Herbert Hovenkamp “Whatever Did Happen to the Antitrust Movement?”

This paper argues that recent claims to the effect that antitrust should be used to combat a variety of social ills – such as industrial concentration, the economic or political power of large firms, the maldistribution of wealth, high profits, low wages, or the absence of policies protecting small business – are not new. Such claims have appeared and reappeared periodically in the history of antitrust, and amount to a rhetorical use of antitrust for promoting various societal goals which must be distinguished from the technical enterprise of antitrust. There is between these two dimensions of antitrust an unsurmountable contradiction, as the main goal of the antitrust enterprise (lower prices, larger output, etc.) will often be at odds with the rhetorical uses of antitrust (e.g. protecting small businesses). The paper is structured as follows: A first section looks at the virtues and defects of technical antitrust. “Technical antitrust” refers to: “a set of antitrust rules that begin with a picture…

Peter Menell  ‘Economic Analysis of Network Effects and Intellectual Property’ in Ben Depoorter & Peter S. Menell (eds.), Research Handbook on the Economics of Intellectual Property Law: Vol I. Theory (2018)

This piece – which can be found here – is a rather long , but very comprehensive book chapter that surveys and integrates the economic, business strategy and legal literatures on IP, competition and network effects. It is structured as follows: Part I introduces network effects. I have done this to death in the past, so I’m not going to repeat it here. Suffice it to say that the author looks mainly at demand side network effects, and what its implications are for IP and competition policy: ‘In a static economic model (i.e., one without innovation), consumers benefit from robust competition within product standards. Open access to product standards encourages realization of network externalities. Although bandwagon effects can enhance consumer welfare in a static context, they can also make it more difficult for developers of improved platforms to enter the market. Consumers and suppliers of complementary products can face significant switching costs in migrating from one platform to another.’ Like…

Ioannis Lianos & Pierre Regibeau “Vexatious”/”Sham” Litigation: When can it Arise and How can it be Reduced?’ (2017) Antitrust Bulletin 62(4) 643-689

It is possible that companies may, through regulatory and litigation processes, be able to exclude or marginalize their competitors from the market and therefore charge higher prices, limit output, maintain the status quo price, or diminish innovation. But while these strategies may offer a cheap mechanism for non-price predation, litigation and regulatory process have been set up to protect public goods regardless of the risk that their use may negatively impact competition. Furthermore: ‘assessing on a case-by-case basis the welfare effects of each use of the regulatory and litigation process through some form of sophisticated cost benefit analysis would be too burdensome and would generate too much uncertainty, chilling the legitimate use of such governmental processes and thus frustrating their aims. For this reason, in practice, the use of the regulatory and/or litigation process stays presumptively outside the scope of competition law, through the operation of some form of antitrust immunity, in both the U.S. and in Europe, this being…

Makan Delrahim, Assistant Att’y Gen., Antitrust Div., Dep’t of Justice, Remarks at the USC Gould School of Law’s Center for Transnational Law and Business Conference (Nov. 10, 2017)

This is a speech by US Department of Justice Assistant Attorney General Makan Delrahim regarding the appropriate approach to standard-setting organisations (SSOs) (and FRAND). As you may or may not know, he is a registered patent lawyer—the first head of the Antitrust Division to be so, so it is unsurprising that he has strong views on the topic. He seems to favour letting IP law run its course unimpeded (or, as he puts it: “Antitrust enforcers should . . . strive to eliminate as much as possible the unnecessary uncertainties for innovators and creators in their ability to exploit their intellectual property rights, as those uncertainties can also reduce the incentives for innovation.”), and only have antitrust intervene exceptionally (‘In case anyone is inclined to misunderstand my comments, let me clearly state that there is an important role for antitrust scrutiny in the standard setting context.’) As he colourfully puts it: ‘Once upon a time, and in their best mode, [SSOs]…

Herbert Hovenkamp ‘Reasonable Patent Exhaustion’ (2018) University of Pennsylvania Law School Faculty Scholarship. 1790

Exhaustion is a typical figure of IP and competition law (and, in the EU, of free movement law as well). The principle is relatively straightforward: after a certain point, restrictions on use or sale of a product cannot be enforced by someone who would otherwise have the right to enforce such restrictions. Exhaustion is often also called the first sale doctrine, as the right to object to the use or sale of a product usually ends after the product is sold for the first time. For example, when someone grants a patent license to another person, the exhaustion rule says that the patentee may not by impose conditions on the patented product’s subsequent use or sale, nor enforce these conditions through a patent infringement suit. This paper – which can be found here –  provides an analysis of a recent US Supreme Court’s decision: Impression Products, Inc. v. Lexmark International, Inc., 581 U.S. 1523 (2017). The case concerned a patent…

