ANTITRUST

• Music: Claude DeBussy– Prelude: Afternoon of a Faun (1894)

– Nocturnes (1900)

– La Mer (The Sea) (1905)

• Performed by Orchestre de la Suisse Romande, Conductor: Armin Jordan (1991)

Possible Goals

• Balance Allocative & Productive Efficiency

• Protect Small Businesses– Concern re Survival: “Right” to Profit– Concern re Concentrated Political Power

• Distributive Justice: Prevent Overcharges to Consumers

• Business Ethics: Outlaw Offensive Commercial Practices

Antitrust Revolution

• 4th Edition: Contains Thirteen Case Studies I Have Assigned in Prior Years

• 5th Edition: Only Has Six of These

SCOPE & ENFORCEMENT

1. The Reach of the Antitrust Laws

2. Public Enforcement

3. Private Enforcement

4. Relation Between Procedure & Substance

5. Conduct of Large Private Civil Lawsuit

CONDUCT OF LARGE PRIVATE CIVIL LAWSUITS

Conduct of Large Private Civil Lawsuits

• Primary Focus: Settlement

• Secondary Focus: Summary Judgment

Order of Proceedings

• Preliminary Negotiations

• Complaint

• Motion to Dismiss Part or All

• Investigation & Discovery

• Summary Judgment Motions

• Trial Prep/Negotiations

Investigation & Discovery: Interactive Process

• Legal Research Set of Relevant Facts to Investigate

• Discovery of Facts More Detailed Legal Qs to Research

• Theories Change as Get More Info

Investigation & Discovery: Goals

• Defendant– Limit Info Going to Plaintiff– Identify D Theory of Case (& Support)– Identify Evidence Key to P Theory of Case

• Plaintiff: Find Evidence Sufficient to Survive Summary Judgment– Evidence Consistent w P Theory– Evidence Inconsistent w D Theory

Investigation & Discovery: Finding Evidence

• Witness Interviews• Early Interrogatories

– Contentions– I.D. Witnesses & Documents

• Document Review (Most Important)• Depositions• Later Interrogatories: What Evidence

Supports Claims

Order of Proceedings

• Preliminary Negotiations

• Complaint

• Motion to Dismiss Part or All

• Investigation & Discovery

• Summary Judgment Motions

• Trial Prep/Negotiations

THEMES OF THIS COURSE

1. Power of Attorneys & Legal Academics to Change the Law

HISTORICAL TRENDS

• 1945-75: Anti-Big Business Ideology

• 1975-92: “Antitrust Revolution”

• 1992-2000: Line-Drawing and Some Counter-Revolution

• 2001 : ???

INTRODUCTION TO THE ECONOMICS

OF ANTITRUST

ASSUMPTIONS OF CLASSICAL ECONOMICS

• PEOPLE ACT RATIONALLY TO MAXIMIZE THEIR OWN INTERESTS

ASSUMPTIONS OF CLASSICAL ECONOMICS

• PEOPLE ACT RATIONALLY TO MAXIMIZE THEIR OWN INTERESTS

• RESOURCES MOVE TO MOST VALUABLE USE IF VOLUNTARY EXCHANGE PERMITTED

““VALUE”VALUE”

MEASURED BY AGGREGATE CONSUMER WILLINGNESS TO

PAY FOR THINGS

““EFFICIENCY”EFFICIENCY”

EXPLOITING ECONOMIC RESOURCES TO MAXIMIZE

“VALUE”

Given these definitions …

• Voluntary transactions are “efficient”

Given these definitions …

• Voluntary transactions are “efficient”

• Free market is “efficient”– allows sequences of transactions

– resources end up w those who most value them

Given these definitions …

• Voluntary transactions are “efficient”

• Free market is “efficient”– allows sequences of transactions

– resources end up w those who most value them

• Interference with market by government or cartel is “inefficient”

PROBLEMS WITH ASSUMPTIONS

• DEFINITION OF “VALUE”

• PEOPLE OFTEN IRRATIONAL

PROBLEMS WITH ASSUMPTIONS

• DEFINITION OF “VALUE”

–CONSUMER CULTURE

–DEPENDS ON INCOME DISTRIBUTION

–MORE $ = MORE VOTES

PROBLEMS WITH ASSUMPTIONS

• PEOPLE OFTEN IRRATIONAL

–OFTEN APPEAR TO ACT AGAINST SELF-INTEREST

–OFTEN PERCEIVE SELVES ACTING AGAINST SELF-INTEREST

PROBLEMS WITH ASSUMPTIONS

• Raise Qs About Normative Use of Theory– Claims that results of comp. market always

desirable

– Claims that interference w comp. market always bad

PROBLEMS WITH ASSUMPTIONS

• Raise Qs About Normative Use of Theory

• Theory Often Describes World Pretty Well

PROBLEMS WITH ASSUMPTIONS

• Raise Qs About Normative Use of Theory

• Theory Often Describes World Pretty Well

• ME: Works Best if Addressing Basic Consumer Items

DEMAND CURVE:

GENERALLY BUY MORE OF GOOD THE LESS IT COSTS

DEMANDDemand

0

5

10

15

20

25

30

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Q

P P

DEMAND CURVE:GENERALLY BUY MORE OF GOOD

THE LESS IT COSTS:

• SUBSTITUTION EFFECT

• INCOME EFFECT

DEMAND CURVE:GENERALLY BUY MORE OF GOOD

THE LESS IT COSTS

• SUBSTITUTION EFFECT: AS GOOD BECOMES CHEAPER, BUY IT INSTEAD OF ALTERNATIVES

• INCOME EFFECT

DEMAND CURVE:GENERALLY BUY MORE OF GOOD

THE LESS IT COSTS

• SUBSTITUTION EFFECT

• INCOME EFFECT: AS GOOD BECOMES CHEAPER, PURCHASING POWER INCREASES, SO BUY MORE

DEMAND CURVE:GENERALLY BY MORE OF GOOD

THE LESS IT COSTS

EXCEPTIONS (RARE):

• INFERIOR GOODS

• LUXURY GOODS

DEMAND CURVE:GENERALLY BY MORE OF GOOD

THE LESS IT COSTSEXCEPTIONS:

• INFERIOR GOODS: GOODS YOU BUY MORE OF, THE LESS $ YOU HAVE

• LUXURY GOODS

DEMAND CURVE:GENERALLY BY MORE OF GOOD

THE LESS IT COSTSEXCEPTIONS:

• INFERIOR GOODS

• LUXURY GOODS: GOODS YOU BUY BECAUSE OF THE HIGH PRICE

FACTORS AFFECTING DEMAND

• PERSONAL TASTE• INCOME

• PRICE OF COMPLEMENTARY GOODS

• PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND

• PERSONAL TASTE

• INCOME• PRICE OF COMPLEMENTARY GOODS

• PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND

• PERSONAL TASTE

• INCOME

• PRICE OF COMPLEMENTARY GOODS

• PRICE OF SUBSTITUTES

FACTORS AFFECTING DEMAND

• PERSONAL TASTE

• INCOME

• PRICE OF COMPLEMENTARY GOODS

• PRICE OF SUBSTITUTES