Jan 10, 2022

Overview
- Sherman Act Section 1 and 2
- Clayton Act Section 7

Jan 12, 2022

Introduction to Antitrust Law

Criminal Antitrust = DOJ

- Criminal Sanctions are reserved for Sherman Act 1 violations
Civil Antitrust = DOJ or FTC
- Civil Remedies: government injunctions, divestitures, mandatory IP licensing, restitution,
OR for private plaintiffs → treble damages, attorney’s fees, injunctions, divestitures

● Leniency Program: First company that admits to conspiracy to the DOJ is safe from
damages. If you’re not the first company in, and you are price fixing in another market,
you can admit to the first charge with some leniency and the second for full.
○ Strategy can be used when the price fixing situations are not equal (the second
situation would amount to much greater charges) or there were employees
involved in both that you want to negotiate for pleas.

United States v. Andreas 6: Companies conspire to fix pricing on lysine. Also agree to
purchase unsold units from each other. Homogenous product + colluded prices = PRICE
FIXING

Things to look for in markets that might indicate collusion: transparent pricing

Brunswick Corporation v. Pueblo Bowl-O-Mat, Inc. 44: Corporate giant buying failing bowling
alleys. Plaintiff claims that the bowling alley mergers were harming the market through
monopoly. Section 7 of Clayton Act prohibits mergers whose effect “may be substantially to
lessen competition, or tend to create a monopoly.” Court found that there is no antitrust injury
because you can’t claim damages for mere competition- antitrust laws were not made for this.
- What is the market here? Bowling center

1. Antitrust injury two-prong test

a. Injury has to flow from some antitrust law
b. Must be type of injury that the antitrust laws were designed to protect

Collusive Anticompetitive Effects: Intentional actions to control market production.

Exclusionary Anticompetitive Effects: Market driven. Company limits competitors' access to

market necessities or access to markets to eventually drive them out. Once gone, the remaining
company can raise prices.
JTC Petroleum Co. v. Piasa Motor Fuels, Inc. 51: Geographic market for asphalt (limited to 70
miles). Applicators colluded for price fixing. Remaining applicator did not. As a result, applicators
disadvantaged standalone. Legal option: exclusive contract for application services. Unlawful
route: exclusionary behavior. Applicators compensated producers for refusing to deal with
standalone.
- The money used for bribes is seen as an investment in future sales when the price fixing
dominates the market.
- Term for standalone: Maverick or Disruptor - someone who can discipline the market
through change outside of the norm

Fungible Service/Good: Homogenous

Effective Antitrust Regimes

- Minimize over-deterrence
- Watch out for false positives - costly to consumers
- Minimize under-deterrence
- Watch out for false negatives (letting bad deals through) - especially harmful in
markets that won’t self-correct
- Authorize enforcement only when superior to market solution
- Create enforcement scheme that is easy and cost-efficient to administer

Can markets self-correct? Maybe. Kind of the issue now.

Ideologies

Structuralists
- Structure, conduct and market performance intertwined
- Skeptical that concentrated markets could perform competitively and efficiently
- COncentrated Markets necessarily spawn anticompetitive effects
- Skeptical about efficiency claims
- Plaintiffs more successful
Chicago School
- Consumer welfare standard
- Markets self-correct
- Monopoly will invite entry and erode
- Entry conditions are easy
- False positives are more harmful than false negatives
- Markets unfettered by regulation will be most efficient
- Trends toward concentration usually reflects more efficient, more desirable market
structure
- Plaintiffs less successful
Harvard School
- More interventionist than Chicago
- Favor balanced, practical solutions
 - Oligopolists take into account responses of rivals (game theory)
- Markets don’t always self-correct
- Entry isn’t always easy
- Exclusion is an important concern
- Buyer information is imperfect
Neo-Brandeis
- Bigness is a curse
- Reinvigorate antitrust enforcement
- Return to structural conduct performance standard
- Ditch consumer welfare standard

Jan 19, 2022

*review slides*
Sherman Act § 1
Concerted Action Among Competitors
- Anticompetitive Effect (“a restraint of trade”)

Main goals of Current Law:

- Prevent acquisition, maintenance, exercise of market power
- Firms exercise market power when they reduce output or otherwise limit competition to
profitably increase price above competitive level
- Raising price above competitive level is shorthand for a range of competitive harms

Sherman Act 15 U.S.C. § 1 - Trusts, etc. in restraint of trade illegal; penalty

- Restricts anti-competitive trade

- Addresses only “concerted” activity, as opposed to the unilateral actions of a single firm,
which are governed by other antitrust statutes.
- Corporation fine: $100,000,000, Individual fine: $1,000,000 and/or 10 years
imprisonment

Board of Trade of City of Chicago v. United States 104: CHI board of trade sets mandated
pricing for to-arrive grain (grain on deck for sale) which could not change until the market
reopened. *Setting a price is not always price fixing, sometimes allowed for procompetitive
justifications*
Analysis steps:
1. Whether restraint imposed is meant to merely regulate and thus, promote competition or
whether it would suppress or even destroy competition. If you can think of a reason for
why restriction is procompetitive, then there can be a deeper analysis.
a. Rule of Reason: Nature, Scope, Effect → If positive, Court considers balancing
between positive for market and restriction negatives
i. For scope, consider the market power of the people imposing the
restraint.
ii. Pg 121 FN 59: Modern use/understanding
Per Se Rule: Total prohibition for kinds of conduct perceived as variants of price fixing
(agreements to restrict output, divide markets, and collusive group boycotts). PRICE FIXING
WITH NO SOCIETAL BENEFIT/VIRTUE. SO PLAINLY ANTICOMPETITIVE.

