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    Antitrust Checklist 3

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    champion_egy325
    This document provides an overview of antitrust law concepts and analyses in the United States. It covers horizontal and vertical arrangements, mergers, monopolization, and procedural issues. For each topic, it outlines the current legal standard (per se illegal, rule of reason, etc.), factors for legal analysis, and examples of accepted and rejected justifications/defenses. The goal is to serve as a checklist for evaluating business practices and transactions under US antitrust statutes like the Sherman and Clayton Acts.

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    Antitrust Checklist 3

    Uploaded by

    champion_egy325
    631 views6 pages
    This document provides an overview of antitrust law concepts and analyses in the United States. It covers horizontal and vertical arrangements, mergers, monopolization, and procedural issues. For each topic, it outlines the current legal standard (per se illegal, rule of reason, etc.), factors for legal analysis, and examples of accepted and rejected justifications/defenses. The goal is to serve as a checklist for evaluating business practices and transactions under US antitrust statutes like the Sherman and Clayton Acts.

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    Antitrust Checklist 3

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    This document provides an overview of antitrust law concepts and analyses in the United States. It covers horizontal and vertical arrangements, mergers, monopolization, and procedural issues. For each topic, it outlines the current legal standard (per se illegal, rule of reason, etc.), factors for legal analysis, and examples of accepted and rejected justifications/defenses. The goal is to serve as a checklist for evaluating business practices and transactions under US antitrust statutes like the Sherman and Clayton Acts.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    631 views6 pages

    Antitrust Checklist 3

    Uploaded by

    champion_egy325
    This document provides an overview of antitrust law concepts and analyses in the United States. It covers horizontal and vertical arrangements, mergers, monopolization, and procedural issues. For each topic, it outlines the current legal standard (per se illegal, rule of reason, etc.), factors for legal analysis, and examples of accepted and rejected justifications/defenses. The goal is to serve as a checklist for evaluating business practices and transactions under US antitrust statutes like the Sherman and Clayton Acts.

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    ANTITRUST CHECK LIST

    I.

    HORIZONTAL ARRANGEMENTS
    1.
    2.
    3.

    4.

    5.

    6.

    1. Horizontal Price Fixing (Sherman Act 1)


    Current LawIllegal Per Se (Socony-Vacuum)
    Exceptions: if fits one of permissible factors then rule of reason is applied
    Justifications making it Rule of Reason/ Defenses:
    Improvement of market conditions (Chicago Board)
    Unsuccessful cartel/monopoly (U.S. Steel)
    Aggregate data dissemination/trade association (Maple Flooring)
    Price/market stabilization (Appalachian Coal)
    Safety defense (National Society of Professional Engineers) (rejected excuse)
    Public interest/education (Brown University)
    State action doctrine
    Efficiency through integration (BMI)
    Product is competition itself/necessity of regulation (NCAA)
    Parent-subsidiary (Copperweld)
    Rejected justifications:
    Open competition plan/firm specific data dissemination (American Column)
    Reasonable prices (Trenton Potteries)
    Learned profession (Goldfarb)
    Horizontal maximum price fixing (Maricopa)
    General Rule of Reason Analysis Factors:
    Structure of industry
    Cartel behavior
    Public interest served
    Facts peculiar to firms operation
    History and duration
    Homogeneity of products
    Inelasticity of demand
    Elimination of service and quality competition
    Suspicious Factors suggesting Price Fixing
    a. fungible commodity/product homogeneity
    b. highly price inelastic demand (no good substitutes)
    c. excess capacity
    d. high barriers to entry
    e. lots of entry in time of excess capacity
    f. market concentration
    g. conscious parallelism (disguised price fixing)
    *** Suggestive factors lead to qualified per se rule (Container Corporation)

    B. Market Division (Sherman Act 1)


    1. Current LawPer Se Illegal (BRG of Georgia)
    2. Factors in Analysis:
    Relevant geographic market

    Economic effect
    Components of same entity
    3. Rejected Justification:
    Free riders
    Cooperative association (Topco)
    C. Group Boycotts (Sherman Act 1 + FTCA 5)
    1. Current LawPer Se Illegal if have Market Power (Northwest Stationary)
    2. Factors in Analysis:
    Alternative means of redress
    Barrier entry
    Common plan/boycott behavior
    Product need not be essential
    Market power or absence thereof (+25% >)
    3. Rejected Justifications:
    Public policy
    Free riders
    4. Potential Justifications:
    Free riders possibly/economic efficiencies
    Heavily regulated industries/due process (Silver)
    Absence of market power leads to rule of reason (Northwest Stationary)
    Efficiency through integration (Rothery)
    D. Monopolization (Sherman Act 2)
    1. Current lawRule of Reason (Alcoa)
    a. possession of market power
    b. willful acquisition or maintenance of that power
    2. Justifications/Defenses:
    Thrust upon
    Natural monopoly
    Achieved by natural growth
    Legitimate business reasons
    United Shoe Fiasco
    3. Rejected Justifications:
    4. Factors in Analysis:
    Geographic and product market
    Price elasticity of demand
    Unreasonable restraint on trade
    Efficiency
    Mere size not determinative (US Steel Corp)
    Intent of monopolist (Aspen Skiing Co.)
    Barriers to entry
    5. Impermissible Monopoly
    Essential monopoly doctrine
    a. control
    b. inability to duplicate
    2

    c. denial of use
    d. feasibility
    hoarding a critical raw material
    coercing supplier to deal or to charge higher prices

