Federal antitrust policy : the law of competition and its practice / by Herbert Hovenkamp, Ben V. & Dorothy Willie Professor, University of Iowa, College of Law.
2011
KF1649 .H68 2011 (Map It)
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Details
Author
Title
Federal antitrust policy : the law of competition and its practice / by Herbert Hovenkamp, Ben V. & Dorothy Willie Professor, University of Iowa, College of Law.
Published
St. Paul, MN : West, [2011]
Call Number
KF1649 .H68 2011
Edition
Fourth edition.
ISBN
9780314210050 (hbk.)
0314210059 (hbk.)
0314210059 (hbk.)
Description
xxiv, 906 pages : illustrations ; 26 cm.
System Control No.
(OCoLC)726824995
Summary
Previous editions published : 3rd (2005) and 1st (1994).
Bibliography, etc. Note
Includes bibliographical references and index.
Series
Record Appears in
Table of Contents
Preface
v
Westlaw Overview
vii
pt. I
FOUNDATIONS: POLICY AND MEASUREMENT
ch. 1
The Basic Economics of Antitrust
2
1.1.
Price Theory: Economic Behavior and Perfect Competition
2
1.1a.
The Perfectly Competitive Market
3
1.1b.
Behavior of the Competitive Firm
8
1.2.
Monopoly
12
1.2a.
Price and Output of the Protected Monopolist
12
1.2b.
Monopsony; Output Effects; Policy Implications
14
1.2c.
De Facto Monopolies in Real World Markets
16
1.3.
Antitrust Policy and the Social Cost of Monopoly
17
1.3a.
Monopoly as a Status; Monopolization as a Process
17
1.3b.
The Deadweight Loss Caused by Monopoly
19
1.3c.
The Social Cost of Monopoly: Rent-Seeking
21
1.3d.
The Social Cost of Monopoly: Lost Competitor Investment
23
1.4.
Industrial Organization Theory and Economies of Scale
27
1.4a.
The General Case of Economies of Scale
27
1.4b.
Persistent Scale Economies, Natural Monopoly, Franchise Bidding and Contestability
32
1.5.
Less-Than-Perfect Competition
36
1.5a.
Product Differentiation
37
1.5b.
Price Discrimination
37
1.5c.
Oligopoly
38
1.5d.
Less-Than-Perfect Competition and "Second Best"
38
1.6.
Barriers to Entry
39
1.7.
The Troubled Life of the Structure-Conduct-Performance Paradigm
42
1.8.
The Increasing Importance of Transaction Cost Economics in Antitrust Analysis
46
ch. 2
History and Ideology in Antitrust Policy
57
2.1.
The Development of American Antitrust Policy
57
2.1a.
The Goals of the Sherman Act: Efficiency and Interest Group Explanations
57
2.1b.
The Common Law and the Federal Antitrust Laws
61
2.1c.
A Thumbnail History of Federal Antitrust Policy
65
2.2.
On the Role of Economics in Antitrust
69
2.2a.
Antitrust and Economics Before 1960
69
2.2b.
The Chicago School and Its Aftermath
71
2.2c.
Skepticism; Competitor v. Consumer Suits; Private v. Public Suits
73
2.2d.
Politics and Democratic Policy
77
2.2e.
Antitrust Policy in the Wake of the Chicago School
77
2.3.
On the Use of Economics in Antitrust
79
2.3a.
The Domain of Antitrust Economics
79
2.3b.
The Substance of Antitrust Economics
82
2.3c.
The Meaning of "Welfare," "Efficiency" and "Consumer Welfare" in Antitrust Economics
83
ch. 3
Market Power and Market Definition
87
3.1.
Introduction
88
3.1a.
Market Power Technically Defined
89
3.1b.
Market Share as a Surrogate for Market Power
90
3.1c.
Market Share as More Than a Surrogate; Independent Relevance of Market Share
91
3.1d.
The Relevant Antitrust Market
92
3.2.
Estimating the Relevant Market; The SSNIP and the "Hypothetical Monopolist"
92
3.2a.
Size of Hypothesized Price Increase
95
3.2b.
The "Profit-Maximizing" Increase; Critical Loss Analysis
96
3.2c.
Broader and Narrower Markets; General Irrelevance of Submarkets
97
3.3.
The Product Market; General Considerations
101
3.3a.
Markets and Brands; "Lock-in"
103
3.3a1.
Single Brand Ordinarily Not a Relevant Market; Kodak
103
3.3a2.
Lower Court Decisions Limiting Kodak
108
3.3a3.
Contract "Lock-in;" Franchisor Brand as Market
109
3.3b.
Substitutes v. Complements; Cluster Markets
110
3.3b1.
Relevant Market Consists of Substitutes
110
3.3b2.
The Limited Rationale for Finding "Cluster" Markets
112
3.4.
"Cross-Elasticity of Demand:" The "Cellophane" Fallacy and Its Consequences
114
3.4a.
Cross-Price Elasticities and Their Meaning
114
3.4b.
Cross-Elasticity of Demand in the du Pont (Cellophane) Case
115
3.4c.
