Law and Economics Commons^™

Modern Economic Analysis And Antitrust Law: A Guide, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

This book presents a modern economics approach to antitrust law. It expands upon and supplements traditional legal analysis of antitrust law and policy. It does so by analyzing antitrust legal standards and case law through the lenses of industrial organization economics and decision theory. The work is intended to be a comprehensive introductory guide for students, practitioners, and anyone else interested in learning the core of modern antitrust economics. Understanding the economics of antitrust and decision theory and applying that reasoning to specific cases and issues are critical steps for successfully studying and practicing antitrust law and policy. It treats …

Antitrust And Economic Liberty, Doha Mekki

Center for Law and the Economy

Over the last few years, antitrust plaintiffs have won important victories in cases against digital platforms. They’ve won important cases involving real estate associations, elite private colleges, sports leagues, pharmaceutical companies, pork processors, and health insurers. In some cases, they have secured record-breaking jury verdicts and redress for harmed individuals.

The U.S. Department of Justice’s Antitrust Division has been active too. Last year, a federal court held that Google illegally maintained monopolies in general internet search and related search advertising markets. That case is about access to the information we see and use to make decisions about how we want …

The Revival Of Section 5: A Return To The Ftc’S Roots In A Time Of Democratic Crisis, Shaoul Sussman

Center for Law and the Economy

On November 10, 2022, the Federal Trade Commission (FTC or the “Commission”) issued a policy statement on the scope of unfair methods of competition under section 5 of the Federal Trade Commission Act (FTCA). This policy statement marked a significant shift, reviving a broad interpretation of the agency’s authority to police anticompetitive conduct. The antitrust defense bar reacted with alarm, arguing that the principles are overly ambiguous and lack guidance. This Essay contends that reaction is misplaced. The statement draws on a rich body of U.S. Supreme Court and circuit court precedent that the antitrust bar seems to have largely …

Reverse Breakup Fees And Antitrust Approval, Albert H. Choi, Abraham L. Wickelgren

Law & Economics Working Papers

The paper examines the antitrust implications of use of reverse breakup (termination) fees in mergers. By promising to pay a reverse breakup fee to the target if the proposed merger does not get the necessary antitrust approval, the acquirer can signal to the antitrust authority that the merger is more likely to be pro-competitive. A large reverse breakup fee can also function as a commitment device by the acquirer to spend more resources in case the merger is challenged by the antitrust authority. While the first, signaling function is efficiency enhancing, the second, commitment function can lead to an efficiency …

Consumers, Laborers, And Antitrust, Oh My! Why Labor Considerations Should Be Examined In Antitrust Law Through The Lens Of U.S. V. Bertelsmann Se & Co. Kgaa, Jodi Nicole Kain

University of Miami Business Law Review

Imagine the disappointing feeling of walking into a bookstore and finding shelves filled with only a narrow and non-diverse selection of titles. This feeling nearly became a reality when the Department of Justice (“DOJ”) won an action blocking a proposed merger between mega publishing houses Penguin Random House and Simon & Schuster in the case United States v. Bertelsmann SE & Co. KGaA (2021) (“Bertelsmann”). The DOJ claimed that the merger would harm consumers by reducing the diversity of books available and directly harm authors—the creative labor force—by limiting competition for publishing deals and suppressing their compensation. For the first …

Control Capture And Competition, D. Daniel Sokol, Robert J. Rhee

UF Law Faculty Publications

This Essay identifies an emerging problem in antitrust law and policy, particularly in the technology industry. Antitrust doctrine has historically revolved around internal control of firm, i.e., equity acquisition. It focuses on the capture of internal control. Mergers and acquisitions trigger regulatory review. In these deals, the locus of anticompetitive behavior lies in ownership and internal governance. However, one can capture control through various ways. An emerging problem in antitrust law is external exertion of control through contract. Competition can be stifled, and thus price, non-price, and innovation factors can be controlled or manipulated through the levers of control existing …

