Final

What must a plaintiff prove to charge a company with attempted monopolization?

(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize," and (3) that there is a "dangerous probability" that the defendant will succeed in achieving monopoly power

What are the federal contribution limits for PACs?

-$5000 per candidate per election (no limit on PAC giving) -$15000/yr to political parties (can give to both)

What are the corporate responsibilities stated by the Corporate Citizen Model?

-A corporation has inherent ethical duties to satisfy the concerns of its stakeholders by virtue of being a powerful member of society -Fulfilling concerns of other stakeholders can maximize long-term value -Shareholders may prefer the company to satisfy certain social/ethical interests, even when doing so might reduce long-term profits -Corporations have an inherent duty to act ethically toward others (stakeholders) -Corporations have a responsibility to make positive contributions to the community and society (Utilitarianism) -A company that breaks the law is not upholding its corporate responsibility, however just bc a company complies with the law doesn't mean that it is necessarily upholding its corporate responsibility

What kind of market power is deemed as monopolization?

-Ability to control prices or exclude competition (force behavior) -High market share=too big (product & geographic markets) -Barriers to entry

What are benefits from increase in interbrand (between different companies) competition?

-Addresses free-rider problems from low-service discounters -New, relatively unknown company -Complex technical product -Need for point-of-purchase promotion and services

Vertical Merger

-Between companies in buyer-supplier relationship; less likely to be considered harmful -ex. Google/Motorola (google supplier of software)

Horizontal Merger

-Between competitors; most likely to be considered harmful -Focus on market structures that may facilitate anticompetitive behavior -ex. U.S. v. Philidelphia National Bank

OSHA

-Cabinet Agency (1970) -Safety & Health Standards (Notice and comment rulemaking; Compliance is mandatory) -General Duty Clause (Furnish place of employment free from recognized hazards likely to cause serious harm) -Guidelines (Failure to comply is not evidence of general duty violation; Acts as form of safe harbor from general duty violation claims) -On-Site Consultation and Cooperative Programs -Inspections (no prior notice, prioritize fatal accidents & high-risk industries) -Whistleblower protection for complaints -Citations and Penalties -Appeals to OSHRC (agency court system seperate from OSHA) -Reporting requirements for certain categories of work-related injuries and illnesses

Conservatives vs. Liberals

-Conservatives are more likely to believe that markets work effectively while liberals are more likely to advocate government regulation to correct market imperfections -Conservatives are more likely than liberals to believe that government regulation of business is not necessary -Conservatives are more likely than liberals to believe that the costs of government regulations exceed the benefits from those regulations

What are the harms and benefits of vertical nonprice restraints?

-Decreases intrabrand competition -May stimulate interbrand competition (active dealer promotion of brand; reduces free-rider problems) -May hurt viability of small/new dealers

What are the funcitons of the CPSC?

-Evaluate required reports about product defects that cause substantial hazards or violate safety standards -Product surveillance: based on complaints, lab testing, research, etc. -Seeking voluntary corrections and preventative steps -Facilitating or ordering recalls (Fisher-Price toys + chairs; Notebook batteries, etc.) -Creating mandatory safety standards -Bringing civil and criminal enforcement cases (CPSC administrative court or federal courts; Potential penalties significantly increased in 2008) -Public education (New information database of product safety reports)

What was Judge Jackson's Ruling of U.S. v Microsoft in 2000?

-Guilty as charged: monopolizing, attempted monopolizing, illegal per se tying, other offenses -Conduct remedies: restrictions on Microsoft behavior by mandatory rules of conduct; supporters of Microsoft argue structural remedies are disproportionate and conduct remedies would suffice to put an end to Microsoft anti-competitive behavior -Structural remedy- like vertical and horizontal divesture (The partial or full disposal of an investment or asset through sale, exchange, closure or bankruptcy); easier to enforce, more effective, more stringent

What is the Hart-Scott-Rodino Act (1976)?

-Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. Ford on September 30, 1976. -Established the federal premerger notification program

Harms from reduction in intrabrand (within same company) competition?

-High relative range of exclusivity: to get better deal from other retailers selling same brand -Effect of Internet -High market share - few alternative brands/close substitutes

FTC

-Independent agency—5 commissioners serve for 7-year terms -Involved with antitrust enforcement -Regulates unfair and deceptive practices (Enforces several specific congressional statutes; General power to police deception and fairness; Rulemaking authority) -Significant involvement with consumer privacy (Enforces specific congressional laws such as CAN-SPAM and COPPA; Researches current practices and advises Congress on need for new laws to combat privacy problems; Enforces privacy promises)

What were the government settlements on the Microsoft case?