United States v. Trenton Potteries Co. 111: Argued that price setting should be allowed
because it was a reasonable price. RULE: Price setting cannot be reasonable → Not an
exception to the sherman act. Per se.

United States v. Socony-Vacuum Oil Co. 115: Further defined price fixing to include an
agreement to buy (price is immaterial). Condemns all forms of price fixing → Weird tension with
Chicago Board. Per se.

Inter-Brand Competition v. Intra-Brand Competition

Jan 24, 2022

National Society of Professional Engineers v. United States (1978) 125: Society of

engineers included in their bylaws that price could not be discussed until an engineer was
selected for a project. This form of price fixing was based on the argument that when price is
considered, there is an adverse effect on public health and safety. Professional services may
differ from business services BUT the equation of competition with deception is too broad. S.C.
Affirmed. The result was just a striking of the rule.
- Under a rule-of-reason analysis, the likely pro-competitive and anticompetitive effects of
a trade restraint are considered on a case-by-case basis.
- Society is a combination (not conspiracy which would be per se unlawful) → Prong 1 of
Sherman Act
- If you see a learned profession, ask yourself if they should get more deference before
saying per se unlawful.

Broadcast Music, Inc. v. Columbia Broadcasting System, Inc. (1979) 132: ASCAP and BMI
issue blanket licenses to copyrighted music at fees negotiated by them. CBS said it was per se
unlawful price fixing. Reverse and remand. Output enhancing → shows reasonableness
A. Not per se restraint of trade. Very high bar.
B. Lower courts found no impediment preventing direct dealing between television networks
if they so desire.
C. Not naked restraint of trade but instead accompanies the integration of sales, monitoring,
and enforcement of copyright use. → Copyright market necessity
D. ASCAP made a market, not imposed on an already existing one (beauty and the beast
rule → Something that wasn’t there before = probably not per se)
E. Needs to be harshly analyzed under rule of reason but the Court was not ready to claim
it was per se price fixing. Too many variables.

Procompetitive Reasons: Increase output, created new product/market, lower transaction costs
Transaction Costs: Cost assumed from doing business. Limiting transaction costs = higher
amount of transactions.

RoR Considerations:
- What’s enough evidence to shift the burden to the defendant?
- When will courts allow plaintiffs to infer
- What defenses are cognizable?
- What amount of procompetitive evidence can shift the burden back to the plaintiff?
EXAM: if Sherman 1, go through burden on defendant, then shift to burden on plaintiff, then
analyze court’s attempt to balance procompetitive v. anti effect on competition

National Collegiate Athletic Ass’n v. Board of Regents of the University of Oklahoma

(1984) 185: NCAA negotiated contracts with limited networks to broadcast college football
games. Some schools joined CFA which tried to license with NBC. The NCAA threatened legal
action and CFA members did not pursue the contract. Horizontal restraint of trade (price fixing)
and output limitation.
Rule of Reason Analysis
1. Market amateur athletic competition
2. By fixing a price for television rights to all games, the NCAA created an unreasonable,
anticompetitive price structure.
3. NCAA argues that they have no market power
4. Another consideration → if live attendance falters because of televised performance, the
market shouldn't be used to continue a dying industry. There should still be economic
darwinism.
NOTE: To find RoR instead of per se, you need to show that a combination occurred to offer
services. For engineering above, combination wasn’t necessary to provide professional
services.

There is a benefit to the NCAA as a moderator BUT they can’t overstep

Jan 26, 2022

California Dental Association v. Federal Trade Commission (1999) 199: Professional

organization of dental societies. They impose advertising restrictions on the truthfulness of
advertising (what members are allowed to advertise re quality of services). Court used new
analysis → Quick Look Analysis: Basic look at the restriction shows anticompetitive effects
(anyone with a reasonable understanding of supply and demand). Treated as abbreviated RoR.
- Note: Economic reasoning and circumstantial evidence might be sufficient to trigger a
quick look.
- TAKEAWAY: Deciding between RoR, per se, and quick look is not bi/tri nary, kind of a
gray analysis.
FTC v. DOJ: When FTC brings a complaint, it can be brought in federal (where DOJ files) or
administrative. ALJ, in administration, gives a report to the commission (which has to authorize
the complaint before ALJ sees it so they’re already on board. After the commission sees and
approves again (merger is usually dead by now), parties can appeal in any circuit court they
want. Being able to choose the circuit court is a benefit of the administrative court.

