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Tagged: Antitrust

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Stanford Law Review Online: The Obama Justice Department’s Merger Enforcement Record

Stanford Law Review

Continuing our dialog on antitrust enforcement, the Stanford Law Review Online has just published an Essay by Daniel A. Crane entitled The Obama Justice Department’s Merger Enforcement Record. Professor Crane responds to Carl Shapiro and Jonathan Baker’s criticism of his response to his earlier Essay:

My recent Essay, Has the Obama Justice Department Reinvigorated Antitrust Enforcement?, examined the three major areas of antitrust enforcement—cartels, mergers, and civil non-merger—and argued that, contrary to some popular impressions, the Obama Justice Department has not “reinvigorated” antitrust enforcement. Jonathan Baker and Carl Shapiro have published a response, which focuses solely on merger enforcement. Baker and Shapiro’s argument that the Obama Justice Department actually did reinvigorate merger enforcement is unconvincing.

He concludes:

Jon Baker and Carl Shapiro are smart, effective economists for whom I have great respect. I have few quarrels with how they or the Obama Administration in general conduct antitrust enforcement. The point of my essay was that antitrust enforcement has become largely technocratic and independent of political ideology. I have heard nothing that dissuades me from that view.

Read the full article, The Obama Justice Department’s Merger Enforcement Record by Daniel A. Crane, at the Stanford Law Review Online.

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Stanford Law Review Online: Evaluating Merger Enforcement During the Obama Administration

Stanford Law Review

The Stanford Law Review Online has just published an Essay by Jonathan Baker and Carl Shapiro entitled Evaluating Merger Enforcement During the Obama Administration. Professors Baker and Shapiro take issue with Daniel Crane’s assertions in his Essay of July 18:

We recently concluded that government merger enforcement statistics “provide clear evidence that the Obama Administration reinvigorated merger enforcement, as it set out to do.” Three weeks later, in an article published in the Stanford Law Review Online, Professor Daniel A. Crane reached the opposite conclusion, claiming that “[t]he merger statistics do not evidence ‘reinvigoration’ of merger enforcement under Obama.”

Crane is simply wrong. The data regarding merger enforcement unambiguously support our conclusion and cannot reasonably be read to support Crane’s assertions. Crane’s conclusion regarding merger enforcement is inaccurate because he relies upon flawed metrics and overlooks or misinterprets other important evidence.

They conclude:

Our analysis of merger enforcement at the DOJ during the George W. Bush Administration—based on the enforcement statistics and more—showed that it was unusually lax and in need of reinvigoration. It is too early to reach a comparably definitive conclusion about merger enforcement at the DOJ during the Obama Administration, but nothing in Daniel Crane’s article seriously challenges our interpretation of the preliminary data as demonstrating that the necessary reinvigoration has taken place.

Read the full article, Evaluating Merger Enforcement During the Obama Administration by Jonathan Baker and Carl Shapiro, at the Stanford Law Review Online.

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Has the Obama Justice Department Reinvigorated Antitrust Enforcement?

Stanford Law Review

The Stanford Law Review Online has just published an Essay by Daniel Crane entitled Has the Obama Justice Department Reinvigorated Antitrust Enforcement?. Professor Crane assesses antitrust enforcement in the Obama and Bush administrations using several empirical measures:

The Justice Department’s recently filed antitrust case against Apple and several major book publishers over e-book pricing, which comes on the heels of the Justice Department’s successful challenge to the proposed merger of AT&T and T-Mobile, has contributed to the perception that the Obama Administration is reinvigorating antitrust enforcement from its recent stupor. As a candidate for President, then-Senator Obama criticized the Bush Administration as having the “weakest record of antitrust enforcement of any administration in the last half century” and vowed to step up enforcement. Early in the Obama Administration, Justice Department officials furthered this perception by withdrawing the Bush Administration’s report on monopolization offenses and suggesting that the fault for the financial crisis might lie at the feet of lax antitrust enforcement. Even before the AT&T and Apple cases, media reports frequently suggested that antitrust enforcement is significantly tougher under President Obama.

For better or worse, the Administration’s enforcement record does not bear out this impression. With only a few exceptions, current enforcement looks much like enforcement under the Bush Administration. Antitrust enforcement in the modern era is a technical and technocratic enterprise. Although there will be tweaks at the margin from administration to administration, the core of antitrust enforcement has been practiced in a relatively nonideological and nonpartisan way over the last several decades.

