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Articles 1 - 30 of 52
Full-Text Articles in Law and Economics
Antitrust: What Counts As Consumer Welfare?, Herbert J. Hovenkamp
Antitrust: What Counts As Consumer Welfare?, Herbert J. Hovenkamp
All Faculty Scholarship
Antitrust’s consumer welfare principle is accepted in some form by the entire Supreme Court and the majority of other writers. However, it means different things to different people. For example, some members of the Supreme Court can simultaneously acknowledge the antitrust consumer welfare principle even as they approve practices that result in immediate, obvious, and substantial consumer harm. At the same time, however, a properly defined consumer welfare principle is essential if antitrust is to achieve its statutory purpose, which is to pursue practices that injure competition. The wish to make antitrust a more general social justice statute is understandable: …
Sherman's Missing "Supplement": Prosecutorial Capacity, Agency Incentives, And The False Dawn Of Antitrust Federalism, Daniel E. Rauch
Sherman's Missing "Supplement": Prosecutorial Capacity, Agency Incentives, And The False Dawn Of Antitrust Federalism, Daniel E. Rauch
Cleveland State Law Review
When the Sherman Act passed in 1890, it was widely expected that it would operate primarily as a "supplement" to vigorous state-level antitrust enforcement of state antitrust statutes. This did not happen. Instead, confounding the predictions of Congress, the academy, and the trusts themselves, state antitrust enforcement overwhelmingly failed to take root in the years between 1890 and the First World War. To date, many scholars have noted this legal-historical anomaly. None, however, have rigorously or correctly explained what caused it. This Article does.
Using historical and empirical research, this Article establishes that the best explanation for the early failure …
The Future Of Dairy Cooperatives In The Modern Marketplace: Redeveloping The Capper-Volstead Act, Sarah K. Phillips
The Future Of Dairy Cooperatives In The Modern Marketplace: Redeveloping The Capper-Volstead Act, Sarah K. Phillips
Dickinson Law Review (2017-Present)
Agriculture plays a fundamental role in the U.S. economy as a multibillion-dollar industry that feeds people all over the world. However, over the past decade, the dairy industry in particular has changed from a reliable sector of the greater agricultural industry into an unsettled, politically-charged, and fractured group. Dairy farmers’ consistently receiving low milk prices has facilitated this divide. Tired of being ignored and underpaid, dairy farmers are demanding change in the current dairy market structure.
Federal Milk Marketing Orders and a variety of statutes regulate the dairy industry, but the 1922 Capper-Volstead Act remains the most notable piece of …
Section 2 Enforcement And The Great Recession: Why Less (Enforcement) Might Mean More (Gdp), Alan J. Meese
Section 2 Enforcement And The Great Recession: Why Less (Enforcement) Might Mean More (Gdp), Alan J. Meese
Alan J. Meese
The Great Recession has provoked calls for more vigorous regulation in all sectors, including antitrust enforcement. After President Obama took office, the Antitrust Division of the Department of Justice abandoned the Bush Administration’s standard of liability under section 2 of the Sherman Act, which forbids unlawful monopolization, as insufficiently interventionist. Based on the premise that similarly lax antitrust enforcement caused and deepened the Great Depression, the Obama Administration outlined a more intrusive and consumer-focused approach to section 2 enforcement as part of a larger national strategy to combat the “extreme” economic crisis the nation was then facing.
This Essay draws …
Monopolization, Exclusion, And The Theory Of The Firm, Alan J. Meese
Monopolization, Exclusion, And The Theory Of The Firm, Alan J. Meese
Alan J. Meese
No abstract provided.
Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese
Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese
Alan J. Meese
No abstract provided.
Taming Sherman's Wilderness, Derrian Smith
Taming Sherman's Wilderness, Derrian Smith
Indiana Law Journal
This Note proceeds in four Parts. Part I outlines the interpretive difficulties spawned by the vagueness of the Sherman Act—particularly, the judiciary’s necessary but undeniable departures from the text of the statute and the resulting doctrinal confusion. Part II considers ways in which the judiciary’s decision-making in Sherman Act cases approximates agency rulemaking and whether it makes sense to delegate interpretive authority to an antitrust agency. Yet, while the agency solution has upside, it would not easily escape criticisms that the Act does not provide sufficient notice of the conduct it proscribes and that the Act is an impermissible delegation …
The Ncaa And The Rule Of Reason, Herbert J. Hovenkamp
The Ncaa And The Rule Of Reason, Herbert J. Hovenkamp
All Faculty Scholarship
This brief essay considers the use of antitrust’s rule of reason in assessing challenges to rule making by the NCAA. In particular, it looks at the O’Bannon case, which involved challenges to NCAA rules limiting the compensation of student athletes under the NCAA rubric that protects the “amateur” status of collegiate athletes. Within that rubric, the Ninth Circuit got the right answer.
