Antitrust Litigation Research Articles

Nonparametric Approaches to Empirical Welfare Analysis

Welfare analysis of policy interventions is ubiquitous in economic research. It plays an important role in merger analysis and antitrust litigation, design of tax and subsidies, and informs the current debate on a universal basic income. This paper provides a survey of existing empirical methods, based on cross-sectional microdata, for calculating welfare effects and deadweight loss resulting from realized or hypothetical policy change. We briefly outline classical parametric methods that are computationally tractable, then discuss recent nonparametric approaches that avoid making statistical and functional-form restrictions on individual preferences. This makes the welfare estimates theoretically more credible, and clarifies exactly what welfare-relevant information is contained in demand distribution in various choice settings. However, these methods also demand greater in-sample variation in the data for practical implementation than classical parametric approaches. We then cover settings with externalities. The above results are theoretical, and take the demand function as known; therefore, we briefly discuss empirical problems around demand estimation. We conclude by suggesting areas for future research. (JEL C14, C35, D11, D60, D62)

『탄소제로 보험동맹(NZIA)』가입 사업자의 미국 반독점법 위반 문제

ESG management is becoming a mainstream trend in corporate management in all industries. In the environmental sector of ESG, there is a global consensus on the need to reduce carbon emissions to fight the climate crisis, and a wide variety of initiatives have been proposed. The Glasgow Financial Alliance for Net Zero (GFANZ) of the United Nations Environment Programme (UNEP) is one such initiative that has formed sector-specific organizations across the financial industry and set out guidelines for action to achieve collective goals. In the insurance sector, the Net-Zero Insurance Alliance (NZIA) was launched. The NZIA started in July 2021 with eight large insurance companies as members. At one point, the number of members reached 30 as more and more insurers realized that ESG management was an essential requirement for corporate sustainability. However, in May 2023, 23 U.S. states warned NZIA member insurers that they would likely violate U.S. antitrust laws if they conducted business under NZIA guidelines. As of February 10, 2024, only 11 companies remained in the alliance. Korean insurers Samsung Fire and Maritime and Shinhan Life have already withdrawn, leaving K.B. Insurance as the only remaining member of the NZIA. This situation involves several complex issues and is more than just a matter of the number of NZIA member companies rising and falling. For example, if an insured seeks fire insurance, can member insurers refuse to underwrite the risk because the insured is a carbon-emitting company? Would an insurance company be sanctioned as a boycott or business entity of illegal cartel conduct under U.S. antitrust law? Will antitrust enforcement extend beyond insurance to banking and asset managers? Is this a political move by the U.S. Republican Party in the run-up to the presidential election or a solid legal judgment? Is it part of a U.S. context that has seen repeated withdrawals from and accessions to the Paris Agreement on Climate Change and anti-ESG legislation on a state-by-state basis?
 There are so many complex factors in these questions that it’s difficult to determine a definitive answer. However, leading global insurance companies see the potential for antitrust violations as a severe legal risk. This article examines the rise and fall of the NZIA, ESG trends and backlash, and the potential for antitrust violations in the insurance business, which is the only financial industry exempt from federal antitrust laws. This is an issue of extraterritorial application of antitrust law, but it also introduces the position of E.U. Competition Law and the TFEU, which are critical of the attitude of the 23 U.S. states. Art.125 Mutual Agreement in the Korean Insurance Business Act and Art.3 Application to Acts Conducted Overseas, Art.56 International Cooperation of the Fair Trade Commission, Art.116 Legitimate Acts under Statutes or Regulations in Korean Monopoly Regulation and Fair Trade Act do not solve the problem.
 The question of whether NZIA members would violate U.S. antitrust laws is currently unanswered. And significant variables such as the outcome of the U.S. presidential election, the policies of the Republican Party, the global trend of pro-ESG, and the possibility of sudden litigation risk should be noted. Whether you win or lose on the merits, antitrust litigation in the U.S. is an arduous process that no business entities wants to go through.