He concludes:

Two points stressed earlier should be stressed again: (1) statistical measures of antitrust enforcement are an incomplete way of understanding the overall level of enforcement; and (2) to say that the Obama Administration’s record of enforcement is not materially different than the Bush Administration’s is not to chide Obama for weak enforcement. Rather, it is to debunk the claims that antitrust enforcement is strongly dependent on politics.

This examination of the “reinvigoration” claim should not be understood as acceptance that tougher antitrust enforcement is always better. Certainly, there have been occasions when an administration would be wise to ease off the gas pedal. At present, however, there is a high degree of continuity from one administration to the next.

Read the full article, Has the Obama Justice Department Reinvigorated Antitrust Enforcement? by Daniel Crane, at the Stanford Law Review Online.

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The Right to Data Portability (RDP) as a Per Se Anti-tying Rule

Yesterday I gave a presentation on “The Right to Data Portability: Privacy and Antitrust Analysis” at a conference at the George Mason Law School. In an earlier post here, I asked whether the proposed EU right to data portability violates antitrust law.

I think the presentation helped sharpen the antitrust concern.  The presentation first develops the intuition that consumers should want a right to data portability (RDP), which is proposed in Article 18 of the EU Data Protection Regulation.  RDP seems attractive, at least initially, because it might prevent consumers getting locked in to a software platform, and because it advances the existing EU right of access to one’s own data.

Turning to antitrust law, I asked how antitrust law would consider a rule that, say, prohibits an operating system from being integrated with software for a browser.  We saw those facts, of course, in the Microsoft case decided by the DC Circuit over a decade ago.  Plaintiffs asserted an illegal “tying” arrangement between Windows and IE.  The court rejected a per se rule against tying of software, because integration of software can have many benefits and innovation in software relies on developers finding new ways to put things together.  The court instead held that the rule of reason applies.

RDP, however, amounts to a per se rule against tying of software.  Suppose a social network offers a networking service and integrates that with software that has various features for exporting or not exporting data in various formats.  We have the tying product (social network) and the tied product (module for export or not of data).  US antitrust law has rejected a per se rule here.  The EU proposed regulation essentially adopts a per se rule against that sort of tying arrangement.

Modern US and EU antitrust law seek to enhance “consumer welfare.”  If the Microsoft case is correct, then a per se rule of the sort in the Regulation quite plausibly reduces consumer welfare.  There may be other reasons to adopt RDP, as discussed in the slides (and I hope in my future writing).  RDP might advance human rights to access.  It might enhance openness more generally on the Internet.  But it quite possibly reduces consumer welfare, and that deserves careful attention.

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Stanford Law Review Online: The 2011 Basketball Lockout

Stanford Law Review

The Stanford Law Review Online has just published an Essay by William B. Gould IV entitled The 2011 Basketball Lockout: The Union Lives to Fight Another Day—Just Barely. Gould, a former chairman of the National Labor Relations Board, provides a succinct postmortem on the 2011 lockout:

The backdrop for the 2011 negotiations was the economic weapon once regarded as a dirty word in the lexicon of American labor-management relations—the lockout. This economic weaponry, endorsed by the Supreme Court since 1965, became the flavor of the two prior decades; baseball flirted with it in 1990, basketball in 1995 and 1999. One of hockey’s lockouts even resulted in the cancellation of the entire 2004-05 season. The lockout again was utilized in 2011 by recently peaceable football as well as by basketball. The owners gravitated towards the lockout tactic because in the event of strike (protesting changes in conditions in employment, which proved ineffective), players who crossed the union picket line could play and still sue in antitrust simultaneously. The lockout put more pressure on the players to settle. . . . The union now was represented by David Boies, who had only a few months before represented the NFL and successfully deprived that union of its only effective antitrust remedy—i.e., an injunction against the lockout, which would have required the owners to open the camps in early summer. Thus the basketball union now would not pursue the injunction remedy, notwithstanding the persuasiveness of Judge Bye’s dissenting opinion in the football case. Of course, Boies would have met himself coming around the corner if he argued for it in basketball.

He concludes:

Nonetheless, even though the union was stripped of its most effective antitrust remedy, litigation seems to have moved the parties together. It most certainly called the NBA’s bluff, in that the league’s regressive or inferior option was quickly forgotten. True, the NBA obtained givebacks that are estimated to be worth more than $300 million. Not only did it win on revenue sharing with the players—the players will possess between 49% and 51% as opposed to 57%—but more stringent luxury tax penalties for violators also have been instituted. As National Basketball Players Association Executive Director Billy Hunter said, the latter element constitutes the “harshest element of the new system.” At the same time, guaranteed contracts were preserved, restricted free agents will benefit from the reduction of the so-called “match period” when teams may match competing offers from seven to three days, which may encourage bidding on these players. The cap remains soft in that the so-called incumbent “Bird” players (named for Celtics superstar Larry Bird) may exceed the cap and have more expansive increases and lengths of contracts than other players. A so-called “amnesty” for bad contracts was permitted, in that even though the contracts must be paid, a player on each club may be waived and his salary not counted towards his team’s cap. What appeared to be a rout of the players in November emerged as a reasonable face-saving compromise.

