Antitrust-Law Outline 2011-Spring Elhauge

Fall
08
GLOBAL ANTITRUST PROF. ELHAUGE SPRING

2011
Short-Form Outlin
Introduction................................................................................. 2
Statutory Framework and Enforcement.................................................2
Per Se Rules and Rule of Reason Review...............................................3
Market Definition.......................................................................... 3
Market Definition................................................................................3
Market Power......................................................................................4
Unilateral Conduct........................................................................5
Overview............................................................................................5
Below-Cost Predatory Pricing...............................................................6
Above-Cost Predatory Pricing...............................................................8
Excessive Pricing.................................................................................8
Price Discrimination............................................................................9
Price Squeezes....................................................................................9
Refusals to Deal................................................................................10
Aftermarkets.....................................................................................12
Proving Separate Entities............................................................13

Horizontal Agreements................................................................13
Overview...........................................................................................13
Proving Horizontal Agreements..........................................................14
Horizontal Price Fixing.......................................................................15
Horizontal Output Restrictions...........................................................16
Horizontal Market Divisions...............................................................17
Horizontal Agreements Not to Deal with Particular Firms (Boycotts). . . .18
Professional Self-Regulation..............................................................19
Agreements Facilitating Oligopolistic Price Coordination.....................21
Vertical Agreements...................................................................22
Overview...........................................................................................22
Proving Vertical Agreements..............................................................22
Exclusive Dealing and Restrictions on Dealings with Rivals..................23
Loyalty Discounts..............................................................................25
Tying................................................................................................27
Vertical Price and Non-Price Restraints...............................................29
Mergers.....................................................................................32
Mergers in General............................................................................32
Horizontal Mergers............................................................................32
Conglomerate Mergers......................................................................37
Vertical Mergers................................................................................38
INTRODUCTION
Statutory Framework and Enforcement
US
Statutes
Sherman Act
1: anticompetitive agreements
2: monopolization
Clayton Act
3: sales of goods conditioned on
the buyer not dealing with the
sellers rivals
78: mergers and interlocking
directorates
FTC Act
5: prohibits all unfair methods of
competition
Enforcement
Parties
Government (DOJ, FTC, States)
Injured parties (or states on
their behalf): injunctive relief,
treble damages, attorney fees
o Most US cases brought
by private parties
EU
101(1): restrictive agreements
between firms
101(3): exemptions from 101(1)
prohibition for agreements
Agreements exempted from
101(1) prohibition if:
1) Improve production or
distribution of goods, or
2) Promote technical or
economic progress, and
3) Allow consumers a fair
share of the resulting
benefit, and
4) No less AC alternatives,
and
5) Eliminate competition in
a substantial part of the
market
102: abuse of a dominant position
Can be a collective dominant
position (for oligopolistic
markets or contractual linkage
among the parties)
Can be applied to any economic
undertaking (including public
entities)
Parties
Virtually all enforcement done
by EC or national competition
agencies (NCAs)
Remedies
No punitive treble damages
Remedies
Criminal Penalties: requires
mens rea
o Proving criminal
violation of the Sherman
Act requires mens rea
Injunctive relief: courts have
discretion to fashion remedies
to meet goals
Punitive Treble Damages: butfor cause of injury, proximate
cause, amount of damages
Pleading
Standard
Twombly-Iqbal Plausibility
Pleading
Drawing all innocent inferences
for the s, is it plausible the s
acted unlawfully?
o Twombly: draw if natural
and obvious
o Iqbal: draw if plausible or
possible
Makes conspiracy and tacit
agreement claims less likely to
survive a 12(b)(6) motion
Plausibility less of an issue

because virtually all enforcement
done by EC or national
competitions agencies (access to
information not as important)
Per Se Rules and Rule of Reason Review

Per Se Rules versus Rule of Reason Review
1) Main justification for holding a particular type of agreement illegal per se

is that agreements of that type always or almost always tend to raise
prices or reduce output
2) However, if agreement could possibly have a PC justification, RoR applies
3) The rule of reason balancing test focuses on whether the restraint in
questions is:
a) Net AC or net PC
b) Necessary / the least AC alternative
Rule of Reason Review: Stages of Analysis and Burdens of

Proof
1) Stage 1: Theory
a) must allege AC theory of conduct
b) must allege plausible PC theory of conduct
i) If abbreviated RoR applies and is not able to do this loses
summarily
ii) Possible PC justifications: expands output, reduces prices, enhances
quality, improves services, or stimulates innovation
2) Stage 2: Empirical Evidence
a) must produce empirical evidence of AC effects
i) Can do so directly or inferred through showing of market power
b) must produce empirical evidence of PC effects
3) Stage 3: Alternatives
a) Court considers whether there is a less AC alternative for achieving the
PC effects
4) Stage 4: Weighing
a) Court weighs AC versus PC effects
MARKET DEFINITION
Market Definition
Overview
1) US and EU apply similar approach

2) Two Main Market Components (Reasonably Interchangeable Test)
a) Product
i) Substitutes
ii) Differentiation
b) Geography
3) Hypothetical Monopoly Test
a) 5% price increase effects on consumer substitution between
products and regions
i) Must be careful about using empirical data on consumer
substitution (demand elasticity) because of the Cellophane fallacy
(if market power exists, using current prices will lead to an
excessively broad market definition)
ii) Also important to keep in mind that firms compete on both price
and quality
Market Power
Market Power Overview
Key
Assumptio
ns
Perfect Competition
All participants are price
takers
Large number of buyers
Maximize utility
Downward-sloping
demand curve
Large number of sellers
No/low barriers to entry
Perfect demand elasticity &

substitability
No/low transaction costs
Monopoly
Monopolistic actor is a price
maker
Not necessarily large number of
buyers (monopsony)
Not necessarily large number of

sellers (monopoly)
Barriers to entry
Large sunk/fixed costs
Technological barriers
Increasing returns to scale
(e.g., network effects)
Government-created
barriers to entry
Establish position of
incumbents
Relative demand inelasticity
and no perfect substitutes
Transaction costs possible
Perfect information
LR
Equilibriu
m
Zero economic profits in LR

Pc = MC = ATC
Asymmetric information
possible
Non-zero economic profits in LR
MR = MC; Pm > MR; Pm > ATC
1) Market Power
a) Based on:
i) Current Competitors (Expandability)
ii) Potential Competitors (Entry)
iii) Product Differentiation (Positioning)
b) Market power usually gained through firm being more efficient
(cost/quality advantage over rivals)
c) Antitrust law aimed at AC conduct used to obtain or maintain market
power not earned through productive efforts
2) Proxy for market power 1: market share
3) Proxy for market power 2: market concentration
a) Lerner index: L = (P MC) / P
b) Herfindahl index (HHI): sum of he squares of the market shares of the
50 largest firms within the industry HHI = S12 + S22 + . . . Sn2
(1)HHI = 10,000 for monopoly
b) However, if there are no barriers to entry/exit, even a concentrated
market will in fact be highly competitive
c) Note: high concentration can make oligopolistic competition likely
c) But proper inference from market share and concentration turns on
rival ability to enter/expand (rival supply elasticity) in response to price
increase (SSNIP)
i) But keep the Cellophane fallacy in mind
2) Proxy for market power 3: firm-specific elasticity of demand
a) Degree to which firm loses sales as it raises prices (%Q/%P)
b) Cellophane fallacy
i) Looking at elasticities in market problematic because they may
themselves be affected by the existence of market power; no firm
prices on the inelastic portion of its demand curve, they raise prices
until demand gets elastic
4) Differentiated Markets (Monopolistic Competition)
a) Main antitrust concern: high diversion ration
b) Factors to weigh
i) Extent to which merging firms are close in the product/locational
space
ii) Degree to which consumers would switch to brands outside that
space if prices rose
iii) Degree to which rivals could reposition their products if prices rose
Legal Tests of Market Power

1) P > MC
a) Hard to do in practice, also has theoretical problems (monopolistic
competition, fixed costs)
2) Power to price above competitive levels
a) Used more by courts, but hard to determine the but for world
3) Power to constrain market output or to raise market prices
a) Unhelpful if already at monopolistic price
b) Runs into market definition problems
UNILATERAL CONDUCT
Overview
Overview
1) Unilateral conduct can be aimed vertically or horizontally

a) Vertically: upstream/downstream effects
i) Downstream: buyers (e.g., only sell our product, not our rivals)
ii) Upstream: strong-arming suppliers (e.g., dont supply our rival)
b) Horizontally: I will hurt you, competitor
2) Because of market share screens, market definition very important for
these cases
Doctrine Overview
Overview
US
Statutes
Market
Power/Domin
ance
Sherman Act 2
o Monopolization
o Attempted Monopolization
o Conspiracy to Monopolize
FTC Act 5
o AC conduct
RPA
o Illegal price discrimination
Power to control prices or
exclude competition
EU
TFEU 102
o Abuse of dominant market
power
o Note: no law against
attempted acquisition of
dominance; must
actually be dominant
Power to control prices or

behave independently of
pressures from other market
participants
Can be collective
dominance by multiple
firms
o MAJOR difference from
US doctrine
> 50%: presumed dominance
25%50%: maybe
< 25%: probably not
. . .but market share can be
deceptive
Market Share
Screens
> 66%: likely monopoly power

