Law Commons^™

Megacorporations Are Jacking Up Prices 'Because They Can,' Pushing Red-Hot Inflation To Historic Levels, Robert H. Lande

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This article argues that corporations may be taking advantages of supply chain bottlenecks and shortages to collude and raise prices illegally. Although price fixing is illegal, the current levels of penalties are far too low. This gives firms an incentive to collude. Before the pandemic, when inflation was low, consumers and the antitrust enforcers would have been more likely to notice any sudden price increases and investigate whether they were caused by collusion. But using bottlenecks and shortages as cover, companies can take advantage of their years of consolidation and collude more easily with less chance of it being detected. …

Can Covid-19 Get Congress To Finally Strengthen U.S. Antitrust Law?, Robert H. Lande, Sandeep Vaheesan

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The COVID-19 pandemic could cause Congress to strengthen our merger laws. The authors of this short article strongly urge Congress to do this, but to do this in a manner that ignores 5 myths that underpin current merger policy:

Myth 1: Mergers Eliminate Wasteful Redundancies and Produce More Efficient Businesses
Myth 2: Current Merger Enforcement Protects Consumers
Myth 3: Merger Remedies Preserve Competition
Myth 4: The Current Merger Review System Offers Transparency and Guidance to Businesses and the Public
Myth 5: Corporations Need Mergers to Grow

Submission Of Robert H. Lande To House Judiciary Antitrust Subcommittee Investigation Of Digital Platforms, Robert H. Lande

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The House Judiciary Antitrust Subcommittee asked me to submit suggestions concerning the adequacy of existing antitrust laws, enforcement policies, and enforcement levels insofar as they impact the state of competition in the digital marketplace. My submission recommends the following nine reforms:

1. A textualist analysis of the Sherman Act shows that Section 2 actually is a no-fault monopolization statute. At a minimum Congress should enact a strong presumption that every firm with a 67% market share has violated Section 2. This would move the Sherman Act an important step in the right direction, the direction Congress intended in 1890. My …

Preventing The Curse Of Bigness Through Conglomerate Merger Legislation, Robert H. Lande, Sandeep Vaheesan

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The antitrust laws, as they are presently interpreted, are incapable of blocking most of the very largest corporate mergers. They successfully blocked only 4 of the 61 largest finalized mergers and acquisitions (defined as the acquired firm being valued at more than $10 billion) that occurred between 2015 and 2018. The antitrust laws also would permit the first trillion-dollar corporation, Apple, to merge with the third largest corporation, Exxon/Mobil. In fact, today every U.S. corporation could merge until just 10 were left – so long as each owned only 10% of every relevant market.

Even though the Congresses that enacted …

The Sherman Act Is A No-Fault Monopolization Statute: A Textualist Demonstration, Robert H. Lande, Richard O. Zerbe Jr.

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The drafters of the Sherman Act originally designed Section 2 to impose

sanctions on all monopolies and attempts to monopolize, regardless whether the

firm had engaged in anticompetitive conduct. This conclusion emerges from the

first ever textualist analysis of the language in the statute, a form of interpretation

originally performed only by Justice Scalia but now increasingly used by the

Supreme Court, including in its recent Bostock decision.

Following Scalia’s methodology, this Article analyzes contemporaneous

dictionaries, legal treatises, and cases and demonstrates that when the Sherman

Act was passed, the word “monopolize” simply meant that someone had acquired

a monopoly. …

Does Crime Pay? Cartel Penalties And Profits, John M. Connor, Robert H. Lande

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This article seeks to answer a fundamental antitrust question: does crime pay? Do the current overall levels of U.S. cartel sanctions adequately discourage firms from engaging in illegal collusion? Seven years ago our research showed that the unfortunate answer was clearly that, yes, criminal collusion usually is profitable! The expected costs (in terms of criminal fines and prison time, civil damages, etc.) was significantly less than expected gains to the price fixers. Sadly, the most recent data re-affirm this conclusion.

The great majority of companies participating in illegal cartels make a profit even after they pay all the penalties. The …

The Merger Incipiency Doctrine And The Importance Of "Redundant" Competitors, Peter C. Carstensen, Robert H. Lande

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The enforcers and the courts have not implemented the merger incipiency doctrine in the vigorous manner Congress intended. We believe one important reason for this failure is that, until now, the logic underlying this doctrine has never been explained. The purpose of this article is to demonstrate that markets’ need for “protective redundancy” explains the incipiency policy. We are writing this article in the hope that this will cause the enforcers and courts to implement significantly more stringent merger enforcement.

