Crane

Articles

Conditional pricing practices--including bundled discounting, loyalty rebating, and market share discounts--are not new phenomena in the U.S. market. Their potentially exclusionary consequences were raised in antitrust cases decades ago. But unlike trying or exlcusive dealing--which have a rich hsitory of case law and scholarly converage--conditioanl pricing practices did not emerge as salient to the antitrust community until a little over a decade ago. Two federal appellate decisions in the early 2000s--Concord Boar on market share rebates adn LePage's on bundled discounting--sparked a period of intensive interest and activity on these topics in teh antitrust agencies, courts, bench, and legal …

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 …

Reinventing Copyright And Patent, Abraham Bell, Gideon Parchomovsky

Michigan Law Review

Intellectual property systems all over the world are modeled on a one-size-fitsall principle. However important or unimportant, inventions and original works receive the same scope of protection, for the same period of time, backed by the same variety of legal remedies. Essentially, all intellectual property is equal under the law. This equality comes at a heavy price, however. The equality principle gives all creators access to the same remedies, even when those remedies create perverse litigation incentives. Moreover, society overpays for innovation through more monopoly losses than are strictly necessary to incentivize production. In this Article, we propose a solution …

Aftermarketfailure: Windows Xp's End Of Support, Andrew Tutt

Michigan Law Review First Impressions

After 12 years, support for Windows XP will end on April 8, 2014. So proclaims a Microsoft website with a helpful clock counting down the days. "What does this mean?" the website asks. "It means you should take action." You should "migrate to a current supported operating system - such as Windows 8.1 - so you can receive regular security updates to protect [your] computer from malicious attacks." The costs of mass migration will be immense. About 30% of all desktop PCs are running Windows XP right now. An estimated 10% of the U.S. government's computers run Windows XP, including …

Were Standard Oil's Railroad Rebates And Drawbacks Cost Justified?, Daniel A. Crane

Articles

In this essay, written for a symposium on the centennial anniversary of the Supreme Court's Standard Oil decision, I reexamine the costjustification question. In the first part, I explain why the cost-justification question is central to the entire case and its acquired and evolving historical meaning. In the second part, I review the evidence of claimed efficiencies passed on to the railroads. I conclude that there is evidence that Standard Oil passed along significant cost savings to the railroads and that these savings could have justified a portion of the rebates and drawbacks. However, I conclude that there is little …

Search Neutrality As An Antitrust Principle, Daniel A. Crane

Articles

Given the Internet's designation as "the great equalizer,"' it is unsurprising that nondiscrimination has emerged as a central aspiration of web governance.2 But, of course, bias, discrimination, and neutrality are among the slipperiest of regulatory principles. One person's bias is another person's prioritization. Fresh on the heels of its initial success in advocating a net neutrality principle,' Google is in the uncomfortable position of trying to stave off a corollary principle of search neutrality.' Search neutrality has not yet coalesced into a generally understood principle, but at its heart is some idea that Internet search engines ought not to prefer …

Has The Obama Justice Department Reinvigorated Antitrust Enforcement?, Daniel A. Crane

Articles

The Justice Department’s recently filed antitrust case against Apple and several major book publishers over e-book pricing, which comes on the heels of the Justice Department’s successful challenge to the proposed merger of AT&T and T-Mobile, has contributed to the perception that the Obama Administration is reinvigorating antitrust enforcement from its recent stupor. As a candidate for President, then-Senator Obama criticized the Bush Administration as having the “weakest record of antitrust enforcement of any administration in the last half century” and vowed to step up enforcement. Early in the Obama Administration, Justice Department officials furthered this perception by withdrawing the …

Rethinking Merger Efficiencies, Daniel A. Crane

Articles

The two leading merger systems-those of the United States and the European Union-treat the potential benefits and risks of mergers asymmetrically. Both systems require considerably greater proof of efficiencies than they do of potential harms if the efficiencies are to offset concerns over the accumulation or exercise of market power The implicit asymmetry principle has important systemic effects for merger control. It not only stands in the way of some socially desirable mergers but also may indirectly facilitate the clearance of some socially undesirable mergers. Neither system explicitly justifies this asymmetry, and none of the plausible justifications are normatively supportable. …

Fixing Patent Boundaries, Tun-Jen Chiang

Michigan Law Review

The claims of a patent are its boundaries, defining the scope of exclusion. This boundary function of claims is undermined by the fact that claims can be changed throughout the life of the patent, thereby moving the patent boundary. A boundary that can be moved at-will is one that the public cannot rely upon. This Article explores the problems of malleable patent boundaries. If a claim can be amended to permit a patentee to capture something he did not foresee when filing the patent application, the amendment confers an unexpected windfall that did not contribute to incentives to invent before …