Correcting for the "Cellophane" Fallacy
116
3.5.
Supply Elasticities; Foreign Imports
118
3.5a.
Foreign Imports and the Alcoa Case
119
3.5b.
Other Decisions Addressing (or Failing to Address) Supply Issues
121
3.5c.
Accounting for Elasticity of Supply: Market Inclusion or Low Barriers to Entry?
123
3.6.
The Geographic Market
123
3.6a.
Shipped Goods; Minimum Geographic Market
124
3.6b.
Stationary Goods and Services
126
3.6c.
Price Movements and Shipping Patterns
128
3.6c1.
Price Movements Generally; Asymmetry
128
3.6c2.
The Elzinga-Hogarty Test
129
3.6d.
Trade Area; Non-competition Covenants
130
3.6e.
Price Discrimination
131
3.7.
Computation and Interpretation of Market Shares
132
3.7a.
Revenue v. Units
133
3.7b.
Output v. Capacity
134
3.7c.
Product Durability and Power
135
3.7d.
Interpreting Market Share Data; Questions of Fact or Law
137
3.8.
Market Definition in the Justice Department Merger Guidelines
139
3.8a.
Product Market Delineation in the 2010 Guidelines
140
3.8b.
Geographic Market Definition Under the 2010 Guidelines
142
3.8c.
Calculation of Market Shares Under the 2010 Merger Guidelines
143
3.8d.
The "Cellophane" Fallacy and the Difference Between Market Delineation for Mergers and Other Practices
144
3.8e.
Conclusion; The Guidelines as a Policy Statement
145
3.9.
Alternative Methods of Establishing Market Power
146
3.9a.
Measuring Residual Demand Directly
146
3.9b.
Persistent Price Discrimination
147
3.9b1.
Price Discrimination and Intellectual Property
149
3.9b2.
Price Discrimination and Market Definition
150
3.9c.
Persistent Monopoly Profits; High Margins
150
3.9c1.
Monopoly Profits v. Accounting Profits
150
3.9c2.
Absence of High Accounting Profits
152
3.9c3.
The Problem of "Rents"
152
3.9d.
Market Power and Intellectual Property
153
pt. II
THE SUBSTANCE OF ANTITRUST
ch. 4
Antitrust Policy Toward Collusion and Oligopoly
158
4.1.
Introduction: The Basic Economics of Price Fixing
158
4.1a.
The (Virtual) Universality of Cartel Cheating
161
4.1a1.
Divergence Between Cartel and Single Firm Profit Maximization
161
4.1a2.
Cartel Cheating Strategies
162
4.1a3.
Detecting and Punishing Cheating; Cartel "Amnesty"
164
4.1b.
Competitive Fringe Firms
168
4.1c.
Internal Efficiencies of the Cartel
169
4.1d.
Cartels of Buyers
170
4.2.
Oligopoly, Cooperative and Non-cooperative
171
4.2a.
Non-cooperative Cournot Oligopoly
172
4.2b.
Cooperative v. Non-cooperative Oligopoly Strategies
174
4.3.
The Social Cost of Collusion
178
4.4.
Antitrust Policy Toward Oligopoly and Tacit Collusion
179
4.4a.
Attacking Oligopoly; The Turner-Posner Debate
179
4.4b.
Identifying Tacit Collusion and Facilitators; Policy Options
182
4.5.
Proving a Price or Output "Agreement" From Indirect or Circumstantial Evidence
185
4.6.
Reaching Oligopoly Behavior on Less Explicit Evidence of Agreement
190
4.6a.
Introduction; Incomplete Agreements
190
4.6b.
Challenging Facilitators Established by Agreement
193
4.6c.
"Unilateral" Facilitators; Basing-Point Pricing Schemes
194
4.6d.
Other Facilitators; 5 of Federal Trade Commission Act
198
4.6e.
Motions to Dismiss and Summary Judgment in Conspiracy Cases
202
4.7.
Intraenterprise Conspiracy
203
ch. 5
Joint Ventures of Competitors, Concerted Refusals, Patent Licensing, and the Rule of Reason
210
5.1.
Introduction: Naked and Ancillary Agreements Among Competitors
211
5.1a.
Distinguishing Naked From Ancillary Restraints; Question of Law
212
5.1b.
Why Multilateral Activity Deserves Closer Antitrust Scrutiny
214
5.1c.
Partial Condemnation; Less Restrictive Alternatives
216
5.2.
Joint Ventures as Market Facilitators
217
5.2a.
Joint Ventures: An Overview
217
5.2a1.
Potential Harms and Benefits
217
5.2a2.
The Two Sides of the Exclusivity Problem
220
5.2b.
Ventures Facilitating R & D, Advertising and Promotion; Ancillary Market Divisions
222
5.2b1.
Joint Ventures and Free Rider Problems
222
5.2b2.
National Cooperative Research Act
222
5.2b3.
Ancillary and Naked Agreements Pertaining to Advertising
223
5.2b4.
Ancillary Market Divisions and Noncompetition Agreements
224
5.2c.
Transactional Efficiencies Justifying Joint Venture Price Setting
228
5.2d.