-Justice Department settles in Nov. 2001 (Bush Administration) -Consumer class action lawsuit=$2 billion (company injured them by not giving an option of what internet browser to choose) -Suits by competitors settled (TW/AOL=$750 million, Sun=$1.6 billion, Novell=$536 million, and RealNetworks=$760 million) -European Union Antitrust Actions: orders unbundled version of Op. Systems without media player; disclosure of interoperability specs for servers -2007 Microsoft settles litigation (around 2.4 billion)

What are criminal remedies for antitrust?

-Justice only -Fines -Amnesty/leniency program for first to squeal (protection from private treble damage suits; ex. Samsung)

What was the court of appeals ruling in 2001 on U.S. v Microsoft?

-Microsoft monopolized operating system market -Govt. did not prove attempted monopolization -Integration of browser is not Illegal per se tying (Platform software different than traditional products; Due to inexperience with this market, courts should use rule of reason) -Jackson's remedies vacated (No hearing to determine if they are socially beneficial; Fewer offenses proven; No structural remedies b/c those are deemed for companies that are dependent or have companies dependent on them)

What are civil remedies for antitrust?

-Money (for damages to U.S. government) -Injunctions (such as stopping an illegal practice or preventing a merger) -FTC may bring cases in FTC administrative court

What were the accusations on Microsoft?

-Monopolizing operating system market -Attempted monopolization of browser market -Illegal per se tying of browser to operating system (market power in the tying product, seperate product tied to the tying product) -Several State Attorney Generals also file suit against Microsoft

Microsoft Case Facts

-Monopoly Power (proven in court): The Court has already found that there are currently no products that a significant % of computer users worldwide could substitute for Intel-compatible PC OS without incurring substantial costs; microsoft can set the market price at whatever they want; Microsoft possesses a dominant & increasing share of the relevant market (95% of worldwide market for Intel-compatible PC operating systems), and the applications barrier to entry protects Microsoft's dominant market share (this barrier ensures that no Intel-compatible PC operating system other than Windows can attract significant consumer demand) -Maintenance of Monopoly Power by Anticompetitive Means (Proven in Court): Microsoft bound Internet Explorer to Windows in order to ensure the presence of Internet Explorer on every Windows user's PC system, and to increase the costs attendant to installing and using Navigator on any PCs running Windows; Microsoft employed an array of tactics designed to maximize the difficulty with which applications written in Java could be ported from Windows to other platforms, and vice versa like the creation of a Java implementation for Windows that undermined portability and was incompatible with other implementations; In a separate effort to prevent the development of easily portable Java applications, Microsoft used its monopoly power to prevent firms such as Intel from aiding in the creation of cross-platform interfaces; Because Microsoft achieved this result through exclusionary acts that lacked procompetitive justification, the Court deems Microsoft's conduct the maintenance of monopoly power by anticompetitive means. Attempting to Obtain Monopoly Power in a Second Market by Anticompetitive Means (not proved in court): the plaintiffs assert that Microsoft made an illegal attempt to amass monopoly power in "the browser market."; Microsoft's effort to convince Netscape to stop developing platform-level browsing software for the 32-bit versions of Windows was made with full knowledge that Netscape's acquiescence in this market allocation scheme would, without more, have left Internet Explorer with such a large share of browser usage as to endow Microsoft with monopoly power in the browser market; When Netscape refused to abandon the development of browsing software for 32-bit versions of Windows, Microsoft's strategy for protecting the applications barrier became one of expanding Internet Explorer's share of browser usage - and simultaneously depressing Navigator's share - to an extent sufficient to demonstrate to developers that Navigator would never emerge as the standard software employed to browse the Web

Planned Parenthood v Casey (1992)

-Privacy right to terminate pregnancy still protected, but in weaker fashion. -Informed consent and 24 hour waiting period OK. -Parental consent of 1 parent OK. -Requirement to notify husband before abortion not OK -- an undue burden.

What is a Pre-Merger notification?

-Provides the FTC and the Department of Justice with information about large mergers and acquisitions before they occur. -The parties to certain concerning mergers must submit premerger notification to the FTC and DOJ. -To prevent expense of "undoing" a completed merger -Created by Hart-Scott-Rodino Act (1976)

What are supplements allowed to claim?

-Supplements do not have to be approved by FDA as safe or effective before marketing -Supplements maintain healthy body functions -Supplements can have label claims about nutritional benefits -FDA may demand substantiation of claims on label—but uncertainty about what evidence is sufficient -FDA has power to pull supplements, but has burden to prove that supplement presents an unreasonable health risk or makes unsubstantiated claims on label -FTC policies dietary supplement advertising for deception

What is the role of private parties in antitrust cases?

