AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions 4 themes of course: history/assumptions of what anti-trust

t does change ideology drives people differently (laissez faire vs technocrats) economic perspective on impact legal basis (but heavy theory stuff). OVERALL this is a class about the development of case law Why do we have antitrust law and for whose benefit does this body of law exist? Unlikely to be able to examine laws for the answer SCOTUS in the modern erathe antitrust laws exist to promote the welfare of consumers. The Court has described the antitrust laws as a consumer welfare prescription. ---HISTORY & LAWS--Post Civil War: Richard Hofstadter- bigness had come with such a rush that its momentum seemed irresistible Sherman Act (1890) was answer to abusive/dominant firms that arose (90% is 1/2) Focused on monopoly power, price fixing, excessive price, misallocation of resources, and loss of dynamic efficiency o competition decentralizes/distrib power, solves the economic problem impersonally o CompetitOR or competition focused? Protects from negl/torts (Schoolmaster case?) o Legsl history can support ANYTHING, corp/Repub Congr used this as small step to prevent communist overreach, used against labor early Just codifying English CL?? Sort of. Use of word trust was super negative, single manager conglomerates THEMES: codifying CL, hurting anti-consumer groupings of K, Jeffersonian ideas ANTI-Trusts- large combo of K in industry, Ks used to consolidate into unified teams, investors surrendered stock to trust organizers who united management with trust certificates faded passion during 20s/30s, Reagan, Bush but aggressive during post WW2, Clinton o 1- sole combination of conspiracy is illegal, 2- people monopolizing with other people (combine or conspire) Collusion- ~1, too little competition (agreements?), broader than 2, JOINT action, MULT ppl o RofR not references but does it exist? Exclusion~2, too dirty (anti-collusion?) MONOPOLIZING predatory acts, SINGLE person o HIGHER threshold than 1 but whats monopoly? Economic power acquired privately WITHOUT GOVT GRANT (baseball, beverage bottlers, insurance) o Dominant of exclusive control of a sector Clayton Act (1914)- yes private right of action Post HUGE 1912, Wilson PROGRESSIVENESS, wanted to go beyond Sherman codifying CL 7- Mergers, elimination of compet via final agreements/ultra-collusion type practices? 2- no discrim in P if subst lessens competition, tends to create a monopoly in line of commerce 3- K exclusive dealing. Heavy 1/2 Sherman overlap.. many hooks if the govt wants to attack 4- 3x dmgs, private DIRECT ONLY COA HERE, big post-WW2 (10x more private than public) o jury cant know about treble or reversible error, atty fees only to winner (HUGE piece of why 75% tossed, 24% settled, 1% jury.. why liab is SO Kd=fear of jury) 6 LABOR EXEMPTION (Norris LGA helped more than this)

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions 7- no acquisition with restaint of trade if monopolizes one line of commerce- MERGERS ADDED 8- dont want overlap with competitors/prophylactic to prevent combos FTC Act (1914)- 5 commissioners on staggered 7 year terms, <=3 of same party 5- directed to prevent pships/corps/persons from unfair comp- NOT banks/commcarriers Robinson-Patman Act (1936), technocratic (illegal under Sherman/Clayton=illegal here, redundant) 2a price selection of customers is fine if bona fide, can make due allowances in price o b- FRAMEWORK- rebutting PF case is affirmative D burden, good faith can rebut allegation o f- cant knowingly induce or receive discriminatory price 5 is absurdly unclear, consumer protection really deceptive acts is consumer protection DOJ (software/media) splits with FTC (hardware, internet) generally but FTC can beat DOJ Added new provision re: buyer liability. Concern over power of chain stores. Added to substantially lessen competition or injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination. Eliminated permission for quantity discounts absent a showing of proportional cost savings. Celler Kefauver Act (1950 anyone engaged in an activity affecting commerce, vertical/horizontal mergers o like Clayton 7 but more interventionalist), closed asset loophole (assets & stocks) Hart-Scott-Rodino Antitrust Improvement Act (1976) State AGs can bring action to secure monetary relief, parens Patriae if you acquire voting stock there is a waiting period w/regisreqs- PREMERGER NOTIF REQS o 30 day preclose notification (prevents unwinding issues), they can come at you a 2nd time which means temporary block (AGENCY upperhand, HUGE blocking tool) o Information disclosure can be fought it unreas cumulative, unduly burdensome, duplicative US district judge shall be assigned for all purposes, can do what he believes the public interest requires re: relief (necc or appropriate) Foreign Trade Antitrust Improvements Act (1982)- (LESS important) direct, substantial, reas foreseeable effect means that, if not with foreign nations, its still killable o increases court reach, Direct, subst, reas foreseeable impact on US commerce= US jurisd 2003 Empagran case- foreign purchases and price fixing, injures US customers- no standing o do foreign purchasers have standing because of US injury? If yes, all litigation will come to US courts. If no, as it was, foreign purchasers dont have it ---IDEOLOGY--Many libertarians and political conservatives view antitrust as a threat to freedom of contract and business. Many liberals view antitrust as the magna carta of economic freedom, to quote from a Supreme Court decision. Who it protects depends on your school Protects: government, consumers, laborers, companies themselves, competitors, *public good o Competitor protection seeks long run efficiency, its like the Jefferson/Brandeis/Anti-Fed idea that the process of economic rivalry, even on a small scale and despite inefficiency, is good because of the fragmentation of power Chicago School- Bork, Posner, ANTI-Warren Court

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions Exclude social values and political considerations, just focus on efficiency metrics o nothing unrelated or antithetical to efficiency, NO WT just DWL issue with monopoly is its inefficient Bork said Sherman was just codification of CL, thats it Last 20 years- BROAD consumer welfare proscription, protect competition 1912 election- HUGE reaction to Standard Oil case, republicans giving trusts a loophole Post-WW2: golden area of anti-trust law (golden w/opp for correction says Chicago school guys) TWO influences in the correction/new trend o Brandeisianism- new deal-ish view (pre war era), Klors Case!, lawyer-ideology driven displaced during the war BUT its still an ideological perspective concerned with protection of small business, leveling the playing fields, concern about the process of rivalry for its own sake not as much consumer benefit results o Structuralism (from economic influences)- Harvard School Old School and New School divide (modern one is more Breyer-type) Original: ONLY economic theory-related, initially driven by technical economics50/60s stuff, Areeda-Turner treatise relation btwn structure/conduct/performance (S.C.P.), empirical focus, use a few key facts about the market and go from there o Solve structure (deconcentrated, rivalrous, etc)=get C&P Merger policy can be aggressive! Facts show bad P? kill it! Focus is NO FAULT monopoly statutes dont look at behavior, just look at structure. NO Intent check NEWER school: less Chicago shift, has belief that structure/apparatus of AntiT are broken/dangerous, limit antiT enf so doesnt make things worse o Harvard and Chicago does begin to converge in late 80s-today o Chicago school- 3 broad claims Its about consumers/efficiency and dont go beyond that Markets are robust so its not easy to get to monopoly status Efficiency is KEY so focus on killing free rider stuff (posner, stigler, bork) BIG CASES N Pac Rway v US- Sherman act was a comprehensive charter of economic liberty, premise that the unrestrained interaction of competitive forces will yield the best allocation of our economic resources, lowest prices, highest quality Brown Shoe Co v US- congressional desire to protect viable small, locally owned businesses US v Aluminum Co of America- immunity from competition is a narcotic, rivalry is a stimulant **Natl Soc of Prof Engineers- RULE OF REASON, broad mandate of common law tradition, can look at all elements of the bargain (quality, cost, service, safety, durability) and not just immediate cost, impact on competitive conditions Berkey Photo v Eastman Kodak- monopoly power is inherently evil BUT cant invoke it perversely in favor of those who seek protections against the rigors of competition Verizon Comm v Curtis v Trinko- cant unduly expand 2 because of false positive risk

