Restraint Agreements Research Articles

Critical Analysis of Agreements in Restraint of Legal Proceedings

Critical Analysis of Agreements in Restraint of Legal Proceedings

An Evaluation of the Restraint of Trade to Contracts for the Sale of a Business Undertaking in South Africa

Agreements in restraint of trade prohibit the contracting party to exercise the choice in performing the profession or business activities. As a general rule, agreements in restraint of trade are p...

Taking Antitrust to Patent School: The Instance of Pay-For-Delay Settlements

The essay develops a new approach for antitrust analysis of pay-for-delay settlements in pharmaceutical patent infringement cases, an approach that shows them to be presumptively prohibited agreements in restraint of competition. The issue is timely in light of Watson Pharmaceuticals v. FTC, a case now pending before the Supreme Court; the decision below is one in a line of antitrust cases concluding that the settlement agreements are legal per se so long as their pay-for-delay provisions fall “within the scope of the patent.” The essay explains why proper antitrust analysis calls for separate attention to the scope of the injunction remedy and then shows how antitrust approval of pay-for-delay provisions entails satisfaction of the Supreme Court's traditional test for the injunction remedy in patent infringement cases set out in the landmark eBay decision. Along the way, the essay briefly describes how the economics of patent law, rightly understood, supports the eBay test's application in the antitrust analysis of cases like Watson.

Is There a Role for Market Definition and Dominance in an Effects-Based Approach?

As the old millennium was coming to an end, European Competition law began a massive reform project aimed at modernizing each and every of its constituent parts. As well known, this ambitious project started with the introduction of Regulation n. 2790/1999 on vertical restraints, and its accompanying Guidelines, it followed with the Guidelines on horizontal cooperation agreements, and made all its way up till the review of the Merger Regulation. The underlying leitmotif of these reforms has been to introduce a more economics-oriented approach to the assessment of competition cases. In practice, these reforms have resulted in a progressive erosion of per se rules in favour of the more flexible rule of reason which leaves the floor open to case by case considerations and seems better suited to take into account the appropriate circumstances (especially of economic nature) of the controversy at issue. The turn has come now for abuses of a dominant position to go under review to determine the extent it should conform to the new mainstream trend which calls for a more substantive recourse to economics insights into the assessment of unilateral practices. As we are about to see, European Commission's (and European competition authorities' in general) treatment of abuse cases has attracted a good deal of criticism for being rather formalistic and rigid and hence inapt to sufficiently take into consideration the economic circumstances of the cases, in particular to weigh the anticompetitive effects apparently caused by the conduct against the likely positive pro-competitive (or, more precisely, pro-consumer) efficiencies which, in the end, could tilt the balance and reverse an initial finding of abuse. In order to do justice to these points of criticism, the European Commission has drafted a Discussion Paper on the application of Article 82 to exclusionary abuses and has called for open discussion on it. Unfortunately, the document, mainly because of its guideline style, is rather confusing and obscure. A coherent suggestion for a new approach, however, can be more easily inferred by reference to the report presented by the Economic Advisory Group for Competition Policy (hereinafter EAGCP) which the Commission has surely considered in the course of preparing its Discussion Paper. The effects-based approach (so called to differentiate itself from the current formalistic one) apparently carries a strong economic imprint and seems aimed at correcting the early methodology adopted by European agencies and courts by introducing two substantive changes. On the one hand, the competition authorities would be asked to prove, with strong economics-based analysis and studies, the anticompetitive harm produced by the presumably abusive conduct. This with specific regard to the ultimate effect that the practice will assert on consumer welfare. On the other hand, because it is extremely complex to discern the pro- from the anti-competitive aspects within the same conduct and, as economists strongly assert, pro-competitive effects can also arise from a unilateral conduct adopted by a dominant firm, the new approach would grant defendants the faculty to plead an efficiency defense against a finding of abuse. This change would appear, at least at a first glance, in line with the assessment of agreements in restraint of competition under Article 81 and would make the overall assessment of competition law cases uniform. Nonetheless, as I will try to demonstrate, such alignment with current assessment of (horizontal or vertical) agreements between firms is nor welcome or desirable.

