Antitrust Notes Outline

7/23/2019 Antitrust Notes Outline

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I. Objectives and Origins of antitrust..................................................................................................................6A. The Goals of Antitrust Policy......................................................................................................................6

1. The Role of Co!etition.........................................................................................................................6". The #heran Act $ other %egislation......................................................................................................6

&. 'istorical #ources of Antitrust.....................................................................................................................61. (arly %a) on *ono!oly +(nglish C% etc,..............................................................................................6". -yers Case +1/10,..................................................................................................................................6

. #choolasters Case +1/12,....................................................................................................................6/. Case of *ono!olies +162",.....................................................................................................................60. *ichel v. Reynolds +3& 1411, +Rule of Reason,....................................................................................66. #oe Trends............................................................................................................................................44. Current Paradig.....................................................................................................................................4

C. 'istorical -evelo!ent of Antitrust #tatutes..............................................................................................41. *any versions cae and )ent.................................................................................................................4". #oe Industries (5e!ted fro Antitrust..............................................................................................4. 172 #heran Act &ac8ground...............................................................................................................4/. 171/ Clayton Act.....................................................................................................................................0. 171/ 9ederal Trade Coission Act......................................................................................................76. -O: $ 9TC each has !o)er to enforce antitrust......................................................................................74. 176 Robinson;Patan Act +dealt )ith !rice,.........................................................................................7. 1702 Celler;3efauver Act........................................................................................................................77. 1746 'art;#cott;Rodino...........................................................................................................................7

-. (arly %egal -octrine< Cartel Cases +01,......................................................................................................71. Issues........................................................................................................................................................7". =# v. Trans;*issouri 9reight Assn +=# 174, >o ROR.......................................................................7. =# v. :oint Traffic Assn +=# 17,......................................................................................................12/. 'istorical Conte5t +Coerce Clause,<................................................................................................120. Addyston Pi!e +17,............................................................................................................................126. Restrictive Covenants< Rest" 3 +171,< Reasonableness....................................................................124. #tandard Oil +1711,...............................................................................................................................12. =# #teel.................................................................................................................................................127. Aerican Tobacco.................................................................................................................................12

II. Cha!ter *ar8et #tructure and *ono!oly Po)er........................................................................................12A. *ar8et Po)er? Relevant *ar8et? *ono!oli@ation....................................................................................12

1. uestions............................................................................................................................................12". =# v. Aluinu Co. of Aerica +"d Cir. 17/0,...................................................................................11. du Pont +=# 1706,BCello!hane Case ;; Brelevant ar8et.................................................................11/. Intl &o5ing Club +1707,.......................................................................................................................1"0. #yufy (nter!. v. A*C +7th Cir. 176,....................................................................................................1"6. *icrosoft................................................................................................................................................1"4. Grinnell +1766, D " B*ono!oli@ation of #ecurity *ar8et...................................................................1". Assessing *8t Po)er............................................................................................................................17. -O:E9TC *erger Guidelines 12/;12/"..............................................................................................1

III. Price 9i5ing and -ivision of *ar8ets #heran D 1..................................................................................1/A. Cons!iracy in Theory and Action..............................................................................................................1/

1. Conditions 9avoring Cartels..................................................................................................................10". &arriers to (ntry and Co!etition.........................................................................................................10. Fhat is )rong )ith !rice fi5ing..........................................................................................................10/. General Princi!les..................................................................................................................................10

&. -evelo!ent of the BPer se Rule on Price 9i5ing...................................................................................10

1



1. Chicago &oard of Trade v. =# +=# 171, Rejecting Per #e..................................................................10". #ocony;Hacuu Oil +=# 17/2, Per #e Rule< Price 9i5........................................................................16. &asic -ichotoy< Per #e v. Rule of Reason..........................................................................................14/. %earned Professions...............................................................................................................................140. &*I v. C&# +=# 1747, Characteri@ation of &lan8et %icense< >e) Product>ot Per Se..................146. The Buic8 %oo8.................................................................................................................................14. >CAA v. Regents of =. of O8l. +17/, Buic8 %oo8..........................................................................1

. =# v. &ro)n =. +d Cir. 177, Buic8 %oo8 not #ufficient................................................................177. Current vie) of 9TC J -O: .6+b, Collaboration Guidelines...........................................................1712. California -ental +1777, Rejecting uic8 %oo8 J Reanding........................................................1711. #te!s of the ROR..............................................................................................................................."21". uic8 %oo8........................................................................................................................................"21. -id Kuic8 loo8 die in Cal -ental....................................................................................................."2

C. Territorial -ivisions J other restraints......................................................................................................"21. >on;Price 'ori@ontal Restraints............................................................................................................"2". >atl Assn Findo) Glass *fgs. v. =# +=# 17",.............................................................................."2. Ti8en +=# 1701, &earing *fgs. Hiolated #heran..........................................................................."2/. =# v. G +1766, (5clusive -ealing< (5clusion of -iscounters..........................................................."20. =# v. #ealy +1764, =nla)ful Territorial Restraints..............................................................................."16. To!co +=# 174", Territorial Restraints Per #e Illegal +bad la),........................................................."14. General %ease)ays +17/, *ere (conoy of #cale -oesnt #ave Restraint......................................."". Paler v. &RG of Georgia? Inc. +&arE&ri Case, +1772,.........................................................................""

IH. Grou! Refusals to -eal +&oycotts, and joint ventures..............................................................................""A. Refusals to deal..........................................................................................................................................""

1. General...................................................................................................................................................""". *ontague v. %o)ry +172/, Tile *fgrs< >o -eal )E>on*ebers........................................................"". 9ashion Originators Guild v. 9TC +=# 17/1, &lac8listed B#tyle Co!yists........................................""/. 3lors +=#1707, Grou! &oycotts Per #e Illegal +under D ",................................................................."0. >yne5 +=# 177, >o Per #e Rule Fhere &uyer Chooses Other #u!!lierRegardless of Reason....."6. Radiant &urners +=# 1761, Refusal to #u!!ly Gas to >on;AGA;A!!roved &urner L Per #e Illegal. "/4. #tructural %ainates +7th Cir. 6, =!holding P;)ood #tandard............................................................"/. >atl #anitation Assn. +6th 172, =!holding #tandards........................................................................."/7. >orth)est Fholesale #tationers +=# 170, Coo!erative &uying (5!ulsionM >OT Per #e............."0

12. 9TC v. Indiana 9ederation of -entists +=# 176,. ROR Actual 9N >o >eed " Prove *8t Po)er

"011. 9TC v. #u!erior Court Trial %a)yers Association +=# 1772,..........................................................."6

&. :oint Hentures +4,..................................................................................................................................."61. #uary Coing to conclusion of discussion of #ection 1 J hori@ontal agreeents......................."6". Fho is to benefit fro antitrust..........................................................................................................."6. =# v. Terinal Rail)ay Assn +=# 171",. B(ssential 9acilities -octrine............................................"4

/. AP v. =# +=# 17/0, *ebershi! HetoERefusal to -eal L =nreasonable Restraint.............................."40. 'o) assess :Hs under RoR.................................................................................................................."6. #C9C I%C? Inc. v. Hisa =#A? Inc. +12th Cir. 177/, HI#A #yste O3.................................................."

C. Governent Action(fforts to Influence Governent..........................................................................."1. (astern RR Presidents Conference v. >oerr *otor 9reight Co. +=#1761, >O(RR;P(>>I>GTO>-OCTRI>(..................................................................................................................................................."". California *otor Trans. +174", A!!lying #ha (5ce!tion................................................................."7. >OF &oycott +172, >oerr Iunity................................................................................................."7/. Otter Tail Po)er +174, #ha (5ce!tion.............................................................................................."70. Allied Tube J Conduit Cor!. v. Indian 'ead? Inc. +=# 17, Reoval 9ro Politics........................"7

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6. >orr;Pennington -octrine....................................................................................................................."74. Professional R( Investors +177, #ha (5ce!tion< BObjectively &aseless......................................."7

-. #tate Action J 9ederalis< BPAr8er v. &ro)n -octrine........................................................................21. Par8er v. &ro)n +17/, +/02, #heran -oes >ot A!!ly to #tate Action.............................................2". #ch)egann &ros. +=# 1701,..............................................................................................................2. Goldfarb +1740,.....................................................................................................................................2/. *idcal +172, ";PRO>G PAR3(R T(#T............................................................................................2

0. #outhern *otor Carriers +170, /61.....................................................................................................26. 9TC v. Ticor +/6/,.................................................................................................................................24. Par8er v. &ro)n -iscussion...................................................................................................................1

(. *unici!alities J PAr8er;*idcal...............................................................................................................11. City of 'allie.........................................................................................................................................1". Oni Outdoor Adving? Inc. +=# 1771, >o Cons!iracy (5ce!tion to Par8er......................................1

H. Cha!ter 6 *ar8et Concentration? Cons!iracy J Antitrust............................................................................1A. Proof of Collusion......................................................................................................................................1

1. Interstate Circuit v. =# +177,. Tacit Agreeent #ufficient +after trial,...............................................1". Theater (nter!rises v. Paraount 9il +170/, Parallel Conduct not Conclusive +on sj,......................". Co!areEReconcile Theater (nter!rises )ith Interstate Circuit.........................................................../. In re &aby 9ood Antitrust %itigation +BPlus 9actors,...........................................................................

&. 9acilitating Practices..................................................................................................................................1. I!edients to Price Coordination.......................................................................................................". #tructural 9actors that 9acilitate or Co!licate Price Coordination +0",............................................ 9acilitating Practices............................................................................................................................../

C. Trade Assns J I>foration e5change +IN, +06,...................................................................................../1. &ac8ground............................................................................................................................................/". Aerican Colun J %uber Co. +17"1, IN Hiolated D 1..................................................................../. *a!le 9looring +17"0, IN of Past J Aggregated -ata O3...................................................................0/. Ceent *anufacturers +17"0, IN O3 to Protect fro Arbitrage..........................................................00. #ugar Institute Public +176, &inding Public Price &A-.....................................................................06. =# v. Container Cor!. +1767, Price #tabili@ing Plan &A- I> T'(OR.............................................04. =# v. Gy!su +627,..............................................................................................................................6. Todd v. (55on +"nd Cir. "221,................................................................................................................67. &lo8est 9ertili@er? Inc. v. Potash Cor!. of #as8.? Inc. +th Cir. "222, +Rule of Reason J #:,............612. Co!are Todd v. &lo8est................................................................................................................6

-. Hertical Restraints +resale Price *aintenance,..........................................................................................41. Hertical v. 'ori@ontal Restraints............................................................................................................4". #har! -ivision &et)een Price J >on;Price Restrictions.....................................................................4. Price Restraints< T)o Rules +*inE*a5,................................................................................................4/. >on;Price Restraints< One Rule Post;#ylvania? all ROR......................................................................40. #uary< Only !er se rule )here iniu !rice aintenance.........................................................46. (5tended Analysis $ 'oldings...............................................................................................................44. -r. *iles +1711, Per se Rule Against *iniu Resale Price..............................................................7. #tate Oil v. 3han +1774, *a5 Resale >OT !er se +overruling Albrecht,.............................................77. Albrecht v. 'erald Co. +176, +overruled in #tate Oil,.........................................................................712. Continental TH v. GT( #ylvania +1744, *a5 Price ROR............................................................7

11. #uary............................................................................................................................................/2(. Hertical Restraints and Refusal to -eal...................................................................................................../2

1. Colgate +1717, Refusal to -eal >ot a BContract? Cobination or Cons!iracy BColgate -efense/2

". Par8;-avis +1762, Illegal Cobination Fhere #eller Pressured Fholesalers...................................../1. *onsanto Co. v. #!ray;Rite #ervice Cor!. +17/, #tandard of Proof / Hert. Price;9i5ing................./1



/. &i@ (lectronics Cor!. v. #har! (lectronics +17, >o Per #e in BPurely Hertical Cases..................../10. #uary of Hert Restraints.................................................................................................................../"6. Reca! of Hertical Relationshi!s............................................................................................................./"

HI. #ection ". *ono!oli@ation. +Cha!ter ,................................................................................................../A. *ono!oly Conduct Revisited..................................................................................................................../

1. Overvie)................................................................................................................................................/". Categories< Actual v. Atte!ted.........................................................................................................../

. Alcoa......................................................................................................................................................//. Grinnell................................................................................................................................................../0. Otter Tail Po)er +174,........................................................................................................................./6. As!en #8iing +170,............................................................................................................................../4. Trin8o +=# "22/, +le5is !rintout,..........................................................................................................//. =# v. *icrosoft Cor!. +-C Cir. "221,...................................................................................................//

&. Atte!ted *ono!oli@ation +D ",.............................................................................................................../41. (leents of Atte!t............................................................................................................................../4". #!ectru #!orts? Inc. v. *cuillan +=# 177, (leents of Atte!t.................................................../4. -iscussion leading to %orain :ournal..................................................................................................../4/. %oraine :ournal +1701, Atte!ted *ono!oly......................................................................................./4

C. Predatory Pricing......................................................................................................................................./41. &ehavioralists v. Chicago #chool........................................................................................................../4". TheoryECounter Theories of PPricing..................................................................................................../. (leents of Predatory Pricing Clai....................................................................................................//. &roo8e Grou! +177,............................................................................................................................./

-. Tying........................................................................................................................................................../71. Clayton Act D +!46,........................................................................................................................../7". =nited #hoe +17"",................................................................................................................................/7. International #alt +17/4,......................................................................................................................../7/. ReKuireents of Tying Clai................................................................................................................020. >orthern Pacific +170, B#ubstantial Restraint ReK............................................................................026. Ties Picayune +170, *ar8et !o)er $ #ubstantial Restraint ReKd..................................................024. Advanced &i@ #ystes +1742, Co!ies? Pa!er J #ervice< Illegal Tie....................................................02. :efferson Parish +17/, >eed Inde!endent -eand 9or " Products.....................................................027. 3oda8 +177",.........................................................................................................................................0112. *ar8et #hare 'ard >ubers.............................................................................................................0111. Technological v. Contractual Tying...................................................................................................011". CritiKue of Tying %a)........................................................................................................................011. ReKuireents of Tying Clais..........................................................................................................0"1/. Tying as !er se violations...................................................................................................................0"10. Proco!etitive :ustification..............................................................................................................0"

(. (5clusive -ealing......................................................................................................................................0"1. In Hertical Conte5t.................................................................................................................................0"". Inter;&rand (5clusivity +hori@ontal,......................................................................................................0". #tandard 9ashion...................................................................................................................................0"/. Ta!a (lectric.......................................................................................................................................0"

9. &undled -iscounts +the hott antitrust to!ic,..............................................................................................01. Overvie)................................................................................................................................................0". %ePages v. * +rd Cir. "22,................................................................................................................0

G. (5clusive -ealing......................................................................................................................................0/1. Overvie)................................................................................................................................................0/

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". R=%(< (NC%=#IH( -(A%I>G *A &( TR(AT(- =>-(R (IT'(R D O9 T'( C%ATO>ACT +I9 IT I>HO%H(# T'( #A%( O9 GOO-#, OR D 1 O9 T'( #'(R*A> ACT..............................0/. #TA>-AR- 9A#'IO> CO. v. *AG>(TT(;'O=#TO> +17"",......................................................0//. 9TC v. &ROF> #'O( +1766, Invalidating Restriction on Resale of Co!etitor #hoes....................000. TA*PA (%(CTRIC CO. v. >A#'HI%%( COA% CO. +1761,............................................................00

'. *ergers......................................................................................................................................................061. Overvie)................................................................................................................................................06

". Clayton Act? #ection 4...........................................................................................................................06. &ro)n #hoe -iscusses Pur!oses of #ection 4.......................................................................................06/. Reasons to *erge...................................................................................................................................060. Co!are to :EH Cases............................................................................................................................046. Ty!es of *erger.....................................................................................................................................044. =# v. Philadel!hia >ational &an8 +176,..............................................................................................04. *ergers during the 1762s......................................................................................................................07. General -ynaics +1746,......................................................................................................................0

I. *erger Guidelines.....................................................................................................................................01. 9ro G- Guidelines.........................................................................................................................0

". Fhat )ould ha!!en if there is a sall but significant and non;transitory !rice increase...................07

. *ar8et -efinition..................................................................................................................................07/. D 1. I- *ar8et Partici!ants..................................................................................................................070. 1./ Calculating *ar8et #hares...............................................................................................................076. D 1.0 *ar8et Concentration...................................................................................................................074. D 1.01.....................................................................................................................................................07. D " Potential Adverse Co!etitive (ffects of *ergers.........................................................................627. ".1" Conditions Codusive to -etecting and Punishing.........................................................................6212. D "."1 9irs -istinguished Priarily by -ifferentiated Products....................................................6211. .2 (ntry Analysis..............................................................................................................................621". /. (fficiencies....................................................................................................................................621. D 0 the failing fir defense +hail ary !ass,.....................................................................................62

:. Hertical *ergers +>OT O> (NA*,.........................................................................................................611. Chicago..................................................................................................................................................61". Post;Chicago..........................................................................................................................................61. Hertical *erger Guidelines +not covered,.............................................................................................61

I. OBJECTIVES AND ORIGINS OF ANTITRUST

A. THE GOALS OF ANTITRUST POLICY

1. The Role of Competto!

". The She#m$! A%t & othe# Le'(l$to!

B. HISTORICAL SOURCES OF ANTITRUST

1. E$#l) L$* o! +o!opol) ,E!'l(h CL et%-

$- #enators )ho enacted coon la) saidEthought that they )ere erely Benacting the C%.

,1- This !ro!osition is dis!uted and soe argue that C% is irrelevant to inter!reting the#heran Act.

- uestions to consider ,1- Can )e I- the beneficiary in the C% cases,"- Is there a unifying theory of ono!oly and co!etition,/- Can )e find consistent thees to dra) u!on later on

". D)e#0( C$(e ,112-.

$- Hel3. Contract to re!ay debt or not )or8 in the -yers trade for 6 onths is void as against thecoon la)? and )ere the P here? he )ould be thro)n in debtors !rison.- -iscussion. Fho is benefited by this !olicy

,1- Consuers less co!etition.

