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DOJ Approves Verizon-SpectrumCo Deal,Yet Key Legal Questions Remain

PORTLAND, OR – Today, the Department of Justice approved Verizon’s purchase of radio spectrum from cable companies that had considered using it to build their . . .

PORTLAND, OR – Today, the Department of Justice approved Verizon’s purchase of radio spectrum from cable companies that had considered using it to build their own wireless network but ultimately decided not to do so.  The deal went through only after the parties agreed to a number of conditions, including a restriction of several commercial agreements that accompanied the deal. Geoffrey Manne, Executive Director of the International Center for Law & Economics and Berin Szoka, President of TechFreedom issued the following statement:

This deal is great news for consumers. The more spectrum is put to use, the more we’ll ease the coming ‘spectrum crunch.’  The DOJ seems to have agreed that, because of the under-utilization of the spectrum in its current hands, and, with its imposed conditions, the lack of incentive or ability of the parties to raise prices, consumers will benefit from this transfer.

The DOJ and FCC also seem to have appropriately divided their review of the deal, with the DOJ considering the competitive effects of the commercial agreements and the FCC assessing whether the spectrum license transfers are in the public interest.  Congressional leaders and many self-appointed consumer advocates had demanded that the FCC evaluate the commercial agreements.  But doing so would violate Section 310(d), which authorizes the agency to evaluate only license transfers.

TechFreedom and ICLE raised this concern about the FCC’s authority in joint comments on the FCC’s review in March.  The FCC was strongly and repeatedly pressured to violate Section 310(d) by Verizon’s competitors, most notably T-Mobile and Sprint, as well as by regulatory activist groups like Public Knowledge and Free Press.  In May, Sen. Herb Kohl sent a letter asking the FCC to evaluate the commercial agreements, and similar letters followed in July from Senator Franken and thirty-two Congressional Democrats.

Manne raised another concern:

I’m troubled by the DOJ’s imposition of conditions on the merger based on speculative, future harms,” referring to the DOJ’s assertion that the “the Commercial Agreements also unreasonably restrain future competition for the sale of broadband, video, and wireless services to the extent that the availability of these services as part of a bundle, including a quad-play bundle, becomes more competitively significant.

The DOJ has ample authority to address such concerns if they ever become non-conjectural.  Merger review conditions should be narrowly targeted at real, identifiable problems.  Otherwise, government risks hamstringing companies today in ways that can unintentionally hamper future innovation and thus harm consumers.

Manne and Szoka are available for comment at [email protected].

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Manne to Participate Tomorrow on This Week in Law Live Webcast

International Center for Law and Economics Executive Director Geoffrey Manne will be a participant tomorrow, April 6, on the live webcast This Week in Law along with TechFreedom Senior . . .

International Center for Law and Economics Executive Director Geoffrey Manne will be a participant tomorrow, April 6, on the live webcast This Week in Law along with TechFreedom Senior Adjunct Fellow Larry Downes. Denise Howell will be hosting and they will also be joined by fellow participant Evan Brown. This week they will be discussing various topics in tech policy including Senator Al Franken’s lambast of Facebook and Google, the newly opened antitrust investigation of Motorola Mobility by the European Commission, and the continued problem of spectrum crunch.

This Week in Law is recorded live every Friday at 11:00am PT/2:00pm ET and covers topics primarily in law, technology, and public policy. You do not have to register, just follow this link at 11:00am PT/2:00pm ET to watch.

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Blocking Verizon/SpectrumCo Deal Would Harm, not Help, Consumers

Yesterday, the International Center for Law and Economics and TechFreedom jointly filed comments [pdf] with the FCC on the Verizon SpectrumCo deal.  In the comments, . . .

Yesterday, the International Center for Law and Economics and TechFreedom jointly filed comments [pdf] with the FCC on the Verizon SpectrumCo deal.  In the comments, ICLE Executive Director Geoffrey Manne and TechFreedom President Berin Szoka counter the primary arguments against the deal:

Critics lament the concentration of spectrum in the hands of one of the industry’s biggest players, but the assumption that concentration will harm to consumers is unsupported and misplaced.  Concentration of spectrum has not slowed the growth of the market; rather, the problem is that growth in demand has dramatically outpaced capacity.  What’s more: prices have plummeted even as the industry has become more concentrated.