-Treble Damages (multiplication of damages) -Attorneys Fees (will only sue if it will cover attorneys fees and some) -A motivation for consent decrees in government actions (A consent decree is a settlement that is contained in a court order.)

What are the federal contribution limits for individuals?

-around $100,000 total over two-year election cycle period to candidates, PAC's and parties -$5000/yr per PAC -$2500 directly to any one candidate per election (primary, general, run-off)

How do monopolies use their power to foreclose competition?

-when theres no legitimate business justifications for conduct -practices cannot be justified on efficiency grounds (lower costs, improved quality, expand consumer choices) -Increased costs only make sense in terms of long-term monopoly returns

Webster v Reproductive Health Services (1989)

5-4 decision to uphold abortion regulations -Right to privacy and abortion rights survive decision.

What is a gorilla?

A big, dominant company with possiblity of becoming a monopoly

Lorain Journal Co. v U.S. (1950)

A classic case of monopolization by exclusion of competitors because it represents the rare instance of rational predation. The exclusive dealing policy of the Journal was an inexpensive (compared to direct price predation) and effective form of foreclosure. The policy could have been profitable by forcing the radio station into bankruptcy and allowing the Journal to more than recoup its costs of predation following the station's demise. Finally, the Journal's policy had no obvious efficiency-increasing potential.

What is the essential facilities doctrine?

A company possessing monopoly power violates the Sherman Act by refusing to make available to a competitor a facility deemed essential to the competitor's business. Created after Aspen Skiing Co. v. Aspen Highlands

Describe CONTINENTAL T.V. vs G.T.E SYLVANIA (1977)

A landmark antitrust decision of the Supreme Court of the United States. Facing declining sales, GTE Sylvania attempted to reduce the number of competing Sylvania retailers by limiting the number of franchises granted for any given area of the country and requiring each franchise to sell his Sylvania products only from the location or locations at which he was franchised. 433 U.S., at 38. When Continental was denied such a franchise, they filed a lawsuit alleging violation of the Sherman Act. Continental's chances looked good, because the Supreme Court had held such restrictions to be subject to a per se rule before. But the court instead held that such business practices must be analyzed under the --->RULE OF REASON<---. Noting that "per se rules of illegality are appropriate only when they relate to conduct that is manifestly anticompetitive," the court concluded that GTE's behavior transgressed the Sherman Act only if it was an unreasonable restraint of trade that would diminish competition and promote inefficiency. The Sylvania case became the first shot in the court's march back to economics as the touchstone of antitrust

Significance of United States v. Microsoft

A landmark case of antitrust intervention in network industries

What is a plaintiff?

A person who brings a case against another in a court of law

What is rational ignorance?

A political theory for regulation whereby: • Politicians propose regulations to improve election opportunities • Regulation sounds like it will lessen a perceived problem (Favorable media exposure) • Doesn't matter if the regulation actually will solve the perceived problem

Whats a Super PAC? How does it work?

A special type of PAC created primarily to engage in advertising. Can raise money from any source including corps & unions. Can spend unlimited amounts of money on issue and advocacy ads. Ads must be developed without coordination with candidates. No limits on amounts from contributers. Cannon contribute directly to candidates. Disclosure of contributers required

What is the "Heart Store Program"?

A year after instituting the pricing policy Leegin introduced a marketing strategy known as the "Heart Store Program." It offered retailers incentives to become Heart Stores, and, in exchange, retailers pledged, among other things, to sell at Leegin's suggested prices.

Who are the government players in antitrust?

Administrative Agencies -The two involved are the Antitrust Division (Cabinet/Executive) and the FTC (Independent). -Pre-merger notification and enforcement (Approvals with fix-it agreements and/or government monitoring)

What is an issue ad?

Ads that don't mention a candidate

Horizontal price fixing

An agreement between two or more parties, generally considered to be competitors, to set, maintain, and charge a specified price for a particular product. This is considered to be a collusion to artificially set prices at a certain level, rather than allowing the free market to organically drive price levels. Horizontal Price Fixing is an unlawful practice

How are Lorain and Aspen cases similar?

Both cases are part of the development of the Essential Facilities Doctrine; both Lorain Journal and Aspen Skiing Company were forced by court to honor old ways: Lorain had to accept the advertisements they had allowed before to keep the radio station in business, Aspen Skiing had to honor vouchers and ski lift tickets as it previously done allowing Aspen Highlands to stay in business

Whats a strong way money can make an impact for organizations?

