Antitrust - ANTITRUST Fall 2005 I. INTRODUCTION A....

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Unformatted text preview: ANTITRUST Fall 2005 I. INTRODUCTION A. Anti-Competitive Practices 1. Cartels (Lets Make a Deal) : (a) Sherman Act 1 prohibits firms eliminating competition by entering into agreements with competitors 2. Monopolies (Blow Them Up) : (a) Sherman Act 2 prohibits firms from eliminating competition by destroying competitors 3. M&A (Buy Them Up) : (a) Clayton Act 7 prohibits firms eliminating competition by buying up its competitors B. Competitive Practices 1. Patents : (a) firms are allowed to profit on intellectual property investments 2. Natural Monopoly : (a) some industries most efficient as monopolies due to economies of scale (e.g. either state-owned or highly regulated) 3. Build a Better Mousetrap : (a) firm entitled to monopoly profits if it has a monopoly simply because it makes better or cheaper product C. Plaintiffs 1. Antitrust Division (DOJ) 2. Federal Trade Commission (FTC) 3. State Attorney Generals (state anti-trust law) 4. Private Parties (consumers, dealers, suppliers, competitors) D. Defendants 1. Corporations 2. Associations (ABA, AMA, NCAA, Ivy League) 3. Individuals (moguls, doctors) E. Referees 1. Judges/Juries F. Stakes 1. Injunctions 2. Treble Damages (civil) 3. Fines (criminal) 4. Imprisonment 5. Divestitures 6. Dissolutions 7. Attorney Fees G. Federal Trade Commission 1. FTC Act 5 prohibits unfair methods of competition 2. anything that violates Sherman Act 1 and 2 also violates FTC Act 5 3. FTC has direct control over Clayton Act 7 which governs mergers 4. 5 Procedure: (a) bureau (staff) recommends to commission (5 members sitting as prosecutors) the issuance of a complaint 1 (b) if commission decides to an issue complaint for 1 or 2 offenses, then the complaint goes to the ALJ (an administrative judge) who gives an opinion (c) if appealed case goes back to the commission (5 members sitting as appellate court) who give an opinion, where affirmation has the same force as a district court opinion 5. FTC has no criminal authority, unlike the DOJ, and may only enforce injunctions, stop mergers or initiate dissolution H. Vertical v. Horizontal Price-Fixing: 1. horizontal price fixing is per se unlawful because: (a) competing manufacturers have no business entering into agreements (b) aggregation of market power means that consumers do not have any other choice but to pay as all manufacturers involved 2. vertical price-fixing is per se unlawful, but less likely to harm consumers as: (a) necessary for manufacturers to maintain agreements with dealers (b) no aggregation of market power because only one manufacturer involved II. PRICE FIXING A. Sherman Act 1 1. every agreement in restraint of trade is unlawful B. Common Law 1. not every restraint of trade regarded as unlawful 2. courts applied a reasonableness standard looking to time, place, and scope C. Evolution of Per Se Rule 1. Mitchel v. Reynolds (1711) : (a) Facts plaintiff leased bakeshop for five years on condition that lessor...
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Antitrust - ANTITRUST Fall 2005 I. INTRODUCTION A....

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