The Relation Between Joint Venture Analysis and Merger Analysis
231
5.3.
Competitor Exchanges of Price or Output Information; Posting Agreements
233
5.3a.
Industry-Wide Dissemination of Price and Output Information
234
5.3b.
Direct Competitor Exchange of Price Information
236
5.3c.
Agreements to Post, or to Post and Adhere
237
5.4.
Concerted Refusals to Deal, Joint Venture Membership Restrictions, and Standard Setting
238
5.4a.
Harms and Benefits; Appropriate Antitrust Standard
238
5.4a1.
A Rule of Reason, With a Few Exceptions
239
5.4a2.
Special Treatment for the Learned Professions?
243
5.4b.
Efficient Joint Ventures and Refusals to Deal
245
5.4b1.
Closed-Membership and Other Traditional Joint Ventures
245
5.4b2.
Open-Membership Ventures; Positive Network Externalities
246
5.4c.
Standard Setting and Rule Enforcement in Private Entrepreneurial and Professional Associations
251
5.4d.
Agreements Involving Non-Competitors
257
5.4e.
Expressive and Noncommercial Boycotts
259
5.5.
Agreements Governing the Licensing and Use of Patents and Other Intellectual Property
260
5.5a.
Introduction; Basic Issues
260
5.5b.
The Scope of the Patent Misuse Doctrine, Antitrust and Beyond
261
5.5c.
Patent Licensing
265
5.5c1.
Price Fixing; Output Restrictions; Royalty Rates; Exclusivity
265
5.5c2.
Horizontal Territorial and Other Market Division Agreements; Patent Settlements, Pharmaceutical and Otherwise
268
5.5c3.
Package Licenses
270
5.5c4.
Patent Pools
271
5.5c5.
Grantbacks
271
5.5d.
Agreements Concerning Non-Patent Intellectual Property
272
5.6.
Characterization and Evaluation: The Per Se Rule and the Rule of Reason
272
5.6a.
The Supreme Court and the Per Se Rule
272
5.6b.
The Exaggerated Distinction Between Rule of Reason and Per Se Treatment
274
5.6c.
Identifying Anticompetitive Conduct: A Tentative Road Map
279
5.6d.
The Truncated, or "Quick Look," Rule of Reason
285
5.6e.
The Burden of Proof
287
ch. 6
Exclusionary Practices and the Dominant Firm: The Basic Doctrine of Monopolization and Attempt
290
6.1.
The Monopolization Offense
290
6.2.
Monopoly Power and Illegal Monopolization
292
6.2a.
Monopolization's Market Power Requirement
293
6.2b.
The Relation Between Market Power and Market Share; Entry Barriers
295
6.3.
Conduct Requirements---Is Bad Conduct Necessary?
296
6.4.
Identifying Monopolizing Conduct
297
6.4a.
Exclusionary Conduct Defined
298
6.4b.
Private and Government Suits Distinguished
301
6.4c.
Intent
302
6.5.
The Offense of Attempt to Monopolize
303
6.5a.
Attempt Law's Specific Intent Requirement
304
6.5b.
"Dangerous Probability of Success"
307
6.5b1.
The "Dangerous Probability" Requirement as a Screening Device
307
6.5b2.
Dangerous Probability and Market Power
309
6.6.
Conspiracy to Monopolize
310
ch. 7
Exclusionary Practices in Monopolization and Attempt Cases
312
7.1.
Introduction
313
7.2.
Merger and Monopoly
314
7.3.
Output Expansion; Strategic Capacity Construction
315
7.4.
Price Discrimination; Leasing Practices
315
7.5.
Unilateral Refusals to Deal I: General Doctrine
317
7.5a.
Refusals Directed at Competitors
317
7.5b.
Scope of Duty to Deal
321
7.5c.
Possible Qualifications; Dominated Networks
322
7.6.
Unilateral Refusal to Deal II: Vertical Integration, Price Squeezes, Tying and Exclusive Dealing
324
7.6a.
Kodak and Its Aftermath
324
7.6a1.
"Lock-in" Requires Initial Purchase and Subsequent Change of Policy
326
7.6a2.
"Average" Customer Must Be Poorly Informed; or Price Discrimination Must Be Possible
326
7.6a3.
Summary: Aftermarket Opportunism Not Within 2's Purview
327
7.6b.
The Price or Supply "Squeeze;" Vertical Integration and linkLine
328
7.6c.
Quasi-Tying and Exclusive Dealing---Technological Ties
331
7.6d.
Use of Vertical Refusals by Private Antitrust Plaintiffs
333
7.6e.
Legitimate Business Purpose
335
7.6f.
Unilateral Refusal by Nonmonopolist
335
7.7.
Refusal to Deal III: The "Essential Facility" Doctrine
336
7.7a.
What Is a Qualifying "Essential Facility"?
337
7.7b.
The Extent of the Duty to Deal
338
7.7c.
Reasonableness of Refusal to Deal
338
7.7d.
Essential Facility Doctrine Inconsistent With General Antitrust Goals
339
7.7d1.
Forced Sharing Requires Price Administration
339
7.7d2.
