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PORTLAND, Ore. (July 23, 2024) – Capital One Financial Corp.’s proposed $35.3 billion acquisition of Discover Financial Services is likely to yield significant benefits to consumers and create a viable new competitor to both existing large banks and to the payment-card-network space currently dominated by Visa and MasterCard, a new International Center for Law & Economics (ICLE) white paper finds.

Authored by ICLE Senior Scholars Julian Morris, Eric Fruits, and Ben Sperry, Nonresident Scholar Todd J. Zywicki, and Director of Innovation Policy Kristian Stout, the paper applies law & economics methodologies to evaluate the merger’s likely effects, with a particular focus on (1) the convenience and needs of the communities to be served by the combined organization and (2) competition in the relevant markets. Those are the criteria the U.S. Office of Comptroller of the Currency (OCC) and the Federal Reserve must apply in vetting the proposed deal, public comments on which must be submitted by tomorrow.

The authors conclude:

• By switching its debit cards to Discover’s payment networks, Capital One might offer more attractive products to depositors. In particular, it could expand access to free checking accounts with no minimum balance requirements to a wider range of low-income consumers. And it could offer debit cards with cashback to lower-income consumers who would not qualify for credit cards. The benefits for this important underserved community could be enormous.
• In combination, Capital One and Discover would be the sixth-largest U.S. bank by assets. Cost savings and other synergies could make it a more effective competitor in the large national bank market, driving improvements in its own offerings, as well as among other, similarly sized banks that serve large segments of the U.S. population.
• The combined Capital One-Discover would become the third-largest credit-card issuer by purchaser volume, after J P Morgan-Chase and American Express. As with its banking operations, its scale and innovative approach could drive improvements both directly for its customers, and indirectly for the customers of other banks. In particular, it would likely lead to significant reductions in fraud, which could result in a virtuous cycle of increased use and acceptance.
• Discover’s credit-card network is currently the fourth-largest in the United States, accounting for only about 4% of payment volumes and thus trailing far behind Visa, MasterCard, and American Express. Through these investments, especially in fraud-detection and prevention, and the resulting network effects, Capital One may be able to leverage Discover’s card network to allow it to compete more successfully.

The full white paper can be downloaded here. To schedule an interview with one of the authors, contact ICLE Media and Communications Manager Elizabeth Lincicome at (919) 744-8087 or [email protected].

PORTLAND, Ore. (July 1, 2024) – The International Center for Law & Economics (ICLE) offers the following statement on today’s unanimous opinions from the U.S. Supreme Court in NetChoice LLC v. Paxton and Moody v. NetChoice LLC.

The following quote can be attributed to Senior Scholar Ben Sperry:

The Supreme Court today vindicated the First Amendment in a pair of online speech cases involving challenges brought by NetChoice to state platform-moderation laws enacted in Florida and Texas. While lower courts will need to sort out the constitutionality of these laws, this fundamental truth is clear: the First Amendment does not allow the government to compel private actors like social-media platforms to carry speech. The marketplace of ideas is best protected when private actors are free to participate through setting their own moderation policies without government interference. As we argued in our amicus brief, the social-media companies, not bureaucrats or courts, are best-positioned to balance the speech interests of their users.

For more on the topic, see the ICLE amicus brief filed in the cases; Ben’s TechREG Chronicle piece “A Law & Economics Approach to Social-Media Regulation“; and the ICLE white paper “Who Moderates the Moderators?: A Law & Economics Approach to Holding Online Platforms Accountable Without Destroying the Internet.”

To schedule an interview with Ben about the topic, contact ICLE Media and Communications Manager Elizabeth Lincicome at (919) 744-8087 or [email protected].

PORTLAND, Ore. (June 28, 2024) – The International Center for Law & Economics (ICLE) offers the following statement on today’s opinion from the U.S. Supreme Court in Loper Bright Enterprises v. Raimondo, overturning its earlier Chevron decision.

The following quote can be attributed to ICLE President Geoffrey A. Manne:

With today’s release of the Supreme Court’s Loper Bright opinion, the task of reviewing agency authority under congressional statutes is returned to the courts, where it belongs. Under the Chevron doctrine, courts often allowed agencies essentially to determine the extent of their own authority by asserting statutory ambiguity, even in ways that proved inconsistent over time. This decision will promote stability in the law, granting both industry and the general public much greater certainty in the meaning of statutes. It will also put the onus on the people’s representatives in Congress, rather than unelected bureaucrats, to fix statutes in light of new social problems. This is a win for the rule of law over executive prerogative.