Mobility-Restricting Covenants In Business Contracts: The Case Of Franchising, Francine Lafontaine, Lorenzo G. Luisetto, J. J. Prescott

Law & Economics Working Papers

Several studies show that restrictive covenants in employment contracts, such as noncompete agreements, may affect employees in detrimental ways, including by reducing mobility and suppressing wages. While such concerns are real, these clauses also have the potential to serve legitimate business purposes by helping companies protect valuable information, which can encourage investment and training and enhance social welfare. This paper explores the use of several types of covenants, including noncompetes but also confidentiality and post-relationship non-recruitment clauses, in franchise contracts, an important and accessible category of business contracts. Many of these contracts impose restrictive covenants on franchisees but also on …

Rethinking The Key Role Of Private Antitrust Enforcement, Filippo Lancieri

Georgetown Law Faculty Publications and Other Works

This Article focuses on the institutional design of American competition policy. It argues that any long-term effective revival of U.S. antitrust policy requires a better acknowledgement of the key and irreplaceable role played by private litigation and proposes a rethink of private anti-trust enforcement policy.

To unpack the nuanced interconnection between public and private competition enforcement, the Article begins by tracing the rise and fall of private antitrust. It builds on a novel, hand-coded, and comprehensive analysis of the entire Supreme Court antitrust track record—all 474 decisions over 130 years—to outline how an ideologically …

Controlling Private Economic Power: Lessons Learned From The Us Experience In The First Decades Of The 20th Century, Thierry Kirat, Frédéric Marty

Yearbook of Antitrust and Regulatory Studies

Concerns related to Big Techs have led to a proliferation of legislative initiatives to complete competition rules with regulatory devices that would lead gatekeepers to be subject to obligations to preserve an equality of opportunities on the market. Within this context, this contribution revisits American decision-making practice from the end of the 19th century and the beginning of the 20th century to show how regulatory-type interventions and the enforcement of competition rules have been activated to control the strategies of firms acting as gatekeepers. What we can learn from this experience is that a big firm having private regulatory power …

Data Advantage And Merger Review: Can Entrenchment Theory Reform Antitrust Enforcement?, Shin-Ru Cheng

Seattle University Law Review

A merger involving giant digital companies is likely to dampen competition, as it allows those companies to combine and control data access, enabling them to entrench their dominant positions in relevant markets and extend those positions into related markets. While competition law in many jurisdictions aims to prohibit mergers that may substantially lessen competition or create a monopoly, arguably the review of digital mergers is failing because antitrust agencies lack an effective approach to identify data-generated anticompetitive harms. This Article demonstrates that entrenchment theory, recently reintroduced in the 2023 U.S. Merger Guidelines, would help reform the process of antitrust enforcement. …

Defining Deference: Impacts Of Abandoning Chevron On Emerging Technology Governance And Administrative Law, R. Aubrey Davis Iii

Seattle University Law Review

Emerging technologies, particularly Artificial Intelligence (AI), often lead to unforeseen legal outcomes. Notable abuses in areas such as facial recognition, employment bias, and housing discrimination are well known. However, legislative responses to these issues either have been largely reactive or there has been no legislative response at all. In lieu of legislation, agencies have sought to fill the gap. For example, the Federal Communications Commission (FCC) recently proposed a rule mandating voter notification for all AI-generated political phone calls citing the Telephone Consumer Protection Act (TCPA) of 1991 as authority. However, the TCPA was originally passed to curtail telemarketing, not …

Legal Market Decartelization, Milan Markovic, Nuno Garoupa

Faculty Scholarship

American lawyers’ grip on the legal market is receding. Scholars and policymakers increasingly agree that the public has little to lose and potentially much to gain from legal market decartelization - the weakening of the lawyers’ monopoly over the legal services market. Harkening to deregulatory initiatives abroad and in Arizona and Utah, reformers contend that removing restrictions on the corporate delivery of legal services and unauthorized practice of law will slash costs and expand access to justice.