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions --MONOPOLY ELEMENTS-MAJOR focus is downward sloping demand curve with up-sloping P curve (shows WT & DWL) BASIC COURSE GRAPH pg 150- downward sloping demand curve WT- people pay more, transfers consumer to producer , at MC consumers get the gains of the trade and at MP its regressive/all to producer DWL- txn are lost because MC -> MP, scarce social resources are misallocated and they are not employed correctly, BIG CONCERN o Triangle representing allocative ineff Market power the ability to profitably reduce Q below competitive level of prod and corresponding power to raise/maintain P above competitive level Economic efficiency- satisfies D above cost of Q (allocative eff), minimum cost (production eff) also involves wealth distribution element (in addition to the economic efficiency concerns) Also dynamic efficiency? Degree to which sellers can shift to preferences Dynamic efficiency (eff from changing innov/innov efficiency- pharma/Tech) v static efficiency (price effects driving efficiency/DWL-type concern) Monopoly Power injuries wealth transfer (C to S/H) o Monopoly overcharge- theft? Chicago school says its irrelevant wealth transfer IN LONG TERM monopoly overcharge is DWL since $ spent on BTEs DWL of consumption benefits reduces economic efficiency of market o consumers lose benefit of bargain (consumer welfare for Bork), loss of consumer surplus (value above P), loss in prod surplus (loss of profit on units not sold) o Consumer can mitigate higher P loss by reducing consumption, consumer welfare loss results (KILLS eff) Deadweight losses: Some people stop buying, and the loss of their transactions is the paradigmatic inefficiency of monopoly pricing, since it represents a misallocation of social resources. Wealth transfers: Some people keep buying, but pay a higher price. Most economists dont consider these transfers of wealth from consumers to producers necessarily inefficient, but they are politically unpopular. AntiTrust and English Common Law (used to attack Guild System) Sherman just extending CL tradition but it wasnt always CL that monopolies were bad! o First opposition was end of 16th C, not strong until 18th C o Sir Edward Coke argued Magna Carta, civil law, Edward 3 unified in opposition o 17th C Parliament curtailed king/crowns power to arbitrarily grant monopoly Can find WHATEVER you want in English CL, all pay lip service to consumerism though Case of Monopolies (Darcy v Allen)- patent is void, restrained ability of others to carry on trades o Malum prohibitum- something REALLY bad, o Counter to mercantilist system that was too widespread to attack with only lawsuits

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions o Queen wants revenue source, grants monopolies but parliament takes the job (tho it does so by saying she was deceived here) Post case- Parliament takes power w/Statute of Monopolies, sep of pwr issue First major objection to profiteering o *Pg 21- monopolies P rise, qual down, kills competition/hurt workers Trades that prevent idleness, keep men in labour should be promoted and cant be restricted to one person of its against common law EARLY: Suppressing competition is bad, helping it is good o Dyer Case- couldnt use art in area for 1 year, void against common law (1415), K case Suppression of competition is a public wrong, not just private o The Schoolmaster Case- cant open school in area, received less per child, writ of trespass court split since it promoted competition, damnum absque injuria or tort suit P down, number of schools up competition is a good thing! Mitchell v Reynolds- FIRST rule of reason (Stnd Oil codifies) (1711), K case o Baker restraint for a period of one year, non-compete, cartel restriction? o Voluntary restraint (ok) or general (VOID)? THIS is voluntary- has proportional consideration, goodwill at issue in bakehouse (want him to lease then compete??) Circumstance shows honest K, not like 1 cartel with naked/no consid agreement Reasonable non-compete (like employment- limited in time and scope) o Similar cases Mogul Steamship Co v McGregor- void K for restraining shipping, no public COA Norfeldt v Maxim- reasonableness is in reference to the interest of the parties concerned AND the interests of the public

US v Trans Missouri Freight Assoc (SCOTUS 1897)- OVERTURNED/ANTIprecedent 18 carriers set rates, 30 day withdraw, couldnt change w/o penalty being levied by assoc, cartel o trusts/combinations are driven by motives of aggrandizement against public interests o purpose in combining is to control the manufacture of any particular article in the market and dictate price at which it shall be sold, make the public subject to the groups price level, make the independent businessman without any business policy powers not in substantial interests of the country, driving out small dealers/worthy men WITHIN the statutes reach regardless of whether they are unreasonable or not (D says P down!!) o Supported by plain language of the Sherman, CL allowed? NOT relevant, goes beyond CL! o Want to grant vendor freest opp to maximize his return but cant let everything get away TAKEAWAY: rejects of RofR, Peckham: where is it in 1 language, literal reading of Sherman o Naked and ancillary restraints are CFd (maybe OK?) and clearly NO naked restraints, court focus on long term potential of centralized power, not just current impact P reas in short run? Might go up in long run though! No CL RofR in Sherman!! o First MAJOR ruinious competition argument failure US v Joint Traffic Assn- SCOTUS 1898, retreat from TransMissouri (RofR may exist) ancillary isnt in purview of Sherman, if made for business interest/doesnt DIRECTLY/immediately restrain trade its good to go Hopkins v US- SCOTUS 1898, voluntary assoc of livestock ppl entering into this to better their business, they kept in full competition with each other so its OK!