Polygram Holding, Inc. v. Federal Trade Commission (2005) 217: Two companies agreed to
split licensing for the release of a new album. In anticipation of the release, the companies
agreed to restrict the sale of old albums (which had much of the same music) to bolster new
sales → Price Setting
- To avoid liability, defendant must identify some reason restraint unlikely to harm
consumers or identify competitive benefit

What qualifies as per se illegal:

- Agreements to price fix, bid rigging, group boycotts

Jan 31, 2022

Sherman Act Section 1 - Concerted Action (an agreement)
Separate economic actors pursuing separate economic interests conspire under sec 1
- Activity within a single firm could be a violation under section 2

Brown Antitrust Case Note: Students are the product (input of experience to other students) and
purchaser (education)

Consider:
- For horizontal restraint cases, try to identify facts that could ifner an agreement between
market participants
- Was parallel pricing by competitors enough, or was the existence of “plus-factors” also
important
- What plus-factors do Courts tend to weigh the most heavily?

Distinguishing Concerted from Unilateral Action

- Sherman Act places special emphasis on concerted action
- In per se cases, proving agreement is sufficient for plaintiffs to prevail
- Aggressive Section 1 enforcement against per se unlawful conduct drove cartels into the
shadows
- Courts rely on circumstantial evidence

Unilateral and Collective Action

- Monopolist can legally restrict output to raise prices
- Vertically integrated firm acts lawfully when it sets the price its wholly-owned retail outlets
can charge for products it makes
- But firms agreeing to act together to reach same results violate Section 1 and risk
criminal liability
Copperweld Corp. v. Independence Tube Corp. 282: A wholly owned subsidiary and its
parent company are incapable of conspiring with each other in violation of § 1 of the Sherman
Act. Section 1 prohibits agreements or conspiracies between separate entities that result in
unreasonable restraints of trade. Due to the separate-entity requirement, § 1 does not reach the
coordinated conduct of a corporation and one of its unincorporated divisions. A corporation and
its unincorporated divisions are functionally the same economic actor, and any agreement
between a corporation and its unincorporated divisions constitutes unilateral action.

Colluding firms have to solve three cartel problems

1. Researching consensus on terms of coordination
2. Detering cheating on consensus
3. Preventing new competition
Solutions
- Reaching consensus: by identifying terms of coordination such as prices each firm will
charge
- Deterring deviation (cheating): creating a method of detecting cheating and means of
punishing cheating → Lysine case where colluders had to purchase spare to level out
costs to participators
- Preventing new competition: by making entry difficult. Might not need to do anything if
entry barriers are high.

Development of Conspiracy Law /

Joint Ventures
- Form immunized overt agreement with rivals
- Can collude safely if authorized by government (COPA hospital mergers)
- Lobbying is effective toi achieve this
- Form overt agreements supported by reasonable business justifications
- Joint ventures are publicly announced
- Form illegal agreements covertly with competitors (lysine cartel)
- Can be hard to hide evidence of conspiracy
- Must be careful to avoid creating evidence of the cartel
- Collectively adopt “facilitating practices”
- Identify forms of conduct that fall outside per se ban, but which still facilitate
coordination

Texaco Inc. v. Dagher: Rivals (Texaco and Shell) combined refining and distribution into a new
entity (Equilon). JV sold gasoline in the Western United States (distinct brand names). Rivals did
not compete in relevant markets (did compete in other markets). Joint ventures have discretion
to determine prices of the products it sells → consider whether the collusion is to market a new
product

Needle, Inc. v. National Football League (canvas): NFLP granted nonexclusive licenses to
petitioner and other vendors. Then, teams authorized the NFLP to grant exclusive licenses.
Petitioner sued for concerted action - defense claimed they were a single entity. Question is
whether NFLP a single entity or contract/combination?

There is Combination if there is a JOINING of separate decision makers

EXAM: Revisit the idea of ASCAP BMI where while there was a blanket license, there was still
competition among the artists to get people to play their music. In Needle, there is a joint
venture to allow for the exclusive sale of competing products. This is WAY BEYOND their
abilities.

Joint Ventures Clues Textbook pg. 157-158

Feb 7, 2022
Distinguishing Concerted and Unilateral Action

Conscious Parallelism: if there are sufficiently few competing firms, they might try to coordinate
to achieve supracompetitive prices simply by anticipating rivals’ moves

Intra-enterprise Conspiracy
Hub and Spoke Conspiracy: Centralized corporation that runs a conspiracy for surrounding
companies (think book publishers that sell to amazon). Example on pg. 320.

Circumstantial Proof to Establish a Civil Agreement

Interstate Circuit, Inc. v. United States 316: Under § 1 of the Sherman Act, an agreement to
participate in a conspiracy may be inferred from the course of conduct of the alleged
co-conspirators. Movie theaters demanded distributors limit their distribution/set. There was no
direct evidence but court found that concerted action was contemplated and invited that the
distributors gave adherence to and participated in which was enough.

