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Antitrust Citations in Federal Court, 2003-2011

Popular Media Below is a graph illustrating the number of citations to selected antitrust publications in federal courts from 2003 – 2011.  The full study is available . . .

Below is a graph illustrating the number of citations to selected antitrust publications in federal courts from 2003 – 2011.  The full study is available on the Antitrust Source website and updates previous data collected by Jonathan Baker on behalf of the Antitrust Law Journal Editorial Board. 

The data and study – including a list of articles and opinions in which they are cited – are available at the Antitrust Source (under Supplementary Materials) and Antitrust Law Journal.

Disclosure: I am a member of the Antitrust Law Journal Editorial Board and the Editorial Advisory Board for Competition Policy International’s Antitrust Chronicle.  Special thanks to my research assistant Stephanie Greco for her work on this.

Filed under: antitrust, legal scholarship, scholarship

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Antitrust & Consumer Protection

Summary Judgment Granted in Mayer Laboratories v. Church & Dwight

Popular Media Judge Edward Chen in the Northern District of California granted Church & Dwight’s motion for summary judgment as to Mayer Laboratories antitrust claims involving Church . . .

Judge Edward Chen in the Northern District of California granted Church & Dwight’s motion for summary judgment as to Mayer Laboratories antitrust claims involving Church & Dwight’s shelf space agreements with retailers in the condom market.  Church & Dwight is the manufacturer of Trojan brand condoms.  Specifically, Mayer argued that Church & Dwight’s shelf space share discounts with retailers — all units discounts triggered upon the retailer committing a specified percentage of its condom shelf space to Trojan products — prevented Mayer from competing by denying it access to retailer shelf space and thus allowed Church & Dwight to unlawfully monopolize the condom market.

Judge Chen’s opinion is available here (and at 2012 WL 1231801).  Judge Chen’s opinion is lengthy and correspondingly thorough; summary judgment was granted on a number of independent grounds, including lack of antitrust injury, failure to demonstrate substantial foreclosure, and insufficient evidence of monopoly power.  I was the economic expert witness for Church & Dwight in the case (along with my colleague at Charles River Associates, Serge Moresi, who filed a rebuttal report) and am obviously quite pleased with the outcome and that Judge Chen relied upon my analysis in reaching these conclusions.

Notwithstanding my private interest in the case, I suspect our readers will find the opinion interesting both respect to the handling of economic evidence, but also with respect to the analysis of shelf space share discounts, which have been the focus of some recent speeches by agency economists.  Judge Chen’s opinion also directly addresses both traditional foreclosure based analysis of allegedly exclusionary agreements as well as the more novel “tax effect” theories.  While I cannot comment on the case directly, I thought some of our readers might be interested in seeing the opinion.

Professor Wright, a recognized authority on vertical contractual arrangements at the George Mason University School of Law, filed expert and rebuttal reports in anticipation of trial. Serge Moresi, CRA’s Director of Competition Modeling, filed a rebuttal report in response to the claims of Mayer Laboratories’ economic experts. Professor Wright and Dr. Moresi explained why, both factually and conceptually, the opposing experts’ claims were substantially flawed. Relying extensively on the evidence and analysis presented by CRA’s economic experts, the Court granted summary judgment in Church & Dwight’s favor with regard to each of the antitrust claims raised in this case.

Filed under: antitrust, economics, exclusionary conduct, exclusive dealing, monopolization

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Antitrust & Consumer Protection

CEO Vacations and Stock Prices

Popular Media An interesting looking empirical piece from David Yermack (NYU), Tailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes.  I . . .

An interesting looking empirical piece from David Yermack (NYU), Tailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes.  I haven’t read it closely yet.  Here’s the abstract:

This paper shows close connections between CEOs’ vacation schedules and corporate news disclosures. Identify vacations by merging corporate jet flight histories with real estate records of CEOs’ property owned near leisure destinations. Companies disclose favorable news just before CEOs leave for vacation and delay subsequent announcements until CEOs return, releasing news at an unusually high rate on the CEO’s first day back. When CEOs are away, companies announce less news than usual and stock prices exhibit sharply lower volatility. Volatility increases immediately when CEOs return to work. CEOs spend fewer days out of the office when their ownership is high and when the weather at their vacation homes is cold or rainy.

HT: Salop.

Filed under: corporate governance, economics, scholarship

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Financial Regulation & Corporate Governance

Steve Salop Wins Global Competition Review Academic Excellence Award

Popular Media Congratulations to my friend, colleague, and occasional TOTM contributor Steve Salop (Georgetown Law) on winning Global Competition Review’s Academic Excellence Award this year.  From the . . .

Congratulations to my friend, colleague, and occasional TOTM contributor Steve Salop (Georgetown Law) on winning Global Competition Review’s Academic Excellence Award this year.  From the announcement:

Around 1,500 Global Competition Review (GCR) readers cast their votes, honoring outstanding individuals in such areas as competition law and economics around the world. GCR is the world’s leading antitrust and competition law journal and news service. The Academic Excellence Award recognizes a highly regarded academic and was presented to Professor Salop at GCR’s 2nd Annual Charity Awards Dinner in Washington, DC. In addition to being a senior consultant to CRA, Dr. Salop is a professor of economics and law at the Georgetown University Law Center in Washington, DC, where he teaches antitrust law and economics and economic reasoning for lawyers.

