In conjunction with Ronald Coase’s new book on China, he’s given a new interview to his co-author Ning Wang. (HT: Paul Walker via Mike Giberson.) Excerpt…

Read the full piece here.

The titular question is posed by Louis Kaplow (Harvard) in a recent piece in the Harvard Law Review that I suspect will attract a fair amount of attention.   I may have more to say about this later, but for now, here is the abstract:

Competition law is dominated by the market definition / market share paradigm, under which a relevant market is defined and pertinent market shares therein are examined in order to make inferences about market power. This Article advances the immodest claim that the market definition process is incoherent as a matter of basic economic principles and hence should be abandoned entirely. This conclusion rests on four arguments. First, meaningful inferences of market power in redefined markets cannot be made. Second, the paradigm relies on an unarticulated notion of a standard reference market whose necessity and prior omission signal a serious gap. Third and most important, determining what market definition is best is impossible without first formulating a best estimate of market power, rendering further analysis pointless and possibly leading to erroneous outcomes. Finally, the need to define markets engenders a mistaken focus on cross-elasticities of demand for particular substitutes rather than on the market elasticity of demand, which further reduces the quality of resulting market power inferences. Although the inquiry is conceptual, brief remarks on legal doctrine suggest that creating conformity may not be unduly difficult.

Check out the whole thing.

The AP Reports:

The Justice Department is investigating claims of anticompetitive behavior by shipping companies FedEx Corp. and UPS Inc.

Los Angeles antitrust attorney Maxwell Blecher said in a sworn court document filed last month that on Nov. 22 a trial attorney in the Justice Department’s antitrust division called him and said they had begun a formal investigation of UPS and FedEx.

The Justice Department declined to confirm the investigation on Friday. FedEx and UPS say they are aware of the investigation.

Blecher represents a firm called AFMS Logistics Management Group that helps companies negotiate lower rates from UPS and FedEx. The company’s federal lawsuit accuses UPS and FedEx of announcing on the same day that they would no longer deal with such consultants. Blecher said on Friday that the moves were “devastating” for AFMS’s business.

The underlying private civil case is AFMS LLC v. United Parcel Service Co., (10-cv-5830, U.S. District Court, Central District of California (Los Angeles)).  I do not have a copy of the complaint in that case which references the DOJ investigation, but will post if I do.

UPDATE: Here is a copy of the complaint (HT: Dale Collins).  Briefs are also available here.

C. Boyden Gray and John Shu offer a very helpful discussion on this issue in an article in Engage.  Here is the abstract:

President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank” or “the Act”) into law on July 21, 2010. The massive and complex Act is reportedly the result of many compromises. Dodd-Frank’s intent, according to its title page, is “[t]o promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘too big to fail,’ to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”

Of particular interest to me was this portion of the discussion of the Bureau of Consumer Financial Protection (BCFP):

One of the BCFP’s stated objectives is to protect consumers “from unfair, deceptive, or abusive acts and practices and from discrimination.”75 The BCFP may halt a company or service provider from “committing or engaging in an unfair, deceptive, or abusive act or practice” with respect to offering or transacting in a consumer financial product or service.76 In fact, Dodd-Frank makes it unlawful for consumer financial product companies or service providers to “engage in any unfair, deceptive, or abusive act or practice.”77 The Act extends this liability to any entity that “knowingly or recklessly provide[d] substantial assistance” to the offender.78

clearly defi ne vague terms such as “unfair,” “deceptive,” “abusive,” and “discrimination.” BCFP is vested with the sole discretion to decide what those terms mean and how they are applied to consumer financial products and services and the consumer financial industry.79 For example, Dodd- Frank defines an act or practice as “abusive” if it “materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service,” or if it takes “unreasonable advantage” of a consumer’s “lack of understanding” of the “material risks, costs, or conditions of the product or service” or a consumer’s “inability” to protect his own interests “in selecting or using a consumer financial product or service.”80 Given that each and every consumer has different abilities to understand a term, condition, material risk, and cost; and each and every consumer has varying levels of ability—or desire—to protect his own interests, the Act’s standard can readily be caricatured as “we know it when we see it.”

