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TOTM It might surprise some readers to learn that we think the Court’s decision today in Apple v. Pepper reaches — superficially — the correct result. But, we hasten to add, the Court’s reasoning (and, for that matter, the dissent’s) is completely wrongheaded.
It might surprise some readers to learn that we think the Court’s decision today in Apple v. Pepper reaches — superficially — the correct result. But, we hasten to add, the Court’s reasoning (and, for that matter, the dissent’s) is completely wrongheaded. It would be an understatement to say that the Court reached the right result for the wrong reason; in fact, the Court’s analysis wasn’t even in the same universe as the correct reasoning.
Read the full piece here.
Amicus Brief To establish antitrust standing, Pulse must show not only “injury causally linked to an illegal presence in the market” but also antitrust injury “attributable to an anti-competitive aspect of the practice under scrutiny.”
To establish antitrust standing, Pulse must show not only “injury causally linked to an illegal presence in the market” but also antitrust injury “attributable to an anti-competitive aspect of the practice under scrutiny.” Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990) (quoting Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488-89 (1977)). Put differently, Pulse must prove the existence of an injury “of the type the antitrust laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Id. (quoting Brunswick Corp., 429 U.S. at 489). As the district court rightly decided, Pulse has failed to meet its burden.
Antitrust law does not punish firms for succeeding even if they become dominant. Congress enacted the Sherman Act for “the protection of competition, not competitors.” Id. at 338 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)). Yet Pulse’s injury flows from increased competition due to Visa’s innovation in the debit- network industry. Pulse freely admits that it lacks the “scale and market relevance” needed to compete with Visa’s challenged business strategies. (Appellant’s Br. 34) That Pulse’s PIN product has (so far, anyway) failed to gain traction in the marketplace, however, is not proof of antitrust injury. On the contrary, mere injury to a competitor, rather than to competition, is not an injury “of the type the antitrust laws were intended to prevent.” Phototron Corp. v. Eastman Kodak Co., 842 F.2d 95, 99 (5th Cir. 1988) (quoting Brunswick Corp., 429 U.S. at 489).
What’s more, Pulse has sued Visa for conduct that Pulse admits lowered merchants’ per-transaction fees, contending that those lower fees caused Pulse to obtain fewer transactions and generate less revenue. Pulse complains that it cannot “undercut” Visa’s new pricing structure. (Appellant’s Br. 40) But non-predatory price competition is no basis for antitrust injury. “When a firm … lowers prices but maintains them above predatory levels, the business lost by rivals cannot be viewed as an ‘anticompetitive’ consequence of the claimed violation.” Atl. Richfield, 495 U.S. at 337. So even if it harms Pulse, Visa’s charging low, but not below-cost, per-transaction fees to win market share is not harm to competition. Instead, both Visa’s conduct and its effects are “fully consistent with competition on the merits.” Taylor Publ’g Co. v. Jostens, Inc., 216 F.3d 465, 477 (5th Cir. 2000).
True, when assessing standing, this Court will assume that an antitrust violation exists. Doctor’s Hosp. of Jefferson, Inc. v. Se. Med. All., Inc., 123 F.3d 301, 306 (5th Cir. 1997). But that is not enough. “[P]roof of a[n antitrust] violation and of antitrust injury are distinct matters that must be shown independently.” Atl. Richfield, 495 U.S. at 344 (quoting Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law ¶ 334.2c, at 330 (1989 Supp.)). Unable to show how Visa’s conduct harmed competition in any way, Pulse seeks to wag the dog of antitrust injury with the tail of an assumed violation. But a competitor has standing only if it proves that its “loss stems from a competition- reducing aspect or effect of the defendant’s behavior.” Atl. Richfield, 495 U.S. at 344. Pulse has proven nothing of the sort.
Antitrust is about unleashing the forces of competition, not throttling them. Accepting Pulse’s watered-down approach to antitrust injury, however, would have just the opposite effect. It would invite struggling firms to use antitrust law as a sword rather than a shield. It would deter innovation in highly competitive markets. And it would permit competitors to seek treble damages for pro-competitive harms that antitrust law does not reach. Rather than ensure vigorous competition, reversing the judgment below would harm competition and consumers alike.
Click here to read the full brief.
TOTM Elizabeth Warren wants to break up the tech giants — Facebook, Google, Amazon, and Apple — claiming they have too much power and represent a danger to our democracy. As part of our response to her proposal, we shared a couple of headlines from 2007 claiming that MySpace had an unassailable monopoly in the social media market.
Elizabeth Warren wants to break up the tech giants — Facebook, Google, Amazon, and Apple — claiming they have too much power and represent a danger to our democracy. As part of our response to her proposal, we shared a couple of headlines from 2007 claiming that MySpace had an unassailable monopoly in the social media market.
Scholarship Abstract The Supreme Court’s decision in Ohio, et al v Am Express Co, et al (‘Amex’)[1] is uniquely important for the antitrust analysis of firms . . .