Forced Sharing Undercuts Incentives to Develop Alternative Sources of Supply
340
7.7d3.
Dominated Networks as Essential Facilities
340
7.8.
"Predatory" Product Design and Development; Failure to Predisclose; Altered Complementary Products
340
7.8a.
Predatory Product or Process Innovation
341
7.8b.
Failure to Predisclose New Technology
344
7.8c.
Microsoft: Unnecessarily Harmful Redesigns and Licensing Requirements
344
7.8d.
Strategic Entry Deterrence; Predatory Advertising, Excessive Product Differentiation
346
7.9.
The Troublesome "Leverage" Theory; Nonmonopolistic Advantage in Second Market
348
7.10.
Raising Rivals' Costs (RRC)
349
7.10a.
The Pedigree and Judicial Development of RRC
351
7.10b.
Pre-emption of Markets or Customers as RRC
352
7.11.
Unreasonably Exclusionary Practices Involving Patents or Other Intellectual Property Rights
354
7.11a.
Walker Process: "Obtaining" Patent by Fraud
355
7.11b.
Enforcement of Patent Known to Be Invalid or Unenforceable; Noerr Issues
356
7.11c.
Accumulation; Nonuse
360
7.11d.
Unilateral Refusal to License, Simple and Conditional
361
7.11d1.
Absolute Refusal to License
361
7.11d2.
Conditional Refusals to License
363
7.11e.
Patent "Deception" and Failure to Disclose, Particularly in Standard Setting
364
7.12.
Abuse of Government Process
365
7.13.
Business Torts as Antitrust Violations
366
7.14.
Conduct Requirements in Attempt Cases
368
ch. 8
Predatory and Other Exclusionary Pricing
370
8.1.
Introduction
370
8.2.
When Is a Price Predatory? The Areeda-Turner Test
372
8.3.
Predatory Pricing: Application and Criticism of the Areeda-Turner Test
373
8.3a.
The Average Variable Cost (AVC) Surrogate
373
8.3b.
The Problem of Long-Run, Strategic Behavior; "Predatory" Prices Above Cost; Multiple-Benefit Predation
375
8.3b1.
Limit Pricing and Strategic Entry Deterrence
375
8.3b2.
Multiple-Benefit Predation
378
8.3c.
AVC Measured as Average Avoidable Cost; Opportunity Cost
379
8.4.
Structural Issues: When Is Predatory Pricing Plausible? Recoupment
380
8.4a.
The Predator's Market Position
381
8.4b.
Barriers to Entry
384
8.4c.
Excess Capacity
385
8.4d.
Disposition of Productive Assets
386
8.4e.
Should Competitor Predatory Pricing Suits Be Abolished?
387
8.5.
Judicial Adaption of the Areeda-Turner Test: Price/Cost Relationships and Intent
388
8.5a.
Price/Cost Relationships
388
8.5b.
Intent
389
8.6.
Judicial Adaption of Areeda-Turner: Identifying Relevant Costs; Multi-product Firms; Customer-Specific Pricing
390
8.7.
Judicial Adaption of Areeda-Turner: Structural Issues and Recoupment
393
8.8.
Predatory Pricing and the Robinson-Patman Act
395
8.9.
More Complex Exclusionary Pricing Strategies, Particularly Discounts
401
8.9a.
Quantity and Loyalty Discounts
401
8.9b.
Package Pricing and Bundled Discounts
403
8.9b1.
The Varieties of Bundled Discounts
403
8.9b2.
The "Attribution" Test for Bundled Discounts
404
8.9b3.
More Complex Bundles
406
8.9c.
Slotting Allowances and Related Pricing Incentives Paid to Retailers
407
8.10.
Predatory Buying and the Weyerhaeuser Decision
408
ch. 9
Vertical Integration and Vertical Mergers
411
9.1.
Introduction
411
9.2.
The Economics of Vertical Integration
412
9.2a.
The Implications of Coase's Work; Transaction Cost Economics
412
9.2b.
Cost Savings, Technological and Transactional
414
9.2c.
Efficient Vertical Integration and Multi-Stage Market Power; Eliminating Double Marginalization; Two-Part Tariffs
417
9.3.
Plausible Anticompetitive Consequences of Vertical Integration
420
9.3a.
Strategic Control of Inputs
421
9.3b.
Price Discrimination
422
9.3c.
Foreclosure and Entry Barriers
423
9.3d.
Vertical Integration by Price Regulated Firms
424
9.3e.
Vertical Integration and Cartels
425
9.4.
Vertical Mergers and Antitrust Law
425
9.5.
Vertical Mergers and the Antitrust Division Merger Guidelines
431
9.5a.
Increased Barriers to Entry
432
9.5b.
Vertical Mergers That Facilitate Collusion
432
9.5c.
Avoidance of Rate Regulation
433
ch. 10
Tie-Ins, Reciprocity, Exclusive Dealing and the Franchise Contract
434
10.1.
Introduction: The Judicial Test for Tie-Ins
435
10.2.
Tying Arrangements and Consumer Welfare
436
10.3.
Market Power and Per Se Unlawful Ties; Sherman v. Clayton Act Tests
437
10.3a.