Anticompetitive Social Norms as Antitrust Violations

The antitrust laws broadly forbid agreements in restraint of trade. These illegal agreements are typically imagined as products of smoke filled backroom discussions, where titans of industry set prices over cigars and whiskey.! Such clear examples form the inner core of what section 1 of the Sherman Act proscribes,2 but the outer boundaries of section 1 liability are unclear and are the subject of substantial disagreement among courts and academics. For instance, imagine an isolated town with two gas stations located across the street from each other, each charging $2.00 per gallon of gaso line. One morning, the owner of the first station increases her prices by $0.25, even though her cost of selling gasoline remains unchanged. This first owner knows that, assuming the second owner does not change his prices, customers will likely abandon her station and opt for the cheaper gasoline of her competitor. However, she also knows that, if the second owner likewise increases his prices by $0.25, each owner will sell the same amount of gasoline at the higher price, and they will therefore both enjoy higher profits. The second owner notices the increase in price and increases his price to match. Has a price-fixing conspiracy occurred in violation of section 1 of the Sherman Act?3 Theoretically, yes. Both have agreed to raise their price above the competitive level. But as a practical matter, both are likely to get away with it, insofar as there is no further evidence of an

Toward a Multilateral Competition Policy Regime?

The multilateral economic system contains a major shortcoming. Although governments have committed themselves to a rule-based multilateral trade policy regime in the World Trade Organization (WTO), private companies that operate in the global marketplace face no such multilateral disciplines. Certainly, most industrialized nations have created their own set of antitrust laws. Furthermore, a series of well-functioning bilateral and regional mutual assistance agreements has been concluded both to facilitate competition enforcement in transnational cases and to avoid the drawbacks of the extraterritorial application of antitrust legislation. Still, on a multilateral level, it has been impossible to agree on a coherent framework for competition rules. Strangely, international competition policy has received attention only from a relatively small group of specialized antitrust practitioners. As a structural factor determining the margin of maneuver of internationally active private companies on the global market, the international dimension of competition policy deserves a higher place on the agenda of all those interested in international public policy and political economy. Competition Policy Competition or antitrust policy serves many purposes. [1] First, by preventing the economy from being dominated by a few large conglomerates, antitrust policy is a tool that ensures the plurality of economic and--ultimately--political life. Second, competition law is set up to protect consumers against abuses of market dominance and against price-increasing and choice-reducing agreements between companies. Third, weak or absent competition poses a problem for the efficiency of resource allocation in the economy. Fourth, competition policy helps to modernize the economy by stimulating companies to constantly innovate in light of the latest technological discoveries. Finally, the strict enforcement of competition policy helps to keep markets open for competitors, whether national or foreign. Today, more than eighty countries have enacted competition legislation, and another twenty countries are considering adopting antitrust laws. [2] Although I do not intend to provide an assessment of the current intellectual debates on antitrust policy, it might be useful to briefly introduce the most well-known examples of competition enforcement. [3] In the United States, antitrust law was already well established at the end of the nineteenth century as a tool to fight the formation of industrial conglomerates. [4] The Sherman Act of 1890--which still forms the basis of U.S. antitrust law--prohibits agreements in restraint of trade and monopolization, attempted monopolization, and conspiracies to monopolize. In 1914, Congress adopted the Clayton Act as a means to protect opportunities for small business. The act notably prohibits price discrimination and tie-in sales and exclusive dealing contracts. Furthermore, the Clayton Act forms the starting point of U.S. merger control. It prohibits acquisitions, mergers, or joint ventures that may substantially reduce competition. Convinced that the concentration of German industries in the 1930s had been an important element in the creation and persistence of Hitler's Nazi regime, the United States insisted after World War II on the establishment of a strict anticartel policy in the Federal Republic of Germany. Germany, in turn, proved instrumental in bringing the antitrust concept into the 1957 Treaty of Rome, which established the European Community (EC). [5] The EC treaty prohibits agreements or concerted practices between companies that may affect trade between the member states and restrict competition. Examples are agreements between companies intended to fix purchase or selling prices. A company's abuse of its dominant position is also prohibited. Large mergers may not be put into effect without EC approval and are prohibited if they create or strengthen a dominant position on the internal market or a substantial part of it. …

Voluntary Export Restraints and Economic Welfare

In this paper, we explore welfare implications of a voluntary export restraint (VER) agreement within a simple model of duopoly with product differentiation and conjectural variations. We assume that the foreign exporter does not sell its product in its own market and that the imposition of a VER makes the domestic firm into a Stackelberg leader. Under these assumptions, it is shown that a VER introduced at the free-trade equilibrium level of export is welfare-improving for the importing country if and only if the foreign exporter is forced to comply with the restraint involuntarily. In other words, it is impossible to benefit home country and foreign country simultaneously by a VER agreement within the class of models we are envisaging. This result holds irrespective of whether firms compete in terms of quantities or prices.