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions STND Oil- CODIFIED RofR, puts into law that context matters- 1 Sherman has RofR o ChiBOT case in 1918 is first exposition of that idea though US v Addyston Pipe- 6th C (but basically SCOTUS since Taft opinion b4 Pres) 1989 6 corps in cast iron pipe manuf conspiracy, fake bidding submitted (market div, P fixing argmnts) o this is goods, TransMO was common carrier=Taft gets wiggle room in logic (RofR in ancillary is OK he says, he WANTS it but this is direct so NO RofR) Mitchell v Reynolds use shows ancillary could be ok, post manuf could be ok RUINOUS COMP ARG: would have been destructive if had competed w/others so restraints=reas o Competition is a first principle, shouldnt hurt it. NO economic analysis review *** courts should no set sail on the sea of doubt into an area of naked restraints on competition RofR use would mandate that sea of doubt PARADIGM that cant use RofR analysis where courts are the ones refereeing whats an acceptable level of competition/profit/price o Argument that marginalism will result in people not making fixed costs rejected NOTE: marginalist revolution during Addyston Pipe times people priced forward looking Ruinous to hurt people who were pushing P towards MC since that destroys investments in K Foundation for RofR and Per Se and RofR is enshrined in Standard Oil and American Tobacco Early Case Themes N Securities (1904)- Sherman apply to corp mergers before Clayton (which was actually passed to strengthen Sherman)? Court says yes, Holmes dissent says hard cases makes bad laws EC Knight- SCOTUS 1895- manufacturing isnt enjoinable/commerce, incidental/indirect only Swift & Co- SCOTUS 1905- current of commerce of stockyards, killed direct/indirect/EC Knight --MARKET DEFINITION(Alcoa, Grinnell, DuPont Cellophane case) Market definition cases are mostly 2 cases, sometimes 1 reqs it, 7 Clayton rarely*** Two major concepts: restraint of trade & monopoly power o Market power and monopoly power are NOT the same thing 3 Questions to ask: o what is the proper technique for measuring market share? o What size do you have to be to get monopoly power? o What kind of business conduct will antitrust laws tolerate? Demand side issues: substitutable by users? Spatial/geogr substitutability? Supply side issues: Entrance barriers, ability to control competition Market definition- usually REQ for 2/1/7 cases (competitive effects can replace this & vice versa) PRODUCT and GEOGRAPHIC components used to determine what will subst lessen competiton o Careful not to get into niche analysis, kills data results/substitution o ALSO allows the agencies to measure market shares and market concentration generally Better to over-exclude distant substitutes since thats a more accurate gauge of merger effect o Too narrow a view if competition from outside mrkt so ample that no in-group competition wont harm consumers clearly needed to include those outsiders in your first market review! Targeted Customer Analysis of Market definition

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions
o If indiv negotiated P, sometimes an indiv customer is the narrow market (RARE though) Geographic Market definition o transport costs, language, regul, tariff/non-tariff barriers, custom/familiarity, service avail o When define by suppliers- customer location doesnt matter Factors: cost of transport, supplier change cost, downstream competition effects on customers, past and predicted shifting of customers o When defined by customers- supplier location doesnt matter

Alcoa- 2nd C 1945- mrkt def, power, monop case (not Post-Chi/current Scotus but its Hand) Virgin aluminum ingot, cartels binding people not to compete, manuf of aluminum restricted o Virgin ingot or all ingot? Global or domestic markets only?? MRKT DEFINITION KEY Market definition has product and geographic components o Q: do they have a monopoly? Did they get there in viol of 2? Alleged restraint of trade, unlawful exclusion in market- PROCESS IS FOCUS o Whats the power level? FOOTNOTE 4 30% isnt, 2/3rds might be, 90% def is monopoly Market share is key to 2 Sherman analysis- today 70-80% is problematic potential imports here put a ceiling on the prices but that doesnt mean its not monopoly o they could also let competition in but crush it later The Sherman Act has WIDER purposes than allowing Co to get fair P (beyond Chicago school) Best profits of a monopolist are a quiet life, skimming off the top o **It deadens initiative, discourages thrift, depresses energy, narcotic vs stimulant o Sherman Act didnt have good and bad trusts, it FORBADE ALL Possible to prefer system of small providers instead of a mass being directed by the few.. that could be purpose of act o Restrictive contracts are forbidden, division of territory is forbidden (Addyston Pipe), price fixing is forbidden (Trenton Potteries) Existence of a monopoly is ok only as long as downstream effects are temp- PROCESS/VERB o INTENT=key, if its there its bad, monopolistic menacewithout intent, hurt successful o anticipating and forestalling competition and holding the field is the issue TAKEAWAY: reas profits? Still can be violator. ACTION is key (skill/foresight/good mousetrap) or building capacity as a hammer? POST-Judgment: remediation was an issue, post-WW2 govt production was sold off to non-alcoa DuPont Cellophane case- 1956 SCOTUS Cellophane market, 20% packing material market (Majority), 75% cellophane market (dissent) o Control of prices and exclusion of competition are the two ELEMENTS- MRKT DEF KEY! Market power is like monopoly power, reqs cross-elasticity review BURDEN of proof on government but their lack of substitute or like price isnt good o By-product of general efficient market competition, modern demand o DuPont had no power to prevent the use of other wrapping materials How far will buyers go to substitute? That is a consideration reas interchangeability still present in the market? What tool do you use to guage this? CROSS ELAST OF D (data drive) o Use or uses to which product is put that drives the market High degree of functional interchangeability? Enough here

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions o BUT Cellophane Fallacy- already at max P, downslope D=false subst Shape of the curve is key to the analysis of substit/mrkt pwr DISSENT- behavior showed there was no substitutability so there WAS market power! o Cheaper things werent growing like cellophane, if were substit, they would! o DuPont didnt acknowledge competition in survey done in 1950 so how can the court? o Stock repo @15x price, they had clear stranglehold on production, value shown in repo o DuPont could not bear the burden that it owes its monopoly power SOLEY to its superior skill (US v United Shoe Machinery Corp) Cellophane fallacy- LAW today but it doesnt deal in merger context an its only bad in the false negative direction (ie- including substitutes that really arent so violator gets off) o Made worse w/better econ: probably pricing at the rational profit maximizing monopolist level so obviously any increase in $ will drop unit sales show false substit What level is sufficient to drive purchasing power? Hard to say DuPont is statistical data based, Grinnell is subjective preferences at lower level- DIFFERENT Grinnell doesnt 100% follow DuPont (diff analysis!!)- NEED MORE HERE Fire and safety services District court uses accredited central service station o Grinnel ties to Split fire and burglary services apart/include unaccredited services in each of those two relative markets. NARROW on one pt, BROADEN on another TWO main Qs o Does grinnel have power to raise the P to attack unaccredited or would clients leave? o Can Grinnell P discrim against the part of the market they dont have to get them?? Doesnt that show that they wouldnt be substitutes?? Court uses substitutability: realistic alternative analysis, reas interchangeability, low degree of differentiation analysis to uphold district court view o Prevalence/size of groups serviced by substitutes is key to Grinnell analysis NOT cross elasticity of demand People arent using them as substitutes so they must not be=Court logic What about idiosyncratic pref? Dont let small group define market with their inelastic demand/preference o NEED RIGOROUS review, not just niche review/idiosyncracies=distort enforcement Price discrimination elements KEY to relevant mrkt segments o 1) Ability to ID subset of people/market with idiosyncratic D prefs, raise P on them? o 2) Prevent arb of customers with higher P from taking advantage of the lower P Opportunistic buyers who are not in the idiosyncratic buyers group Arbitrage cant be executed in all markets but is it possible here? Not really Hard to buy services and sell to someone else, much easier with commodities o P discrim=WT up since everyone paying reservation price, no consumer surplus GEOGRAPHIC Market definition question o Court gets it more wrong here, whats the relevant markets? National market because the planning decisions are made on a national basis uhmmmm Dissent- gerrymandering! you decided Grinnell is bad and you're working backwards