The Rationale and Development of Tying's Market Power Requirement
438
10.3b.
Tying Arrangements in Imperfectly Competitive Markets; Locked-In Customers
440
10.3c.
Intellectual Property and the Presumption of Market Power
443
10.3d.
"Uniqueness" and Ubiquity as Market Power
444
10.3e.
Separate Sherman and Clayton Act Tests? Federal Trade Commission Act
445
10.3f.
The Rationale for Per Se Illegal Tie-Ins
446
10.4.
When Are Products Tied Together?
448
10.4a.
Coercion by Contract, Condition, or Understanding
448
10.4b.
Proof of a Relevant Tying "Agreement;" Uncommunicated Conditions
450
10.4c.
Package Discounts
451
10.4d.
Coercion by Package Design; Technological Ties
451
10.5.
The Requirement of Separate Tying and Tied Products
453
10.5a.
Introduction; Basic Competitive Market Test
453
10.5b.
"New" Products
454
10.5c.
Complete and Partial Substitutes as Separate Products
455
10.5d.
Intellectual Property and Labor as Separate Products
456
10.5e.
Efficiency---"Economies of Joint Provision"
457
10.6.
Competitive Effects
459
10.6a.
The Leverage Theory: Using Tie-Ins to Turn One Monopoly into Two; Tipping
459
10.6b.
Entry Barriers, Foreclosure, and Collusion
461
10.6b1.
Entry Barriers and Tying Arrangements
461
10.6b2.
Foreclosure; Market Share
462
10.6b3.
Tie-Ins and Collusion
463
10.6c.
Evasion of Rate Regulation
464
10.6d.
Predatory Pricing and Other Attempts to Monopolize
466
10.6e.
Tie-Ins as Price Discrimination and Metering Devices; Franchise Agreements
466
10.6f.
Tying and Double Marginalization; "Reverse Leveraging"
471
10.7.
Tie-Ins and Efficiency: Toward a General Rule of Reason
473
10.7a.
Efficiencies and Tying Law's Idiosyncratic Per Se Rule
473
10.7b.
Distribution Economies; Full-Line Forcing and Unwanted Tied Products; Lack of Consumer Injury
473
10.7c.
Conclusion: Moving Tying Law Toward a Rule of Reason
474
10.8.
Reciprocity
476
10.9.
Exclusive Dealing
478
10.9a.
Anticompetitive Foreclosure and Its Variations
479
10.9a1.
The Foreclosure Theory of Exclusive Dealing
479
10.9a2.
Raising Rivals' Costs
479
10.9a3.
Defining Markets to Measure Vertical Foreclosure
480
10.9b.
Exclusive Dealing as a Cartel Facilitator
480
10.9c.
The Difference Between Exclusive Dealing and Tying
481
10.9d.
Efficiency Explanations and Defenses for Exclusive Dealing
482
10.9e.
The Legal Standard for Exclusive Dealing Contracts
484
ch. 11
Intrabrand Restraints on Distribution
489
11.1.
Introduction
490
11.2.
Perceived Competitive Threats of Minimum RPM and Vertical Territorial Restraints
491
11.2a.
Introduction
491
11.2b.
Vertical Restraints as Collusion Facilitators; Powerful Individual Dealers
491
11.2b1.
Dealer Power; Policy Implications
494
11.2b2.
Manufacturer Collusion and Vertical Restraints
496
11.2c.
Foreclosure Effects
497
11.2d.
Third Degree Price Discrimination
497
11.2e.
Other Theories
498
11.3.
Vertical Restraints and Efficiency
498
11.3a.
The Free-Rider Problem
498
11.3a1.
The Economics of Vertical Restraints to Combat Free Riding
500
11.3a2.
The Domain and Efficiency of Vertical Restraints to Combat Free-Riding
501
11.3b.
Variations on the Free-Rider Problem and Alternative Explanations
502
11.3b1.
Purchase of Preferred Distribution Services; Shelf Space; Quality Certification
502
11.3b2.
Facilitating Resale Density
503
11.3b3.
Facilitating Supplier Entry
503
11.3b4.
Protection of Dealer Margins; Enforcement of Distribution Contracts
504
11.3c.
Vertical Restraints and Efficiency Reconsidered
505
11.4.
The Agreement Requirement in Vertical Restraints Cases
507
11.4a.
Agreements---Horizontal and Vertical, Price and Nonprice
507
11.4b.
The Colgate Doctrine
508
11.4c.
Dealer Terminations
509
11.4d.
The Agreement Requirement and Antitrust Policy Respecting Vertical Restraints; Restraints Initiated by Powerful Dealers
514
11.5.
Resale Price Maintenance in the Courts
514
11.5a.
From Dr. Miles to Leegin
514
11.5b.
The Meaning of "Resale"---Consignment Exception
517
11.5c.
Maximum RPM
521
11.5d.
The Difference Between Price and Non-Price Agreements
524
11.6.
Vertical Nonprice Restraints Under the Rule of Reason
526
11.6a.
Balancing "Intrabrand" and "Interbrand" Competition
528
11.6b.