While the FCC undeniably has authority to review the license transfers, the argument that the separate but related commercial agreements would reduce competition is properly the province of the Department of Justice.  That argument is best measured under the antitrust laws, not by the FCC under its vague “public interest” standard.  Indeed, if the FCC can assert jurisdiction over the commercial agreements as part of its public interest review, its authority over license transfers will become a license to regulate all aspects of business.  This is a recipe for certain mischief.

The need for all competitors, including Verizon, to obtain sufficient spectrum to meet increasing demand demonstrates that the deal is in the public interest and should be approved.

The authors are available for comment at [email protected].

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Further Empirical Evidence on Forum Shopping in Philadelphia Civil Courts

Updated Report with Appendix Appendix only Late last year the International Center for Law and Economics published a study finding that Philadelphia civil courts, and the Philadelphia . . .

Updated Report with Appendix
Appendix only

Late last year the International Center for Law and Economics published a study finding that Philadelphia civil courts, and the Philadelphia Complex Litigation Center (PCLC) in particular, are marked by structural biases that likely attract plaintiffs with little or no connection to the city, leading to relatively disproportionate litigation and verdicts. Today we release a supplemental appendix to the study, also authored by Professor of Law and Economics at George Mason University School of Law, Joshua D. Wright, presenting further research demonstrating that, indeed, a substantial fraction of plaintiffs with cases pending at the Philadelphia Complex Litigation Center seem to have have no discernible or relevant connection to Philadelphia or to Pennsylvania.

Removing cases that were identified as lacking sufficient data, 1,370 cases were analyzed and coded. From this sample the plaintiff’s home address was identified in 1,355 cases. Of these, 638 cases had electronically filed complaints yielding the alleged location of injury in 369 cases.

In total, it was found that:

  • Of the 1,357 cases, 913 (67.2%) were brought by plaintiffs who live out-of-state without any apparent connection to Pennsylvania or Philadelphia.
  • Only 180 cases (13.3%) reveal plaintiffs who live in or allege injury in Philadelphia.
  • The most substantial case types where the plaintiffs were overwhelmingly out-of-state are hormone therapy, denture adhesive cream, and Paxil birth defect cases.
  • Although most or all of the companies involved in these cases do business in Philadelphia and a few have some sort of administrative offices there, the vast majority of defendants do not have their principal place of business in Philadelphia or even in Pennsylvania. It is unlikely that venue was moved to the PCLC in most or any of the cases.

This preliminary analysis supports the conclusion that Philadelphia courts demonstrate a meaningful preference for plaintiffs by coaxing business from other courts and providing a unique combination of advantages for plaintiffs.

 

Here is the full report with the new appendix attached; the Appendix by itself is available here. Please contact us if you are interested in speaking with Professor Wright about the report or would like a comment on the report or the pending legislation.

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Larry Ribstein, RIP

By Geoffrey Manne This morning our dear colleague, Larry Ribstein, passed away. The intellectual life of everyone who knew him and of the legal academy . . .

By Geoffrey Manne

This morning our dear colleague, Larry Ribstein, passed away. The intellectual life of everyone who knew him and of the legal academy at large is deeply diminished for his passing.

For me, as for many others, Larry was an important influence, not only intellectually but personally, as well. Larry was the godfather of Truth on the Market, which got its start when a few of us, including Bill Sjostrom, Josh, Thom and me, pinch hit for Larry at Ideoblog in November 2005. It took eight of us, including my dad, to fill his shoes, and still his traffic went down. More than anyone else, Larry was instrumental in my decision to leave law teaching to work at Microsoft. Completely unsure what to do and worried about how it would affect my ability to return to law teaching, I called Larry, who had no doubt. He sealed the deal by pointing out that a move like that one would open some completely unanticipated, and potentially great, career paths and telling me not to worry so much about getting back to law teaching. He was right, of course, and, thus also an important influence on the creation of the International Center for Law and Economics. And Larry was a friend, one of those I always looked forward to seeing at ALEA and other conferences, more than once providing the necessary marginal incentive to attend.

We grieve for Ann, Sarah and Susannah and mourn his passing.

