Law Commons^™

Leegin, The Rule Of Reason, And Vertical Agreement, Herbert J. Hovenkamp

All Faculty Scholarship

The Supreme Court’s Leegin decision overturned the longstanding rule of per se illegality for resale price maintenance and applied a rule of reason. One might think that the question whether a vertical “agreement” exists between a manufacturer and a dealer should not be affected by the mode of analysis to be applied after an agreement is found. First one asks whether an agreement exists, and determines whether the per se rule or rule of reason applies only after receiving an affirmative answer. Nevertheless, ever since Colgate the Supreme Court has generally taken a more restrictive approach on the agreement issue …

Vertical Restraints, Dealers With Power, And Antitrust Policy, Herbert J. Hovenkamp

All Faculty Scholarship

The Supreme Court’s Leegin decision has now brought the rule of reason to all purely vertical intrabrand distribution restraints. But the rule of reason does not mean per se legality and occasions for anticompetitive vertically imposed restraints may still arise. Of all those that have been suggested the most plausible are vertical restraints imposed at the behest of a powerful dealer or group (cartel) of dealers.

Although a vertical distribution restraint resembles a dealer cartel in that both limit intraband competition, a manufacturer restraining the distribution of its product shuns the excess dealer profits a dealer cartel would seek. Accordingly, …

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

All Faculty Scholarship

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 …

Striking An Efficient Balance: Making Sense Of Antitrust Standing In Class Action Certification Motions, Kelly J. Bozanic

Kelly J. Bozanic

Class actions are powerful litigation devices, especially in antitrust cases. Plaintiffs who otherwise would not have the economic incentive to pursue judicial redress are vested with status as equal players in the commercial marketplace. The aims of both the antitrust laws and Rule 23(b)(3) of the Federal Rules of Civil Procedure are served through class actions, yet class actions also bear the potential of negatively impacting the consuming public. This is so, because district court judges considering certification motions face seemingly contradictory standards when it comes to certifying an antitrust class. As a result, plaintiff classes are often given an …

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 …

A Decision-Theoretic Rule Of Reason For Minimum Resale Price Maintenance, Thom Lambert

Faculty Publications

This article evaluates these approaches from the perspective of decision theory and, finding each lacking, proposes an alternative approach to structuring the rule of reason governing RPM. Part II sets forth the decision-theoretic perspective, which seeks to maximize the net benefits of liability rules by minimizing the sum of decision and error costs. Part III then evaluates, from the standpoint of decision theory, the proposed approaches to evaluating instances of RPM. Part IV proposes an alternative evaluative approach that is more consistent with decision theory’s insights.

The Pleading Problem In Antitrust Cases And Beyond, Herbert J. Hovenkamp

All Faculty Scholarship

In its Twombly decision the Supreme Court held that an antitrust complaint failed because its allegations did not include enough “factual matter” to justify proceeding to discovery. Two years later the Court extended this new pleading standard to federal complaints generally. Twombly’s broad language has led to a broad rewriting of federal pleading doctrine.

Naked market division conspiracies such as the one pled in Twombly must be kept secret because antitrust enforcers will prosecute them when they are detected. This inherent secrecy, which the Supreme Court did not discuss, has dire consequences for pleading if too much factual specificity …

Did We Avoid Historical Failures Of Antitrust Enforcement During The 2008-2009 Financial Crisis?, Daniel A. Crane

Articles

During both economic crises and wars, times of severe national anxiety, antitrust has taken a back seat to other political and regulatory objectives. Antitrust enforcement has often been a political luxury good, consumed only during periods of relative peace and prosperity. In 1890, the Sherman Act's adoption kicked off the era of national antitrust enforcement. Barely three years later, the panic of 1893 provided the first major test to the national appetite for antitrust enforcement. Perhaps 1893 should not be included in the story: antitrust was still young, and it was not even clear that the Sherman Act applied to …

Optimizing Private Antitrust Enforcement, Daniel A. Crane

Articles

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 …

Antitrust, Class Certification, And The Politics Of Procedure, Joshua P. Davis, Eric L. Cramer

Joshua P. Davis

This Article develops two arguments against a possible trend in federal appellate courts toward imposing a new, heightened standard for class certification in antitrust cases. Recent case law can be read to imply that trial judges may make findings of fact on the merits in deciding class certification, including about whether plaintiffs will be able to show with class-wide evidence that every class member was harmed by allegedly anticompetitive conduct. The first argument is that the potential new standard would require a showing at class certification on an issue—whether all class members were injured—that plaintiffs need not, and typically do …