Antitrust Ii - Meyers

Front 1

How is ATII different

Back 1

More practical.

Not all of our sections are purely substantive antitrust law. (first two ) Some are how you do it (last two).

Front 2

Understanding antitrust and its economic implications

Back 2

A book recommended by Professor Meyers.

Hovencamp also has an outline summary of this book and Meyers says it's excellent. He doesn't care how we get there only that we get there.

Hovencamp also has a hornbook called "Federal AT policy the law of competition and practice"

Front 3

What is price discrimination under the Robison Pattman Act?

Back 3

Crasy stupid on the books and enforceable but widely widely criticized.

Front 4

Mergers and Aqcuisitions

Back 4

Bush - Never saw a merger it didn't love

Obama - Never saw a merger it didn't hate

Front 5

M&A issues

Back 5

When a big company wants to buy another company, there is a concern regarding competition.

Front 6

Section 7 of Clayton

Back 6

you cannot acquire the stock or assets of a firm if the effect is to lessen competition.

Front 7

Vertical Merger

Back 7

Honda buys tires, now they want to own a tire company.

Conoco buying out all the independently owned Conoco Stations.

Front 8

Horizontal Merger

Back 8

Conoco want to merge with Philips, competitors want to merge.

Front 9

Mergers of Potential Competitors

Back 9

Colgate wants to merge with a deoderant firm.

It would not take much for these companies to enter each other's markets but if they merge, they can stop the other from competing with them.

Front 10

AT settlement with multiple defendants

Back 10

Don't be the last one to settle. You will get a lousy settlement or have to go to trial.

Front 11

prevailing party statutes

Back 11

Winner gets atty fees. AT is not like this plaintiff wins, plaintiff gets atty fees, defendant does not.

Front 12

How many AT cases are private party

Back 12

90% of AT cases are private party cases.

Front 13

What kind of malpractice are you on the hook for if you do not keep good records of your atty fees (to which you client is entitled)

Back 13

Big time.

Front 14

What are the two kinds of industries?

Back 14

AT law industries and Regulated industries where there is not free and open competition. (retail electricity market)

Front 15

We are covering 4 chapters and there will be 1 from each chapter on the exam.

Back 15

Same final as last time each worth 25%.

Front 16

What is the 2(b) defense?

Back 16

meeting competition defense

Front 17

meeting competition defense

Back 17

Yes I sold to buyer 2 at .75 not 1.00 but buyer 2 had received an offer from a seller 2 for .75 and I would not get the business unless I met it.

Front 18

Broker

Back 18

an independent contractor representative of the seller. The classic middleman. Typically the broker does not warehouse.

Front 19

what kind of brokering was 2C designed to stop?

Back 19

Dummy brokeridging. Dummy gives his broker fee back and was just a tool for the buyer to ask for a better price. (subterfuge) .

Front 20

Borden I

Back 20

facts: Two different lables and prices for chemically identical evaporated milk.
Rule: too possible for adverse competitive effect for a company to slap a different label on products of like grade and quality.

Front 21

what do we need for two companies to violate the RPA?

Back 21

Unity of Economic Interest.

Front 22

uniform jury instructions for federal antitrust cases.

Back 22

published by the antitrust bar.

Front 23

What does Borden I say about like grade and quality?

Back 23

When the products are identical they are of like grade and quality, they do not, however, have to be identical to be like grade and quality.

Front 24

Rainbird

Back 24

Identical sprinker heads of different color sold to commercial entities at a lower per head price than to consumers.

Front 25

Does consumer preference matter in terms of like grade and quality?

Back 25

NONONONONO
Borden case.

Front 26

Cost justification defense

Back 26

The proof a court requires is in sufficient detail and narrowly tailored enough to be meaningful. The cost savings to you must match the discount to the customer.

Front 27

Cost justification defense is an illusory defense

Back 27

There are some cases but there are very few b/c:
1. Regional sales person makes the price decision and can make a discount.
2. Cost justification comes up after you have been sued and the RSM will not have done the kind of research on the discount prior to justify the discount (Required by 2(a))

this is why cost justification rarely prevails.

Front 28

read this

Back 28

2b (all relates to the meeting competition defense)

Front 29

Meeting competition

Back 29

A seller facing a competitive offer, from another seller may meet, not beat, that offer. this is a complete defense to price discrimination.

Front 30

U.S. v. U.S. Gypsum

Back 30

Seller 1 Seller 2 - Seller 5. Sellers where communicating the prices to each other to deal with a lying buyer problem. this however violates section 1 of the Sherman Act.

Dicta: A seller who suspects a lying buyer, can
1. rely on reports from other customers.
2. Seller 2 can demand a price quote from the buyer.
3. Evaluate the market to see if the price seems reasonable.
4. Rely upon the seller's experience with the buyer. (good faith belief buyer is being truthful as opposed to a moral certainty).

Front 31

oligopolistic

Back 31

a market with a few sellers.

Front 32

homogeneous product

Back 32

Means everyone's product is the same. (wallboard is wallboard is wallboard)

Front 33

oligopolistic + homogeneous market = ???