To vastly oversimplify, the current enforcement approach assumes that if N significant competitors are necessary for competition, N-1 competitors could …

Restoring The Legitimacy Of Private Antitrust Enforcement, Robert H. Lande, Joshua P. Davis

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This is a draft chapter from the American Antitrust Institute's 2017 recommendations to the 45th President of the United States. It contains a brief but well-deserved defense of the benefits of private antitrust enforcement and a critique of the claims that private enforcement in the United States is excessive, that it leads to overdeterrence, and that the courts are plagued with widespread frivolous antitrust lawsuits. It also offer a number of specific recommendations for the new administration to implement in the private antitrust enforcement area, including:

* Educate the courts, the public, and federal and state legislatures about the virtues …

Comment On “The Empirical Basis For Antitrust: Cartels, Mergers, And Remedies”, John M. Connor, Robert H. Lande

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In this journal, James Langenfeld critically reviewed four of the present authors’ articles that analyze the size of cartel overcharges and their antitrust policy implications. In this comment, we explain why we believe Langenfeld errs in his criticism of our work. In particular, this comment discusses the variation in research quality of the sources used to compile a large sample of historical cartel overcharges; the advisability of trimming outliers or large estimates from the sample; alleged publication bias; why our 25% median estimate is much more likely to be correct than the US Sentencing Guideline’s 10% presumption; and the implications …

Class Warfare: Why Antitrust Class Actions Are Essential For Compensation And Deterrence, Robert H. Lande

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Recent empirical studies demonstrate five reasons why antitrust class action cases are essential: (1) class actions are virtually the only way for most victims of antitrust violations to receive compensation; (2) most successful class actions involve collusion that was anticompetitive; (3) class victims’ compensation has been modest, generally less than their damages; (4) class actions deter significant amounts of collusion and other anticompetitive behavior; and (5) anticompetitive collusion is underdeterred, a problem that would be exacerbated without class actions. Unfortunately, a number of court decisions have undermined class action cases, thus preventing much effective and important antitrust enforcement.

Not Treble Damages: Cartel Recoveries Are Mostly Less Than Single Damages, John M. Connor, Robert H. Lande

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Antitrust law provides treble damages for victims of antitrust violations, but the vast majority of private cases settle. The average or median size of these settlements relative to the overcharges involved has, until now, been only the subject of anecdotes or speculation. To ascertain what we term "Recovery Ratios," we assembled a sample consisting of every completed private U.S. cartel case discovered from 1990 to mid-2014 for which we could find the necessary information. For each of these 71 cases we collected, we assembled neutral scholarly estimates of affected commerce and overcharges. We compared these to the damages secured in …

Recent Journalism Awards Won By "Old," "New," And "Hybrid" Media, Robert H. Lande, Thomas J. Horton, Virginia Callahan

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This compares the quality of the "old" media to that of the "new" media by determining how often each type of media source wins major journalism awards. It divides media sources into three categories: old, new and hybrid. New media is limited to publications that were started purely as online news publications. Old media is classified in the traditional sense to include such newspapers as the New York Times. Hybrid media combines elements of both new and old media. Our research compares the number of Pulitzer Prizes and other major journalism awards won by these three types of media sources …

Non-Price Competition In “Substitute" Drugs: The Ftc's Blind Spot, Gregory Dolin

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As the recent case of United States v. Lundbeck illustrates, the Federal Trade Commission’s lack of knowledge in medical and pharmacological sciences affects its evaluation of transactions between medical and pharmaceutical companies that involve transfers of rights to manufacture or sell drugs, causing the agency to object to such transactions without solid basis for doing so. This article argues that in order to properly define a pharmaceutical market, one must not just consider the condition that competing drugs are meant to treat, but also take into account whether there are “off-label” drugs that are used to treat a relevant condition, …

The Proposed Damages Directive: The Real Lessons From The United States, Robert H. Lande

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Europeans should be doubly cautious when they study the U.S. experience with private antitrust enforcement. Nevertheless, there are ten specific lessons they can learn. None, however, is consistent with the conventional wisdom in the international competition community that U.S.-style private enforcement has been a disaster. Each should help Europe objectively consider the Commission's proposed Directive concerning private enforcement of Competition law.