Moreover, the Act does not seem to include the concepts of deception or fraud with respect to the term “abusive,” which would mean that the BCFP could still declare illegal products and services whose terms, conditions, risks and costs are fully disclosed, so long as the BCFP labels them “abusive.” Moreover, the BCFP’s charter
is so vast that its power could be characterized as including the practical authority to re-write consumer financial protection laws if it chooses to do so. Accordingly, it is reasonable to argue that Congress must do the re-writing, not an agency that escapes
meaningful oversight.

Those challenging Dodd-Frank will maintain that Congress structured the BCFP in such a way that it unconstitutionally escapes both Article I and Article II oversight. The key is that the Act houses the BCFP within the Federal Reserve, thereby placing one protected entity (the BCFP) within another (the Fed).81

The article provides a good summary of the provisions of Dodd-Frank as well.

Professor Bainbridge passes along the sad news that UCLA Law’s Arthur Rosett has passed.  Professor Rosett my my contracts professor at UCLA in my first year of law school.  The LA Times Obituary hits the highlights of Professor Rosett’s legal career:

Arthur was a distinguished legal scholar and esteemed member of the faculty at the UCLA School of Law for over 35 years. His areas of expertise included contract law, international business transactions, comparative law and Jewish law. He published numerous books and articles during his long academic career, and enjoyed lecturing at various institutions throughout the world. Upon graduating from Columbia Law School in 1958, Arthur served as a law clerk to Chief Justice Earl Warren of the U.S. Supreme Court. During his early career, Arthur also served as an Assistant U.S. Attorney for the Southern District of New York. Prior to joining the UCLA faculty 1967, Arthur served as Associate Director of the President’s Commission on Law Enforcement (The National Crime Commission).
Arthur will be remembered for his high intellect, his dedication to fairness and justice, his sharp wit and love of life. He is survived by his wife, Rhonda K. Lawrence; his three children David Rosett (Consuelo Ruiz Esparza) of Guadalajara, Mexico, Martha Rosett of Sherman Oaks, CA and Danny Rosett of Westlake Village, CA; his two grandsons Benjamin Rosett and Jacob Rosett; and many other family members and friends who loved him. In lieu of flowers, the family requests that memorial donations be made in his name to the following charities: Los Angeles Chapter of the American Parkinson’s Disease Association, www.parkinsonla.org/ or to Hillel at UCLA, www.ucla.hillel.org Services entrusted to Hillside Mortuary (800) 576-1994.

More than any other class during law school, I remember my experience in contracts and think back to it often as I struggle to improve in teaching contract law to my students at George Mason.  Professor Rosett was masterful in the classroom and artful in his teaching methods in ways that I was not capable of appreciating as a young law student  — though I do remember an especially entertaining lecture on Frigaliment.  I draw upon my experiences in his class as a 1L frequently and am grateful to have had the opportunity to be his student.

The “consumer choice” approach to antitrust is increasingly discussed in a variety of settings, and endorsed by regulators and in scholarship, especially but not exclusively in the Section 5 context.  The fundamental idea is that the “conventional” efficiency approach embedded in the total and/or consumer welfare standards is too cramped and does not measure the “right” things. The consumer choice is a standard focusing on the options available to consumers and is proposed as an alternative to efficiency-based standards.  Preliminary, I do not think the approach as I understand it is an improvement for modern antitrust methods, nor do I think that its adoption would be a good development for the coherence of antitrust jurisprudence or consumers.

Read the full piece here.

At the excellent Core Economics blog, Andreas Ortman discusses an Australian policy debate involving the Review of the Governance, Efficiency, Structure and Operation of Australia’s Superannuation System (also known as the Cooper Review), and more specifically, retirement savings and the superannuation system.  The Cooper Review drafters contend that the behavioral economics literature strongly supports a mandated default option (MySuper).

Read the full piece here.