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Antitrust Law
University of California, Hastings School of Law
McCall, James R.

My Antitrust Outline
Absence of Evidence is not Evidence of Absence

I. Damages and Standing
a. Under Clayton 4 (treble damages provision)
i. Damages suffered from:
1. Overcharge (as result of price fixing or monopolization)
2. Loss of Sales (profits)
a. b/c exclusive dealing K, competitor can’t make sales they would have been able to if not for conduct of defendant.
ii. To get damages, Plaintiff must prove:
1. D violated antitrust law
a. Can be hard to meet, unless govt has already made its case.
2. Damages
a. Causation:
i. Damages were caused by the violation of antitrust law.
b. Standing
i. P must be a direct purchaser of the product whose price was fixed, etc.
ii. (or, could be co driven out of business by D’s acts.)
1. IL Brick
c. Damages of the Type AT Laws were Designed to Prevent
i. Damages must be related to practices which prohibited/foreclosed competition, or show that prices charged were too high.
ii. If P’s injury results from lawful competition, no remedy.
iii. Cases:
1. Brunswick v. Pueblo Bowl-O-Mat (1977)
a. Competitors of B sue for damages where B bought up a bowling alley in bankruptcy.
b. No ‘failing company defense’ b/c smaller competitors B could have bought bankrupt lanes.
c. Ps suffered from too much competition, not too little.
i. “not the kind of damages AT law was designed to prevent”
2. (note – diminishing market at work here)
d. Amount of Damages
i. P must have reasonable basis for their figure and convince the jury.
iii. (Note: P can sue for 3x damages even if themselves at fault. (para delictu)
1. A party that signs an exclusive dealing K at behest of D can still sue.
iv. Cargill v. Monfort 1986
1. If you are bringing an equitable action alleging a violation of the antitrust laws, you have to show that you will likely suffer antitrust injuries if you don’t get the injunction.
2. “threat of lost profits due to possible price competition following a merger does not constitute threat of AT injury”
II. Monopolization (Sherman 2)
a. Introduction
i. Goals of Antitrust Law- what antitrust law seeks is to have the largest possible number of independently functioning economically viable competitors in every market—with that we get lower prices, extremely efficient production, better resource allocation, and product innovation.
1. Antitrust is curtailment of business power
a. Since time of Henry the 8th.
2. Goal of AT law?
a. Efficiency/curtailment of economic power? (primary concern)
i. Unchallenged economic power deadens initiative, inefficient, discourages thrift and depresses industry. L. Hand.
b. The individual helpless before the great aggregations of capital.
i. Social goals is secondary
3. 2 types of K’s of interest
a. Output K
i. ??
b. Requirement K
i. Buyers must buy all that Seller produces –
ii. Always suspicious – shuts out competitors
ii. Historical Timeline
1. Cartel Activity-
a. groups of competitors that agree among themselves to take a course of action that benefits all of the competitors.
2. Monopolization –
a. Benefits one firm to detriment of others.
i. Inefficient/monopolist unconcerned with competition.
b. Vertical agreements b/t buyer and seller.
3. Formation of Standard Oil Trust (1882)
a. Used predatory pricing to drive out competition. Then buy them up.
4. Sherman Act (1890) –
a. §1 was aimed at price fixing and market division but as an afterthought it also applied to vertical agreements (cartel behavior)
b. §2 was aimed at monopolies (single firm behavior)
5. US v. Standard Oil (1911) –
a. Not all contracts that restrained trade were illegal, only those that ‘unreasonably restrain trade or commerce’. The ‘Rule of Reason’.
6. Clayton Act (1914) – Tends to apply to most monopolies.
a. §2- Price discrimination that harms competition (price discrimination)
i. Now the RPA (infra) (doesn’t apply to cartels)
b. §3- exclusive dealing contracts and tie in agreements are illegal if they restrain trade (exclusive dealing arrangements) (doesn’t apply to cartels)
c. §7 – prohibits mergers where the effect of the merger is to substantially lessen competition (mergers) (both vert/horiz mergers)
7. Federal Trade Commission Act/ FTCA (1914) – This created the FTC, which is composed of 5 commissioners.
a. FTCA 5- prohibits unfair methods of competition and unlawful or deceptive practices. It gives the FTC the power administratively to stop through cease and desist orders any violation of letter or spirit of Sherman and Clayton.
8. Robinson Patman Act (1936) – §2 prohibited price discrimination.
9. Fair Trade Law (1937)- Congress passed the Fair Trade Law that said that Sherman did not apply to minimum resale prices that a manufacturer sets for a retailer as long as the resale price minimum contracts had their effects in states that had state fair trade laws that allowed for minimum price fixing. (vert price fixing)
a. Fair Trade Laws Repealed (1975)
10. Socony Vacuum (1940) – Socony was a Sherman 1 case that held that certain types of agreements between competitors are illegal per se—that they were unreasonable per se and there was no need for an investigation why the people entered the agreement.
a. Incl: Price fixing/market division/output agrmt between competitors.
11. Clayton 7 Amended – 1950
a. Applies now to horizontal/vertical/conglomerate mergeres
12. Earl Warren becomes Chief Justice (1954)
a. Warren Court/ Market Restriction Era (1956- 1973) – an era where the court did not believe that the market disciplined large firms.
13. Chicago School of Antitrust Economic (1974- Present) –
a. Court trusts the market as a disciplinary force—allowed for more freedom of business decision.
14. Hart-Scott Rodino Act (1976) – (Amended Clayton 4)
a. Requires ‘premerger notification’ when large firms merge.
i. DOJ has 90 days to bring a challeng
b. Gives the state AGs the right to bring civil treble damage suits on behalf of consumers injured as the result of violation of the Sherman or Clayton Acts.
15. US Steel Case (1977) –
a. Narrowed Sherman 1 definition of restraint of trade