Economic Analysis in Antitrust Litigation: Empirical Evidence from the Courts, 1890-2018

Economic Analysis in Antitrust Litigation: Empirical Evidence from the Courts, 1890-2018

Уніфікація показників для контролю за різними формами монопольної влади

The paper demonstrates the necessity and possibility to unify the controlling indicators for different types of monopoly (monopolistic competition, oligopoly, natural monopoly) in order to increase efficiency of the monopoly control. Especially this concerns the complex types of monopoly from the point of view of its control, for example, oligopoly. The complexity of this type of monopoly control is associated with the actual inevitability of the appearance of tacit pricing coordination among the oligopoly participants. And the problem is not so much in admitting that the very fact of such a coordination is difficult to prove as in defining the harm it causes to the market and the entire economy. This paper shows the possibility to use the quantitative indexes of monopoly control proposed based on author’s CMI-model of macroeconomic dynamics, to apply these indexes for various types of monopoly. A distinctive feature of this model is the possibility to calculate the vector of “natural” prices for any sector (i.e., the prices that correspond to the state of perfect competition even if it is impossible to reach this state in the existing markets). And the comparison of the actual market price with the “natural” one allows us to control a monopoly using the price indexes alone. In turn, it allows us to perform a monopoly control at various hierarchical levels of the economic system (a firm, an economic sector and economy as a whole). Such a control enables us to calculate the degrees of the monopoly impact both on the entire economy, and on its various sectors. Quantitative values of these degrees can be used as evidence in antitrust litigations and for choice of corresponding instruments to “punish” the monopoly for such abuses. The paper reveals the mechanism of use of the proposed formulas for determination of the monopolistic power and degree of its impact on economy and various economic sectors for the cases of oligopoly and natural monopoly. Also, this paper demonstrates the mechanism of the influence of antimonopoly policy on the configuration of business cycle and on economic growth rate (when other policies are neutral). This opens up the possibility to combine the antitrust policy with the anticyclical and fiscal ones, because, under recession, increased monopolistic power in an individual sector may help the whole economy get out of the crisis.

Models on trial: antitrust experts face Daubert challenges

ABSTRACT Economists are often called upon as expert witnesses by the parties involved in antitrust litigation. One challenge they may face in US federal courts is compliance with the Daubert standard of admissibility of expert testimony. The interplay between model applicability and the Daubert standard is analyzed, suggesting the importance of distinguishing between weak applicability claims, those that state that a model’s critical assumptions are shared by the target, and strong applicability claims, those that connect empirical models and quantitative market features. Recent antitrust cases in which expert testimonies based on economic models have been assessed following the Daubert standard are examined using this framework. Some normative implications are drawn concerning how to improve judges’ assessment of model-based arguments.

Competitors’ Responses to Employee-Related Antitrust Litigation

Competitors’ Responses to Employee-Related Antitrust Litigation

Enforcement of US antitrust law in labour markets

In recent years, the US government has begun to focus antitrust enforcement efforts on labour markets. In 2022, for example, the Department of Justice (DOJ) blocked Penguin Random House’s acquisition of Simon & Schuster based on the theory that the merger would reduce compensation for authors.1 In the same year, the DOJ settled a lawsuit with three poultry processing plants that allegedly exchanged information on compensation of plant workers for the purpose of collaborating on pay decisions.2 The DOJ has also brought several criminal complaints against firms and individuals for fixing wages and agreeing not to poach one another’s employees, and it has intervened in numerous private cases to express its views on the application of antitrust to labour markets.3 The Federal Trade Commission (FTC) has also gotten involved. In 2020, the FTC submitted a filing before a state commission criticizing a hospital merger that it predicted would lower the wages of nurses.4 In 2023, the agency forced several companies to drop covenants not to compete that it had imposed on their employees.5 And in the same year, the FTC proposed a rule banning covenants not to compete.6 The two agencies are also reportedly planning to include a section on labour markets in their updated merger guidelines.7 Private antitrust litigation against employers is also flourishing.

Is Data-Monopoly Banned by Antitrust Law? Antitrust and Digital Economy in the US: Ideas, Institutions, Decisions and Impacts, 1998-2023

This study employs case studies and historical research method to scrutinize the causes, processes, and outcomes of antitrust litigation against major internet platforms spanning the past quarter-century, commencing with the inaugural U.S. Internet antitrust case in 1998. Due to their intricacy, some antitrust proceedings remain ongoing, involving protracted timeframes and substantial financial resources. Nonetheless, the impetus and consequences of these cases are already affecting prevailing and forthcoming antitrust laws and policies. Given the significant role of major internet enterprises in the digital economy era, their adherence to equitable competition principles will engender an indelible impact on global economic development. Drawing on retrospective analysis, this study aims to elucidate the laws and trends undergirding antitrust regulations and practices within the digital economy milieu and to explore prospective transformations, pointing out the lack of regulation on data-monopoly and corresponding threats to the fair competition, thereby affording enlightenment for the realm of antitrust law, public policy-makers, and large technology enterprises.