50%66%: maybe
< 50%: probably not
. . .but market share can be
deceptive
Proving
Abuse
Defenses
SCOTUS: Monopolization =
monopoly market power +
willful acquisition or
maintenance
o Objective intent standard
o Distinguished from growth
or development as
consequences of superior
business or historic
accident
Efficiencies
Abuse of dominant market

power = exclusion of rivals or
exploitation of consumers
o No US parallel for consumer
exploitation, but rarely
enforced
Efficiencies
o But if you actually get to
a monopoly position,
this is no defense
Objective necessity for product
safety
o ECJ nearly always rejects
this
Below-Cost Predatory Pricing

Definition, Economics, and Policy
1) Below-cost predatory pricing: predator prices below costs to drive rivals

from market, then recoups costs later
a) Overdeterrence especially problematic here because low prices are
generally good for consumers
b) Most scholars and many judges think this rarely if ever happens
i) If you can't keep new entrants out of the market when you raise
prices to a supracompetitive level, how do you maintain your
dominant market position?
2) What measure of costs to use?
a) LRAIC
i) Now method often used by courts
ii) Basically, forward-looking total cost
iii) LRAIC = FC + VC (increment), for product in question (i.e., excluding
common costs)
iv) Normally, only pricing below LRAIC is capable of foreclosing as
efficient competitors from the market
b) MC
i) Hard to measure in practice
c) AVC
i) Bad because it favors capital-intensive firms with low VCs
d) AAC (VC of predatory output increase)
i) EEs preferred method; compare total costs during period of
predation to what would have occurred in the same period with the
predation
Current Doctrine
US
Predatory
Pricing
Price
Measure
Eliminates or disciplines rivals

+ below incremental costs +
recoupment likely (Brooke
Group)
o Applies even to cases
involving predatory
overbidding in inputs
markets (Weyerhauser)
P < LRAIC illegal if proof of
AC intent
But some courts use other
cost measures (MC, AVC, AAC)
EU
Pricing below costs
P < AAC: presumptively illegal

(EU Guidelines)
P < AVC: illegal if dominant
(Akzo)
P < LRAIC: illegal if dominant
+ can fund losses with profits
protected by legal monopoly or
privatized sector with low VCs
(Deutsche Post)
AVC/AAC < P < ATC illegal if
proof of AC intent to eliminate
rivals (Akzo, EU Guidelines)
None (Tetra-Pak II, Deutsche
Post)
Recoupment
Requirement
RPA: reasonable prospect

(broader)
Sherman 2: dangerous
probability
Recoupment unlikely in
oligopoly setting (Brooke
Group)
Right to
Meet
Competition
No absolute right to meet

competitions prices (France
Tlcom, Deutsche Post)
o Policy concern here:
dominance by legal
monopoly or privatized
sector
Above-Cost Predatory Pricing

1) Same overdeterrence concerns as below-cost predatory pricing

2) Problem with doctrine in this area is that it conduct would not drive an
equally-efficient competitor out of business
a) But could it make it difficult for new entrants who have yet to reach
economies of scale
3) Also, EU doesnt technically need this doctrine as an antitrust tool
because it has the excessive/exploitative pricing tool
Current Doctrine
US
ACPP Claim
Allowed?
Price
Measure
No (United States v. AMR)
Other
Requirement
s
EU
Yes (Compagnie Maritime

Belge, Irish Sugar)
Above-cost predatory pricing

illegal if P > ATC but price cuts
are (Compagnie Maritime
Belge):
o Reactive
o Selective
o Predatory purpose / shortterm profit sacrifice
Possibly also require:
o Superdominance
(Compagnie Maritime, Irish
Sugar)
o Recoupment
Excessive Pricing
Current Doctrine
1) US: no excessive pricing claims

2) EU: excessive pricing illegal, but unclear how this is determined, but
rarely, if ever, enforced
Price Discrimination
1) Price discrimination: sales of identical goods/services from the same
provider + at different prices to different groups of consumers
a) Generally increases ex post total welfare but reduces consumer welfare
(unless theres a monopoly, in which case even total welfare may
decrease)
2) Two types for antitrust purposes
a) Primary-line price discrimination: injury to buyers competition
(damage to competition between the seller and its competitors
because of the low price)
b) Secondary-line price discrimination: injury to sellers competition
(injury is in the downstream retail market)
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Current Doctrine
1) Primary-line price discrimination (competition between seller and its
rivals) AC in both US and EU
2) Secondary-line price discrimination (competition between downstream
retailers) AC in both US and EU
3) Consumer harm
a) US: no claim for just harming consumer welfare directly
b) EU: if just harms consumer welfare directly AC
Price Squeezes
1) Price squeeze: price differential between upstream and downstream

products insufficient for rivals to survive
a) E.g., vertically integrated firm:
i) Engages in both wholesale and retail sales
ii) Has market power at the wholesale level
iii) Competes with non-integrated rivals at the retail level
iv) Charges high wholesale price, low retail price, such that equally
efficient downstream rivals cannot survive, though the price
differential is not below the cost of the integrated operation
2) This makes it like a more complicated above-cost predatory pricing claim
a) According to EU guidance paper, downstream costs measured by LRAIC
Current Doctrine
1) In order to prove price squeeze claim under US and EU law, there must be
a duty to deal in the upstream/wholesale market (EU Guidance Paper,
Linkline)
2) If other duty to deal elements satisfied:
a) EU
i) If (s post-squeeze downstream price s wholesale price) < s
downstream LRAIC (EU Guidance Paper, see Napier/Spheriques)
illegal (Napier/Spheriques)
(1)Note: standard applies even if rival has more costly, higher
quality downstream process, and is as efficient as possible at it
(Napier/Spheriques)
b) US
i) Unclear what price and cost conditions need to be met to prove a
price squeeze
Refusals to Deal
1) Refusals to deal
10
a) Refusal to deal = exactly that a refusal to do business with another

firm in some manner
b) If a court refuses to allow an exclusion, it is essentially imposing a
duty to deal
c) With all duties to deal, there is a concern that imposition of the duty
would create an incentive to rivals to free-ride and reduce incentives
for ex ante investment
d) Courts may be more willing to impose a duty to deal on an unearned
monopoly
2) Two-tier markets
a) Two components
i) Upstream market
ii) Downstream market
b) Successive monopolies problem
i) If you have two successive monopolies, you will get two deadweight
losses instead of one
ii) However, the upstream monopoly has two options: 1) charge the
downstream firm a higher price and eat up its margin (e.g., through
a two-part tariff) or 2) vertically integrate
iii) However, an upstream monopoly should only vertically integrate if it
can operate in the downstream market more efficiently than the
incumbent downstream firm
c) Essential facilities and two-level entry barriers
i) If A owns an essential facility upstream and it refuses to deal with
downstream competitors, they cannot enter the downstream market
because they wont have access to supplies from upstream
ii) Paradox
(1)If the upstream facility truly is essential and non-duplicable, then
two-level entry is actually impossible
(2)But if the upstream facility is not essential and non-duplicable,
then one could theoretically enter upstream
(3) So the idea of erecting two-level entry barriers as a form of
AC conduct doesnt make a whole lot of sense
3) Administrative problems with imposing duties to deal
a) How to set the price dealing must occur at
i) Could use terms from prior dealing, but things change
b) Regulatory power to impose duty and price on wholesale markets may
make antitrust duty unnecessary or difficult to administer, or may
violate legislative compromise
c) Price regulation upstream but not downstream may incentivize nonallocatively efficient integration to evade upstream regulation
d) Imposing duty may reduce ex-ante investment incentives (especially in
IP cases)
4) Discrimination among buyers as a potential alternative doctrine
a) Advantage is it can provide terms for the imposed duty
11
b) Problem is that such a rule could create incentives for a firm not to
deal with anyone, or may increase upfront transacting costs for all of
firms dealings (because all dealings could provide the base terms for a
future imposed duty)
5) Although ex post efficiency justifications not allowed under current
doctrine, they are theoretically possible:
a) Deal with successive monopolies problem
b) Sharing inefficient (e.g., sharing assembly line would probably not
work)
Current Doctrine
US
EU
Type of
Refusal
Straight refusal
Constructive refusal
o Provision of inferior service (see Trinko)
o Price squeeze (see Prize Squeezes section, infra)
Regulatory
Duty to Deal
Screen*
Market
Power
Refusal
Terms
Essential
Facility /
Other AC
Conduct
Normal elements required,

proceed to test (Trinko
interpreting Otter Tail)
has market power in upstream market
Denial eliminates rival in

downstream market and:
o On reasonable terms
about essential nonduplicable facility (lower
courts interpreting Otter
Tail; never ruled on by
SCOTUS, see Aspen)
Denial impairs rival
competitiveness and:
o On same terms as with
other non-excluded rivals
(Aspen, Otter Tail, Kodak)
o On same terms as prior
dealing with excluded rival
(Aspen, Kodak)
But potentially no duty to deal
if (Trinko citing Aspen):
o No sacrifice of short-run
profits
o No discrimination among
outsiders vs. for self
o No termination of prior
voluntary dealing
Refusal
Terms
IP Sharing
Impose duty (Guidance Paper)
Denial eliminates rival in

downstream market and:
o On reasonable terms
about essential nonduplicable facility (Bronner)
Denial impairs rival

competitiveness and:
o On same terms as prior
dealing with excluded rival
about essential raw
materials (~Commercial
Solvents)
Refusal to license IP + IP
essential for production of
new product (Magill, IMS) or
improved product (Microsoft)
not offered by dominant firm +
12
unsatisfied demand for new

product
No ex post efficiency
No ex post efficiency
Defenses
justifications have been upheld
justifications have been
upheld
Can justify based on ex ante
incentives (e.g., ex ante
investment)
Regulatory gap: agency can specify terms of dealing but cannot impose the duty itself
Aftermarkets
1) Aftermarket: primary product with long life and complementary product

sold after purchase of primary product for use with that product (e.g.,
printer and printer cartridge)
2) Main question: should aftermarkets be deemed part of the initial product
market (through lifecycle purchasing) or should we look at the
aftermarkets as a separate market?
Case Law
United States
Kodak (1992)
1) Facts
a) Primary product: equipment
i) Kodak does not have market power (based on traditional measures)
b) Complementary product: parts
i) Kodak has monopoly power
c) Complementary product: service
i) Unclear if Kodak has market power
d) Kodak begin tying parts to service, denied parts to rival service
providers
i) This only illegal if Kodak has market power; but question is where
we should measure the market power
2) Holding & Reasoning
a) Issue: can Kodak have market power in the complementary product
market if it does not have traditionally-measured market power in the
primary product market?
i) Holding: yes, there is no evidence that parts prices (or service
prices) are being restrained to competitive levels by equipment
competition
(1)Information costs: for service and parts markets to affect
demand in the equipment market, customers would have to be
able to gauge the accurate lifecycle price of the equipment,
which is unlikely
(2)Kodak could price discriminate between either:
(a) Unsophisticated and sophisticated customers
13
(b)Locked-in and new customers