Sylvania's Impact in the Lower Courts
530
11.6c.
Boycott Claims
532
11.6d.
Exclusive Dealerships, Sole Outlets, and Refusals to Deal
533
11.6e.
Dual Distribution
534
11.7.
Conclusion: The Rule of Reason for Distribution Restraints
535
11.7a.
General Policy Concerns
535
11.7b.
General Efficiency of Vertical Integration Not Decisive
536
11.7c.
Rejected Approaches
537
11.7d.
Rule of Reason Inquiry Summarized
538
ch. 12
Mergers of Competitors
540
12.1.
Introduction: Federal Merger Policy and the Horizontal Merger Guidelines
541
12.1a.
The Continuing Importance of Market Structure to Merger Analysis
543
12.1b.
The Basic Concerns of Merger Policy: Reduced Market Output, Higher Prices, and Offsetting Efficiencies
544
12.1c.
Mergers and Exclusionary Practices; Predatory Pricing; Private Challenges
547
12.2.
Efficiency and Merger Policy
549
12.2a.
The Dubious Legacy of the Warren Era
550
12.2b.
Assessing the Efficiency Effects of Horizontal Mergers
551
12.2b1.
The Welfare "Tradeoff" Model
551
12.2b2.
Must Efficiencies Be "Passed On"?
552
12.2b3.
Efficiencies Must Be "Merger-Specific" and "Extraordinary"
553
12.2b4.
Problems of Identification and Measurement
554
12.2b5.
Benefit and Threat in Different Markets
555
12.3.
Estimating Anticompetitive Consequences I: Mergers Facilitating Unilateral Price Increases
556
12.3a.
Introduction
556
12.3b.
Merger to Monopoly
556
12.3c.
Dominant Firm's Acquisition of Nascent Rival
556
12.3d.
Unilateral Effects in Product Differentiated Markets
557
12.3e.
Mergers That Threaten Innovation
562
12.4.
Estimating Anticompetitive Consequences II: Mergers Facilitating Coordinated Interaction
564
12.4a.
Measuring Market Concentration: The CR4 and the Herfindahl
564
12.4a1.
The Four-Firm Concentration Ratio (CR4)
565
12.4a2.
The Herfindahl-Hirschman Index (HHI)
566
12.4b.
Market Share Thresholds Under the Horizontal Merger Guidelines
571
12.4c.
The Weight to Be Given to Market Definition and Market Share Measures
572
12.4d.
How Should Concentration Count? Philadelphia Bank
574
12.4e.
Mergers of Competing Buyers
575
12.5.
The Significance of Product Differentiation
576
12.5a.
Product Differentiation as Undermining Collusion
576
12.5b.
Product Differentiation: When Is a Merger Horizontal?
577
12.6.
Barriers to Entry in Merger Cases
579
12.6a.
The Appropriate Definition of Entry Barriers for Merger Policy
579
12.6b.
What Constitutes an Entry Barrier?
583
12.6b1.
Economies of Scale
583
12.6b2.
Risk and Size of Investment; Sunk Costs
584
12.6b3.
Advertising, Promotion, and Customer Loyalty
585
12.6b4.
Product Differentiation
586
12.6b5.
Government Entry Restrictions
586
12.6c.
Evidence Required to Prove Entry Barriers or Their Absence
587
12.6d.
Entry Barrier Analysis Under the 2010 Horizontal Merger Guidelines
590
12.7.
Other Factors Affecting the Competitive Consequences of Mergers
592
12.7a.
Sophistication and Power of Trading Partners
592
12.7b.
Adequacy of Irreplaceable Raw Materials
594
12.7c.
Excess Capacity
594
12.7d.
Marketing and Sales Methods
595
12.7e.
History of Collusion or Facilitating Practices
596
12.7f.
"Trends" Towards Concentration
596
12.7g.
Aggressiveness of Acquired Firm
597
12.8.
Observed Anticompetitive Behavior; Post-Acquisition Review
597
12.9.
The "Failing Company" Defense and Related Factors Affecting Firm Viability
600
12.10.
Partial Acquisitions and Acquisitions "Solely for Investment"
603
12.11.
Interlocking Corporate Directors or Officers
605
ch. 13
Conglomerate Mergers
607
13.1.
Introduction: Competition and Conglomerate Mergers
607
13.2.
Conglomerate Mergers and Efficiency
608
13.3.
Perceived Dangers to Competition
610
13.3a.
Reciprocity
610
13.3b.
Leverage and Tie-Ins
612
13.3c.
Strategic Pricing and Entry Deterrence
613
13.4.
Mergers of Potential Competitors
614
13.4a.
The Perceived Potential Entrant Doctrine
615
13.4b.
"Actual" Potential Entrant Doctrine
618
13.5.
Conglomerate Mergers and the Antitrust Division Guidelines
619
ch. 14
Price Discrimination and the Robinson-Patman Act
621
14.1.
Introduction: Price Discrimination
621
14.2.
Price Discrimination and Competition
622
14.3.
Price Discrimination and Market Power
623
14.4.
Three Degrees of Price Discrimination; Arbitrage
624
14.5.
