Antitrust 60314 LAW 607
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60314 LAW 607
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This 8 page Class Notes was uploaded by Cavan Randall on Monday February 9, 2015. The Class Notes belongs to 60314 LAW 607 at Gonzaga University taught by Tim Nord in Fall. Since its upload, it has received 152 views. For similar materials see Antitrust Seminar in Law and Legal Studies at Gonzaga University.
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Date Created: 02/09/15
Antitrust 1132015 1 2 3 10 11 12 13 14 15 16 Sherman act how have they been interpreted clayton act OR has its own state antitrust statutes He has a pro consumer pro competition does not necessarily align with a lot of defense counsels and SCOTUS Some areas that antitrust will pop up healthcare mergers if selling larger businesses price setting franchise agreements patentcopyright price fixing Price fixing per se violation it is a violation in and of itself Courts assume it is so bad that it is prohibited outright a Can a contractor when bidding give information about his bid to a competitor Monopoly alone is okay acquiring it improperly is what s wrong Once you have that statusmarket power your acts may be judged differently than someone who is much smaller Antitrust case pending for setting prices previously had been dismissed on a jurisdictional basis wont get into foreign conduct a Law changed started having more and more international business starting adjusting jurisdictional issues If you are price fixing a market b Fatia act Sherman act we wont apply it if it is solely foreign conduct and is not importexport conduct c He thinks that OPEC will get an excemption d Antitrust cases right now for NCAA A per se agreement you have to have an agreement Going to read cases a What arguments were made and why Test couple problems with a lot of facts Go through them and identify the key facts the issues cite cases and principles Want to know what is missing what you want to know Might ask to write from the perspective on one party or another a Don t try to reconcile all the cases i Try to go through the cases and get the big concepts the main points ii He really likes the TOC and the headings tells you why you are reading the case b Don t panic at the start of the course A lot of jargon A lot of references to civil procedural stuff a Does not occur in a vacuum Find an area that you have an interest in and google it with antitrust Antitrust backbone of capitalism a What happens when there is a dog fight that gets down to 1 dog capitalism works well with 6 dogs doesn t work well with 1 or 2 or 3 Spend a lot of time in other classes doing historical cases not going to spend a lot of time talking about historical developments Principles are all contained in the cases we are going to do First Chapter a Lysine case the informant rarity to have the video and people coming to you and everything Why would competitors collude customer can be the enemy i ii 1 Businesses don t like to have to compete for every single customer want some predictability That s what they are thinking about in the cartel case 1 gotta have two people or more people and there has to be an agreement not just pricing has to restrain competition if it involves price it is a per se violation a Rule of agreements what factors to see if it violates 1 Factors in the industry that make it a conducive environment 1 2 3 F 9 Inelastic product Smaller number of players Barrier for entry can be geographical can have a patent better location only one with a permit etc Transparencyhidden Frequency more frequent regular transactions smooth regular if its all or nothing a lot less likely Fungible buyers can t buy up a lot and hold it ties into the inelastic nature gotta have it have to keep it coming in Something that is a middle product lysine ram Commodity easier to price fix Low marginal costs how much will it costs them to make the next car after making their 1000 cars really low with computer chips just silicone 10 Oversupply almost all collusion occurs when there is an oversupply b Co ee shop 39 Market power people will pay more if I sell less or I can raise my price 1 ii iii iv v c J TC Pe a When there is oversupply it s like musical chairs someone is always left out Leads to everyone cutting their price just because there is one extra the price starts to drop economists think this is good without a drop in demand Market definition geographic area product substitutes Elasticity Marginal costs vs fixed costs Patents monopolies with patents not very elastic troleum next time d Brunswick fundamental case seminal case simple in some ways but a little nuanced Make sure to read and figure out i 1262015 What is harmful about cartels 1 2 What about a joint venture or a partnership percentage joint ventures with smaller market shares are not as scrutinized BMI a valid joint venture will bring something to market What is the nature of the commitment are we friends with benefits or are we in a committed relationship a If it is a true integration and they go all in together they will be less scrutinized than if they just agree on a price How do you distinguish the difference between cartel and legitimate relationship 4 Distinguishing between Procompetitive and Anticompetitive a Pro competitive choice differing qualities new entries in a condensed market will always lower the price b Anticompetitive not limited just to price agree on qualitativeness c Different lines through the supply chain i Direct purchasers ii Indirect purchasers iii End purchasers at the end of the supply chain 5 Collusion vs Exclusion a Collusion 2 or more b Exclusion doing something to hurt a competitor 6 Antitrust Injury a Really big in litigation has to be a nexus of foreseeability b Ram example 20 overcharge civil case too tangential to be an antitrust