(3)Service competitors wouldnt provide this information because
they themselves might benefit from the lack of information by
reaping supracompetitive profits
3) Notes
a) Main point: things should be clear at the time of purchase
b) Significance: overcomes Cellophane fallacy by saying what matters is
that youre making monopoly profits, not a high cross-elasticity of
demand
c) Scalias argument: antitrust coming to the nuisance claim
i) Not convincing, because when a consumer comes to a market
they assume they will be protected by AT law
ii) EE: but its still true there was no market power over you at the
time you made the choice; might we want to say you should
contractually protect yourself?
(a) But problems of contracting transaction costs, unequal
bargaining power, adhesion contract issues
PROVING SEPARATE ENTITIES

1) Two main questions for antitrust analysis for any potential agreement:
a) When are the two entities sufficiently separate that they are capable of
reaching an agreement?
i) See table below
b) What facts suffice to infer an agreement?
i) Main question is whether agreement is horizontal (agreement
between competitors) or vertical (supply agreement)
ii) See Proving Horizontal Agreements and Proving Vertical
Agreements sections, infra
Current Doctrine
US
Separate
Entities
Subsidiaries
Separate
Entities
Joint Venture
EU
Wholly-owned subsidiary
same entity (Copperweld)
no agreement
Wholly-owned subsidiary
same entity (Viho) no
agreement
Joint venture entity

functional test (Am. Needle)
o If JV subject to ongoing
control by members with
independent economic
interests evidence of
separate entities
agreement
o If members retain ongoing
ability to unilaterally
compete in the relevant
???
14
market evidence of
separate entities
agreement
HORIZONTAL AGREEMENTS
Overview
Doctrine Overview
US
Statutory
Basis
Sherman Act 1
Per Se Illegal
/ Hardcore
Restrictions
Horizontal price-fixing
Horizontal output limitations
Horizontal market divisions
Horizontal agreements not to
deal with particular firms
(boycotts)
Exemptions
from Per Se /
Hardcore
Rules
PC
Justifications
Agreement advances PC
purpose of a productive
business collaboration (i.e.,
joint venture)
o But does not apply if PBC is
unrelated to the
justification offered or a
mere fig leaf
Agreement is a professional
self-regulation to further a PC
purpose (e.g., correcting
market failure)
Agreement is non-professional
self-regulation to further a PC
purpose where the nonprofessional group is not
financially interested in the
regulations
Same as EU except for
eliminate competition in a
substantial part of the market
factor
EU
101(1): AC effects shown if:

o Object is AC
Presumed if hard-core
If not, presumed if
market share > 10% (or
15%25% for
cooperation agreement)
o Actual effects shown to be
AC
101(3): exemptions from 101(1)
Horizontal price-fixing
Horizontal output limitations
Horizontal market divisions
o Unless part of a valid
cooperation agreement
Horizontal agreements not to
deal with particular firms
(boycotts)
Agreement advances PC
purpose of a productive
business collaboration (i.e.,
joint venture)
101(3) exemptions: PC effects

shown if:
o Not a hard-core restraint
o Productive efficiency
o Consumer welfare increases
o No less AC alternative
15
Cannot eliminate
competition in a substantial
part of the market
Different from US
Proving Horizontal Agreements

1) Explicit evidence of horizontal agreements hard to come by

2) Note: this doctrine interacts with Twombly-Iqbal plausibility pleading (not
covered by EE)
a) Drawing all innocent inferences for the s, is it plausible the s acted
unlawfully?
i) Twombly: draw if natural and obvious
ii) Iqbal: draw if plausible or possible
Current Doctrine
US & EU
General
Standard
Parallel
Conduct
Independent
Motive
Parallel
Conduct
Hidden
Agreement
Parallel
Conduct
OPC
Evidence must be more consistent with an agreement than with

independent parallel action (Matsushita, Twombly)
o Need some plus factor in the complaint and must ultimately
prove it
Cannot use evidence of what is happening in foreign markets (US
Matsushita, probably EU also)
Note: see Twombly-Iqbal note, supra
Parallel conduct at least equally consistent with an independent
motive that each firm would pursue regardless of what other firms
did no agreement/concerted action under both US and EU law
(Theatre Enters., Cement Mfrs., Asturienne)
o But unclear how rigorously Court will assess independent
motives (see Interstate Circuit)
Parallel conduct that would be unprofitable if other firms did not
engage in the same conduct:
o Implausible without a hidden explicit agreement (interdependent
action) agreement inferred under both US and EU law (Am.
Tobacco)
o Following common announcements/invitations, suspicious
information sharing or secret meetings agreement inferred
under both US and EU law (E. States, Am. Column, Interstate
Circuit, Dyestuffs)
Parallel conduct that would be unprofitable if other firms did not
engage in the same conduct
o Explained by pure oligopolistic coordination no
agreement/concerted action under both US and EU law (dicta in
Am. Tobacco, Twombly, Woodpulp II)
o But if firms in oligopolistic market engage in facilitating
agreements or practices that can be avoided (e.g., bans and
secret discounts), US and EU law may ban adoption of such
practices (see Am. Tobacco)
16
Horizontal Price Fixing

1) Horizontal price fixing = any agreement whereby competitors agree with

purpose and effect of raising prices
a) Somewhat counter intuitively, price-fixing need not involve an actual
fixed price
2) Competitive process standard: with price-fixing, there is an underdeterrence concern but no over-deterrence concern because a
competitive market will set the correct price
3) EU policy concerns:
a) Want to encourage firms from different nations to work together in
fostering a common market favors deference to joint ventures
b) Want to prevent firms from different nations from conspiring not to
compete too much outside of their traditional markets favors being
suspicious of joint ventures
Current Doctrine
US & EU
Firms Not in
Legitimate
Joint Venture
(PBC)
Firms in
Legitimate
Joint Venture
(PBC)
Horizontal price fixing per-se illegal (US) and a hard-core restraint

(EU)
o Regardless of whether price is a minimum price, maximum price
(Maricopa), reasonable price (Trenton Potteries), or non-uniform
price (Polypropylene)
o Focus is on the agreement and intent, not the actual effects
(Polypropylene)
o Need not be an explicit fixed price (Palmer)
If horizontal price-fixing agreement legitimately advances PC
purposes of some productive business collaboration RoR applies
(BMI v. CBS, Texaco, Eurocheques, see Maricopa)
o But keep in mind that you must first figure out if the joint
venture is legitimate; if it is not, the parties are competitors, and
the per se rule applies
o Also keep in mind Court might reject a legitimate joint ventures
arguments anyway (NCAA in Horizontal Output Restrictions
section, infra)
Case Law
United States
BMI v. CBS (1979)
1) Facts
a) s ASCAP and BMI represented composers; each received nonexclusive
copyright licenses for compositions from composers, then packaged
them up and sold blanket licenses to use the compositions to
broadcasters; broadcasters paid a flat fee or % of revenue to use the
licenses; broadcasters, ASCAP, and BMI all pay composers royalties in
proportion to the nature and use of their compositions
2) Holding & Reasoning:
17
a) Holding: the blanket licenses are not per-se illegal and should be
subject to RoR
i) Here, the price-fixing is ancillary to a productive business
collaboration
ii) PC justification for price-fixing: transaction costs (monitoring,
tracking)
(1)Broadcasters are still paying owner for each use; but if thre were
differential prices, they the broadcasters would have an incentive
to lie about uses
3) Notes
a) EE: shows that Courts per se rule is really just RoR
b) Important features of fact pattern: many sellers, hard to contract with
sellers individually, hard for sellers to monitor use of their product
European Union
Eurocheques (1984)
1) Facts
a) Triangular arrangement between issuing bank, cashing bank, and
consumer
i) Issuing bank charges fee to consumer
ii) Charging bank charges commission to issuing bank
iii) Consumers get cash from charging bank in exchange for check
b) Agreement fixed 1) maximum amount of each Eurocheque and 2) the
commissions cashing banks could charge issuing banks
a) Holding: anticompetitive within 101(1), but redeemed within 101(3) by
efficiencies to payment system and payments market generally
Horizontal Output Restrictions

1) In practice, output restrictions tend to work better than price-fixing (think

of OPEC)
2) Similar to horizontal price-fixing in most respects
Current Doctrine
1) Same as horizontal price-fixing (see supra)