Defying Conventional Wisdom: The Case For Private Antitrust Enforcement, Joshua P. Davis, Robert H. Lande

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The conventional wisdom is that private antitrust enforcement lacks any value. Indeed, skepticism of private enforcement has been so great that its critics make contradictory claims. The first major line of criticism is that private enforcement achieves too little — it does not even minimally compensate the actual victims of antitrust violations and does not significantly deter those violations. A second line of criticism contends that private enforcement achieves too much — providing excessive compensation, often to the wrong parties, and producing overdeterrence. This article undertakes the first ever systematic evaluation of these claims. Building upon original empirical work and …

Should The Internet Exempt The Media Sector From The Antitrust Laws?, Thomas J. Horton, Robert H. Lande

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This article examines whether the "old media" and the "new media", including the Internet, should be considered to be within the same relevant market for antitrust purposes. To do this the article first demonstrates that proper antitrust consideration of the role of non-price competition necessitates that “news” and “journalism” be analyzed in two distinct ways. First, every part of the operations of a newspaper (or other type of media source), including its investigative reporting and local coverage, should be assessed separately. We present empirical evidence collected for this study which demonstrates that the old media continues to win the vast …

A Traditional And Textualist Analysis Of The Goals Of Antitrust: Efficiency, Preventing Theft From Consumers, And Consumer Choice, Robert H. Lande

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This Article ascertains the overall purpose of the antitrust statutes in two very different ways. First, it performs a traditional analysis of the legislative history of the antitrust laws by analyzing relevant legislative debates and committee reports. Second, it undertakes a textualist or "plain meaning" analysis of the purpose of the antitrust statutes, using Justice Scalia's methodology. It does this by analyzing the meaning of key terms as they were used in contemporary dictionaries, legal treatises, common law cases, and the earliest U.s. antitrust cases, and it does this in light of the history of the relevant times.

Both approaches …

Toward An Empirical And Theoretical Assessment Of Private Antitrust Enforcement, Joshua P. Davis, Robert H. Lande

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The dominant view in the antitrust field is that private enforcement cases, and especially class actions, accomplish little or nothing positive but, on the contrary, are counterproductive. Despite strongly worded convictions, that view has been premised on anecdotal, self-serving and insufficiently substantiated claims. Indeed, the authors' 2008 study of 40 private cases appears to constitute the only systematic effort to gather information about a significant number of private antitrust actions. That study generated a great deal of controversy, including questioning of our conclusions by high officials at the Department of Justice and by Professor Daniel Crane at the University of …

Robert Bork's Controversial Legacy, Robert H. Lande

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Judge Robert Bork was undeniably one of the towering figures in antitrust history. He advanced the field positively in many respects, articulating a serious critique of excesses of an earlier social-political approach to antitrust. But as one of the conservative movement’s intellectual godfathers he also shares responsibility for many of their own excesses that have transformed our nation in harmful ways. This short essay explores some of the effects of his overall approach to antitrust: his preoccupation with economic efficiency.

Cartels As Rational Business Strategy: Crime Pays, John M. Connor, Robert H. Lande

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This article is the first to analyze whether cartel sanctions are optimal. The conventional wisdom is that the current level of sanctions is adequate or excessive. The article demonstrates, however, that the combined level of current United States cartel sanctions is only 9% to 21% as large as it should be to protect potential victims of cartelization optimally. Consequently, the average level of United States anti-cartel sanctions should be approximately quintupled.

The United States imposes a diverse arsenal of sanctions against collusion: criminal fines and restitution payments for the firms involved and prison, house arrest and fines for the corporate …

How The Ftc Could Beat Google, Robert H. Lande, Jonathan L. Rubin

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The U.S. Federal Trade Commission is rumored to be deciding whether to bring a “pure Section 5” case against Google as a result of complaints that the company unfairly favors its own offerings over those of its rivals in its search results. But the case will fail miserably at the hands of a reviewing court and the agency will be confined to relatively non-controversial enforcement violations if the FTC fails to impose upon itself a tightly bounded and constrained legal framework that contains clear limiting principles. The only way a court will allow the FTC to pursue a pure Section …

Price-Fixing: Hefty Penalties On Big-Biz Cartels Will Provide Level Playing Field To Small Businesses, John M. Connor, Robert H. Lande

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Cartels are illegal in India, as they are almost everywhere. They are subject to heavy fines. Why, then, do businesses frequently try to fix prices? Because doing so usually is profitable. On average cartels raise prices by more than 20%, and probably face less than a 25% chance of being caught and convicted. Based upon a sample of 75 international cartels, the authors calculate that the expected profits from price fixing almost always exceed the penalties. No wonder businesses often try to fix prices.