injury i With LCD screens made the argument that you don t have computers without screens etc won on summary judgment proving it was an injury 7 Brunswick antitrust injury a Respondent owns a bowling alley competitor bought up all the distressed bowling alleys around them Sued for the money they would have gotten had they all gone under i Manufacturer of bowling equipment bought up the stores ii Suing for the profits they would have had had the bowling alleys gone into bankruptcy b Makes it all the way to the SC c Enacted for the protection of competition not competitors has to be an antitrust injury that arises from anticompetitive acts i Concerned with a decrease in competition not a decrease in the number of competitors 8 Whenever you have a merger somebody is getting removed from the marketplace There are some situations where mergers are anticompetitive 9 Market Power 10 Courts don t so much categorize collusionary and exclusionary conduct the book does it to assist ll JTC Petroleum a Inelastic demand standard product few market players regional restrictions high barriers to entry 9 b Applicators and the asphalt manufacturers not only are the competitors are friends but the people who supply me and my competitors are friends two levels of collusion If the applicator can charge more I can get more out of the applicator c Boycott sell at like 25 market allocation agreeing not to compete price fixing d Ps didn t win but it s a good case to see these 3 types of competitive conduct 12 6372 philosophy of antitrust not assigned but if we want more Chicago school has won out 13 7786 a Sometimes what is procompetitive vs anticompetitive isn t really obvious and can change over time b Judges don t want to regulate the market place c Price fixing is per se so clear cut it has to be antitrust violation d Courts have become more conservative over time reluctance to really get into it 14 LIB OR inter bank rate when banks have to borrow money from other banks would report daily Some of the banks held money some of the banks what they got paid was tied to LIBOR then banks had loans that may be tied to LIBOR student loans were also tied to LIB OR Sometimes false reported back sometimes they reported rates lower or higher inside information a Goes to judge not a direct enough injury for the student loans argued that when they report the LIB OR rate they really aren t competing in the nature of what they are doing they are not competing when they actually give the rates 15 Whever you have a sole player 2 can have 2 or more some time with collusive elements 1 collusion need to have at least 2 16 SoconyVacuum Oil important case opened the door to more nuanced use of anticompetitive practice a Agreed to buy up spot market gasoline so that they could raise the price of all oil b Buying up small percentage to stabilize price c They said the competitive evils argument is bogus they said this was illegal per se nothing good will come out of this conduct d Takeaway just taking out 5 of the market can have a huge impact on the market i Falling markets are more prone to collusive activity e Had proof that there was a conspiracy proof was to affect the price proof that the activity had an impact i For private have to have all 3 for criminal prosecution only need the first 2 17 BM introduction 18 Illinois Brick 1980s under the Sherman act except in a few limited situations a under fed law you can only recover for direct purchases b About 30 states have passed what are called indirect purchaser laws that allow someone to sue if the injury is passed on 222015 1 ORCP 32 requires an opt in once the class is determined you have to submit a claims form and opt in any money that doesn t go to the claimant goes back to defendants a Federal Rules a little different can have a class of people are known b Bill tries to eliminate the opt in and allows the settlement not go back to defense could go to legal aid or charitable 2 BMI 1979 Entry to the modern approach a Tot397 Nonprofit representing all the publishing companies come in and say you are listening to our songs in our bar you have to pay us for the license trademark allows them to assert that they come in with a set price and tells you how much you will pay sounds like price fixing Court decides this isn t plainly anticompetitive Reduce transaction costs in general offering a new product we aren t taking something off the market we are giving you a reasonable means to get all the licenses in one place Arguments against BMI aggregating the enforcement rights of every major public house aggregating their market power by creating this new product it makes it easier and more economic to enforce Court founds it was a means of providing a new product can still get your own licenses Are these blanket licenses always going to make them less competitive Courts have learned to be more conservative about labeling things per se Backs away from saucone a bi not all arrangements amoung actual or potential competitors that have an impact on price are pre se violations of the Sherman act or even unreasonable restraints 3 First line of defense in any antitrust claim is to justify business arrangements using BMI a Bringing new product developing new standard brings efficiencies to the market 4 Quick look some courts have gone to this SC has never once said the quick look analysis is correct they have never completely killed it basically it hasn t gotten any traction anywhere a Have language that actually supports a more uid reason test 5 Catalano bunch of wholesalers decide not to give free interest TAKEAWAY price fixing its not always about dollar costs have price fixing when they have the same terms 6 Maricopa County Medical Society one of the tougher cases to understand a b Majority of practitioners were members all agree to maximum price create fee schedule could charge less other