2) If horizontal price-fixing agreement legitimately advances PC purposes of
some productive business collaboration RoR applies (NCAA, Synthetic
Fibres)
Case Law
United States
NCAA v. Univ. of Okla. (1984)
1) Facts
18
a) NCAA had contract with TV networks that limited number of televised

games generally and of individual teams
b) NCAA wanted to be able to punish renegade schools that entered into
their own TV contracts
a) Holding: legitimate joint venture so RoR applies, but agreement AC on
net and therefore illegal
i) In this industry (college football), some horizontal restraints are
essential if product is to be available at all (need to preserve
academic eligibility of athletes)
ii) However, evidence shows agreement reduces quantity, increases
price, and is unresponsive to consumer demand (more games would
be televised absent restrictions)
iii) Partly as a result, Court found PC justifications weak (protect live
attendance, promote revenue parity between teams, protect
amateurism)
European Union
Synthetic Fibres (1984)
1) European synthetic fibers market had excess capacity, firms were losing
money, came to agreement regarding capacity reductions
2) Holding: agreement justified under RoR
3) EE: there were theoretically possible PC and AC effects here
4) Crisis-era case; seems like Court is effectively subsidizing the industry
Horizontal Market Divisions

1) Horizontal market division: firm A and firm B divide up a market such that
they are selling to different customers
a) Like price discrimination except it is being done by more than one firm
2) Generally involve territorial divisions, but can be done other ways
a) Type of customer (e.g., commercial and regular)
b) Type of product
c) Bid rigging
d) Sources of supply
3) Firms do not need to currently compete in the market being divided (see
Palmer v. BRG)
a) However, if one of the firms is a new market entrant, AC effects are
less and agreement is more likely to be upheld
4) These are probably even worse than price-fixing or output-restrictions, as
they allow the cartel to avoid the problem of coordinating prices or output
or market share
5) Furthermore, unlike price and output restraints, they cannot be
undermined by non-price competition (quality and service)
19
6) Vertical supply relationships can create some doubts about AC effects, but
also likely could just be a fig leaf for AC conduct (see Palmer v. BRG)
Current Doctrine
1) US: per se illegal (Palmer v. BRG)
2) EU: per se illegal (Soda-Ash-Solvay)
a) But specialization agreements allowed (these agreements couple a
product division with an agreement to supply the product in which one
firm specializes to the other)
Horizontal Agreements Not to Deal with Particular

Firms (Boycotts)
1) Definition: multiple firms agree not to deal with a particular firm
a) Also known as a concerted refusal to deal
2) Different from other horizontal agreements in that aim is to harm a
competitor, not competition necessarily
3) Noneconomic justifications are more plausible
4) Can take the form of an exclusive distribution agreement
Current Doctrine
US & EU
Agreement
Among Firms
Not in
Legitimate
Joint Venture
Agreement
Among Firms
in Legitimate
Joint Venture
Per se illegal (Klors, Fashion Originators)

o But if exclusive agreement (usually distribution) not targeted at
particular firm probably RoR
EU especially on the lookout for agreements meant to enforce a
cartel or to hinder trade in the Community (Powerpipe, ANSEAU)
If agreement advances legitimate PC purposes of PBC RoR

o But illegal if:
Joint venture has market power against excluded rivals (Nw.
Stationers);
I.e., lack of access to joint venture puts other firm at a
competitive disadvantage
And joint venture excludes or discriminates against nonmember rivals for reasons unrelated to the PC justification
for the joint venture (Terminal, AP)
o Note: tighter review of expulsions than of refusals to admit (Nw.
Stationers)
Extra-governmental attempt at regulating and enforcing property
rights through exclusive dealing legitimate joint venture (Fashion
Originators)
Note: EU seems like same approach as US, but EE never summarized EU doctrine, only 2 EU
cases
20
Case Law
United States
Associated Press v. United States (1945)
1) Holding: joint venture itself fine, but discrimination against non-members
is not
2) Notes
a) Case unstable
i) Degree of monopoly not the same as in Terminal RR because UPI
and Reuters exist
ii) Ex ante problems ignored
iii) PC justification that new towns add more valuable news;
newspapers in towns where they already have a partner do not
European Union
Powerpipe (1999)
1) Boycott used to enforce a cartel illegal
ANSEAU (1983)
1) Water companies agreed with manufacturers to refuse to connect
washers/dishwashers to water supply unless they had a label that said
they were from the official distributor
2) Goal was to prevent parallel importers from buying products in low-price
nations and reselling in high-priced nations (made possible by trade laws
in EU)
3) Illegal; rejected PC justification: protects public health and ensures
conformity checks
Professional Self-Regulation
1) Key question in this area of antitrust law is whether we should allow nongovernmental actors to correct market failures through agreements which
restrain trade, or whether it would be better to give the only the
government this power
a) This is a controversial, unsettled area of antitrust
2) Belief that professionals are much more likely to enforce things contrary
to their self-interest, more likely to come together to try to improve the
value of their profession
a) Also, tradition of legislatures leaving the regulation of professional
industries to these types of associations; intervening here could disrupt
this regulatory balance
Current Doctrine
1) Professional self regulation + financially disinterested

a) US: RoR (Profl Engrs, Indiana Dentists)
21
i) Or, RoR applies at least when professional self-regulation is aimed at

curing informational market defects (Cal. Dental)
ii) Court does not always accept their PC justifications (Profl Engrs,
Indiana Dentists)
b) EU: exemption from 101(1) possible (Wouters)
2) Professional self-regulation + financially interested
a) US: per se illegal if the professional group exists purely for selfinterested reasons (Sup. Ct. Trial Lawyers)
b) EU: ???
3) Non-professional self-regulation + financially disinterested probably
legal under RoR
4) Non-professional self-regulation + financially interested illegal under
RoR
Case Law
United States
Profl Engrs (1978)
1) Engineers professional organizations canon of ethics banned discussions
of fees for project bids until after engineer was selected
a) Engineers PC justification: competitive bidding would pressure
engineers to cut effort, endanger public welfare (lead to dangerous
buildings, etc.)
2) Holding: agreement illegal under RoR; PC justification cannot be that a
form of competition is unreasonable
FTC v. Ind. Fedn of Dentists (1986)
1) Dentists agree not to submit x-rays to insurers who were using them to
decide when to reimburse treatment; claims it is doing this to ensure
quality of care to patients
2) Federation includes 67%-100% of dentists in some towns
3) Holding: agreement illegal under RoR because the allegedly PC quality of
care justification is not convincing legally or in fact and dentists are
financially interested
FTC v. Superior Court Trial Lawyers Assn (1990)
1) All of the private lawyers appointed to represent indigent defendants in
DC agreed to stop taking cases until DC increased fees; DC couldnt find
any replacements
2) Holding: agreement illegal because group exists purely for self-interested
reasons (they did not have another justification)
Cal. Dental Assn v. FTC (1999)
1) Dental associations ethical code creates horizontal agreement not to
advertise quality claims, low prices, or across-the-board discounts without
making detailed disclosures that effectively made such ads unfeasible
22
a) PC justification: s claim this prevents deceptive advertising about

matters that cannot be verified in a market with asymmetric info
2) Holding: agreement upheld (for now); court says FTC must prove actual
AC effects before s need prove actual PC effects under RoR, plus PC
effects here are plausible
European Union
Wouters (2002)
1) Dutch bar assn prohibited lawyers from partnering with accountants
2) Holding: this is not prohibited by 101(1) even though it has AC effects
because the PC justification (that it preserves lawyer independence and
confidentiality and avoids conflicts of interest) outweighs these
Agreements Facilitating Oligopolistic Price

Coordination
1) Factors for identifying an oligopolistic market
a) Number of competitors (lower makes oligopoly more likely)
b) Ease of entry (harder makes oligopoly more likely)
c) Product homogeneity (makes oligopoly more likely)
d) Continued excess capacity (makes oligopoly more likely)
2) Requirements for oligopolistic price coordination:
a) s collectively have market power
i) Oligopoly price will not be undermined by rival expansion, new
entry, or consumer substitution
b) Can:
i) Settle on a price
ii) Monitor deviations
iii) Retaliate against the deviations
c) Real question: Do they have an independent motive to engage in the
conduct in question? How likely are they to coordinate without direct
discussions among each other?
Current Doctrine
US
Statutory
Basis
OPC?
Pure OPC
Interdepende
nt Practice
Facilitating
OPC
EU
Sherman Act 1 (conspiracy)

102 (collective dominant
position)
FTC Act 5 (unfair trade
practices)
Must first identify market as one in which OPC might occur (see
supra)
Not illegal
Can theoretically be challenged Can theoretically be
RoR (under FTC Act 5; see
challenged (UK Tractors,
Cement Inst.)
though that case involved an
agreement)
o Treat it as a horizontal
23
Agreement
Facilitating
OPC
RoR
Agreement (explicit or tacit):

o Inter-seller price verification
per se illegal (Gypsum,
Container)
Though unclear if
Container says per se
illegal or RoR
o Sharing past individuated
info + estimated future
output and prices
probably illegal (Am.
Column)
o Sharing past
aggregate/average info
per se legal OR RoR applies
(Maple Flooring)
Could agreement/conduct
plausibly facilitate OPC?
o Plausible independent
motive?
o Settle on price?
o Monitor deviations?
o Retaliate against
deviations?
Is there a PC justification for
the OPC?
If so, is there a less restrictive
alternative?
agreement (101(1))
probably per se illegal
o Treat it as unilateral
conduct (abuse of a
collective dominant
position, 102) probably
per se illegal
Illegal (Dyestuffs, UK Tractors)
o Suspicious without secret
agreement (Dyestuffs)
o But high level of price
transparency makes OPC
unlikely in absence of other
evidence suggesting an
agreement (Woodpulp II)
Case Law
United States
Maple Flooring (1925)
1) Case could stand for two things
a) Agreement to exchange past aggregated/average info, standing alone,
is per se legal even among oligopolists; or
b) RoR applies to such agreements
United States v. Container Corp. (1969)
1) Seems unlikely firms would exchange individual price quotes in order to
allow for other firms to undercut their price
a) What could they gain by exchanging individual price quotes other than
avoiding decisions to undercut prices by mistake?
2) Unclear whether this market was actually oligopolistic (18 firms, low entry
barriers, commoditized product)
24
FTC v. Cement Inst. (1978)