That outcome leads to a broader question, however: should the NCAA’s long held goal, frequently supported by the courts, of preserving athletic amateurism be jettisoned? Given the dual role that colleges play, that is a complex question, raising …
Market Power In Antitrust, George A. Hay
Market Power In Antitrust, George A. Hay
George A. Hay
The concept of market power is at the core of antitrust. Philosophically, antitrust policy is aimed primarily at preventing firms from achieving, retaining, or abusing market power. Operationally, assessing whether a firm or firms have market power or any reasonable prospect for achieving it is often the first (and sometimes, the only) step in performing an antitrust analysis. Few would dispute that market power should play a prominent role in antitrust analysis. Nevertheless, important questions remain. Some of these questions quite naturally focus on the precise degree of importance given to market power. Is it an essential ingredient in antitrust …
Predatory Pricing, George A. Hay
Guiding Section 5: Comments On The Commissioners, Steven C. Salop
Guiding Section 5: Comments On The Commissioners, Steven C. Salop
Georgetown Law Faculty Publications and Other Works
FTC Commissioners Joshua Wright and Maureen Ohlhausen have proposed that the Commission adopt Guidelines for the application of Section 5 to Unfair Methods of Competition. This short note comments on the role of Section 5 distinct from the Sherman Act. It suggests that Section 5 be used to attack and deter certain conduct that falls into gaps of the Sherman Act. This includes exclusionary unilateral conduct that likely leads to the achievement, enhancement, or maintenance of market power (as opposed to monopoly power). It also includes unilateral conduct such as invitations to collude and other practices that facilitate conscious …
Antitrust Law And Economic Theory: Finding A Balance, Edward D. Cavanagh
Antitrust Law And Economic Theory: Finding A Balance, Edward D. Cavanagh
Faculty Publications
Over the past forty years, the federal courts have relied more and more on economic theory to inform their antitrust analyses. Economic theory has indeed provided guidance with respect to antitrust issues and assisted the courts in reaching rational outcomes. At the same time, infusion of economic evidence into antitrust cases has made these cases more complex, lengthier, more expensive to litigate, and less predictable.
This Article argues that courts need to restore the balance between facts and economic theory in undertaking antitrust analysis. The problem is not that judges and juries cannot reach good outcomes in antitrust cases, but …
Section 2 Enforcement And The Great Recession: Why Less (Enforcement) Might Mean More (Gdp), Alan J. Meese
Section 2 Enforcement And The Great Recession: Why Less (Enforcement) Might Mean More (Gdp), Alan J. Meese
Faculty Publications
The Great Recession has provoked calls for more vigorous regulation in all sectors, including antitrust enforcement. After President Obama took office, the Antitrust Division of the Department of Justice abandoned the Bush Administration’s standard of liability under section 2 of the Sherman Act, which forbids unlawful monopolization, as insufficiently interventionist. Based on the premise that similarly lax antitrust enforcement caused and deepened the Great Depression, the Obama Administration outlined a more intrusive and consumer-focused approach to section 2 enforcement as part of a larger national strategy to combat the “extreme” economic crisis the nation was then facing.
This Essay draws …
Were Standard Oil's Railroad Rebates And Drawbacks Cost Justified?, Daniel A. Crane
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 …
Parallel Exclusion, C. Scott Hemphill, Tim Wu
Parallel Exclusion, C. Scott Hemphill, Tim Wu
Faculty Scholarship
Scholars and courts have long debated whether and when "parallel pricing" – adoption of the same price by every firm in a market – should be considered a violation of antitrust law. But there has been a comparative neglect of the importance of "parallel exclusion" – conduct, engaged in by multiple firms, that blocks or slows would-be market entrants. Parallel exclusion merits greater attention, for it can be far more harmful than parallel price elevation. Setting a high price leaves the field open for new entrants and may even attract them. In contrast, parallel action that excludes new entrants both …
Mixed Agendas And Government Regulation Of Business: Can We Clean Up The Mess?, Thomas M. Arnold, Jerry L. Stevens
Mixed Agendas And Government Regulation Of Business: Can We Clean Up The Mess?, Thomas M. Arnold, Jerry L. Stevens
University of Richmond Law Review
The purpose of this article is first to navigate through variousperspectives on government regulation in an effort to develop areasonable and consistent view for regulatory proposals. Parts II and III of this article provide a brief outline of our current regulatory environment and its evolution. Part IV presents arguments for an efficient regulation of business by using market based regulation with a separation of efficiency and equity issues, where feasible. Examples of this regulatory approach appear throughout the article along with suggested reforms.
