I don’t know.  But apparently, industry analysts preliminarily think not.   I tend to disagree.  At least, I think its far too early to be confident in either direction. Press reports, such as this one,  are primarily relying on the report of an analyst who correctly points out that Apple’s market share would be an obstacle for a case against Apple…

Read the full piece here. 

One of the most significant issues in current US antitrust policy has been the Federal Trade Commission’s attempt to avoid some of the rigorous requirements imposed by Section 2 of the Sherman Act in monopolization cases by expanding FTC authority under Section 5 of the Federal Trade Commission Act (FTCA). This issue is nothing new. FTC leadership has made clear its view that the limitations the Supreme Court has imposed on antitrust plaintiffs apply only in the context of private plaintiff cases – not in cases brought by the agencies. Thus, according to the FTC’s current line of thought, the Supreme Court’s restrictions on the agencies have been imposed erroneously on the agencies both by the Supreme Court and lower courts misinterpreting those decisions. Chairman Leibowitz frames the argument as follows…

Read the full piece here. 

Intel’s rebates are apparently given rise to a potentially whole new class of suits based on the notion recipients of the rebates at the center of the Commission’s antitrust action should have been disclosed.   The WSJ reports…

Read the full piece here. 

Abstract

The Federal Trade Commission’s recent complaint targets the Intel Corporation for antitrust scrutiny under Section 5 of the Federal Trade Commission Act and Section 2 of the Sherman Act. The Commission alleges that, through the use of loyalty discounts offered to microprocessor purchasers, Intel unlawfully excluded rivals and harmed consumers in the microprocessor and graphics processor markets. This article analyzes the Commission’s claims. The Commission’s reliance on Section 5 should be viewed with suspicion because it allows the Commission to evade the more stringent standards of proof that have been emerged in the Supreme Court’s Section 2 jurisprudence. Furthermore, the Commission’s actions surrounding its prosecution of Intel reflect an adversarial attitude that undermines the Commission’s stated comparative advantages over private litigants. Moreover, the Commission’s allegations form a weak case when evaluated under the conventional Section 2 standard. Unlike many Section 2 cases alleging speculative future consumer harm, the disputed conduct in this case has been in the marketplace for nearly a decade, and its competitive footprint is readily observable. The available data do not support the Commission’s theory that Intel’s behavior harmed consumers. To the contrary, it is almost certain that Intel’s distribution contracts led to tangible, demonstrable consumer welfare gains in the form of lower prices. Accordingly, the Commission’s complaint against Intel threatens to harm consumers directly in the computer industry as well as indirectly by undermining the stability and certainly which longstanding Section 2 jurisprudence has afforded the business community by requiring the plaintiffs offer rigorous proof of competitive harm.

As regular readers know, interchange fees are a frequent topic of conversation around the blog.  Taking the conversation from the ether to the real world, ICLE has funded a white paper and is putting on a conference next week on the topic.  The conference, in fact, grows out of the successful online symposium we held here at Truth on the Market a few months ago.  An e-book/pdf version of the posts and comments from that sympoisum can be downloaded here, by the way.  A few of the participants from the symposium will be participating in the conference, as well (more below).

Read the full piece here. 

We are a group of economists (listed at the end of this letter) with extensive experience working on antitrust issues, including horizontal mergers. We applaud the Federal Trade Commission and the Department of Justice for inviting comments from the public on the proposed Horizontal Merger Guidelines (HMGs). The proposed HMGs represent a substantial advance over the existing guidelines by better explaining the methodologies actually employed at the Department of Justice and Federal Trade Commission in their evaluations of mergers. We are writing to comment on one specific aspect of the proposed HMGs: the use of price/cost margins in merger analysis.

Late in the Senate’s proceedings on the financial regulatory reform bill, the Senate adopted – with no hearings and minimal debate – a controversial provision proposed by Sen. Richard Durbin, Illinois Democrat, that imposes price controls on interchange fees for debit and prepaid cards. The amendment also allows merchants to override several rules of payment card networks that currently protect consumers from abusive practices by merchants. While big-box merchants and convenience stores are declaring this a victory against the financial services industry, if the amendment survives in conference committee, consumers and small banks will be the real losers.

Summary

Fresh off of the most substantial national liquidity crisis of the last generation and the enactment of sweeping credit card regulation in the form of the Credit CARD Act, Congress continues to deliberate, with a continuing drumbeat of support from lobbyists, a set of new regulations for credit card companies. These proposals, offered in the name of consumer protection, seek to constrain the setting of “interchange fees”— transaction charges integral to payment card systems—through a range of proposed political interventions. This article identifies both the theoretical and actual failings of such regulation. Payment cards are a secure, inexpensive, welfare-increasing payment mechanism largely unlike any other in history. Rather than increasing consumer welfare in any meaningful sense, interchange fee legislation represents an attempt by some merchants to shift costs away from their businesses and onto card issuing banks and cardholders. In particular, bank-issued credit cards offer a dramatic improvement in the efficiency and availability of consumer credit by shifting credit risk from merchants onto banks in exchange for the cost of the interchange fee—currently averaging less than 2% of purchase value. Merchants’ efforts to cabin these fees would harm not only consumers but also the merchants themselves as commerce would depend more heavily on less-efficient paperbased payment systems. The consequence of interchange fee legislation, as Australia’s experiment with such regulation demonstrates, would be reduced access to credit, higher interest rates for consumers, and the return of the much-loathed annual fee for credit cards. Interchange fee regulation threatens to constrain credit for consumers and small businesses as the American economy begins to convalesce from a serious “credit crunch,” and should be accordingly rejected.

One of my antitrust students recently pointed me to a television commercial that could inspire a great exam question. Unfortunately, I didn’t see the ad until I’d finished drafting this semester’s antitrust exam (which I’ve been grading…hence the absence from TOTM).

Read the full piece here.