Consumer Choice As The Best Way To Describe The Goals Of Competition Law, Robert H. Lande

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This article is both a short introduction to the Consumer Choice explanation for Competition Law or Antitrust Law, and also a short advocacy piece suggesting that Consumer Choice is the best way to articulate the goals of European Competition Law and United States Antitrust Law.

This article briefly:

1. defines the consumer choice approach to antitrust or competition law and shows how it differs from other approaches;
2. shows that the antitrust statutes and theories of violation embody a concern for optimal levels of consumer choice;
3. shows that the United States antitrust case law embodies a concern for optimal levels of consumer …

Introduction: Benefits Of Private Enforcement: Empirical Background, Robert H. Lande

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This short piece takes a first step toward providing the empirical bases for an assessment of the benefits of private enforcement. It presents evidence showing that private enforcement of the antitrust laws is serving its intended purposes and is in the public interest. Private enforcement helps compensate victimized consumers, and it also helps deter anticompetitive conduct. This piece demonstrates this by briefly summarizing a more detailed analysis of forty of the largest recent successful private antitrust cases.

To analyze these cases' compensation effects this presents, inter alia, the amount of money each action recovered, what proportion of the money was …

As Antitrust Case Ends, Microsoft Is Victorious In Defeat, Norman Hawker, Robert H. Lande

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As the final judgment in the celebrated Microsoft case ends, this piece very briefly assesses the impact of its remedy. When evaluated in terms of its most important goals, the remedy has proven to be a failure. Microsoft's monopoly power in the PC operating systems market is now as great as it was when the case was brought in 1998 or the remedy was ordered in 2002. The article also very briefly discusses the implications of this remedy for Google and AT&T.

Reverse Settlements As Patent Invalidity Signals, Gregory Dolin

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Over the last decade a new type of settlements, commonly referred to as “reversed payment settlements” or simply “reverse settlements,” emerged in litigation over patents covering pharmaceutical products. What differentiates these new settlements from their traditional counterparts is that whereas traditionally, the alleged trespasser on someone else's rights pays the rights-holder to settle the litigation, in these new settlements it is the rights holder that pays the alleged trespasser. These settlements are a direct consequence of the various incentives provided by the Hatch-Waxman Act - an Act designed to increase competition between brand name and generic manufactures of pharmaceutical products. …

Comparative Deterrence From Private Enforcement And Criminal Enforcement Of The U.S. Antitrust Laws, Robert H. Lande, Joshua P. Davis

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This article shows that private enforcement of the U. S. antitrust laws-which usually is derided as essentially worthless-serves as a more important deterrent of anticompetitive behavior than the most esteemed antitrust program in the world, criminal enforcement by the Antitrust Division of the U.S. Department of Justice.

The debate over the value of private antitrust enforcement long has been heavy with self-serving assertions by powerful economic interests, but light on factual evidence. To help fill this void we have been conducting research for several years on a variety of empirical topics. This article develops and then explores the implications of …

"Consumer Choice" Is Where We Are All Going - So Let's Go Together, Neil W. Averitt, Robert H. Lande, Paul Nihoul

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Globalisation of business makes it important for firms to predict how their behaviour is likely to be treated in the roughly 200 nations that have competition laws. In that context, a crucial question is: are we in a position to develop a common intellectual framework that would give coherence to policy statements made on specific competition related issues and, at the same time, be acceptable, broadly, in a variety of legal systems, not necessarily based on identical assumptions? We believe that the answer is “yes.” A concept is emerging as a possible source of unification for competition policies around the …

The Intel And Microsoft Settlements, Robert H. Lande

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This article briefly compares and contrasts the recent U.S. Federal Trade Commission's antitrust settlement with Intel, and the antitrust cases brought against Microsoft. The article praises the FTC's settlement with Intel, and predicts that history will judge it very favorably compared to the settlement by the U.S. Department of Justice of its antitrust case against Microsoft.

New Options For State Indirect Purchaser Legislation: Protecting The Real Victims Of Antitrust Violations, Robert H. Lande

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In Illinois Brick v. Illinois Co., the Supreme Court held that, under federal antitrust law, only direct purchasers have standing to sue antitrust violators for damages. Since most products travel through one or more intermediaries before reaching consumers, this decision left most true victims of illegal cartels and other antitrust violations without a remedy to compensate them. Illinois Brick Co. also had the effect of undermining the objective of optimal deterrence of antitrust violations-because direct purchasers often have a suboptimal incentive to sue, the Court's decision often allows violators to escape paying significant damages. For this reason firms are insufficiently …