    E. Predatory Pricing (Clayton 2)


    1. Current LawIllegal Per Se
    2. Determing if Predatory Pricing Exists:
    a. price below VC (variable cost) suggests predatory pricing (Areeda and Turner)
    b. price below MC
    3. Factors in Analysis:
    a. almost impossible achieve (McGee)
    b. duration of process (Matsushita)
    c. absence of motive
    d. practice in foreign market not determinative of domestic market
    e. actual harm, not speculative
    F. Mergers (Clayton 7)
    1. Current LawRule of Reason
    2. Analysis:
    a. relevant market (product + geographic)
    b. effect of merger substantial lessen competition
    3. Analysis Factors:
    Avoids concentration in incipiency
    Market foreclosure
    Market share
    Trend toward concentration
    Reason for trend
    Number of firms
    HHI/DOJ guidelines
    Elimination of potential competitor/ What would happened without merger?
    Overlapping markets
    Barriers to entry
    Potential reciprocity
    4. Relevant Markets:
    a. Product Market
    Outer boundaries of product market are determined by cross-elasticity of demand
    (Brown Shoe)
    Substitutability (Continental Can)
    b. Geographic Market
    Defined by effect on competition (PNB)
    5. Defenses:
    Failing firm defense
    Efficiency through integration
    G. Antitrust Standing/Private Litigant
    1. injury type antitrust law were intended to avoid
    3

    2. direct injury
    II.

    VERTICAL ARRANGEMENTS

    A. Resale Price Maintenance (Sherman Act 1)


    1. Current Law
    a. Minimum price fixing is Per Se Illegal with Exceptions
    b. Maximum is Rule of Reason looking for anticompetitve effects(State Oil)
    2. Exceptions to Minimum:
    a. must have actual agreement
    b. direct agents or on consignment allowed (no passing of title)
    3. Factors of Analysis for Minimum Price Fixing:
    Suggest retail price allowed
    Unilateral actions allowed
    Means of agreement
    Boycott can achieve (Klors, Inc.)
    Vertical minimum price fixing = horizontal minimum price fixing
    Compare with vertical non-price restraints
    4. Factors of Analysis for Maximum Price Fixing:
    Conscious parallelism is permissible
    Vertical maximum price fixing = horizontal maximum fixing
    5. Defenses:
    License of Patent (GE)
    B. Territorial Allocation
    1. Current LawRule of Reason (Sylvania)
    2. Factors of Analysis:
    Intrabrand vs. interbrand
    Efficiency
    Effect on competition
    Avoids free riding
    Agent-dealer distinction not used
    Small or failing firm
    C. EXCLUSIVE DEALING (Clayton 3)
    1. Current LawRule of Reason unless Substantial Share of the Market
    2. Factors of Analysis:
    Share of market/foreclosure of market share
    Positive economic effect
    a. both parties can plan operation
    b. reduces risk of opportunistic behavior
    c. protects reputation
    Likelihood conduct will cause anticompetitve effects
    D. TYING (Sherman 1, Clayton 3)
    1. Current Law: Jefferson Parish Test
    a. one product or two
    4

    b. market power with tying product


    c. likelihood of obtaining market power with the tied product
    d. efficiency factors
    2. Factors of Analysis:
    Effect on competition related to tied product
    Beneficial effects of tying
    abuse monopoly power
    separate products
    Method of implementing prices
    Increased barriers to entry
    Franchise generally single product
    Single brand can be the relevant market (Eastman Kodak)
    Future integration possible
    Sophistication of customers
    3. Defenses:
    New industry defense
    III.

    JURISDICTION/PROCEDURES

    A. Interstate Commerce
    1. Current LawMust be in interstate commerce antitrust laws to apply
    2. Analysis Factors:
    Focus on defendants conduct (Summit)
    Manufacture not commerce
    Effects must be felt within United States
    B. Patent Law
    1. Patent May assign rights (i.e. through license)
    2. Patent Pools are legitimate Settlement of disputes
    C. Filed Rate Doctrine
    1. Antitrust law does not apply to rates filed with a regulatory agency
    2. Rate cannot be challenged because state action doctrine
    D. State Action Doctrine
    1. Current LawMidcal Test
    a. policy must be articulated and affirmatively expressed by state
    b. actively supervised by state
    2. Factors of Analysis:
    Part onestate is only legislature
    Policy must be clear
    Municipality bestowed with specific powers from state legislaturesatisfies Midcal one and two
    City government cannot be sued for treble damagesonly injunction
    Compulsion not necessary, authorization sufficient (Southern Motor Carrier)
    Permissive regulation doesnt satisfy active supervision (Ticor)
    Judicial review inadequate for state supervision
    Peer review committees are agents of state if satisfy due process
    Noer-Pennington Doctrine
    5

    a. sham exception
    E. International Jurisdiction
    a. jurisdictionconduct outside US , must have substantial effects within US
    b. comityif conflicting laws, must be compelled by foreign entity, otherwise within jurisdiction

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