Restraints were for the sole purpose of restraining competition (Adyston Pipe)
Permitted if reasonable, test is whether it regulates or promotes competition – if the effect on competition (Brandeis says that the only competition is pure competition) (CBOT):
Just saying it is reasonable is not a defense (Trenton potteries) -- so, in total they control 82% of the market: question is whether it helps or does not help competition
Topco: agrement amount competitors to allocate territories
Messing up competition: Socony
Old rule of Topco was illegality per se for horizontal territorial divisions
Critisized because they didn't use the rule of reasons
Rule of reason can be gotten to if horizontal restraints are necessary in the first place (whether it promotes competition): (but it seems like you can get into the rule of reason by claiming it)
Efficiencies can be found in blanket licenses (but blanket licenses were not really a restraint)
BMI could be aiding productive or allocative efficiencies
No efficiences in keeping price out marketplace as a a smokescreen for safty (what matters is people competition)
Complex market may function with consumers as well or better, even with agressive limitations on advertising:
Question as to whether price is connected to safty. Dissent was that, in a complex market, truthful claims about price and quality serve to bring dentists together
Can be a difference between conspriacy in restraint of trade and a conspiracy to monopolize
Violation of part does not necessarily imply violation of part number 2
A single firm can to act anti-competiviely (with a parent and subsidiary) so long as it doens't threaten a monopoly
Section 1 requires combination
Section 2 only monopoly action and may include uniltaal behavior
Uniliteral behavior
Copperweld: Parent-subsidiary doesn't count
Horizontal Group Boycott
FOGA: Even per se illegal if there is a tort remedy
Purely vertical agreement with a 3rd party must be addressed under the rule of reason
Not all concerted refusals to deal are predomantly anti-competive
Per-se requires market power, exclusive access to an element, and conclusion that expulsion would have access to an anti-competive effect ('s)
Oligopoply
Inference can be drawn from conscious paralellism and signaling (American Tobacco).
agreement can be inferred from being a part of the spokes of the conspiracy: Interstate
American Tobacco: gave rise to inference of conspiracy
Can be rebutted by legitimate business reasons
Data dissemination to promote oligopoly – might fascilitate collusion
Exchange of information about current or future prices (as opposed to past prices)
Identification of parities, as well as price in sales transaction
Mapel Flooring didn't (even though there was a greater concenatration)
Highly concentrated or oligopolistic market structure with relatively new sellers
American column: were discussing future prices and warning against oligoply
Basis point pricing: Condemend Container Corporation because it reduces incentive to reduce fraight charges
Bpp is really a tacit agreement
Disent: migration into the market, and have to look at the warranties
Have to prove an intent to raise prices
Essential facility refusal to deal
AP: in a non-natural monopoly, consumer welfare can suffer by allowing the organization that holds an essential facility to be a kingmaker
Note: orothodox view is to look in terms of comsumer welfair
If an association has no market power, than rule of reason treatment would be used: Northwest Wholesale
Question: if they did not have market power, it would be rule of reason
Agreements to not provide
Northwest was purely rule of reason
Can be decided under quick look – wherein the defendant can show lack of power or justification: both some maket power, and some justificaiton for it
Vertical agreements – if the deal involves apparant non-competitors, it has to be under the rule of reason
Purely vertical agreemetns not to deal with a 3rd party must be addressed under the rule of reason (NYNEX)
Please visit
Poltical side
Noerr: concerted efforts to influence government ok
Can influence legislature, courts, or executive
(California) But can't be sham to cover anti-competitive attempt
"objectively baseless and improperly motivated" (Professional Real Estate)
Poltical activity itself cannot be the restraint of trade
Private action in private ordering, and rigging the election – doesn't apply even if a private body has an influence on government standards
Even if genuinely intending to influence, the government, a horizontal boycott has to be for political reasons, not economics
Can be an exception if the political aspects outweight the other issues
Attempting to monopolize
Two requirements in standard oil: but firms can become monopolies through normal industrial methods
Defendant, unless restrained, will obtain a monoply
Conduct must reveal a "specific intent" to acheive a tainted monopoly
Hard to define
Bad conduct or makes no senses, unless predicated on the idea that the alleged pretender will drive everyone from the market
Coercive refusals to deal can constitute monopolization attempt: (e. g. we will do business, if you refuse to do business with competitor)
Dangerous probability: Needs to show either market power, or a common senses substitute. Also needs to show a reasonable amount of market power, or its common senses substitute: Spectrum Sports:
Monopolization is defined as using market power as a monopolist to drive out competition and raise prices (Standard Oil)
Attmempting to monopolize is a drive toward acquiring the market power in being able to monopolize (Standard Oil)
Monopsony power, plus not being a passive beneficiary is being a monopolizers
Griffith: if there is domanance in one geographic area, can't leverage it to dominace over firms in other geographic areas
The possesion of monoply power in the relevatn market
The willful acquisition or maintnece of that power as distinquifed from frowth or developed as a conseuqnce of a superior product, etc.