Bundling: get a bunch of individual's contributions ($2500) and give them to a candidate on one-on-one meeting.

What is a vertical restraint?

Can take numerous forms, ranging from a requirement that dealers accept returns of a manufacturer's product, to resale price maintenance agreements setting the minimum or maximum price that dealers can charge for the manufacturer's product.

What are colgate policies?

Colgate policies, are independently adopted and announced by the manufacturer. The manufacturer, without any agreement with the reseller, announces a minimum resale price and refuses to make further sales to any reseller fails to sell at or above the announced price. There is no contract and the parties do not agree on the price. Aside from suggesting retail prices or having the reseller act as an agent of the manufacturer and sell the goods on consignment, until the 2007 Leegin Creative Leather Products v. PSKS, Inc. decision a Colgate Policy was the only way that a manufacturer could directly influence reseller's retail price without subjecting itself to per se liability for price fixing.

CPSC

Consumer Product Safety Commission Consumer Product Safety Act -CPSC authority increased in 2008 Independent Agency -5 commissioners (typically only 3 positions filled from 1986-2009); 7-year terms Jurisdiction -Protect the public from unreasonable risks of injuries from consumer products -No authority over guns, ammunition, tobacco, autos, foods or drugs.

How did 2010 supreme court decision change what corporations and unions can do during elections?

Controversial 2010 Supreme Court decision now allows corporations and unions to spend unlimited money on advocacy ads as well. But they still cannot give money to candidate campaigns.

Describe Music Companies and MAP Policies case

Discounting retailers can free ride on retailers who furnish services and then capture some of the increased demand those services generate. If a manufacturer, on its own, adopts a policy regarding a desired level of prices, the law allows the manufacturer to deal only with retailers who agree to that policy. A manufacturer also may stop dealing with a retailer that does not follow its resale price policy. Arrangements entered into by the five largest distributors of prerecorded music violate the antitrust laws in two respects: 1) the arrangements constitute practices that facilitate horizontal collusion among the distributors, 2) when viewed individually, each distributor's arrangement constitutes an unreasonable vertical restraint of trade under the rule of reason.

Who is an international antitrust authority?

European Union -Examples: Microsoft, Intel (European Union brought an action on different topics, windows media player and server compatibility issues, just know that they are involved)

Where is the fine line drawn between illegal vertical nonprice fixing cases and legal?

Even if distributors follow the suggested resale prices because they fear they will be terminated if they do not follow the suggestions. ... To establish [unlawful] resale price-fixing in such a situation, the plaintiff must show that the distributor reached an agreement on price with the supplier, rather than merely followed the supplier's suggestion.

Sherman Act

Every contract, combination or conspiracy in restraint of trade is illegal.

What is an advocacy ad?

Expenditures that advocate the election or defeat of a candidate (for ads, billboards, brochures)

T or F: "A merger is required to be disclosed no matter what"?

False; has to meet certain size

What is the Securities Exchange Act?

Fraud in connection with purchase or sale of security; insider trading and regulating securities -unlawful to use any deceptive device (an act which operates as a fraud) in connection with the purchase or sale of a security -civil & criminal remedies; treble damages

Google Motorola Merger

Google doesn't directly compete with Motorola. Legally, it's more difficult for the government to successfully challenge such a "vertical" deal between two companies that aren't direct rivals. Other competitors (HTC, Samsung, Sony, and LG) to Motorola may end up questioning whether Google will grant Motorola preferential treatment. For example, Google could theoretically give Motorola its latest versions of Android exclusively, placing them at a competitive disadvantage. One way for the Justice Department to hold Google to its promise not to discriminate against Motorola rivals by asking Google to sign a consent decree legally compelling it to license Android to any comers on fair, non-discriminatory terms. The Department of Justice and European Commission approved the Google-Motorola merger in February 2012

What is the free rider argument?

Historically, one saw this in stereo equipment long ago, where retailers were required to provide listening rooms and other amenities. Manufacturers would want retailers to invest a lot of money and make the best possible ambience for people to see and view the product. The concept was that if prices went down due to discounting, high-end retailers couldn't afford to compete with their competitors and the services provided by the high-end retailers would disappear. If the services disappeared, then consumers would be worse off. This is an example of a free-rider argument.

Describe the "Dr. Miles Medical Co. v. John D. Park and Sons" Case

In Dr. Miles Medical Co. v. John D. Park and Sons, 220 U.S. 373 (1911), the United States Supreme Court affirmed a lower court's holding that a massive minimum resale price maintenance scheme was unreasonable and thus offended Section 1 of the Sherman Antitrust Act. The decision rested on the assertion that minimum resale price maintenance is indistinguishable in economic effect from naked horizontal price fixing by a cartel. Subsequent decisions characterized Dr Miles as holding that minimum resale price maintenance is unlawful per se - that is, without regard to its impact on the marketplace or consumers.