Congratulations Steve.

Filed under: announcements, antitrust, economics, scholarship

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Antitrust & Consumer Protection

Gary Becker, the Economic Approach to Crime, and Guerilla Grafters

Popular Media Fruit trees in a number of cities, including San Francisco, are prevented from bearing fruit in the name of “protecting” pedestrians from slip and falls . . .

Fruit trees in a number of cities, including San Francisco, are prevented from bearing fruit in the name of “protecting” pedestrians from slip and falls and keeping away insects and vermin.  In response to these regulations, a group of Guerilla Grafters has emerged to — you guessed it — graft fruit bearing branches onto the non-fruit bearing city trees.

But grafting trees to bear the occasional pear is not all fun and games, apparently.  San Francisco officials consider the renegade arborists to be engaged in a serious offense (San Francisco Examiner):

While the grafters’ activities might seem harmless, Public Works Director Mohammed Nuru said the renegade gardeners are running afoul of the law.

“The trees that are in the right of way, they’re not for grafting,” he said. “The City considers such vandalism a serious offense. There would be fines for damage to city property.”

Nuru had not heard of Guerrilla Grafters, but said he would ask his staff to investigate. Meanwhile, he added, if the grafters have ideas about urban agriculture, they should discuss them with city officials.

NPR embeds one reporter with grafter Tara Hui on a covert grafting operation.  The first thought that crossed my mind as I read the story was skepticism that the costs associated with fallen fruit on city trees could be significant.  The second was hope the story had overestimated the prevalence of this type of regulation.  There is also some interesting law and economics.  The cops and robbers angle in the NPR story with Hui attempting to avoid detection for fear of sanction by the city authorities in the way of fines for vandalism was also interesting.  From the standard Beckerian model of rational criminal behavior we see Hui’s sensitivity to changes in the “price” of engaging in guerilla grafting (that is, the probability of detection weighted by the sanction she will pay if caught) and investments to avoid detection.

But what about the economic benefits?  Here’s Hui’s account:

“If we say where it is, they could come after me,” says Tara Hui, a fruit tree grafter. She’s talking about city officials, who manage the trees and say it’s illegal to have fruit trees on sidewalks.  So let’s just say we’re in some Bay Area city in a working-class neighborhood, at a line of pear trees that bear no pears.

Hui and two assistants pull out a knife, reach into a plastic bag filled with twigs no bigger than your pinkie, and cut from a fruit bearing pear tree. She says it’s an Asian pear, and that she’s grafting it onto a flowering pear tree.  They whittle a wedge into one end of their twig, then cut a groove into a similar-sized twig on the city tree. They join the two, like tongue and groove carpenters. And when their grafted twig eventually grows into a branch.

“There will be a much better looking tree that actually will provide fruit for people that come by,” Hui says.

Hui’s motives to break the law are straightforward.

“We don’t have a supermarket and we have very few produce stores [here],” she says. “What better to alleviate scarcity of healthy produce in an impoverished area than to grow them yourself and to have it available for free.”

For a recent and illuminating paper on the law and economics of criminal behavior which attempts to incorporate conventional critiques of the economic approach — for example, that criminals lack self-control, have non-standard preferences or do not act in their own self-interest — into the standard model, see Murat Mungan’s Law and Economics of Fluctuating Criminal Tendencies.  Mungan’s main goal is to show that the standard economic approach is capable of modification so as to absorb more realistic assumptions and that it gains explanatory power by doing so.

HT goes to Steve Salop for pointing me to the Guerilla Grafter story.

Filed under: behavioral economics, economics, regulation

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Financial Regulation & Corporate Governance

Against Antitrust Exemptions, H.R. 1946 Edition

Popular Media I testified Thursday on H.R. 1946, the “Preserving our Local Hometown Independent Pharmacies Act of 2011,” in front of the House Committee on the Judiciary Subcommittee . . .

I testified Thursday on H.R. 1946, the “Preserving our Local Hometown Independent Pharmacies Act of 2011,” in front of the House Committee on the Judiciary Subcommittee on Intellectual Property, Competition and the Internet.  The Act, as implied by the title, would establish an antitrust exemption for smaller pharmacies.  The hearing lineup is available here.  My written testimony is available here.  The basic case against antitrust exemptions to allow price-fixing is pretty clear as a matter of economics — e.g. the Antitrust Modernization Commission strongly opposes such exemptions on both public choice and consumer welfare grounds.  As I discuss in my testimony, that case is made stronger in the health care context.

For more on the case against antitrust exemptions, see here, here, and here.

Filed under: antitrust, exemptions

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Antitrust & Consumer Protection

A Little Too Close To Home

Popular Media The apparent perils of antitrust blogging: Last summer, professor Enrique Dans wrote a blog post about the powerful copyright lobby in Spain.  One of his arguments is . . .