Leasing is the same 0--- if people can be forced into leases reducing liquidity (United Shoe)
Three approaches
Dominate firm violates Se. 2 when it engaged in unreasonabke restrains under § 1
Has the power, has exercsied it, or has the power to exericse it
One could monopolize when they do business
Three possible tests
Douglas: monopoly plus intention to use
Monopoyl power plus a non-passive beneficiary
White: Monopoyl power plus not honestly industrial practices (Aspen)
Monopolization of a necessity
Significant change in a pattern of distribution that had originated in a competitive market
Apparantly irrational
Court tells to collude
Predatory Pricing: rare
Areeda Test: if price above ATC (Barry Wright)
Is pricing below marginal costs
Plaintiff must show a that the defendant anticipated recoupment through monoply (Brooke Group)
Entry issues
Market definition
A market such a hypothetical monopolist could produce a small, but significant and non-transitory price increase (estimation of responces to price increases)
Exclusionary practice
Right to refuse to deal is not absolute – in the context of monopoly power it is unlawful – if there is already a dominant position in the market: Lorrain Journal
American airlines: exclusionary intent plus dangerous probability
Attempt: need proof of a dangerous probability that they would monopolize (dangerous probably plus specific intent – plus some manifest exclusionary conduct)
Vertical price restraints
RPM: per se illegal (dissent is that producers know what price where it can best do business) if there is an actual agreement (Dr. Miles): But, maximum prices may be under ror. Kahn.
Monsanto
Price
Non-price
In the Monsanto case, decided in 1984, the Supreme Court held if a supplier terminated one dealer in response to a second dealer’s complaint about the first dealer’s prices, the termination could be per se illegal resale price maintenance. However, under Colgate, the terminated dealer must show that there was actually an agreement between the supplier and the second dealer. The mere fact that the second dealer had complained and that the supplier subsequently terminated the first dealer was not sufficient to establish an agreement. Further, it must be shown that the rationale for the termination was the dealer’s price cutting, not its violation of a nonprice restriction.
(Bus Electronics): Has to be actual agreement
Rule of reason for geographic: more competiton can be an excuse for less competition intra-brant (Sylvania) -- vertical geographical constraints are pro-competitive
Colgate: has to be actual agreement (uniltateral "suggested" prices don't count) – can't threaten, warn or intimidate
Non-price restraints are under the reason
Tying: tying arrangements are illegal soft-core per se when the pre-requisites or not
Easy ones are tying worthless product to worthful product
Clayton: needs to be across state line, and only goods
Tying arrangements are illegal per-se under the Sherman act as long as there a not-insubstantial amount of interstate commerce effected
for a Plaintiff to prevail
under a per-se analysis has to be a showing that people were "coerced" to buy the tied product or that competitors were placed at a measurable disadvantave
Services Tied to Land: Northern Pacific
Seller has sufficient economic power to appreciably restrain in the tied product market
Supplementary product : International Salt
Repair services are a separate market and defined the market as being a market of only one brand: Kodak
The scheme involves two distinct products and provides that one (the tying product) may not be obtained unless the buyer or lessee takes the second product (the tied product) as well;
Distinct products can be limited to a single brand
The seller possess sufficient market power in the market for the tying product to restrain competition in the market for the tied product;
Market power should not be inferred from the fact that a tying product is unique (Fortner)
A "not insubstantial" amount of commerce in the tied product market is affected by the arrangement. Sales of $50,000 to $60,000 have been found to satisfy this requirement.
If you can't prove the three requisites
Lower courts: may be necessary at first to ensure synergy's between equipment
Jefferson Parish was not a tie (needs to have market power)
Low market share (could go to other hospital)
concurrance – consumer welfare
must power in the tying product market
risk that the tied marked will fall prey to the tied agents (very little if stable providers)
must be a cherant economic for treating the tied product as distinct
Standard oil: looks at the amount of the marked "foreclosed" by the tying
Doesn't need to increase (but maintain)
Relevant makets are where they compete, and not where they are located
Vertical Mergers
Brown Shoe: would lead to a monopoly (incipiency argument)
Even if the numbers are small, things can still be inferred
Brown Shoe: The fact that, at a large number of cities, there were maximums as much as 5% on both companies, joining these competitors would probably lessen competition
Where there was a combined share in the merged entity in a particular line of shoes, than the courts felt that this could lessen compeititon
There could be an oligoply situation which congress saught to avoid at hand
There could be a triggering of reactive mergers toward oligopoly
Old rule in Philadephia Bank: Produced a high market share (e. g. over 30% shifts burden)
General Dynamics; non-statistical factors can be used
Failing business excetpion
Changin size of market
Nature of the contracts
1800 is the threshold +/-100
Conglomerate
Acquiing firm had the necessary means
Existing firms would be influenced
Eliminatino of the acquiring firms would not be significant
