Joshua P. Davis and Robert H. Lande on ‘Restoring the Legitimacy of Private Antitrust Enforcement’ in A Report to the 45th President of the United States (American Antitrust Institute’s Transition Report on Competition Policy), Chapter 6, page 219

This report, which can be found here, argues against the increasingly prevalent view that class actions are little more than legalised blackmail, and that class action lawyers are ambulance chasers rather than private attorneys general. The paper submits that there is no systematic empirical support for the view that frivolous antitrust litigation is a serious problem, and present a defence of the benefits of private antitrust enforcement. The paper is structured as follows: A first section argues that private antitrust cases are a critical component of effective antitrust enforcement. Government cannot be expected to do all or even most of the necessary competition enforcement. In addition to budgetary constraints, there are a number of reasons for this – including “undue fear of losing cases; lack of awareness of industry conditions; overly suspicious views about complaints by ‘losers’ that they were in fact victims of anticompetitive behavior; higher turnover among government attorneys; and the unfortunate, but undeniable, reality that government enforcement (or…

Makam Delrahim (Assistant Attorney General, Antitrust Division, U.S. DoJ) ‘Antitrust Enforcement in the Digital Era’

In these remarks, hich can be found here, AAG Delrahim defends the ‘broad antitrust consensus that still reigns today’ and considers how it might apply to the digital sphere. He begins by outlining the two key components of the current antitrust consensus. The first is the consumer welfare standard, which requires that some business practices should be condemned as unlawful only where they harm competition in such a way that consumers suffer. The second component is “evidence-based enforcement”. Outside the realm of naked horizontal restraints such as price fixing, bid rigging, and market allocation, antitrust demands evidence of harm or likely harm to competition, often weighed against efficiencies or procompetitive justifications. Evidence-based enforcement also requires a readiness to adapt our existing antitrust framework and tools to new or emerging threats to competition. One such threat comes from digital platforms and the increased market concentration they give rise to. AGG Delrahim considers that the antitrust consensus approach is flexible to new business…

Tim Wu ‘After Consumer Welfare, now what? The ‘Protection of Competition’ Standard in Practice (2018) CPI Antitrust Chronicle April

The goal of this short piece, which can be found here, is to address arguments that abandoning the ‘consumer welfare’ standard would make antitrust law too unworkable and indeterminate. The paper argues that there is an alternative standard ‘protection of competition’ that is practicable and at least as predictable as the consumer welfare standard. This standard has the additional advantage of being much truer to the legislative intent underlying US antitrust laws than the consumer welfare standard. The piece is structured as follows The first section provides an overview of the two main criticisms of current antitrust practice. Critics of current antitrust practice are committed to antitrust revival, and broadly opposed to the extremes of the Chicago. However, they then divide as regards their approach to the “consumer welfare” standard. The first group – comprising mainly economist and lawyers – believes that the standard has been abused and misused, but nonetheless retains its utility as the anchor of antitrust law and policy….

Jonathan B. Baker, Jonathan Sallet & Fiona Scott Morton ‘Introduction: Unlocking Antitrust Enforcement’ (2018) Yale Law Journal 127(7) 1916

This piece is the introduction to a special issue by the Yale Law Journal on ‘Antitrust Enforcement’. I shall review a number of these articles in forthcoming posts. In the introduction, the authors begin by describing the context in which this special issue of the Yale Law Journal was published. This context is not dissimilar to that which led to the adoption of antitrust rules in the first place:  there is a market power problem which may contribute to slow economic growth and to widening economic inequality. This issue of the Journal tries to lay the foundation for an overarching enforcement agenda ‘in the long, but receding, shadow of the Chicago School, which brought economic analysis to the forefront of antitrust but failed to fully capture the realities of competition and the private actions that can curb it”. This small piece also explains the basic underpinnings of this new enforcement agenda. In particular, they consider that: “Economic analysis lies at…

The Competitive Assessment of Vertical Mergers: The ATT/TimeWarner judgment

The decision regarding  the first challenge to a vertical merger brought by the U.S. federal government since 1979  came out recently: it is the ATT / Time Warner merger judgment, decided on 12 June, which can be found at http://www.dcd.uscourts.gov/sites/dcd/files/17-2511opinion.pdf. The DoJ’s case was that the merger would substantially lessen competition in the video programming and distribution market by enabling AT&T to use Time Warner’s ‘must have’ television content to either raise AT&T’s rivals’ video programming costs or to drive those rivals’ customers to AT&T’s video distribution channels.  ATT / Time Warner’s (the merging parties) case was that the video programming and distribution market is in the middle of a revolution where digital players such as Netflix, Amazon and Hulu are integrating video programming and distribution, while companies such as Facebook and Google are syphoning advertising from the TV to the digital space. The merger of AT&T and Time Warner would allow them to catch up to the competition –…