The apparent perils of antitrust blogging:

Last summer, professor Enrique Dans wrote a blog post about the powerful copyright lobby in Spain.  One of his arguments is that Promusicae, the well-known recording industry outfit, is violating antitrust laws. The group has set up a digital system to send music to radio stations for airplay, which the professor says is unfair since non-member companies and independent artists can’t join.

The music group was not happy with this accusation and has filed a lawsuit against the IE Business School professor, claiming that he defamed the group and threatened their honor.

Through the lawsuit Promusicae demands 20,000 euros in damages and a public apology. They claim that the accusations are false and state that “some of the information supplied on the website is false and violates the honor and good name of the group.”

Here is the allgedly offending blog post.  HT: Competition Policy International.

 

Filed under: antitrust, blogging

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Antitrust & Consumer Protection

DOJ’s Latest on Apple Investigation

Popular Media From the WSJ: Publishers argue that the agency model promotes competition by allowing more booksellers to thrive. They say Amazon had sold e-books below cost . . .

From the WSJ:

Publishers argue that the agency model promotes competition by allowing more booksellers to thrive. They say Amazon had sold e-books below cost and that agency pricing saved book publishers from the fate suffered by record companies.

But the Justice Department believes it has a strong case that Apple and the five publishers colluded to raise the price of e-books, people familiar with the matter say.

Apple and the publishers deny that.

The Justice Department isn’t taking aim at agency pricing itself. The department objects to, people familiar with the case say, coordination among companies that simultaneously decided to change their pricing policies.

“We don’t pick business models—that’s not our job,” Ms. Pozen says, without mentioning the case explicitly. “But when you see collusive behavior at the highest levels of companies, you know something’s wrong. And you’ve got to do something about it.”

For related posts, see here.  The case increasingly appears to focus on whether the DOJ can prove coordination among rivals with respect to the shift to the agency model and e-book prices.

Filed under: antitrust, cartels, contracts, doj, e-books, economics, error costs, law and economics, litigation, MFNs, monopolization, resale price maintenance, technology, vertical restraints Tagged: agency model, Amazon, antitrust, Apple, doj, e-books, iBookstore, major publishers, MFN, most favored nations clause, per se, price-fixing, publishing industry, Rule of reason, vertical restraints

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Antitrust & Consumer Protection

Holtz-Eakin & Smith on The Economics of ObamaCare

Popular Media Douglas Holtz-Eakin and my former George Mason colleague and Nobel Laureate Vernon Smith are in the WSJ today discussing the economic wisdom and constitutionality of . . .

Douglas Holtz-Eakin and my former George Mason colleague and Nobel Laureate Vernon Smith are in the WSJ today discussing the economic wisdom and constitutionality of ObamaCare.  From the WSJ:

The Obama administration defends the mandate on the ground that a person’s decision to not buy health insurance affects commerce by materially increasing the costs of others’ health insurance. The government adds that health care is unique and therefore can be regulated constitutionally in ways other markets cannot.

In reality, the mandate has almost nothing to do with cost-shifting. The targeted population—the young, healthy and not poor who choose to forgo coverage—has a minimal role in the $43 billion of uncompensated health-care costs. In 2008, for example (the latest figures available), the Department of Health and Human Service’s Medical Expenditure Panel Survey showed that the uncompensated care of the mandate’s targeted population was no more than $12.8 billion—a tiny one-half of 1% of the nation’s $2.4 trillion in overall health-care costs. The insurance mandate cannot reasonably be justified on the ground that it remedies costs imposed on the system by the voluntarily uninsured.

The government’s other defense is that the health-care market does not exhibit textbook competition. No market does. The economic features relied upon by the government—externalities, imperfect information, geographically distinct markets, etc.—are characteristic of many markets.  The presence of externalities and other market imperfections does not justify a departure from the normal rules of the constitutional road. Health care is typically consumed locally, and health-insurance markets themselves primarily operate within the states. The administration’s attempt to fashion a singular, universal solution is not necessary to deal with the variegated issues arising in these markets. States have taken the lead in past reform efforts. They should be an integral part of improving the functioning of health-care and health-insurance markets.

Holtz-Eakin and Smith conclude:

Without the individual mandate, ObamaCare imposes total net costs of $360 billion on health-insurance companies from 2012 through 2021. With the mandate, the law would provide a net $6 billion benefit—i.e., revenues in excess of costs—over that same time period. In other words, the benefits of the individual mandate to health-insurance companies, along with their additional revenues provided by ObamaCare’s Medicaid expansion, are projected to balance, nearly perfectly, the costs that the law’s various regulatory mandates impose on insurers.

The individual mandate and Medicaid expansions appear to many to be unconstitutional. They are certainly bad economic policy. When they go, the entire law must fall. The administration built an intricate, balanced policy on a flawed economic foundation. It is up to the Supreme Court to pull it down.

Go read the whole thing.

Filed under: business, commerce clause, constitutional law, economics, health care, nobel prize

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Financial Regulation & Corporate Governance