1) One possibility: say that this fits in a line of cases that even
interdependent adoption of a practice as evidence of an agreement
2) Another way to approach this case: whether or not we find an agreement
doesnt really matter, just say a unilateral adoption of a basing point
pricing system facilitates OPC, and thats AC and illegal under FTC Act 5
VERTICAL AGREEMENTS
Overview
Overview
1) Agreements between firms at different market levels (upstream &

downstream)
2) Generally raise less scrutiny than horizontal agreements because effects
on competition are usually more indirect; were generally concerned with
vertical agreements that have an effect on horizontal competition
Proving Vertical Agreements

Current Doctrine
US
Agreement
Standard
Evidence must be at least

equally as consistent with an
agreement as not, and must
tend to exclude the possibility
of independent action
(Monsanto)
o But circumstantial
evidence (e.g., meetings,
well-timed
communications) can be
highly probative
When upstream firm demands
compliance with AC condition
and downstream firm
acquiesces:
o If exclusionary condition
(e.g., tying, CRtD)
agreement
o If intrabrand restraint on
distribution no, but yes
if:
Supplier seeks and
obtains assurances
they will comply, or
Supplier engages in
individualized
exhortations to induce
EU
Relevant factors may include

(Bayer):
o Express agreement
o Unity of purpose
o Monitoring of conduct
o Invitations to fulfill a goal
jointly vs. unilateral
expressions
25
noncomplying dealers
to get back into line
Exclusive Dealing and Restrictions on Dealings with

Rivals
1) Definition: an agreement to buy/sell a product on the condition that the

counterparty not deal with rivals in that same product
a) Note: exclusive dealing called single branding in EU
2) Possible AC and PC effects
a) AC concerns
i) Main concern is foreclosure in the product market: 1) deter entry or
drive rivals out sub-optimal number of firms for full competition,
2) lower rival expandability
ii) Economies of scale (including network effects) and/or learning
economies
iii) Recouping R&D investments
iv) Discourage price competition
v) Facilitate oligopolistic coordination
vi) Allow for seller to serve as regional cartel ringmaster
b) PC justifications
i) Reduce uncertainty of price and supply/sales (inventory, risk
management)
ii) Encourage relation-specific investments that increase efficiency
(1)E.g., reduce transportation costs relative to one buyer by moving
plant closer to them
(2)E.g., encouraging manufacturer investments in things (like
advertising) that increase dealer sales but which have positive
externalities for other competitors products
iii) Reduce transaction costs (either upfront negotiating costs or
monitoring & enforcement costs of contracts)
iv) Possibly less restrictive alternative to a vertical merger
3) Collective action problem
a) Collective action can be especially problematic here, as buyers may
benefit individually from agreeing, but not collectively
b) This is particularly a concern when rivals are not yet in the market or
when they cannot compete for all of the buyers demand because
some of that demand is locked up and non-contestable, or when the
agreements have long durations that make consumer switching
difficult
4) Regulation can also foreclose part of a market
5) Over-deterrence here will encourage inefficient vertical integration
Current Doctrine
US
EU (2010 Guidelines)
26
Technical
Term
Statutory
Basis
Exclusive dealing
Single branding
Sherman Act 12
o If it violates Sherman Act
1, then it violates FTC Act
5
Clayton Act 3 (limited to
goods)
FTC Act 5
40% foreclosure sufficient
(Standard Fashion)
o Market definition especially
important (see Tampa
Elec.)
o Foreclosure share
should be measured by
aggregating the
foreclosure produced
by the leading sellers
with exclusive
arrangements (not just
the ) (Motion Picture
Adver. Serv.)
o High foreclosure share + 1
year term + efficiencies
may be okay (Motion
Picture Adver. Serv.)
Foreclosure share < 40%
(possibly lower than 15%
25%) may be sufficient if most
efficient distribution channels
are foreclosed (see US
Microsoft)
Illegal when substantial share
of the market is foreclosed
Steps to analysis:
o Product definition
o Market definition
o Is a substantial share of
the market foreclosed?
o Weigh AC vs. PC effects
101
102
Imposes screens because

exclusive dealing deemed
unlikely to be harmful unless
term of long duration makes
consumer switching difficult
If supplier & buyer market
share < 30% + term < 5 years
presumptively legal
o Unless market share of 5
largest firms is > 50% or
cumulative foreclosure >
30%40%
If foreclosure share > 30% but
less than dominant + term < 1
year presumptively legal
less than dominant + term 15
years RoR
less than dominant + term > 5
years presumptively illegal
Market Share
and Term
Screens
RoR Analysis
Illegal when substantial share

of the market is foreclosed
In addition to absolute
requirements, right of first
refusal also considered to
foreclose the market
Quantity forcing (pricing
schemes that reward a buyer
for purchasing some threshold
quantity from the seller)
treated the same as partial
exclusive dealing
Loyalty Discounts
1) Tension between two legal standards and their key concerns
a) Exclusive dealing: substantial foreclosure
b) Predatory pricing: below cost, recoupment, over-deterrence concerns
27
2) Bundled discounts
a) Pay a lower price for product A if also buy product B from the
defendant. Lower price may be on A separately or on A-B as a bundle.
b) Same basic economics as tying but failing to buy product B causes a
price change on product A rather than absolute denial
3) Loyalty discounts
a) Buyer pays a lower price if they buy a higher % of purchases from
seller
b) Basically, can function like partial exclusive dealing or partial tying
4) Volume discounts
a) Pay lower price for A if you buy a minimum amount from the
i) Could be linked to volume-based efficiencies
ii) But could have same practical effect as a loyalty discount
5) Hybrid discounts
a) Bundled loyalty discount: buying high share of B from the gets you
lower price for product A
b) Bundled volume discount: pay lower price for A for buying some
minimum amount of B from the
i) Treated better by antitrust law because easier to link to efficiencies
6) Is the price difference a discount for compliance or a penalty on
noncompliance?
7) Contractual issues: may not involve an explicit contractual promise to
comply (unlike usual case with exclusive dealing), because you can
always just withhold the discount
8) AC effects
a) If unbundled prices > but-for prices, bundled discounts achieve the
same price discrimination or consumer surplus extraction as tying
b) Otherwise, the main concern is market foreclosure (see general section
notes, supra)
9) PC justifications
a) Efficiencies (but usually only works for volume-based discounts)
Current Doctrine
US
Statutory
Basis
Substantial
Foreclosure
Sherman Act 12
Clayton Act 3 (goods only;
text explicitly covers these
kinds of discounts)
FTC Act 5 (probably)
Substantial foreclosure required
(Concord Boat, LePages)
o But foreclosure can be up to
60%
Foreclosure if:
o Foreclosure of free
competition (preferred by
EU (2008 Guidance
Paper)
102
Same, except EU Guidance

paper adopts EER test
approach
28
Loyalty
Discounts
(Get
Discount for
Buying More
of One
Product from
Seller)
Bundled
Discounts
(Get Overall
Discount
Through
Buying Two
Products)
ACPC
Weighing
EE)
Buyer commits to buy
for discount, or
Price difference
conditioned on
restricting purchases
from rivals is either
significant or is proven
to have effect on rival
sales
o Or EER test met (see below)
Adopted by some lower
courts but legally
inconsistent with
SCOTUS cases
EE: does not make
sense because more
focused on costs, here
were focused on
foreclosure
Lower courts split on:
o Whether discount must
require 100% loyalty
o Whether to apply EER test
(Concord Boat says
required, LePages says not)
See calculator Excel doc
If so, determine
incremental price (IEP)
If IEP < MC
exclusionary
Lower courts split on:
o Whether any price penalty
on non-compliance can be
considered a bundled
discount
o Whether to apply EER test
(PeaceHealth required,
LePages says not)
See calculator Excel doc
If so, determine IEP for B
If IEP for B < MC for B
exclusionary
Weigh AC vs. PC effects
(LePages)
Abbreviated RoR: Lower courts
split on whether lack of PC
justification may lead to
illegality (LePages says yes,
Concord Boat says no)
Determine incremental
effective/price
o See calculator Excel doc
If IEP < LRAIC could be
exclusionary
If IEP < AAC presumptively
exclusionary
If IEP > LRAIC not
exclusionary
Determine
incremental/effective price:
attribute whole discount to the
tied product
o See calculator Excel doc
If IEP for B < LRAIC could be
exclusionary
If IEP for B < AAC
presumptively exclusionary
(probably)
Abbreviated RoR: EC need not
prove actual AC effects
(Michelin II) must offer PC
justification
Relative levels of suspicion
o Loyalty discounts
disfavored (Hoffman)
o Individualized discounts
more worrisome than fixed
ones (Michelin I)
29
Volume-based discounts
less suspicious
But can be if they have
no PC justification and
tend to be loyaltyinducing or give the
discounting firm the
ability to pressure firms
it supplies (Michelin II)
Incremental discounts (to
incentivize sales above a
threshold) are less
suspicious
Note: US doctrine above summarizes current lower courts doctrine; old SCOTUS
cases (Loews, Brown Shoe) still good law, but have different requirements
Tying
1) Tying: a refusal to sell one product unless the buyer also buys another
product
2) Tying occurs in three ways:
a) Quantity-forcing (make someone buy X units of Y when they buy Z)
b) Unbundled penalty pricing (products usually available as a bundle, may
be available separately but at a higher penalty price; this doesnt
happen often in the real world)
c) Technological conditions (e.g., make your product only interoperable
with other technology produced by you, like operating systems and
software)
3) Single monopoly profit theory
a) Chicago School line of thought that said tying could not lead to AC
effects
b) But according to now-famous EE article, when their assumptions dont
hold, AC effects are possible, given some additional assumptions (see
below)
i) For EE, this means tying should be judged according to RoR
Assumption of
Single-Profit
Monopoly Theory
Unvarying Tied Product
Usage (fixed ratio)
Unvarying Tying Product
Usage (fixed ratio)
Strong Positive D.
Correlation (no separate
utility)
Tying Market
Possible AC Effect
When Assumption
Relaxed
Intraproduct Price
Discrimination
Extracting Individual
Consumer Surplus
Interproduct Price
Discrimination
Assumptions
Required for AC
Effect
Tying market power
Increased Tying Market
Substantial tied
Tying market power

