Antitrust Doctrine Research Articles

The National Resident Matching Program and antitrust law.

In May 2002, a group of physicians filed a class action lawsuit alleging that the National Resident Matching Program (NRMP) violates antitrust laws. The plaintiffs contend that NRMP practices have stabilized lower-than-competitive wages and imposed exhausting working conditions on residents. They also maintain that NRMP procedures virtually force applicants for house officer positions to forfeit their right to negotiate for better wages and conditions. The plaintiffs also allege that the defendants have collectively fostered anticompetitive accreditation standards through the Accreditation Council for Graduate Medical Education. Jung v Association of American Medical Colleges could present antitrust law with some difficult challenges. Although the matching program on its face appears to limit competition in a manner that previous cases have found illegal, it operates in the context of important professional activities (medical education and quality improvement) that may generate some judicial deference. At this early stage, no confident prediction can be made about the outcome of the case if it goes to trial; however, the plaintiffs appear to have a plausible case under existing antitrust doctrine, and lengthy litigation is possible. Given the important questions that the litigation will not address, such as the potential costs of a finding of illegality to the government and other payers, and the impact of such a finding on the health care system as a whole, a legislative solution seems highly desirable.

Intellectual Property, Antitrust, and Strategic Behavior

Economic growth depends in large part on technological change. Laws governing intellectual property rights protect inventors from competition in order to create incentives for them to innovate. Antitrust laws constrain how a monopolist can act in order to maintain its monopoly in an attempt to foster competition. There is a fundamental tension between these two different types of laws. Attempts to adapt static antitrust analysis to a setting of dynamic R&D competition through the use of "innovation markets" are likely to lead to error. Applying standard antitrust doctrines such as typing and exclusivity to R&D settings is likely to be complicated. Only detailed study of the industry of concern has the possibility of uncovering reliable relationships between innovation and industry behavior. One important form of competition, especially in certain network industries, is between open and closed systems. We present an example to illustrate how there is a tendency for systems to close even though an open system is socially more desirable. Rather than trying to use the antitrust laws to attack the maintenance of closed systems, an alternative approach would be to use intellectual property laws and regulations to promote open systems and the standard-setting organizations that they require. Optimal policy toward R&D requires coordination between the antitrust and intellectual property laws.

Antitrust in the New Economy

In this paper Judge Posner addresses the application of the antitrust laws to computer software and related new economy industries. He argues that antitrust doctrine is sufficiently supple to cope adequately with the legal and economic issues of antitrust policy presented by these industries but that the institutional framework of antitrust is inadequate; antitrust cases move too slowly and the antitrust community lacks the necessary technical expertise. He proposes several partial solutions to these problems.

Theory and Fact in Antitrust Doctrine: Summary Judgment Standards, Single-Brand Aftermarkets and the Clash of Microeconomic Models

Theory and Fact in Antitrust Doctrine: Summary Judgment Standards, Single-Brand Aftermarkets and the Clash of Microeconomic Models

