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Antitrust
University of California, Hastings School of Law
Cohen, Richard

 
Cohen/Ries_Antitrust_Fall_2013
 
Antitrust
Economic freedom: Access to market is available for the participants.
why we need antitrust
Economic freedom was one of the main reasons of revolutionary wars of the US. Coz British dictated Americans what, to who, for what price they can buy stuff. 
At first US was a collection of distant communities, there was not competition at that time, coz transportation was so poor and communities were not that much connected.
By growth of industrialization and banking, slowly we saw regionalization. Civil war resulted in more concentration of industries, and made economy much more concentrated. At the time of civil war, industry supported entire US.
More Concentration means less choice.
After civic war, the laws on making corporation was relaxed. Corporation makes it possible to be able to absorb more capital.
Trust was a form a corporation, problem was that at 19th century, corporations can only act in the state they were incorporated. Therefore, holding companies was established.
Clayton act: US can enjoin mergers that makes monopoly
Sherman uses broad words, coz economy is changing a lot, so Sherman and Clayton acts are written in a way that courts can interpret them. So that these acts can evolve as the economy evolves.
U can bring a conspiracy case under section 1 or 2, but 1 has easier burden of proof.
2 fed enforcement agencies: US department of justice antitrust division, federal trade commission
Congress set for prvt action for Sherman act, fearing that fed gov wont enforce it.
 
Session 2
Section 1, sherman act
Combination is not that much different from k. it is an agreement between 2 or more people, such as holding, trust, pool.
Conspiracy is a commitment/agreement between two or more parties, that involves a scheme results in unlawful purpose.
Person includes individuals and corporations and associations.
If we are not in the same market then we are not competitors, if u have potential to come to my market, we can be competitors.
3 elements of violation of sec 1 of Sherman act: agreement, unreasonable restraint on trade, interstate or foreign commerce
Rules of reason factors
Nature of the agreement: u look at the history of the k,
Ability of participants to compete independently
Pro-competition: if the participants are more efficient, they reduce stuff on lower price
Appakacian coal case.
U cant have per se violation, unless u have participants that have substantial percent of market. U HAVE TO LOOK AT ARKET SHARE TO MAKE DETERMINATION ABOUT PER SE ILLEGAL ACTION
IF IT IS INHERNETLY UNRES RETRIANT ON TRADE, WE DON’T LOOK AT THE MARKET SHARE, WE DETERMINE IT IS VIOLATING, NO MATTER THE MARKET SHARE OF PARTICIPAMNTS IS LOW.
8/26/13
Per se rule of evidence: if existence of agreement is proved, it is presumed to be unreas.
All u need to see violation of sec 1, is AGREEMENT OF PER SE VIOLATION.
PRICE FIXING IS UNRES INHERENTLY.SO ANY AGREEMENT IMPACTING PER SE VIOLATION IS PER SE VIOLATION.
Topco was a corporation/cooperative.
Territorial allocation was to promote and encourage sale of topco in any of the regions.
Members were horizontal competitors, so members of same group made an agreement to limit competition.
BRG/HBJ case.
•          What if HBJ did not offer bar review courses in Georgia, but did so in Alabama? Does that make difference if these two were not direct competitors?
Would that be per se violation? YES, BECOZ THEY ARE HORIZANTAL COMPETITORS AND LIKELEY TO COMPETE
•          What if HBJ did not offer bar review courses in Georgia, but sold bar review materials in Georgia? It can be pro-competitive, so it gets outa per se category and got thru res category. 
8/28/13
Price fixing is inherently unres, ALL U HAVE TO SHOW IS A VIOLATION OF SEC 1, SHERMAN ACT, AN AGREEMENT TRLATES TO UNRES RESTRAINT OF TRADE THAT HAS SOME IMPACT ON INTERSTATE COMMERCE. Then it is a per se violation of sec 1, Sherman act.
American column limber case.
At the time American column working, becoz of transportation cost, they don’t worry about competition from outa region, coz most competitors outa region couldn’t really bring their stuff to that region as communication n transportation was bad at that time.
If buyers and sellers both have the info, then market will be a more efficient one. Coz this information will lead to price stabilization.
Data dissemination can stimulate competition if accessible to all but future info accessible only to some can be unres restraint. So THE FACT THAT DATA DISSEMINATION IS UNRES RESTRAINT ON TRADE OR NOT DEPENDS ON TYPE OF INFO.
 