Tying market power +
Tied market power
30
Competitiveness Fixed
Tied Market
Competitiveness Fixed
Power
Increased Tied Market
Power
foreclosure
Substantial tied
foreclosure +
No fixed ratio +
No separate utility
4) Possible AC effects (if single monopoly profit theory does not hold see
table supra)
a) Note: tying that impairs tied rival competitiveness without increasing
the degree of tying market power cannot increase monopoly profits if
the products are used/bundled in a fixed ratio AND the tied product has
no utility without the tying product
5) Possible PC effects
a) Bundling lowers costs
b) Bundling increases value to consumer
c) Bundling improves quality (worried about customer using inferior
complementary good)
d) Metering to shift financing or risk-bearing costs to the actor that can
minimize them
i) E.g., printers and ink selling printers at MC and ink at higher prices
means pricing more in line with consumers actual usage needs
Current Doctrine
US
EU
Statutory
Basis
Type of
Review
Tie?
Sherman Act 1
Clayton Act 3 (for goods)
Abbreviated RoR: if cannot prove AC effects offset by PC

justifications illegal
Separate
products?
Selling the tying product on the condition that the purchaser takes
the tied product
o Could be quantity-forcing, unbundled penalty pricing, or a
technological tie
Are the products 1) possible of being sold separately and 2) desired
in separate form by some consumers (Jefferson Parish for test; know
required in EU because of Tetra-Pak II)
o Note: not hard and fast rule (think shoes and shoelaces)
o Cant consider PC justifications within the one-product inquiry
itself (would eliminate the screening function of the test)
Evidence of one product:
o Competitive market practice of bundling (historical or
contemporaneous)
o Complete substitutes (essentially the same product)
o New product (no prior analogue)
o Finished product (one product a necessary component part of
the other)
o Government-allowed bundling (e.g., separate episodes of
copyright TV show in DVD set)
Substantial dollar amount of
Substantial dollar amount of
Substantial
102 (Hilti, Tetra-Pak II)
31
sales in tied product
sales?
Market
power in
tying
product?
ACPC
Weighing
Tying product market power >

30% (unclear; Jefferson Parish)
Patent presumption of
market power (Illinois Tool
Works)
Reminder: abbreviated RoR
If above elements met, do not
need to show actual AC effects
before must offer a PC
justification, otherwise illegal
Efficiency justifications
probably admissible (no clear
doctrine)
sales in tied product

However, EU Guidance Paper
suggests substantial
foreclosure share may be
required
Tying product market power >
30%
Reminder: abbreviated RoR

If above elements met, do not
need to show actual AC effects
before must offer a PC
justification, otherwise illegal
Tie must also be the least
restrictive way to further the
PC justification that offsets the
AC effects (Tetra-Pak II)
Case Law
United States
Eastman Kodak v. Image Technical Servs. (1992)
1) Facts
a) Kodak sold replacement parts only to buyers of Kodak equipment who
used Kodak service or repaired their own machines
b) Kodak did not have market power in tying market, but had monopoly in
tied market, and did not offer convincing PC justification for the tie
a) Holding: tying parts to service was unlawful given Kodaks market
power in the tied market
i) Parts and service are separate products (note: this is debatable;
they may be partial substitutes)
ii) Customers who buy equipment have high switching costs, so there
are possible AC effects despite the low upfront pricing
Vertical Price and Non-Price Restraints

1) Vertical intrabrand distributional agreements

a) Overview
i) Agreement between upstream firm and downstream firm on
upstream firms brands only
ii) Take 3 forms
(1)Non-price (usually territorial)
(2)Maximum price-fixing
(3)Minimum price-fixing
32
iii) Main policy concern: distortion of competition in downstream

market among those (usually dealers) restricted by the agreements
b) Economic critique of this doctrine
i) Manufacturer should want to minimize the downstream margin so it
can capture more of the pie created by the consumers willingness
to pay
ii) Manufacturer should therefore only want an agreement that
increases the retail markup if it creates some offsetting efficiencies
that increase total sales
(1)Examples: curb free riding in services
iii) However, empirical evidence for services argument not that strong,
and there are arguably less restrictive alternatives (manufacturer
could require, pay for, or provide services itself)
c) Possible AC effects: responses to economic critique
i) Might facilitate oligopolistic coordination by manufacturers (but
could deal with separately like normal oligopoly)
ii) Might reflect individual retailer market power or retailer cartel (but
could deal with as exclusionary agreement or cartel / horizontal
agreement)
iii) Might reflect desire to have dealers push manufacturers brands
over others
iv) Might facilitate downstream price discrimination against consumers
(1)Not necessarily problematic; depends on which welfare standard
you use, how distributive effects play out
(2)Bigger concern in EU than US
2) Vertical non-price restraints
a) Overview
i) Dont affect interbrand price competition but can completely
eliminate intrabrand competition
ii) Usually take the form of downstream market division, give retailer
sole possession of a territory
iii) Aim is to protect the downstream entity from competition, but
specifically from other competitors selling products produced by the
same manufacturer
b) AC vs. PC Effects
i) AC effects: all except oligopolistic coordination by manufacturers
are possible
ii) PC effects: possible efficiencies are somewhat greater than vertical
price restraints
(1)Encourage dealer to make manufacturer-specific investments to
develop demand
(2)Assure qualifications for specialization
3) Vertical maximum price restraints
a) Overview
i) Dont affect interbrand price competition but restrict intrabrand
competition
33
b) PC justifications
i) Deal with successive monopolies problem
(1)May be efficient only to have one distributor in a given territory
(e.g., newspaper) but that leaves them vulnerable to local
market power
(2)But even though it may be efficient to have a local distributor
with market power, that leads to the successive monopolies
problem
(3)One way to deal with the problem is by an agreement that the
retailer/distributor just wont charge more
ii) Deal with low-price brand reputation
(1)E.g., McDonalds; one McDonalds with higher prices than others
can free-ride off of the other stores low prices and McDonalds
corresponding brand reputation
4) Vertical minimum price restraints
a) Less common, more suspicious
Current Doctrine
US
Vertical NonPrice
(Territorial)
Restraints
RoR (GTE
Sylvania)
EU
Vertical
Maximum
Price
Restraints
Vertical
Minimum
Price
Restraints
RoR (Khan)
RoR
(probably
abbreviate
d, but
unclear
Leegin)
Do not get block exemption except for following

exceptions:
o Can restrict dealers to particular locations from
which to sell
o Can restrict active sales (but not passive
sales, like over the internet) into exclusive
territories of other dealers
Note: EE says this distinction does not make
sense, just creates middlemen
o Can restrict wholesalers from selling at retail
o Can restrict sales to unauthorized distributors
o Can restrict sales of components that others
would use to make the same product
Otherwise, get abbreviated RoR (can condemn
without showing AC effects if no PC justification
proven)
o Fostering common market concerns especially
acute here, makes it highly likely court will find
the agreement net AC (Grundig, VW, Glaxo)
Includes price recommendations
If market share < 30% per se legal (block
exemption applies)
If market share > 30% RoR (abbreviated?)
Covered by abbreviated RoR (can condemn without
showing AC effects if no PC justification proven)
(Binon)
34
Case Law
United States: Vertical Non-Price Restraints
GTE Sylvania (1977)
1) EE comments
a) Court cites Chicago-school type theories as basis for decision, so
basically, what weve got here is an RoR that hardly ever turns out
being net AC
b) Why couldnt a bunch of retailers agree horizontally for the very same
reason? Why does a manufacturer have to do it for them? with
horizontal restraints, retailers generally do not have any incentives to
limit themselves to situations that have a good PC justification
European Union: Vertical Non-Price Restraints
Grundig (1966)
1) Facts
a) Grundig made Consten its sole outlet in France
b) Parallel importers began to buy Grundig products in Germany and
resell them in France at prices 25% less than Consten; Grundig and
Consten sued parallel importers
a) Holding: vertical territorial restraint illegal under RoR analysis
b) Offered justifications rejected
i) Service argument: rival service not inadequate, any problem could
be cured by informing consumers (less AC alternative), no free
riding problems because not responsible for servicing machines sold
by parallel importers
ii) Investment in market argument rejected because costs already
amortized
iii) Technical improvements to machines argument rejected because
only Consten got the advantage of those, so no service free riding
problem
c) Note: no actual AC effects proven
3) Notes
a) Special concern for fostering common market here
MERGERS
Mergers in General
1) Kinds of Mergers and Relevant AC Concerns