iii. Enforcement and Jurisdiction
1. USDOJ- criminally enforces Sherman 1 and 2/ Clayton 3 and 7. (DOJ does not enforce Clayton 2, a.k.a, RPA.)
a. Fines of up to $350k for an individual and $10m for a corporation.
b. Violati

r damages suffered by anyone as a result of raising market.
b. Midcal Aluminum –
i. Private parties who are complying with a state law that reduces competiton in a market, are immune under Sherman act if state is engaging in active supervision.
ii. Local govts have immunity for actions with anti-competitive effects that are clearly authorized/clearly foreseeable consequences of state act.
iii. Political Action Doctrine-
1. Stems from right to petition the govt for redress
2. private parties are immune from application of the Sherman act when they are engaged in petitioning govt for action
3. One Exception: Sham
a. If the defendant is not petitioning govt for purpose of getting a particular outcome, but instead is using process of petition govt to intimidate or wear down competitors, then no PA exemption applies –
i. CA Motor Transport (SCT 1972)
ii. Here, repetitious fraudulent representation before the state government agency.
iii. Applies to frivolous lawsuits too. 1 likely enuf.
4. Cases:
a. Noerr (SCT 1961) (Railroads lobbied state legislature to shut down road-building bill)(used deceptive ads)
i. Held: petitioning the govt is a protected activity, lies or no.
ii. Liability under Sherman would be penalizing a constitutional right
b. City of Columbia v. Omni Outdoor Advertising (SCT 1991) (Columbia Outdoor Advert, with 95% of billboard market conspired with city council to prevent Omni from putting up competing billboards)
i. Held: Noerr immunity applies here.
ii. No ‘conspiracy/bribery’ exception to Noerr.
iii. Zoning laws tend to have anticompetitive consequences (but are w/n state/local pwr)
c. Allied Tube v. Indian Head (SCT 1988) (To prevent NFPA from accepting plastic tubing for elec. Wiring, Steel interests packed the vote, spend 100K$, etc, and prevented acceptance of plastic tubing)
i. A member of an association, any bylaw is considered to be an agreement with other members, per AT laws.
ii. Almost always include not only competitors, but also traders in vertical relationships to each other.
iii. Rule of Reason applies. There are PCJ’s, so no per se treatment
iv. Where economically interested parties are making determination, assumption is that std is unreliable and illegal under ‘foreshortened’ rule of reason.
v. To avoid foreshortened analysis, you have to have an unbiased procedure, where interested parties don’t have a vote.
vi. ‘Indirect political action exemption’ applies, but only where context was public, and nature of activity was commercial.