Antitrust and Baseball: Stealing Holmes

Antitrust and Baseball: Stealing Holmes Kevin McDonald (bio) Kevin McDonald Kevin D. McDonald is a partner at the Washington office of Jones, Day, Reavis & Pogue. Endnotes Note: The author is grateful for the support and help of his friends and colleagues, especially Joe Sims, Don Ayer, Joe Migas, Feroz Moideen, Dave Rutowski, Jana Crouse, and Marybeth McDonald. 1. 259 U.S. 200 (1922). Federal Baseball is “still the law” despite the recent passage of the Curt Flood Act of 1998, which purports to work a partial repeal of baseball’s antitrust exemption. The new statute is discussed in the Author’s Note at the end of this article. 2. Gardella v. Chandler, 172 F.2d 402 (2d Cir. 1949). 3. Toolson v. New York Yankees, Inc., 346 U.S. 356, 357 (1953). 4. Flood v. Kuhn, 407 U.S. 258 (1972). 5. Joe Sims, Antitrust in the Health Care Field: The First Decade (1977–1987), (unpublished manuscript, on file with author). Before the Nat’l Health Lawyers Assoc. Tenth Annual Seminar on Antitrust in the Health Care Field (Jan. 29, 1987). 6. Gardella v. Chandler, 172 F.2d 402, 409 (2d Cir. 1949). 7. Salerno v. American League, 429 F.2d 1003, 1005 (2d Cir. 1970), cert, denied, 400 U.S. 1001 (1971). 8. G. Edward White, Creating the National Pastime 70 (1996). 9. Flood v. Kuhn, 407 U.S. at 286. 10. 193 U.S. 197, 400 (1904). 11. Hans B. Thorelli, The Federal Antitrust Policy 474 (1955). 12. Robert H. Bork, The Antitrust Paradox 31 (1978). 13. Id. 14. Rothery Storage & Van Co. v. Atlas Van Lines, Inc., 1986–1 Trade Cas. (CCH) ¶ 67, 121 at 62, 774 (1986). 15. Richard A. Posner, “Foreword: Holmes,” 63 Brook. L. Rev. 7, 7 (1997). 16. Id. at 17. 17. Radovich v. Nat’l. Football League, 352 U.S. 445, 451 (1957). 18. Bork, note____, at 30 (“the Addyston opinion of 1898 may well have been the highwater mark of rational antitrust doctrine”). 19. United States v. Von’s Grocery Co., 384 U.S. 270 (1966). 20. Albrecht v. Herald Co., 390 U.S. 145 (1968) (Douglas, J., concurring). 21. State Oil v. Khan, 118 S. Ct. 275 (1997). 22. Sierra Club v. Morton, 405 U.S. 727, 741 (1972) (Douglas, J., dissenting). 23. Lee Allen, 100 Years of Baseball 180–88 (1950). Similar circumstances attended the birth of the Union Association, id. at 74–83, the Player’s (or Brotherhood) League, id. at 103–14, the American Association, id. at 64–73, and of course the surviving American League, id. at 142–51. See also Hy Turkin & S.C. Thompson, The Official Encyclopedia of Baseball 16–20 (revised edition 1956). 24. Bob Broeg & William J. Miller, Jr., Baseball from a Different Angle 224 (1988); Turkin & Thompson, supra note 23, at 36. 25. Broeg & Miller, supra note 24, at 225. 26. See National League of Prof’l Baseball Clubs v. Federal Baseball Club of Baltimore, Inc., 269 E 681, 682 (D.C. Cir. 1920). 27. Roger I. Abrams, Legal Bases, Baseball and The Law at 55 (1998); Allen, supra note 23, at 185. 28. Federal Baseball Club of Baltimore, Inc. v. National League of Prof’l Baseball Clubs, 259 U.S. 200, 208 (1922); The New York Times, Apr. 13, 1919, at 21. 29. Federal Baseball, 259 U.S. at 208. 30. 155 U.S. 648 (1895). 31. Federal Baseball, 259 U.S. at 201 (emphasis added). 32. Id. at 203. 33. Id. at 208–209. 34. White, supra note 8, at 79. 35. Id. at 79. 36. “The Supreme Court 1953 Term,” 68 Harv. L. Rev. 104, 136 (1954). 37. John Eckler, “Baseball — Sport or Commerce?,” 17 U. Chi. L. Rev. 56, 65 (1949). 38. Id. at 66. 39. “Recent Cases,” 105 U. Pa. L. Rev. 110, 111 (1956). 40. United States v. Int’l Boxing Club of New York, Inc., 348 U.S. 236, 251 (1954) (Minton, J., dissenting). 41. Id. at 248 (Frankfurter, J., dissenting). 42. Flood v. Kuhn, 407 U.S. 258, 286 (1972) (Douglas, J., dissenting). 43. Id. 44. United States v. Shubert, 348 U.S. 222 (1954). 45. Radovich v. Nat’l Football League, 352...

The Application of Antitrust Doctrine to the Healthcare Industry: The Interweaving of Empirical and Normative Issues

The Application of Antitrust Doctrine to the Healthcare Industry: The Interweaving of Empirical and Normative Issues