a) Horizontal mergers
i) Unilateral power
ii) Oligopoly
b) Vertical mergers
i) Foreclosure via post-merger unilateral refusals to deal
35
c) Conglomerate/Potential Horizontal Competitor mergers

i) Eliminating potential horizontal competition
(1)New guidelines seem to take the view that this is a horizontal
merger; agencies will just project the market share
ii) Ability to engage in post-merger vertical exclusionary conduct
2) International Mergers
a) For international mergers, the most aggressive regulator is usually the
most decisive one
i) Over-enforcers tend to prevail
3) Total Welfare vs. Consumer Welfare
a) Total welfare standard: more friendly to firms which want to merge
b) Consumer welfare: less friendly to firms which want to merge because
they must show that the benefits of the merger will be passed on to
consumers rather than retained as increased profits
c) Net importing nations have a stronger incentive to apply the consumer
welfare standard; net exporting nations have stronger incentive to
apply the total welfare standard (and just about every nation exempts
export cartels from antitrust scrutiny)
Horizontal Mergers
1) Key AC concerns
a) Unilateral power
b) Oligopoly
2) Market Definition
a) Market definition very important in horizontal merger analysis
b) See Market Definition section, supra
c) Agencies generally apply threshold approach
3) Filing Process
a) US
i) If merger has AC effects only in certain markets:
(1)Firms may agree to divest assets in those local markets
(preferred)
(2)Firms may offer conduct remedies, like guarantees not to raise
prices
ii) If merging parties and agency cannot come to an agreement,
agency may seek injunction in court (private parties can also do this
but rarely do)
iii) Usually, though, merging parties drop the merger as soon as the
agency disapproves
(1)Historical (still standing) caselaw very unfriendly to s
b) EU
i) EC decides whether to approve, subject to judicial review
36
ii) Historical concern: mergers creating a dominant position shift:

mergers creating a collectively dominant position (oligopolistic
market structure) now: focus on specific AC theories
4) Mexicos Approach
a) Uses a dominance index
b) Like a sliding scale approach; if market more concentrated and
merging firms shares are larger relative to largest incumbents, more
likely to challenge
Current Doctrine
Horizontal Mergers
US
Merger
Statute
s
Thresho
lds
AC
Effects:
Unilater
al
AC
Effects:
OPC
Normally: Clayton Act 7

o Prohibits acquiring stock of
another firm when effect is
to lessen competition
Also: Sherman 12, FTC Act
5
Concentration
o Unlikely AC: post-merger HHI
< 1500 or HHI < 100
o Potentially AC: PM HHI 1500
2500 & HHI >100, or PM
HHI > 2500 & HHI 100200
o Presumptively AC: PM HHI >
2500 & HHI > 200
EU
EMCR
o Incorporates dominant position
standard; dominant position
can be collective (unlike US)
o Efficiencies may be taken into
account
Merged share threshold
o < 25% merger presumptively
legal
o > 50% merger presumptively
illegal
o 25%50% evaluate further
Concentration
o Unlikely AC: PM HHI < 1000
o Presumptively unlikely AC: PM
HHI 10002000 & HHI < 250, or
PM HHI > 2000 and HHI < 150
o Likely AC: PM HHI > 2000 and
HHI >150 (by implication)
Number of firms
o If concern is OPC, at least covers
mergers leading to markets with
23 firms (Kali & Salz, Gencor,
Airtours)
Note: remember to ask whether competition is occurring at retail or at
wholesale
Market power
o Turns on market share and barriers to entry/expansion
o Could also be monopsony power
Differentiated market
o Diversion: brands too close to each other but not very close substitutes
(would allow merged firm to profit by raising the price of one or both of
the products)
o Most common objection to mergers
If OC before merger assume merger worsens it by increasing
concentration
o BOP on to show coordination unlikely in the relevant market
If no OC before merger ask if merger makes it more likely
37
AC
Effects:
Other
Defense
s&
Efficien
cies:
Low
Entry
Barriers
Defense
s&
Efficien
cies:
Efficien
cies
Defense
s&
Efficien
cies:
Failing
Firm
Defense
o Fewer firms in market

o Raise entry/expansion barriers
o Make it easier to settle on price
o Make it easier to notice deviations
o Make it easier to respond (many repeat transactions)
Outlier/maverick firm merger
Decreasing innovation, R&D, or product variety
Consider firms that would enter

in response to SSNIP
Entry must be timely, likely (i.e.,
profitable), and sufficient to
constrain prices
Same as US, except that assumes

entry within 2 years is timely (this
borrowed from US guideline that has
since been abandoned)
Allowed (US Procter & Gamble)

Must be 1) verifiable, 2) merger-specific, and 3) passed on to consumers
(Staples)
o Focus on immediate customers, not end-users
o Variable cost decreases more likely to be passed on than fixed cost
decreases
Must have PC effect in every market
o Possible exception if markets are inextricably linked
Cleansing possible (market power increases, but no increases in
consumer prices; caused by big enough cost decrease)
Complete defense (Intl Shoe,
Same (see BASF)
Citizen Publg)
o Acquired firm would otherwise
exist the market
Ultimate test: whether merging
o No less AC alternative merger
firms assets would exit the
o Without merger, acquired firms
market without the merger
assets would exit the market
Indicators
o Firm on verge of
bankruptcy/insolvency
o Bankruptcy more likely to
lead to liquidation than
reorganization
o Liquidation would not keep
assets in the market
(through assets being sold
piecemeal to competitors)
o Firm has made an
unsuccessful good faith
effort to find alternative
buyers who would keep
assets in the market ad who
would pay more than the
liquidation value of the
assets outside the market
Statutory exception:
newspapers need only show
38
insolvency to get the defense
Partial Stock Acquisitions

1) Clayton Act 7 also applies to partial stock acquisitions (purchases of
non-controlling shares of stock)
2) If purely for investment (no influence or information access), then need
not file if acquiring less than 10% voting stock, otherwise substantive test
is whether actually lessens competition or intended to do so.
3) If active investment (acquiring firm gets influence or information access),
must always file and substantive test is whether the acquisition may
substantially lessen competition.
a) If acquisition gives actual influence over decision-making, tend to call it
an antitrust merger and focus attention on effects of combining
independent economic decision-makers.
b) If not, focus on whether access to confidential information might create
anticompetitive effects (like increasing coordination) or whether the
investment alone lessens incentives to compete because the acquirer
now gets a share of any profits from lost sales to the target.
Preliminary Injunction Standard
1) Overview
a) Idea: can't unscramble the eggs once a merger has been approved
b) Merging firms usually say that if an injunction issues they will lose their
financing because they cannot maintain it through trial, so when an
injunction issues they just abandon the merger
2) Factors to consider
a) Magnitude of AC and PC effects
b) Probability they will occur
c) Degree of irreversibility once they occur
Case Law
United States
FTC v. Staples (1997)
1) Facts
a) Staples and Office Depot were 2 of 3 office superstores in the US. But
sold same office supplies (paper, pens, etc.) as many other stores
b) Many geographic markets with few firms in each
c) Market definition
i) Staples and Office Depot: market is all office supplies, S and OD
have low share
ii) Agencies: market is office superstores, S and OD have high share
iii) Price evidence
(1)Staples OR Office Depot + other stores prices high
(2)Staples AND Office Depot + other stores prices low
d) Barriers to entry
i) More exit than entry recently
39
ii) Walmart planned entry, but not into same office superstore
market
iii) Price evidence comparing towns showed entry threat insufficient
a) Holding 1 (market definition): the market is office superstores and the
merged shares would be high enough to infer AC effects
b) Holding 2 (barriers to entry): entry threat was no sufficient
FTC v. H.J. Heinz Co. (2001)
1) Facts
a) Baby food market dominated by 3 firms, Gerber, Heinz, and Beech-Nut
b) H and BN want to merge
c) Gerber has unparalleled brand recognition and customer loyalty
d) G has 65% share, H 17%, BN 15%; local market prices with all 3 around
same as those with just 2 in most but not all cities
e) G and BN quality brands, H a value brand (low cross-elasticity of
demand at retail between H and BN)
f) Wholesale competition for second shelf position no clear effect on
consumer prices
i) National market, unlike local retail markets
a) Holding 1: because there were no structural market barriers to
collusion that are unique to the baby food industry, the ordinary
presumption of collusion in a merger to duopoly holds
b) Holding 2: efficiency justification not good enough
i) Pass-through rate too low, s exaggerate cost savings, some effects
not merger specific
3) Notes
a) Not much evidence of actual OC here
b) EE: H and BN are competing to get on the shelf (theyre not often in
the same supermarket), and this competition would not last after the
merger could also think of this as a merger to monopoly in the
market for shelf space
European Union
Airtours v. Commn (2002)
1) Facts
a) Proposed merger between two package tour operators
a) Holding: merger okay because it met rigorous standards for showing
that oligopolistic coordination was sufficiently likely to constitute
collective dominance:
i) Transparency (firms can monitor each other)
(1)Coordination was on capacity, not price, and was set 18 months
ahead of time and non-homogenous
40
ii) Deterrence (deviations from oligopoly conduct are likely to be