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions o Ask how buyer perceives Geogr market CLEARLY a local market (tho $ at corp level) Supply side, not demand side perspective/organization of decision making
HORIZONTAL MERGER GUIDELINES & Hypothetical Monopolist Test-- how do they regul mrkt def? Uses SSNIP- small but significant non-transitory increase in price (5% is standard) o Methodological tool for hypothetical monopolist test, NOT tolerance level for $ increase Q: can you raise prices profitably and not lose market share?? PROCESS: find what would be substituted to, add it to market, then redo over and over until you have your market list/no more profitable SSNIP o Can also do with Geogr markets to get selling area (matters in retail?) o MIGHT identify mrkt where customers will go outside market in response to P increase o Might also include 3rd product if its something close to product A but not prod As competitor prod B o DOESNT generally lead to single relevant market (GOAL: ID competitors in merger) Share of sales/units can be misleading, distant competitor effect more accurate here o SSNIP benchmark (P w/o merger) of P can be higher, lower, the same P effects are quantifiable, not more important than non-price effects o Hypothetical monopolist incentive to raise prices depends on customers substituting away and companys ability to increase price/profit margins on product FACTORS: past substitution, predicted subst, sellers business decisions documented, industry participant behaviors, cost of subst, recaptuce %-age (if prod A loses $$ when they raise prices but others in that group get that %age it means hypothetical monopolist has power) Critical Loss (number of units lost that would leave profits unchanged) and predicted loss (units that will be lost due to price increase) are key metrics Higher pre-merger margin=low P sensitivity, smaller predicted/critical loss Higher pre-merger margin =need smaller recapture % to satisfy the test o Hart-Scott merger analysis is before the merger has occurred so you're going to avoid the Cellophane Fallacy because you havent GOTTEN to the monopolistic situation where the profit maximizing monopoly price has been arrived at Horizontal Merger Guidelines Completely overhauled in 2010, NOT law/regul but persuasive o Relevant mrkt def focuses on D substitution & NOT supply substitution (anti-Grinnell) Supply helps to ID who is in market but thats AFTER ID the relevant market If no, it seems there would be substitution away from the widget **Summation of Market definition/approach** MRKT DEF IS ONLY 1 PT MRKT POWER!! Courts generally approach it inductively than deductively (facts and then theory to facts) Reasonable substitutability from consumer perspective is important Cross elasticity (+ or -) is BIG but dont commit the cellophane fallacy o make sure there is some pre-merger/anti-competitive conduct data (baseline to ensure you can recognized profit maximizing monopolization thats already occurred) Grinnell Approach- direct evid of idiosyncratic subst, buy behavior, goods physical properties o Tech constraints, buyer stmnt, research studies, transport costs (which = BTEs) o Brown Shoe case- everyone in the trade understands mens/womens/kids shoes are diff so market should be looked at that way, general line of commerce Can you use cross elasticity data +direct consumer/Grinnell evidence? That strengthens story o But where the approaches point in different directions, find tie breakers that supports

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions the more coherent narrative --CARTEL BEHAVIOR-- 1 conspiracy cases Market division agreements, JV agreements, boycotts (anything that P up so D down & DWL) o price by committee, etc or exclusionary behaviors to kill competition o MRKT div=Each group gets quota to maintain (but incentive is to cheat and raise Q) Also ways to police cheating 3 conditions: high degree of market concentration (few sellers, big mrkt=coordination), low elasticity (P up=no subst), high BTEs (nobody can assail cartel model if outside of it)
PRICE FIXING & Per Se (Addyston pipe is case #1 here) Socony Vacuum and CBOT are the two poles Chi BOT v US- 1918 Brandeis (heyday of 20th C, out of favor today) Chi agreed to basic open/close market calls (the Call Rule- horizontal restraint, anything en route) o Govt says per se (like Addyston and TransMO), no showing of mrkt power/effects vs. CBOT showing ALL good effects Brandeis accepts one-sided record (pro-little buy, more open) EVERY agreement binds/restrains trade, that doesnt make it bad! (CBOT uses RofR defense) o This created a public mrkt, more trading, direct buyer/seller relations, more dealers, no private market risks anymore Pro v Anti-Competitive: the true test of legality is such that it merely regulates and thereby promotes competition or whether it is such that it suppresses and even destroys competition o pro-competitive is to strengthen the COMPETITIVE process, not just bring P down o Does the Call Rule regulate and promote OR suppress? MORE competition is key metric TAKEAWAY: more competitors? Doesnt matter unless more competitive market o LIST OF FACTORS for RofR- pg 190 Court reviews: Nature, scope, Effects! (facts of business, condition before and after restraint, nature/effect is probable/actual) Appalachian Coals v US (1933)- impliclty killed by Socony (but shows diff depression era logic!!) 137 providers agree on 10% commission to help kill destructive post WW2 (glut/bad of coal) o initially enjoined by 1 after pre-deal analysis by DOJ- not tech horizontal more P fixing INDUSTRY spec conditions means they were making honest effort to remove abuses, make competition fairer, promote essential interests of commerce so IT WAS FINE o a cooperative enterprise otherwise free from objection which carries with it no monopolistic menace is not to be condemned merely because it may effect a change in market conditions where the change would be in mitigation of recognized evils and would not impair, but rather foster, fair competitive opps NOTE: EU Treaty of Rome makes P fixing rules inapplicable if will improve production/distrib of goods or promote technical/econ progress while allowing consumers a fair share of the benefit CHANGE in coalitions between Appalachian coal and SOCONY 3 coalitions within new deal: o business commonwealthers- progressive industrialists, fault of depression was chiselers (violators of collective norm/well being, competed to hard and drove prices down) great men in cooperation w/govt to make general agreements/P/acts/output

