DYNAMIC COMPETITION IN ANTITRUST LAW

The US appears to lean towards the model of unconcentrated and distributed competition regulation agencies, instead of a single concentrated one. Aside from the states and private litigants, in practice, this model mainly runs through the Department of Justice (DOJ), via its Antitrust Division, and the Federal Trade Commission (FTC)’s enforcement. Traditionally, under developments of the regulatory approach, the ‘quasi-judicial’ FTC could be understood to be a cornerstone of US antitrust law, particularly in its practical enforcement. However, it appears that the DOJ contributes far more policies on the specific regulation of mergers as well as consumption of merger remedies. By analysing the US model of ‘inter-agency competition’ under perspectives of merger control, this writing leads to proof that the DOJ is a dominant actor to some extent. More significantly, the DOJ’s performances partially bring the FTC and others to the uniformity of stipulated mergers as well as approved remedy fashions. Merger regulation, merger remedies, merger guidelines, DOJ, FTC, clearance process, Sherman Act, Clayton Act, HSR Act, US antitrust.

ANTITRUST AND INEQUALITY

Comments of J. Gregory Sidak and David J. Teece before the Federal Trade Commission & U.S. Department of Justice on the Horizontal Merger Guidelines Review Project

Healthcare services markets display a trend toward concentration in recent decades. 1,887 hospital mergers have been announced in the United States between 1998 and 2021. In one regional market—really, in several regional markets—the University of Pittsburgh Medical Center (UPMC) acquired twenty-eight hospitals between 1996 and 2019. UPMC’s consolidating tendency has not slowed down into the present: in June of 2023, UPMC signed a non-binding letter of intent to affiliate with the Washington Health System, which consists of two hospitals. Meanwhile, in December of 2023, the two federal agencies empowered to enforce federal antitrust law, the Federal Trade Commission (FTC) and the Department of Justice (DOJ), released new merger guidelines thatsignal a more aggressive approach to Section 7 of the Clayton Antitrust Act in seeking injunctions against corporate mergers. The new guidelines above all signal a stronger presumption of illegality with respect to mergers and thus require less concrete evidence of a merger’s future individualized detrimental impacts on consumer welfare than previous guidelines for FTC or DOJ’s antitrust division to prosecute such mergers. Whether these guidelines will acquire cachet in the courts and change the state of antitrust law as we know it is an open question.Similarly, in February of 2023, the Department of Justice retracted Clinton-era policy statements creating an “antitrust safety zone” for hospital mergers. This Note will consider how the changes in FTC and DOJ policy signaled by the 2023 guidelines bear upon the healthcare services market. Though ultimately it is not likely that the shift in the agencies’ policies will be perfectly reflected in judicial decisions, healthcare administrators and their legal counsel concerned with the expense of litigation can consult this Note to understand how the FTC and DOJ will analyze mergers in their industry under the new guidelines.

This chapter asks how competition policy should be shaped if it were to favor Schumpeterian competition over neoclassical static competition. Schumpeterian competition is the kind of competition that is engendered by product and process innovation. Such competition not only brings price competition – it tends to overturn the existing order. A framework that favors dynamic over static competition would put less weight on market share and concentration, and more weight on assessing potential competition and enterprise-level capabilities. Developments in evolutionary economics and the behavioral theory of the firm in recent decades indicate how the machinery of a new framework can be engineered and applied to antitrust. Introduction In 1988, in anticipation of the centennial of the Sherman Act, my Berkeley colleagues and I held a conference on campus that led to the 1992 volume titled Antitrust, Innovation, and Competitiveness , with contributions from many of the leading scholars in antitrust law and economics. The conference was designed to alert the law and economics communities to a set of emerging issues on antitrust and innovation. With hindsight, we believe it was a watershed event, and a slow and reluctant awakening to antitrust and innovation issues is now underway.

Bridging Parallel Universes

This paper introduces the Special Issue of the Review of Industrial Organization that studies the impact of the 2010 Horizontal Merger Guidelines after 10 yearsOn August 19, 2010, the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) issued newly updated Horizontal Merger Guidelines (2010 Guidelines) [See https://www.ftc.gov/sites/default/files/attachments/merger-review/100819hmg.pdf.]. The 2010 Guidelines begin by stating:“These Guidelines outline the principal analytical techniques, practices, and the enforcement policy of the Department of Justice and the Federal Trade Commission (the “Agencies”) with respect to mergers and acquisitions involving actual or potential competitors (“horizontal mergers”) under the federal antitrust laws.”Since the first Merger Guidelines were issued by the DOJ 1968, the merger guidelines have been an important channel by which economic research and learning affects antitrust enforcement. Each iteration of the merger guidelines has reflected the economic thinking of the day. Each iteration also has made a substantial impact on merger enforcement and the development of antitrust law. This special issue examines the impact of the 2010 Merger Guidelines after 10 years.