Read the full article, The 2011 Basketball Lockout: The Union Lives to Fight Another Day—Just Barely by William B. Gould IV, at the Stanford Law Review Online.

Note: Updated quotation.

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On the Colloquy: The Credit Crisis, Refusal-to-Deal, Procreation & the Constitution, and Open Records vs. Death-Related Privacy Rights

NW-Colloquy-Logo.jpg

This summer started off with a three part series from Professor Olufunmilayo B. Arewa looking at the credit crisis and possible changes that would focus on averting future market failures, rather than continuing to create regulations that only address past ones.  Part I of Prof. Arewa’s looks at the failure of risk management within the financial industry.  Part II analyzes the regulatory failures that contributed to the credit crisis as well as potential reforms.  Part III concludes by addressing recent legislation and whether it will actually help solve these very real problems.

Next, Professors Alan Devlin and Michael Jacobs take on an issue at the “heart of a highly divisive, international debate over the proper application of antitrust laws” – what should be done when a dominant firm refuses to share its intellectual property, even at monopoly prices.

Professor Carter Dillard then discussed the circumstances in which it may be morally permissible, and possibly even legally permissible, for a state to intervene and prohibit procreation.

Rounding out the summer was Professor Clay Calvert’s article looking at journalists’ use of open record laws and death-related privacy rights.  Calvert questions whether journalists have a responsibility beyond simply reporting dying words and graphic images.  He concludes that, at the very least, journalists should listen to the impact their reporting has on surviving family members.

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Me, Justice Stevens, and the Dublin Marathon

Here is a sentence I never expected to write. So there I was on Monday in the middle of running the Dublin Marathon when I decided to listen on my Ipod to a C-Span podcast interview with Justice Stevens. I had traveled to Dublin to run the actual Dublin marathon and to co-host Antitrust Marathon IV: Marathon with Authority, a round table discussion co-hosted with the British Institute of International and Comparative Law and the Irish Competition Authority.

Around Mile 11, I was hurting and turned from a combination of Irish rock and random songs to some pod casts. After some short New York Times and NPR pod casts, I remembered that I had downloaded a series of C-Span interviews with the current Justices and Sandra Day O’Connor.

I have a special fondness for Justice Stevens. We are both Chicagoans, Cub Fans, and Northwestern Law grads. More improbably, we even had the same antitrust professor (James Rahl) at Northwestern, albeit about 35 years apart. That plus the fact he was primarily an antitrust litigator before going on the bench was enough to get me to devote the next 30 some minutes, and about 3 miles, to the Stevens interview.

A lot of it was a fluffy discussion of his chambers and personal history. But mixed among the fluff and the questions for non-lawyers (What is certiorari?), there were a handful of interesting tidbits. Justice Stevens talked about the reasons and impact of not participating in the cert pool, the importance of writing his own first drafts, and his interest in having the court hear a few more cases than its current docket. There are no smoking guns or shocking revelations, but Justice Stevens does mention the need for Justices from diverse legal backgrounds, such as veterans and litigators, as an important mix for the Court to have on the bench. Justice Stevens is of course both and as far as I know the only current Justice to actually have made his living as a litigator.

The main thing I came away with was the genuine niceness of the good Justice which was my impression from the only time I ever met him. In 1993, I taught in a summer program in Innsbruck, Austria where Justice Stevens was lecturing. Instead of staying for the three days as promised, he stayed and lectured the entire week and interacted warmly with the students and the rest of the faculty. At one point, a student asked him to sign the packet of course materials which he did after class. Because he did not want to play favorites, he then stayed and patiently signed for more than a hundred students.

In the pod cast interview, Stevens demurred on picking a most important or favorite case. But when asked about a most memorable experience, he didn’t hesitate and proudly mentioned throwing out the first pitch at Wrigley Field before a Cubs game at the age of 85.

With that, I grinned, quickened my pace a bit, and headed up the next of an endless series of hills on my way around Dublin on a surprisingly warm and sunny late October day.

I have not listened to the rest of the interviews. But if anyone else has, please post if there are particularly revealing or interesting moments.