Describe the facts of the Dr Miles v John Park and Sons case

In Dr. Miles the plaintiff, a manufacturer of medicines, sold its products only to distributors who agreed to resell them at set prices. The Court found the manufacturer's control of resale prices to be unlawful. It relied on the common-law rule that "a general restraint upon alienation is ordinarily invalid." The Court in Dr. Miles relied on a treatise published in 1628, but failed to discuss in detail the business reasons that would motivate a manufacturer situated in 1911 to make use of vertical price restraints. By relying on the common-law rule against restraints on alienation, the Court justified its decision based on "formalistic" legal doctrine rather than "demonstrable economic effect."

What recent Microsoft law conflict has come up?

Investigation related to Internet Explorer and operating system ("Ballot Screen" settlement in 2009: accused of violating settlement with Windows 7 in 2012)

Whats the current Google antitrust case?

Is Google violating antitrust laws by using its search dominance to favor its own products in search results over competitors? The Federal Trade Commission (FTC) is trying to decide whether or not to sue Google for antitrust violations. A final decision about whether to pursue an antitrust case is expected before the end of the year. -Argument #1: Google Flight Search. Google has a number of search services, such as Google Flight Search, that compete with airfare shopping sites such as Kayak, Expedia, and Travelocity. Some say Google is unfairly referring traffic to its own vertical sites, ranking them above competitors, and thereby violating antitrust or fair competition rules. -Argument #2: Google Shopping. In Google's new shopping search feature, only paid Google advertisers are listed. Rivals complain that consumers are not being shown the best available shopping results, and that this kind of search setup forces competitors to pay to appear in Google Shopping, since the lion's share of clicks and traffic happen to the first few spots of a SERP, where Google Shopping shows its results.

HHI

It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. The closer a market is to being a monopoly, the higher the market's concentration (and the lower its competition). -HHI value under 1,000: DOJ considers unconcentrated, and mergers w/in such a market aren't considered to have adverse effects on concentration. -An HHI value of 1,000 to 1,800 is considered moderately concentrated, and increases of more than 100 points "raise significant competitive concerns," according to DOJ guidelines. -An HHI value of more than 1,800 is considered highly concentrated, and a post-merger increase of more than 50 points raises red flags with the DOJ.

What is the liberal and conservative views of the 9th amendment: "The enumeration in the Constitution of certain rights shall not be construed to deny or disparage others retained by the people"?

Liberal- "others" not listed are protected by U.S. Constitution, like privacy Conservative- state governments may protect other rights not specifically listed by US Constitution

Describe Microsoft and middleware relationship

Microsoft early on recognized middleware as enabling rival operating systems to enter the market for Intel-compatible PC operating systems unimpeded. Middleware threatened to demolish Microsoft's coveted monopoly power. Alerted to the threat, Microsoft strove for 4 years to prevent middleware technologies from fostering the development of enough full-featured, cross-platform applications to erode the applications barrier. In pursuit of this goal, Microsoft sought to convince developers to concentrate on Windows-specific APIs and ignore interfaces exposed by the two incarnations of middleware that posed the greatest threat, namely, Netscape's Navigator Web browser and Sun's implementation of the Java technology. Microsoft's campaign succeeded in preventing - for several years, and perhaps permanently - Navigator and Java from fulfilling their potential to open the market for Intel-compatible PC operating systems to competition on the merits. Because Microsoft achieved this result through exclusionary acts that lacked procompetitive justification, the Court deems Microsoft's conduct the maintenance of monopoly power by anticompetitive means.

Describe the conflict between Microsoft and Java

Microsoft employed an array of tactics designed to maximize the difficulty with which applications written in Java could be ported from Windows to other platforms, and vice versa. Microsoft used its monopoly power to prevent firms such as Intel from aiding in the creation of cross-platform interfaces. Microsoft's actions markedly impeded Java's progress to facilitating porting between Windows and other platforms to a degree sufficient to render the applications barrier to entry vulnerable. Microsoft's actions with respect to Java have restricted significantly the ability of other firms to compete on the merits in the market for Intel-compatible PC operating systems.Microsoft's actions to counter the Java threat went far beyond the development of an attractive alternative to Sun's implementation of the technology. Specifically, Microsoft successfully pressured Intel, which was dependent in many ways on Microsoft's good graces, to abstain from aiding in Sun's and Netscape's Java development work. Microsoft also deliberately designed its Java development tools so that developers who were opting for portability over performance would nevertheless unwittingly write Java applications that would run only on Windows. Microsoft's means of luring developers to its Java implementation included maximizing Internet Explorer's share of browser usage at Navigator's expense in ways the Court has already held to be anticompetitive.