- Court may apply “concerted action” label to interfirm coordination accomplished by

means other than direct exchange of assurances
- Courts may infer agreements from circumstantial proof suggesting that challenged…
- Not enough to show recognized interdependence and mimicked competitor’s conduct
- Additional evidence beyond parallel conduct (plus factors) required

Monsanto Standard of Proof: there must be direct or circumstantial evidence that reasonably
tends to prove that the parties had conscious commitment to a common scheme

Matsushita Electric Industrial Co. v. Zenith Radio Corp. 327: Plaintiffs alleged that 20
Japanese companies set prices artificially low and once their prices push US competitors out,
they would price set to make up for lost profits. 1) need to show evidence that the alleged
conspirators acted independently 2) you can’t argue on something that hasn’t happened in
court.
When Sherman Act applies internationally:
Made and sold in foreign country: No
Made and shipped to US for sale: Yes
*Some connection to the product entering the US*

Bell Atlantic Corp. v. Twombly 340: Mini companies (resulting from the breakup of AT&T) were
limiting competition with regional companies and then not competing. Court found that
1. To state a claim under § 1 of the Sherman Act, the complaint must contain enough
factual material to suggest that an agreement existed between the defendants
2. To prove an illegal conspiracy under § 1 of the Sherman Act, the plaintiff must introduce
evidence that tends to exclude the possibility that the alleged conspirators acted
independently.

Synthesizing Plus Factors

1. Factors that tend to distinguish agreement from parallel conduct short of an agreement
a. I.e. meetings, phone calls, some types of conduct difficult to understand absent
an agreement (can’t rationalize it without collusion), deviation from past practice
2. Factors that suggest industry is conducive to agreement
EXAM: might be enough to prove violations if there are enough of the factors
below! In general, these are harder standards to argue.
a. Industry features
b. Prior history of coordination
c. Rational motive to conspire
d. Aspect of market performance and conduct that suggest firms have solved their
cartel problems and are exercising market power
e. Factors offering reason to think that, if firms are exercising market power, they
are doing so in a coordinated manner

Most Favored Nation Clause: If a company gives someone a good deal, they have to
reciprocate to other companies. Apple got this for ebooks based on the good prices amazon
got.

Feb 9, 2022
Absent
Information Exchanges

Feb 14, 2022

No Poach Agreement: Companies will not impede on other company’s employees

Leniency Program on Ringleaders: Ringleaders typically can’t get leniency BUT agencies treat
conspiracy as a meeting of the minds so there is no actual ringleader → this ensures that
ringleaders are not disincentivized from whistleblowing
Wage setting cont. (started Feb. 9)
Facilitating Practices
- Devices that fall short of reaching a consensus on price and output but that help firms
approximate the rests of an express arrangement
- Facilitate price, output, and quality coordination
- May help firms achieve a consis on terms of coordination
- May help firms detect and deter coordination
- May discourage firms from competing aggressively against rivals
- Examples
- Information exchanges
- Trade association meetings
- Regular contact between executives at competing firms

Williamson Oil: Sharing information about prices and other sensitive terms is not illegal per se
but → serves as a plus factor that the finder of fact can rely upon, added to parallel pricing, to
infer an illegal conspiracy to fix prices
- Distinguish between inferring an agreement to fix prices (which is how the issue was
framed in Williamson) and attacking an agreement to exchange information as
unreasonable on a stand-alone basis because it leads to higher prices

American Column & Lumber Co. v. United States: Competitors organized in a trade
association violate the Sherman Act by sharing and analyzing competitive information if the
purpose and effect of the activities are to restrict competition.
- Brandeis Dissent: How can competition be restrained if there’s no binding agreement?

Maple Flooring Manufacturers Association v. United States: Competitors may meet for the
purpose of exchanging information about products and market conditions without violating
antitrust law.
- Focused on impact of competition → Competition does not become less free merely
because the conduct of commercial operations becomes more intelligent through the
free distribution of knowledge of all the essential factors entering into the commercial
transactions

Feb 16, 2022

Globalization of Antitrust

Conflicting substantive law leads to international tension and risks a “most restrictive” approach
to global antitrust

Extraterritoriality: When a jurisdiction may apply their domestic law to outside jurisdictional
dealings
- Based on the Effects Test: "minimum contacts" due process requirement for personal
jurisdiction could be satisfied on the basis of the "effects" that out-of-state conduct had in
 the forum state. The Court held that a California court could assert jurisdiction over a
Florida publisher for publishing an article defaming a California plaintiff when the
defendant's act was an intentional action expressly aimed at California and that the
"brunt of the injury would be felt" by the plaintiff in California.
- Domestic Effects Exception: To apply Sherman Act to non-import
trade/commerce, the conduct must be direct, substantial, reasonably
foreseeable

Industrial Policy: Antitrust used inappropriately as a tool for countries to advance their national
economic interests. → CHINA

Different Substantive Approaches

1. Dominance: While the U.S. and E.C. both recognize the need for market power for
anticompetitive effects, U.S. decisional law considers a firm with under 70% market
share unlikely to be a monopolist. The E.C. finds a presumption of dominance when
firms have shares greater than 40%.
2. Excessive Pricing: Some developed competition regimes (US, Canada, Australia) do not
prohibit excessive pricing in the absence of exclusionary behavior. The E.C. recognizes
excessive pricing as an abuse of dominance.
3. Other Examples: Approach to exclusive pricing contracts, “portfolio effects” doctrine in
the E.C., approach to minimum resale price maintenance.