For more on the topic, see the amicus brief filed in the case, joined by Geoffrey Manne, ICLE Director of Law & Economics Programs Gus Hurwitz, ICLE Nonresident Scholar Todd J. Zywicki, and ICLE Academic Advisor Richard Epstein. See, also, Gus’ recent Truth on the Market piece “An Equilibrium-Adjustment Theory of Current Trends in Administrative Law.”

To schedule an interview with Geoff about the topic, contact ICLE Media and Communications Manager Elizabeth Lincicome at 919-744-8087 or [email protected].

PORTLAND, Ore. (May 1, 2024) – Potential monopsony power in labor markets has drawn growing interest from legal and economic academics in recent years, and is increasingly invoked by policymakers interested in using antitrust law to address concerns regarding labor-market concentration.

But according to a new International Center for Law & Economics (ICLE) white paper, the empirical evidence on the extent and impact of labor monopsony remains mixed, and there are important differences between monopoly and monopsony even as a theoretical matter that complicate applying traditional antitrust tools and standards to labor markets.

While monopsony concerns have been cited in the Federal Trade Commission’s (FTC) recent ban on employment noncompete agreements, its challenge to the proposed Kroger/Albertsons merger, and in the FTC and U.S. Justice Department’s 2023 Merger Guidelines, the antitrust agencies may be glossing over both the unsettled state of the economics literature and the legal difficulties of proving labor-market harms under existing antitrust standards, authors Brian Albrecht, Dirk Auer, and Geoffrey A. Manne note.

The authors explain that traditional efficiencies and increased buyer power are often two sides of the same coin, which would inherently force antitrust enforcers to weigh difficult tradeoffs between, for example, worker harms and consumer benefits. Moreover, defining the relevant market for antitrust claims is significantly more complex in labor markets, where the boundaries between different occupations, industries, and geographic areas can be blurry.

“As labor-market concerns continue to arise in antitrust cases, it will be critical for the FTC and other enforcers to develop more robust analytical frameworks and evidentiary standards to support their claims, and for courts and policymakers to provide clearer guidance on how labor-market harms should be assessed under existing legal standards,” the authors write.

The full white paper can be downloaded here. To schedule an interview with one of the authors, contact ICLE Media and Communications Manager Elizabeth Lincicome at 919-744-8087 or [email protected].

PORTLAND, Ore. (April 23, 2024) – The International Center for Law & Economics (ICLE) offers the following statement on today’s vote by the Federal Communications Commission (FTC) to adopt a rule classifying internet service providers (ISPs) under Title II of the Communications Act.

The following quote can be attributed to ICLE Senior Scholar Eric Fruits:

Title II is much more than net neutrality. It is the same type of expansive and heavy-handed regulation that governs public utilities. The FCC’s rule is a sharp reversal from decades of light-touch regulation that has fostered America’s leadership in broadband innovation and investment. The industry would face the yoke of onerous federal regulation and meddling that would stifle and slow future investment and experimentation.

For more on the topic, see ICLE’s issue spotlight laying out the history of Title II and net neutrality, as well as our comments to the FCC on their notice of proposed rulemaking (NPRM). To schedule an interview with Eric about the topic, contact ICLE Media and Communications Manager Elizabeth Lincicome at (919) 744-8087 or [email protected].

PORTLAND, Ore. (April 23, 2024) – The International Center for Law & Economics (ICLE) offers the following statement in response to today’s vote by the Federal Trade Commission (FTC) to adopt a rule banning all new noncompete clauses in employment contracts and rendering existing noncompetes unenforceable for all but senior executives.

This first quote can be attributed to ICLE Senior Scholar Daniel Gilman:

There are legitimate policy concerns about many noncompete agreements, but such agreements–and the business contexts in which they are adopted–are far from uniform. By today’s purely partisan vote–and despite varied, active, and ongoing state-policy reform on noncompetes–the FTC adopts a sweeping rule that goes way beyond its statutory authority, just as Commissioners Melissa Holyoak and Andrew Ferguson pointed out.

And the following quote can be attributed to ICLE Chief Economist Brian Albrecht:

Public policy requires a proper weighing of the costs and benefits of any decision. Instead of recognizing the tradeoffs and differences among workers and companies, this final rule from the FTC banning noncompetes for everyone–even for senior executives–rejects that balancing.

For more on the topic, see ICLE’s comments to the FTC, as well as Dan Gilman’s recent paper on physician noncompete agreements. To schedule an interview with Brian, Dan, or other ICLE scholars about the topic, contact ICLE Media and Communications Manager Elizabeth Lincicome at (919) 744-8087 or [email protected],

PORTLAND, Ore. (Mar. 27, 2024) – The International Center for Law & Economics (ICLE) is excited to announce its second year of Speakers Series Grants to support law & economics scholarship on campus. These grants allow recipients to bring several speakers to their campus over the course of the academic year to present current scholarship.