Drawing on economic theory and recent market developments, this Article offers a cautionary rejoinder. Understandable concerns about cartelization and lawyer rent-seeking have led …

The Healing Power Of Antitrust, Theodosia Stavroulaki

Northwestern University Law Review

Millions of Americans live in hospital deserts—communities where people lack geographic access to hospitals and primary care physicians. People living in these deserts often miss doctor appointments, delay necessary care, and stop adhering to their treatment. In this way, hospital deserts exacerbate the health disparities plaguing America. This Article demonstrates that hospital deserts are not inevitable but the result of several business strategies—including noncompete agreements and merging with competitors—and antitrust enforcers’ unwillingness to recognize these harmful practices as antitrust violations. To cure the issue of hospital deserts, this Article makes three proposals. First, antitrust enforcers and the courts should expand …

Redefining The Relevant Market: Abandonment Or Return To Brown Shoe, Daniel A. Hanley

Dickinson Law Review (2017-Present)

Defining a relevant market is arguably the most important requirement in antitrust litigation. Between the 1890s and the 1940s, defining a relevant market was a simple and generalized process, typically undertaken by courts as a cursory matter. However, in the 1960s, defining relevant markets became a centerpiece of antitrust litigation. The modern method originates from the Supreme Court’s landmark 1962 decision in Brown Shoe v. United States. The method commonly known as the Brown Shoe test requires judges to construct relevant markets by carefully analyzing accessible and understandable qualitative data, such as internal corporate documents and consumer surveys. Since the …

The Failings Of Post-War Japanese Antitrust Reforms, Gregory Hayes

Northwestern Journal of International Law & Business

This paper discusses the antitrust reform measures taken during the occupation of Japan following the end of World War II. These antitrust reforms included the dissolution of the zaibatsu business groups and the adoption of the Antimonopoly Act. However, the trust-busting and antitrust measures taken by Japan failed to prevent the eventual rise of keiretsu business groups and lower the concentration of corporate ownership in Japan. The primary reasons behind this failure were the inability of the reformers to fully dismantle the zaibatsu business groups and the changing priorities of the reformers due to the growing threat of the spread …

The Last Line Of A Weak Defense: The Waning Force Of The Ncaa's Procompetitive Defense Of Amateurism In § 1 Compensation Challenges, Morgan Small

American University Law Review

The Supreme Court in NCAA v. Alston determined that the NCAA’s education-related compensation restrictions violated § 1 of the Sherman Act. The Court, however, did not scrutinize the legality of the NCAA’s athletic-related compensation restrictions, begging the question: when will the Supreme Court, if ever, stop presuming the validity of the NCAA’s athletic-related compensation restrictions because they allegedly ensure that college athletics remain amateur?

This Comment examines this question in further detail by cataloging the Court’s antitrust jurisprudence involving § 1 compensation challenges and what this jurisprudence may spell for future litigation in a college athletics landscape increasingly defined by …

Anticompetitive Directors, Lane Miles, Mark A. Lemley, Rory Van Loo

Faculty Scholarship

Antitrust scholars have virtually ignored the question of who controls corporations by sitting on their boards of directors. We show that the problem of who sits on boards of directors is considerably greater than previously believed. Drawing on a new dataset spanning both public and private companies across multiple industries, we find evidence that individual board members sit simultaneously on boards of competitors throughout the economy, despite such “interlocking directorates” being illegal under antitrust law. Many of these individuals are senior directors at private equity, venture capital, and other firms investing in the competing firms on whose boards they sit. …