Antitrust Risk in Practice Mergers: A Framework for Evaluation

Accountable Care Organizations: A Balancing Act

IntroductionOne often hears two things about Roberts Court's treatment of antitrust. first is that this Court has displayed a greater interest in antitrust than its direct predecessor.1 That seems accurate. Whereas Rehnquist Court showed little enthusiasm for antitrust cases in its later years, Roberts Court issued seven antitrust decisions in its first two years alone.2 Some have attributed trend toward more antitrust cases, and more business cases generally, to Chief Justice Roberts's years in private practice, during which he confronted a number of business and antitrust issues.3 Whatever its cause, there does seem to be an uptick in enthusiasm for antitrust cases on current Supreme Court.The second oft-heard observation about Roberts Court's antitrust decisions is that they betray a significant pro-business (or, pejoratively, anti-consumer) shift on Court. Not surprisingly, left-leaning advocacy groups have repeatedly sounded this refrain.4 But even respected academics and leaders of antitrust bar have construed Roberts Court's antitrust decisions as being radically and reflexively probusiness. 5 For example, noted legal scholar Erwin Chemerinsky recently dubbed Roberts Court the most pro-business Supreme Court there has been since mid-1930s and has characterized Court's antitrust decisions as favoring business over consumers.6 Chemerinsky, by his own admission, is not an antitrust expert.7 meme he recites has nevertheless been embraced by others who do have substantial antitrust expertise. For example, William Kolasky, a former Deputy Assistant Attorney General in Antitrust Division of U.S. Department of Justice and an associate editor of American Bar Association's Antitrust magazine, made following observations in 2008:Our Supreme Court, especially under leadership of Chief Justice John Roberts, seems equally intent on cutting back on private enforcement. It has been more than fifteen years since Supreme Court last decided an antitrust case in favor of a plaintiff. Over this fifteen-year period, plaintiffs have gone 0- for-16, with not a single plaintiff winning an antitrust case in Supreme Court since first George Bush was president. This record led Antitrust to ask in its last issue whether Supreme Court's recent antitrust decisions represent The End of Antitrust as We Know It?8The central claim of this Article is that second common assertion about Roberts Court's antitrust jurisprudence-that it is probusiness and anti-consumer and represents a radical departure from past-is wrong and reflects a misunderstanding of antitrust enterprise. As a body of law regulating business conduct for benefit of antitrust is inherently limited. Once one accounts for limits of antitrust, rulings of Roberts Court, rather than favoring business over consumers, seem calculated to maximize antitrust's effectiveness to ultimate benefit of consumers. Specifically, Roberts Court's antitrust cases embrace a decision-theoretic approach that seeks to minimize sum of decision and error costs that inevitably result from antitrust adjudication.This Article proceeds as follows: Part I sets forth limits of antitrust and explains how a decision-theoretic approach, in light of these inherent limits, ultimately benefits consumers by maximizing overall effectiveness of antitrust enterprise.9 Part II then discusses Roberts Court's antitrust decisions, demonstrating how each coheres with a decision-theoretic approach.10 Part III looks to future and predicts how Roberts Court, harnessing insights of decision theory, will resolve several antitrust issues that are likely to come before it.11I. Limits of Antitrust and Need for a Decision- Theoretic ApproachWhen it comes to ensuring that consumers have access to low prices, high quality goods, and product variety, there is no better regulator than competition. …

The Evolving Antitrust Treatment of Labor-Market Restraints: From Theory to Practice

