Showing 9 of 273 Publications in Monopolization

Section 2 Symposium: Dan Crane on Buyer-Instigated Bundled Discounts

TOTM Bundled discounts have been one of the hottest monopolization topics of the last decade. Much of the trouble began with the Third Circuit’s en banc . . .

Bundled discounts have been one of the hottest monopolization topics of the last decade. Much of the trouble began with the Third Circuit’s en banc decision in LePage’s v. 3M, which reversed an earlier 2-1 panel decision which in turn had overturned a plaintiff’s jury verdict largely based on 3M’s bundled discounts. After the Solicitor General’s amicus curiae brief asked the Supreme Court to deny cert on the grounds that there wasn’t sufficient scholarship on bundled discounts, there was a flurry of legal and economic scholarship, the overwhelming majority of which was highly critical of LePage’s.

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Antitrust & Consumer Protection

Section 2 Symposium: Bill Kolasky on a Stepwise Rule of Reason for Exclusionary Conduct

TOTM The most controversial part of the Justice Department’s Single Firm Conduct Report is the Department’s proposed use of what it terms a “substantial disproportionality” test for exclusionary . . .

The most controversial part of the Justice Department’s Single Firm Conduct Report is the Department’s proposed use of what it terms a “substantial disproportionality” test for exclusionary conduct. Under this test, the Justice Department would bring a case only if the harm to consumers and competition caused by a dominant or near-dominant firm’s conduct is “substantially disproportionate” to any legitimate benefits the firm might realize. The Department argues that this test is superior to the three alternative tests it considers—an effects-balancing test, a no-economic-sense test, and an equally-efficient-competitor test—because it is more administrable and because it reduces the risk of false positives (i.e., finding conduct unlawful that does not harm competition ), which the Department views as more serious than that of false negatives (i.e., finding conduct lawful that does harm competition).

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Antitrust & Consumer Protection

Section 2 Symposium: Michael Salinger on Error Costs and the Case for Conduct-Specific Standards

TOTM The source of much of the disagreement between the Antitrust Division and the FTC is based on chapter 3, which discusses general standards for Section . . .

The source of much of the disagreement between the Antitrust Division and the FTC is based on chapter 3, which discusses general standards for Section 2 liability.

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Antitrust & Consumer Protection

Section 2 Symposium: Bill Page on Microsoft and the DOJ’s General Standards of Exclusion

TOTM The DOJ’s § 2 Report offers two recommendations under the heading of “General Standards for Exclusionary Conduct.” First, for evaluating alleged acts of exclusion, the . . .

The DOJ’s § 2 Report offers two recommendations under the heading of “General Standards for Exclusionary Conduct.” First, for evaluating alleged acts of exclusion, the Report endorses the burden-shifting framework of the D.C. Circuit’s 2001 Microsoft decision. Second, after canvassing various standards of anticompetitive effect, the Report settles on the “disproportionality test,” under which “conduct that potentially has both procompetitive and anticompetitive effects is anticompetitive under section 2 if its likely anticompetitive harms substantially outweigh its likely procompetitive benefits.”

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Antitrust & Consumer Protection

Section 2 Symposium: Bruce Kobayashi on Are Administrable Bright Line Rules Underutilized in Section 2 Analyses?

TOTM One of the most important changes in the antitrust laws over the past 40 years has been the diminished reliance of rules of per se . . .

One of the most important changes in the antitrust laws over the past 40 years has been the diminished reliance of rules of per se illegality in favor of a rule of reason analysis. With the Court’s recent rulings in Leegin (eliminating per se rule for minimum RPM) and Independent Ink (eliminating the per se rule against intellectual property tying), the evolution of the antitrust laws has left only tying (under a “modified” per se rule) and horizontal price fixing under per se rules of illegality. This movement reflects advances in law and economics that recognize that vertical restraints, once condemned as per se illegal when used by firms with antitrust market power, can be procompetitive. It also reflects the judgment that declaring such practices pre se illegal produced high type I error costs (the false condemnation and deterrence of pro competitive practices).

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Intellectual Property & Licensing

Section 2 Symposium: Alden Abbott on the View from Within the FTC

TOTM Much ink has been spilled concerning the policy split revealed by the Justice Department’s September 2008 Report on Single Firm Conduct (“SFC”) and the Federal Trade Commission’s . . .

Much ink has been spilled concerning the policy split revealed by the Justice Department’s September 2008 Report on Single Firm Conduct (“SFC”) and the Federal Trade Commission’s swift and rather critical rejoinder (issued by three of the four FTC Commissioners). (By “SFC” I refer to actions taken by a “dominant” firm or by an actual or aspiring monopolist.) Among the concerns raised is that the lack of U.S. interagency consensus on SFC enforcement standards may undermine the ability of the United States to influence the development of international norms in this area, and, in particular, to promote convergence toward desirable best practices. These concerns, while understandable, are greatly overblown, in my opinion. As I will explain, work on SFC by leading scholars and agencies world-wide has greatly enhanced understanding of SFC practices in recent years. The September 2008 FTC-DOJ contretemps is a mere “bump in the road” and will not seriously detract from enforcers’ efforts to promote convergence in the SFC area. (However, the pace and direction of convergence efforts, and the desirability of particular SFC enforcements standards, are questions beyond the scope of this blog entry.)

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Antitrust & Consumer Protection

Section 2 Symposium: Keith Hylton–An Economist’s View

TOTM The “error cost” or “decision theory” approach to Section 2 legal standards emphasizes the probabilities and costs of errors in monopolization decisions.  Two types of . . .

The “error cost” or “decision theory” approach to Section 2 legal standards emphasizes the probabilities and costs of errors in monopolization decisions.  Two types of error, and two associated types of cost are examined.  One type of error is that of a false acquittal, or false negative.  The other type of error is that of a false conviction, or false positive.  Under the error cost approach to legal standards, a legal standard should be chosen that minimizes the total expected costs of errors.

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Antitrust & Consumer Protection

Section 2 Symposium: Howard Marvel–An Economist’s View

TOTM In the wake of Bork and Posner, and Baxter and the Reagan Revolution, a consensus emerged that big could be bad, but the harm that . . .

In the wake of Bork and Posner, and Baxter and the Reagan Revolution, a consensus emerged that big could be bad, but the harm that dominant firms could do needed to be demonstrated, not simply assumed in consequence of their sheer size. Moreover, the demonstration required harm to competition. The consensus held through the Clinton Administration, buoyed by the talented economists that it attracted. The Section 2 Report is controversial in drawing lines about where harm to competition begins, but it is not hard to imagine all sides of the debate agreeing with this from the report: “Competition is ill-served by insisting that firms pull their competitive punches so as to avoid the degree of marketplace success that gives them monopoly power or by demanding that winning firms, once they achieve such power, ‘lie down and play dead.’ ” (Report, p.8)

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Antitrust & Consumer Protection

Section 2 Symposium: Dan Crane on Framing the Debate

TOTM I must confess that my basic reaction to the Section 2 report was disappointment.  It’s not that I find much fault with the report itself–a few quibbles . . .

I must confess that my basic reaction to the Section 2 report was disappointment.  It’s not that I find much fault with the report itself–a few quibbles yes, but generally I find it quite satisfactory–but that after all of the time and effort put into the joint hearings by the FTC, the FTC wasn’t able to join the report.  Moreover, the shrill dissenting statement by three commissioners will probably prevent the report from playing influencing judicial decisions or legislation.

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Antitrust & Consumer Protection