Antitrust Outline

Antitrust Outline
1.     OVERVIEW
Sherman Act
Ø Section I®felony to engage in any unlawful contract, combination, or conspiracy in restraint of trade among the several states or with foreign nations.
Ø Section II®offense to monopolize or attempt to monopolize.
Ø Remarkable in its simplicity: only two very basic provisions.
w NO clear standards–congress passed the buck to the courts.
w About 90% of all acts filed today are filed under the Sherman act, and it has not really been amended since 1890.
Ø Key Distinction—Agreement?
w Section 1 talks about conduct involving more than one economic actor; and there must be an agreement between two or more independent actors for Sec 1 to kick in.
w Section 2 talks about unilateral actions by single firm (except for conspiracy, which is considered redundant with Section 1).
w This distinction is true of every antirust statute in the world, TK thinks.
– When he started teaching, only about ten statutes worldwide—Japan had one imposed by Macarthur, Germany had old dormant one.
– Today there are over 120 countries with antitrust legislation. EU treaty of Rome has sections 81 and 82, which draw the same distinction.
w  So first question for ALL section one cases is “is there an agreement?”
Ø Jurisdiction: basically unlimited.
w Technically confined to cases that meet the constitution test of “affecting or being in commerce,” but Court has said that the bounds of Sherman act jurisdiction is as broad as the constitution allows. So basically allowed jurisdiction in every case.
w Int’l jurisdiction. Clear jurisdiction for imports into the US, and the DOJ now takes the position that they have jurisdiction for conspiracy to fix prices for exports as well.
Ø Sherman Act written as criminal act. Only later is a civil jurisdiction added.
w The most important thing to learn, from a client’s perspective, are the criminal cases.
w But civil liability can be huge: with criminal penalties could end up paying out 6-7 times the actual damages.
w Treble damages are unique to America and to antitrust, though it is to some degree also incorporated in the RICO statute.
Clayton Act
Ø In 1914 congress enacted the Clayton act, which was intended to contain flat prohibitions against certain forms of conduct.
w Focused on exclusive dealing contracts. Included was notion of tying arrangements, like when I sell but only on conditions that you buy a second product from me.
w Section 2 of the Clayton act was designed to flatly prohibit certain forms of price competition, like driving price down to force rivals out of the market.
w Section 7 was the first attempt to deal with forms of mergers.
w Section 8 deals with interlocking directors. No one deals with this anymore.
Ø All these put into Clayton act as flat prohibitions, but as the bill worked through several compromised, they added to the end “where the effect may be substantially to lessen competition.”
w And thus it reintroduced much of the uncertainly it was meant to avoid, since courts would once again have to decide if the practice was anticompetitive.
w Section one better know as Robinson-Pactman act, the statute that amended it in 1936.
FTC Act
Ø The FTC act also passed. Thought to be independent of exec branch. Given its own statute to enforce—section 5. The FTC is the only agency able to enforce this
w       Section 5 declares unlawful any “unfair” competition. That’s all.
– Notion was that FTC would define what unfair through an adjudicative procedure.
w An ALJ would make a determination at a quasi