Price Discrimination and Antitrust Policy
627
14.5a.
The Social Cost of Price Discrimination
627
14.5b.
The Social Cost of Preventing Price Discrimination in Concentrated Markets
628
14.6.
The Robinson-Patman Act and Price Discrimination
628
14.6a.
General Interpretation
628
14.6a1.
Legislative History and Effectiveness in Achieving Goals
628
14.6a2.
The Robinson-Patman Act's Theory of Competitive Injury
630
14.6b.
The Meaning of Price "Discrimination" Under the Act
631
14.6c.
Primary- and Secondary-Line Violations
632
14.6d.
Technical Requirements
633
14.6e.
Violations by Buyers
636
14.6f.
Affirmative Defenses
637
14.6f1.
"Cost Justification" Defense
637
14.6f2.
"Meeting Competition" Defense
638
pt. III
ANTITRUST AS A REGULATORY INSTITUTION
ch. 15
Public Enforcement of the Federal Antitrust Laws
642
15.1.
Public Enforcement Generally; The Antitrust Division
642
15.1a.
Criminal Enforcement
643
15.1b.
Civil Enforcement
644
15.2.
The Federal Trade Commission
645
15.3.
The Process of Premerger Notification
648
15.4.
"Quasi-Public" Enforcement: The States' Attorneys General
648
ch. 16
Private Enforcement
651
16.1.
Introduction: [§] 4 of the Clayton Act
652
16.2.
Permissible Plaintiffs---Who Should Enforce the Antitrust Laws?
653
16.3.
Antitrust's Special Requirement of Competitive Injury
654
16.3a.
"Antitrust Injury"; Private Merger Challenges
654
16.3a1.
Mergers Alleged to Facilitate Exclusionary Practices
654
16.3a2.
Takeover Targets as Antitrust Plaintiffs
656
16.3a3.
Consumer Plaintiffs
657
16.3b.
"Antitrust Injury" Beyond 7; Per Se Violations
657
16.3c.
Causation, Injury-in-fact, Antitrust Injury Distinguished
659
16.3d.
Antitrust Injury and Damages Claims
660
16.3e.
Injunctive Relief
661
16.3f.
Plaintiffs Unaffected by Injury to Competition
662
16.4.
Statutory and Judicial Rules Limiting Antitrust Standing
663
16.4a.
"Business or Property"
664
16.4b.
Market Relationships; "Direct Injury" and "Target Area" Tests
664
16.4b1.
"Direct Injury"
665
16.4b2.
"Target Area"
665
16.4b3.
Supreme Court Attempts at a More Useful Alternative
666
16.4c.
The Preferred Position of Consumers and Competitors
667
16.5.
Special Problems of Antitrust Standing
669
16.5a.
The Unestablished Business as Antitrust Plaintiff
669
16.5b.
Employees
670
16.5c.
Derivative Injuries and "Duplicative Recovery"
671
16.5d.
Second Best Plaintiffs
673
16.5e.
Pari Delicto; Declaratory Judgment Actions
674
16.6.
The Indirect Purchaser Rule
674
16.6a.
Hanover Shoe and Illinois Brick
674
16.6b.
Exceptions to the Illinois Brick Rule
677
16.6b1.
Pre-existing Contracts
677
16.6b2.
Injunction Suits
679
16.6b3.
Cases Involving Vertical Agreements or Control
679
16.6c.
Monopsony; Buyers' Cartels
680
16.6d.
Policy Implications of the Indirect Purchaser Rule; State Indirect Purchaser Statutes
680
16.6e.
The Umbrella Plaintiff
683
16.7.
The Antitrust Statute of Limitation
684
16.8.
Disposition of Issues; Pleadings; Summary Judgment; Expert Testimony; Tagalong Suits
687
16.8a.
Jury Trial
687
16.8b.
Antitrust Pleadings and Summary Judgment
687
16.8b1.
Antitrust Motions to Dismiss and the Twombly Case
687
16.8b2.
Matsushita and Summary Judgment in Antitrust Cases
690
16.8c.
Judicial Control of Expert Testimony
696
16.8d.
Tagalong Suits; Offensive Collateral Estoppel
702
16.9.
Equitable Relief
703
16.10.
Compulsory Arbitration
704
ch. 17
Damages
706
17.1.
Antitrust Damages Actions and Social Welfare
706
17.1a.
Introduction: The Role of Efficiency in Damages Theory
706
17.1b.
Deterrence and Damages
708
17.1c.
Using Damages to Minimize the Social Cost of Antitrust Violations
710
17.2.
The Optimal Deterrence Model for Antitrust Damages
711
17.2a.
Victim's Losses v. Violator's Gains
711
17.2b.
Optimal Damages for Overcharge Injuries
712
17.2c.
Optimal Damages for Exclusionary Practices
715
17.2d.
The Optimal Deterrence Model in Litigation
718
17.3.
The Rationale for Treble Damages
720
17.4.
How Accurately Must Damages Be Measured?
722
17.5.
Measuring Damages for Overcharge Injuries
724
17.5a.
Introduction; Basic Conceptual Problems
724
17.5b.