What are the elements of fraud in insider trading?

Misrepresentation of material fact, injury, and silence can be fraudulent if under a feduciary duty to speak b/c of position of trust or confidence (akin to stealing or misappropriation; grandma)

Why was Sylvania v. Continental an impactful case?

Non-price restraint

Who does the cost/benefit analysis in gov.?

OMB during their rulemaking review; during clinton policy there were a broader acceptance of benefits, bush had same as clinton policy on paper but more rules were returned for reconsideration, obama requires agencies to engage in periodic retrospective review of passed regulations

What is the significance of Leegin Creative Leather Products v. PSKS?

On June 28, 2007, the Supreme Court overruled Dr. Miles v. John Park and Sons (5-4; 4 dissenting judges were liberals), holding that such vertical price restraints as Minimum Advertised Pricing are not per se unlawful but, rather, must be judged under the "rule of reason." This marked a dramatic shift on how attorneys and enforcement agencies address the legality of contractual minimum prices, and essentially allowed the reestablishment of resale price maintenance in the United States in most (but not all) commercial situations.

How do today's courts differentiate price fixing cases?

Our recent cases formulate antitrust principles in accordance with the appreciated differences in economic effect between vertical and horizontal agreements, differences the Dr. Miles Court failed to consider.

Describe Kay Klosets role in Leegin v. PSKS

PSKS operates Kay's Kloset, a women's apparel store in Lewisville, Texas. Kay's Kloset became a Heart Store soon after Leegin created the program. After a Leegin employee visited the store and found it unattractive, the parties appear to have agreed that Kay's Kloset would not be a Heart Store beyond 1998. Despite losing this status, Kay's Kloset increased its Brighton sales. In December 2002, Leegin discovered Kay's Kloset had been marking down Brighton's entire line by 20 percent. Kay's Kloset contended it placed Brighton products on sale to compete with nearby retailers who also were undercutting Leegin's suggested prices. Leegin, nonetheless, requested that Kay's Kloset cease discounting. Its request refused, Leegin stopped selling to the store. The loss of the Brighton brand had a considerable negative impact on the store's revenue from sales. PSKS sued Leegin in the United States District Court for the Eastern District of Texas. It alleged, among other claims, that Leegin had violated the antitrust laws by "enter[ing] into agreements with retailers to charge only those prices fixed by Leegin." Leegin planned to introduce expert testimony describing the procompetitive effects of its pricing policy.

Lawrence v. Texas (2003)

Privacy rights extended to same-sex intimate conduct at home.

What is the difference between the product market and geographic market?

Product market=includes close substitutes Geographic market=how far will customer go to obtain product or service

What is the main purpose of the Clayton Act?

Prohibits mergers which may substantially lessen competition

What is a possible benefit of vertical minimum price agreements?

Protection of services that might stimulate interbrand competition.

What are interbrand restraints?

Regulate a dealer's or manufacturer's relationship with its trading partner's rivals

What is resale price maintenance (Vertical Minimum Price Fixing)?

Resale price maintenance (RPM) is the practice whereby a manufacturer and its distributors agree that the distributors will sell the manufacturer's product at certain prices (resale price maintenance), at or above a price floor (minimum resale price maintenance) or at or below a price ceiling (maximum resale price maintenance). If a reseller refuses to maintain prices, either openly or covertly (see grey market), the manufacturer may stop doing business with it.

What are intrabrand restraints?

Resale price maintenance that govern products made by a particular manufacturer

Cost/Benefit Analysis

Risk Assessment -Hazard identification (Is there a risk at any level of exposure? Relevance of animal tests) -Dose/Response Assessment (How draw the curve from high exposure to low? Can body detoxify at low levels? Agencies typically use a straight line; Are certain populations (children) more sensitive?) -Exposure Assessment (What is current exposure?) -Risk Characterization (Voluntary vs. involuntary risks) Costs to reduce risk vs. Benefits from reducing risk -How to value benefits (Life, health, environment) -How measure the costs (Competing risks: Solving one problem may create others) -Relative cost/benefit considerations (Best uses of scarce resources - Most bang for buck.)

SEC

Securities and Exchange Commission -Independent Agency (1933 after depression) -Jurisdiction: to protect investors through honest disclosure and regulation of securities industry participants -Notice and Comment Rulemaking -Enforcement (civil- administrative actions w/in SEC or in court; criminal- referred to justice dept)

So is vertical minimum price fixing ever illegal per se?