0



,"- >ot the -yer i!airs his freedo of 3./. S%hoolm$(te#0( C$(e ,114-.

$- Hel3. >o action can be aintained against schoolaster )ho set u! a school that co!eted )iththe e5isting school? thereby driving do)n !rices.- >otes.

,1- B'ar )ithout legal injury.,"- 'ere the !riary benny a!!ears to be the consuer again.,/- Fhat if ne) entrant is Bdu!ing belo) cost to drive out the co!etitor

. C$(e of +o!opole( ,154"-.

$- Hel3? in an action )as brought against a haberdasher )ho !ur!ortedly violated a !atent granted by the ueen to the !laintiff as the sole i!orter of !laying cards )as invalid.- >otes.

,1- The court invalidated +obliKuely, a !atent granted by the Kueen? but shortly thereafter !arliaent granted a !atent another !arty.,"- This case is really about the authority of the ueen to grant !atents. Parliaent had theauthority? the ueen didnt. This is about se!aration of !o)ers.

2. +%hel 6. Re)!ol3( ,7B 1811- ,R9le of Re$(o!-.

$- F$%t(. &a8er sold his ba8ehouse and agreed not to co!ete in that locality for five years or to !ay a su of oney if he did.- Hel3? the contract )as valid and enforceable.%- -istinguish -yers J Reynolds

,1- The -yers case is a bare restraint of trade.,"- In Reynolds? there is ancillary no;co!ete agreeent to a 3 for the sale of a business.,/- General v. Particular -istinction.,- The cessation of co!etition )as !ro!ortional to the 3 +a five year lease and a five yearrestraint of trade,.,2- The no;co!ete clause )as necessary for a good and useful contract for the sale of the

business.5. Some T#e!3(

$- Protectionist- Political%- *ercantilist3- Consuerist +fairly strong,e- 9ree %abor

f- These trends often conflict but are not ac8no)ledged.8. C9##e!t P$#$3'm

$- =nder Current Paradig? consuer L !riary beneficiary of antitrust la)- Priary evil to be solved is the dead)eight loss $ )ealth tfer.%- Antitrust is cyclical? so its evolving.

C. HISTORICAL DEVELOP+ENT OF ANTITRUST STATUTES

1. +$!) 6e#(o!( %$me $!3 *e!t

$- >ational Industrial Recovery Act +early ne) deal, +cae and )ent,,1- 170 #checter invalidated ne) deal via coerce clause or non;delegation doctrine

- Resale Price *aintenance,1- 172s Congress )anted to !erit it,"- Per se illegal today.

". Some I!39(t#e( E:empte3 f#om A!tt#9(t/. 1;<4 She#m$! A%t B$%='#o9!3

$- %et)in -ece!tively si!le.,1- Congress that !assed the act )ere Re!ublicans and doinated by industrial agnates.

,$- #oe argued that #heran Act )as intended as a band;aid.,- #ee8ing to head off !o!ular resentent to)ards industrialists.

- Fhy Antitrust,1- Trusts )ere large cor!orate orgs.,"- Cor! la) )as less evolved? so any trusts consisted of any cor!s bound contractuallyto follo) direction of a central organi@er +-avid Roc8efeller,.,/- Resentent against high !rices $ concentration of !o)er.

6



%- %egislative 'istory,1- #enators sa) theselves as enacting the coon la).,"- &elief that ono!olies? trusts and cartels injured consuers through higher !rices andlo)er Kuality.,/- %egislators believed that industry should be organi@ed to benefit sall dealers and )orthyen not)ithstanding that the trusts ay have ade things chea!er at ties.,- %egislative history is isleading because soething to su!!ort everyones vie).

3- Te5t,1- #ection 1 !rohibits Bcontract? cobination in the for of trust or other)ise? orcons!iracy? in restraint of trade.

,$- ReKuires t)o actors.,- Fholly o)ned subsidiary and holding co. not subject to this rule.

,"- #ection " !rohibits ono!oly.,$- #ection " does not reKuire joint action +ore than one actor,.,- >ot a status offense. Prohibits ono!oli@ing +verb,.

,/- #ection " is ore liberal +doesnt reKuire joint action, but only !unishes ono!oly?)hereas section 1 is narro)er +reKuiring joint action, but a ere Brestraint of trade is

!unished.,- Original section 4 !rovided a !rivate right of action $ treble daages.

. 1<1 Cl$)to! A%t

$- *ore Aggressive

- #ection " !rohibits Price -iscriination +largely re!laced by Robinson;Patan Act,%- #ection !rohibits certain fors of e5clusive dealing +still on the boo8s and active,3- #ection / +Hery I!ortant Reedially,.

,1- Private !erson injured in business or !ro!erty by reason of antitrust ay sue for trebledaages $ attorneys fees.,"- 'annover+, =# # Ct held that retailer could sue for overcharge even if !rice increase)as !assed on.,/- 1<88 Ill!o( B#%=. 'eld that consuer Bindirect !urchaser could not sue. #tatesres!onded by !assing legislation Bre!ealing Illinois &ric8 and !eritting action in state courtfor indirect !urchaser.,- A((o%$te3 Ge!e#$l Co!t#$%to#(. Only indirectly injured co!etitor can sue +not theinvestors,.

4



e- #ection 6 labor not a coodity. Intended to shield labor unions.f- #ection 4 e5tends AE% to cor!orate ergers in soe cases )here not ono!olistic.'- #ection !rohibits interloc8ing directorshi!s.

2. 1<1 Fe3e#$l T#$3e Comm((o! A%t

$- H9mph#e)0( E:e%9to#. Peritted Congress to establish a !osition not reovable by !resident.- Se%to! ". =nfair co!etition unla)ful $ coission e!o)ered to enforce.

5. DOJ & FTC e$%h h$( po*e# to e!fo#%e $!tt#9(t.

$- Coe5tensive authority.- Currently? inforal division of labor.

8. 1</5 Ro!(o!>P$tm$! A%t ,3e$lt *th p#%e-

$- *ost reviled antitrust la) today.- Created buyer liability.%- &uyer ust sho) that the discount is !ro!ortional to the savings fro dealing in greater volue.&ecae difficult to !rove cost justification defense.3- *ore concerned about sall bi@.

;. 1<24 Celle#>7ef$96e# A%t

$- (5tended antitrust la) to +asset acKuisitions,- Old #ection4 only a!!lied to co!etitors. Aendent ade it clear that vertical or congloerateergers could be the subject of A%.

<. 1<85 H$#t>S%ott>Ro3!o

$- Pre;erger notification syste. *ergers becoe re!ortable and ust be re!orted !rior to closure

- Only a!!lies to stock acKuisitions not asset acKuisitions.%- -oes not a!!ly to joint ventures.3- 2;day )aiting !eriod.e- Prior to end of 2 days 9TC or -O: can issue the +-R(A-(-, )ords Bsecond reKuest.

,1- &urdensoe,"- Prevents closure until reKuest fulfilled

f- >ot an a!!rovalEclearance statute. (ven if Bcleared? not iuni@ed fro suit by gov or !rivate !arties.

D. EARLY LEGAL DOCTRINE? CARTEL CASES ,21-

1. I((9e(

$- C%- RoR %- %o)er PricesE#all -ealersEForthy *en

3- >a8ed v. Ancillary". US 6. T#$!(>+((o9# F#e'ht A((0! ,US 1;<8- No ROR.

$- 'eld? the freight assn.s !rice;fi5ing schee violated the #heran Act not)ithstanding that it )asfound by the TC to !roote Bfair and healthy co!etition.- Reasoning

,1- &y driving out the Bsall dealers and )orthy en? !rice;fi5ing schees that reduce !rices can ultiately har co!etition and thus violate the #heran Act.,"- (5!licitly rejected a rule of reason a!!roach.

%- %ater cases conclude that? to the e5tent Trans;*issouri rejected the Rule of Reason? it is no longer good.

/. US 6. Jo!t T#$ff% A((0! ,US 1;<;-.

$- P(c8ha retreated fro *issorui 9reight and recogni@ed ancillary restraints as acce!table.

. H(to#%$l Co!te:t ,Comme#%e Cl$9(e-?$- 1720 %ochner v. =#. %iiting sco!e of gvt !o)er under the coerce clause #)itch in

Tie that #aved 7.- (C 3night suggested that anufacturing )as outside the coerce !o)er.%- &y 1720? in antitrust conte5t coerce !o)er is not so hotly dis!uted.

2. A33)(to! Ppe ,1;<;-

$- 9acts. Agreeent to fi5 !rice of !i!e according to geogra!hic regions. Prices 022 iles a)ay)ere less than !rices in areas nearby the foundry.- Reasoning

,1- -istinguished direct v. indirect restraints,"- >evertheless the restraint )as void at cl.



,/- =nli8e (C 3night? this involved inter state coerce in restraint of trade.5. Re(t#%t6e Co6e!$!t(? Re(t" 7 ,1<;1-? Re$(o!$le!e((

$- >o co!ete !roise unreasonable if ,1- Greater than needed,"- Proisees need out)eighed by hardshi! to !roisor

- Halid ancillary !roises include,1- >o co!ete )Esold bi@,"- (!loyeeEe!loyer !roise,/- Partner !roise

%- Courts loo8 at three factirs,1- Geo area,"- -uration,/- #co!e

8. St$!3$#3 Ol ,1<11-

$- Roc8efeller $ 41 other - oil cos charged )ith cons!iring to ono!oli@e and restrain trade in oil- 'eld? standard oil ust be dissolved.%- Reasoning

,1- Princi!le (vil of the Cobination,$- Po)er to fi5 !rices and injure the !ublic,- Po)er to liit !roduction,%- -anger to reduced Kuality

;. US Steel$- A!!lied ROR to consolidation case and u!held.

<. Ame#%$! To$%%o

$- Affired use of ROR.II. CHAPTER / +AR7ET STRUCTURE AND +ONOPOLY PO@ER

A. +AR7ET PO@ER RELEVANT +AR7ET +ONOPOLIATION

1. / 9e(to!(

$- 'o) easure 8t share- Fhat share gives rise to ono!oly !o)er%- Given ono!oly !o)er? )hat conduct )ill the la)s tolerate

". US 6. Al9m!9m Co. of Ame#%$ ,"3 C#. 1<2-.

$- 9acts. Alcoa accused of ono!oli@ing anufacture and sale of Bvirgin aluinu ingot. adedeal )E!o)er cos not to deal )Eco!etitors? etc. Resulted in 171" consent decree. Alcoa had 72Q of

the ar8et in virgin ingot. It faced co!etition fro foreign i!orters? )ho faced soe disad due totariff !rices.- Reasoning

,1- P !roved 8t share +doestic 8t,.,"- It )as for - to !rove no abuse of the !o)er.,/- *oreover? lo) !rofits not a defense bEc la@y ono!olist ay have consued itsono!oly rents.,- Alcoa Bono!oli@ing by constantly redoubling ca!acity in order to absorb ne) deandand !reclude entry of co!etitors into the ar8et.

%- -iscussion,1- Relevant *ar8et< 'o) -eterine Fhat 9actors

,$- Product

,- #u!!ly,%- Geogra!hy,"- Gvt argues that Alcoas balance sheet +!rofits, deonstrate that it is a ono!oly. 'and<Profits is a bad )ay to !rove ono!oly because the la@y ono!olist ay have consued itsono!olist rents.,/- 'and suggests that ca!ture of 72Q of ar8et share is to ono!oli@e. 'o)ever? if theono!oly is obtained through s8ill? foresight and industry? the,- Fhat Alcoa -id Frong< BPredatory InvestentCrane,2- Alcoas investent in ca!acity )ould have been irrational +inefficient, but for the factthat such e5cess ca!acity )ould e5clude ne) entrants.

7



,5- Current Test at -O:< B#acrifice Test. Fould an investent be irrational but for the factthat it )ould result in e5clusion of co!etitors.

/. 39 Po!t ,US 1<25-Celloph$!e C$(e >> #ele6$!t m$#=et

$- F$%t(. duPont controls 72Q of the =# ar8et in cello!hane sales. It bought the e5clusive right toar8et fro its 9rench inventor.- I((9e. Fhat is the relevant 8t BCello!hane or all Bfle5ible !ac8aging aterial.%- Hel3? no ono!oly bEc relevant 8t is fle5ible !ac8aging aterialsM duPont cannot ono!oli@eand raise !rices because it faces co!etition fro other Bfle5ible !ac8aging aterials.3- Reasoning

,1- Court< BThe ultiate consideration in such a deterination is )hether the defendantscontrol the !rice and co!etition in the ar8et for such !art of trade or coerce as they arecharged )ith ono!oli@ing. This is the fallacy.S,"- Fhat factors define the relevant ar8et

,$- Reasonable interchangeability,- Cross;(lasticity of -eand

,- This refers to increase in !rice acco!anied by a change in deand.

,- If 122Q change in !rice 10Q deand then there is a 1.0 elasticity.

Generally? if 1 then deand is Belastic.e- -issent

,1- #!ecialists )ould disagree that there is a substitute for cello!hane.,"- The other !roducts do not co!ete for !rices< )hen the !rice of cello!hane fluctuated?

the other !roducts should change also if they are co!eting. They did not change along )ithcello!hane.

f- Analysis< The Cello!hane 9allacy,1- (lasticity is the FRO>G *(A#=R( O9 A *O>OPO%.,"- Profit has already been increased to the !rofit;a5ii@ing level +ono!oly !rice,. Anyfurther increase )ill drive consuers to other !roducts +the !rice has reached the !oint )hereother)ise non;substitutes becoe viable,.,/- If du Pont is already charging ono!oly !rices? there is elasticity of deand,- At soe !rice there is a !rice for everything +in other )ords? there is al)ays elasticity ofdeand,.

. I!t0l Bo:!' Cl9 ,1<2<-.

$- Cha!ionshi! bo5ing fights are not the sae relevant ar8et as regular fights.2. S)9f) E!te#p. 6. A+C ,<th C#. 1<;5-.

$- Hel3? no error in concluding that the relevant ar8et in the #an :ose area )as Bindustry

anticipated to!;grossing fils.- (ven in the absence of hard evidence sho)ing cross;elasticity of deand? the jury could !ro!erlyconclude that such fils )ere not in substantial co!etition )ith each other.

5. +%#o(oft

$- *iddle)are and non;PC o!erating systes e5cluded fro the relevant ar8et because they)erent Breasonably interchangeableM users )ouldnt realistically s)itch over and they didntconstrain !rices on )indo)s

8. G#!!ell ,1<55- " +o!opol$to! of Se%9#t) +$#=et

$- Hel3 Grinnell violated D " by Bono!oli@ing the ar8et for accredited central station !rotectionservice.- Reasoning

,1- Relevant *ar8et.,$- Accredited central service stations.,- Although soe co!etitors? they did not have sae Kuality or effect ononsurance !reiusM soe consuers )ould be si!ly un)illing to s)itch. Thus?

!er du Pont? they )ere not Breasonably interchangeable.,"- Relevant Geogra!hic *ar8et.

,$- *ajority,- >ational.,- &i@ +rates? accreditation? etc, is conducted on a national level.

,- -issent<

12



,- The geogra!hic 8t gerryandered to fit -s bi@. Relevant geo 8tshould be deterined by loo8ing to the consuers available alternatives.This is %OCA%.,- The actual bi@ is by its nature locally !rovided.

,/- *ono!oly Po)er ,$- -s control 4Q of the relevant 8t.,- Products are not reasonably interchangeable due to the i!ortance ofaccreditation and the su!erior Kuality of central station !rotective servicesM soeconsuers )ont s)itch.

,- P#olem He#e. -ont 8no) if Grinnell can act li8e a ono!olist just

because soe sub;grou! )ont s)itch to another !roduct. >eed other info.

,- A#t#$'e. &uying and reselling to undercut the ono!olists !rice

)here ono!olist tries to !rice discriinate and charge Bca!tive ar8et aono!oly !rice.

,%- The doinance )as acKuired largely by unla)ful e5clusionary !ractices<

,- >o;co!ete ar8et division

,- Pricing,- AcKuisitions by Grinnell of co!etitors

,- Reme3)? -ivestiture.,$- -issent< The reedy is local divestiture? )hich illustrates that the choice of a

>ATIO>A% ar8et )as )rong.

;. A((e((!' +=t Po*e#$- Tie- &arriers to entry.

,1- Potential entrants ay constrain 8t !o)er.%- Countervailing buyer !o)er.3- Conduct evidence

<. DOJFTC +e#'e# G93el!e( 14/>14"

$- >ot la)< #tateents of enforceent intentions.- 9irst Kuestion is? B)hat is the relevant ar8et%- *ar8et -efinition 9ocuses solely on -eand #ubstitution 9actors

,1- This eans that the Grinnell a!!roach is rejected to the e5tent it focused on su!!ly side.,"- #u!!ly considerations are still relevant to ergers? but not the deterination of the

relevant ar8et.3- Def!to! 14/2. A ar8et is defined as a or grou! of !roducts and a geogra!hic area in )hich itis !roduced or sold such that a hy!othetical !rofit;a5ii@ing fir? not subject to !rice regulation?that )as the only !resent and future !roducer or seller of those !roducts in that area li8ely )ouldi!ose at least a Bsall but significant and nontransitory increase in !rice? assuing the ters of saleof all other !roducts are held constant.e- P#o39%t +$#=et Def!to!.

,1- Fould sall nontransitory !rice increase be !rofitable If no? the reason ust be becauseconsuers )ould s)itch to an alternative !roduct. Therefore? find the ne5t best substituteand add it to the relevant ar8et. Fhat if single su!!ly controlled both? and i!osed anontransitory !rice increase If not !rofitable? add in the ne5t substitute? and continue untilthe ans)er is Byes. All substitutes have been included in the ar8et.

f- This is an analytical a!!roach still any variables but at least a res!ected a!!roach.