punished)
(1)Hard to respond because if one firm increases capacity, other
firms couldnt increase capacity until next season
iii) Collective market power (oligopoly price will not be undermined by
rival expansion, new entry, or consumer responses)
(1)Elasticity of non-oligopoly supply: fringe expandable (set capacity
later than majors), but less efficient
(2)Elasticity of demand: consumers price sensitive (raises market
definition questions)
3) Notes
a) After case, EU 2004 Guidelines imposed additional requirement: firms
are likely to be able to reach terms of coordination to begin with
i) Convergence with US horizontal merger oligopolistic coordination
doctrine
Other Nations
Superior Propane (Canada 2002)
a) Holding: efficiency must be greater than and offset AC effect
i) Merger-specific test
(1)Asks whether efficiencies would (not could) be obtained without
the merger
ii) AC price increases
(1)Need not entirely eliminate AC price increase
(2)Need not offset in each market aggregate judgment
(3)Looked at distributional effects: 90% of propane sold to other
businesses, 10% sold mainly to affluent consumers, harm to 20%
lowest income only $2.6M
iii) Analysis excludes effects on foreign producers or consumers
2) Notes
a) This is the only decision out there trying out a total welfare standard
b) Canadian doctrine does not say merger must lead to zero AC effects,
as US doctrine says it must; must just offset them
c) Uses weighted formula probably not widely administrable because
wed have to come up with new weights for every case
Conglomerate Mergers
1) Comparison with Horizontal Mergers

a) Conglomerate mergers are essentially the same as horizontal mergers,
except that one of the merging firms is a potential competitor who
has yet to actually enter the other firms market
41
b) Theory is that the prospect of potential competition already constrains

prices in the relevant market, such that a merger could loosen these
constraints, leading to AC effects
2) AC concerns
a) Eliminate potential competition
i) Perceived (limit pricing)
ii) Actual (cf. entry barrier)
b) Enable post-merger misconduct
i) Bundling
(1)Ill keep selling you product A but now you have to buy product
B
(2)US: bundling not really pursued as theory for blocking a merger;
might owe to fact that tying doctrine is viewed as over-inclusive
as it is, so no need to block a merger
(3)EU: more likely to block merger on these grounds
ii) Reciprocity
(1)Ill keep buying product A from you but now you have to buy
product B
(2)Theory prevailed in the Consol. Foods case but has not been
pursued since; unclear whether it is viable as a modern theory
for blocking a merger
Current Doctrine
US
1984 Guidelines
EU
2004
Guidelines
2010 Guidelines
Overvi
ew
Who is
a
Potent
ial
Entran
t?
Unclear if 2010 Guidelines supersede 1984

On exam, run both analyses
Basically, same
as US
???
Potential entrant only if:

o Already committed
to enter, or
o Would likely enter
rapidly after SSNIP
without significant
sunk costs
Project post-merger
market share for
potential entrant then
Potential entrant
if:
o Could easily
enter market
without
incurring sunk
costs, or
o Are likely to
enter market
despite sunk
costs
The higher
the sunk
costs, the
more likely
they are to
be
constraining
Potential
competitor
already
AC
Concer
Acquired firm market

share > 5%
o Not toehold merger
42
ns
Where
Joint
Ventur
es
Legal
Entry
Barrie
rs
Defens
es
run standard horizontal

Post-merger HHI >
merger analysis; this
1800
will take entry
Merged potential
advantages into
entrant has entry
account
advantages over all but
Unlikely AC: post-merger HHI

a few firms
< 1500 or HHI < 100
o If very strong,
Potentially AC: PM HHI 1500

project post-merger
2500 & HHI >100, or PM HHI
share
> 2500 & HHI 100200
o If not, there must be
Presumptively AC: PM HHI >
3 or fewer firms with
2500 & HHI > 200
similar entry
advantages
Merger illegal if but for the joint venture (Penn-Olin):
o Both firms would have entered the market, or
o One firm would have entered and the other firm
would have continued to constrain the market to
the same degree
In a merger between firm A and firm B, if firm A could
simply not enter Bs market because of a legal entry
barrier, the merger is allowed (Marine Bancorp)
constrains prices
or is likely to
grow into a
competitive force
Other potential
competitors could
not sufficiently
constrain the
market to the
same degree
post-merger
???
???
See Horizontal Mergers section, supra

o Entry barriers
o Efficiencies
o Failing firm
Vertical Mergers
1) AC vs. PC Effects
a) Possible AC concerns
i) Foreclosure (like exclusive dealing)
ii) Facilitate oligopolistic coordination (like horizontal mergers)
b) Possible PC efficiencies
i) Encourage firm-specific investments (like exclusive dealing)
ii) Economies of scale and scope (like horizontal mergers)
iii) Deal with successive monopolies problem (like unilateral refusals to
deal)
iv) Synergies / lower costs of integrating vertical production (unique to
vertical mergers)
2) Political enforcement
a) Horizontal mergers: statistical studies indicate relatively bipartisan
enforcement, at least at the FTC
b) Vertical & conglomerate mergers: enforcement less likely in Republican
administrations
3) State of the law in this area in a lot of flux
a) Brown Shoe is the controlling SCOTUS authority on vertical mergers,
and it says a 1% foreclosure share is grounds to block the merger
43
b) But under DOJ guidelines in force, Brown Shoe would come out
differently
c) Also, when these cases come about, courts usually just pay lip service
to the old cases, then cite the guidelines
Current Doctrine
US (1984 Guidelines)
When
Likely
to
Challen
ge
AC
Foreclos
ure
AC OPC
Incentiv
es
Antitrus
t
Deterre
nts
Defense
s
EU (2008 Guidelines)
Primary market = market

where AC concerns exist,
secondary market = other
market
AC concerns exist where HHI >
2500
Market foreclosure caused by

raising of entry barriers
o Non-integrated firms in
secondary market could not
support two firms at
minimum-efficient-scale in
primary market, and
o Two-level entry significantly
harder than one-level entry
Unlikely to challenge merger unless:

o Post-merger market share > 30%
in both markets
o Post-merger HHI > 2000 in both
markets
o (See casebook p 1062)
Market foreclosure upstream or

downstream
o Merged firm could substantially
foreclose market given market
power and rival options
o Merged firm would have
incentives to foreclose given lost
profits in foreclosed market,
increased profits in other market,
and legal penalties
o Foreclosure would have AC
effects
Facilitates OPC
Facilitates OPC
o Large % of primary product
o Decreases number of firms,
sold in integrated retail
increases firm symmetry or
outlets whose prices are
market transparency
easier to monitor, or
o Eliminates disruptive buyer
o Merger eliminates disruptive
o Increases ability to punish
buyer
deviation
Guidelines ignore incentives
Must consider firms incentives with
whether or not to deny access
respect to denying access postpost-merger (Cadence dissent)
merger (GE)
Do not take other antitrust
Must prove AC effects likely given
deterrents into account
already-existing antitrust deterrents
(GE)
o EU probably more deferential
because of collective dominance
standard (makes it easier to deal
with post-merger AC conduct)
See Horizontal Mergers section, supra
o Entry barriers
o Efficiencies
o Failing firm
44

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Fall

GLOBAL ANTITRUST PROF. ELHAUGE SPRING

Proving Separate Entities............................................................13

Plausibility less of an issue

Per Se Rules and Rule of Reason Review

1) Main justification for holding a particular type of agreement illegal per se

Rule of Reason Review: Stages of Analysis and Burdens of

1) US and EU apply similar approach

Perfect demand elasticity &

Not necessarily large number of

Zero economic profits in LR

Legal Tests of Market Power

1) Unilateral conduct can be aimed vertically or horizontally

Power to control prices or

> 66%: likely monopoly power

Abuse of dominant market

Below-Cost Predatory Pricing

1) Below-cost predatory pricing: predator prices below costs to drive rivals

Eliminates or disciplines rivals

Pricing below costs

P < AAC: presumptively illegal

RPA: reasonable prospect

No absolute right to meet

Above-Cost Predatory Pricing

1) Same overdeterrence concerns as below-cost predatory pricing

No (United States v. AMR)

Yes (Compagnie Maritime

Above-cost predatory pricing

1) US: no excessive pricing claims

1) Price squeeze: price differential between upstream and downstream

a) Refusal to deal = exactly that a refusal to do business with another

Normal elements required,

has market power in upstream market

Denial eliminates rival in

Impose duty (Guidance Paper)

Denial eliminates rival in

Denial impairs rival

unsatisfied demand for new

1) Aftermarket: primary product with long life and complementary product

(b)Locked-in and new customers

PROVING SEPARATE ENTITIES

Joint venture entity

101(1): AC effects shown if:

101(3) exemptions: PC effects

Proving Horizontal Agreements

1) Explicit evidence of horizontal agreements hard to come by

Evidence must be more consistent with an agreement than with

Horizontal Price Fixing

1) Horizontal price fixing = any agreement whereby competitors agree with

Horizontal price fixing per-se illegal (US) and a hard-core restraint

Horizontal Output Restrictions

1) In practice, output restrictions tend to work better than price-fixing (think

1) Same as horizontal price-fixing (see supra)

a) NCAA had contract with TV networks that limited number of televised

Horizontal Market Divisions

Horizontal Agreements Not to Deal with Particular

Per se illegal (Klors, Fashion Originators)

If agreement advances legitimate PC purposes of PBC RoR

1) Professional self regulation + financially disinterested

i) Or, RoR applies at least when professional self-regulation is aimed at

a) PC justification: s claim this prevents deceptive advertising about

Agreements Facilitating Oligopolistic Price

Sherman Act 1 (conspiracy)

Agreement (explicit or tacit):