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions o cooperative democracy- suspicious of capitalist class/blamed them for depression central-type planning to replace over-competition BUT they wanted the competition to be accountable committee-type structure with reps from all over o atavistic competition (Brandeisian)- blames capitalists, wants robust, small scale compet New Deal periods o 1933-35 is coop democracy (Early new deal, NIRA=local committees planning prices/allocation with limited Fed supervisionabject failure) BUT Schechter gave FDR an out from upopular NIRA o 1935-42- atavistic competitionists get SCOTUS/DOJ power and 5 SCOTUS appts are Brandeis appointments in 5 yrs before 1940 without this, Socony is not as strong per se rule of competition o 1942 (Pearl Harbor)- industrialist attack, Perryman indictment=commonwealthers SOCONY Contest: Refiners dump hot oil onto the spot market, kills P, hurts indies o 33-35 it was MAJOR priority to stop hot oil sale, indies collab-ing w/majors to stop o Ickes (SecofInt) is given job to stop hot oil, told them to plan together! Blessed by FDR Charles Arnaut (SOCONY vp) came up with Dancing Partner Program o Fine under NIRA but then 35-42 period comes and Schechter/Panama Refining come down and kill NIRA but the collaboration continued Then Brandeis group comes along and says this is a huge problem! They say reasonableness doesnt matter because Per Se is the stnd!!!
US v Standard Oil of NY (SOCONY)- SCOTUS 1940- supreme recitation of 1 Per Se illegality, depression-ish Horizontally integrated oil people who were fixing prices for bad oil- 83% of oil in market! o CF- App Coal: not fix prices on consuming market, that was production side PER SE restraint if price fixing is involved- RULE, no intent/effects showing needed, evils gone? tough o Ruinous competition, financial disaster, evils of price cutting are still not price fixing justifications they are always alleged! Sherman protects vital part of our economy against any degree of interference. o Legsl didnt give us power to say if P-fixing schemes are wise/unwise, healthy/destructive Proof that the combination was formed for purse of price fixing? Thats enough o Even if incapable (US v Rabinowich), couldnt accomplish it? Whatever BROAD tampering with market structures language = amorphous Arnold/Brandeis group undercuts the whole reasonable, necc restraint administration set up o Cfs App Coal by saying (pg 199)- unlike this case, that was just wholesale and had no retail impact (even though it was) PLUS that was injunction (not active yet But today the level doesnt matter, its all bad if conduct is wrong PLUS verb of trying to agree shouldnt matter that is not active yet TAKEAWAY- P fixing? dont need anti-competitive effects or power AND reasness isnt a defense o WHY NOT Joint selling agent in App Coal, price fixing during hours in CBOT?? Pg 201- harkens back to TransMO-type logic. BROAD description of price fixing Post-Socony: Rule of Reason (broad, flexible, inquiring 1 look) and then there is rigid price fixing/Per Se inquiry (tampering attack that shuts down defenses)- P is central nerve of econ! NOTE: the category of price fixing over time has changed a bit (to include things that arent specific price fixing o Catalano beer case pg 205 is like price fixing and its per se to kill short term credit o AZ v Maricopa Co (pg 206)- Drs agree on maximum fee schedule and thats price fixing

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions too formalistic? Max P has same effects as min P (benchmarking, coordination) o JTC Petroleum- channel of distribution price fixing conspiracy was bad o Natl Macaroni Manuf- conspired to keep down durum P, intent: ward off price compet=BAD o Levine v Cent FL Med Affl- SJ to Insur Co that set max reimbursement because Drs could still fluctuate/lower their prices and experiment its price fixing but not antitrust kind!
Characterization of joint action (pp. 211-213; 215-229) Natl Soc of Prof Eng v US- 1978 SCOTUS- Doctrinal Quick Look foundation (~CalDental 5-4 same Crt) No P talk w/clients until choose an engineer, otherwise will be unethical and grab super low bids SCOTUS looked at Mitchell v Reynolds RofR and then to development in CBOT and Stnd Oil o Reluctant to apply per se to professional associations, (antiself-policing blunt instrum) TWO inquirieso 1) necc effects are plainly anticompetitive/illegal per se o 2) where the facts of the business must be reviewed for competitive significance Court said you cant say unethical temptation warrants doing away with it (~ruinous compet) o RofR doesnt support saying competition itself=unreas o Price competition = inherently problematic/destructive? holds zero weight o Competition is a beneficial 1st Prin, US industrial policy founded on it, wont hurt safety NORMATIVE case even if NSPE is correct as a factual matter, this is a predictive case that shows problem is competition argument doesnt work

Broadcast Music (BMI ASCAP) v CBS- user performance copyright Qs JV that would blanket license copyrights to people, take percentage of revenues o 1950 decree forced them to offer more than one type blanket license o CBS says blanket liscn are bad! If they arent they are still monopolists & kill whole COURT says NOT Per Se (tho little experience allows them to dig, prevents per se) arrangements are economically beneficial, flex enough so NOT per se framework o Copyright Act weakened individual bargaining, made it hard for this kind of cost aving efficiency so is this a better arrangement? Necc economically? NSPE- does this facially seem like it would restrict output? No, might help efficiency and hep output o NOT naked restraint of trade that does anything but stifle compet (White Motor v US BALANCE indeminified access to copyrights with protecting efficient defense of copyrights o the very terms price fixing should never be taken literally Market needs this, how else would defense efficiently be done? o Would this affect the central nervous sytem of the economy? (Socony-Vacuum) NOT ALL restraints among actual/potential competitors that have impact on price are per se Sherman viols This is a different product from the individual license uses dont analyze like it! Needed review TAKEAWAY: No ruinous compet D BUT if you say combo helps output, you might escape per se o Plausible story up front is KEY, shape efficiencies argument (does good story undermine Per Se in light of Board of Regents and other Quick Look/RofR cases?) DISSENT- this isnt per se but it is viol of RofR and it should be anti-trust viol o All or nothing system is unique, classic example of economic discrim when you take a percentage of peoples revenues/sales across the board because that isnt tied to the use

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions o Also barrier to entry for someone that wants to enter the market, get air time by pricing LOW and getting someone to buy it via value play o aggregation of economic power e closely scrutinized. Especially important when aggregation is composed of statutory monopoloy privileges Remand: CBS had chance to negotiate and didnt! o Buffalo Broadcasting- even small TV stations dealing with BMI could compete too! NOTE: CBS tried to get together with other networks to schedule slates of boring but useful programming so that nobody would suffer is that a violation?? RULE today: per se exists and the RofR exists and they do work sometimes US v US Gypsum Co- interseller price verification is ok if the lower price is being offered in good faith (not Robinson Patman violation) NEED MORE ALSO- criminal cases MUST have anticompetitive INTENT and EFFECT o BUT if there is per se violation alleged, you just need effect because intent is inferred there US v Brighton Building and US v Alston Gypsum isnt BMI- this is the kind that facially reduces output, BMI wasnt (PERNICIOUS!) 2 recent cases at other end of the spectrum: Texaco v Dagher (2006)- JV (FTC approved tho like merger) between shell and Texaco to market petrol on west coast, sued under Per Se (not RofR), SCOTUS says attacking lawful JV? you must be using RofR (since Per Se is only for NAKED obvious restraints) o JVs could be lawful normally and here so no naked restraint American Needle v NFL Properties- excl licensed grant to reebok for apparel branding, NFL says single entity (defense) so they are incapable of 1, loses 9-0 o see Copperweld 1909 where parent & sub cant agreeing under 1 not even subj to RofR either because there is only 1 party/single firm.. corporate firm boundaries are impregnable for antitrust look at control! ----QUICK LOOK---NCAA v Board of Regents- 1984 SCOTUS, Quick Look described! Dont want to apply per se to restr of TV arrangements, education deference here o Protecting live attendance, amateurism! o But is this classic per se since it wont be responsive to consumer demand? Output down Exception for leagues in so much that they MUST have some collaboration (BORK) ESCAPE!! o Production function of the league is pretty clear in its requiring collaboration o NCAA gets deference here (but it dies when burden shifts and they got nothing) NOT full RofR despite not being Per Se shift burden to NCAA to show pro-competitive benefit o Pg 239- footnote 58: Areeda- not unlawful per se BUT there are places where a rule of reason analysis in its full breadth doesnt need to apply Can be done in the twinkling of an eye ie- quick look o BUT there doesnt seem to be a decent reason, this hurts output! No mrkt power? Unnecc AND there is market power (no substitutes) DuPont Monopoly like o RofR puts heavy burden on establishing an aff D that justifies dev from free market