Back 33

buyers know the price is generally the same.

Front 34

Fall City v. Vanco Beverage

Back 34

facts:

rule: 1. Seller has to be reasonablly prudent (not right) to meet the standard of good faith.

2. in a wide diverse marketplace, you can look at a reasonable cross section (3 out of 20 walgreens) and give the new price to that entire group.
3. Competitive offer may be a higher offer.
4. You can meet an offer state wide.

Front 35

my Question

Back 35

Could you argue what your competitions obligations would have been under RPA as a defense to waht you did? NO you have to show they actually did it.

Front 36

RPA

Back 36

Seller 1 may not meet an illegal price of seller 2 and assert the meeting competition defense.

Front 37

example of change in marketability. Chlorofloracarbons

Back 37

6 manufacturers prior to the report that CFC's catalyzed the breakdown of ozone. Report said that use of CFC's as a propellant was bad. Propellant was 50% of production of CFC's. The 6 manufs got sued by a foreign importer from Japan who said they were trying to keep it off the market.

Front 38

When will the changing conditions defense not fly?

Back 38

When the defendant caused the change in conditions.

Front 39

Can you have a going out of business sale?

Back 39

Yes, but you damn well better shut your doors.

Front 40

ATT's manufacturer prior to Lucent.

Back 40

Western Electric lost the captive market when Judge Greene broke up Ma Bell.

Front 41

if the sller has a meeting competition deens, thebuyer i s off the hook for antitrust vilations.

Back 41

If the seller is not liable under 2A the buyer is not liable under 2f

Front 42

if you are suing a buyer, what is the two-fold burden

Back 42

.buyer induced the illegal price, seller met it.

Front 43

Oklahoma's 2b (204) has only the a and b equivalents (no c d e or f)

Back 43

better that waqy

Front 44

I should know a 2(a) prima facia case, the 3 defenses, and buyer liability.

Back 44

summary

now read 7 mergers and acquisitions.

Front 45

merger

Back 45

two corporate entities have joined together and one disapears. (there is a destruction one or both corporations)

Front 46

acquisition

Back 46

A buys B. It may merge or leave B

Front 47

limited liability acquitisions

Back 47

An acquisition of only the stock or only the assets.

Front 48

what is our concern with M&A

Back 48

If the M or A tends to create a monopoly or substantially lessen competition.

Front 49

What section of the Clayton Acts forbids bad M&A

Back 49

Section 7(b)5

Front 50

What are teh three things the gov't can do with an M&A

Back 50

1. nothing
2. deny authorization to complete the transaction. If not blessed, then it is litigation.
3.

Front 51

Toys R. Us vs. U.S.

Back 51

No mas

Front 52

who has standing to challenge a mergere

Back 52

1. Private parties
2. Gov't after they approve
3. Gov't after they remain silent

Front 53

what are the factors in allowing the merger.

Back 53

1. Size of entities that want to merge
2. Size of resulting entity

Front 54

vertical merger.

Back 54

A merger between businesses occupying different levels of operation for the same product, such as between a manufacturer and a retailer; a merger of buyer and seller.

Front 55

U.S. vs Columbia Steel

Back 55

US Steel makes rolled steel, and sells it to Columbia Steel.

Front 56

when is there a statute of lims on Uncle Sam regarding an antitrust lawsuit?

Back 56

Only if the government is seaking damages or criminal charges. If the feds only seek injunctive relief, there is no SOL.

Front 57

Dupont case

Back 57

fact: 40 years prior, Dupont had bought 25% of GM.
issue: can the gov't sue them to divest the stock in GM all these years later?

Front 58

When you are working for or against a publicly traded company, what do you want to look at?

Back 58

The company's annual report. They may be sorry about what they put in them.

Front 59

Brown shoe.

Back 59

facts: b

Front 60

seven indicia of sub markets you will need them in actual practice.

Back 60

FACTORS DEFINING “SUBMARKETS”
(1) Recognition as separate economic entity
(2) Products peculiar characteristics & uses
(3) unique production facilities
(4) distinct customers
(5) distinct prices
(6) sensitivity to price change
(7) specialized vendors
(8) probability of substantially lessening competition

Front 61

Sub market elements

Back 61

1. industry recognition of a submarket
2. Distinct customer
3. Distinct Prices
4. Sensitivity to price changes

Front 62

merger (vertical integration)

Back 62

1.
2.
3. Was there an avoidable foreclosure of competition
4. Will it create a barrier to entry?

Front 63

Northern Securities (1904)

Back 63

Two railroads crossing the Northern US. A merger is proposed between them and the gov't sues to stop the merger.
Rule: Illegal under Sherman, b/c the merger will bring an end to competition.

Front 64

United States v. General Dynamics

Back 64

gov't challenge the merger of two mines. Govt brought section 7 Clayton challenge
Rule: Market was energy and production area, not mining technique. (strip mining vs. deep shaft)

Front 65

What are the factors the court looked at in U.S.

