Sherman Act Research Articles

YURIDICAL ANALYSIS OF THEORY OF THEORY OF ETHICAL FACILITIES DUTIES LAW COMPETITION COMPETITION IN INDONESIA

Indonesian competition law today requires a renewal of one of them concerning the doctrine of essential facilities duties. The doctrine essential facilities duties is a doctrine imposed on a dominant business actor who has access to essential facilities to provide access for competing business actors to use the facility. Regulation of essential facilities duties are needed to reduce dominance of a dominant firm in a particular market. This study uses a statutory approach, conceptual approach, and a comparative approach between the arrangements in the United States, Europe and Indonesia. The approach is expected to illustrate, harmonize problems arising, and provide better legal protection in the world of business competition. The doctrine essential facilities duties were first applied in the United States and then followed by European countries. The doctrine of essential facilities duties in the United States is based on the sherman act and uses theapproach rule of reason. The doctrine of essential facilities duties in European countries based on EC focuses on refusal to deal. The doctrine of essential facilities duties is explicitly implied in Law No. 5 of 1999. From this study it is concluded that the regulation on essential facilities duties in Law No. 5 of 1999 still can not provide a good legal protection for business competition in Indonesia.

Assessment of competition commission of European Union and Singapore and its effect on new firms and consumer power

Competition law protect the competition process by prohibiting three major competitive activities, such as anti-competitive agreement, abuse of dominance and anti-competitive mergers, (Singapore Academic of Law 2012). This helps to reinforce pro-enterprise and pro-competition policies, enhance the efficiency of markets and strengthen countries economic competitiveness, (Lane 2000, p1). The American Sherman Acts of 1890 is taken as the starting point of modern competition law but the roots of competition law lie much deeper,(Furse, 2008, p3). However, after the American Sherman Act of 1890, this competition law was enacted in the law of many nations. E.g. Singapore 2004, UK 1998, etc, therefore this research tend to compare and give assessment of competition commission of Singapore and that of European Union and shows how the market power of the existing firms negatively affecting the emergence of the new firms as well as the consumer power in the two economies.

Beyond Securities Fraud: The Territorial Reach of U.S. Laws After Morrison v. N.A.B.

In Morrison v. National Australia Bank, the Supreme Court sent a clear signal that the presumption against extraterritorial application of federal legislation must be construed seriously going forward. The Court then adopted a transaction-based approach to resolving claims brought under the antifraud provision of the Exchange Act, focusing almost exclusively on the place of the transaction. In the months after the decision, practitioners and academics alike directed much of their attention––and criticism––on the impact it would have on private securities litigations. This Note posits that the real significance of Morrison lies in its application beyond securities law. Indeed, in the two and a half years since the decision, Morrison has been raised by defendants seeking to dismiss claims brought under the RICO Act, the Alien Tort Statute, the Torture Act, the Lanham Act, the Sherman Act, and the Anti-Retaliation Provision of the Dodd-Frank Act, to name a few. The use of Morrison to limit claims beyond securities fraud is troubling for several reasons. First, finding a clear expression of extraterritorial effect in the language and context of a statute is an inherently subjective exercise. Different courts have applied, and will continue to apply, inconsistent standards concerning similar statutes. Second, the transaction-based approach, which acts as a bright-line test in cases involving exchange-traded securities, may not be so readily adapted under a wholly different set of law and facts. As a result, courts that agree on a statute’s lack of extraterritorial effect may nonetheless disagree regarding its extension to reach a claim. Finally, many of the policy rationales for limiting the cross-border application of the Exchange Act do not so readily extend to other statutes. This Note examines the application of Morrison both inside and outside of securities law. It then makes a case against extending Morrison, and suggests steps that Congress may take to provide greater clarity for the courts.