Patenting Strategies on Inhaler Delivery Devices

Patients with asthma and COPD rely on inhalers to control symptoms. Yet, these products remain expensive, in part because brand-name manufacturers have obtained numerous patents on inhalers, including on their delivery devices. Recent antitrust litigation has raised questions about the boundaries of listing device patents with the US Food and Drug Administration (FDA), particularly when patents do not claim any active ingredients. How have manufacturers relied on device patents to preserve market exclusivity on brand-name inhalers? We identified patents on brand-name inhalers approved for asthma and COPD between 1986 and 2020 using the FDA's Approved Drug Products with Therapeutic Equivalence Evaluations (Orange Book). We extracted information about patents from LexisNexis TotalPatent One and Google Patents and searched device patents for mention of active ingredients or other prespecified features linking the patent to the relevant drug. For each inhaler, we determined the duration of protection added by device patents. The FDA approved 53 brand-name inhalers for asthma and COPD from 1986 through 2020, 39 of which had at least one device patent. One hundred thirty-seven distinct device patents were in the final cohort, representing 49%of all patents listed on inhalers. Seventy-seven percent of device patents made no mention of active ingredients or their molecular structures, and 72%made no mention of any relevant prespecified feature connecting the device patent to the drug product. For the 39 brand-name inhalers with one or more device patents listed in the Orange Book, device patents extended the duration of market protection by a median of 5.5 years (interquartile range, 0.0-10.5 years) beyond the last-to-expire nondevice patent. Patent and regulatory reform is needed to promote generic competition and to ensure that patients with asthma and COPD have access to affordable medications.

Antitrust Litigation in the Protein Markets

Allegations of collusion are prevalent in many of the major protein markets including beef, chicken, eggs, pork, salmon, tuna, and turkey. The sources of collusion, however, are different across markets. For some markets, like chicken and pork, the collusion was allegedly facilitated through information exchanges using Agri Stats, a data collection and sharing service. In other markets, the collusion was facilitated among parties within the market. There are allegations of collusion in the input markets for some proteins, the output markets for others, and some like chicken and beef have allegations in both. While many of these cases are ongoing, there have been a few cases where settlements have been reached or the courts have decided on a verdict. This introduction provides a snapshot of the many articles in our symposium that specialize on one protein market or another. We provide a brief review of each case, as well as emphasize the importance of this research given how substantial the protein markets are in the U.S.

Gotta Get Those Ill-Gotten Gains: Improving the FTC's Authority to Seek Disgorgement in Antitrust Cases

Disgorgement is an equitable monetary remedy that requires a defendant to give up all ill-gotten gains from their illegal conduct. Unlike damages, which can be compensatory, deterrent, or even punitive in nature, disgorgement focuses primarily on deterring future illegal conduct. It relies on the simple moral premise that wrongdoers should not be allowed to retain the profits of their wrongdoing. Especially in antitrust litigation involving complex, multilayered supply chains, damages can underestimate the true harm suffered as a result of anticompetitive conduct. Disgorgement, if calculated properly and litigated thoughtfully, has the potential to provide redress for the full amount of harm and therefore act as a more efficient deterrent. Federal and state antitrust enforcers have sought disgorgement for anticompetitive conduct with limited success, and a recent Supreme Court decision casts doubt on the Federal Trade Commission’s authority to seek disgorgement altogether. Still, there is bipartisan support in Congress and the White House to restore the FTC’s disgorgement authority. This Note proposes enacting legislation to that effect, including a provision that would allow state attorneys general or private plaintiffs to seek disgorgement on the FTC’s behalf (called a “qui tam” provision). Further, this Note outlines how leveraging existing litigation tools can alleviate concerns that disgorgement will lead to duplicative recovery. By restoring the FTC’s authority to seek disgorgement and creating a qui tam mechanism for private enforcement, antitrust plaintiffs will benefit from increased leverage, enabling them to both recover the totality of harm caused by anticompetitive conduct and deter such conduct in the future.

No-Poach Antitrust Litigation in the United States

No-Poach Antitrust Litigation in the United States

In the Beginning: The Creation of the Economic Expert in Antitrust

Today one cannot imagine antitrust litigation without the use of economic experts. Defendants and plaintiffs alike pay handsomely for their reports and testimony. However, the use of economists as expert witnesses did not begin until the iconic case of United States v. United States Steel, when two prominent economists, Francis Walker and Jeremiah Jenks, testified on behalf of the Department of Justice and United States Steel. Drawing on the original trial transcript, this paper assesses their role in the litigation. While their level of theoretical sophistication and empirical analysis falls short of today’s standards, the testimony of Walker and Jenks featured some of the same elements of expert testimony that continue today and analysis that was a precursor to the Chicago School’s perspective on competition.

