The witch hunt is over.

Last evening, the FTC announced that it would drop its antitrust action against high-end grocer Whole Foods in exchange for the chain’s agreement to sell 32 stores and to give up the rights to Wild Oats’ name. FTC Chairman Jon Leibowitz proclaimed that “[a]s a result of this settlement, American consumers will see more choices and lower prices for organic foods” — you know, those ubiquitous food products that are available at, among other places, Wal-Mart and that the FTC insisted were not the focus of its Whole Foods challenge, which was purportedly aimed at protecting competition in the provision of grocery store formats, not particular types of products. Mr. Leibowitz also announced that the settlement of this surreal antitrust action “allows the FTC to shift resources to other important matters.” Can’t wait to see what those will be.

Read the full piece here.

I want to second Josh’s commendation of Ben Klein’s submission to the recent FTC Hearings on Resale Price Maintenance. Klein’s paper, which bears the same title as this post, is lucidly written (blissfully free of equations, Greek letters, etc.) and makes a point that, at this juncture in antitrust’s history, is absolutely crucial.

Read the full piece here. 

There are some pretty scary devils in the details of this Detroit bailout legislation. This WSJ article provides some specifics.

Under the terms of the draft legislation, “the government would receive warrants for stock equivalent to at least 20% of the loans any company receives.” Let’s put that in perspective. General Motors is seeking around $10 billion in short-term loans, so the legislation would give the government the option to buy a $2 billion stake in GM. GM’s market capitalization — the market value of its outstanding stock — is currently around $3 billion. If the government were to exercise its option today, it would pay GM $2 billion (thereby enhancing GM’s value by that amount) and would receive $2 billion worth of newly issued stock in a (now) $5 billion company. Thus, the government would end up owning 40% of GM.

Read the full piece here. 

“Now for the evidence,” said the King. “And then the sentence.”
“No!” said the Queen. “First the sentence, and then the evidence.”

So goes a famous passage of Lewis Carroll’s Alice in Wonderland. And so begins Whole Foods’ new lawsuit against the Federal Trade Commission.

Read the full piece here. 

Being a “glass is half-full” type of guy, I figured there was no way the D.C. Circuit’s decision on Whole Foods’ petition for rehearing en banc could turn out poorly: Either the court would grant the motion and correct the panel’s mistakes, or the court would deny the motion, setting up an attractive opportunity for the Supreme Court, which hasn’t decided a significant merger case since 1974 and badly needs to update its doctrine (see, e.g., Brown Shoe, upon which the D.C. Circuit heavily relied in Whole Foods).

Read the full piece here.

I had the pleasure last week of participating in a bailout panel at William & Mary Law School. The William & Mary Federalist Society, which hosted the event, asked each panelist to address three topics: what led to the current situation, how the bailout plan will (or won’t) fix things, and suggestions for implementing a bailout plan. I’ve already blogged a bit about the first two topics — here I speculate on one of the causes of the mess (Fannie/Freddie); here I discuss the original (“buy troubled assets”) versus revised (“inject capital directly into financial institutions”) bailout plans. I thought I’d take a few moments to blog about the third topic — suggestions for implementing the bailout plan.

Read the full piece here. 

The Mizzou campus is all atwitter today over a scheduled appearance this evening by the world’s biggest celebrity — my old constitutional law prof, Barack Obama. As I write this, I’m watching the Obama folks prepare for the rally, which is to take place on the quad my office overlooks. I must say, it’s a pretty impressive operation.

Read the full piece here.

Once again displaying its tenacious devotion to old Dr. Miles, the FTC is investigating whether makers of musical instruments and audio equipment have engaged in illegal resale price maintenance (RPM). Yesterday’s WSJ reported that the Commission has issued subpoenas to a number of prominent musical instrument manufacturers, including Fender, Yamaha, and Gibson, as well as to the retailer, Guitar Center, Inc. The Commission is apparently seeking to determine whether the manufacturers’ minimum advertised price (MAP) programs, which forbid retailers from advertising prices below some minimum level, amount to unreasonable vertical restraints of trade. In the post-Leegin world, even those MAP programs that amount to agreements to set retail prices are not automatically illegal. Instead, a challenger must establish their anticompetitive effect.

Read the full piece here.

Today’s New York Times features an op-ed by Michigan Law Professor Michael Barr and former Clinton advisor Gene Sperling that (somewhat predictably) blames our current financial mess on a lack of “common sense regulation” and exonerates the Community Reinvestment Act, Fannie Mae, and Freddie Mac.

Read the full piece here.