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions BUT this isnt a BMI-like competitive JV No precompet efficiencies could be marketed without these restrictions!! NCAAMBB DISSENT- Rhenquist and White say its OK under RofR, MRKT DEF!! entertainment market TAKEAWAY: REJECT per se if restr are inherently necc (NSPE, caldental, prof assoc generally) o Novelty here is stopping short or rule of reason analysis (though it does the analysis (sort of) it says they arent fully required) Twinkling of an eye: further than per se BUT short of RofR Court wants justifications and then proceed to RofR or kill it if bad reasons Brown v MIT- financial aid price fixing/collusion in Ivies, not competing on price discounts?? Is diversity an allowable justification for anti competitive effects? The ruinous compet arg might work when ruinous socially not economically? NO! Cali Dental v FTC- SCOTUS 1999, sort of kills quick look? 501c for group of dentists ads but its 75% of dentists in the area high value of membership Q: is quick look justified here? o NO, if anticompet effects are far from obvious, the RofR demands more thorough enquiry NO quick look because anticompetitive effects are not comparably/suff obvious, maybe a potential/ plausible net precompetitive effect o Are professional price and quality advertising sufficiently verifiable destructive to fall into quick look general rule? NO Rudimentary understanding of econ=fast look, Is it of the kind that usually produces anti-competitive effects?? Does this type of restraint look fishy?? o ALSO want some self-policing of professional associations Professional context KEY, need empirical evidence of anticompet effects Does limitation/advertising guidelines limit the total delivery of dental services? THAT should be the question at issue Per se, quick look, RofR arent fixed categories, no bright line separating them since often market research/conditions will need to be done before or after a conclusion o There is a sliding scale in determining reasness- need quality proof (varies w/circumst) Need circumstances, details, logic of the restraint. Is experience of the market so clear that confident conclusion that principal tendency will come from quick look Dissent- Breyer (technocrat! Defer to FTC/agencies here, Not private parties, Harvard School) o Just need 4 qs answered: whats the restraint at issue, what are likely anticompetitive effects, offsetting precompetitive ones? Sufficient market power to make a difference??? o Breyer note- when private parties suing, would rather leave to admins) FIVE STEPS (Cranes pedagogical steps) quick look v RofR-ish- 1 suits 1) P: restraint (ie- contract, combo, restraint of trade), proves existence of agreement o Substantive and evidentiary killer 2) P: likely anticompet effects of #1 (analytical necc to track quick look intersecting with RofR) 3) P: Relevant market and market power OR anticompetitive effects in the relevant market 4) D gets burden to either: o Rebuts #3 (NOT AVAIL IN QUICK LOOK) o Shows offsetting procompetitive effects (ONLY viable rebuttal for quick look attack)

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions 5) P shows less restrictive alternative for those precompetitive benefits (balancing??) o Open Q to what extent this exists/is available after D shows pro-competitive nature o If this is rational basis-like, dont balancequick look/interm scrutiny doesnt really have it strict scr/per se does have balancing more In RofR the DC Circuit has said its open balancing questions STEPS FOR QUICK LOOK Based on rudimentary restraint shown in #1, court says we know that, burden immed to #4b (D show offsetting precompetitive effects) If #4b burden met, it goes back to step #2 and P gets burden, and then progression continues on Polly Gram- where quick look is moving, DC Circuit 2005 3 Tenors perform in 2 concerts, 3 Cos have rights, make JV to promote/market 3 tenors 3rd concert, agreement to market is time restriction on discounting 3 tenors 1&2. o Activities w/in a JV are not per se illegal but this isnt within JV scope DC Circuit says arent sure there should be a quick look- should be continuum! No 3 tests Here, agreement was inherently suspect, polygram didnt identify any competitive justification
Limits to per se illegality; Market division Texaco v Dagher- SCOTUS 2006 JV to refine and sell gas, economically integrated JV CANNOT viol 1, cant agree with yourself o Prior approval from FTC, AGs of states o JOINT market participation, not competition here price setting is hallmark JV activity literal price setting but its not the unlawful/Sherman kind this is core business function so its not ancillary by definition, immune-ish Timken Roller- 1951 Restrain interstate/foreign commerce by divvying up trade through trademark protection o Allocation of territory, import restriction, market protection go WAY beyond merely protecting a trademark/affording protection to a name Horizontal restraint here under the color of trademark licensing BAD US v GM- 1966 Telling dealers not to deal w/wholesalers undercutting price= Eliminating class of competitors o No ruling on location clauses though vertical or horizontal here? CRITICAL is that the dealers get together among themselves o If horizontal & vert exists, H rules apply & will be judged more harshly than V restraints US v Sealy- 1967 Licensees to fix prices of items sold, territorial arrangements by licensees o Sealy=merely the instrumentality dealers get excl licenses from entity they created Sellers said V! Court said no tried to make it V-looking but it was just baseline market division o Clearly per se case because they maintain prices, prevent competitive incursions *NOTE: Sealy & GM cases are important when thinking about V & H restraint differences

US v Topco- SCOTUS 1972 Private label maintained by tons retailers, VERY restr agreements on zones/resale prices, approval of competitors BUT done to compete w/majors? Need collab/restr=procompetitive o District court says intrabrand competition loss is offset by interbrand competition!

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions Burger concur said bigs will get bigger an want protection of competition Govt says its territorial restriction & a restriction on customers who can buy the label o Main thing D needs to rebut is the territorial carve ups, make Sports League argument?? Inability to weigh, in meaningful sense, competition here vs there=why we have per se rules o dont tolerate naked restraints! Thats for Congress! Sherman is antitrust magna carta got rules for a reason, no rambling through wilds of econ theory ft 97** Sherman is magna carta of free enterprise, single backstop against abuse Dissent- these are minimally ancillary restraints that we should view as being reasonable o Addyston pipe didnt lay down per se rule, didnt say it was de facto horizontal division o Predictability?? We are supposed to struggle with difficult Qs, sholdnt abdicate that role Horizontal shouldnt be a blanket rule/prohibition TAKEAWAY: market carve-ups are just like price fixing NOTE: CRUCIAL to Chicago school kick-off post-Topco. FREERIDER PROBLEM is the huge issue o Without mrkt carve ups ppl sell in areas they dont invest, underinvestment in a particular function but they reaping market share where they havent invested!! Without fiefdoms, there are no incentives to operate/invest in your idea because the dude across the street is undercutting you Ex: Co B sells in Co A territory despite not advertising there at all (or anywhere) want everyone to invest in brand promotion, etc DOMINANT explanation for vertical restraints o Free riding (on pollygram continuum) might trigger RofR, court familiar w/justification Like JV? they invest in brand creation, its not naked mrkt division and price fixing Palmer v BRG of GA- SCOTUS 1990 Agreement between 2 BAR Cos to not compete in (a) and outside (b) of GA, P shoots up o DID compete before and then stopped SCOTUS: absurd to say this=RofR, clearly market division/per se! theres no econ integration here o Cant just license trade names/agree not to compete, thats end around of antitrust o Socony Vacuum- combo formed to restrain, depress, peg prices is per se o TopCo showed that if you compete at same level of market and divide up, its bad Remains hardcore price fixing/bid rigging/market division get back of hand per se treatment Today there is a core of per se illegal but that core has been contracted (IN dentist case, etc dont feel Socony-esque)
---BOYCOTTS/REFUSAL TO DEAL--- (pp. 307-322) per se illegal?? In BMI they said that something new is made possible by collab and that means OK Other Cases o WM Mantague v Lowry- 1904, restr on who people can buy from, allowed arbitrary app rejection=clearly antitrust! it requires conformity to a condition of doing business o Paramount Famous Lasky- 1930, 2500 theatre owners dealt with via standard K and deposit, arb agreement despite arbitration, it seemed they entered into unusual agreements that unreas suppress normal competition so that makes it illegal State St Bank and Trust- business methods can be patented so is there some diff degree of protection depending on patent protection itself?