Remedies → usually forms a “most restrictive” enforcer dynamic

Feb 21, 2022

Municipal Bonds
- Allows for people to take money that would be otherwise stagnant and invest it → allows
an opportunity for violations

Coded Conversations:
- You have a little bit of room there → You can lower your bid and still win
- That;s gonna put you about a nickel short
- Q: What did you do as a response to his bid of 5.04 percent?
A: I brought his bid down to 5.00 percent.

- Isn’t it fair to say that you believed that by lowering… Steve’s bid to 5%, Steve’s bid was
still a fair price to pay?
- I don’t determine the fair price… the market does.

Introduction to Civil Antitrust

* Feels like you should review the slides/ quimbee the cases

Reining in Antitrust Plaintiffs: stems from Chicago School

- Antitrust Injury
 - Antitrust Standing
- Limits on damages

Assoc. Gen’l Contractors v. California State Council of Carpenter

Considerations
- Connection between the violation and the injury to the plaintiff, where the injury was
intended
- Nature of the injury, whether plaintiff is consumer or competitor in relevant market
- Directness of the injury and whether the claimed damages are too speculative
- Existence of more direct victims
- Potential for duplicative recovery and whether apportioning damages would be too
complex

Illinois Brick Co. v. Illinois

Rule: A plaintiff must be a direct purchaser from an antitrust violator in order to sue for treble
damages under § 4 of the Clayton Act.
- Illinois Brick Company (Illinois Brick) (defendant) was a manufacturer of concrete bricks
operating in the Chicago area. Illinois Brick sold bricks to masonry contractors, who then
submitted bids to general contractors for specific portions of larger construction projects.
The State of Illinois (plaintiff) awarded construction projects to general contractors who
accepted bids from masonry contractors using bricks purchased from Illinois Brick. As a
result, Illinois was an indirect purchaser of Illinois Brick’s products. Illinois believed that
an unlawful price-fixing conspiracy by Illinois Brick had caused Illinois to be overcharged
on construction projects by a significant amount. Illinois brought a lawsuit, seeking treble
damages under § 4 of the Clayton Act. Illinois Brick moved for summary judgment on the
theory that indirect purchasers were not eligible to sue under § 4 for overcharges. The
court of appeals rejected the motion, and Illinois Brick appealed.
- SCOTUS limits (federal) damages to direct purchasers
- Concerned about massive efforts to apportion damages among different groups
of purchasers
- This approach will encourage “vigorous private enforcement of antitrust laws”

Apple v. Pepper
Rule: A customer who directly purchases a good from a seller may sue the seller for alleged
antitrust violations if an upstream manufacturer or supplier set the price of the good.
- In 2008 Apple Inc. (defendant) launched its App Store, an electronic store where iPhone
owners could purchase iPhone applications, also known as apps. Apps for the App Store
were created by independent developers. The developers set the retail prices at which
their apps would be sold through the App Store. Apple required all apps to have sale
prices ending in $0.99 and received a 30 percent commission on each app sold. In 2011
four iPhone owners (collectively, the consumers) (plaintiffs) sued Apple under § 4 of the
Clayton Act, alleging that Apple monopolized the market for the sale of apps and used
its monopoly power to charge customers noncompetitive prices in violation of § 2 of the
Sherman Act. Apple moved to dismiss the case, claiming that the consumers were not
 direct purchasers from Apple. Apple cited Illinois Brick Co. v. Illinois, 431 U.S. 720
(1977), in which the United States Supreme Court held that indirect purchasers may not
sue a seller under antitrust laws. Apple argued that under Illinois Brick, a customer could
only sue the company that set the retail price for the good or service. The United States
Court of Appeals for the Ninth Circuit held that the consumers were direct purchasers of
apps from Apple and therefore could sue Apple for its alleged antitrust violations. Apple
appealed.
- Overrules Illinois Brick without saying so.