Farewell to the Sea of Doubt: Jettisoning the Constitutional Sherman Act

Farewell to the Sea of Doubt: Jettisoning the Constitutional Sherman Act

A Sobering Look at Why Sunday Closing Laws Violate the Sherman Act

A Sobering Look at Why Sunday Closing Laws Violate the Sherman Act

Toward an Expansive Reading of FTC Act § 5: Beyond the Sherman Act and an Ex Post Model of Enforcement

This paper is an edited and lightly footnoted version of Remarks made at a session convened during the American Antitrust Institute’s most recent annual conference. The session was entitled “Can FTC Section 5 and E.U. Article 82 Converge?” The paper distinguishes between the “domestic question” of whether FTC Section 5 should be interpreted to go beyond Sherman Act Section 2, and the “cosmopolitan question” of whether convergence with Article 82 is desirable and achievable. The paper focuses on the domestic question; to the extent an expansive use of Section 5 would foster convergence, that would be a side benefit. The paper asserts three propositions: First, there is a strong and undisputed historical basis for the view that the FTCA is something different in kind from both the Sherman and Clayton Acts. Second, in this light, the FTC’s institutional character is properly understood as a competition commission to investigate, report, advise against, and if necessary stop practices deemed unfair methods of competition, ex ante, in their incipiency. The FTC is not an antitrust enforcement agency like the DOJ Antitrust Division. Third, federal court decisions beginning in the 1960s unanimously support the view that the FTC Section 5 and its enforcement by the Commission legitimately serve competition policy understood more broadly than antitrust law, i.e., than the Sherman Act. In sum, the FTC has a long-standing Congressional mandate and judicial invitation to be bold, to push past the antitrust laws, to investigate and stop in their incipiency “unfair methods of competition.” The Commission should be an innovator and investigator rather than an enforcer; it should spend significant resources working at the cutting edge of economic theory and legal doctrine. The FTC mission, properly understood, is to engage in research and development of competition policy at the forefront of changing commercial circumstances.

An Emerging Consensus on Bundled Discounts under Section 2 of the Sherman Act?

An Emerging Consensus on Bundled Discounts under Section 2 of the Sherman Act?

Legal and Economic Issues with the Courts' Rulings in Pickett v. Tyson Fresh Meats, Inc., a Buyer Power Case

In the historic cattle trial, Pickett v Tyson Fresh Meats, Inc., Plaintiff cattlemen alleged that Tyson/IBP used captive (contracted) supplies of cat tle ready for slaughter to manipulate the cash market, in violation of the 1921 Packers & Sto ckyards Act (PSA). After a five week Trial in Federal Court, the Jury found Tyson/IBP guilty o n all counts and assessed actual damages of $1.28 billion, which applied to a large but unspeci fied number of cattle, likely 10-50 million head. Justice for Plaintiff cattlemen was short, as the T rial Judge set aside the Jury’s verdict—a rare but not unprecedented legal action—and entered summary judgment for Tyson. The Eleventh Appellate Court subsequently sided with the Trial J udge. In 2006, the United States Supreme Court denied without comment Plaintiff’s Petition t o rehear the case, thus ending legal activities in Pickett v Tyson and effectively killing similar legal action pending un der the same Trial Judge against two other major beef packers, E xcel (Cargill) and Swift (ConAgra). Together the three packers account for over 70% of fed cattle slaughter. In essence Pickett was filed under the PSA, tried under Sherman and Clayton antitrust law, and overturned, in part, under the Robinson-Patman Act, with the Trial Court and the Appellate Court implicitly appointing themselves as fact-find ers. This is not how the American judicial and legislative system is supposed to function. The Courts gave a narrow and extreme interpretation to the antitrust rule of reason and to the meaning of “unfair” in the PSA. The PSA as well as the Sherman and Clayton Acts may be greatly weakened if not essentially repealed if the Courts’ Opinions in Pickett come to dominate case law.