'- Geogra!hic *ar8et -efinition sae a!!roach as aboveM 8ee! adding ar8ets.h- 1.1" Product *ar8et -efinition in the Presence of Price -iscriination- 'ave the *erger Guidelines Coitted the Cello!hane 9allacy

,1- >o? because they deal )ith ergers in the future. Thus? !resuably here the firssee8ing to erge are not yet !erforing at a ono!oly level.,"- *erger Guidelines As8< Fill this a8e things )orse

- a!!roaches to ar8et definition< Cello!hane? Grinnell? *erger Giuidelines,1- If the Kuestion !resents a future erger issue? follo) guidelines.,"- If it is an atte!t case?,/- If alleging actual ono!oly? ho) do it

,$- #ee Posner 101 +,.

11



,- #ee Authors !. 171. B'unt and Pec8 A!!roach.III. PRICE FIING AND DIVISION OF +AR7ETS SHER+AN 1.

A. CONSPIRACY IN THEORY AND ACTION

1. Co!3to!( F$6o#!' C$#tel(

$- %o) cost of organi@ing- %o) nubers of firs%- %o) !rice elasticity at co!etitive !rice3- -urability

". B$##e#( to E!t#) $!3 Competto!

$- #lo) s!eed of entry- #un8 costs%- Cost and deand -isads

,1- Patents and licenses,"- #carce resources,/- Product differentiation +consuer loyalty,

3- (conoies of scale/. @h$t ( *#o!' *th p#%e f:!'K

$- #ee "26 Aerican Airlines. Fe are )orried that? by their agreeent? they )ill behave as aono!olist.- There is still an incentive to cheat on the !rice;fi5ing agreeent. The higher !rice )ill reducedeand. Thus? there is an incentive to reduce !rices a little to ca!ture the deand that )as lost as a

result of the higher !rice.%- One vie) is that cartels colla!se under their o)n )eight very Kuic8ly.

,1- >ot clear that this is al)ays so.,"- Also? a short ter injury.

. Ge!e#$l P#!%ple(

$- 'ighly concentrated ar8ets are ost susce!tible to collusion because it is easier to !olice asaller nuber of firs.- -eand;(lasticity. (asier to !olice )here deand is in;elastic.%- &arriers to entry

,1- 'igh cost to entry.,"- *a5iu Hiable #cale. *ust o!erate at high efficiency to be !rofitable,/- Governent Regulations. (5< Uoning regulations.

B. DEVELOP+ENT OF THE PER SE RULE ON PRICE FIING

1. Ch%$'o Bo$#3 of T#$3e 6. US ,US 1<1;- Ree%t!' Pe# Se$- F$%t(. Three ty!es of grain sales< #!ot sales? 9uture sales? #ales Bto Arrive. The &oard had arule restricting the !eriod of !rice;a8ing. &ids on Bto arrive grain could only be at the closing

!rice. Gvt. #ues to enjoin enforceent of the call rule.- Hel3. The restraint is !erissible and effectuated the creation of a ore effective !ublic ar8etfor Bto arrive grain.%- Reasoning

,1- All regulation restrains. 'ere? the regulation erely regulates the conduct of traders )ithout su!!ressing co!etition.,"- BCreated !ublic ar8et and leveled !laying field.

,$- &ut? cartels al)ays level the !laying field and !erit inefficient !roducers toco!ete. Perha!s &randeis is really trying to !rotect the less efficient little guy.

,/- B&rought buyers and sellers into direct relations.,$- This doesnt ean ore efficient.,- B-istributed grain aong ore receivers and erchants

,$- &ut? cartels often distribute to ore !eo!le.,2- B(liinated ris8s incident to a !rivate ar8et

,$- Perha!s &randeis eans that sall country dealers can no) give a confidant+and higher, !rice to the farer. This ay be inefficient.

3- Class.,1- The governents failure to do ore to allege the negative effects of the rule +they argueda !er se rule, eant that the &oards assertions )ere uncontested. Oddly? &radeis didntreand for consideration of the Rule of Reason and ore evidence at the trial level.

1"



,"- -idnt ta8e the *ichel v. Reynolds a!!roach. Instead? the test is )hether the restraintBerely regulates co!etition or )hether it Bsu!!resses or destroys co!etition.,/- This ay be right on its facts? its a good stateent of the rule of reason? but unclear ifreally correct due to !rocedural !osture.

". So%o!)>V$%99m Ol ,US 1<4- Pe# Se R9le? P#%e F:

$- Retail !rices for gasoline )ere custoarily !egged to the Bs!ot ar8et for gasolinethe ar8etfor sur!lus gasoline at distressed !rices. The defendants had a coordinated !rogra of buying in thes!ot ar8et )hich had a stabili@ing effect. =nder the agreeent? ajor co!anies had a Bdancing

!artneran inde!endent refiner fro )ho they !urchased the distressed gas at the going ar8et !rice. The effect )as to establish a Bfloor belo) the distressed gas ar8et and stabili@e gas !rices.- Class.

,1- Interesting change in the vie) of co!etition.,"- >atl Recovery Act delegation by President. #ubseKuently? the statute invalidated.

Coittee )ent on to do its )or8 any)ay. Thus? vie) of legality of coo!eration changed inthis !eriod.,/- -ouglas atte!ts to distinguish A!!. Coal.

,$- B>ot directly affecting consuers in a!!. Coal. &ullshit< +1, 9actually )rong? bEc in #ocony not direct to consuers? either and +", even if there arent directeffects? they )ill ri!!le to the consuer.,- B(ffect conjectural and court retained jurisdiction in A!!. Coal. &ut -ouglascontradicts hiself later.

,- #ee "1. Price fi5ing is !er se unla)ful.,$- 'e clais for forty years !rice;fi5ing )as !er se illegal? but Chicago &oard ofTrade )as a legal !rice fi5.

/. B$(% D%hotom)? Pe# Se 6. R9le of Re$(o!

$- Per se in #ocony very rigid.- >o)? ho) decide )hether !er se or rule of reason a!!lies%- *ichel v. Reynolds Ancillary v. >a8ed. Proble< they dont !erfectly enco!ass the cases.3- #ocony arguably erely regulated and rationali@edV)hy !er see- Proble )ith defining !rice;fi5ing

,1- Chicago &oard of Trade $ A!!alachain Coal. &oth literally involved !rice;fi5ing.,"- #ocony did not literally involve !rice;fi5ing.

. Le$#!e3 P#ofe((o!(

$- >atl #ociety of (ngineers +174,,1- 'eld? an absolute ban on co!etitive bidding )as !er se unla)ful. Fhile co!etitionay lead to unethical conduct? a total eliination of co!etition )as i!erissible. RORdoesnt !erit a defense that co!etition itself is unreasonable.

- A*A v. 9TC +172,.,1- Per se did not a!!ly to A*As rule against !rice advertising? but under ROR total ban on

!rice ads )as i!erissible. 'o)ever? the court of A!! affired a !roviso in the order thatauthori@ed the A*A to regulate dece!tive ads.

2. B+I 6. CBS ,US 1<8<- Ch$#$%te#$to! of Bl$!=et L%e!(e? Ne* P#o39%tNot Per Se

$- 9acts. A#CAP and &*I L licensing clearinghouses. &*IEA#CAP held e5clusive right to licenseartists )or8. Per a consent decree? they ceased issuing blan8et licenses only and began !erittingindividual licensing negotiations. "d circuit agreed that it )as !rice;fi5ing.- Issue. Fhether this should be invalidated as per se !rice;fi5ing.

%- Class<,1- C&# sought either +1, an injunction directing A#CAP and &*I to a8e licensesavailable at standard !er;use rates )ithin negotiated categories of use or +", if that or blan8etlicensing constitutes !rice;fi5ing? C&# sought an injuction against all blan8et licenses.

,$- This strategy shoots cbs in the foot. If they actually !refer to 8ee! soe as!ectsof the blan8et license? then that is evidence that the !er se rule is the )rong a!!roachto ta8e.

,"- -oes the court 8no) enough about the !ractice of blan8et licensing to a!!ly the !er serule,/- Fhite< There is no !rice;fi5 because the !roduct is the license? not the individual )or8s.&*I is the !roducer of the !roduct.

1



3- Ta8e;A)ays,1- Practicality.

,$- C&# doesnt as8 for a total ban on blan8et licensing. This concedes that the blan8et licensing is useful. Therefore? the !er se rule is ina!!licable.

,"- Chicago #chool.,$- Out!ut;focused.

,/- %egal Point,$- Characteri@ation Baround the !er se rule< the blan8et license is a ne) !roduct.

e- #tevens -issent.,1- Fould have a!!lied ROR.

5. The 9%= Loo=

$- The role of other +non;econoic, justifications- The Kuic8 loo8 arises ost in cases that arise at the argins of coercial activity.

8. NCAA 6. Re'e!t( of U. of O=l. ,1<;- 9%= Loo=

$- (ach net)or8 !aid a !re;set lu! for 1/ gaes. The net)or8s Bnegotiated )ith the individualschools for televised gaes? but each school )as liited to a certain nuber of televised gaes and

!rices )ere set by the >CAA. The schools )ere forbidden fro negotiating )ith anyone else fortelevising gaes.- 'eld

,1- The >CAAs !lan violates the #heran act.%- Reasoning

,1- >ot a!!lying the !er se a!!roach bEc of the i!ortant role hori@ontal agreeents !lay in !reserving the s!ecial character of college football.,"- This is a !rice;fi5ing agreeent< Prices are 8e!t higher because out!ut is restricted.,/- Consuers are hurt because less gaes are televised. The su!!ly does not res!ond toconsuer deand.,- Fhere there is an agreeent not to co!ete in ters of !rice or out!ut? no elaborateanalysis of ar8et !o)er is necessary to deonstrate the antico!etitive character. #ee !."0 $ 9ootnote 04. BThe rule of reason can soeties be a!!lied in the t)in8ling of an eye.,2- It thus falls on - to coe for)ard )ith an affirative defense.,5- =nli8e &*I? here !roduction is liited? not increased.

3- -iscussion,1- >CAA argued

,$- that it )as !rooting live attendance by restricting television coverage.

,- that it )as !rooting aateuris and co!etitive balance.,"- #hould the non;econoic values advanced by >CAA by a defense to an antitrust action

,$- Generally? )hat if an institution is totally non;!rofit,/- -oes the court do a full ROR analysis >O.

,$- #ee 9> 04 BROR a!!lied in t)in8ling of an eye.,- 'o)ever? if - can sho) soe !ro;co!etitive 9N full ROR analysis.

;. US 6. B#o*! U. ,/3 C#. 1<</- 9%= Loo= !ot S9ff%e!t

$- *IT and other to! schools agreed to offer financial aid solely on the basis of need? therebyeliinating financial aid +and thus? tuition cost, as a !oint of !rice co!etition aong Ivy leagueschools. It advanced other? non;econoic justifications +the !rootion of diversity and egalitarianaccess, in defense of the BOverla! !rogra.- 'eld? reanded for a full BRule of Reason analysis.

<. C9##e!t 6e* of FTC M DOJ /./5,- Coll$o#$to! G93el!e($- BReasonably necessary need not be essential.14. C$lfo#!$ De!t$l ,1<<<- Ree%t!' 9%= Loo= M Rem$!3!'

$- California -ental Association !laced restrictions on its ebers ability to advertise< no !rice orKuality inforation or false or isleading info. C-A argued that it !rooted full disclosure. Adinla) judge held that there )as no ar8et !o)er but that there )as no ar8et !o)er sho)ing reKuired.- 7th Circuit

,1- A!!lied uic8 %oo8< Obvious antico!etitive effects because restricted truthfuladvertising.,"- Increases costs by increasing search costs.

1/



,/- :ustification )as that !rooted truth< A%: ade no such finding so theoretically C-Ashould lose at this !oint.

%- #u!ree Court,1- This is an a!!ro!riate subject for 9TC Act +it is governed by antitrust,. The C-A

!erfors an i!ortant econoic service for its !rofit;a8ing ebers.,"- uic8;%oo8 +"2, triggered )hen an observer )ith a rudientary understanding ofeconoics could conclude that the arrangeent )ould have antico!etitive effects onconsuers and ar8ets.,/- In this case? the antico!etitive effect? if any? is not sufficiently verifiable to be the basisfor such a general rule.,- Therefore? the burden reained on the 9TC to !rove that the rules )ere antico!etitive.

,$- They did not eet this burden. #ee "/.11. Step( of the ROR

$- P Pria 9acia,1- P sho)s restraint,"- %i8ely to have antico! 9N,/- *ar8et !o)er or actual antico! 9N

- -,1- >o antico! 9N or no 8t !o)erM rebutting above? andM,"- Offsetting !roco! 9N

%- P< %ess restrictive alternative

1". 9%= Loo= $- P alleges restraint

,1- Court iediately sees that the restraint is !robleatic- - ust iediately s8i! to -s +", above and sho) !roco!etitive 9N.

,1- If - is successful? bac8 to Ps +", above and do ROR.

10



%- Lt'$to! Tp< Al)ays !lead in the alternative< !er se? ROR? Kuic8 loo8. Courts )ont give youa second bite at the a!!le.

1/. D3 9%= loo= 3e ! C$l De!t$lK

$- Cal8ins< One vie)< Hindication for Kuic8 loo8 bEc #C did not reKuire sho)ing of 8t !o)erV+Crane not agree,M- (llen *ees< 9are)ell to the Kuic8 loo8. Relic of !o!ulist !astM econoic theory no) recogni@esany restraints as !rooting co!etition. Therefore? ROR al)ays necessary.%- 9TC oving to)ards ROR.

C. TERRITORIAL DIVISIONS M OTHER RESTRAINTS

1. No!>P#%e Ho#o!t$l Re(t#$!t(

$- Agreeents not directly !ertaining to !rice- Agreeent bE) co!etitors

". N$t0l A((0! @!3o* Gl$(( +f'(. 6. US ,US 1<"/-

$- - )ere fgs of )indo) glass. They did it by hand )hich )as uch ore e5!ensive andinefficient. They agreed on a division of the labor force in order to 8ee! their ailing industry alive.- Hel3? the cobination )as not an unreasonable restraint of trade.%- >ote< This case is incredibly fact;s!ecific.3- Price;fi5 v. 8t division. &ut 8t division has even ore severe f5 on co!etition than a !rice;fi5. In !rice;fi5? firs still ust co!ete on non;!rice factors.

/. Tm=e! ,US 1<21- Be$#!' +f'(. Vol$te3 She#m$!

$- Allocation of trade territories? fi5ed !rices in territories of co!etitors? coo!eration to e5clude

co!etitors and liits on i!ortsEe5!orts violated # act.. US 6. Gm ,1<55- E:%l9(6e De$l!'? E:%l9(o! of D(%o9!te#(

$- Agreeent by dealershi!s not to conduct business )ith discounters violated the #heran Act.- This )as a classic cons!iracy in restraint of tradeM an agreeent bet)een dealers designed toeliinate a class of co!etitors.

2. US 6. Se$l) ,1<58- U!l$*f9l Te##to#$l Re(t#$!t(

$- 2 anufacturer;licensees of the #ealy nae )ere also the shareholders of #ealy. Theyestablished territorial restraints.- 'eld? the -Cs finding that the restraints )ere not unreasonable reversed. The territorial restraints)ere illegal because they !eritted the licensees to aintain !rices in there area free of co!etition.

5. Top%o ,US 1<8"- Te##to#$l Re(t#$!t( Pe# Se Ille'$l ,$3 l$*K-

$- To!co )as organi@ed as an association of inde!endently o)ned grocery stores. It enabled the to buy goods collectively? etc.. 'o)ever? the organi@ation also !laced restrictions on locality.

- -C 9indings,1- Average 8t share of co!anies )as 6Q... >ot really ono!olist !o)er.,"- (5clusive territory essential to the success of To!co,/- To!cos branding co!eted )ith the big su!erar8et chains,- Fhatever antico!etitive effects intra;brand? greatly offset by gains in inter ;brandco!etition.,2- Invalidation of the restraints )ould not increase intra;brand co!etition,5- The relief sought )ould substantially diinish co!etition in the su!erar8et ar8et.

%- *ajority,1- 9> 7/ +12,. Abandonent of the !er se rule )ould leave courts free to rable throughthe )ilds of econoic theory.,"- Contrast )ith Addyston Pi!e? Bsetting sail on a sea of doubt. In Addyston? ho)ever? the

litigants )anted the court to evaluate the reasonableness of price. 'ere? *arshall is sayingthat the court doesnt )ant to evaluate the reasonableness of the practice.

3- Fhat if &*I )as on the boo8s at the tie this case )as decided,1- They are creating a uniKue ne) !roduct +a sei;national brand,. #ee &urger W 1".

e- Fhat is To!cos econoic justification,1- &rand !rootion and !reventing free riders. (5clusive territories !revent free ridersfro ca!turing benefit of other To!co stores advertising.,"- (ven if To!co is right that the !lan !rootes the brand and this is a !ro!er objective ofantitrust la)? did To!co use the least restrictive ethod +see 0 ste! a!!roach,,/- -C )ould have ended e5clusivity but !eritted an arrangeent )here ne) entrant to aterritory )as reKuired to contribute to the advertising budget of the other store.

16



f- Posner on To!co. BTo!co dead as dodos.8. Ge!e#$l Le$(e*$)( ,1<;- +e#e E%o!om) of S%$le Doe(!0t S$6e Re(t#$!t

$- 'eld? association of sall truc8 leasing and service co!anies violated #heran Act byestablishing territory reKuireentsM econoies resulting fro reci!rocity aong association ebersdid not justify eliinating all co!etition aong the. 'ere? the ebers could have continued toe5tend reci!rocity )ithout liiting co!etition.

;. P$lme# 6. BRG of Geo#'$ I!%. ,B$#B# C$(e- ,1<<4-.

$- &RG and '&: )ere the t)o !roviders of !re! courses in Georgia. They agreed to allo) one tohave all of Georgia? and the !rice iediately )ent fro 102 to /22. 'eld? invalidated under !er serule )ithout oral arguent.