Class Actions and Private Antitrust Litigation

When firms collude and charge supracompetitive prices, consumers can bring antitrust lawsuits against the firms. When the litigation cost is low, firms accept the cost as just another cost of doing business, whereas when the cost is high, the firms lower the price to deter litigation. Class action is modeled as a mechanism that allows plaintiffs and attorneys to obtain economies of scale. We show that class actions, and the firms’ incentive to block them, may or may not be socially desirable. Agency problems, settlement, fee-shifting, treble damages, public enforcement, and sustaining collusion through repeat play are also considered. (JEL D21, D24, D82, K15, K21, K41, L40)

Digital Cluster Markets

One foundational requirement of markets in antitrust cases is that they consist of products that are close substitutes for one another. Even though markets are nearly always porous, this principle is very robust in antitrust analysis and there are few deviations. The principle is also important for ensuring that changes in substantive antitrust law are not made through the back door as a result of overly broad or narrow market definitions.
 This Article considers the role of “cluster” markets, or markets for goods that are not close substitutes, in antitrust litigation, the minimum requirements for recognizing such markets, and the relevance of network effects in identifying them. Clustering noncompeting products into a single market for purposes of antitrust analysis can be valuable, provided that its limitations are understood. Clustering contributes to market power when (1) many customers prefer the convenience of receiving the defendant’s grouping of products rather than any single one, or (2) economies of joint provision (economies of scope in production) make joint distribution of the cluster cheaper per good than distribution of each separately, and (3) entering into competition with the cluster is difficult.
 When network effects are present, an important additional reason is what might be termed economies of scope in consumption, or increased value that accrues as a group of goods or services offered on the same platform becomes not only more numerous but also more diverse. Often the best way to address the cluster market problem is to avoid market definition altogether. Here, digital markets are particularly susceptible to direct measurements of market power that do not depend on a market definition. One limitation on their use, however, is that many of the methodologies require estimating demand changes in response to price changes, but several digital platforms engage with consumers at a price of zero. Here, however, changes in product quality can operate as an adequate (inverse) surrogate for changes in price.
 Finally, the logic of cluster markets carries an implicit warning about antitrust remedies. Clustering occurs when it creates value, and for consumers as well as producers. As a result, antitrust enforcers should be wary about aggressive breakup remedies that serve to break apart components that were clustered for the very reason that clustering is valuable.

Price response of the high fructose corn syrup industry in the United States: a Bertrand model application

ABSTRACT This paper uses a Bertrand duopoly model application and derives a high fructose corn syrup (HFCS) price reaction function that shows the response of the price of HFCS to changes in the price of sugar. It conducts cointegration analysis and assesses the performance of the HFCS price reaction model by estimating a Dynamic Ordinary Least-Squares model. It finds that the prices of HFCS-55, sugar, and corn are cointegrated over the period 1981:1 to 2017:12. The estimated long-run relationship shows that a one percent increase in the price of sugar increases the price of HFCS-55 by 0.19 percent. Additionally, the price of corn has a positive effect on the price of HFCS-55. The model and the results offer important insights for antitrust litigation.

A Three-Tiered Circuit Split: Why the Supreme Court Was Right to Hear Alston v. NCAA

This article provides a retrospective look at the Supreme Court’s decision to review the NCAA v. Alston antitrust litigation by defining and analyzing a three-tiered circuit split that existed in the courts’ application of antitrust law to NCAA amateurism regulations. Using mixed-methods citation network analysis review, this article shows wide disarray within the NCAA amateurism discrete citation network by analyzing the doctrinal differences in how three distinct jurisdictional silos applied antitrust law to four broad categories of NCAA rules. As such, this article argues that the Supreme Court was correct to grant certiorari to the Alstonpetitioners to resolve this circuit split and better define the precedential effect of the much-debated NCAA v. Board of Regents.