DOJ's Antitrust Division places opening bid on private equity firm investigation

PurposeThis paper aims to summarize and discuss the motivation behind an investigation recently begun by the Department of Justice Antitrust Division concerning the practices of private equity firms when they are bidding for control of target companies.Design/methodology/approachDescribes the reasons for the Antitrust Division's interest in private equity firms' auction practices; hypothetical auction scenarios that could raise the Division's interest; additional steps the Division could take such as further letters and Civil Investigative Demands; and possible private equity firm defenses and responses to Division theories.FindingsThe Division appears most interested in the nature of the “clubs” formed by competing private equity firms to place bids. So, the Division's investigation will likely focus on whether it can bring claims against private equity firms for violations of Section One of the Sherman Act (15 U.S.C. § 15), which prohibits “contracts, combinations and conspiracies in restraint of trade”. Private equity firms can respond to the Division's theories by showing that “club” collaborations are beneficial to competition and actually help streamline the process, resulting in better auction bids.Originality/valueA useful explanation and update of an investigation in process.

Section 2 Standards and Consumer Welfare: Some Lessons from the World of Merger Enforcement

This Article will discuss the role of “consumer welfare” in judging the legality of single-firm conduct. There is a debate raging in the antitrust world over the standards for judging whether the business decisions of individual firms with a significant degree of market power will run afoul of competition law principles–embodied in the United States in Section 2 of the Sherman Act –and thus potentially give rise to claims for damages by the firm’s customers and rivals. A few core principles are now well established in the United States. First, unilateral conduct has long been immune from antitrust scrutiny when the firm is not yet a monopolist and the firm’s small share of the market or other market conditions make it unlikely that monopoly power could be achieved. Second, “bigness” (or dominance) is no longer equated with “badness.” The concern of antitrust law is instead with the maintenance or acquisition of monopoly power rather than its mere possession or exercise. Firms with monopoly power are thus free to exercise that power by charging high prices and collecting supra-competitive returns. Those returns are the rewards for success that has been achieved lawfully, often by developing products or services that meet an important and previously untapped consumer need. Moreover, high prices are now generally recognized as “procompetitive” acts, at least in the sense that they stimulate entry and investment and other competitive responses. Ideal Section 2 liability rules would accomplish at least three things simultaneously. They should properly identify and prohibit “bad” actions that destroy or impede competition without sufficient justification or sufficient benefit to consumers. At the same time, those rules should not penalize “good” actions that reflect innovative or efficiency-enhancing behavior by the monopolist. Perhaps most importantly, they must provide reasonably clear guidance to firms and their antitrust counselors as to the scope of permissible competitive freedoms and the range of potential legal risks. Otherwise, uncertainty about the application of the rules–including both the risk that courts might reach the wrong results and the high cost of having to defend misguided lawsuits brought by disgruntled rivals–would slacken the drive of all firms that have or might hope to achieve significant market shares. We can hope that the debate over Section 2 liability rules will eventually yield an approach to the law of monopolization that effectively protects consumer welfare by neither over-restricting (or over-deterring) pro-competitive behavior, nor being overly permissive of harmful conduct.

Morality and Antitrust

Unlike many other crimes involving wealth transfers, such as theft or fraud, there is no consensus on the morality of antitrust offenses. Some opine that antitrust offenses are: (i) immoral, (ii) amoral (being mala prohibitum rather than mala in se), or (iii) moral and consistent with natural human behavior so it is the federal antitrust laws that are immoral. But these differing viewpoints have not sparked any debate over the morality of antitrust violations. Under the continued influence of the Chicago-school’s neoclassical economic theories, antitrust analysis is primarily concerned with economic efficiency. Since terms like “morality” and “evil” are judgmental, not descriptive, they are deemed outside the discourse of economic theory’s self-described positivism. Reducing antitrust to normative morality judgments would represent, for Richard Posner and others, antitrust’s descent into “a weak field, a field in disarray, a field in which consensus is impossible to achieve in our society.” But antitrust analysis is not beyond the judgmental. One may question the need to address these moral issues. But over the past thirty years, while antitrust’s civil remedies have remained relatively unchanged, the criminal penalties for price fixing, bid rigging, and other Sherman Act antitrust violations have soared–from a misdemeanor to a felony punishable by up to ten years imprisonment. If the criminal laws reflect society’s moral judgments, then antitrust and morality ultimately are intertwined. Even if a utilitarian sought to divorce morality from antitrust, in asserting that antitrust’s criminal penalties have increased to ensure optimal deterrence, morality resurfaces in addressing the means of deterring such behavior and the degree to which criminal sanctions are employed. Inevitably moral issues will surface as the Sherman Act’s criminal penalties continue to escalate. A broader implication is that antitrust policy, to borrow Robert Bork’s phrase, may be at war with itself. If policy makers assume that the federal antitrust laws are concerned solely with allocative efficiency and are essentially amoral, then efforts to deter such conduct through criminal sanctions may be self-defeating. Criminal law, as many legal scholars have argued, reveals society’s moral opprobrium to certain conduct. That moral component (through internalizing the standard of conduct and the attendant guilt or fear of shame) can be effective in deterring socially unacceptable conduct. But to harness that moral component, antitrust policy makers should re-examine certain policies underlying antitrust law. To date, antitrust policymakers, enforcers, and scholars have largely encamped in utilitarianism and the economic theory of optimal deterrence, whereby general deterrence is achieved through the right mixture of financial penalty and incarceration to offset the profit-maximizer’s expected cartel gains. But it is unclear whether that alone will effectively deter cartel behavior. Instead, fostering a moral component to antitrust crimes may more effectively deter these violations at a lower social cost, encourage other nations to increase their prosecution of cartel behavior, and prevent antitrust from slipping into irrelevancy.