The False Choice Between Digital Regulation And Innovation, Anu Bradford

Northwestern University Law Review

This Article challenges the common view that more stringent regulation of the digital economy inevitably compromises innovation and undermines technological progress. This view, vigorously advocated by the tech industry, has shaped the public discourse in the United States, where the country’s thriving tech economy is often associated with a staunch commitment to free markets. U.S. lawmakers have also traditionally embraced this perspective, which explains their hesitancy to regulate the tech industry to date. The European Union has chosen another path, regulating the digital economy with stringent data privacy, antitrust, content moderation, and other digital regulations designed to shape the evolution …

Getting Merger Guidelines Right, Keith N. Hylton

Faculty Scholarship

This paper is on the new Merger Guidelines. It makes several arguments. First, that the Guidelines should be understood as existing in a political equilibrium. Second, that the new structural presumption of the Merger Guidelines (HHI = 1,800) is too strict, and that an economically reasonable revision in the structural presumption would have increased rather than decreased the threshold. Whereas the new Guidelines lowers the threshold to HHI 1,800 from HHI 2,500, an economically reasonable revision would have increased the threshold to HHI 3,200. I justify this argument using a bare-bones model of Cournot competition. Third, it seems unlikely, …

From Rancid To Reasonable: Unfair Methods Of Competition Under State Little Ftc Acts, Samuel Evan Milner

American University Law Review

When Congress gave the Federal Trade Commission the power to identify and enjoin unfair methods of competition, it did not create a parallel private right of action as it had for other antitrust laws. Yet approximately two dozen states have since enacted their own “Little FTC Acts,” under which private plaintiffs may sue for damages and other remedies. These poorly understood state laws are actively shaping American competition policy on a national scale. The Ninth Circuit recently affirmed the nationwide injunction that Epic Games obtained against Apple under California’s law despite concluding that Apple violated no federal or state antitrust …

The Failure Of "Quick Look" Analyses Of Antitrust Claims, Jonathan Berman

American University Business Law Review

Before courts can determine whether a defendant may have violated antitrust laws, they must first select the appropriate mode of analysis: the fact-intensive rule of reason, summary condemnation under the per se rules, or a quick look analysis. “Quick look” is intended to shorten and simplify inquiries into conduct that does not fall under the per se rules but that nonetheless has obvious anticompetitive effects.

The quick look doctrine, however, has failed to streamline antitrust litigation, and the related caselaw has failed to develop concrete or usable rules. Despite decades of litigation, the quick look doctrine remains of dubious legal …

Towards An Effective Merger Review Policy: A Defence Of Rebuttable Structural Presumptions, Filippo Lancieri, Tommaso Valletti

Georgetown Law Faculty Publications and Other Works

We discuss the design of an effective merger review policy for the 21st century. We argue that the practice of the past decades is inadequate and propose a move towards much stronger rebuttable structural presumptions. These presumptions establish that all mergers above certain thresholds are illegal unless the merging parties can prove that merger-specific efficiencies will be shared with consumers and yield tangible welfare gains. These presumptions are grounded on solid economics and also acknowledge the real-world limitations in enforcement resources and information asymmetries between companies and regulators. We outline how to establish such presumptions in practice, defending the implementation …

Antitrust, Amazon, And Algorithmic Auditing, Jens Frankenreiter, Abhisek Dash, Abhijnan Chakraborty, Saptarshi Ghosh, Animesh Mukherjee, Stefan Bechtold, Krishna P. Gummadi

Scholarship@WashULaw

In digital markets, antitrust law and special regulations aim to ensure that markets remain competitive despite the dominating role that digital platforms play today in everyone's life. Unlike traditional markets, market participant behavior is easily observable in these markets. We present a series of empirical investigations into the extent to which Amazon engages in practices that are typically described as self-preferencing. We discuss how the computer science tools used in this paper can be used in a regulatory environment that is based on algorithmic auditing and requires regulating digital markets at scale.

