We dole out at least our fair share of criticism for the Federal Trade Commission here.  Now its time for some credit where its due.  Historically, one of the consistent highlights of the Commission’s output has been its competition policy advocacy work.  In this case, the FTC (or at least the Bureau of Competition, Bureau of Economics, and the Office of Policy and Planning) provided comments on New Jersey Senate Bill 484.

Read the full piece here.

Last Thursday and Friday, I attended a conference at Case Western Law School on the Roberts Court’s business law decisions. I presented a paper on the Court’s antitrust decisions. Adam Pritchard, Matt Bodie, and Brian Fitzpatrick presented papers considering the Court’s treatment of, respectively, securities law, labor and employment law, and pleading standards.

Read the full piece here. 

Abstract

Antitrust is back in vogue at the U.S. Supreme Court. Whereas the Rehnquist Court decided few antitrust cases in its latter years (only one from 1993 to 1995, one each year from 1996 through 1999, and none from 2000 to 2003), the Roberts Court issued seven antitrust decisions in its first two years alone. Numerous commentators have characterized the Roberts Court’s antitrust decisions as radical departures that betray a pro-business, anti-consumer bias. While some of the decisions do represent significant changes from past practice (see, e.g., Leegin, which overruled the 1911 Dr. Miles rule of per se illegality for minimum resale price maintenance, and Twombly, which abrogated the infamous “no set of facts” pleading standard set forth in the 1957 Conley v. Gibson decision), the “pro-business/anti-consumer” characterization of the Roberts Court’s antitrust decisions is inaccurate. The characterization – caricature, really – fails to appreciate the fundamental limits of antitrust, a body of law that requires judges and juries to make fine distinctions between procompetitive and anticompetitive behaviors that frequently resemble each other. While false acquittals of anticompetitive conduct may harm consumers, so may false convictions of procompetitive actions. And efforts to eliminate errors in liability judgments are themselves costly. Optimal antitrust rules will therefore aim to minimize the sum of decision costs (the costs of reaching a liability decision) and expected error costs (the social losses from false convictions and false acquittals). Each of the Roberts Court’s antitrust decisions can be defended in light of this “decision-theoretic” approach, an approach calculated to maximize the effectiveness of the antitrust enterprise, to the ultimate benefit of consumers. This Article first describes the fundamental limits of antitrust and the decision-theoretic approach such limits inspire. It then analyzes the Roberts Court’s antitrust decisions, explaining how each coheres with the decision-theoretic model. Finally, it predicts how the Court will address three issues likely to come before it in the future: tying, loyalty rebates, and bundled discounts.

The WSJ recently published the next installment of the Microsoft-Google antitrust wars.  A Google representative argues “competition is one click away”; Charles (“Rick”) Rule, Microsoft’s antitrust attorney, argues that Google’s conduct might harm competition.  Rule’s main point is summed up in the first line of his piece: “what goes around comes around.”  The longer version of the argument is as follows: (1) Microsoft was faced with antitrust allegations instigated by rivals that its business practices harmed competition; (2) Microsoft defended on various grounds, including that there was ample competition in high-tech markets; (3) Microsoft lost and new law was made; (4) Google is now faced with similar allegations, brought on and/or instigated by similar rivals (including Microsoft), and involving similar defenses; (5) fair play and consistency dictates that the same standard be applied to Microsoft and Google; (6) thus, Google is an antitrust problem and should lose a suit brought against it.  I will refer to (1)-(6) as the “antitrust karma” argument.

Read the full piece here. 

How should an economist interpret the fact that Microsoft appears to be “behind” recent enforcement actions against Google in the United States and, especially, in Europe?

“With skepticism!”  Is the answer I suspect many readers will offer upon first glance.  There is a long public choice literature, and long history in antitrust itself, that suggests that one should be weary of private enforcement of the antitrust laws against rivals both in the form of litigation and attempts to delegate the enforcement effort (and costs) to the government.

Read the full piece here.

The opinion in Ovation (i.e. FTC v. Lundbeck) is now available.  The first footnote in Judge Ericksen’s opinion notes that “the FTC and Minnesota began their closing argument by disclaiming the notion that these cases were ‘about unhappiness about the high price of Indocin.’  Nevertheless, the FTC and Minnesota cited in their post-trial response a press release issued by the FTC to announce the action’s commencement.  The press release asserts that the acquisition of NeoProfen resulted in the increase of Indocin IV’s price by almost 1300%; characterizes the prices charged by Lundbeck as ‘artificially high;’ and notes one commissioner’s view that Lundbeck’s ‘profiteering on the backs of critically ill premature babies is not only immoral, it is illegal.”

Read the full piece here. 

There are some new developments in the Federal Trade Commission’s consummated merger case brought against Ovation.  Namely, the FTC has lost.  TOTM readers may recall that I spent some time criticizing the Federal Trade Commission’s complaint, back in 2008, in FTC v. Ovation in federal district court in Minnesota.  As I described the stylized facts back then…

Read the full piece here. 

Economist and occasional TOTM guest blogger Steve Salop (Georgetown) recently sent me the following questions spurred by the local debate over Governor McConnell’s proposal to private the retailing of alcoholic beverages…

Read the full piece here. 

Steve Salop, Serge Moresi, and John Woodbury have posted a very useful primer on the new HMGs new “value of diverted sales” approach to unilateral effects: the gross upward pricing pressure index (GUPPI).  Here’s the basic idea…

Read the full piece here.