IV. GROUP REFUSALS TO DEAL ,BOYCOTTS- AND JOINT VENTURES

A. REFUSALS TO DEAL

1. Ge!e#$l

$- -uty of ono!olist to coo!erate. Co!are )ith Alcoa? )here 'and observed that Alcoa neveraided less doinant firs. &ut 'and )as res!onding to Alcoas assertion? not saying that failure tocoo! L ono!oly.- -uty by joint venturersEtrade association to adit all or deal on sae ters

". +o!t$'9e 6. Lo*#) ,1<4- Tle +f'#(? No De$l *No!+eme#(

$- F$%t(. Tile anufacturers !rohibited dealing )ith nonebers e5ce!t at the inflated Blist !rice.- 'eld? the restraint is illegal under D 1.%- Reasoning

,1- Tile anufacturers argued ebershi! )as o!en. Tile association could arbitrarilyrefuse ebershi! and there )as an incentive for e5isting ebers to e5clude a!!licant;co!etitors.

,$- &ut )ho cares if ebershi! is o!en Isnt that just an o!!ortunity to collude inviolation of section 1

/. F$(ho! O#'!$to#(0 G9l3 6. FTC ,US 1<1- Bl$%=l(te3 St)le Cop)(t(

$- The guild anufacturers aintained a blac8list of retail firs )ho carried the !roducts of Bstyle;co!yists. The guild ade u! about Q of the ar8et and )as co!osed of any of the industryleaders.- Hel3? the coission correctly concluded that this )as an unfair ethod of co!etition.%- Reasoning

,1- It narro)s the outlets available for the resale of anufacturers goods? and subjectsnonco!lying retailers and anufacturers to an Borgani@ed boycott.,"- In addition to the e5clusionary agreeent? the guild regulated discounts +!rice;fi5ing,?

!rohibited advertising? and denied ebershi! to anufacturers conducting fashion sho)sunless the erch is actually sold and delivered. *any of these !olicies bore no relation toobjective of !reventing style co!ying.

3- -iscussion,1- Pre;%anha act.,"- 'o) do )e cabin this rule so as to liit absurd results +for e5a!le? a violation ofantitrust )here daycare centers agree not to hire se5 offenders,.,/- The rules relied u!on characteri@ation as B!iracy and the e5clusion of co!etitors +therule )as closely related to the econoic interests of 9OGA,.

. 7lo#0( ,US1<2<- G#o9p Bo)%ott( Pe# Se Ille'$l ,9!3e# "-

$- F$%t(. &oth !arties o!erate de!t stores. &road)ay;'ale +-, reaches agreeent )Eits su!!liers

that they )ill not sell to 3lors. 3lors argues that the agreeent )as !er se illegal under sections 1 J" of the #heran act.- Hel3? the trade restraint is i!erissible.

,1- It de!rives anufacturers and su!!liers of their freedo to sell to 3lorsM it interferes)ith the Bnatural flo) of interstate coerce.,"- #uary judgent for &road)ay;'ale reversed and reanded for trial.

%- Reasoning,1- Grou! boycottsEconcerted refusals to deal are in the forbidden category of conduct that?

by its very nature? is unduly restrictive and outla)ed by the #heran Act. +Is this !er se,3- -iscussion

,1- This case i!licates the free rider !robleM !otentially 3lors )as free;riding.

14



,"- G( could )ant to deal e5clusively )ith &;' in order to encourage &;' to actively !roote G(s !roducts.,/- Criticis of 3lors is that it doesnt allo) the facts to be heard )here there ay have

been a good !roco!etitive justification for the restraints.,- I!ortant to vie) this as a hori@ontal caseM &road)ay;'ale induced a hori@ontalagreeent aong anufacturers in order to defeat its co!etitor.

2. N)!e: ,US 1<<;- No Pe# Se R9le @he#e B9)e# Choo(e( Othe# S9pple#Re'$#3le(( of Re$(o!

$- After ATJT brea8u!s call;s)itching eKui!ent had to be re!laced and u!dated. P +-iscon, !rovided these Breoval services to >yne5? the local !hone co!any. P alleged that >yne5 )or8eda fraud on consuers and the governent by !aying inflated !rices to Ps co!etitors in the reovalservices business. #ubseKuently? >yne5 )ould receive a rebate )hich aounted to an e5cess of

!rofits. Fhen P refused to !artici!ate in the fraud? >yne5 refused to deal.- 'eld

,1- >o boycott;related !er se rule a!!lies hereM P ust allege and !rove har? not just to aco!etitor? but to the co!etitive !rocess itself.,"- -istinguished 3lors< =nli8e 3lors? this is a !urely vertical agreeent bet)een asu!!lier and a custoer.,/- -istinguished 9OGA< A grou! boycott by co!etitors on third !arties.,- There is virtually no barrier to entry in this ar8etM local !hone co can do the )or8 itself.

%- -iscussion,1- Consuers are clearly hurt here? if the allegations are true. Seems li8e it should be an

antitrust event.,"- 'o)ever? this doesnt hurt co!etition itself. There is still co!etition? but as to this

!articular buying decision the effect hurt consuers by defrauding regulators.5. R$3$!t B9#!e#( ,US 1<51- Ref9($l to S9ppl) G$( to No!>AGA>App#o6e3 B9#!e# Pe# Se Ille'$l

$- A Gas Assn. set standards for radiant burners and refused to license Ps burner. The AGA testsare not set according to objective standards? but are influenced by the AGAs eberssoe of)ho are Ps co!etitors. *eber gas su!!liers refused to su!!ly gas to burners that lac8 the seal.This allegedly ade it i!ossible to sell the burner and P )ent out of business.- Hel3? the cons!iratorial refusal to su!!ly gas )as aong the Bclass of restraints )hich fro theirnature or character are unduly restrictive? and hence forbidden.

8. St#9%t9#$l L$m!$te( ,<th C#. 5;- Uphol3!' P>*oo3 St$!3$#3.

$- uality standards set by Ply)ood Assn. )ere routinely !ublished by -e!t. of Coerce andcertification becae essential to the !ly)oods saleability.

- Hel3? ere ado!tion of a standard that discriinates bet)een !roducts is not !er se illegalviolation!articularly )here standard is !art of a Congressionally sanctioned schee. P failed tosho) that the standard )as either unreasonable or ado!ted )ith evil intent.

;. N$t0l S$!t$to! A((!. ,5th 1<;4- Uphol3!' St$!3$#3(.

$- Hel3? absent anifestly antico!etitive and unreasonable conduct? alleged boycotts arising frostandard;a8ing or even industry self;reguilation did not violate #heran Act. =nifor standardsactually !roote co!etition.- Comme!t$to#? These standards actually ado!ted to eliinate need for innovation and to reduceco!etition fro innovative ne) firs.

<. No#th*e(t @hole($le St$to!e#( ,US 1<;2- Coope#$t6e B9)!' E:p9l(o! NOT Pe# Se

$- I((9e. Fhether a !er se violation occurs under D 1 )hen a coo!erative buying agency of retailerse5!els a eber )ithout !roviding a !rocedural eans for challenging the e5!ulsion.

- 'eld?,1- the !er se a!!roach does not a!!ly under these circustances.,"- Court )ill not !olice the !rocess of these e5clusions.

%- -iscussion +!07,,1- Cases generally involved joint efforts to disadvantage co!etitors by either Bdirectlydenying or !ersuading or coercing su!!liers or custoers to deny relationshi!s theco!etitors need in the co!etitive struggle.

,$- There ust be a hori@ontal agreeent +directed at a co!etitor,.,"- (5a!les of 'ori@ontal Agreeents

,$- Co!etitor A gets all su!!liers to agree not to sell to Co!etitor &.

1



,- >eed agreement between horizontal competitors? i.e.? a grou! of su!!liers or agrou! of retailers

,/- (NC%=#IO> $ 'ORIUO>TA% AGR((*(>T14. FTC 6. I!3$!$ Fe3e#$to! of De!t(t( ,US 1<;5-. ROR A%t9$l F No Nee3 " P#o6e +=t Po*e#

$- -entists o!!osed !ractice of sending 5;rays to insurance co!anies for revie) in order todeterine )hether a !rocedure )as the least adeKuate necessary. They collectively refused to co!ly)ith ins co!anies reKuests. The co!anies ade u! a doinant 8t !osition in several to)ns inIndiana.

- 'eld?,1- the !er se rule does not a!!ly.,"- The restraint is i!erissible under ROR analysis.

%- Reasoning,1- ROR Analysis< P#oof of Rele6$!t +=t !ot !e%e(($#) *he#e p#oof of f!3!' of

$%t9$l (9(t$!e3 $36e#(e effe%t( o! %ompetto!< Proof of relevant ar8et is intended tosho) potential for detrimental effects. Accordingly? )here there is !roof of such effects?analysis of 8t !o)er is unnecessary.,"- Proof of effect here is deeed sufficient that 5;rays )ere not !rovided to insurers inareas )here the agreeent )as in effect.,/- This is #ocony;li8e because? although !rice increases )ere not sho)n? a ta!ering )iththe ar8et )as sho)n +doesnt this cut bac8 the other )ay i.e. there arent actual effectssho)n here,.

3- -iscussion,1- #ee 66 Indiana -entists< BPer se liited )here firs )E8t !o)er boycott su!!liers inorder to !revent the fro doing bi@ )E co!etitors +FRO>GXXX,. -oesnt accuratelydescribe 3lors. This is just slo!!y language.,"- This doesnt fit the >orth)est Fholesale old of a grou! boycott that )ould justifyinvo8ing the !er se rule.,/- This case +slo!!ily, a!!lies the north)est )holesale rule +for cabining the grou! boycott

!er se rule,.11. FTC 6. S9pe#o# Co9#t T#$l L$*)e#( A((o%$to! ,US 1<<4-.

$- F$%t(. Trial la)yers agreed to refuse a!!ointent unless they )ere given an increase inco!ensation. 9TC argued it )as a !rice fi5 and boycott in violation of section 0 of the 9TCA. -Cu!held on 9irst Aendent grounds.- Hel3 #e6e#(e3. The boycott )as a Bna8ed restraint? restricting su!!ly in order to raise !rice.%- -iscussion

,1- There is a hori@ontal agreeentM but there is no e5clusion of a co!etitor. Fhy is this !ro!erly a !er se case and not ROR,"- Court says in a footnote that this is a !rice;fi5ing case.,/- -issent argues that this scre)s u! Indiana 9ederation of -entists and >F Fholesalers.,- A!!arently non;statutory labor e5e!tion )asnt argued belo). Instead? argued as a firstaendent case.

B. JOINT VENTURES ,/8;-

1. S9mm$#) QCom!' to %o!%l9(o! of 3(%9((o! of Se%to! 1 M ho#o!t$l $'#eeme!t(.

$- 'istory- #)itch to -iscussion of *8t Po)er %- #)itch to discussion of s!ecific ty!es of conduct

3- >otice a strong but liited !er se category,1- Grou! &oycotts ;;;rd big !er se category,$- %iited to instances )here both hori@ontal ag and e5clusion of a co!etitor

e- #oe verticality eergingf- >OF< :oint Hentures +stuff they ay do,

,1- Price;fi5ing,"- (5clusion,/- #ubstantial Integration of functions to develo! efficiencies

17



". @ho ( to e!eft f#om $!tt#9(tK

$- :oint ventures !resent the !ossibility that they increase efficiency and therefore increase !roducersur!lus )hile at the sae tie reducing co!etition and haring the consuer< loo8 to net gain or

!refer consuer )elfare- (5a!le

,1- Aces !re;:H cost L Y12E!re :H !rice L 1". consuers value )idget as follo)s< :+"2,&+"0, *+2,. (ach buys one? for Y6 in revenue. Y6 !roducer sur!lus $ Y7 consuersur!lus L Y/0 total sur!lus.,"- Aces !ost;:H cost L Y. Post;:H !rice Y"1. : no) doesnt )ant the )idget. & and *no) !ay Y/". Total sur!lus is Y/4. Consuer sur!lus is negative and there is dead)eightloss +because : doesnt buy,M ho)ever? the efficiency gains offset this for a net econoic gain.

/. US 6. Te#m!$l R$l*$) A((! ,US 1<1"-. E((e!t$l F$%lte( Do%t#!e

$- inde!endent terinal co!anies o!erated the connections to ferries and bridges in #t. %ouis.This )as inefficient. 1/ RR co!anies cobined to for the Assn? bought all terinal co!anies?and fored a unified syste.- Hel3? the discriinatory !ricing violated the #heran act.

,1- #uch a unified syste ust be o!erated as an Bi!artial agent.,"- The Court did not order dissolution<,/- The Assn ust

,$- !rovide !ro!rietary status or use on nondiscriinatory basis and,- abolish discriinatory charges and billing !ractices.

%- -iscussion,1- (ssential 9acilities -octrine,"- Antitrust is not a very good tool for reedying this case. Reedy for antitrust is toincrease accessM but here that )ould generate inefficiencies if they ust o!erateinde!endently. *oreover? to add ore o)ners +of the sae syste, does nothing? becausethey )ill continue to behave li8e ono!olies.

. AP 6. US ,US 1<2- +eme#(hp VetoRef9($l to De$l U!#e$(o!$le Re(t#$!t

$- F$%t(. AP is a clearinghouse for ne)s. Part of its byla)s allo)ed a eber to veto adission ofa non;eberM it also !rohibited sale of AP ne)s to nonebers.- Hel3? the byla)s )ere !ro!erly held to be an unreasonable restraint insofar as they restricted thesale of AP ne)s to non;eber co!etitors of AP ebers in the sae city? and gave AP ebers the

!o)er to veto their co!etitors adission to the AP.%- -iscussion

,1- In APs defense? they are trying to !revent freeriding by Bother local !a!ers. &ut )hy isthis a !roble if they !ay for it &ecause they )ont !ay enough to offset the co!etition inthe local ar8et. If the PI can just buy the #eattle Ties ne)s it is free riding.,"- The free rider !roble does not justify e5clusion fro ebershi! in AP. Could allo)all in? but have a byla) that !rohibited !ublication of local AP ne)s.,/- Antitrust -octrine< %ess restrictive alternatives are available.

2. Ho* $((e(( JV( 9!3e# RoRK

$- Conduct reediesV e5< becoe Bi!artial agent +Terinal RR Assn.,. Courts )ant to !reservethe efficiency gains achieved by the joint ventures.

5. SCFC ILC I!%. 6. V($ USA I!%. ,14th C#. 1<<- VISA S)(tem O7

$- Hisa byla) !rohibited adission to the Hisa syste of any co!etitor )ho )as issuing aco!etitor card +A(5M -iscover,. #ears +issuer of -iscover cards, )as refused adission to the

Hisa syste. Relevant ar8et )as sti!ulated as issuer ar8etintrasyste ar8et.- 'eld,1- Proof of ar8et !o)er )as insufficient.,"- >o evidence of antico!etitive effects.

%- -iscussion,1- #ee !.71 B!roof of ar8et !o)er is a screen )hich is often dis!ositivethis is a badstateent of the la). 9ailure to !rove 8t !o)er is often not dis!ositiveM if no 8t !o)er butP sho)s antico!etitive effects? P )ins.

"2



3- "d Circuit cae do)n the other )ay on this sae issue.

C. GOVERN+ENT ACTIONEFFORTS TO INFLUENCE GOVERN+ENT

1. E$(te#! RR P#e(3e!t( Co!fe#e!%e 6. Noe## +oto# F#e'ht Co. ,US1<51- NOERR>PENNINGTON

DOCTRINE.

$- 'eld? RR Assns !ublicity ca!aign against truc8ing did not violate the #heran Act.- Reasoning

,1- Imm9!t). (fforts to influence governent action brought about by hori@ontalagreeent are not antitrust violationsM ho)ever?

,"- (5ce!tion. There is a sha e5ce!tion to antitrust iunity that subjects the activity to#ection 1 scrutiny< )here the activity is an atte!t to directly interfere )ith co!etitiveconduct.

%- -iscussion,1- D#e%t I!te#fe#e!%e. Fhat is Bdirect interference in light of the sha !rovision,"- That if? irres!ective of the outcoe of the lobbying? the co!etitor is hared. 9ore5a!le? really just a sear ca!aign.,/- >oerr Pennington -octrine iuni@es !olitical activity.

". C$lfo#!$ +oto# T#$!(. ,1<8"- Appl)!' Sh$m E:%epto!.

$- A!!lied the sha e5ce!tion )here -s sought to harass and deter res!ondents fro access toadjudicatory tribunals and to usur! the decision;a8ing !rocess.- Pattern of baseless and re!etitive clais.

/. NO@ Bo)%ott ,1<;4- Noe## Imm9!t)

$- >OFs boycott of *issouri conventions )as iune under >oerr because its !ur!ose )as toinfluence *issouris ratification of the (RA.

. Otte# T$l Po*e# ,1<8/- Sh$m E:%epto!

$- Court reanded to -C in light of CA *otor Trans!ort? and the -C found a !attern of baselesslitigation designed to frustrate co!etition +a!!lying the Bsha e5ce!tion,.

2. Alle3 T9e M Co!39t Co#p. 6. I!3$! He$3 I!%. ,US 1<;;- Remo6$l F#om Polt%(.

$- F$%t(. #tandard;setting board cons!ired to e5clude co!etitors !roduct by !ac8ing the annualeeting )ith ne) ebers )hose sole !ur!ose )as to vote against a!!roval of P co!etitors

!roduct.- Hel3? Content of standards )ere Btechnical and not the subject of antitrust iunity under

>oerr.%- R9le ,"1-? (fforts that are one step removed fro !olitics +standard;setting board, not giveniunity.3- #ha ust interfere directly )ith the co!etitor regardless )hether the governent ta8es action.

5. No##>Pe!!!'to! Do%t#!e

$- -octrinal *atter< Iuni@es fro antitrust scrutiny efforts to !ersuade the governent to ta8eaction even if the action has antico!etitive conseKuences.