Calculating Damages
Collusion (overcharges)
Exclusion (lost profits, changes in going concern value, lost growth opportunities)

Feb 23, 2022

ABSENT

When one suit is filed→

PRE v. Columbia (1993): Two-prong test for Sham Litigation (MUST PROVE BOTH TO GET IT
THROWN OUT) → Sham is harder to prove in stand alone litigation
1. Litigation being challenged is “objectively baseless”
a. No reasonable litigant could realistically expect to succeed on the merits
b. Probable cause precludes finding of sham litigation
2. Subjective motivation to injure rivals through baseless litigation
a. Use of government process- as opposed to the outcome of that process - an
anticompetitive weapon
Difficult standard: any remote hope of success sufficient
- Malice alone is insufficient

When more than one suit is filed → California Motor Transp. Co. v. Trucking Unlimited
- Far more serious implications
- Prosecutor Approach: Look for a pattern of filings for the purposes of harassment OR tie
the multiple filings into one larger antitrust issue (Walker Process Claim) \

Feb 28, 2022

Concerted Conduct Having Exclusionary Effects

Collusive: price fixing, division of markets, mergers of competitors

Exclusionary: Some boycotts, exclusive dealings, tying, predatory pricing
Intermediate Consequences: eliminate or impair rivals, block or impede entry or
expansion, increase cost of entry or information
Eastern State Retail Lumber: Boycott of retailer/wholesaler that sells to both retailers and
consumers. Retailers collude to not but from wholesalers who sell to the retailer/wholesaler.
Agreement organized through a trade association through a blacklist.
- You can decide to stop dealing with anyone BUT when there is a coercive influence
involved, that’s collusion
- Blacklist made it per se unlawful → Would probably be ROR today
Single Monopolist Profit Theory: Better to have one monopolist along the supply chain rather
than multiple

Fashion Originators’ Guild of America v. FTC (603): FOGA agreed to boycott retailers who
sold their pirated designs (held 38% of market at certain price point and 60% at higher price
point)
- Collusionary:
- Not advertise at retail level
- Limit allowable discounts
- Not sell at retail
- Regulate Sale days
- Exclusion:
- Boycott

Klor’s Takeaway: Harm to competitors is ok but if it also harms competition→ then there’s a
problem

Northwest Wholesale Stationers v. Pacific Stationery & Printing: Co-op sell supplies to
members who received a portion of profit at the end of the year. Are buying groups
exclusionary?
- DOJ decided that it will not object to “buying groups” that represent up to 35% of the total
volume of purchases in particular markets
- Silver v. NY Stock Exchange: ROR only available if cooperative provided procedural
safeguards sufficient to prevent arbitrary expulsion and to furnish a basis for judicial
review

Per se boycott:
- Joint efforts by firms (or firm) to disadvantage competitors by either directly denying or
persuading or coercing suppliers or customer to deny relationships the competitors need
in the competitive struggle
- Practices not justified by plausible arguments

United States v. Visa U.S.A, Inc. 612: Visa and Mastercard prohibited their banks from issuing
amex/discovery cards to customers. Never labeled boycott but there was a collusionary effort to
minimize competition.
- Relevant Market and market power
- Direct: merchants could not refuse to accept payments through mastercard or
visa, amex unable to persuade any bank to issue its card
 - Indirect: Visa share (47%), Masertcard share (26%), barriers to entry
- Barriers to entry: Indirect network effect: issuing banks are an important
distribution channel for cards to reach consumers → how many
merchants accept amex cards (cyclical results→ the more people carry,
the more merchants accept, the more people carry)
- Natural experiments are typically strong evidence → more restrictions in us and
less in europe, lower costs in europe = GOOD PROOF

Mar 2, 2022
Vertical Non-Price and Price Restraints

Intrabrand Competition: competition between competing dealers of the same product e.g. best
buy v. amazon selling samsung tv’s
Interbrand Competition: competition between competing manufacturers e.g. Sony v. Samsung
- Vertical restraints generally judged under ROR, horizontal per se treatment → this is a
broad generalization under federal law but applies pretty well (on exam, specify that this
isn’t the be all end all approach but generally applicable)
- Assumes retailer and manufacturers on the same team, rather than treating them as
separate competitive force

Bork’s Antitrust Paradox: Vertical restraints should be completely lawful. Vertical agreements are
procompetitive and encourage lower prices. (Chicago School)
- Procompetitive Theories
- Enhances retailer services by removing incentives for “free riders”
- Assumes all consumers want lots of services; ignores inframarginal
consumers
- Example: using local bookstore to find things and then finding comparable
product on amazon. Vertical restraints would set a minimum price so
amazon couldn’t draw you away from the bookstore.
- Enhances retail services by implicit contracts
- Eliminates need for detailed contracts
- Creates incentives to compete on services
- Increases retailer distribution (since make more money) → encourages retailer to
carry a product because other carriers won’t undercut your pricing
- Creates incentives for retailers to maintain adequate inventories
- Anticompetitive theories
- Facilitates downstream collusion
- Creates cartel of retailers
- Facilitates upstream collusion
- Use of RPM (resale/retail price maintenance) to reduce secret discounting
to retailers
- May be used by upstream suppliers to exclude rivals
- Use of RPM to reduce retailer incentives to stock competing products
(Hauser isn’t convinced)
 - May be used to enhance oligopoly pricing by suppliers
- May be used by a dominant retailer to forestall retailer innovation and cost-cutting
- RPM precludes price competition from more efficient retail rivals (e.g.
brick and mortar retailers v. internet sellers)