Market Realities Do Not Embody Necessary Economic Theory: Why Defendants Deserve A Safe Harbor Under Section 2 Of The Sherman Act For Exclusive Dealing, Danielle N. Paschal
Market Realities Do Not Embody Necessary Economic Theory: Why Defendants Deserve A Safe Harbor Under Section 2 Of The Sherman Act For Exclusive Dealing, Danielle N. Paschal
Georgia Law Review
Exclusive dealing agreements are a form of vertical
restraint. They are often procompetitive and treated as
presumptively legal. Although claims against
anticompetitive agreements may be pursued under
numerous antitrust laws, claims have been brought more
recently under section 2 of the Sherman Act. Antitrust
laws generally focus on the percentage of foreclosure.
Section 2 of the Sherman Act, though, requires a smaller
percentage of foreclosure of distribution channels than
other antitrust laws. Analysis under section 2 of the
Sherman Act also focuses on the actual effects of the
agreement in the relevant market. Determining the
agreement's actual effects on the …
The Ftc's Anticompetitive Pricing Case Against Intel, Herbert J. Hovenkamp
The Ftc's Anticompetitive Pricing Case Against Intel, Herbert J. Hovenkamp
All Faculty Scholarship
The FTC’s wide ranging complaint against Intel Corporation indicates that the FTC intends to rely on the “unfair methods of competition” language in §5 of the FTC Act to reach beyond the proscriptions on unilateral conduct contained in §2 of the Sherman Act. The Supreme Court has expressly authorized such expansion, and statutory text, legislative history and legal policy all support it. While §2 reaches only conduct that threatens to “monopolize” a market, the “unfair methods of competition” language can reach improper abuses of a dominant position that fall short of creating monopoly. Further, the FTC has expertise that courts …
The Federal Trade Commission And The Sherman Act, Herbert J. Hovenkamp
The Federal Trade Commission And The Sherman Act, Herbert J. Hovenkamp
All Faculty Scholarship
The FTC has explicit antitrust authority to enforce the Clayton Act, although not the Sherman Act. More than a half century ago, however, the Supreme Court held that the FTC Act’s prohibition of “unfair methods of competition” reaches everything the Sherman Act reaches and also a “penumbra” of practices that are not technical Sherman Act violations. That view, which had fallen into disuse in recent decades, is now being revived.
This essay defends a limited version of that “penumbra” view and suggests several applications. First, while both Sherman Act provisions are open ended in their coverage, they have limitations. Section …
Patenting Standards - A Case For Us Antitrust Law Or A Call For Recognizing Immanent Public Policy Limitations To The Exploitation Rights Conferred By The Patent Act?, Apostolos Chronopoulos
Patenting Standards - A Case For Us Antitrust Law Or A Call For Recognizing Immanent Public Policy Limitations To The Exploitation Rights Conferred By The Patent Act?, Apostolos Chronopoulos
Apostolos Chronopoulos
This paper examines the adverse effect of patent ambushing on competitive conditions resulting in the distortion of the standardization process in markets where the effectiveness of competition relies heavily on standardization. The US Rambus litigation serves as a point of departure. In this case, the strategic behavior of the patentee was subjected to both an antitrust and unfair competition analysis. Both approaches display an inadequacy to squarely balance all of the conflicting interests involved. The solution proposed is to apply the patent misuse doctrine as a rule that expresses a public policy defense against patent enforcement so as to ensure …
The Neal Report And The Crisis In Antitrust, Herbert J. Hovenkamp
The Neal Report And The Crisis In Antitrust, Herbert J. Hovenkamp
All Faculty Scholarship
The Neal Report, which was commissioned by Lyndon Johnson and published in 1967, is rightfully criticized for representing the past rather than the future of antitrust. Its authors completely embraced a theory of competition and industrial organization that had dominated American economic thinking for forty years, but was just in the process of coming to an end. The structure-conduct-performance (S-C-P) paradigm that the Neal Report embodied had in fact been one of the most elegant and most tested theories of industrial organization. The theory represented the high point of structuralism in industrial organization economics, resting on the proposition that certain …
Complex Bundled Discounts And Antitrust Policy, Herbert J. Hovenkamp, Erik Hovenkamp
Complex Bundled Discounts And Antitrust Policy, Herbert J. Hovenkamp, Erik Hovenkamp
All Faculty Scholarship