Market Talk: Competition Policy in America

A dreary debate has occupied the antitrust community over the past 30 years. debate is a elegant, scholarly version of the commercials for Miller Lite beer that ran during much of the same period. In the beer commercials, one group of modestly recognizable celebrities and personalities of the day shouted Tastes great while the opposing group shouted Less filling. antitrust equivalent of this debate involves distinguished academics and policymakers arguing whether antitrust law and policy should be more efficient or should incorporate greater fairness. Both schools of thought have enjoyed their periods of supremacy. economically oriented efficiency camp, normally dubbed The Chicago School, had reigned supreme since the mid-1970's as its narrower version of antitrust policy has been adopted by the Supreme Court, has been relied upon by the Reagan and Bush administrations, and has persuaded the majority of commentators. sterile nature of the resulting discourse makes a book like Rudolph Peritz's Competition Policy in America, 1888-1992: History, Rhetoric, Law particularly welcome. Peritz is not interested in rehashing the existing debates over the original intent of the antitrust laws or their proper interpretation. Instead, he explores antitrust law and policy using the insights of postmodernism and the teachings of Michael Foucault to analyze the history, rhetoric, and legal doctrine of the first century of antitrust. He further analyzes antitrust law not as a narrow specialty field but as a body of competition policy including labor, corporate, and commercial free speech law. In this review essay, I seek to analyze Peritz's vision for antitrust law and an American competition policy. In the first section, I discuss why antitrust history and rhetoric lends itself so effectively to a postmodern approach and Peritz's overall success at this endeavor. Part II looks at one of the vexing questions underlying any attempt to delineate an integrated competition policy that includes commercial free speech: namely, whether the marketplace for ideas is really a marketplace at all. Part III goes beyond Peritz's work to suggest that a vision of a competition policy embracing that just antitrust doctrine is appropriate for international, as well as domestic, markets. Finally, I offer my personal speculations on the impact of Peritz's postmodernism on the ongoing debates in antitrust law.

Policy Watch: Antitrust Goes to College

It may have come as a shock to many economists, especially those in academia, to learn that the Antitrust Division of the U.S. Department of Justice (DOJ) has been investigating alleged price fixing and information exchange of financial aid among 23 prestigious east coast colleges and universities. These schools include the “Ivy overlap group”—MIT, Brown, Columbia, Cornell, Dartmouth, Harvard, University of Pennsylvania, Princeton, and Yale—and the “Pentagonal/Sisters group”—Amherst, Barnard, Bowdoin, Bryn Mawr, Colby, Mount Holyoke, Middlebury, Smith, Trinity, Tufts, Vassar, Wesleyan, and Williams. We have no specific knowledge concerning the possible validity of these allegations or expertise about their legality. Rather, in this article, we wish to present the potential applicability of current antitrust doctrines to colleges and their conduct and the possible defenses that they might raise to justify their actions.

Anti-trust and regulatory issues in a competitive electric industry

This paper contains a brief synopsis of the anti-trust enforcement structure and those anti-trust principles most pertinent to the regulated energy industries of the USA. A discussion of how the courts have applied anti-trust doctrine, especially to electric power, follows. The evolving role of agencies charged with economic regulation who have themselves applied anti-trust principles as competition emerges is then discussed, as are the major institutional relationships, most notably between the Federal Energy Regulatory Commission (FERC) and the traditional anti-trust enforcement agencies. How FERC is applying anti-trust principles in the course of various facets of its economic regulation of these industries is analysed. Finally, in view of the enormous task facing the European Community integrating its energy markets by 1992, the article looks at the US-Canadian experience of integrating their domestic energy markets under the Canada-US Free Trade Agreement (1 January 1989).

The Antitrust Doctrine: How It Was Internationalized

ABSTRACT The pro-competitive antitrust doctrine has originated in the free-market economies of Western capitalist countries but with economic transformations in Eastern Europe the doctrine ceased to be an exclusive Western concept. Using the example of the Polish law on combating Trust in the National Economy of 1987, the author demonstrates the spread of the antitrust doctrine from capitalism to socialism. Apart from these changes, the doctrine has been spreading on the international level because increasingly it has found application not only within particular countries but also with regard to trade and commerce between and among countries. The multidimensional nature of the antitrust doctrine has important implications for combating both domestic and international antitrust crime. The efficiency of efforts to combat abuse of a dominant market position, limiting access to the market or other forms of restraining competition will depend increasingly on the degree to which organs responsible for fighting ...

Antitrust and Hospital Peer Review

C. Risks of Peer Review by the Hospital Medical Staff 14 1. Historical Perspective 15 2. Economic Models of the Hospital 18 3. Sociological and Organizational Perspectives 22 4. Implications 24 III. Antitrust Doctrine: An Overview of the General Issues ......... 25 A. The Nature and Scope of Permissible Justificiations ......... 28 B. Potential Immunity from Antitrust Liability 32 1. The Health Care Quality Improvement Act 32 2. State Action Immunity 34 IV. Application of Antitrust Doctrine to Hospital Peer-Review Activity 37 A. The Capacity to Conspire: A Threshold Issue 39 B. Substantive Doctrine 53

The State Action Doctrine and The Local Government Antitrust Act: The Restructured Public Hospital Model

This Article analyzes the development and complexities of the antitrust state action doctrine and the Local Government Antitrust Act as these doctrines apply to both "municipalities" and private entities. The restructuring of a public hospital is used as a model to facilitate the antitrust analysis. The restructuring model, which typically involves the leasing of a hospital facility by a public entity to a private nonprofit corporation, offers the unique opportunity to compare the different standards employed under the state action doctrine and the Local Government Antitrust Act. As a practical matter, the Article provides a framework for a public hospital to evaluate the impact of corporate restructuring on its antitrust liability exposure and to develop strategies to minimize antitrust risks.