Reorienting the sharing economy for social benefit: the nonprofit digital platform business model

PurposeDigital platforms enable the sharing economy and have become dominant business models in many industries. Despite their many benefits, negative externalities associated with the growth of for-profit digital platforms, such as Uber and Google, have ignited concerns among market participants, policymakers and society as a whole, without corrective market forces in sight. One way to address this problem is through a combination of government regulation, criminal enforcement actions and private antitrust litigation. This study aims to analyze an alternative approach, called the nonprofit digital platform (NDP), which is an emerging business model capable of unleashing free-market forces and enhancing the sharing economy’s social benefits.Design/methodology/approachThis study documents the negative externalities (actual and potential) of for-profit digital platforms, uses the product attributes model to explain the market position and strategy of NDPs with respect to for-profit digital platforms and provides recommendations for the successful launch and management of NDPs.FindingsAn NDP is a market-based alternative to antitrust, regulation and litigation that enhances the social value created by the sharing economy, but its success requires startup-like management that attracts and retains talent, capital, effective advertising and positive network externalities.Social implicationsNDPs can force free-market adjustments in the industries they enter, reduce the negative spillovers of for-profit digital platforms and increase social value by incrementally raising the level of competition.Originality/valueThis study conceptually explores the value that nonprofits could bring to the sharing economy in fulfilling its promise and provides strategic recommendations for social-digital entrepreneurs and nonprofits.

The Price Tag of 'Pay-for-Delay'

In a landmark decision nearly a decade ago, the Supreme Court opened the door for antitrust suits against brand and generic pharmaceutical companies who engage in collusive settlements to delay the time for the generic to come to market. With these “pay-for-delay” agreements, brand-name companies offer prospective generic competitors cash or another form of compensation in exchange for the generic’s promise not to enter the market until an agreed-upon date. Laying the groundwork for the lawsuit that would eventually lead to the Actavis decision, the Federal Trade Commission (FTC) published a study estimating that pay-for-delay agreements cost American consumers $3.5 billion annually, a figure that has been cited repeatedly by scholars and policy-makers alike. As this article will demonstrate, the $3.5 billion figure vastly understates the landscape. Moreover, although the Supreme Court’s landmark decision in Actavis opened the door for antitrust litigation, courts have failed to follow through on the pathway provided. To understand the state of pay-for-delay agreements, this article presents an in-depth examination of the burden that pay-for-delay imposes, both on society at large and on individual patients, as well as exploring the modern legal landscape that has emerged since the Supreme Court’s historic pronouncement. Part I describes pay-for-delay agreements, exploring the literature on the potential harm of such agreements among pharmaceutical competitors. Part II presents a new analysis demonstrating that the cost of pay-for-delay to American consumers is far greater than anyone has recognized, and well beyond the $3.5 billion figure cited by the FTC in 2010. We applied six different methodologies to provide as fair and broad a view as possible. The range of methodologies show that at a minimum, the cost of pay-for-delay settlements on the U.S. population between 2006 and 2017 is a minimum of $6.4 billion per year—almost double that of the FTC’s estimate. The methodology with the largest result suggests that the cost could be as high as $36 billion per year—10 times higher. Part III argues that courts are allowing this costly problem to flourish unchecked. This part reviews pay-for-delay decisions since Actavis, arguing that the courts have failed to properly analyze such cases from the perspective of all three notions inherent in the words “pay,” “for,” and “delay.” Finally, Part IV offers a path forward through the doctrinal haze.

Digital Cluster Markets

This paper considers the role of “cluster” markets in antitrust litigation, the minimum requirements for recognizing such markets, and the relevance of network effects in identifying them. One foundational requirement of markets in antitrust cases is that they consist of products that are very close substitutes for one another. Even though markets are nearly always porous, this principle is very robust in antitrust analysis and there are few deviations. Nevertheless, clustering noncompeting products into a single market for purposes of antitrust analysis can be valuable, provided that its limitations are understood. Clustering contributes to market power when (1) many customers prefer the convenience of receiving the defendant’s grouping of products rather than any single one, or (2) economies of joint provision (economies of scope in production) make joint distribution of the cluster cheaper per good than distribution of each separately, and (3) entering into competition with the cluster is difficult. When network effects are present, an important additional reason is what might be termed economies of scope in consumption, or increased value that accrues as a group of goods or services offered on the same platform becomes not only more numerous but also more diverse. Finally, often the best way to address the cluster market problem is to avoid market definition altogether. Here, digital markets are particularly susceptible to direct measurements of market power that do not depend on a market definition. One limitation on their use, however, is that many of the methodologies require estimating demand changes in response to price changes, but several digital platforms engage with consumers at a price of zero. Here, however, changes in product quality can operate as an adequate (inverse) surrogate for changes in price. Finally, the logic of cluster markets carries an implicit warning about antitrust remedies. Clustering occurs when it creates value, and for consumers as well as producers. As a result antitrust enforcers should be wary about aggressive breakup remedies that serve to break apart components that were clustered for the very reason that clustering is valuable..