How to define two-sided markets? Ohio v American Experess

A recent US Supreme Court decision is  likely to have an impact on antitrust practice: Ohio v American Express 585 U. S. [to be determined] (2018), available here. In short, the case is about the correct antitrust treatment of anti-steering provisions introduced by American Express (Amex) into its contracts with merchants. The United States and several States (collectively, the plaintiffs) sued Amex, claiming that its anti-steering provisions violate §1 of the Sherman Act. The District Court agreed, finding that the credit-card market should be treated as two separate markets—one for merchants and one for cardholders—and that Amex’s anti-steering provisions are anticompetitive because they prevent competition in the merchant side of the market and results in higher merchant fees. The Second Circuit reversed; it determined that the credit-card market is a single market, not two separate ones; and that Amex’s anti-steering provisions did not infringe the Sherman Act. You may remember that I reviewed the Circuit court decision almost two years…

Chinese Vitamins – Extraterritoriality and State Compulsion

This is a U.S. Supreme Court decision in the ‘Chinese Vitamins case’ (Animal Science Products, Inc. v. Hebei Welcome Pharmaceutical Co. Ltd, 585 U. S. [to be determined] (2018), available here). As to the facts of the case, in 2005 Animal Science sued Hebei Welcome. Animal Science manufactures livestock supplements, in which it uses Vitamin C. It alleged that Hebei and other Chinese manufacturers had fixed the prices of the Vitamin C that they sold to the United States. The Chinese sellers moved to dismiss the complaint on the ground that Chinese law required them to fix the price and quantity of vitamin C exports, thus shielding them from liability under U. S. antitrust law by the act of state doctrine, the foreign sovereign compulsion doctrine, and under principles of international comity. The Ministry of Commerce of the People’s Republic of China (the ‘Ministry’) filed an amicus brief explaining that it is the administrative authority authorized to regulate foreign trade,…

A Quarter Pounder tying with Cheese

I would like to refer you to a very interesting (i.e. entertaining) class action – which you can find here. In short, the claim is that McDonald’s Quarter Pounder and Double Quarter Pounder with Cheese constitutes an unlawful tying of Quarter Pounders and … cheese. While a customer may still obtain (single or double) Quarter Pounders without cheese, this is not a listed product in stores and a customer who enters into a physical store in the US will still be forced to pay the price of the (single or double) Quarter Pounder with cheese. This leads to an overcharge of 30 to 90 cents, reflecting the price McDonalds charges for the additional slices of cheese which customers ‘do not want, order, or receive’. I would point out that this requires evidence that McDonald has market power in the market for… fast food? Burgers? Fast-food burgers? Coronary-disease inducers? You may feel that this is a silly class action. But one…

Steven Salop  ‘An Enquiry Meet for the Case: Decision Theory, Presumptions, and Evidentiary Burdens in Formulating Antitrust Legal Standards’

Because legal decisions are adopted with imperfect information, decision-makers must strive to create a decision process and make decisions that are rational in light of the costs and benefits of information-gathering and the inevitable uncertainty under which they decide. Presumptions play an important role in this.  Antitrust law contains a number of important presumptions, which: ‘run the gamut along a continuum from irrebuttable (i.e. conclusive) anticompetitive presumptions to rebuttably anticompetitive to competitively neutral to conclusively procompetitive and finally to irrebuttable procompetitive presumptions. These presumptions are based on the effects inferred from the market conditions’ and most capture the central tendency of the category of conduct to increase or decrease competition and consumer welfare. This paper – which can be found here – seeks to understand, through the lens of economic decision theory, how the appropriate presumption for various categories of conduct should be established, and how rational presumptions and their associated post-rebuttal evidentiary burdens of production and persuasion can be better…

Herbert Hovenkamp ‘Antitrust Balancing’ (2016) NYU J. L. & Bus. 12 369

The basic argument of this paper, which can be found here, is that courts very rarely engage in any balancing even when cases fall under the rule of reason. Most people who are familiar with Hovenkamp’s work will not be particularly surprised by this argument. The interesting claim in this paper is that he thinks that there can be meaningful balancing in merger control – particularly when determining whether merger-induced efficiencies are sufficient to offset upward pricing pressures created by the merger. The paper is structured as follows: A first section looks at balancing under the Sherman Act. It points out that “aside from naked price fixing, market division, and a few boycotts, most agreements among competitors are addressed under the rule of reason”. It then explains (as he has done so many times before) that in practice: “the courts pursue rule of reason analyses through a verbal sequence something like this: first, the plaintiff has the burden to show…