Cartels globaux, riposte américaine. L'ère empagran ?

<titre>R&#233;sum&#233;</titre> Comment la politique de concurrence prend-elle en compte les pratiques anticoncurrentielles des entreprises op&#233;rant &#224; l&#8217;&#233;tranger? Depuis toujours, la r&#233;ponse n&#8217;est pas autre que la doctrine de l&#8217;effet: la politique de concurrence s&#8217;exprime &#224; travers un droit traditionnellement enracin&#233; dans des d&#233;terminants domestiques, mais r&#233;prime n&#233;anmoins les pratiques anticoncurrentielles &#233;trang&#232;res qui produisent un effet n&#233;gatif sur les march&#233;s domestiques. &#192;l&#8217;inverse, elle exclut de son champ de comp&#233;tence les pratiques domestiques produisant des effets anticoncurrentiels dans les pays &#233;trangers. La question vient de se poser de mani&#232;re renouvel&#233;e avec la d&#233;cision r&#233;cente de la Cour supr&#234;me am&#233;ricaine dans l&#8217;affaire Empagran&#160;: interrog&#233;e sur le point de savoir si les victimes &#233;trang&#232;res du cartel des vitamines pouvaient obtenir r&#233;paration aupr&#232;s des juridictions am&#233;ricaines pour des pr&#233;judices subis lors de transactions &#224; l&#8217;&#233;tranger, la Cour supr&#234;me a r&#233;pondu par la n&#233;gative lorsque les pr&#233;judices all&#233;gu&#233;s sont ind&#233;pendants du march&#233; am&#233;ricain et a renvoy&#233; &#224; la juridiction inf&#233;rieure l&#8217;examen du sc&#233;nario alternatif du pr&#233;judice subi &#224; l&#8217;&#233;tranger en liaison avec un pr&#233;judice int&#233;rieur am&#233;ricain. Quelle sera la port&#233;e pratique de cette d&#233;cision&#160;? Face &#224; la fermeture des juridictions am&#233;ricaines, va-t-elle consacrer une strat&#233;gie de lutte contre les cartels internationaux &#224; partir d&#8217;approches nationales, le cas &#233;ch&#233;ant renforc&#233;es par les instruments de coop&#233;ration entre les autorit&#233;s nationales de la concurrence, et contribuer ainsi &#224; &#233;quilibrer le contentieux concurrentiel mondial? Autrement dit &#224; &#171;&#160;cartels internationaux, ripostes nationales&#160;&#187;&#160;? Au contraire, le r&#233;sultat de la causalit&#233; globale des pr&#233;judices inflig&#233;s par les cartels internationaux se manifestera-t-il sous forme d&#8217;un drainage du contentieux anticartel mondial vers les juridictions am&#233;ricaines? Autrement dit &#224; &#171;&#160;cartels internationaux, riposte am&#233;ricaine&#187;&#160;? L&#8217;analyse de ces questions, impliquant un acteur majeur de la sc&#232;ne concurrentielle mondiale, prend un sens particulier &#224; l&#8217;heure o&#249; la politique de concurrence, notamment la lutte contre les cartels, vient d&#8217;&#234;tre retir&#233;e de l&#8217;agenda des n&#233;gociations commerciales multilat&#233;rales de l&#8217;OMC.