Continental T.V. v. Sylvania: Vertical non-price restraint (geographic restraint). Company

reduced number of franchisees to attract “more aggressive and competent retailers”
- Location clause limiting geographic area
- Non-price restriction
- Output expansion from 1-2% to 5%
- Quimbee: Vertical restraints challenged as antitrust violations should be assessed under
the rule-of-reason analysis. The rule of reason is the standard used to analyze most
anticompetitive practices. This standard allows a trier of fact to consider both the
pro-competitive and the anticompetitive effects of a challenged restraint before deciding
whether an antitrust violation has occurred. In United States v. Schwinn & Co., 388 U.S.
365 (1967), the United States Supreme Court held that a per se antitrust violation occurs
when a manufacturer sells a product to a distributer subject to customer or location
restrictions on the product’s resale. In this case, Sylvania’s practice of restricting resale
locations for its television sets clearly falls within the language of Schwinn and would
constitute a per se antitrust violation under that standard. However, a vertical restraint,
such as a restraint on location for a manufacturer’s own products, generally reduces
intrabrand competition in order to increase interbrand competition. Intrabrand
competition is reduced by a vertical restraint, because a location restriction reduces
competition within the manufacturer’s own brand. Interbrand competition, on the other
hand, is increased by a vertical restraint, because the manufacturer can use a location
restriction to establish more efficient distribution practices. Thus, the per se standard set
forth in Schwinn is inappropriate for vertical restraints and is overruled. Vertical restraints
are capable of both pro-competitive and anticompetitive effects, and the rule-of-reason
standard allows a trier of fact to have greater flexibility in determining whether a specific
vertical restraint is inconsistent with antitrust law. Therefore, the appropriate standard
here is the rule of reason
- Effects of Sylvania: Non-price vertical restraints judged under ROR; largely
legal in federal court

Leegin Creative Leather Products, Inc. v. PSKS, Inc.: An agreement between a manufacturer
and a distributor on the minimum price that the distributor can charge for goods is not a per se
antitrust violation. Under the Sherman Act, only unreasonable trade restraints are prohibited.
When a trade practice is challenged under antitrust law, the practice will generally be tested
under the rule of reason. Under the rule of reason, a restraint is analyzed to determine whether
the practice actually amounts to an unreasonable restraint on trade or whether the practice has
pro-competitive effects that outweigh any anticompetitive effects. However, some trade
practices have been proven to be so likely to produce anticompetitive effects that the practices
are deemed unlawful under antitrust law without consideration of the specific circumstances.
Such practices are referred to as per se violations. In Dr. Miles Medical Co. v. John D. Park &
Sons Co., 220 U.S. 373 (1911), the United States Supreme Court held that agreements
between manufacturers and distributors to set a minimum price for goods at resale were per se
antitrust violations. However, it is now recognized that there are genuine pro-competitive
benefits created by vertical-price agreements, and Dr. Miles is no longer good law. For example,
resale-price limitations can foster competition among retailers of the same brand by
encouraging retailers to compete on elements other than price that will benefit the consumer,
such as customer service. Additionally, without resale-price limits, some retailers may price
products lower than competitors by not investing in customer service and product
demonstrations. In summary, it is no longer the case that minimum-price agreements for goods
at resale tend to always restrict competition, and application of the per se rule is no longer
appropriate. In light of the decision to overturn Dr. Miles and assess resale-price maintenance
agreements under the rule of reason, the decision of the court of appeals is reversed and
remanded.

Mar 7, 2022
Tying and Exclusive Dealing

U.S. v. Apple: Apple facilitated horizontal price fixing between publishers. Vertical usually
applies ROR but due to their facilitation of the publishers, per se was appl;ied. Apple organized
meetings and used a MFN clause to monitor adherence.
- MFN Clause: Can be used to monitor price fixing/ alert other distributors on a horizontal
level BUT not necessarily a violation and has procompetitive justifications

Tying: Selling one product on the condition that you purchase another (even when the second
product could be found for a lesser price elsewhere)
- Historically treated as per se
- IBM Case: Machine tied with punch cards that go in them. IBM argued that it was
necessary to guarantee proper functioning. Court wasn’t persuaded.

Technological Tie: Product doesn’t work with other supplementary products (apple chargers vs.
off brand ones that do not charge well) → Antitrust law generally permits these

- 3rd Base Tying: Apple releases a key to unlock the iphone screen that is only available
to certified repair centers. Don’t necessarily need the key to work the phone but do need
it for continued maintenance.