Methods of Measurement: "Yardstick" and "Before-and-After"
727
17.5b1.
Yardstick Method
727
17.5b2.
Before-and-After Method
728
17.6.
Damages for Exclusionary Practices
732
17.6a.
When Are Damages Due?
732
17.6b.
Damages for Lost Sales and Market Share
734
17.6b1.
Before-and-After Method
735
17.6b2.
Yardstick Method
737
17.6b3.
Lost Market Share
737
17.6c.
Damages and Disaggregation
739
17.6d.
Terminated Dealers and Firms Driven From Business
741
17.6e.
Damages for Precluded Entry
742
17.7.
Contribution; Joint and Several Liability
744
ch. 18
Antitrust and the Process of Democratic Government
746
18.1.
Regulation, Rent-Seeking and Antitrust Immunity
746
18.1a.
Introduction
746
18.1b.
Regulatory Intervention and the Right to Seek It
747
18.1c.
The General Irrelevance of Regulatory Capture
748
18.1d.
Noerr Protects the Process, Not the Result
749
18.2.
The Scope of Antitrust's Petitioning Immunity
750
18.2a.
Petitions for Legislative or Executive Action Generally
750
18.2b.
Petitions to Governments Acting as Market Participants
750
18.2c.
Petitions for Adjudicative Action
754
18.3.
The "Sham" Exception in Legislative and Adjudicative Contexts
755
18.3a.
Use of Abusive Methods; False Information
757
18.3b.
Baselessness in the Adjudicative Setting; Successful Claims
758
18.3c.
Single or Repetitive Claims
762
18.3d.
Threat to Sue; Ex Parte Statements
762
18.3e.
Petitions for Invalid Legislation and Administrative Rules
763
18.4.
The Relation Between Unprotected Petitioning and the Substantive Offense
764
18.5.
Corruption of Private Decision Making Bodies
764
ch. 19
Antitrust and Federal Regulatory Policy
767
19.1.
Antitrust and Regulation in a Federal System
767
19.2.
Regulation, Deregulation and Antitrust Policy
768
19.2a.
The Scope of Regulation and the Domain of Antitrust
768
19.2b.
The Rationales for Deregulation
768
19.2b1.
Expanded Confidence in Competition and Markets
768
19.2b2.
Public Choice: Decreased Confidence in the Regulatory Process
770
19.3.
The Role of Antitrust in the Regulated Market
771
19.3a.
Express or Implied Repeal
771
19.3b.
The Relation Between Federal Regulation and Antitrust Jurisdiction: Two Views
772
19.3c.
Requisite Regulatory Oversight; "State Action" Compared
775
19.4.
Procedure in Areas of Divided Authority; Primary Jurisdiction
776
19.5.
Market Power Offenses in Regulated Markets
778
19.6.
Antitrust Damages Actions and Regulated Rates: The Keogh Doctrine
781
19.7.
Particular Exemptions
782
19.7a.
Miscellaneous Express Exemptions
782
19.7b.
Antitrust and Federal Labor Policy
783
19.7c.
The McCarran-Ferguson Act and the Insurance Exemption
786
19.7c1.
"Business of Insurance"
787
19.7c2.
"Regulated by State Law"
789
19.7c3.
Acts of Boycott, Coercion or Intimidation
789
19.7c4.
Continuing Vitality of McCarran-Ferguson
791
ch. 20
Antitrust Federalism and the "State Action" Doctrine
793
20.1.
Introduction; Preemption
793
20.2.
Federalism and the Policy of the "State Action" Doctrine
797
20.2a.
The Historical Basis of the "State Action" Doctrine
797
20.2b.
Conflicts Between Federal Antitrust and State Regulation; Alternative Solutions
798
20.3.
Basic Qualifications for Exemption
800
20.4.
Authorization
801
20.5.
Active Supervision
805
20.5a.
When Is Supervision Required?
806
20.5b.
What Kind of Supervision Is Required?
807
20.5c.
Who Must Supervise?
810
20.6.
The Special Problem of Municipal Antitrust Liability
810
20.7.
The Relationship Between Petitions to the Government and the "State Action" Doctrine
814
20.8.
The Relation Between State and Federal Antitrust Law
815
ch. 21
The Reach of the Federal Antitrust Laws
820
21.1.
Local Activities: Federal Antitrust and Interstate Commerce
820
21.1a.
The Sherman Act's Jurisdictional Reach
820
21.1b.
Jurisdictional Reach of Other Antitrust Provisions
824
21.1c.
"Commerce": Antitrust and Noncommercial Activities
825
21.2.
Antitrust's Global Reach
826
21.2a.
Extraterritorial Jurisdiction: Basic Doctrine and the FTAIA
827
21.2b.
Prudential Constraints on Extraterritorial Reach
830
21.2c.
The Act of State Doctrine
833
21.2d.
Foreign Sovereign Compulsion; Petitions to Foreign Governments
834
21.2e.
Foreign Sovereign Immunity
835
21.3.
Judicial Jurisdiction and Antitrust
836
Appendix: Westlaw
839
Table of Cases
855
Table of Statutes
885
Index
891