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Why Congress Should Reject the FTC’s Request for a Trinko Exemption

TOTM 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 . . .

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…

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Antitrust & Consumer Protection

An Antitrust Analysis of the Federal Trade Commission’s Complaint Against Intel

ICLE White Paper 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 . . .

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.

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Antitrust & Consumer Protection

Proposed Horizontal Merger Guidelines: Economists’ Comment

Regulatory Comments 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 . . .

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.

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Antitrust & Consumer Protection

Comments on Jonathan Baker’s Preserving a Political Bargain

TOTM I’ve recently finished reading Jonathan Baker’s Preserving a Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement, forthcoming in the Antitrust Law . . .

I’ve recently finished reading Jonathan Baker’s Preserving a Political Bargain: The Political Economy of the Non-Interventionist Challenge to Monopolization Enforcement, forthcoming in the Antitrust Law Journal.

Baker’s central thesis in Preserving a Political Bargain builds on earlier work concerning competition policy as an implicit political bargain that was reached during the 1940s between the more extreme positions of laissez-faire on the one hand and regulation on the other.  The new piece tries to explain what Baker describes as the “non-interventionist” critique of monopolization enforcement within this framework.

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Antitrust & Consumer Protection

Judge Sullivan and the UPP: Much Ado About Nothing or Articulating the Real Problem with the New HMGs?

TOTM Much has been made of Judge Sullivan’s recent decision in City of New York v. Group Health Incorporated and its implications for the UPP test . . .

Much has been made of Judge Sullivan’s recent decision in City of New York v. Group Health Incorporated and its implications for the UPP test and market definition in merger cases under Section 7 of the Clayton Act.  Given the 2010 Proposed Horizontal Merger Guidelines’ (2010 HMGs) shift toward diversion ratios and margins and away from market shares, the blogosphere has sold Judge Sullivan’s decision as sign that the agencies might have a tough time selling the UPP to federal courts in the post-2010 HMG world.

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Antitrust & Consumer Protection

Are State Consumer Protection Acts Really Little-FTC Acts?

Scholarship Abstract State Consumer Protection Acts (CPAs) were designed to supplement the Federal Trade Commission’s mission of protecting consumers and are often referred to as “little-FTC . . .

Abstract

State Consumer Protection Acts (CPAs) were designed to supplement the Federal Trade Commission’s mission of protecting consumers and are often referred to as “little-FTC Acts.” There is growing concern that enforcement under these acts is not only qualitatively different than FTC enforcement, but may be counterproductive for consumers. This article examines a sample of CPA claims and compares them to the FTC standard. It identifies qualitative differences between CPA and FTC claims by commissioning a “Shadow Federal Trade Commission” of experts in consumer protection. The study finds that many CPA claims include conduct that would not be illegal under the FTC standards and that most of the cases with illegal conduct would not warrant FTC enforcement. Even among CPA cases where the plaintiff prevailed, nearly half do not include illegal conduct under the FTC standard and most of the cases with illegal conduct would not invoke FTC enforcement. The results clearly suggest private litigation under little-FTC Acts tends to pursue a different consumer protection mission than the Bureau of Consumer Protection at the Federal Trade Commission.

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Antitrust & Consumer Protection

Section 5, Collateral Consequences, and Counting Unicorns

TOTM Judge Frank Easterbrook once opined that observing predatory pricing was a bit like seeing a unicorn —  in the sense that it was a phenomena . . .

Judge Frank Easterbrook once opined that observing predatory pricing was a bit like seeing a unicorn —  in the sense that it was a phenomena around which there was much lore but not much empirical evidence.  The debate over the current expansion of Section 5 liability increasingly has become about the search for a different sort of “unicorn” — follow-on actions. The conventional wisdom is that private rights of action in the US, ceteris paribus, militate in favor of less aggressive enforcement of Section 2 relative to other countries.  It follows, some have argued, that an expansive view of Section 5 is appropriate because it avoids the social costs —  and in particular the chilling effects on efficient behavior associated with potential antitrust liability — associated with false positives.

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Antitrust & Consumer Protection

Market Definition and Margins in the New Guidelines

TOTM I’m still working through the 2010 Horizontal Merger Guidelines, and like Dan, I find myself puzzling over some of the revisions, and in favor of . . .

I’m still working through the 2010 Horizontal Merger Guidelines, and like Dan, I find myself puzzling over some of the revisions, and in favor of others.  I wanted to start with some first impressions.  The big movement here, is that the new HMGs repudiate the market definition requirement in the new Section 4 and in Section 6 on Unilateral Effects.  Consider the language in Section 4 on market definition…

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Antitrust & Consumer Protection

David Balto (and the FTC) gets it woefully wrong on Intel

TOTM David Balto has penned a short apologia of the FTC’s Intel case (HT: Danny Sokol).  Unfortunately his defense (and, unfortunately, the FTC’s case) is woefully . . .

David Balto has penned a short apologia of the FTC’s Intel case (HT: Danny Sokol).  Unfortunately his defense (and, unfortunately, the FTC’s case) is woefully misguided.

Balto writes…

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Antitrust & Consumer Protection