Economics--especially microeconomics and the field of industrial organization-has had a long history of involvement with antitrust (see Blaisdell 1932; Henderson 1924; Scherer 1990; Stevens 1940; White 1984, 1999). The U.S. Bureau of Corporations, which was established in 1903 within the Department of Commerce and Labor, provided research support for early antitrust prosecutions brought by the U.S. Department of Justice (DOJ), including U.S. v. Standard Oil of New Jersey et al. (1911) and U.S. v. American Tobacco Co. (1911). An early, and possibly the first, use of an economist's testimony was in the DOJ's prosecution of U.S. v. United States Steel Corp. (1920). The Bureau of Corporations was superseded and absorbed by the Federal Trade Commission (FTC) in 1914. Within the FTC, the Economic Department (which later became the Economic Division and then the Bureau of Economics) inherited the Bureau of Corporation's research and investigative role. In 1933, responsibility for antitrust prosecutions was placed in the DOJ's Antitrust Division. Within three years, the Division hired its first staff economist. As late as the 1960s, however, economists at both enforcement agencies were generally second class citizens and outside the mainstream of decision making and policy influence (see Green 1972; Weaver 1977). Since then, however, economists' roles and positions within both agencies have risen (see Kwoka and White 1989, 1994, 1999). In general, economics since the 1930s has had an increasingly influential role in shaping the paradigms of public and private antitrust enforcement. Areas in which economists, within and outside of the agencies, have contributed include the following: 'Structure-behavior-performance paradigm (Sherman Act 1890, 1, 2; Clayton Act 1914, 7), *Merger guidelines (Clayton 7), *Intellectual property guidelines (Sherman 2), *Tying (Sherman 2; Clayton 3), *Predatory behavior (Sherman 2), 'Vertical restraints (Sherman 1, 2; Clayton 3), *Price discrimination (Clayton 2), *Network economics (Sherman 2), 'Raising rivals' costs (Sherman 2; Clayton 3), and *Treble damages remedy (Clayton 4).

1. IntroductionTwo firms, competing with each other in at least one line of business, face a complicated regulatory regime if they attempt to merge. Under the Hart-Scott-Rodino (HSR) Act of 1975, almost all large transactions in the United States are subject to review by either the Department of Justice or the Federal Trade Commission (FTC). In the event an enforcement agency objects to the transaction, several outcomes are possible: (i) The parties could give up and abandon their transaction, (ii) take the case to a federal court and litigate the dispute to a conclusion, or (iii) the firms could settle their differences with the enforcement agency. All settlements, however, are not the same. In particular, agencies have shown some willingness to accept settlements, defined here as consents that do not fully resolve the relevant competitive concerns. The purpose of this study is to model the interaction between an antitrust agency and firms seeking to consummate mergers. In doing so we will attempt to answer an important question in antitrust regulation: What attributes drive the final outcome of a merger challenge?This paper will model interactions between the FTC and private parties interested in consummating horizontal mergers that may adversely affect competition in at least one relevant market. This decision to fight, fold, or settle is somewhat more complicated than an action for damages, because the prospective nature of the alleged competitive injury gives the defendant an opportunity to abandon the transaction before the injury occurs. Moreover, the conglomerate nature of most mergers creates a possibility for a strong settlement to resolve competitive concerns while allowing the firm to quickly consummate the innocuous portions of the transaction. Compromise settlements also are possible, under which the consent offers partial relief. The maximum-likelihood estimation procedure used in the paper is derived directly from a game-theoretic analysis that models the outcome of the interaction between merging firms and the FTC. This allows for formal estimation of for both merging parties and the FTC. Estimating the structural equations of the model offers more detailed insight into the regulatory system.We have two basic hypotheses with respect to this process. First, the underlying opportunity costs, the legal merits of particular cases, and possibly the political ramifications of enforcement decisions drive FTC decisions. Second, firms' decisions depend not only on the competitive merits of the FTC's case, but perhaps more importantly on both the financial issues relevant to the specific transaction and how the nature of the case fits into the merger review process.Section 2 presents the background for the analysis by discussing the institutional structure of the FTC, explaining the merger review process, describing the hostage effects that may affect a firm's response to an FTC enforcement decision, and introducing the idea of a compromise settlement. Section 3 models the game-theoretic interaction between firms and the FTC and then explores an econometrically tractable method of estimating the underlying utility functions for the players in the game. Section 4 describes the data and specifications to be used. Results of the maximum likelihood estimation are presented in section 5. Concluding comments are in section 6.We hope to shed light on an important aspect of the U.S. merger review process. We also suggest that our results may have broader consequences. Since the mid-1980s, a large number of countries have established formal antitrust procedures. The results here may be of assistance to those policy regimes as well.2. Issues in Merger EnforcementBackground on the FTCThe FTC is a government agency charged, along with the Department of Justice (DOJ), with enforcing U.S. antitrust laws. The bulk of the casework involves the evaluation of proposed horizontal mergers. …

Introduction to The Oxford Handbook of International Antitrust Economics

Response to the Subcommittee on Antitrust, Commercial, and Administrative Law Committee on the Judiciary, U.S. House of Representatives