Issue in rule of reason is that, WHETHER THE PARTICIPANTS HAVE THE MARKER FORM. SO A LARGE NUMBER OF PARTIPANTS MAY NOT HAVE THAT UCH POWER EACH TO CONTROL MARKET ND ITS HARDER FOR THEM TO CONSPIRE.
•          Did the blanket licensing agreement (BLA) restrict competition? No, coz it was not exclusive license.
•          Did the BLA decrease output? No
•          Did the BLA provide any efficiencies in the sale of musical compositions? Yes
•          Were the copyright holders really offering the same product? No
•          Could the BLA be considered a single product?
NOT EVEY AGREEMENT IMPACTING PRICE IS PER SE VIOLATION…FIRST U LOOK IF THERE IS ANY PRO COMPETETIVE BENEFIT OR NOT, IF THERE IS THEN U DO BALANCING TEST. IF THE PURPOSE IS STABLIZING PRICE THEN IT DOENST HAVE PROP COMPETETIVE BENEFIT. IF THERE ARE NOT ANY PRO COMPETETIVE BENEFIT, TEHN GO WITH PER SE VIOLATION.
9/4/13
Territorial divisions, and market allocation are per se.
Setting a maximum price is a price fixing, usually price moves to maximum level and people will eb charge for maximum.
MAXIMUM FEE SCHEDUES ARE PER SE ILLEGAL.
We have to limit output in televising college football matches, so its not per se violation. Oklohoma case.
If u are def, u wanna show that market is as broad as possible so that telling u don’t have market power, but if u are on pla side, u wanna show that market is very narrow, so that def has lot of market power.
Naked restraint is negative impact on price or output.
9/9/13
Rule of reason analysis steps.
Even if there is a naked restraint, but there is some pro competitive aspects, then still have to go on and analyze.
If def cant argue that there is not any procompetitive aspect, then he can argue that they don’t have any market power.
Sup said a joint venture, as long as the core activity is to produce, the owners can get together and set price, BUT THE IMPORTANT THING TO DETERMINE THAT THIS IS A VALID JOINT VENTURE (POOLING OF CAPITAL, SHARING THE PROFIT AND

holds title.
Once title passed
 
9/23/13
In order to a boycote to be per se, it should be between competitors or competitors and suppliers to keep out another competitors plus market power.
Competitors or competitor and supplier should have market power otherwise, it is not per se violation but should be analyzed under rule of reason.
Boycote for case of price fixing is per se violation, no matter what is the market power, coz its price fixing.
Sp ct used per se rule for vertical non-price restraint when title passed up until continental case.
Leegin case.
Clayton sec 3, is only about commodities not services
How did the Court analyze the legality of the Tampa/Nashville exclusive dealing arrangement?
•          Defined the relevant product market.
•          Defined the relevant geographic market.
•          Determined whether the competition foreclosed by the requirements contract foreclosed a substantial share of the relevant markets. Whether as result of this agreement competition for this market/product will be substantially curtailed.
9/25/13
One of the factors we look at establishment of bid rigging is abrupt change in conduct.
1.       Communication between competitors during the time bid was received
2.       Abrupt change in conduct, from significant competition to almost no competition
Plus factors: not acting in self-interest, abrupt change in conduct, no economic explanation for the conduct, not operating with full capacity, evidence of communication between competitors, uniformity of action/consistency, bid pattern, radical departure from the previous business practices of the industry, Communications between the conspirators before and during the implementation of the unreasonable restraint, The use of facilitating practices – like information sharing, motive to collude.
 
We don’t have direct evidence of k, but we use circumstantial evidence
Economic self-interest
Section 7 clayton
What s prohibited? Merger and acquisition that substantially lessen competition, effecting commerce, in
Brown shoe was both vertical and horizontal merger.
Lines of commerce are analyzed by product market, and the buying pattern, for example mens shoes, women shoes, children shoe.
Market: cities, major cities
Ct said intent of cong is about competition not efficiencies. Concentration is a measure of conglomeration of the firms that control resources and output.
The problem here is that ct look at competitors, BUT THE FOCUS OF SEC 7 IS ON COMPETITION, MEANS EFFECT OF IT ON S=CONSUMERS, SO IF THE EFFECT OF COMPETITION IS TO DECREASE PRICE, THEN ITS GOOD EVEN IF IT TAKES OUT SOME COMPETITORS.