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions

Fashion Originators Guild of America v FTC 1941 (still good law post-BMI??) Guild member boycott people that sell style pirates, band together for protection=HORIZ RESTR o Design registration bureau with enforcement arm ~Socony??? FTC said agreements, understandings/conspiracies that lessen/hindered compet btwn retailers Havent achieved it? Not important only matters if they try/want to deprive public of competition benefits o Hadnt brought qual drop? P rise? irrelv. INCIPIENCY=key, could lead to em Black concerned about extra-govt agency taking power to regul compet by itself o What about private self-regulation issues? THIS says want them in public process Tortious so it needs protection? Go to state courts! Klors v Broadway-Hale- 1959 BH (showy) conspired w/3rdP to sell to Klors (small) @ inflated P/unfav terms, HORIZ o but there are many merchants around so not bad? 9th C says no public injury o 9th C says no public injury so not something we care about SCOTUS: interrupting natural flow IS bad, public injury isnt needed since its clearly bad o Group boycotts long in forbidden category, no open mrkt compet? Never too small o Must stop if tendency is creeping or at a full gallop Private quarrel or full anti-competitive action? Malice cant convert tort to AntiT Injury to competition or competitors? District court says this is just injury to competitor, not competition generally (which is courts concern) Does this mean any tort BH does to hurt Klors is a treble damage-ready crim suit? Tort to AntiT?? o Here, concerned w/competitors AND competition NYNEX seems to swing back to competition not as much competitors so this case might be a bit different today Free rider argument in BH? BH informs customers then Klors undercuts BH after educate? o Stores dont want direct manuf-to-buyer internet selling for same reason? Chicago school likes this free rider thing and then the Ds always win the RofR cases because they use it, Ps cant show market power and then its a game over o Degree of rest vs danger of free riding =Q. how large can restr be? neighb/city/state?? Whats a reas restraint?? Few cases get there but its outstanding question Rambus- failure to disclose patents to competitor, wouldve allowed to design the stuff the other way DC circuit says this isnt an antitrust claim that they didnt share info o Mayyyyybe if the choice was we would have made other technology but its definitely not when damn it, you stopped our products! Is there ground between per se and just non-use? Rambus seems to say that certain categories of business behavior are just not in antitrust AT ALL o Rambus shows that without agreement/combination you are NOT going to have any sort of antitrust NYNEX v Discon- 1998, Breyer- Baby Bell case, shrinks anti-T substance, opp of Klors literalism per se NYNEX had to remove solo connections, install those adaptable to national carriers, rebates NYNEX for inflated price (secret kickbacks gets around rate regulation) o consent decree to comply with this

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions ATT: Use Klors and FOGA to say that this is horizontal restraint thats invalid? Ill motive to be choosing supplier A in order to screw supplier B o 2nd C says per se illegal, cutting discon out of chain of services BUT SCOTUS reverses Q: per se group boycott where one merchant favors one seller over another? NO! o P here must allege/prove harm, not just to 1 competitor but to competition/process NOT an anti-trust case AT ALL (????????) Injuring consumers? SCOTUS says injury to consumers not competitiveness down, its fraud o biz torts to antitrust?? Done for 3x damage only! Use other Aves, everyone would sue Sharp (1988 case looked at in vertical restraint section) ????? Klors does not apply to context where manuf is talked to by retailer other retailer gets screwed o Is this Klors? Dissent says yes, Majority says this is vertical! They say only sell to us AND there is no horizontal manuf agreement no horizontal group of manufs has said we will only sell to retailer A (as they did in Klors) Limited to its facts by Chicago school not really overturned necessarily Post-WW2=golden are of anti-trust law (SEE NOTES IN IDEOLOGY) Harvard and Chicago does begin to converger in late 80s-today Procedures by which antitrust law enforced becomes MORE than the substance o What are limitations on the private enforcement? o Georgetown study on private litigation- large sample of 70s-80s cases V > H rest challenges, competitors/Dealers bring 50%+ cases (less customer) Litigation $$ settlement values high FTC v Superior Court Trial lawyers (pg 335, used as class hypo) Pub pol arguments by pro bono lawyers, fixed prices-ish, took no new cases Purely horizontal, ~ NSPE BUT IT DOESNT HAVE NW WHOLESALE attack to rivals o Customers/manufs directed, doesnt meet the NW Wholesale Test!!!!! Also, trial lawyers have zero market power Court: per se illegal!!! If it wasnt a group boycott what else is it? Output rest like in IN Dentists case manipulation of the market inputs Footnote: P fixing & its understood to be a group boycott tho no NW Wholsale Clairborne Hardware- 1962, boycott of businesses that wouldnt serve African Americans 1st A protected boycott upheld here, no profit from boycott like Trial Lawyers so diff standard!
CABINING PER SE BOYCOTT RULE Northwest Wholesale v Pacific Stationery- SCOTUS 1985 (DC said RofR, 9th C says per se), at odds w/Klors? Kicked out of wholesale club without reason, no method to challenge/appeal 1? No dmgs shown o CHALLENGE is H boycott, not that group is a viol of antitrust (no Const challenge to DP) Q: Concerted refusal to deal when you just boot someone? Huge cost adv to membership o Silver v NYSE- 9th C says RofR only if there is a procedural safeguard to review expulsion pernicious, justification-less restraints? Need to narrow self-policing per Silver? no o 4 Robinson-Patman is very pro-self regulation, no constriction of Sherman tho o Cant hide behind statutory authority (Robinson-Patman exempting co-ops/allowing them to give rebates/organize themselves) BUT opposite side DOESNT say that you only get Per Se w/o procedural safeguards

