- ABC
- Antitrust
- Historical context and philosophy
- Late 19th Century
- America industrializes
- Moves away from agrarian, locally focused generalist craftsmen
- Move toward cities, nationally and regionally focused economic acivity, extreme division of labor
- Mechanization, railroads, factories, interchangable parts
- Electricity, steel, petroleum usage
- Highly capital intensive industry
- Massive trusts control economic inputs and outputs
- Natural resources
- Production
- Transportation
- Retail
- Era of trusts and robber barons
- Examples:
- Standard Oil (Rockefeller)
- U.S. Steel (Carnegie)
- Carnegie Mellon University
- American Tobacco Co. (Duke)
- Central & Southern Pacific Railroads and railroad construction (Stanford)
- Sherman Antitrust Act passed in 1890
- 1920s to today
- Trend of lessening susupicion of business tactics and combinations and increasing reliance on economic theory and academic research
- 1990s to today
- Over last 20 years, increasing acceptance in courts of Chicago School of economic thinking, which is distrustful of antitrust law, believing the market will provide for the most efficient solutions, with law only hindering competition
- Goal
- Competition - the free market
- Both backers and opponents of strong antitrust laws claim to be in favor of unfettered competition
- Legal frameworks
- Common law
- State statute
- Federal law
- Sherman Act
- Sherman Act §1
- Restraints
- Horizontal restraints (cartels; horizontal collaboration)
- Vertical restraints (vertical collaboration)
- Sherman Act §2
- Monopoly (horizontal domination)
- Clayton Act
- Tie-in sales
- Anti-competitive mergers
- Robinson-Patman Act
- FTC Act
- General prohibition of unfair and deceptive business practices
- Enforcement through government commission
- Hart-Scott-Rodino Act
- Pre-merger notification, merger review, DOJ enforcement
- Fact patterns
- Restraints
- Kinds of restraints
- Horizontal
- Cartels, collaborating competitors
- Vertical
- Sherman Act §1
- Text
- 15 U.S.C. §1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.
- Interpretation
- Only unreasonable restraints outlawed
- Per-se illegality
- Unreasonable as a matter of law
- No justifications or defenses entertained
- Examples:
- Agreement between competitors to maintain fix minimum prices
- Agreement to divide up market into exclusive territories
- Agreement between competitors to fix output levels
- Current trend is away from per se illegality
- Example: Vertical price restraints no longer per-se illegal. Reversed 96-year precedent. Leegin Creative Leather v. PSKS (U.S. 2007)
- &
- "Quick look" rule of reason analysis
- Case-by-case, but detailed analysis not necessary, for inherently suspect restraints
- Exchange of price information between competitors
- Rule-of-reason analysis
- Case-by-case determination
- Look at pro-competitive justifications
- Examples:
- Joint-ventures between competitors
- Vertical price maintenance
- Exclusive distribution arrangements
- Monopoly
- Sherman Act §2
- Text
- 15 U.S.C. §2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.
- Interpretation
- Monopolization
- Monopoly Power
- Power to control prices, or exclude competition
- Factors
- 1st
- Market share
- 70% or more is strongly suggestive
- 40-70%, possibly
- 40% or below, not sufficient
- 2d
- in the relevant market
- market definition is key
- product market
- what are the substitutes?
- who are the customers?
- geographical market
- purposeful act
- predatory or coercive conduct that violates Sherman Act §1, or
- intentional conduct aimed at acquiring, maintaining or exercising monopoly power
- Examples:
- Predatory pricing with a dangerous probability of recouping discounts
- Denial of access to essential facilities
- Attempted monopolization
- Dangerous probability of success, and
- Specific intent
- Monopsony
- Monopsony counts as monopoly for Sherman Act §2
- Intellectual Property & Antitrust
- IP
- Legal monopolies
- Patents
- Copyrights
- When does antitrust limit IP monopolies?