8. P#ofe((o!$l RE I!6e(to#( ,1<</- Sh$m E:%epto!? Oe%t6el) B$(ele((

$- . In order to be a sha? is it enough that the !arty initiating the !roceeding has a ho!e that it)ill interfere regardless of )hether the atte!t is successful.- *ajority

,1- Clais ust be +1, objectively baseless and +", subjectively intended by the !artyasserting the clai to interfere )ith a co!etitors business in order for the >;P iunity to

be stri!!ed a)ay.,"- Objectively baseless L )hether a reasonable litigant could realistically e5!ect success on

the erits.%- #tevens Concurrence,1- 'e )ould hold that a clai has no objective erit if the !otential recovery is less thancost of the litigation. #oeties a clai ay have a realistic !ros!ect of success on theerits? but not a8e econoic senseM such a clai ay be an e5a!le of a litigant abusingthe courts syste to harass a co!etitor.

"1



D. STATE ACTION M FEDERALIS+? PAR7ER 6. BRO@N DOCTRINE

1. P$#=e# 6. B#o*! ,1</- ,24- She#m$! Doe( Not Appl) to St$te A%to!

$- The CA Prorate Act authori@ing ar8eting !rogras that )ere intended to restrict co!etitionaong gro)ers and aintain !rices.- Hel3? that )here a restraint of trade is i!osed by a state acting as a sovereign? the #heran Act)as not intended to a!!ly.%- Co!arison to #ocony. #iilar industry collaboration. #ocony even started as a fed gvtinitiative. Atte!t to rationali@e oil.

,1- Court says nothing in languageEhistory of #heran Act to indicate that intended to restrictstate actionV &ut didnt the C% !rohibit Kueen granting a !atent The courts arguent isfla)ed. At C% definitely soe restrictions on state action.,"- &ut bac8 )hen #heran Act )as !assed? Bono!oly )as thought of as an e5clusive

!rivilege granted by gvt.,/- Par8er inverts things by stating that !urely !rivate action are the subject of antitrust)hereas state action +the ost durable for of restraint, is iuni@ed.,- This )as obviously a collusive schee by CA !roducers +in coo! )ith CA leg, to hurtnon;CA raisin !roducers.

". S%h*e'm$!! B#o(. ,US 1<21-.

$- #tate cannot just authori@e !rivate conduct +by !ur!orting to grant iunity, that has already been !rohibited by the #heran Act.

/. Gol3f$# ,1<82-.

$- Private !arty ust be compelled to act by state acting as sovereign in order to have iunity.. +3%$l ,1<;4- ">PRONG PAR7ER TEST

$- ";Part Test,1- Challenged restraint ust be clearly articulated and affiratively e5!ressed,"- *ust be actively su!ervised by the state.

,$- Cant si!ly atte!t to iuni@e other)ise violative conduct.- B#heran cant be th)arted by casting such a Zgau@y cloa8 of state involveent over )hat isessentially a !rivate !rice;fi5ing arrangeent.

2. So9the#! +oto# C$##e#( ,1<;2- 51

$- If there is a !erissive !olicy? ay still have Par8er iunity if it is actively su!ervised.5. FTC 6. T%o# ,5-

$- >egative veto o!tion in title insurance rate filing schee did not eet active supervision

reKuireent.- Analogythis is siilar to nondelegation doctrine.

8. P$#=e# 6. B#o*! D(%9((o!

$- The Bdo)nstrea side of things. After governent authori@es and soe entity is acting !ursuantto this authori@ation? to )hat e5tent do they have iunity.- The easier case is )here gvt co!els the econoic actors to soe action.%- 'arder case is )here the gvt is !erissive to)ards soe collusive action.3- Par8er is about deference to state legislative judgentM thus? reKuireent for active su!ervisionore intense )here the state is !erissive.

E. +UNICIPALITIES M PAR7ER>+IDCAL

1. Ct) of H$lle

$- City had to sho) that the decision to !erit a restriction )as ade !ursuant to a state directiveMho)ever? !rong t)o of the Par8er test )as et )here the city actively su!ervised the !rogra.

". Om! O9t3oo# A360!' I!%. ,US 1<<1- No Co!(p#$%) E:%epto! to P$#=e#$- Colubia doinated the outdoor advertising ar8et and enjoyed a close relationshi! )ith the cityleaders. Fhen Oni sought to enter the ar8et and construct ne)? co!eting billboards? Colubiasuccessfully lobbied +siultaneously )ith other concerned citi@ens grou!s, for a strict regulation nthe construction of ne) billboards.- 'eld? there is no Bcons!iracy e5ce!tion to Par8er iunity.

,1- Court )ont loo8 to the otivations of gvt officials.,"- >o corru!tion e5ce!tion to Par8er. #heran Act is not the a!!ro!riate tool to cobatcorru!tion.,/- Ps Bsha +>oerr;Penn, arguent rejected. The injury flo)ed fro !assage of theunici!alitys action rather than directly fro -s lobbying activity.

""



,$- This is a !aradigatic case for rejecting the sha e5ce!tion bEc the har isindirect.

%- -iscussion,1- Private actors ay be !rotected by Par8erE*idcal.,"- The Court observed that )hen the state acts as a coercial actor +!rivate ar8et

!artici!ant,? it ay lose its antitrust iunity.,/- In ters of !rong 1? )hen state gives uni the !o)er to regulate +but not s!ecificallyrestrict co!etition,? that is insufficient +by itself, to eet the first !rong of *idcal.

V. CHAPTER 5 +AR7ET CONCENTRATION CONSPIRACY M ANTITRUST

A. PROOF OF COLLUSION

1. I!te#(t$te C#%9t 6. US ,1</<-. T$%t A'#eeme!t S9ff%e!t ,$fte# t#$l-

$- F$%t(. T)o ty!es of -< +1, *ovie distributors and +", large ovie e5hibitors. One e5hibitor senta letter to the distributors deanding co!liance )ith t)o deands< +1, a m!m9m p#%e on first;runs and +", a m!m9m p#%e on second;runs. #ubseKuently? $ll 3(t#9to#( mpleme!te3

l%e!(!' pol%e( th$t (9(t$!t$ll) %omple3 )ith these deands.- Hel3? the Court inferred fro the unaniity of action that there )as an agreeent in violation ofsection1.

,1- They all got the letter.,"- They all acted the sae.,/- They all changed draatically.,- -s did not testify.

,2- &ut for the +intended adverse, effect on co!etition? the ters in Kuestion )ould nota8e econoic sense.,5- Absence of an Alternative (5!lanation +)hich could have been offered by the e5ecs,,8- #ee /7. BIt )as enough that? 8no)ing that concerted action )as conte!lated andinvited? the distributors gave their adherence to the schee and !artici!ated in it.

,$- Interestingly? there is no e5!licit agreeent.%- -iscussion

,1- Fhat is this case about,$- #ufficiency of evidenceM or,- #ubstance of contract? cobination? or cons!iracy in restraint of trade

,"- 'ere? it sees that tacit agreeent is sufficient,/- Court uses fact that e5ecs didnt testify as evidence that there )as an agreeent +this)ouldnt fly in a criinal case? due to 0th A;#elf;incri concers,.

,- (vidence of Collusion,$- In tight? co!etitive Oligo!oly? unifor !ricing could be evidence ofco!etition and !ricing at the ost co!etitive levels.,- &=T? isnt loc8ste! behavior evidence of collusion as )ell

,2- This is )hat Interstate Circuit? above? is about.,$- The evidence )as<

,- #ae letter ,- %oc8ste! action,- -raatic change in behavior ,6- Inference fro failure to testify,6- Placing of ters in licensing agreeents

". The$te# E!te#p#(e( 6. P$#$mo9!t Flm ,1<2- P$#$llel Co!39%t !ot Co!%l9(6e ,o! (-.

$- All the defendants +!roducers and distributors, )ould license first;run !ictures to do)nto)n&altiore theaters only? and refused to do so for P theater in neighborhood sho!!ing district. All thedefendants stated that they only licensed first;runs to non;co!eting theaters? and that the Crest )asin co!etition )ith the do)nto)n theaters. *oreover? as no do)nto)n theater )ould )aiveclearance? any first;run license to Crest )ould have to be e5clusive)hich )as econoicallyunsound.- Hel3? suary judgent to P deniedM evidence of !arallel conduct )as insufficient to concludethat there )as a cons!iracy in restraint of trade.

,1- BConscious !arallelis has not yet read cons!iracy out of the #heran Act entirely.

"



/. Comp$#eRe%o!%le The$te# E!te#p#(e( *th I!te#(t$te C#%9t

$- In Theater (nter!rises? defendants cae for)ard )ith reasons for their conduct +they had aninde!endent econoic justification,. -istributors had already licensed their fils to do)nto)ntheaters and also agreed not to license the fil to geogra!hically co!eting theaters.

. I! #e B$) Foo3 A!tt#9(t Lt'$to! ,Pl9( F$%to#(-.

$- Acted contrary to econoic interests- Fere otivated to enter into a !rice;fi5ing cons!iracy.

B. FACILITATING PRACTICES

1. Impe3me!t( to P#%e Coo#3!$to!

$- The BPrisoners -ileaeach has an incentive to cheat because the increental gain of oneay out)eigh +in that ones !ers!ective, the losses to all.- 'o) enforce the tacit agreeentB9acilitating Practices%- Other facilitating !ractices

,1- *9> Clauses3- 9TC Act !erits the 9TC to go after facilitating !ractices as Bunfair trade !racticese- T)o Theories available to P )hen challenging antico!etitive !ractices<

,1- That the facilitating !ractice is itself an unreasonable restraint of tradeM this )ould be aROR case.,"- There is an actual !rice fi5 +tacit or e5!licit, and the inforation e5changeEor facilitating

!ractice is evidenceE!lus factor sho)ing the e5istence of the !rice;fi5.". St#9%t9#$l F$%to#( th$t F$%lt$te o# Compl%$te P#%e Coo#3!$to! ,2";-

$- 'igh Concentration- &arriers to (ntry%- O!en #alescheating detectable3- 'oogeneous Productsless variables in agreeente- %u!y #alesgreater incentive to cheatf- (5cess Ca!acitycuts both )ays. (5cess ca! L incentive to cheatM but? )here deand fi5ed orfalling? incentive to collude.'- #tatic -eandcheating detectable by loo8ing at o)n sales.h- #iilaritysiilar firs have siilar !referencesM agreeent easier to negotiate.

/. F$%lt$t!' P#$%t%e(

$- Inforation (5changes,1- detect cheating Kuic8er.

- Incentive *anageent

,1- directly alter !ayoffs )ithout info e5change. (5. *onetary !enalty on !rice discounters.%- #ta!ede (ffect

,1- develo! clauses that are in advantage of individual buyers but i!ose a cost on buyers as)hole.

3- *9> Clauses.,1- Agree to give sae deal offered to another

e- *eeting Co!etition Clauses +*CCs,,1- (ncourages detection,"- (ncourages coo!M seller can raise !rice )Eout fear of losing sales.,/- >o;release *CC is a ore credible threat but ay have allocative inefficiencies byforcing seller to Beet all !rices

f- (ntry -eterrence

,1- A no;release *CC is a credible threat that seller )ill cut !rices to eet those of a ne)entrant.

"/



C. TRADE ASSNS M INFOR+ATION ECHANGE ,I- ,2;5-

1. B$%='#o9!3

$- Isnt inforation e5change just li8e an auction)here all have !erfect info and co!ete on !rice

". Ame#%$! Col9m! M L9me# Co. ,1<"1- I Vol$te3 1

$- Trade association of inde!endent ills distributed elaborate !ricing? shi!!ing? antici!ated !ricinginfo? stoc8 and stores info? held eetings? distributed econoic analysis and forecasts fro the tradeassociation econoist. The ar8et )as large and the association did not have ar8et !o)er.

- Hel3? the inforation e5change )as calculated to coordinate a restriction of !roduction and isunla)ful under the #heran actM the e5!licit agreeent is unnecessary n light of the Bdis!osition ofen to follo) their ost intelligent co!etitors.%- Reasoning

,1- There )ere also antico!etitive effects !roven.3- &randeis -issent

,1- #tability as a virtueBrationality,"- Absence of coercion,/- Res!onse to &randeis< 9utures contracts could acco!lish sae !ur!ose )ithout+leveling 8t, )ithout antico! f5.,- Contrast )EChicago &oard of Trade +)here he )rote for the ajority,.,2- Price Increase(5!lainable by soething other than restraint on co!etition +bad)eather,

e- -efendants Args,1- Cheatinghere there is no !rice agreeent and all have an incentive

f- Prisoners dilea is Zsolved here by the info 5chg'- 'oles -issent

,1- Hie)s it as a free s!eech issue,"- This is the iddle of 'oles transforation into a free s!eech advocate

/. +$ple Floo#!' ,1<"2- I of P$(t M A''#e'$te3 D$t$ O7

$- F$%t(. Producers accounted for 42Q of flooring. (5change of cost info? co!ilation anddistribution of a freight boo8? aggregated !rice and stoc8 data? eetings discussing industryconditions.- Hel3? no violation.%- D(t!'9(h. Only involved inforation sharing re< closed and !ast transactions and aggregated

!rice data.,1- This is an i!ortant distinction.,"- Present and future !ricingEout!ut decisions are es!ecially susce!tible of abuse.

. Ceme!t +$!9f$%t9#e#( ,1<"2- I O7 to P#ote%t f#om A#t#$'e

$- Hel3? a!!roved statistical and credit activities of ceent anufacturers )ho sought to 8ee! closetabs on buyers.- D(t!'9(h. Per industry !ractice? custoers had an Bo!tion to buy ceent at a fi5ed !riceM thisraised the !roble of custoers buying e5cess and reselling +arbitrage, at the e5!ense of the ceentanufacturer.%- Re$(o!!'. :ustified by the anufacturers need to !rotect theselves.

2. S9'$# I!(tt9te P9l% ,1</5- B!3!' P9l% P#%e BAD

$- Hel3? agreeent not to deviate fro !ublicly announced !rice )as a violation of the #heranAct.

5. US 6. Co!t$!e# Co#p. ,1<5<- P#%e St$l!' Pl$! BAD IN THEORY$- Hel3? agreeent to tell co!etitor? u!on reKuest? their last !rice )as invalid.- :. -ouglas +*ajority,

,1- #uggested that info e5changes )ere a !er se violationthis vie) later rejected in theGy!su case.

%- 9ortas +Concurring,,1- Theory of Anti;Co!etitiveness< This enables co!etitors to undercut each otherM butnot by too uch. Thus? co!etition )as restricted if not eliinated.

3- Co!are )EAerican Colun,1- In AC? econoic theory +&randeis, said no !roble )ith arrangeent? but the factsindicated that the !ractice affected !rice.

"0



,"- 'ere? the facts do not sho) an effect on !rice? but econoic theory doesXe- *arshall

,1- Co!are )ith his o!inion in To!co< -eclined to Brable through the )ilds of econoictheory.,"- #ee !. 62. The governent !resented a theory but the theory does not sKuare )ith thefacts.

8. US 6. G)p(9m ,54<-.

$- Agreeent on inforation e5change is not !er se violation. %oo8 to 9N on co!etition.;. To33 6. E::o! ,"!3 C#. "441-.

$- F$%t(. A!!eal fro 1"+b,+6, order of disissal. Oligo!sonistic ar8et in )hich large oil !roducers shared co!ensation data regarding their anagerial? !rofessional and technical e!loyeesAlleged relevant ar8et )as the labor ar8et for *PT e!loyees in the oil industry.- Hel3? Ps D 1 clai survived the otion to disiss.%- -iscussion

,1- Fhy is su!!ressing )ages bad,$- >o guarantee the savings are !assed on to the consuer.,- There is evidence that oligo!sonyEono!sony can de!ress out!ut and !riceincreases.

,- (lasticity of su!!ly *PTs )ill s)itch to another co!anyEindustry if

!rice is reduced. Therefore? by de!ressing !rice? the Oligo!olist reducesin!uts necessary for !roduction and therefore reduces out!ut.

,"- Relevant *ar8et,$- %abor 8t for *PT e!loyees in the oil industry.

,/- >ature of the Inforation (5change,$- Past? !resent and future salary inforation.,- Co!le5 syste designed to a8e !ositions co!arable +i.e. a8ing thee!loyees ore fungible,.

<. Blom=e(t Fe#tle# I!%. 6. Pot$(h Co#p. of S$(=. I!%. ,;th C#. "444- ,R9le of Re$(o! M SJ-.

$- F$%t(. Oligo!olist !otash anufacturers )ere reKuired to !ost bonds after the -e!t. ofCoerce found that they )ere du!ing !otash on the =# 8t. The +Canadian, industry leader )assubseKuently !rivati@ed. Other !roducers raised their !rices after the leader did so. Plaintiff . Theinforation e5change is evidence of a !rior !rice;fi5ing agreeent. #ought to !rove the e5istence ofa !rice fi5 by circustantial evidence. 'o)ever? in order to !rove !fi5 by circ ev ust rule outinde!endent e5!lanation for the !fi5.- Hel3? the class failed to rebut -s inde!endent business justifications for the inforatione5changes. #: granted.%- -iscussion

,1- Relevant *ar8etno need to !rove )here !rice;fi5ing alleged bEc !rice fi5ing is per se

illegal.14. Comp$#e To33 6. Blom=e(t

$- Inforation (5change,1- Todd. PastE9uture,"- &lo8est. Past only.

- #!ecificity of Info (5change.,1- Todd. Aggregated into as sall as three;fir lu!s.,"- &lo8est. #!ecific !ast sales.

%- Public -isseination,1- Todd. >ot disseinated to the !ublic. Therefore? no !roco!etitive effects.

3- Contact bet)een !arties,1- Todd. Regular eetings.,"- &lo8est. 'igh level contacts but s!oradic.

e- *ar8et #tructure.,1- 9ungibility

,$- Todd. #tructure of the ar8et )as i!ortant for deterining )hether it )assusce!tible of ani!ulation.

,- The ore fungible the good +here labor,? the easier to set !rices andenforce.

"6



,- The -s develo!ed a syste to a8e the !ositions co!arable.,- &lo8est.

,- Potash is co!letely fungible.,"- (lasticity

,$- Todd. #u!!ly )as inelastic because labor is a !erishable coodity.,- &lo8est. Potash inelastic.

f- *ar8et Concentration,1- Todd. Per 9TC Guidelines? ar8et not Bconcentrated for erger !ur!oses.