The outpouring in the blogosphere from Larry’s friends, admirers, colleagues, and the like is, not surprisingly, moving. As they are found, remembrances will be posted here at Truth on the Market.

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New Report Shows Systemic Biases in Philadelphia Court System as Pennsylvania General Assembly Prepares to Vote on Venue Reform

Philadelphia civil courts have come under fire for attracting and favoring plaintiffs from outside the city at the expense of its consumers and businesses. A . . .

Philadelphia civil courts have come under fire for attracting and favoring plaintiffs from outside the city at the expense of its consumers and businesses. A new study, entitled “Are Plaintiffs Drawn to Philadelphia’s Civil Courts? An Empirical Examination,” issued by the International Center for Law & Economics and authored by Professor of Law and Economics at George Mason University School of Law, Joshua D. Wright, finds evidence that Philadelphia civil courts are indeed marked by structural biases that attract plaintiffs with little or no connection to the city, leading to disproportionate litigation and verdicts relative to other courts.

Using data from the Administrative Office of Pennsylvania Courts, Professor Wright compares filing trends and case outcomes in Philadelphia to the rest of Pennsylvania and other representative state courts. As explained in greater depth in the paper, Philadelphia courts, when measured against non-Philadelphia Pennsylvania state courts and federal district courts, exhibit marked and significant dissimilarities supporting an inference that something intrinsically unusual is occurring in Philadelphia. Philadelphia courts host an especially large number of cases, Philadelphia courts have a larger docket than expected, Philadelphia plaintiffs are less likely to settle than other non-Philadelphia Pennsylvania plaintiffs, and Philadelphia plaintiffs are disproportionately likely to prefer jury trials. These findings are consistent with a conclusion that Philadelphia courts demonstrate a marked and meaningful preference for plaintiffs.

Here is the full report. Please contact us if you are interested in speaking with Professor Wright about the report or would like a comment on the report or the pending legislation.

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Todd Zywicki to Speak on Canadian Payment Systems

Tomorrow, Todd Zywicki, Academic Affiliate at the International Center for Law and Economics and a Foundation Professor of Law at George Mason University School of . . .

Tomorrow, Todd Zywicki, Academic Affiliate at the International Center for Law and Economics and a Foundation Professor of Law at George Mason University School of Law, will speak on payment systems with particular concern to the Canadian context at a conference sponsored by the C.D. Howe Institute in Toronto. The conference is titled The Canadian Payments System: Ensuring Competition, Innovation and Stability and will feature Patricia Meredith, the Chair of the Task Force for the Payments System Review in Canada, and Steve Rauschenberger, President of Rauschenberger Partners LLC, among others.

As the organizers notes, Getting [payment systems] right will be integral to building a competitive, functioning and efficient payment system, with important consequences for industry and the Canadian economy as a whole.

This conference comes on the heels of a recently released paper on the subject and is a continuation of the research he has been conducting for the International Center for Law and Economics’ Financial Regulatory Program White Paper Series, including his previous paper The Economics of Payment Card Interchange Fees and the Limits of Regulation

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If Search Neutrality Is the Answer, What's the Question?

Search bias is not a function of Google’s large share of overall searches. Rather, it is a feature of competition in the search engine market, . . .

Search bias is not a function of Google’s large share of overall searches. Rather, it is a feature of competition in the search engine market, as evidenced by the fact that its rivals also exercise editorial and algorithmic control over what information is provided to consumers and in what manner. Consumers rightly value competition between search engine providers on this margin; this fact alone suggests caution in regulating search bias at all, much less with an ex ante regulatory schema which defines the margins upon which search providers can compete. The strength of economic theory and evidence demonstrating that regulatory restrictions on vertical integration are costly to consumers, impede innovation, and discourage experimentation in a dynamic marketplace support the conclusion that neither regulation of search bias nor antitrust intervention can be justified on economic terms. Search neutrality advocates touting the non-economic virtues of their proposed regime should bear the burden of demonstrating that they exist beyond the Nirvana Fallacy of comparing an imperfect private actor to a perfect government decision-maker, and further, that any such benefits outweigh the economic costs.

Download the paper “If Search Neutrality is the Answer, What is the Question?

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