Lorain, Aspen, And The Future Of Section 2 Enforcement, Xiao Jeff Liu

Michigan Telecommunications & Technology Law Review

The Sherman Antitrust Act § 2 makes monopolizing or attempting to monopolize a particular trade or aspects of a trade a federal felony. More specifically, Section 2 of the Act addresses a firm's unilateral conduct. Under the administration of former President George W. Bush, a comprehensive guideline titled Competition and Monopoly: Single-Firm Conduct under Section 2 of the Sherman Act ("Bush Guidelines") was adopted in September of 2008 for enforcing Section 2 violations. Under President Barack Obama's administration, however, the enforcement of antitrust laws is expected to undergo a radical transformation. On May 11, 2009, Christine A. Varney, the Assistant …

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 …

Bargaining In The Shadow Of Rate-Setting Courts, Daniel A. Crane

Articles

Judges will tell you that they are comparatively poor rate regulators. The specialized, technical competence and supervisory capacity that public utilities commissions enjoy are usually absent from judicial chambers. Nonetheless, when granting antitrust remedies-particularly remedies for monopolistic abuse of intellectual property-courts sometimes purport to act as rate regulators for the licensing or sale of the defendant's assets. At the outset, we should distinguish between two forms ofjudicial rate setting. In one form, a court (or the FTC in its adjudicative capacity) grants a compulsory license and sets a specific rate as part of a final judgment or an order. The …

Can Bundled Discounting Increase Consumer Prices Without Excluding Rivals?, Daniel A. Crane, Joshua D. Wright

Articles

Since we abhor suspense, we will quickly answer the question our title poses: No. As a general matter, bundled discounting schemes lower prices to consumers unless they are predatory—that is to say, unless they exclude rivals and thereby permit the bundled discounter to price free of competitive restraint. The corollary of this observation is that bundled discounting is generally pro-competitive and pro-consumer and should only be condemned when it is capable of excluding rivals. We pose and answer this question because it is at the heart of Section VI of Professor Elhauge’s provocative draft article which is the subject of …

Substance, Procedure, And Institutions In The International Harmonization Of Competition Policy, Daniel A. Crane

Articles

Many people who pay attention to the rapid development of antitrust regimes across the globe hold two tenets in common. First, most of the relevant stakeholders would benefit if competition policy could be harmonized interjurisdictionally.' Second, and alas, this beneficial harmonization is unlikely to happen on a significant scale in the foreseeable future.2 To many, antitrust harmonization is thus a noble but utopian aspiration. I generally share both the former sentiment and the latter lament but both are far too general to be of much use without further specification. Uniformity of competition policy is valuable to be sure, but not …

Obama's Antitrust Agenda, Daniel A. Crane

Articles

Antitrust law is back in vogue. After years in the wilderness, antitrust enforcement has reemerged as a hot topic in Washington and in the legal academy. In one heady week inMay of 2009, a frontpage story in the New York Times reported the dramatic decision of Christine Varney —theObama administration’s new AntitrustDivision head—to jettison the entire report onmonopolization offenses released by the Bush JusticeDepartment just eightmonths earlier. In a speech before the Center for American Progress, Varney announced that the Justice Department is “committed to aggressively pursuing enforcement of Section 2 of the Sherman Act.” As if to prove that …

Linkline's Institutional Suspicions, Daniel A. Crane

Articles

Antitrust scholars are having fun again. Not so long ago, they were the poor, redheaded stepchildren of the legal academy, either pining for the older days of rigorous antitrust enforcement or trying to kill off what was left of the enterprise. Other law professors felt sorry for them, ignored them, or both. But now antitrust is making a comeback of sorts. In one heady week in May of 2009, a front-page story in the New York Times reported the dramatic decision of Christine Varney-the Obama Administration's new Antitrust Division head at the Department of Justice-to jettison the entire report on …

Software Development As An Antitrust Remedy: Lessons From The Enforcement Of The Microsoft Communications Protocol Licensing Requirement , William H. Page, Seldon J. Childers

Michigan Telecommunications & Technology Law Review

An important provision in each of the final judgments in the government's Microsoft antitrust case requires Microsoft to "make available" to software developers the communications protocols that Windows client operating systems use to interoperate "natively" (that is, without adding software) with Microsoft server operating systems in corporate networks or over the Internet. The short-term goal of the provision is to allow developers, as licensees of the protocols, to write applications for non-Microsoft server operating systems that interoperate with Windows client computers in the same ways that applications written for Microsoft's server operating systems interoperate with Windows clients. The long-term goal …

Independent Invention As A Defense To Patent Infringement, Samson Vermont

Michigan Law Review

Under current law, independent invention is no defense to patent infringement. This Article argues that independent invention should be a defense, provided the independent inventor creates the invention before receiving actual or constructive notice that someone else already created it. The defense reduces wasteful duplication of effort and enhances dissemination of inventions without lowering the incentive to invent below the necessary minimum. To be sure, the defense lowers the incentive for inventions that face significant odds of being invented by more than one inventor By enabling a second inventor to compete with a first inventor the defense essentially breaks up …