Hollywood's Triple Threat: Writers, Actors, And Antitrust Regulators Take On The Streaming Giants, Remy S. Farkas

American University Business Law Review

In the summer of 2023, Hollywood froze when actors, writers, and crew took to the picket lines. Their gripe: the recent mega mergers by media conglomerates. The Writers Guild Association and Screen Actors Guild American Federation of Television and Radio Artists joined forces to protest recent acquisitions by Disney, Amazon, and Netflix; these companies vertically integrated within the industry, which allowed them to exploit workers, limit content, and raise prices for consumers. In the same summer, the Department of Justice and Federal Trade Commission released Draft Merger Guidelines, which included thirteen new guidelines for evaluating whether a merger violates antitrust …

Inflation, Market Failures, And Algorithms, Rory Van Loo

Faculty Scholarship

Inflation is a problem of tremendous scale. But the leading response to inflation-raising interest rates-also poses economic risks. Raising interest rates rapidly may increase unemployment and heighten the chance of recession. This Article argues that there is a better way to think about antiinflation policy. Rather than defaulting to interest rate hikes that harm markets, policymakers should prioritize laws that lower prices while improving markets. Most importantly, there is evidence that businesses have raised prices by colluding with one another, exploiting consumers' behavioral and informational limits, and lobbying for protectionist laws that block competition. Artificial intelligence pricing algorithms and dark …

Stop The Games: How Broker-Dealer Gamification Affronts Antitrust, Tanner Dowdy

University of Cincinnati Law Review

No abstract provided.

Hospital Mergers: The Symptoms Of Anticompetitive Consolidation & A Routine Checkup On The Horizontal Merger Guidelines, Stefan Rao Kostas

University of Miami Business Law Review

In 2021, President Biden issued an executive order that addressed the negative implications of market concentration within the healthcare industry. Specifically, President Biden called for the revision of the Horizontal and Vertical Merger Guidelines to enact antitrust safeguards that limit unchecked hospital mergers and promote competition. This Article delves into the role of the healthcare sector in the U.S. economy and how the current state of hospital mergers limits competition and, thus, the quality of care available to patients. Further, this Article studies U.S. federal regulations, case law, and merger retrospectives to uncover pitfalls within the current Horizontal Merger Guidelines. …

Stakeholderism Silo Busting, Aneil Kovvali

Articles by Maurer Faculty

The fields of antitrust, bankruptcy, corporate, and securities law are undergoing tumultuous debates. On one side in each field is the dominant view that each field should focus exclusively on a specific constituency—antitrust on consumers, bankruptcy on creditors, corporate law on shareholders, and securities regulation on financial investors. On the other side is a growing insurgency that seeks to broaden the focus to a larger set of stakeholders, including workers, the environment, and political communities. But these conversations have largely proceeded in parallel, with each debate unfolding within the framework and literature of a single field. Studying these debates together …

Fixing "Litigating The Fix", Steven C. Salop, Jennifer E. Sturiale

Georgetown Law Faculty Publications and Other Works

Merging firms have increasingly been asking trial courts to adjudicate their merger “as remedied” by a voluntary “fix.” These are remedies that have been rejected by (or never proposed to) the agency. This procedure is known as Litigating-the-Fix” (“LTF”). This article proposes a judicial procedure for managing cases in which the merging parties attempt to LTF. Our recommendations flow from a decision theory approach informed by the relevant LTF case law, the merger enforcement record, the language and goals of Section 7, and an economic analysis of the incentives of the parties and agencies created by LTF. Our recommendation addresses …

On The Misuse Of Regressions Of Price On The Hhi In Merger Review, Jonathan Baker

Scholarly Articles in Law Reviews & Journals

The article explains why regressions of price on HHI should not be used in merger review. Both price and HHI are equilibrium outcomes determined by demand, supply, and the factors that drive them. Thus, a regression of price on the HHI does not recover a causal effect that could inform the likely competitive effects of a merger. Nonetheless, economic theory is consistent with the legal presumption that a merger is likely to have adverse competitive effects if it occurs in a concentrated market and makes that market more concentrated.