- Generally, trying to get more than the monopoly is supposed to grant
- Fine
- Charging customers monopoly rents
- Example:
- Charging ultra-high prices for drugs that cancer patients will die without
- Exclusive licenses
- Limiting output
- Refusing to manufacture
- Not allowed
- Fixing prices of unpatented articles made by patented machine
- Agreements for royalties that continue after the expiration of the patent
- May violate Sherman Act
- Grant-back clauses
- Patent accumulations
- Tying arrangements
- Blockbooking
- Generally okay
- Price Discrimination
- Robinson-Patman Act
- Clayton Act §2a (15 U.S.C. 13(a))
- Text
- It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them
- (With numerous exceptions)
- Elements
- Engaged in commerce
- Construed narrowly - must generate discrimination across a state line
- Discriminate in price between different purchasers
- Commodities of like grade and quantity
- must be tangible goods
- services and intangible goods do not count
- Injure competition with any person who grants such discrimination
- Primary-line injury
- a substantial and sustained price drop in a limited area which has the intended effect of hurting a smaller competitor
- Secondary-line injury
- a competitor of an advantaged buyer who received a discriminatorily low price
- Tertiary-line injury
- a customer of a buyer who was disadvantaged by discriminatory prices, when that customer is then disadvantaged in competition with customers who received the advantage of lowered prices
- Defenses
- Justified cost differences
- Examples:
- higher transporation costs
- higher production costs
- higher distribution costs
- Changing conditions
- Examples:
- Spoiling produce
- Shifting market demand or supply
- Meeting competition in good faith
- De minimis effect
- Mergers
- Clayton Act §7
- Prohibits mergers where effect may be to substantially lessen competition
- Prophylactic
- Makes Sherman Act §1 inapplicable to mergers
- Hart-Scott-Rodino
- Requires advance notice of some mergers
- DOJ or FTC can then review and conduct a hearing
- Competitive justifications for mergers
- Smaller competitors merging to tackle a bigger rival
- One company won't survive without merger
- Barriers to entry are low
- Increased operating efficiences
- Private plaintiffs usually lack standing, enforcement by government
- Bankruptcy
- Historical context
- Goals
- Orderliness
- Compels collective creditor action and cooperation, emphasizing equality and fair treatment of creditors
- Cf. race of diligence, judgment-debtor proceedings under state law
- Fresh start
- "it give to the honest but unfortunate debtor ... a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt" Local Loan Co. v.Hunt (U.S. 1934)
- Key substantive concepts
- Stay
- Discharge
- Relief
- Liquidation
- Restructuring
- Chapter 11
- Chapter 12
- Chapter 13
- Current scheme
- U.S. Constitution, Art. I, §8
- "uniform Laws on the subject of Bankruptcies"
- Exclusively federal
- Role of state law
- Bankruptcy Code (11 U.S.C.)
- Chapter 1
- Definitions, general provisions
- Chapter 3
- Chapter 5
- Claims, duties of debtors, estate
- Chapter 7
- Chapter 9
- Adjustment of Debts of a Municipality
- Chapter 11
- Chapter 12
- Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income
- Chapter 13
- Adjustment of Debts of an Individual with Regular Income
- Chapter 15
- Ancillary and Other Cross-Border Cases
- Bankruptcy Courts
- One in each of 90 federal judicial districts
- Article I courts, Article I judges
- Appeals to U.S. District Courts
- Bankruptcy Rules
- Federal Rules of Bankruptcy Procedure, promulgated by SCOTUS per 28 U.S.C. §2075
- Consumer Law
- Why?
- Information
- Lemon laws
- Labeling
- Disclosures
- Irrationality
- Funeral homes
- Door-to-door sales
- Realism / complexity
- Insurance regulation
- Safety standards
- Lack of bargaining power
- Fair credit practices
- Debt collection
- Unifying themes
- Limitations on freedom of contract
- Limitations on the free market
- Consumers
- Issue spotting in for general business practioner