A bundled discount occurs when a seller conditions a discount or rebate on the buyer's purchaser or two or more different products. Firms that produce fewer than all the good in the bundle find it difficult to compete because they must amortize the discount across a smaller range of goods. For example, if the dominant firm offers a 10% discount for purchase of both good A and good B, but the rival makes only good B, it will have to offer a discount that is large enough to match the dominant firm's B discount as well as the foregone discount …
The Viability Of Antitrust Price Squeeze Claims, Erik Hovenkamp, Herbert J. Hovenkamp
The Viability Of Antitrust Price Squeeze Claims, Erik Hovenkamp, Herbert J. Hovenkamp
All Faculty Scholarship
A price squeeze occurs when a vertically integrated firm "squeezes' a rival's margins between a high wholesale price for an essential input sold to the rival, and a low output price to consumers for whom the two firms compete. Price squeezes have been a recognized but controversial antitrust violation for two-thirds of a century. We examine the law and economics of the price squeeze, beginning with Judge Hand's famous discussion in the Alcoa case in 1945. While Alcoa has been widely portrayed as creating a "fairness" or "fair profit" test for unlawful price squeezes, Judge Hand actually adopted a cost-based …
Unilateral Refusals To Deal, Vertical Integration, And The Essential Facility Doctrine, Herbert J. Hovenkamp
Unilateral Refusals To Deal, Vertical Integration, And The Essential Facility Doctrine, Herbert J. Hovenkamp
All Faculty Scholarship
Where it applies, the essential facility doctrine requires a monopolist to share its "essential facility." Since the only qualifying exclusionary practice is the refusal to share the facility itself, the doctrine comes about as close as antitrust ever does to condemning "no fault" monopolization. There is no independent justification for an essential facility doctrine separate and apart from general Section 2 doctrine governing the vertically integrated monopolist's refusal to deal. In its Trinko decision the Supreme Court placed that doctrine about where it should be. The Court did not categorically reject all unilateral refusal to deal claims, but it placed …
The Antitrust Standard For Unlawful Exclusionary Conduct, Herbert J. Hovenkamp
The Antitrust Standard For Unlawful Exclusionary Conduct, Herbert J. Hovenkamp
All Faculty Scholarship
This essay considers the general definition of unlawful exclusionary practices under Section 2 of the Sherman Act as acts that: (1) are reasonably capable of creating, enlarging or prolonging monopoly power by impairing the opportunities of rivals; and (2) that either (2a) do not benefit consumers at all, or (2b) are unnecessary for the particular consumer benefits claimed for them, or (2c) produce harms disproportionate to any resulting benefits. An important purpose of this progression of queries is to permit the court to avoid balancing, although balancing certainly cannot be avoided in some close cases. The given definition is very …
Restraints On Innovation, Herbert J. Hovenkamp
Restraints On Innovation, Herbert J. Hovenkamp
All Faculty Scholarship
Beginning with the work of Joseph Schumpeter in the 1940s and later elaborated by Robert W. Solow's work on the neoclassical growth model, economics has produced a strong consensus that the economic gains from innovation dwarf those to be had from capital accumulation and increased price competition. An important but sometimes overlooked corollary is that restraints on innovation can do far more harm to the economy than restraints on traditional output or pricing. Many practices that violate the antitrust laws are best understood as restraints on innovation rather than restraints on pricing.
While antitrust models for assessing losses that result …
Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese
Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese
Faculty Publications
No abstract provided.
The Supreme Court And The Trusts: Antitrust And The Foundations Of Modern American Business Regulation From Knight To Swift, Donald J. Smythe
The Supreme Court And The Trusts: Antitrust And The Foundations Of Modern American Business Regulation From Knight To Swift, Donald J. Smythe
ExpressO
The period from 1870-1920 was a turning point in modern history. It was during this time that the contours of the modern industrial state were formed. A “Great Merger Movement” occurred right in the middle of this period across most of the industrialized nations of the world. The trend toward industrial concentration, which was known at the time as the “trust problem,” generated considerable public alarm. Some have argued that it was caused by antitrust policy and the Supreme Court’s early antitrust decisions. Indeed, the idea has become the conventional wisdom among some antitrust scholars, especially those connected with the …
Monopolization, Exclusion, And The Theory Of The Firm, Alan J. Meese
Monopolization, Exclusion, And The Theory Of The Firm, Alan J. Meese
Faculty Publications
No abstract provided.
The Anticompetitive Effect Of Passive Investment, David Gilo
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 …