Competition Law Issues in the Upstream Oil and Gas Industry

The Competition Act has many implications for Canada's oil and gas industry. To assist the industry in understanding the application of the Act, the author reviews the treatment of horizontal agreements in restraint of trade and describes some of their statutory and jurisprudential defences. The enforcement agency's Program of Compliance and current law enforcement policies are also detailed.

COLLUSION, PREDATION AND MERGER IN THE UK BUS INDUSTRY

Collusion, predation and merger in buses should each be viewed as attempts by firms to restore and improve profits following deregulation in 1985. Their analysis by competition authorities should define the entry conditions which deregulation in 1985 exposed, and the changes since, including some raised barriers. Effective pro-competitive action depends on modifying these conditions. The analysis of predation and merger in buses performed by the Office of Fair Trading and the Monopolies and Mergers Commissions are assessed in this light. Some evidence linking the registration since 1985 of agreements in restraint of trade, denoting collusion, with greater than average entry, and other parameters, is presented. (Author/TRRL)

An Overview of the New Competition Law: Issues for the Oil and Gas Industry

This paper reviews the major changes to Canada's competition law enacted in 1986, including new merger and abuse of dominant position provisions, the establishment of a Competition Tribunal, mandatory pre-notification of certain transactions, and revisions of the prohibition against agreements in restraint of trade. Special attention is given to joint ventures, export agreements and vertically integrated resource companies.

Comments on Arguments in Justification of Agreements in Restraint of Trade—The United Kingdom, Australian and New Zealand Experience

Comments on Arguments in Justification of Agreements in Restraint of Trade—The United Kingdom, Australian and New Zealand Experience

An Empirical Evaluation of Arguments in Justification of Horizontal Agreements in Restraint of Trade

An Empirical Evaluation of Arguments in Justification of Horizontal Agreements in Restraint of Trade

Patent License Restrictions in the Prescription Drug Industry

OST agreements in restraint of trade contravene the Sherman ?V.~L Act,' the Clayton Act2 or both. However, because our patent system authorizes limited monopolies, it has traditionally been thought permissible for a patentee to impose restrictions upon his licensees which, absent a patent, would be clearly illegal.3 While this antitrust exception has been narrowed in recent years, it continues to play a significant role in determining the structure and behavior of some of our basic industries. This Article will explore the impact of restrictive licensing practices upon the ethical drug industry and will suggest means to resolve the apparent conflict between the patent and antitrust policies involved. The incidence of both innovation and obsolescence in the drug industry is high, and it is not surprising that patents play a significant role. However, it has been pointed out that much of the innovation, and the concomitant obsolescence, is due at least partially to the patent lawsmany are little more than minor deviations from older products and are developed not to provide new therapeutic benefits, but simply to invent around someone else's patents.4 The social value of such innovation is dubious, although drugs with novel therapeutic characteristics do occasionally result by accident. Consequently, some observers have suggested the abolition or severe curtailment of patent protection for drugs.5 Statistics have been produced to show that the rate of beneficial innovation in countries which do not allow drugs to

Agreements in Restraint of Trade

Agreements in Restraint of Trade

The Family Watchdog

The modern family, like other human institutions, is subject to the constantly varying pressures of social, economic and psychological conditions, among them being the age old conflict between individualism and regimentation. Interest in reaching a stable equilibrium is shown by the principals, their respective kin, the church and the state.' The tide of controversy sways presently back and forth.2 The proponents of individualism 3 are interested in experiments such as those in Russia.4 Their point of view, in this country, is suggested by such principles and policies of the law as: disapproval of agreements in restraint of marriage; 5 the general requirement of extreme provocation as an element in annulments of marriage on the ground of fraud, duress or mistake; 6 the tendency to construe

Monopolies. Agreements in Restraint of Trade

Monopolies. Agreements in Restraint of Trade

Agreements in Restraint of Trade

Agreements in Restraint of Trade

Agreements in Restraint of Trade by Copyright-Holders and Patentees

Agreements in Restraint of Trade by Copyright-Holders and Patentees

Contracts. Agreements in Restraint of Trade. Public Policy. Gamewell Fire Alarm Tel. Co. v. Crane et al., 35 N. E. Rep. 98 (Mass.)

Contracts. Agreements in Restraint of Trade. Public Policy. Gamewell Fire Alarm Tel. Co. v. Crane et al., 35 N. E. Rep. 98 (Mass.)