Some new state laws and proposed federal legislation may ban vertical minimum price fixing; in Maryland Vertical Nonprice Fixing is illegal per se

Describe the Toys R Us case vs FTC

Starting in 1989 and continuing into the 1990s, Toys, "R" Us (TRU), the nation's largest toy retailer, attempted to quell growing competition from discount warehouse clubs like Costco by facilitating vertical agreements with top toy manufacturers. These vertical agreements placed restrictions on the toy manufacturers, limiting their ability to sell products to discount warehouse clubs. However, the only way to get the toy manufacturer industry to "agree" with TRU's plan was to broker similar horizontal agreements among the top toy manufacturers. The FTC found this activity to be in violation of antitrust laws. In 1997, Administrative Judge James Timony upheld the FTC's finding. Judge Timony found that TRU had violated the Colgate doctrine, a fundamental antitrust principle. Under the doctrine, a company is free to deal with whomever it wishes unilaterally as long as it does not act with the purpose of forming a monopoly. The Commission upheld Judge Timony's finding that TRU violated the parameters of the Colgate doctrine by stepping beyond unilateral action and committing illegal concerted action. On appeal, the Court of Appeals for the Seventh Circuit affirmed the FTC findings.

Describe "State Oil Company v. Khan" and how it impacted price fixing

State Oil Co. v. Khan (1997), was a decision by the United States Supreme Court, which "does not hold that all vertical maximum price fixing is per se lawful, but simply that it should be evaluated under the rule of reason, which can effectively identify those situations in which it amounts to anticompetitive conduct." It thereby overruled a previous Supreme Court decision, Albrecht v. Herald Co. (1968). The Case: The case before the court involved a gasoline wholesaler and Chicago service station. State Oil Co. attempted to force the gasoline station owner, Barkat Khan, to sell State Oil's product at certain prices; Khan resisted and filed suit under anti-trust law. Khan won his case in the United States Court of Appeals in Chicago. Sandra Day O'Connor wrote the unanimous opinion for the Court, overturning the previous case. Although she noted that the Court was cautious in overturning precedents, the "great weight" of scholarly opinion had held that the Court's 1968 decision was incorrect.

What happened regarding Target and showrooming?

Target is asking suppliers for help in thwarting "showrooming"—that is, when shoppers come into a store to see a product in person, only to buy it from a rival online, frequently at a lower price. Showrooming is an increasing problem for chains ranging from Best Buy to Barnes & Noble, while at the same time that it's a boon for Amazon and other online retailers. Suppliers create special products for Target that would set it apart from competitors and shield it from the price comparisons that have become so easy for shoppers to perform on their computers and smartphones. Where special products aren't possible, Target asked the suppliers to help it match rivals' prices. It also said it might create a subscription service that would give shoppers a discount on regularly purchased merchandise. Vendors are likely to have little choice but to play ball with Target because of its clout as the second-largest discount chain.

Roe v Wade (1973)

The Court ruled 7-2 that a right to privacy under the due process clause of the 14th Amendment (Nor shall any State deprive any person of life, liberty, or property, without due process of law) extended to a woman's decision to have an abortion, but that right must be balanced against the state's two legitimate interests in regulating abortions: protecting prenatal life and protecting women's health Compelling Reasons for Governments to Interfere with Right to Privacy: 1. Protection of women from hazardous procedures (When abortion safer than carrying child to term, 1st trimester; increasing interest to regulate procedures to protect maternal health) 2. Protecting Potential Life (Sufficient reasons only in 3rd trimester, like if necessary to protect life or health of mother.)

What was the result of the Leegin v. PSKS case?

The District Court excluded the testimony, relying on the per se rule established by Dr. Miles. At trial PSKS argued that the Heart Store program, among other things, demonstrated Leegin and its retailers had agreed to fix prices. The jury agreed with PSKS and awarded it $1.2 million + a couple million $'s in attorney costs. However, Leegin contended that the rule of reason should have applied to those agreements. Court of appeals granted certiorari to determine whether vertical minimum resale price maintenance agreements should continue to be treated as per se unlawful.

United States v. Philadelphia National Bank

The Philadelphia National Bank and Girard Trust Corn Exchange Bank are, respectively, the 2nd and 3rd largest of the 42 commercial banks with head offices in the Philadelphia metropolitan area. Were the proposed merger between PNB and Girard to happen, the resulting bank would be the largest in the area with 36% market share. After the merger the four largest banks in the area would have 78% market share. The proposed merger would have substantial anticompetitive effects in the Philadelphia metropolitan area, and the outcome in court found the merger to violate the Clayton act so it was prohibited.