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Academic Books, Non-Academic Books, BitTorrent, and Google’s Brand Power

D is for Digital is over now. I urge anyone interested in the Google Book Deal (aka the Google Book Search) to check out the schedule page and the webcast links (the stream links are at the top of the Friday and Saturday schedules respectively). James Grimmelmann put together a conference that aired out pro and con views rather well. In fact, I’d say although many were questioning the deal, I learned a good amount about the views of those in favor of the deal. I was not convinced that the deal is good and should go forward, but I appreciated hearing more about how the deal evolved and defenders’ views.

I highly recommend the keynote lunch with Pam Samuelson and Paul Courant. That panel warmed up the group. Some really good questions about transparency of the process, responsibility, and more came up. Pam’s key point that if one builds a pubic good this big, public trust responsibilities go with it was dead on for me. I highly recommend watching the video for all that was said.

The next panel C is for Culture was excellent. James asked a question that has been on my mind and we had kicked around at WIP IP last week. Is Google Book Search irrelevant?

Here is why that is good question. First, the day so far emphasized that the majority of the books in question are academic books. As Pam explained and Paul Duguid echoed, if scholars’ books are at stake, scholars should be involved. Paul made clear that scholarly standards should guide the project.

Now, consider that many books are becoming available on BitTorrent. In addition, one panelist, Dan Reetz has a fascinating project. His DIYscanner project is a wild moment in grassroots digital activism. The story of how he chose to build his low-cost, open source DIY scanner (we’re talking maybe $300-$400 total) so that one could scan personal (and other books) at the rate of a few seconds per page and without destroying the book merits another post. (for now here is a link to the plans to build your own scanner) In addition, Reetz noted that majority of new books are leaked prepublication. As a general matter, a key claim is that users will pay for a book but copy the book so that they can search and take many books with them. The importance of these changes is that crowd-sourced and other approaches to digitizing text is on the move. One can see this shift as indicating market failure or that ereader functionality will be more and more the case.

As scanners, ereaders, and companies like Stanza offer better ways to access, search, mark, and read, the walled or controlled version of the text experience that the Google Book Deal offers seems odd. I doubt, however, that it will be irrelevant. Google’s brand, the ease of searching (even with its errors so far), and the ability to trust Google over BitTorrent or other sources will likely make it relevant to many. Nonetheless, the growth in alternative sources would suggest that Google will need to choose between a web search that captures all useful book offerings or a Google Book Search that only gives Google Book results. As the last panel on antitrust explored, Google is already dominant in search. It arguably killed a little company called MapQuest. Once Google offered its maps and its maps became the default listing when one entered address information into the search, MapQuest was done. That seems awfully close to the MS bundling issues of the last decade. When it comes to books, Google’s lead and dominance will give it massive power and leverage over how we all access knowledge. Nonetheless, it may be that grassroots, crowd-sourced movements will permit an end around for the control the publishers want through this deal. To be clear an end-around is insufficient protection against the lock-in problems the Google Book Deal poses, but it may help push Google to reach a deal that is less run by publisher interests.

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Antitrust in Obamaland

Antitrust enforcement was one area where most observers expected significant changes from the Bush years, particularly at the Antitrust Division of the Justice Department. For the past eight years, the Antitrust Division had vigorously prosecuted cartels, but had not been active in monopolization or merger enforcement. In addition to bringing relatively few cases in these areas, the Division had filed a number of amicus briefs in support of defendants, opposed a petition for certiorari sought by its sister agency the Federal Trade Commission, and issued a number of reports and policy recommendations that restricted the reach of the antitrust laws or imposed significant burdens on private plaintiffs. During this same period, the FTC proved to be more active in the competition area, particularly in the health care and intellectual property fields which suggests that the FTC will have a greater continuity in the competition area despite key changes at the Commissioner and staff levels.

The key officials in the Obama administration came into the antitrust agencies promising change. Christine Varney, the new head of the Antitrust Division, gave a speech in her early days promising more vigorous enforcement and hearkening back to the days of Thurman Arnold during the latter half of the New Deal. At the same time, she repudiated a highly restrictive report on monopoly power issued during the waning days of the prior administration issued by the Justice Department alone because a majority of the FTC had refused to endorse. In addition, the Division has reversed policy and filed an amicus brief in support of plaintiffs in a key Supreme Court case involving the pharmaceutical industry. Most recently, the Justice Department and the FTC jointly announced a new initiative to revisit the Merger Guidelines of the 1990s used by both agencies to decide which mergers and acquisitions to challenge on competition grounds. Read More