Antitrust Policy: A Century of Economic and Legal Thinking

Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act's broad commands, Congress gave economists a singular opportunity to shape competition policy. Because the statute's vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of antitrust doctrine and enforcement policy eventually would shift, as well. This article follows the evolution of thinking about competition since 1890 as reflected by major antitrust decisions and research in industrial organization. We divide the U.S. antitrust experience into five periods and discuss each period's legal trends and economic thinking in three core areas of antitrust: cartels, cooperation, or other interactions among independent firms; abusive conduct by dominant firms; and mergers.

Schumpeter, product innovation and public policy: the case of cigarettes

Perhaps the most fundamental proposition advanced by Joseph Schumpeter is that competition drives innovation and innovation drives progress. Strangely, although “competition” was a key ingredient to the processes of his capitalistic world, Schumpeter was not concerned about private monopolies and evidently had little stomach for the antitrust policy practiced over the past 50 years in the United States, or for the rather aggressive policy that is emerging currently in the European Common Market.1 At the same time, a careful reading of his writings discloses that Schumpeter’s benign view of monopolies and restraints of trade was limited to product markets; he expressed a definite concern about monopoly and restraints of trade in R & D-innovation markets. Schumpeter also displayed a very prophetic insight about R & D/innovation and public policy, observing: “... Surely nothing can be more plain or even more trite common sense than the proposition that innovation ... is at the center of practically all the phenomena, difficulties, and problems of economic life in capitalist society.”2 As keen a vision as Schumpeter displayed about economic processes and public policy, he could not have imagined that his theories of innovation and “creative destruction” would become a centerpiece during the 1990s for the widespread antitrust prosecutions by several states against U.S. tobacco companies alleging a conspiracy in restraint of trade and other types of unlawful conduct, and for recovery

The Meaning of "Agreement" under the Sherman Act: Thoughts from the "Facilitating Practices" Experience

The Meaning of "Agreement" under the Sherman Act: Thoughts from the "Facilitating Practices" Experience

Antitrust Policy: A Century of Economic and Legal Thinking

Passage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed every contract, combination or conspiracy in restraint of trade and monopolization and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordinary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization.

A Critique of Noncommercial Justifications for Sherman Act Violations

A Critique of Noncommercial Justifications for Sherman Act Violations

The cartage industry in New York

The private garbage collection industry, dominated until recently by numerous very small firms in essentially local markets, has a long history of customer allocation conspiracies in restraint of trade. In New York metropolitan areas, these agreements have involved members of the Mafia. The reputation for racketeering involvement in the New York region has restricted entry, particularly by the few large national firms; maintained discipline among the conspirators; and inhibited customers from complaint. The carters have treated customers as assets to be bought and sold. Prices for collection of waste from commercial customers have been raised by as much as 50 percent in these markets. Both law enforcement and regulation have failed to eliminate customer allocation agreements.

Identifying contracts, combinations and conspiracies in restraint of trade

Antitrust guidelines rely on structural screens to review horizontal merger proposals for possible anti-competitive effects. This paper extends this screening approach to forecast where industry cartels will form, and where cartel agreements are more likely to raise price. I test the screen's reliability for a unique data set of legal, privately enforced industry cartels that formed under the Webb-Pomerene Export Trade Act. Consistent with screening assumptions, I find that cartels formed more frequently in industries with significant potential market power, high barriers to entry, and conditions facilitating the enforcement of agreements. However, these characteristics generally perform less well at distinguishing when cartels are likely to raise price without generating offsetting cost-savings, suggesting that screening is reliable only as a preliminary check for possible anti-competitive behavior.

Accrediting and the Sherman Act

Accrediting and the Sherman Act