Economic Tie: Printer costs $100, but printer with toners is also $100 → some checks on this
provided by tying and bundling law

Exclusive Dealing: I will only sell you A if you only buy A from me
- ROR because… Procompetitive reasons: assurance of supply, long-term planning,
market predictability

Antitrust and Healthcare

1. Providers compete for inclusion in insurance networks → increased patient volume for
the provider
a. Providers get to be in network if they agree to a reduction in reimbursement rates
and submit to utilization review
 b. Rates determined by bargaining leverage (value add of their network inclusion),
willingness to pay (WTP) economic modeling
2. In-network providers compete for a health plan’s enrollees
a. Difficult for and out-of-network to compete against an in-network provider
b. Competition largely based on non-price factors
i. Location, reputation, and quality

Jefferson Parish - The Concurrence test

1. Seller must have power in the tying product

2. Substantial threat that the tying seller will acquire market power in the tied product
market
3. “Coherent economic basis” for treating the tying and tied products as distinct

Mar 16, 2022

§ 7 Clayton Act
“Prohibits acquisitions whose effects may be to substantially lessen competition, or to tend to
create a monopoly”
- Engaged in commerce / activity affecting commerce
- In the relevant product market
- Any section of the country (geographic market)

Remedies: injunctive relief to block merger, treble damages for private plaintiffs

Mergers & Acquisitions

- Union of previously separate enterprises
- One firm purchases stock or assets of another firm

Buyer - Acquiror - A-Side

Seller - Acquiree - B-Side - Target

Horizontal Mergers

- Procompetitve: reduce costs, improve products, replace ineffective management

- Anticompetitive: Unilateral effects (closeness of competition between merging parties),
coordinated effects (change in market structure)
- Competitively Neutral Motivations: tax inversion (changing locations for tax incentives),
ego and empire building
- Tension: Mergers may simultaneously create an incentive to exercise market power AND
generate efficiencies that incentivize firms to reduce prices

Structure Conduct Performance Paradigm (Pre-Chicago) (nka Structural Paradigm): Strong

relationship between market structure, firm conduct, and performance
 - Chicago needs you to show why it’s going to change the market, not just that it’s
concentrated

Brown Shoe v. United States (1962): In a fragmented market, the government may block a
merger that achieves a very small percentage of market control if the merger reflects a potential
trend toward concentration in the industry.

U.S. v. Philadelphia National Bank (1963): A merger that significantly concentrates

competition and creates a firm with an undue share of the relevant market is presumptively
unlawful under the Clayton Act.

Mar 28, 2022

EXAM: 3 questions (30% section 1 price fixing bid rigging case (per se ROR, violation?,
recommendations) (30% sec 2 monopolization - market definition, competitive effects,
efficiencies, market power) (40% merger question)

HHI: (DO IN EXAM) Figure out who’s in the market, take their market shares, square them and
add them all up. Find sum of entire market HHI. Then add combining companies market shares
before you square and redo calculation. Compare the two numbers. Change in numbers is the
delta.

Unconcentrated > 1500

Finish in slides!!!!!

- 4,000 word limit, should be 5-6 hours

- Guest speakers: section 1 information sharing (don’t need to review), oracle speaker
could be good to mention (review using market definition) → don’t really matter

United States v. General Dynamics (1974): Market shares alone do not entitle plaintiff to a
presumption of harm.

United States v. Baker Hughes, Inc. (1990):

- Lumpy sales make for less post-merger collusion because the incentive is much higher.
If the price for a product is so high that one company cheating on a price fixing scam
changes their revenue 25%, that’s a huge deal and they will. → also encourages entry
because huge sale price way increases incentive to enter the market
- Considerations for Market share statistics on page 702
- Three step Baker Hughes Burden-shifting analysis: EXAM
1. Plaintiff’s prima facie case
a. Highly concentrated market
b. Significant increase in concentration
2. Defendant has opportunity to rebut prima facie case or show
merger-specific efficiencies
 a. Too easy for government to win merely by showing increase in
concentration
b. Defendant can show prima facie case inaccurately predicts the
relevant transaction’s probable effect on future competition
i. Government presented inaccurate or misleading market
shares
ii. Quick and effective entry
1. No requirement that defendant made a clear
showing that entry into the market by competitors
would be quick and effective
iii. Efficiencies → not enough alone
3. Balancing

FTC v. H.J. Heinz Co. (2001): structural presumption remains relevant today.

Prospective Merger Review: Hart-Scott-Rodino Act (1976): if size of transaction or party is of a

certain size, you have to file 4(c) (anything prepared in regards to the mergers presented to the
board of directors/officers) or 4(d) → agencies get a month to review, parties may choose to pull
and review the file to ease antitrust concerns, agencies may file a second request (sign that
there is trouble)
- If HSR filing, suing always happens after the second request.

UPE: Ultimate Parent Entity

2010 Merger Guidelines: mergers should not create/enhance market power or facilitate its
exercise
- Concerns
- Higher prices
- Lower output
- Less innovation
- Lower quality
- Less product variety (consumer choice)
- Worse service
- Analytical Process
- Defining the market (product market and geographic market)
1. Hypothetical Monopolist Test: Say someone was a monopolist over a
market and there is no entry - they are it. Could they possibly and
PROFITABLY impose a SSNIP (5-10% increase?).
a. When you get to a point where the SSNIP would be profitable,
then you have a market. Start narrow and keep expanding. Same
for geo market, instead of if there is a buyer substitution possibility,
it analyzes location for where you might find the next nearest
competitor.
- Unilateral / coordinated effects
- Entry
- Efficiencies
- Failures & Exiting Assets (companies that is going to go out of business but for
the merger, we would rather the merger go through)