In evaluating proposals for the 2024-2025 academic year, we will place special emphasis on bringing new voices into the law & economics community, including both more junior scholars and scholars from cognate disciplines such as business and engineering.

Proposals should include a list of potential invited speakers, a copy of your CV, and a short paragraph noting reasons you believe such a series will be well-received at your school, any challenges you anticipate facing, and opportunities you may have for speakers to engage with non-law faculty or students.

This program is modeled on workshop series common in law schools. That is not, however, intended to prescribe a format necessary to receive support through this program. We welcome applications from both law and non-law faculty, and encourage faculty to submit applications for support of programs that “break the mold” described in this call for proposals.

Typical awards will be $10,000. Awards will be made as a gift to the recipient’s school, restricted for the use of a speakers series with speakers identified at the sole discretion of the award recipient. Speakers invited to this series should be given the same level of support afforded to any other speaker invited to your school (e.g., in terms of room availability, promotion, scheduling, etc). The precise administration of funds shall be at the discretion of the recipient. ICLE would anticipate the funds being used to support speakers’ travel and hotel costs, food and promotional materials, and a group dinner with the speaker. ICLE does not allow overhead to be charged against gifts of this size.

At the end of each semester, award recipients should report to ICLE the names and affiliations of speakers and the number of faculty and students who attended their presentations (including their disciplines if they are not all law faculty and students). At the end of the academic year, award recipients should report to ICLE the amount of unspent funds.

ICLE is planning to execute these series starting in Fall 2024, but is open to proposals that envision an earlier timeline. 

Please submit your proposal to [email protected] by Friday, May 31, 2024.

PORTLAND, Ore. (11 March 2024) – The International Center for Law & Economics (ICLE) offers the following statement from ICLE Senior Scholar Miko?aj Barczentewicz in response to today’s vote by the European Parliament to adopt the Artificial Intelligence (AI) Act:

The AI Act focuses on restraining AI, while putting very little attention on supporting EU developers. It is difficult to say whether the AI Act will have much of an effect overall, positively or negatively. Its application will depend heavily on implementing rules that are yet to be designed. There is some hope that the whole framework will emerge as more friendly to innovation than a reading of the AI Act’s text would suggest.

What we do already know is that the AI Act does not address the key ways in which EU-based AI developers are held back by national and EU law. Developers face the risk of privacy and copyright laws being applied to them in disproportionate ways by myopic enforcers who do not consider technological and economic growth to be serious values. The chance for a considered legislative decision on how to address those difficult problems has been abandoned, with the false justification that existing laws provide sufficient clarity.

For more on the topic, see Miko?aj’s March 2022 issue brief on the AI Act, as well as ICLE’s more recent comments to the European Commission on competition in generative-AI markets. To schedule an interview with Miko?aj or other ICLE scholars about the topic, contact ICLE Media and Communications Manager Elizabeth Lincicome at [email protected] or (919) 744-8087.

PORTLAND, Ore. (Feb. 8, 2024) — The International Center for Law & Economics (ICLE) today announced that Mario Zúñiga of the University of Lima and the Pontifical Catholic University of Peru has joined the center as a senior scholar of competition policy.

Mario previously was a commissioner of Peru’s Commission for the Defense of Free Competition (INDECOPI); an advisor in the Cabinet of Advisors of the Peruvian Ministry of Economy and Finance; director of research at Taxpayers for Respect; and a researcher at Hernando de Soto’s Institute for Liberty and Democracy (ILD). 

“As we continue to see jurisdictions around the world exploring ex ante rules for their competition regimes, we are thrilled to welcome Mario to our team. He has a unique combination of skills and experience—as an academic, a practitioner, and a former regulator—to analyze these developments through the lens of law & economics,” ICLE President and Founder Geoffrey Manne said.

Mario received his JD from the Pontifical Catholic University of Peru, as well as an LLM from the George Washington University Law School. He also serves as a nongovernmental advisor for Peru at the International Competition Network (ICN).

“I have been drawn to the profound insights offered by the law & economics approach since I was a law student,” Zúñiga said. “Working in my law career in fields like antitrust or tackling informality has confirmed for me how these insights can lead to better law and better institutions, and can foster economic growth, competition, inclusion, and even equality. Due to its mission, intellectual legacy, and stellar team, I think the ICLE is the best place for me to keep learning and hopefully contributing to such goals.”