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ICLE Academic Affiliate Liya Palagashvili joined the She Thinks podcast episode to discuss harms and threats to independent contracting stemming from a new U.S. Labor Department rule. Video of the full episode is embedded below.

ICLE Senior Scholar Daniel J. Gilman took part in a virtual panel convened by the Federalist Society on the Federal Trade Commission (FTC) and U.S. Justice Department’s (DOJ) recent moves to put labor issues at the center of antitrust enforcement and policy making. Video of the full event is embedded below.

ICLE Academic Affiliate Liya Palagashvili joined the Labor Relations Radio podcast to discuss her recent study on the damaging effects of California’s war on independent contractors through the disastrous A.B. 5. The full episode is embedded below.

Section 7 of the Clayton Act prohibits mergers that harm competition in “in any line” of commerce. And, indeed, the Supreme Court’s decisions in Philadelphia National Bank and Topco are often cited on behalf of the proposition that this means any single cognizable market, and that anticompetitive effects in one market cannot be offset by procompetitive effects in another.

That would appear to simplify antitrust analysis, and it certainly can. But as is so often the case in antitrust, apparent simplicity can be confounding in application. Is it really true that harm in any market, however narrow, is grounds to block a merger, whatever its broader effects? Is that the best reading of legal precedent? Is it required? And is it either practicable or desirable?

Read the full piece here.

INTEREST OF AMICUS CURIAE[1]

The International Center for Law & Economics (“ICLE”) is a nonprofit, non-partisan global research and policy center aimed at building the intellectual foundations for sensible, economically grounded policy. ICLE promotes the use of law and economics methodologies, as well as the results of economic research, to inform public policy debates, and it has longstanding expertise in antitrust law. It has filed amicus briefs in this Court and others around the country. See, e.g., Apple Inc. v. Epic Games, Inc., No. 23-344 (U.S.); United States v. Am. Airlines Grp. Inc., No. 23-1802 (1st Cir.); Giordano v. Saks Inc., No. 23-600 (2d Cir.).

ICLE respectfully submits that the decision below undermines the economic foundations of antitrust law by presuming that a potentially procompetitive restraint is per se unlawful, rather than analyzing the restraint under the default rule of reason. The Court should grant the petition for a writ of certiorari to clarify that the type of restraint at issue here is presumptively procompetitive and thus subject to the rule of reason.

ICLE scholars have written extensively on issues closely related to this case, and respectfully submit that their expertise will help clarify the economic problems with the decision below and highlight the reasons for the Court to grant certiorari.

SUMMARY OF ARGUMENT

This Court has clearly and repeatedly recognized that “[t]he rule of reason is the accepted standard for testing whether a practice restrains trade in violation of [Sherman Act] § 1” and that per se prohibitions are “con- fined to restraints … ‘that would always or almost al- ways tend to restrict competition and decrease output.’” Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 885–86 (2007) (quoting Bus. Elecs. Corp. v. Sharp Elecs. Corp., 485 U.S. 717, 723 (1988)). The decision below cannot be reconciled with those important principles.

The Seventh Circuit committed at least three errors that threaten the economic foundations of antitrust law and are worthy of this Court’s attention.

First, the Seventh Circuit inverted the strong presumption in favor of rule of reason analysis—a presumption that is critical in preventing antitrust law from deterring productive and beneficial conduct. Plaintiffs can overcome that presumption, but only when they show that the challenged restraint falls squarely within a class or category that “always or almost always” harms competition. Leegin, 551 U.S. at 885–86. For a court to make that prediction with confidence, it must have sufficient experience with the restraint. Here, the Seventh Circuit turned settled law on its head. From a dearth of experience, the court of appeals reasoned that a per se claim was plausible and sustainable. This approach threatens to chill Interbrand competition.

Second, the Seventh Circuit sustained a per se challenge to a restraint that has significant procompetitive virtues. The challenged contractual provision was designed, and chiefly functioned, as a vertical restraint. The economic literature shows that intrabrand vertical restraints tend to benefit competition. While there are circumstances under which certain vertical restraints can be anticompetitive, there is no literature demonstrating that they are typically anticompetitive. In the franchise context, intrabrand vertical restraints strengthen the franchise’s brand overall and thus foster competition. The existence of some horizontal aspects or applications of such a restraint, moreover, does not negate these procompetitive virtues. The rule of reason fosters consideration of such issues, whereas the Seventh Circuit’s decision curtails it.

Third, the Seventh Circuit held that positive effects on consumers cannot justify a restraint in the labor market. This holding is in deep tension with this Court’s admonition that antitrust analysis focus on “the commercial realities” of a business or industry rather than on “formalistic distinctions.” See Ohio v. Am. Express Co., 138 S. Ct. 2274, 2285 (2018) (“AmEx”) (quoting Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 466–67 (1992)). Second, the decision below is at odds with this Court’s teaching that “reasonableness” is a holistic endeavor, which incorporates consideration of consumer welfare. See NCAA v. Alston, 141 S. Ct. 2141, 2151 (2021). As petitioners explain, a growing circuit split on this fundamental, analytical issue warrants this Court’s immediate attention.

[1] Pursuant to S. Ct. Rule 37.2(a), counsel for all parties have been notified about the filing of this brief. No counsel for a party authored this brief in whole or in part and no person or entity other than amicus, its members, or counsel made a monetary contribution to its preparation or submission.

Abstract

In the headline to a Dec. 7 press release, the Federal Trade Commission (FTC) announced that it, in concert with the U.S. Justice Department (DOJ) and U.S. Department of Health and Human Services (HHS), had managed to “Lower Health Care and Drug Costs, Promote Competition to Benefit Patients, Health Care Workers.” According to the subhead: “Recent agency actions have helped lower costs, increase care quality for consumers and promote competition across the health care market.”

The headline sounds great. One wonders about the extent to which the subhead is true.

Read the full piece here.

When my family and I moved to rural America from Armenia in the mid-1990s, we found that it stood true to its reputation as the land of opportunity and abundance. Work was readily available, and my parents also found opportunities to pursue other sources of income through self-employment, contracting and starting their own businesses.

Read the full piece here.

ICLE Senior Scholar Eric Fruits joined Supermarket News‘ SN Off the Shelf podcast to discuss the proposed merger of Kroger and Albertsons and the likelihood that the Federal Trade Commission will attempt to block the deal. Video of the full episode is embedded below.