insurers they contract with they wont charge them more charge others more i 70 of doctors they are competitors because they are not part of the same practice competitorshorizontal competitors ii Defenses l fee schedule lower transaction costs forces doctors to not compete on price but on quality of services rendered maximum price iii Plaintiff collusive exclusionary effect price fixing compare prices to see if it is an indirect way for everyone s prices to come up Ruled anticompetitive effect they stick with per se case 7 Texaco v Dagher a Shell and Texaco if you went around NW you would see chevron shell Texaco and 77 ii iii iv V1 8 Obanon Formed a joint venture called equalon 2004 shell and Texaco each firm to withdraw from Equalon at any time Put all the retail operations in Equilon and kept their refineries and set the prices for all of their stations 1 per se price fixing Court decided it was not per se illegal They had put retailers together and had pro efficiency arguments and that you couldn t operate a joint venture without setting the prices court decided they were allin and that it was okay They didn t rebrand the stations they kept their respective names on the retail stores This has been questioned SC denied review there has been tons of criticism of Dagher Doctors in Maricopa didn t form joint venture but set the price One of those cases that is good to know but it doesn t fit neatly and control everything a NCAA all schools banded together and banned all students from using commercial likeness b Court at out rejected NCAA saying it is necessary for the NCAA to prohibit athletes from licensing there must not be a legitimate reason because you are selling their licensing and making money on it 9 Palmer v BRG of Georgia a Found per se violation 1990 cites to socony doing for anticompetitive purposes agreeing not to compete against each other 10 Group Boycotts some group of competitors agreeing to exclude or to do something in a particular fashion Is what they are doing restricting competition Objectively what you have done intent doesn t matter Think of market power if you are two unpopular people and decided to exclude people wont matter if you only had 5 of the market and you wanted to exclude people If you are only 1 of the market court wont care not in uencing the market Much more concern when there is enough market power to in uence conduct a Collusive boycotts b Exclusionary boycotts 11 FTC v Superior Court Trial Lawyers ASS n a All decide to refuse to take new cases until they get an increase All voted to accept the offer Then FTC refusal to deal goes to SCOTUS going to assume that the rates were unreasonable we are going to assume better legal representation would be better if you were paid more When they decide it is a strict per se case c Noer not an antitrust for you to solicit the government d What the court is getting into is it is clear that this group of competitors agree on a price and there is an actual agreement i ii Couldn t they make the argument that they are not competing and argue that there is only a single customer Only protects unions that are recognized by the NLRB 1 Disbanded union as soon as possible in the nba 2 Years ago baseball disbanded and went FA for a while and whenever they bargain is refuse the salary cap 12 16465 summarizes the concepts of core issues of the various cases 13 Modern trends the search for a more structures and operational rule of reason a Has been a lot of angst by judges trying to figure out what they should do b What factors the court is looking for and how the court is kinda struggling once they get away from a per se analysis towards a rule of reason 14 NCAA v Oklahoma important case a Outlines factors and analysis and how you make arguments for both sides I This case spawned the different networks pac 12 network Its fine for you to do a BMI model but you are taking one step beyond and not letting me do a deal to pick up more games on the side 6 NCAA tries to limit the amount of games any 1 team can be televised d Decide they are not going to apply a per se rule recognize that in college athletics you have to have some agreement amongst the participants 139 No bright line separating per se from the rule of reason analysis Posner doesn t like to use any labels leading antitrust conservative judge ii Some judges will never even use the phrases per se or rule of reason 6 What are the market effects looking at market power trying to define what the market itself is if college football is a separate market then NCAA has huge market power and is controlling supplies f No real difference when you look at it from broadcasters advertisers or viewers g Higher prices is not a procompetitive justification basically have a volume restriction h remove excess supply to keep prices high just like socony 139 direct vs indirect evidence of anticompetitive acts 139 direct trial lawyers increase the price by boycotting ii indirect evidence e g trend of prices going up unless they can come up with another justification 15 California Dental seminal case 15 years later a Dental Association per se or rule of reason 139 Put limitations on advertising disclosures 9 Court starts looking at what anticompetitive effects they can find in the record 139 Assuming that the record shows that the rules bar across the board discounts of advertising doesn t automatically make it anticompetitive 6 Court what is the actual market analysis what is the restraint i Restraint ii Effect anticompetitive Breyer wants a shifting burdens test 6 Not using the labels majority want to force the analysis into a more economic approach making it a lot tougher for a plaintiff 16 Sidebar 25 read 17 205 good little outline nice little buzzword framework 18 21011 summarizes the range on the continuum 19 Start with 211221
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