,$- Court says Container Cor!. )as even less concentrated.,"- &lo8est. (5treely concentrated.

'- Procedural -ifferences,1- Todd. On a otion to disiss.,"- &lo8est. *otion for suary judgent. P ust identify dis!utes of aterial fact)hich )arrant a trial.

,$- #C has encouraged -Cs to a!!ly #: in antitrust cases.

D. VERTICAL RESTRAINTS ,RESALE PRICE +AINTENANCE-

1. Ve#t%$l 6. Ho#o!t$l Re(t#$!t(

". Sh$#p D6(o! Bet*ee! P#%e M No!>P#%e Re(t#%to!(

/. P#%e Re(t#$!t(? T*o R9le( ,+!+$:-

$- *iniu Resale Price *aintenance is !er se illegal- *a5iu Resale Price *aintenance #ubject to ROR as of 1774 +#tate Oil v. 3han,.

. No!>P#%e Re(t#$!t(? O!e R9le Po(t>S)l6$!$ $ll ROR.2. S9mm$#)? O!l) pe# (e #9le *he#e m!m9m p#%e m$!te!$!%e.

5. E:te!3e3 A!$l)(( & Hol3!'(

$- *anufacturers are free to for)ard;integrate. +(5< >i8e Outlet,.- (conoic functions fro su!!ly to retail could either be integrated or !erfored by inde!endenteconoic actors.%- Given the above? )hat retail !rice level is best for anufacturers

,1- The anufacturer )ants to set !rices,"- Fhy )ould anufacturer ever increase its o)n cost of distribution +i.e. set a *a5 resale

!rice,,$- Theoretically? once anufacturer has sold to the distributor? further increase in

!rice )ill only decrease deand for its !roducts )hile !utting oney in thedistributors !oc8ets.,- *fr. has incentive to 8ee! retail !rices do)n.

3- @h) m!m9m p#%eK

,1- Pro;Co!etitive :ustifications,$- -ont underine fr !rices.,- Avoid free;rider !roble +e5< fr )ants brand !rootion but discounters )illfree ride,.,%- >o loss leading +underining brand eKuity,.

,"- Antico!etitive #tories,$- Retailer 8t !o)er ay deand that fr enforce a retailer cartel.

,- *anufacturing Cartel. Cannot !olice the cartel if retailers can charge their o)n !rice. Retailers discretion )ould as8 fg cheating.

e- Alte#!$t6e to Ret$l P#%e +$!te!$!%e

,1- 9or)ard integrate,"- (5clusive Territories

,$- Proble. *ay create intra brand !o)er in retailers bEc they get ono!olies,- *fgrs #olution< (5clusive Territories $ *a5iu Price.

f- +$:m9m P#%e +$!te!$!%e

,1- Antico!etitive Issues,$- *a5iu becoes the iniu.

,"- Counter;Arguents,$- If !rohibit !rice aintenance? you hurt sall distributors because anufacturers)ill for)ard integrate.

"4



,/- *a5iu !rice aintenance )ill tend to channel distribution through large outlets because little guy )ill be unable to co!ete.

,$- This assues that there is soething good about retaining the little guys and !ro!!ing u! inefficient dealers.

,- This is not really a value recogni@ed by antitrust la).'- Co!('!me!t S$le(

,1- Arguent is that not an antitrust violation because the retailer is acting as the agent of theanufacturer.,"- Smp(o! ,1<5- p5/". 'eld that Bbogus consignent arrangeent )as an antitrustviolation because only designed to avoid -r. *iles.,/- +o##(o! 6. +9##$) B(%9t +4th Cir. 176, +Posner,.

,$- 'eld? no cons!iracy because the arrangeent )as a true bro8erEagentrelationshi! )hereby - )ould ta8e orders and sell at the !rice set by *urray &iscuitand be !aid a 0Q coission.,- Rule< 3ey is )hether the agency relationshi! has a function other than tocircuvent the rule against !rice fi5ing. +Per se if circuvent? ROR other)ise.,

,- ROR )here the anufacturer retains the ris8 and title.h- Te##to#$l Re(t#%to!(

,1- Fhite *otors +176, +not !er se, #ch)inn +1764, +!er se,.

- S)l6$!$ ,1<88,. Overruled #ch)inn? rejecting a!!lication of the !er se rule in the conte5t ofvertical non!rice restrictions.

,1- #hift li8ely reflects Chicago school of econoics.,"- &or8 and Posner.

8. D#. +le( ,1<11- Pe# (e R9le A'$!(t +!m9m Re($le P#%e

$- Invalidated iniu resale !rice contractually fi5ed by anufacturer of edicines.;. St$te Ol 6. 7h$! ,1<<8- +$: Re($le NOT pe# (e ,o6e##9l!' Al#e%ht-

$- #tate Oil contracted )ith 3han for the resale of its gasoline. 3han )ould receive ."0 cents !ergallon sold if it sold at or above a retail !rice set by #tate Oil. Any argin above this aount )asrebated to #tate Oil? and if 3han sold for less than #tate Oils !rice the difference )ould subtractedfro its ."0.

<. Al#e%ht 6. He#$l3 Co. ,1<5;- ,o6e##9le3 ! St$te Ol-

$- The court invalidated under the !er se rule the 'eralds !ractice of granting e5clusive territories)hile setting a5iu resale !rices to !revent its distributors fro !rice gouging.- The Court objected to substituting the B!erha!s erroneous judgent of the anufacturer for the

o!eration of the ar8et.14. Co!t!e!t$l TV 6. GTE S)l6$!$ ,1<88- +$: P#%e ROR

$- Hel3? vertical a5iu !rice fi5ing? li8e the ajority of coercial arrangeents subject to theantitrust la)s? should be evaluated under the ROR.- D(%9((o!

,1- #ylvania illustrates the effect of the Chicago school on antitrust la).,"- #ylvania e5!resses i!atience )ith coon la) rules. #ch)inn relied in !art on the C%rule against restraints on alienation.,/- Pur!orted that the coon la) of 122 years ago )as irrelevant to the eaning of the#heran act.,- Antitrust !olicy should not be divorced fro econoic theory. Contrast )ith To!co< B>o)andering in the )ilds of econoic theory.

,2- Inter brand v. intra brand co!etition.,5- Interbrand co!etition ore i!ortant.

,$- Intrabrand co!etition less of concern bEc anufacturer )ill try to sKuee@e allthe ono!oly !rofits out of its !roduct regardless. (ither for)ard;integrate oroutsource de!ending on )hat is ost advantageous.

,8- 9ree;riding story is relevant here. ROR can ta8e account of this concern.,;- If )illing to a!!ly ROR for non;!rice? )hy not overrule -r. *iles

"



11. S9mm$#)

$- It is the rare case that a vertical non;!rice restraint cannot )ithstand the ROR.- %o)est coon denoinator. *ay see non;!rice and !rice restraint i5ed.%- &EC anufacturer has !o)er to refuse to deal? )hy shouldnt they be !eritted to set iniu

!rices,1- &EC that )ould overrule -r. *iles +)hich the court has not done,.,"- Greaterincludes;the;lesser arguent. :ust doesnt !lay out.

E. VERTICAL RESTRAINTS AND REFUSAL TO DEAL

1. Col'$te ,1<1<- Ref9($l to De$l Not $ Co!t#$%t Com!$to! o# Co!(p#$%) Col'$te Defe!(e

$- There is an absolute !ro!erty right by the anufacturer to deal on )hatever ters )ith )hoeverit )ants.- Rhetoric is the rhetoric 17th century !ro!erty rights. 3inda anaolous.%- Colgate doctrine rooted in !ro!erty rights.3- Per se rule of legality )here anufacturer refuses to deal )ith retailers )ho refuse to sell atanufacturers advance announced !rice.e- -iscussion

,1- #hortly after %ochner. &ut )hy does this doctrine !ersist so long after %ochner? etc die,"- Colgate gets reduced so narro)ly to its facts.,/- &ut at the sae tie? the rise of the Chicago school begins to underine not Colgate? but-r. *iles.,- %a) and econoics does not !articularly li8e !er se foralis.

,2- 9ootnote 6" *onsanto. #olicitor general )anted !er se rule for all vert restraints.". P$#=>D$6( ,1<54- Ille'$l Com!$to! @he#e Selle# P#e((9#e3 @hole($le#(

$- 9acts. *anufacturer !ressured its )holesalers into cutting of retailers )ho refused to co!ly )ithannounced !rices.- 'eld? )hen frs !olicy goes beyond ere announceent of its !olicy and a refusal to deal? it

becoes guilty of a cons!iracy in violation of the #heran act.%- >ote< 'ere? Par8-avis )as enforcing an illegal agreeent aong hori@ontal co!etitors.

/. +o!($!to Co. 6. Sp#$)>Rte Se#6%e Co#p. ,1<;- St$!3$#3 of P#oof Ve#t. P#%e>F:!'

$- F$%t(

,1- #!ray;Rite )as a discounter that )as cheating on *onsantos *#RP. One of the dealersco!lained of #!ray;Rites action. *onsanto terinated #!ray;Rites distributorshi!. -Cgave to jury )ith instructions that if

- Hel3

,1- In order to establish a violation? P ust coe for)ard )ith evidence tending to e5cludethe !ossibility that the anufacturer and nonterinated dealers )ere acting inde!endentlyM Pust !resent direct or circustantial evidence of a conscious coitent to a coonschee designed to achieve an unla)ful objective.,"- The standard )as et here.

%- D(%9((o!

,1- *anufacturer and other retailers ust have agreed u!on !rices.,"- *onsanto )as for)ard;integrated to the retail levelM this case is !artly about a hori@ontalagreeent. The court doesnt a8e uch of this? but in future could !robably bedistinguished on this ground.,/- I!ortant factors in distributor;terination cases +according to #C,

,$- Concerted v. Inde!endent Action

,- Price v. >on;!rice Restrictions,%- Perha!s should have added< 'ori@ontal v. Purely Hertical,- 9ree;Riding #tory. *onsanto )anted to aintain !rices in order to encourage itsdistributors to invest in advertisingE!roduct !rootion.

"7



. B Ele%t#o!%( Co#p. 6. Sh$#p Ele%t#o!%( ,1<;;- No Pe# Se ! P9#el) Ve#t%$l C$(e(

$- F$%t(. One of t)o distributors threatened to sto! carrying #har! !roducts if #har! didnt cut off a !rice;cutting co!etitor.- I((9e. Fhere single retailer and single anufacturer agree to eliinate a retailer due to !ricecutting? is that a violation )here the reaining retailer does not agree to a fi5ed !rice%- Hel3

,1- Per se analysis does not a!!ly because no hori@ontal agreeent +just a single retaile and asingle dealer,.

3- D((e!t

,1- Argued that there )ere hori@ontal effects to the agreeent bet)een the anufacturer andthe retailer.,"- #calias CEA )as that any vertical restraint has soe hori@ontal effect.

e- D(%9((o!

,1- Co!are to 3lors. In 3lors? hori@ontal agreeent.,"- Co!are to To!co< Horizontal agreement to divide territory !er se illegalM GT( vertical

division ROR.,/- 'ere? free;riding story is very !ersuasive.

,$- -issent !oints out that the reaining retailer has not ade any coitent to !rovide better services. 9ree;rider arguent is not justified here.,- #calia cEa

,- #calia relies on the coon la) definition soe)hat in inter!reting the eaning of the

#heran act.,2- #calia is s8e!tical of the need for antitrust in this area and argues that cartels are difficultto aintain. -oesnt )ant a !er se rule to interfere )ith ar8ets.,5- #calia

,$- Presu!tion in favor of ROR ,- Per se reKuires deonstrable econ 9N,%- Interbrand co!etition is the !riary concern of antitrust

2. S9mm$#) of Ve#t Re(t#$!t(

$- Inter; v. Intra;brand restraints,1- *ore concern about interbrand restraints.

- 9ree;riding story really relevant here.,1- &rand !rootion as a social good.,"- &ut? aybe advertising is not so good. *aybe distorts value and antitrust la) should not

concern itself )ith ads.,/- (conoists )ould not agree. >o such thing as inherently goodjust let the 8tfunction.

5. Re%$p of Ve#t%$l Rel$to!(hp(

$- *iniu Resale Price *aintenance is Per #e Illegal. -r. *iles.,1- -r. *iles is still good la) +although critici@ed,.

- *a5iu resal !rice aintenance is ROR. #tate Oil v. 3ahn.%- All vertical !rice restraints are subject to the ROR 3- =nilateral refusal to deal )ith a !rice discounting dealer is !er se la)ful. Colgate -octrine.

,1- Colgate doctrine is very narro).,"- (5ce!tions to Colgate -octrine )here there is an effort to coerce aintenance.,/- %oss of Colgate defense in RORM not necessarily !er se

e- (liination of a cheating dealer after co!laints not enough alone to sho) agreeent on !rice+*onsanto,M but if there is evidence of an agreeent on !rice then either ROR or !er se illegality.f- Fhere a single anufacturer and single retailer agree that a second retailer )ill be discontinued

bEc it cheated? subject to ROR. #har!.VI. SECTION ". +ONOPOLIATION. ,CHAPTER ;-

A. +ONOPOLY CONDUCT REVISITED

1. O6e#6e*

$- #ection " is &roader ,1- >o reKuireent of joint action,"- (ven attempt is !rohibited

2



- #ection " is >arro)er ,1- #ection " only !rohibits Bono!oli@ation

". C$te'o#e(? A%t9$l 6. Attempte3

$- Courts are often i!recise in their discussion- Courts soeties discuss iniu ar8et shares as !rereKuisites to a finding of D " liability.This confuses issue< referring to actual or atte!t%- If tal8ing about actual ono!oli@ation? ty!ically need greater than 02Q.

/. Al%o$

$- Conduct reKuireentM Bbad act. *ono!oli@ation is an active verb.- Obtaining a ono!oly through su!erior s8ill? foresight or industry is not Bono!oli@ation.

,1- 'o)ever? all Alcoa did )as redouble ca!acity in antici!ation of increased deand.. G#!!ell

$- Possession of ono!oly !o)er in relevant ar8et.,1- In section " case ar8et definition is al)ays critical.,"- Fillful acKuisition or aintenance of !o)er

2. Otte# T$l Po*e# ,1<8/-.

$- The to)ns Otter served )ere Bnatural ono!olies in that they could only su!!ort onedistribution net)or8. Otter tail refused to !rovide !o)er over its lines to unici!al !o)er systes.- Hel3? Otter Tails conduct violated D ".%- Reasoning. Otter tail !ossessed a strategic doinance )hich it used to e5clude !otential entrants+generally? uni!alities, into the retail arena.

5. A(pe! S=!' ,1<;2-$- F$%t(. After several years of coo! in )hich the #8i Areas offered a joint !ass? #8i Co. )ithdre)and issued its o)n ;area !ass +it also o!ened a ne) ountain,. It refused to acce!t vouchers fro'ighlands? its co!etitor.- Fhat Bbad act

,1- Prior course of dealing follo)ed by shar! de!arture.,"- Created e5!ectation of ulti;ountain? ulit;day !ass.

%- Is there a !erversity in saying that initial coo!eration ay lead to a duty to coo! in the future3- Real easure of illegality )as #8i Co.s refusal to deal +acce!t vouchers or sell at retail, and a8eshort;run gains in favor of gaining long ter co!etitive advantage.e- Often co!laints under D " are vie)ed )ith sus!icionM D 1 cases treated as !aradigatic antitrustcase.

8. T#!=o ,US "44- ,le:( p#!to9t-.

$- F$%t(. Heri@on )as reKuired by statute to !rovide access to its net)or8. It initially failed to !rovide adeKuate access to Bo!erations su!!ort systes +O##,? and subitted to a consent decree)hich !rovided !erforance easureents and re!orting reKuireents.- Hel3

,1- Heri@ons alleged insufficient assistance in the !rovision of services does not a8e out anantitrust clai.

%- #C reluctant to i!ose a general duty to coo!erate.,1- Recall Otter Tail. ReKuired !o)er co!any to !rovide access to its !o)er lines. #iilarto As!en #8iing.,"- Co!are bEc regards a failure to coo!erate.

3- T)o distinctive feature of As!en #8iing cited by #calia as central to its holding and !lacing atBouter liits of antitrust

,1- Prior course of dealing in As!enM 'ere? !rior course of dealing sheds no light onHeri@ons intent bEc it )as forced into the course of dealing.,"- As!enEOtter Tail involved a !roduct that )as already being !roducedM Heri@on involved auniKue ne) !roduct +access services, that Heri@on )as obliged to !rovide as the resu.lt of astatutory schee.

e- B(ssential 9acilities -octrine,1- #t. %ouis Rail. =niKue geogra!hy gave rise to duty to deal on non;discriinatory ters.,"- #calia said that #C has never acce!ted the essential facilities doctrineM suggests that theans)er )ould be no.,/- In any case? the doctrine is ina!!licable )here a governental entity has the !o)er toco!el sharing and regulate its ters.

1



;. US 6. +%#o(oft Co#p. ,DC C#. "441-

$- Overvie),1- >e) econoy characteristics

,$- 'uge ca!ital investent in initial !roduct,- Tiny arginal cost !er unit

,"- >et)or8 (ffects,$- One !ersons use of the !roduct a8es it ore desirable to the ne5t !erson.,- Findo)s. In order to get !eo!le to )rite soft)are? there needs to be a criticalass of users of an O#.,%- Relevance to antitrust< -oesnt change the basic !rinci!les.,3- >et)or8 effects are also a for of a barrier to entry.

,/- Governents Theory,$- Involves t)o things that ight not be ar8ets

,- PC;co!atible o!erating systes

,- *iddle)are+a, >etsca!e+b, :ava+c, Allo)s soft)are users to B)rite+d, -oes other functions

,- Relevant *ar8et,$- Possibility of future ne) iddle)are !roducts in co!etition )ith *# does not

get included in +definition of, relevant ar8etM ho)ever ,- *iddle)are still relevant to Kuestion )hether *# is constrained +has ar8et

!o)er, in the relevant ar8et as it is defined.,2- *icrosoft argues that that PC;co!atible is not the ar8et

,$- *iddle)are constrains *icrosofts ability,- Court rejects. *iddle)are cannot realistically co!ete )EFindo)s as a )hole.Can only co!ete )ith soe functionality.