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions
When do you apply Per Se? 342: Per Se can be attacked when persuading/coercing firms or cutting them off from supply needed to compete big boys strangle/choke them out o Does this kill the market power requirement? Maybe yes o MUST have H agreement somewhere between competitors at same level NOT manuf/distrib o Meets REQ IF bunch of mfgs persuaded by one guys competitor not to sell to rival (KLORS bunch of customers boycott distrib because of rival coercion (FOGA) rivals agree! NW wholesale? NO, that just says firm cant be part of coop, not that they cant do business with that firm outside of the coop if it was agreement beyond the coop AND in coop, THATS a boycott o simply denying access if NOT a sufficient boycott IS THIS JUST A TAILORED FORM OF THE ROFR?? o EXTRA BELLS AND WHISTLES ADDED HERE SO MUCH THAT IT CHANGES THE PER SE RULE? NOT SAME THING? conclusion is focus here, not the mechanism of analysis, no burden/process review BIG confusion here about how far Per Se goes with group boycotts. Klors used here? o What about Board of Regents at other end? Some things require collusion o What about BMI? Does this increase econEff, make markets more competitive? o SCOTUS rejects/hates Per Se but says they could have used RofR if they wanted Court doesnt want to check procedures BUT also reject coop immunity from antiT BUT are there certain classes of behavior that are subject to non-Antitrust regulatory scheme? ~Silver v NYSE (NYSE is delegated self-regulation power by SEC, secur law, not antiT) Exclusion act itself doesnt mean there is animus and thereby a probable anticompetitive effect o **W/O market power or excl access to key input, expulsion NOT auto anticompet effect!! DC was right! Per Se doesnt apply here IN Dentists SCREWS H group boycott descrip o says NW Wholesale=boycott of suppliers/customers ) but thats WRONG, its rival boycott discussion- KEY factor is the coercion/agreement among RIVALS rival level doesnt even need market power, just need to A group w/market power o Must be directed against the competitor AND it must cut off essential supply AND absence of plausible efficiency arguments

FTC v IN Federation of Dentists- SCOTUS 1986- case screws everything!!!! Outlier in Quick Look Group up to prevent participation w/insurance Xray mandates for least $ treatment eval o First move by dentists is to say this is like NW Wholesale they arent part of our group o oustside of scope of antiT? Had trade assoc but that was bad, then had union w/ HUGE % dentists in area 7th C: NOT bad but suppressed compet w/dentists whod compete to comply w/Insur companies o no evid BUT a reas mind could conclude compet for patients had mrkt dislocation!! Court has been slow to apply per se with prof assoc o when there is no immed obvious econ impact (NSPE, BMI) but here its too much- RofR! CLEAR H agreement that impairs ability of mrkt to adv social welfare, goods mrkt dislocated o No qual of care (~NSPE/TransMO) arg here in compet mrkt cant say quality will decline No findings of economic impact so its not viol as MOL? Didnt identify a product and geogr market o Court talking about potential there wasnt much technical attention to that buuuut Market

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions
power is surrogate for detrimental effects if you can directly prove anti-competitive effects you can use that instead!!! o Court: concerted effort to withhold info from consumers is likely to disrupt market functioning and itll be a price fixing mechanism Last ditch: unauthorized dentistry if insurance employees look at x-rays!! o antitrust when actively supervised by state (See 10/19 notes on Raisin case!!) TAKEAWAY: skip market def/power steps! D must show procompet effects up front in quick look o There MUST be SOME quick look being done in IN Dentist case soft, across the board quick look (& Crane says he doesnt know what to do with it) Reimagining Cal Dental quick look through IN Dentist o Not really H P fixing as such but quick look as done here (no mrkt def/power) is bizarre

---JOINT VENTURES-- What happens in JVs/what their results are- what are purposes of antiT law?? Attack which of below o Total welfare increases o Total welfare decreases (JV fails) o Total welfare decrease (JV succeeds) o Prod welfare increase > consumer welfare decrease Output reductions or wealth transfers? That distinction matters o Consumer welfare decrease > producer welfare increase o Consumer welfare increase but least restrictive alternative? (Terminal RR) Net gain despite JV but could they have gained more? Joint venture is amorphous term, lots of (+s) but can also have issues (statis? WT=D down w/P up?) o But prod eff that means P down? But then maybe BTEs that leads to P up? Eff gain>DWL? Rent seeking- hoarding scarce inputs, pushing costs up as BTE US v Terminal RR- SCOTUS 1912 (Seminal case for efficient JV but ineff failure to negotiate/deal) Railroad junctions are MS river owned by same group, great for insiders (cheap!) but thats it o Court: ExtraO collusion cant stand, disallow=arb discrim that was injurious to commerce Forced to allow access to the terminals, eliminate non-member discrim charges/billing practices Court: essential/infrastructure facility thats indispensible, must be opened to all (free riders tho??) o Obligation of non-discrim like a common carrier-type duty least restr means to increase consumer welfare? Opening this=best way to max consumer welfare AP v US- SCOTUS 1945 DC said restricted coop access to 1200 AP membership, restrictive no appeal process o cant sell new or AP news to non-members is that anti-competitive?? Its their news! o BYLAW allowing anyone to veto a new member is the issue, not the news item Rest by law hindered/impeded growth of compet papers- less rest alt to get the eff/protect news? o Net effect is to enter these cities, trade restraints are aimed at destruction of competition.blocks initiative thats key to the system do what you want with your property/news but CANT go beyond it by k/combo and hinder or obstruct free/natural flow of commerce o Here, pooled power to prevent competition, not using their ingenuity to strengthen themselves as much o Newspaper w/o AP is at disadvantage, its critical piece of what paper has, weapon for AP!

AntiTrust Exam Outline- EXAM: 3-4 hrs and 3 issue spotter questions
Indispensible issue instead of enterprise and sagacity? Yes it is here BUT indispensability test would kill antitrust in fields where not indispensible Having member criteria <> safe harbor, Membership exclusivity can be anti-trust mechanism US v Visa- 7th C 2003 Dual governance (OK) & exclus rules in the dual markets of cards/network services o Amex and Discover kept on outside, excl by 20k banks is really what screws em (network!) RofR applied - REAL full CBOT-like RofR (not crappy quick look/IN Dentists) o Mrkt power? YES, subst impacts on commerce? YES, Procompetitive benefit? They try and then if make it, govt must show less rest alt Market here had no reas subst for network services so there was clear market power o Large % of concentrated market, competition hurt, innovation hurt (Visa CEO) Visa uses ruinous competition argument o 2 sided market! (2 diff user groups on 2 sides of the platform, here: merchants/consumers) both groups put in/take out, pay for the service (here in txn costs/interchange fees paid by merchants, interest/fees from card holder) MUST have some balance in two sided markets so imbalance doesnt force one side to subsidize the other also dont want people to get squeezed so they get inefficient & shift costs o free rider argument, it would have been made here Visa: hurting competitors, NOT competition o Court: presumptive legal exclusive dealing arrangements that have been upheld before? NO This is a total block not an excl dealing arrangement Visa: the exclusion if its here is ancillary to a precompetitive business strategy, need it? o Court: issuing rival cards hasnt been found to torpedo cohesion RELATED CASES o Visa v Sears: 10th C: RofR, ok for Visa to block Sears from issuing a card using its structure The rates are variable, significant intrasystem competition so no market power! o Worthen Bank & Trust Co- MasterCharge blocked rival NBI from issuing card on network Group boycott? No, productive capacity here was key and allowing competitor in would torpedo that (need national network and ok to prevent compet from killing it)