Market as Mirage

George J. Stigler (1985)1 I find much to endorse in Professor Areeda's magisterial presentation: (1) his description of the dubious role of juries as antitrust policymakers; (2) his recognition of the importance of clearly defining those anticompetitive improprieties that spell monopolization; and (3) his acknowledgement of the need for doctrines that do not chill innovative incentives or competitive vigor among even the most powerful enterprises.2 I too join the growing consensus that regards reforms in private treble damage enforcement as timely, since such reforms would not only diminish the sway of juries, but would also avert other excesses that might otherwise warrant cutting substantive antitrust doctrines to the bone.

Antitrust and Core Theory

Economists have kicked antitrust law around a lot in the last couple of decades but one thing has seemed clear: at least they have agreed that antitrust should outlaw per se horizontal agreements that explicitly and exclusively fix prices or restrain output. Recently, however, some economists have challenged even this remnant of doctrinal tradition. Using a part of game theory known as core theory, these economists suggest that horizontal agreements among competitors to restrain output sometimes can be essential for productive efficiency.' One commentator rightly remarks that this work strike[s] at the root of orthodox antitrust doctrine, even of the economic kind.2 Professor Lester Telser of the University of Chicago Department of Economics is the most prominent advocate of core theory.3 Virtually all courts and commentators accept economic effi-

PREDATORY PRICING AND THE RECONSTITUTED LEMON JUICE INDUSTRY

Current antitrust doctrine seemingly accepts average variable cost as one possible boundary between competitive and predatory pricing. Certain authors contend, however, that equally efficient rivals can sometimes be excluded from a market even when a dominant firm prices above its own average variable cost. A model is developed to test for predatory conduct in one such case. This model is applied to the reconstituted lemon juice industry. It shows that under certain conditions, even prices above average variable cost can be exclusionary.

The "Competitive Advantages" Explanation for Intrabrand Restraints: An Antitrust Analysis

This article argues that antitrust doctrine concerning intrabrand restrictions is unsatisfactory because the economic theory of intrabrand restrictions has been only partially developed and articulated. An unfilled and largely unacknowledged analytical gap exists between the view that intrabrand restraints are generally anticompetitive and the view that intrabrand restraints are generally efficiency-producing. That gap is the failure to explore how a manufacturer benefits from intrabrand restraints other than by increasing the profitability of his dealers. This article attempts to fill that gap by drawing on the theory of imperfect competition to explain why manufacturers find it profitable to restrict intrabrand competition in an anticompetitive way. Using this analysis, the article explains why price restraints should indeed be treated differently from nonprice restraints2s and formulates an analytial approach under the rule of reason for addressing nonprice vertical restraints. Non-economic analyses are possible, but are not treated here. The approach of this article rests on economic theory.

Tying Arrangements and Reciprocity: A Lawyer's Comment on Professor Ferguson's Analysis

Perhaps in no area save the arena of mental responsibility in the criminal law does the average attorney find himself confronted with the rigors of such an explosive and often self-contradictory discipline as in the field of antitrust law. Recent litigation in the federal courts and before the Federal Trade Commission signals the opening of a fresh assault on the business community by a concerned government and public. Having survived the enthusiasm of such trustbusters as Teddy Roosevelt and Thurman Arnold, our business giants have been forced to seek more acceptable means of exerting their market power so as to maximize profits within the framework of the existing antitrust laws. If provisions written into sales contracts by firms with weighty horizontal market power provide an example of the more sophisticated approach adopted by the business world, the reaction of the modern trustbusters and ultimately of the Supreme Court demonstrates an equally ingenious application of antitrust doctrine.1 Professor Ferguson has suggested that the antitrust decisions of the courts reflect social policy weighed in equal measure with economic factors in arriving at a particular determination. It is the purpose of this comment to suggest that such a phenomenon is not new and indeed that such a result is the natural and unavoidable consequence of our system, which forces upon bench and bar the adversary roles in all fields of socio-economic decision. The Ferguson article propounds an economic analysis of two of the more modern business practices that have come under attack by the Government, the so-called tying contract and the practice of reciprocity in buying and selling.