,- 'o)ever? iddle)are is sufficiently threatening to e5!lain *icrosoftsatte!t to sKuash iddle)are co!anies li8e >etsca!e.

,5- *icrosofts Alleged *isconduct +in O# ar8et,,$- %icensing agreeents.

,- Prohibiting reoval of Internet (5!lore.,- Ibedding Internet (5!lorer )ith the Findo)s code a8ing it inse!arable.,%- (5clusive dealing arrangeents.

,8- *icrosofts Alleged *isconduct in &ro)ser *ar8et,$- Court< Gvt. >ever !ro!erly defined the relevant 8t. for bro)sers

,;- Tying,$- Fhether *icrosoft violated Clayton Act by tying I( to Findo)s,- Reversed bEc should have been judged under ROR.

,<- Reand,$- Case settled,- Attorneys General resistedM :udge ultiately acce!ted the gvts settleent.

,14-*ono!oly Po)er ,$- *# s!ent billions on ongoing research? and argued that that )as evidence itlac8ed ono!oly !o)er.

,- Court rejected the arguent that further investent !roved there )asnt aono!olyM even a ono!olist ay !roote !roduct by innovation.

- *icrosofts Antico!etitive Conduct +44/,,1- Princi!les of *ono! under D "

,$- *ono!olists act ust have an Bantico!etitive effect.,- Antitrust la) is not about har to co!etitors? but about har to competition.

,%- P has the burden of !roving +1, antico! 9N,3- If P establishes !ria facia case? - ay !roffer !ro;co!etitive justification

,"- If -s justification is not rebutted? P ust deonstrate that the har +to co!, out)eighsthe good +to co!,.,/- Intent is relevant only to sho) li8ely effect.

"



%- >et)or8 9N +467,,1- =tility that a user derives fro a good increases )ith the nuber of other users.,"- Co!etition in these ar8ets is for the field, rather than in the field.

,/- Perha!s here there )as inevitably going to be a ono!olist? and the Kuestion )as only)ho.,- #chu!eterian co!etition< Co!etition is for ono!oly and the desire for ono!oly

!rofits.3- %icensing Agreeents )ith O(*s

,1- *#s efforts to gain share in bro)ser 8t served to eet the threat to its ono!oly in theO# 8t by 8ee!ing rival bro)sers fro attracting critical ass of users necessary to achievenet)or8 effects.,"- Prohibition against reoval of icons? etc raised other co!etitors distribution costs byrendering their !roduct redundant.,/- ReKuiring that I( reain in the boot seKuence and barring others fro the boot seKuencehad effect of !rotecting *# 8t share.,- *#s co!yright arguent disissed as frivolous.,2- Integration of I( and Findo)s o8 bEc legit bi@ justification +enabling sealess tfer frointernet to )indo)s environent,.,5- Coingling of codes )as antico!etitive bEc raised O(* cost of including andsu!!orting rival !roduct +bEc then they )ould have to !rovide su!!ort for both !roducts,.

e- Agreeents )ith IAPs

f- Reedy,1- *icrosoft is a single entity +not fored by ergers,. *ore difficult to s!lit u!M therefore,"- Conduct reedy is used.

'- Ta8e;a)ay. #te!s to analy@e $ bad conduct eleents.B. ATTE+PTED +ONOPOLIATION , "-

1. Eleme!t( of Attempt

$- Predatory or antico! conduct- #!ecific intent%- -angerous !robability of achieving ono!oly !o)er

". Spe%t#9m Spo#t( I!%. 6. +%9ll$! ,US 1<</- Eleme!t( of Attempt

$- (leents of Offense of Atte!ted *ono,1- P/1 !redatory or antico!etitive conduct,"- #!ecific intent

,/- -angerous !robability of achieving ono!oly !o)er /. D(%9((o! le$3!' to Lo#$! Jo9#!$l

$- Refusals to -eal,1- =sually involve refusal to deal )ith a co!etitor ,"- -ifferent story )here it is a refusal to dela )ith a custoer )ho is dealing )ith aco!etitor +)hich )ould be ore li8e a boycott case,

. Lo#$!e Jo9#!$l ,1<21- Attempte3 +o!opol)

$- %oraine journal? )hich enjoyed a substantial ono!oly in the disseination of ne)s in %oraineCounty? refused to acce!t advertiseents fro any custoer )ho also !laced ads )ith a ne) radiostation in the area. Advertisers testified that? as a result of the !olicy? they terinated their radioadvertising in order to !reserve their ability to advertise in the :ournal.- 'eld? the injunction )as !ro!erly granted.

%- Reasoning,1- The !olicy )as an atte!t to ono!oli@ing by forcing custoers not to !lace ads )iththe co!etitor.,"- Although there is no obligation on %orains !art to acce!t advertising? it ay not refuse todo so )here the intent is to create or aintain a ono!oly in violation of D of the #heranAct.



C. PREDATORY PRICING

1. Beh$6o#$l(t( 6. Ch%$'o S%hool

$- Chicago disissed !redatory !ricing- Gae theorists thought !redation )ould a8e sense given certain !reises

". Theo#)Co9!te# Theo#e( of PP#%!'

$- Proble idd by Chicago #chool +%ott,< 9irs ust incentivi@e anagers to !rice lo) enough todrive out co!etitors? resulting in benefit to shs that is reflected in co!ensation to the anager.- #olution< #toc8 o!tions? etc that delin8 anagers co!ensation fro short;ter !rofits. In fact?not !resent in ost cases.%- Court error in this area '=RT# CO*P(TITIH( CO>-=CTPRIC( CO*P(TITIO>XXX3- :urors have Bdavid and goliath entalitye- %itigation encourages inforation e5changeX

/. Eleme!t( of P#e3$to#) P#%!' Cl$m

$- !ricing belo) an a!!ro!riate easure of cost- a dangerous !robability that the belo);cost !ricing )ill lead to recou!ent.

. B#oo=e G#o9p ,1<</-

$- FACTS? %iggett +P, !ioneered and obtained doinance in the generic cigarette ar8et. &ro)nand Filliason entered the ar8et )ith its o)n blac8 and )hites. &JF continuously aintainedlo)er !rices on its generics and offered significant )holesale rebates. %iggett claied that the !roducvolue rebates offered to )holesalers resulted in net !rices on its generic cigarettes that )ere belo)AHC. %iggett claied that &JF sought to !olice the ar8et rather than drive %iggett outM forcing it

to acce!t oligo!olistic !ricing.- Hel3 although there )as sufficient evidence to conclude that +1, & J F intended to ono!oli@eand +", !riced its generics belo) AHC? %iggett failed to !rove legal injury bEc the evidence does not

!rove that &JF had a reasonable !ros!ect of success in recou!ent through slo)ing the gro)th ofthe generic segent of the cigarette ar8et.%- D(%9((o!

,1- T)o eleents need be sho)n,$- Pricing belo) a!!ro!riate easure of cost

,- -efendant Average Hariable Cost,- -angerous !robability that the belo) cost !ricing )ill lead to recou!ent

,- #C does not usually revie) lc deterinations for sufficientcy,- There )as no evidence to su!!ort th conclusion that &JF could recou!

,"- #C has never settled u!on )hat the a!!ro!riate easure of cost is

,$- %o)er courts tend to)ards AHR as the easure,- -ifficulty is that cost structure is co!le5 and not attributable to any single

!roduct line

,- 'o) allocate overhead to sidgets v. )idgets

,- 'o) allocate sunk costs3- A6e#$'e V$#$le Co(t? The A#ee3$ A#'9me!t ,;55>;58-

,1- In the real )orld its rational for firs to !rice as near as !ossible to arginal cost.,"- Thus? arginal cost is really the ceiling for !redatory !ricing. As long as above *C? notliable.,/- &ut? firs thin8 in ters of fi5ed costs and variable costs.

,$- Hariable costs fluctuate )Echanges in out!ut.,- *aterials? labor.

,- 9i5ed costs unaffected by out!ut.,- C(Os salary? the factory.

,- Therefore? variable costs are a better !ro5y for arginal cost for !ur!oses of the legal test bEc easier to ascertain for !ur!oses of litigation.,2- 9or a violation? - ust have !riced belo) AHC.,5- Practical Result< Fhen litigating? Kuestion is? )hich costs corres!onds to out!ut.,8- #econd Circuit has ado!ted AHC test but still fluctuating.,;- #C not fir? soe courts treat AHC as !resu!tively the ceiling.,<- (5a ti!< )e )ill be using avc.,14-The rule is infored by

,$- Chicago #chools s8e!ticis about the freKuency of !redatory !ricing

/



,- Only loo8 to short ter recou!ent. =nli8ely that firs )ill engage in long;ter !redatory !ricing due to the unli8elihood of recou!ent. #ee *atsushita.

D. TYING

1. Cl$)to! A%t / ,p;85-

$- Illegal to a8e salesE8 on condition that the buyer )ill not useEbuy fro a co!etitor.". U!te3 Shoe ,1<""-.

$- =# leased achinery subject to the condition that if the lessee used the achines on )hich other=# achines had not been used? a su!!lies clause? a clause regarding additional achineryreKuireents? etc..- 'eld? the tying arrangeent )as an i!erissible atte!t to ono!oli@e because it barredanufacturers fro using co!etitors !roducts for fear of losing their lease to use =#s eKui!ent.

/. I!te#!$to!$l S$lt ,1<8-.

$- I# reKuired !urchasers of its +!atented, achinery to use only its salt and salt tablets.- Hel3? the tying arrangeent violated D of the clayton act.%- Re$(o!!'

,1- I#s !atents on its achinery do not confer a further right to restrain the use of un!atentedsalt.,"- Price;atching !rovision didnt save the agreeentM a co!etitor )ould be forcedundercut !rices in order to enter the ar8et )hile I# could defend erely by atching.,/- Fhile true that I# had additional obligation to re!air and aintain the achines? thatdidnt justify a total ban on use of co!etitors saltM a less restrictive alternativeiniu

Kuality reKuireentscould serve the sae !ur!ose )ithout unreasonably restraining trade.. Re9#eme!t( of T)!' Cl$m

$- >eed t)o !roducts. >o shit.- >eed ar8et !o)er over the tying !roduct. Ties;Picayune.%- #ubstantial volue of coerce ust be restrained. >. Pac.

2. No#the#! P$%f% ,1<2;- S9(t$!t$l Re(t#$!t Re

$- *ust be sufficient econoic !o)er to i!ose an a!!reciable restraint on free co!etition in thetied !roduct.

5. Tme( P%$)9!e ,1<2/- +$#=et po*e# & S9(t$!t$l Re(t#$!t Re03

$- &efore tying arrangeent can be condened !er se under D 1? +1, the seller )ould have had toenjoy ono!olistic !o)er +this ay overstate, for the tying !roduct and +", substantial volue ofcoerce in the tied !roduct )ould have to be restrained.

8. A36$!%e3 B S)(tem( ,1<84- Cope( P$pe# M Se#6%e? Ille'$l Te

$- 6th Circuit held that charging a single !er;co!y !rice for rental of co!y achine? su!!lies andservice violated the Clayton Act by de!riving custoers of their freedo of choice.

;. Jeffe#(o! P$#(h ,1<;- Nee3 I!3epe!3e!t Dem$!3 Fo# " P#o39%t(

$- Nclusive 3 bet)een hos!ital and a fir of anesthesiologists. Ct A!! held illegal !er se under D 1.- 'eld? reversed. P failed to sustain case under ROR analysis.%- Re$(o!!'

,1- Relevant geo ar8et L :efferson Parish.,"- There ust be a substantial !otential for antico!etitive i!act to justify !er secondenation.,/- Per se rule a!!lied only )here Bforcingusing ar8et !o)er in the tying ar8et toforce the buyer to buy the tied !roductis li8ely.,- *ust loo8 at 8t in )hich t)o !roducts are soldhere? the hos!itals sale of

anesthesiological services.,2- Are there t)o !roducts To sho) tying? there sut be inde!endent deand foranesthesiological services +i.e.? t)o distinct !roducts,.,5- 'ere? there )as a!le evidence of inde!endent deand for anesth services.,8- *ar8et !o)er< 'ere? only 2Q of the :efferson Parishs !atients go to defendantshos!ital. >ot sufficient 8t !o)er to a!!ly !er se.,;- A!!lying ROR? P failed to sho) an a!!reciable restraint. 'ere? the hos!ital alreadyretains the !o)er to restrict the !atients choice to one of four doctors )ith staff !rivileges.

3- Co!%9##e!%e.

,1- 2Q in tying 8t !robably not enough.,"- Proco!etitive justifications should be allo)ed +)e should get rid of the B!er se rule,.

0



<. 7o3$= ,1<<"-.

$- On -s otion for #:. (Kui! Parts #ervice. 3oda8 tied !arts to service. Although it ay

not have had ar8et !o)er in the eKui!t 8t? it did in the !arts ar8et.- Hel3? #: denied.

,1- #ection 1 Clai. A Kuestion of facts e5ists )hether 3oda8s doinance in the !artsar8et enabled it to force higher !rices on its custoers in the service ar8et.,"- #ection " Clai.

,$- Relevant 8t L anufacturers of !arts that are co!atible )E3oda8 achines.

,- 3oda8 has 122Q of !arts and 2;70Q of !arts ar8et.8t.,%- 9act Kuestions re< !roco!etitive justifications offered +see 714,.%- 7o3$= . Argued that any forcing acco!lished by leverage its doinance in the !arts ar8et)ould lead to ruinous losses in eKui!ent sales? )here it faced co!etition fro other anufacturers.3- D((e!t< Argued that its lac8 of ar8et !o)er in the !riary +tying, ar8et eant that it couldntincrease !rices in the derivative +tired, ar8et )ithout sacrificing sales in the eKui!ent ar8et.e- +$o#t) Re(po!(e<

,1- Assues that buyers have !erfect inforation +that they 8no) the lifecycle costs ofco!iers,.,"- Assues that there arent any s)itching costs.,/- Assues that +for e5a!le governents, arent doing !urchasing se!arately +for !arts v.service, and are thus a)are of the overall cost.,- These are Kuestions of fact and #: ina!!ro!riate.

14. +$#=et Sh$#e H$#3 N9me#($- *ono!oli@ation Case< 02Q or higher? generally.- Tying Cases< A!!ro5. 2Q.

11. Te%h!olo'%$l 6. Co!t#$%t9$l T)!'

$- Per #e only )Econtractual.- (5. *icrosoft bundling of I( )as technological tying.

1". C#t9e of T)!' L$*

$- >. Pac. 1. Btying agreeents serve hardly any !ur!ose beyond the su!!ression ofco!etition.

,1- This !reise is critiKued.- =nclear that the ono!olist )ill be able to increase !rofits in 8t & )ithout -(CR(A#I>G

!rofits in 8t A +the tying 8t,.,1- (5. Int l #alt. #alt achines and salt are co!leentary !roducts and an increase in the

!rice of one +salt, )ould increase overall !rice thereby driving do)n deand.,$- Chicago #chool;;'as lead to a loosening of tying la).

1/. Re9#eme!t( of T)!' Cl$m(

$- :efferson Parish. Fhether there are t)o !roducts de!ends u!on )hether there is inde!endentdeand for each !roduct- *ar8etEono!oly !o)er in the tying ar8et

,1- Fithout ar8et !o)er? no credible )ay to force consuers to ta8e the tied !roduct.%- #oe threat to co!etition in the tied ar8et. :efferson Parish< Bforcing

1. T)!' $( pe# (e 6ol$to!(

$- (ven though they !ur!ort to a!!ly !er se analysis? courts loo8 to !roco!etitive justifications.12. P#o%ompett6e J9(tf%$to!

$- Tying as !rice discriination

,1- A )ay to charge a higher !rice to buyers )ith higher deand,"- Offer the sae !rice for the eKui!ent +tying !roduct, but charge higher !rice for theafterar8et +tied, !roduct +!a!er or service,. Thus? the higher deand user !ays ore overtie.,/- Is this !roco!etitive #oe say yes.

6



E. ECLUSIVE DEALING

1. I! Ve#t%$l Co!te:t

$- *an Ret. ou ay only sell in certain area and to certain custoers.

". I!te#>B#$!3 E:%l9(6t) ,ho#o!t$l-

$- Agreeent that retailer )ill not carry a co!etitors brand.- -istinguish fro #ylvania. #ylvania involved restraints on intra brand co!etition.

/. St$!3$#3 F$(ho!

$- Retailer agreed to buy all its dress !atterns fro seller.

,1- Fhat is the antitrust concern here,$- 9oreclosure of distribution outlets )ill have an antico!etitive effect at theanufacturers level.

,"- #eller )as a very larger anufacturer controlling "E0ths of the ar8et.- &ut is there a free;riding issue to be told here

. T$mp$ Ele%t#%

$- Court u!held "2 year reKuireents contract for the !urchase of coal used as boiler fuel. The=tility +buyer, sought enforceent of the contract and the Coal Co. +seller, argued that the contract)as unenforceable because it violated the Clayton Act.- Three 9actors

,1- %ine of coerce,"- Area of co!etition +i.e. relevant ar8et,,/- Co!etition foreclosed ust constitute a substantial share of the relevan ar8et

F. BUNDLED DISCOUNTS ,THE HOTT ANTITRUST TOPIC-1. O6e#6e*

$- #u!!ose yer !lanning a vacation. Airline? s8i !ass? lodging? etcV #oe!lace offers a !ac8agethat is chea!er than the a la carte.- &asic facts< #e!arate !roducts. =nli8e a tying case they are still available se!arately. 'o)ever?if bought together?

". LeP$'e( 6. /+ ,/#3 C#. "44/-.