The Supreme Court’s decision in Ohio, et al v Am Express Co, et al (‘Amex’)[1] is uniquely important for the antitrust analysis of firms in the modern platform economy. Although it is undoubtedly not the last word on the subject, the case represents the Court’s first comprehensive effort to address the thorny and previously indeterminate question of how courts should define the relevant market and assess competitive effects in antitrust cases involving two-sided or multi-sided platforms (‘two-sided markets’). In this article, I evaluate the Supreme Court’s approach to this question, discuss the economic and legal underpinnings of how it approached market definition and effects analysis, and demonstrate why the primary criticisms of the Court’s decision are misguided. While the Court’s approach has been roundly decried by some, its conclusion—that both sides of a two-sided market must be considered in defining the relevant market and evaluating the existence and consequences of a firm’s exercise of market power—is, indeed, the proper one.
[1] (2018) 138 S Ct 2274 (Slip Opinion) [hereinafter, ‘Amex’ and ‘Amex Slip Op.’].
Scholarship In this article, Geoffrey Manne evaluates the Supreme Court’s approach, discusses the economic and legal underpinnings of how it approached market definition and effects analysis, and demonstrates why the primary criticisms of the Court’s Ohio v American Express decision are misguided.
In his commentary, Geoffrey A. Manne supports the Supreme Court’s decision, and offers insightful analysis of why, to his mind, the decision properly identifies the competitive process of platforms.
Tim Wu’s critique, on the other hand, raises concerns as to the treatment of evidence and theory in this case and the legacy of the ruling, which may undermine the efficacy of future antitrust enforcement.
The Supreme Court’s decision in Ohio, et al v Am Express Co, et al (‘Amex’) is uniquely important for the antitrust analysis of firms in the modern platform economy. Although it is undoubtedly not the last word on the subject, the case represents the Court’s first comprehensive effort to address the thorny and previously indeterminate question of how courts should define the relevant market and assess competitive effects in antitrust cases involving two-sided or multi-sided platforms (‘two-sided markets’). In this article, I evaluate the Supreme Court’s approach to this question, discuss the economic and legal underpinnings of how it approached market definition and effects analysis, and demonstrate why the primary criticisms of the Court’s decision are misguided. While the Court’s approach has been roundly decried by some, its conclusion—that both sides of a two-sided market must be considered in defining the relevant market and evaluating the existence and consequences of a firm’s exercise of market power—is, indeed, the proper one.
Click here to read the full paper.
Popular Media Last week we learned that the Senate has likely scraped together the four votes needed to join the House in passing a joint resolution to . . .
Last week we learned that the Senate has likely scraped together the four votes needed to join the House in passing a joint resolution to overturn President Trump’s declaration of a national emergency on the U.S. border with Mexico. The House passed its resolution with the votes of just 13 Republican members, all of them joining the Democratic majority over the vigorous efforts of Republican House leaders to prevent any defections. It is a virtual certainty that Congress will be unable to muster the two-thirds majorities in both houses required to override the president’s promised veto of the measure.
TOTM Near the end of her new proposal to break up Facebook, Google, Amazon, and Apple, Senator Warren asks, “So what would the Internet look like after all these reforms?” To Warren, our most dynamic and innovative companies constitute a problem that needs solving.
Near the end of her new proposal to break up Facebook, Google, Amazon, and Apple, Senator Warren asks, “So what would the Internet look like after all these reforms?”
Presentations & Interviews ICLE President & Founder Geoffrey Manne participated in the Organisation for Economic Co-operation and Development’s “Going Digital” summit in Paris, March 11-12. The summit served . . .
ICLE President & Founder Geoffrey Manne participated in the Organisation for Economic Co-operation and Development’s “Going Digital” summit in Paris, March 11-12. The summit served as the high-level closing event of the two-year Going Digital Project. The project’s main findings and policy messages were presented, including the final synthesis report, its companion publication on Measuring the Digital Transformation, and the Going Digital Toolkit, a new website that will grow to include indicators, evidence, experiences and innovative policy practices. Video of Geoff’s panel, “Competition in the Digital Age” is embedded below.
Regulatory Comments We write to address a crucial question relevant to your upcoming, March 12 hearing on “The State of Competition in the Wireless Market: Examining the Impact of the Proposed Merger of T-Mobile and Sprint on Consumers, Workers, and the Internet.”
The International Center for Law and Economics (ICLE) is a nonprofit, nonpartisan research center whose work promotes the use of law & economics methodologies to inform public policy debates. We believe that intellectually rigorous, data-driven analysis will lead to efficient policy solutions that promote consumer welfare and global economic growth.
We write to address a crucial question relevant to your upcoming, March 12 hearing on “The State of Competition in the Wireless Market: Examining the Impact of the Proposed Merger of T-Mobile and Sprint on Consumers, Workers, and the Internet”: the likely effects on consumer welfare that a “4-to-3” merger among the largest US mobile carriers would have. We are currently working on a comprehensive literature review of economic studies looking at such mergers in other developed countries. Although that review is not yet completed, this letter shares several notable preliminary conclusions for consideration by the Subcommittee.
Click here to read the full letter.
