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Law Outlines Antitrust Law Outlines

Outline 3 Outline

Updated Outline 3 Notes

Antitrust Law Outlines

Antitrust Law

Approximately 77 pages

Various outlines that aided me during the course of my study as well as the actual notes I prepared of the cases and concepts taught during class. ...

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The following is a more accessible plain text extract of the PDF sample above, taken from our Antitrust Law Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

  1. Introduction to Antitrust

    1. Central tension of antitrust law – we want firms to compete and succeed, but monopoly is not illegal

      1. We punish illegal acquisition of maintenance of monopoly power

    2. At the time of passage, antitrust laws were meant to protect small businesses; prevent them from being beholden to large trusts who provided transport for goods and inputs

    3. Over time, rationale evolved as people become uncomfortable with the consequences of punishing large corporations

      1. Recognize tension between efficiency and equity

    4. Competitive outcome is one where the output is being maximized and everyone who is willing to pay the cost of the product can buy it

      1. Marginal cost pricing

      2. Link between number of firms competing and competitiveness not very tight

    5. Antitrust Statutes

      1. Sherman Act §1 – horizontal restraints – where we get felony convictions

      2. Sherman Act §2 – monopolizing conduct

        1. “monopolize” not interpreted literally

        2. limits unilateral conduct

        3. civil fines, injunctions, behavioral mandates, treble damages in private suits

      3. Clayton Act §7 – comprehensive statute for mergers

        1. Ripe for debate about interpretation

    6. Trans-Missouri Freight Association (1897)

      1. No exception in the Sherman Act for reasonable restraints of trade

      2. Not up to the Court to determine whether the anticompetitive effects are within the zone of reasonableness

    7. United States v Addyston Pipe & Steel Co. (6th Cir. 1898)

      1. Contracts that are unreasonable restraints of trade at common law are not criminal, just void

      2. Very hesitant to make things previously voided and turning them into a lot of harm and damages

      3. Covenants in partial restraint of trade generally upheld as valid

      4. Legitimate ancillary restraints of trade may actually enhance competition

  2. Antitrust Injury

    1. Basic question of antitrust is who can sue? On what basis can they sue?

      1. Government – statutory parens patriae standing

      2. Private litigants? Direct/indirect purchasers?

    2. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. (1977)

      1. Case brought under §4 of the Clayton Act

      2. CoA held that private plaintiffs only needed to show that the merger would in some way negatively affect them.

      3. Antitrust law requires a showing of antitrust injury for standing – injury of the type that antitrust laws were intended to prevent and that flows from what makes defendant’s conduct illegal

    3. Cargill, Inc. (Excel) v. Monfort of Colorado, Inc. (1986)

      1. Does §16 of the Clayton allow equitable relief in cases where such relief is not allowed under §4?

        1. Statute says that plaintiff is entitled to injuctive relief for threatened loss or damage by a violation of the antitrust law

      2. Holding - §4 and §16 best understood to provide complementary remedies for single set of injuries and therefore must still plead an antitrust injury

        1. Alternative would allow competitors to seek an injunction any time a competitor threatens to cut prices to increase market share.

        2. This is precisely the behavior antitrust law seeks to encourage

      3. Court refuses to adopt a per se rule “denying competitors the standing to challenge acquisitions on the basis of predatory pricing theories”

    4. What is the right type of plaintiff? – Illinois Brick Co. v. Illinois (1977)

      1. Previously Court held in Hanover Shoe that indirect purchasers are not the parties injured by an antitrust violation.

      2. Court does not want to complicate the damage calculations to trace the effects on the overcharge throughout a supply chain.

      3. Allowing offensive but not defensive use would create serious risk of multiple liability.

      4. Cannot justify unequal treatment of plaintiffs and defendants

      5. Comments

        1. Direct purchasers may have no incentive to sue because they can often pass on the increased price.

        2. Supreme Court has ignored indirect purchaser suits.

        3. Large number of states have repealed the effect of this rule in their state antitrust statutes

  3. Antitrust Standing

    1. Must be some degree of sufficient nexus between the plaintiff and defendant – hard time getting standing if you are neither the competitor nor the customer of the defendant.

    2. Blue Shield of Virginia v. McCready (1982)

      1. Allegation that Blue Shield conspired with psychiatrists to lock out psychologists from reimbursement

      2. Sufficient nexus does exist for a consumer to challenge because they are directly harmed by the conspiracy – unable to pay for psychologist services

    3. Associated General Contractors

      1. Association encouraging people to do business with non-union contractors

      2. Unions do not have standing to challenge because they are neither the purchaser of contracting services nor a competitor

  4. Section 1 of Sherman Act

    1. Horizontal Restraints

      1. Generally – composed of price agreements and output restrictions

        1. Reduce competition

        2. Cartels exist, all the time

          1. Notoriously unstable, though may last for some period of time

          2. Larger number of competitors, low barriers to entry may make more unstable, different profit maximizing output, different cost structures

          3. Per se illegal – proof of conduct is proof of the violation

      2. Standard Oil

        1. Overrules Trans-Missouri Freight – overly restrictive rule

        2. Sherman Act meant to bring in the rule of reasonableness, articulated this rule in a case here where everyone agrees on the outcome

        3. Certain category of restraints are so likely to do harm on their face that they are per se unreasonable restraints

        4. Test:

          1. Agreement/combination of some kind?

          2. Does it necessarily or inherently restrain trade without benefit? – If so, per se illegal.

          3. If not, balance the harms and benefits.

            1. “harmful purpose” – intent is probative of effects

            2. If there is evidence that conduct is undertaken with a particular intent to harm the market, then we will generally believe that it harmed consumers.

      3. Antitrust Guidelines

        1. Some collaboration between competitors may be a good thing.

        2. Firms may look to the guidelines to know what is okay and what isn’t.

        3. Small groups of firms serving a small market getting together could not actually ever fix price due to small market...

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