What does in restraint of trade mean?

The Rule of Reason: Does the restraint, on balance, promote or supress "competition"

United States v. Microsoft

The United States Department of Justice and 19 States sued Microsoft alleging (i) that it monopolized the market for operating systems of personal computers and took anti-competitive actions to illegally maintain its monopoly; (ii) that it attempted to monopolize the market for Internet browsers because such browsers would create competition for operating systems; (iii) that it bundled its browser (Internet Explorer) with Windows; and (iv) that it engaged in a number of other anti-competitive exclusionary arrangements with computer manufacturers, Internet service providers, and content providers attempting to thwart the distribution of Netscape's browser.

Who does amnesty reward?

The company who first discloses it

Describe Eastman Kodak Co's Antitrust Suit (restraint of trade example)

The government believes a monopoly is present because they possess a market share of 75%, and now holds over 70% of the nation's macrolab photofinishing market. Kodak's monopoly allows them to raise prices, negotiate exclusive deals with retailers, and essentially cut their competitors' throats. However, Kodak achieved its market share through legal (and more honorable) means, and while still attempting to increase their profits, they aren't using shady tactics to achieve their goals. The conclusion of the case was that Kodak had violated the Sherman Anti-trust Act, specifically Section II, and Kodak was required to liquidate several of their recent acquisitions.

Aspen Skiing Co. v. Aspen Highlands

The issue raised in the case is the degree to which a company with monopoly power can ever be required to cooperate with a competitor. The United States Court of Appeals for the 10th Circuit applied to the case an antitrust doctrine known as the ''essential facilities'' doctrine. Aspen Skiing violated the Sherman Act when it refused to continue a joint-marketing arrangement with Aspen Highlands, the owner of Aspen's fourth mountain, Highlands. For several years, the two had offered skiers a four-mountain pass, with revenues shared on the basis of how many skiers used the various facilities. Aspen Highlands won over $10,000 in treble damages

What is the lesson of the Dr Miles case?

The reasons upon which Dr. Miles relied do not justify a per se rule. As a consequence, it is necessary to examine, in the first instance, the economic effects of vertical agreements to fix minimum resale prices, and to determine whether the per se rule is nonetheless appropriate.

What is the colgate doctrine?

This important antitrust doctrine was established by the U.S. Supreme Court decision in United States v. Colgate Co. (1919), under the doctrine, a company is allowed to decide, on its own, with whom to do business as long as it does not act with the purpose of forming a monopoly. Any company may unilaterally terminate business with any other company without triggering a violation of the antitrust laws.

T or F: If restraint is not per se illegal, this does not necessarily mean that it is legal.

True

T or F: Illegal to contribute money or services in exchange for promise to perform official acts

True

T or F: Illegal to contribute money to government officials who are not elected

True

T or F: Until 2010, Corporations and Unions could not spend any funds to advocate the election or defeat of federal candidates, although they could finance "issue ads"

True

How can Obama make the Supreme Court more liberal?

Wait til conservative judge dies/retires and appoint liberal

What was the free-rider argument made by Toys R Us? Was it successful?

We were able to say that there is not a cognizable free rider problem here because, first, Toys "R" Us gets paid for everything they do by the manufacturers, and second, in the end, it is the manufacturers that are concerned with free riding not the retailers. If there is a free rider problem, the manufacturers generally take care of it. If the only reason the manufacturers stop selling to discount stores is because of pressure from Toys "R" Us and unrelated to efficiency considerations, then we really don't think there is a free rider argument.

Are all mergers required to notify FTC and DOJ with premerger notification?

Whether a particular acquisition is subject to these requirements depends upon the value of the acquisition and the size of the parties, as measured by their sales and assets. Small acquisitions, acquisitions involving small parties and other classes of acquisitions that are less likely to raise antitrust concerns are excluded from the Act's coverage.

Before, were corporate funds allowed to have issue ads mentioning a candidate?

Yes, but not close to election time (ex. Hillary the Movie in Citizens United; late anti Hillary ad)

Do different states have different antitrust laws?

Yes; State attorneys general enforce federal and state antitrust laws for state citizens

Illegal Per Se

You did it, you lose (cannot explain that the process was reasonable in your situation)

Vertical price fixing

a manufacturer's attempt to control the price of its product at retail ("fair trade"=practice of setting minimum retail prices) (firms have also set maximum retail prices)

What is a horizontal restraint?

agreements between horizontal competitors

What are consent decrees?

settlement; in antitrust: no admission that company violated antitrust laws