$- In order to receive the a5iu rebate available fro *? )hich had 72Q share of trans!arentta!e 8t? the custoer had to eet dollar targets in diverse categories of * !roducts. The rebate

!rogra )as instituted after %ePages began to a8e inroads in the B!rivate label trans!arent ta!e !roduct. %ePages alleged that the rebate !rogra )as designed to !ush it out of the ar8et by a8ingit i!ossible to co!ete )ith the rebate !ac8ages. 9ollo)ing the !rogra? %ePAges began losingar8et share and !rofits. * !resented evidence sho)ing that )as selling above cost.- I((9e? )hether *s bundling constituted the Bono!oli@ationthe bad conduct reKuireent ofD ".%- Hel3? there )as adeKuate evidence to su!!ort the jurys finding that * violated D ".3- +$o#t). An eKually efficient co!etitor could still be !ushed out of the ar8et )here * soldabove its cost? because the single;co!etitor could not co!ete )ith the rebate on that single !roductalone.e- C#$!e. AT T'( H(R %(A#T? if the aggregated rebate still !erits !laintiff to sell above cost+a!!ro!riately defined,? then there is no violation. This should be a T'R(#'O%- R(=IR(*(>T.f- D((e!t. Although traditional !redatory !ricing rules should not a!!ly? at least the defendant usthave !riced belo) cost if you a!!ly the entire rebate to the !roduct in Kuestion +trans!arent ta!e, orderto !rove antico!etitive conduct. If the %o(t Q $''#e'$te3 #e$te p#oft( the! the#e ( !o

6ol$to!.

'- Sol%to# Ge!e#$l. Fe just dont 8no) )hat the test of legality is in %ePages.h- A!$lo') to t)!'. TyingL no sale of A unless you buy &. &undling L either buy A $ & togetherat a discount or buy the se!arately at a higher !rice.- THE PROBLE+< *any custoers still choose to buy a la carte +so not so coercive,.

- B9(!e(( Co!te:t

,1- The !ractice of !rice;discounting is a GOO- T'I>G and totally P(RHA#IH(.,"- The !roble )ith this case is that it fails to articulate a )or8able T(#T of legality.,/- The ajoritys reasoning does not account for the !ressure e5erted on the !rice;discounter by co!etitors in the OT'(R !roduct categories and the liits this !laces on theability to dro! the aggregate discount.

4



,$- &=T? if the defendant has a ono!oly in the other !roduct ar8ets? it ayleverage its ono!oly in order to offer a discount large enough to drive out theco!etitors.

=- H)po

,1- #ha!oo and conditioner. Cost to !roduce conditioner is ".02 and 1.02 for sha!oo.Prior to discount? fir A offered at Y0 and Y. A then lo)ers its !rice to Y conditioner andY"."0 for sha!oo )hen bought together.

,$- There is no !redatory !ricingM sales are ade above cost +fir is o!erating at a !rofit,.,- If custoer forgoes the !ac8age? he ust still !ay Y0 for the conditioner. Thus?the co!etitors are effectively e5cluded.

,- This deonstrates )hy !redatory !ricing is the )rong analysis.,%- Crane< #hould ta8e all defendants discount and a!!ly it to the !roduct in theco!etitors ar8et.

,- uestion is )hether? after a!!lying all of the rebates to the trans!arentta!e ar8et? * is selling above cost.

G. ECLUSIVE DEALING

1. O6e#6e*

$- ReKuireents 3sbuyer )ill fill all reKs,1- Presu!tive good reasons

- Out!ut 3sseller )ill sell all out!ut

". RULE? ECLUSIVE DEALING +AY BE TREATED UNDER EITHER / OF THE CLAYTONACT ,IF IT INVOLVES THE SALE OF GOODS- OR 1 OF THE SHER+AN ACT

/. STANDARD FASHION CO. 6. +AGNETTE>HOUSTON ,1<""-

$- FACTS< C%OT'(# *A>=9ACT=R(R +"E 8t share, and R(TAI% C%OT'(# #TOR(

(>T(R I>TO A R(=IR(*(>T# 3 → F'(R( T'( R(TAI% #TOR( AGR((# >OT TO #(%%

A> OT'(R *A>=9ACT=R(R# C%OT'(#.

- ISSUE? -oes the 3 fall under D of the Clayton Act because the covenant not to sell the !atternsof others ay be to substantially lessen co!etition or tend to create ono!oly%- HELD? es. The restriction of each erchant to one !attern anufacturer ust in hundreds?

!erha!s thousands of sall counities aount to giving such single !attern anufacturer aono!oly of the business in such counity.

3- CRA>(< bad fact for this o!inion< the geogra!hic location of the !articular store→

&ostonM in&oston there are any retail outlets → in sall to)ns this could be a !roble. → if the [ did thisacross the country → certainly that )ould be antico!etitve → as a atter of real concern aboutco!etition→ sees that there is nothing to )orry about on the record of this case

. FTC 6. BRO@N SHOE ,1<55- I!6$l3$t!' Re(t#%to! o! Re($le of Competto# Shoe(

$- → 9ACT#< [;shoe anufacturer ade 3s )ith a substantial nuber of inde!endent retail shoestores )hich reKuire the to restrict their !urchases of shoes for resale to the &ro)n lines and )hich

!rohibit the fro !urchasing co!etitors shoes. → in e5change for getting reKuireents 3s froretail outlets → &ro)n #hoe gives the a franchise agreeent? architectural !lans? service → all

benefits fro being an e5clusive &ro)n shoe distributor - HELD< D0 of the 9TC ACT gives the 9TC the !o)er to arrest trade restraints in their inci!iency)ithout !roof that they aount to an outright violation of D of the #heran Act%- Reasoning

,1- The ct. distinguishes bt)n. D of the Clayton Act and D 0 of the 9TC act → ight behard to !rove D violation but ftc act gives ftc the !o)er to go further +The 9TC ACT )asdesigned to su!!leent and bolster the #heran Act,

3- -iscussion,1- #trong free rider story here,"- 9ranchisors are idd )ith the &ro)ns brand,/- &=T? )ould &ro)n !lausibly share ono!oly !rofits )ith retailers



e- CRANE< there is insufficient evidence to sho) the antico!etitive effect2. TA+PA ELECTRIC CO. 6. NASHVILLE COAL CO. ,1<51-

$- Hel3? reKuireents 3 did not violate D of the Clayton act and therefore the 3 is enforceable.- Re$(o!!'

%- !arts to the test for e5clusive dealing,1- -eterine the line of coerce,"- Relevant geogra!hic 8t

,$- 'ere? coal !roducers.,/- 9oreclosed co!etition ust be substantial

,$- >otice? not loo8ing to -s 8t share but )hat co!etition is foreclosed.,- Tie of reK 3 )ill affect aount of co! foreclosed.

3- #trong advantages to having this ty!e of 3 in conte5t of !ublic utility.H. +ERGERS

1. O6e#6e*

$- *ost erger issues are guide by the 9TC Guidelines.- 9or *onday? read the erger guidelines.%- 'art;#cott Rodina Act. A notification statuteM establishes reKuireents for !arties see8ing toerge. Once a erger is challenged? Rodino is not relevant.3- Clayton Act governs the substantive issues in erger cases.e- In !ractice? !arties are focused on convincing the 9TC to ta8e no action. +>ote that? they nevertechnically Ba!!rove soething.,

f- &OT' 9TC and -O: can ta8e jurisdictioncontributes to uncertainty for the !arties. Recently?the agencies try to allocate the industries to a8e it ore !redictable. 9TC is soe)hat oreinde!endent +less !olitically accountable, than the -O:.

". Cl$)to! A%t Se%to! 8.

/. B#o*! Shoe D(%9((e( P9#po(e( of Se%to! 8

$- Plug the asset loo!hole.,1- Previously? Clayton Act only a!!lied to stoc8 acKuisitions. Co!anies could thusacco!lish erger via asset acKuisitions.

- -eleting the acKuired;acKuiring language to clarify that section 4 a!!lied to vertical andcongloerate ergers as )ell as ergers by hori@ontal co!etitors.%- #te the rising tide of concentration.3- Protect co!etition? not individual co!etitors.e- #C has stated that Congress )anted to avoid atheatical tests? and favored a Kualitative

a!!roach.,1- Fhen )e get to the guidelines? )hat ha!!ended to this a!!roach.

f- Hie) ergers functionally.'- Fordsay substantially lessen co!etition indicate that Congress )as concerned )ith probabilities, not certainties or e!heeral !ossibilities.

. Re$(o!( to +e#'e

$- Pro;Co!etitive,1- (conoies of #cale

,$- The efficiency of greater +or lesser, !roduction ca!acity on a single !roduct.,"- (conoies of #co!e

,$- (fficiencies gained by !roducing ulti!le !roductsEservices.,/- &etter use of RJ-e5< cobining !atents

,- &etter *anageent- Anti;Co!etitive,1- Obtain a *ono!oly

7



2. Comp$#e to JV C$(e(

$- ROR bEc strong !ro;co!etitive !otential5. T)pe( of +e#'e#

$- 'ori@ontal;the ost concern- Hertical%- Congloeratealost no concern anyore

8. US 6. Phl$3elph$ N$to!$l B$!= ,1<5/-

$- Hel3? !ro!osed erger bE) ban8s- Re$(o!!'

,1- Product 8t L col ban8ing,"- Geo 8t L /;county area,/- *erger here )ould +1, !roduce a fir controlling undue !ercentage of 8t? +", give riseto significant increase in concentration? +, )ill li8ely significantly lessen co!etition.Therefore? injunction !ro!er unless !roco! f5.,- 9undaental !ur!ose of D 4 is to sto! inci!ient concentration.

%- D(%9((o!

,1- Assue that the relevant 8t is the Philly etro ban8ing ar8et. 2Q 8t share. Fhatis the courts concern )ith this level of 8t share.,"- B*averic8 Theory#all fir that is !ushing do)n !ricesEco!eting on other levelsaggressively. Role of these firs in disru!ting tacit collusion a8es it undesirable that theyerge.

,/- A !riary concern of erger !olicyM !revention of tacit collusion< BCoordinated (ffects,- =nli8e the Theaters case? erger !olicy is concerned )ith ar8et structure not conduct.

,2- Fhat evidence is relevant here,$- Concentration< *ar8et share of to! " +6Q, and to! / +4Q, firs.

,5- Fhat are the erging co!anies defenses,$- 9ollo)ing custoers out into the burbs.

,- Court< The ban8s can just o!en branches. +There is a less restrictivealternative.,,- This is not really trueore efficient to erge.

,- Trying to co!ete )ith the larger ban8s.,- Court says you can go to > for larger credit.

+a, *aybe this is evidence that the ar8et definition is too broad.,%- The erger )ould be good for Philly.

,- This concern not really relevant to erger revie)M only Kuestion isco!etitiveness.,- Congress role to change.

;. +e#'e#( 39#!' the 1<54(

$- Gvt. Al)ays seeed to )in.- Accusation that Court seeed to gerryander ar8et definition to fit the defendant.%- In !er se cases? not necessary to define relevant ar8etM >OT #O I> *(RG(R cases.

,1- In erger? the structure of the ar8et is a !riary concern.3- Governent suits coenced years after erger.

,1- -efendants )ould assert that there )as no antico!etitive effect.,$- Res!onse 1< Post;erger evidence irrelevantM Kuestion is !otential at tie oferger.

,- Concerned )ith !robability not certaintiesM gvt. >eed not even sho) a !robability.e- 'art;#cott Rodino Act alost ended the !ost;erger suit.

<. Ge!e#$l D)!$m%( ,1<85-.

$- F$%t(. *aterial #ervice +later acKuired by G-, obtained =nited (lectric controlling share in1707? and continued to acKuire its stoc8 to 122Q in 1766. *# dee!;ined coalM =( stri!;ined coal.=( had dee!;ined coal eight years !rior to 1707.- Hel3 DC 3e%(o! of !o 8 l$lt) $ff03.

%- D(%9((o!

,1- *ar8et definition is not controlling in G-.,$- Court didnt address because gvt. -idnt eet its case regardless.

/2



,"- Conte5t,$- #ignals an end to #Cs aggressive erger !olicy.,- Post;G-? erger !olicy is ore technocratic.

,/- Coal Reserves,$- I!ortant to the Courts decision.,- Of =(s coal reserves? ost )as already coitted at a set !rice in long;ters3s.,%- -issent< =( is a !otential entrant into dee!;shaft ining. Therefore? a li8elyfuture co!etitor.

,- 9ailing 9ir -efense,$- *ajority disclais the failing fir defenseV #ays that ar8et share is just notas relevant as it is in other cases. *ar8et share does not L 8t !o)er here.

I. +ERGER GUIDELINES

1. F#om GD G93el!e(

$- %ast #C case a!!lying substantive antitrust- #ignals de!arture fro !ro;gvt. A!!roach%- >o)? erger revie) is a bureaucratic function.3- 'ori@ontal erger guidelines i!ortant !olicy stateent.

". @h$t *o9l3 h$ppe! f the#e ( $ (m$ll 9t ('!f%$!t $!3 !o!>t#$!(to#) p#%e !%#e$(eK

/. +$#=et Def!to!

. 1./ ID +$#=et P$#t%p$!t(

$- 1.1 Current Producers or #ellers,1- e5. &arge trans!ortation in the great la8es.

,$- 9or)ard;integrated coal !roducers that o)ned bargeds )ere counted becausethey )ere !otential entrants.

- 1." 9irs That Partici!ate Through #u!!ly Res!onse +Buncoitted firs,,1- 9irs li8ely to enter ,"- (ntry ust be )Ein one year ,/- Fould recou! )ithin one year ,- (ntry ust not reKuire significant sun8 costs

%- 1."",1- Potential su!!ly res!ondent could be a fir )ith no closely related assets )here barriersto entry are lo) +e5. Adult filV anyone can get a videota!e and a cou!le of actors,.,"- B#un8 costa terinal? not a !lane. If the cost ca be rede!loyed in a different ar8et it

is not Bsun8.2. 1. C$l%9l$t!' +$#=et Sh$#e(

$- 1./1,1- %oo8 at current salesEca!acity as )ell as the ca!acity that )ould be de!loyed in the eventof a #&>PI.,"- If lots of !roduct differentiation? use dollar sales to easure. If !roduct is co!arable?use unit sales. Other)ise? aybe use reserves +i.e. Gen -ynaics,.

5. 1.2 +$#=et Co!%e!t#$to!

$- 'erfindahl;'irschan Inde5 +B''I,,1- #u the sKuares of the individual ar8et shares of all the !artici!ants.,"- *a5< 12?222 +122",.,/- %o)est< near 2.

- Calculate Pre;*erger ''I%- Calculate Post;*erger ''I8. 1.21

$- Post;*erger ''I &elo) 1222 is unconcentrated.- Post;*erger 1222;122 is oderately concentrated

,1- If -elta \ 122? no big deal.,"- If -elta 122? !robleatic.

%- Above 122 is highly concentrated.,1- If -elta \ 02? !robably o8.,"- If -elta 02;122? you got !robles.,/- -elta 122? Bcall a !riest? yer fuc8ed.

/1



;. " Pote!t$l A36e#(e Compett6e Effe%t( of +e#'e#(

$- T)o Ty!es,1- Coordinated Interaction

,$- Posner. *erger !olicy is !riarily otivated against collusion.,"- =nilateral (ffects,/- #ubsidiary uestion

,$- D ".1 Is the ar8et susce!tible to ar8et coordinationEcollusion 9actors<,- Past collusion.,- #usce!tible to detection and !unishent of deviations +cheating,

<. ".1" Co!3to!( Co39(6e to Dete%t!' $!3 P9!(h!'

$- *averic8 9irs ay liit !otential? therefore acKuisitionEerger of such firs is !robleatic14. "."1 F#m( D(t!'9(he3 P#m$#l) ) Dffe#e!t$te3 P#o39%t(

$- Fhere the erging firs are considered the best substitutes for each other 11. /.4 E!t#) A!$l)((

$- *ust be sufficiently tiely and !rofitable- Tiely

,1- Is the threat of entry sufficient to restrain the antico!etitive effect in the ar8et,"- Affected by nature of !roduct +refrigerator v. toilet !a!er,. O)ner of refrig. *ay hold outfor chea!er !rice a8ing threat of ne) entry ore significant even though ta8es a )hile forthe entry.

%- Profitable at !re;erger !rices

3- %i8elihoode- #uffciency

1". . Eff%e!%e(

$- *ust be erger;s!ecific- If an alternative source of efficiency? they dont count in favor of the erger.%- (fficiencies ust be !roven? not vague or s!eculative.3- (fficiencies ust be sufficient to offset the antico!etitive effects.e- >ot all efficiencies are created eKual.

,1- Cobining or shifting !roduction functions in a )ay that lo)ers the cost of !roduction ishighly favored +arginal costs,,"- RJ- synergies are ore s!eculative but )ill be considered.,/- Reduction of !rocureent costs? ca!ital costs? anageent costs? etcV +fi5ed costs, areless !ersuasive bEc they are justified by any erger. &ut? )hy

1/. 2 the f$l!' f#m 3efe!(e ,h$l m$#) p$((-$- I9 the acKuiring fir is a acKuiring a co!etitor )ho )ould other)ise go out of bi@ and )hoseassets )ould other)ise leave the ar8et? )hat is the har- ReKuireents

,1- 9ailing fir could not eet financial obligations,"- Could not successfully reorgani@e under ch 11,/- 'as ade good faith unsuccessful effort to be acKuired by a fir that !osed less of athreat,- Absent the acKuisition? the assets leave the ar8et

J. VERTICAL +ERGERS ,NOT ON EA+-

1. Ch%$'o.

$- Hertical ono!oly is not a concern bEc ono!oly !roducts in one Bar8et )ould decrease

deand in the other.- O!! Cost to the fir eans it cant really Bsave be selling belo) cost.". Po(t>Ch%$'o

$- This assues that there is a one;to;one relationshi!./. Ve#t%$l +e#'e# G93el!e( ,!ot %o6e#e3-

$- Priary concern is )ith the creation of barriers to entry

Documents

Antitrust Notes Outline