Doug Ginsburg and Joshua Hazan ‘Extraterritoriality and Intra-territoriality in US Antitrust Law’ Concurrences No. 3 – 2016, pp. 32

This short paper – which can be found here – looks at case law on the US Foreign Trade Antitrust Improvements Act (FTAIA), which regulates the extra-territorial effects of US antitrust law. A first section provides an overview of how US law has dealt with the issue of extraterritoriality of its antitrust law over time. It notes that: ‘The antitrust laws protect U.S. consumers from foreign and domestic conduct alike; since Judge Hand’s landmark opinion in Alcoa, the U.S. antitrust laws have applied extraterritorially when foreign conduct has a domestic effect. ’ However, effects-based jurisdictional tests are quite broad, and can catch in their net many foreign conducts with limited impact on the US. As a result: ‘In the 1970s, the exercise of jurisdiction by U.S. courts over foreign defendants in antitrust cases caused a good deal of international tension; some of the nation’s major trading partners, including Canada, France, and the United Kingdom, passed “blocking” and “clawback” statutes to…

Michael A. Carrier and Carl J. Minniti III ‘Biologics: The New Antitrust Frontier’ (2018) University of Illinois Law Review 1

This paper – which can be found here – can be read together with the paper on biologics that was reviewed here. Biologics differ from small-molecule drugs along multiple axes. They are more expensive, costing hundreds of millions of dollars to develop. They also cannot be precisely replicated. As a result, they are likely to present different challenges than chemical generics. This article develops an antitrust framework for the problematic conducts most likely to arise. Part I provides a primer on biologics, offering a brief history before focusing on the relevant science and markets. In a nutshell, the pharmaceutical industry consists of small-molecule drugs and biologics. A biologic is a large, complex molecule derived from a living organism, most commonly a protein. Through an intricate manufacturing process, biologics are harvested in genetically modified cell lines and purified through complex, lengthy procedures. For most of the twentieth century, innovation resulted in small-molecule therapies in the form of compounds produced through chemical synthesis, up…

Michael A. Carrier ‘Sharing, Samples, and Generics: An Antitrust Framework’ (2017) Cornell Law Review 103(1) 1

This paper – which you can find here – looks at a specific type of obstacle to generic entry: refusals by originators to share samples of branded medicines. As is often the case in this sector, this practice takes advantage of the existing regulatory scheme, in this case in the US. This strategy involves risk-management programs known as Risk Evaluation and Mitigation Strategies (“REMS”). Pursuant to legislation, REMS are required when a drug’s risks (such as death or injury) outweigh its rewards. According to the author, brands have used this regime, intended to bring drugs to the market, to block generic competition. The paper is structured as follows: Part I provides a background on REMS, offering a history and overview of these programs before examining the concerns they raise regarding blocking generic entry. The FDA has defined REMS as “required risk management plans that use risk minimization strategies beyond the professional labeling to ensure that the benefits of certain prescription drugs outweigh…

Fiona M. Scott Morton and Lysle T. Boller “Enabling Competition in Pharmaceutical Markets’ Hutchins Center Working Paper #30 (May, 2017)

This paper – which you can find here – argues that the pharmaceutical industry in the US has managed to disable many of the regulatory mechanisms that promote competition. The paper focuses on the incentives’ structure that enables the persistence of high prices, and its goal is to identify measures that will make US pharmaceutical markets competitive again. The author identifies three major barriers to effective competition in U.S. pharmaceutical marketsi. I. Obstacles to entry of biosimilars Over the past two decades, pharmaceutical innovation has shifted from chemically-synthesized small molecule drugs toward more complex, bioengineered treatments grown from living tissue that are known as biologics. While biologics carry a high price tag, many were licensed in the 1990s or early 2000s – which means that prices are high despite the relevant patents having expired. It is held that this is a consequence of regulatory barriers to competition being higher in biologic drug markets than elsewhere, resulting in fewer competitors and allowing…

Mark Anderson and Max Huffman, ‘The Sharing Economy Meets the Sherman Act: Is Uber a Firm, a Cartel, or Something in Between?’ (2017) Columbia Business Law Review 859

This is a rather long piece – which you can find here – that tries to understand how antitrust should be applied in the context of the sharing economy. I think the spur for this piece is the recent price-fixing case brought against Uber in New York. Regardless of the incentives for writing the paper, it tries to identify the various approaches that antitrust can adopt regarding digital platforms and to determine which one is better suited. The paper also argues that: “Unique to sharing economy enterprises is a structure that approaches a single entity while remaining a set of agreements among individual actors. This structure results in a sharing of economic risks among the participants in a sharing economy enterprise which can incentivize efficiencies in operation that ordinarily are found in a single entity. The article concludes that those efficiencies can overcome anticompetitive concerns about coordination on competitively sensitive matters.” The paper begins by observing that: “antitrust law has…