Back 65

1.
2. lessening use of coal because of other energy sources and concerns about coal's effect on the environment.
3. Requirements contracts with electric companies provided protection to the customers (utils not home users)

Front 66

factors in allowing a merger

Back 66

1. Market definition and concentration.
2.potential adverse competition effects
3. Entry analysis

Front 67

FTC v. Staples

Back 67

Proc: This was a hearing for a preliminary injunction against the merger.
Staples wanted to acquire office Despot.
Market:
FTC- consumable office products from supercenters
Staples - consumable office products in the country

Rule : staples price increases did not result in the loss of customers to Wal-mart and other stores, so there is low elasticity of demand. Staples did not consider Wal-marts when choosing locations. Only considered Staples, Office Max and Office Depot.
holding: injunction granted

Front 68

Efficiencies Defense

Back 68

Staples promised to pass on 2/3 of the savings to consumers, but in reality to date they only passed on about 15% (your crazy your lying)

Front 69

Barriers to entry

Back 69

Difficult for a new superstore to emerge in such a market. Hard for a new player to get in.

Front 70

Nor/Pennington Doctrine

Back 70

Nor - RRs lobby congress for legislation that will cripple trucking. They lie cheat and steal. Truckers sue but SC holds "so what" Rule: Sherman ACT does not apply to legislative relief.

Front 71

Allied Tube

Back 71

facts: Steal conduit manufs are worried about PVC. Spent 100K on industry voters for a national fire protection organization. PVC fails 394-390.
Rule: This is not the gov't and you DO NOT HAVE THE NOR/PEN PROTECTION B/C THIS IS NOT PETIONING YOUR GOV'T DIRECTLY.

Front 72

FTC vs. Superior Trial Lawyers Assn of DC

Back 72

facts: Lawyers go on strike to get a raise for indigent defense.
Rule : NOR/PENN does not protect you if you strike first.

Front 73

Sham Exception to NorPen
California Motor Transport

Back 73

facts: Truckers get the same lawyer and object to every new CA applicant for a transport license.
Rule: With a repeated pattern of baseless allegations, this is alleged to be an attempt to delay/deny the process.

Front 74

State Action Doctrine

Back 74

means that the state can substitute its own judgment for federal statutes regulating anti-trust. This allows states to create exemptions from federal antitrust laws.

Front 75

California Liquor

Back 75

The two requirements of state action are?

1) Clearly articulated and Affirmatively expressed state policy to displace federal regulations with state policy.
2) Active Supervised by the state

Front 76

City of Boulder

Back 76

Cities do not have sovereignty and therefore can be liable for their conduct.

Front 77

Local gov't anti-trust acti

Back 77

Local gov't and officials [elected or appointed] acting in their capacity are not liable for anti-trust judgements interest or atty fees. (A city may still be enjoined and may be liable for atty fees necessary to obtain the injunction.)

Front 78

Hally vs. City of AuClaire

Back 78

missed it

Front 79

Active supervision

Back 79

Active unless the actor is a city.

Front 80

Omni v. Columbia Outdoor Advertising

Back 80

facts: Omni alleges Collumbia in cahoots with city council to squeeze out competition.
issue: can the city conspire with COA to exclude Omni.
rule: if the council acted only at the urging of a private party and we can prove a conspiracy, that is an exception to the state action doctrine. (the city must be a commercial participant to hide behind the state action doctrine).

Front 81

forseable result of the statutory scheme

Back 81

The clearly articulated policy does not have to be so specific as to say "our purpose is to restrain trade."

Front 82

is the commercial actor exception the state action doctrine law?

Back 82

No, it is dicta from Scalia

Front 83

What activity did Omni argue took the city council out of the state action exception?

Back 83

Bribery, from a private actor. (contributions from Columbia to reelection campaigns). But Scalia disagreed: other laws passed by congress to deal with bribery.

Front 84

Who won in Omni?

Back 84

The defendent, COA. There is no conspiracy or bribery exception, b/c the exception would swallow the rule.

Front 85

FTC v. Tyco (active supervision requirement)

Back 85

facts : Title insurance companies price fixing for title searches and examination. Rating bureau set rates and the state could object if they wanted.
issue: is this sufficient supervision
rule: the "negative option" is not enough to satisfy the active supervision element of the state action doctrine.

Front 86

Rating bureau

Back 86

has an official sound, but do not be fooled, this is a group of horizontal competitors that get together to fix a price.
Companies do not have to worry about 50 states and 50 rates, they can leave this up to a rating bureau and pay the fees.

Front 87

most states statutorily allow rating bureaus to set rates, and to not allow this would create a quagmire, so what can they do?

Back 87

Something besides the "negative option" or phantom supervision. If the state looks, but does not look very hard, a court will in all likelihood not do anything. Even a random sampling that is statistically valid, will suffice.

Front 88

McCARRAN-FERGUSON INSURANCE EXEMPTION:

Back 88

(1) if action is "the business of insurance"
(a) practice has the effect of spreading risk of the policy holders
(b) practice is part of Contact between policy holder and Ins Co
(c) practice limited to entities within the insurance business
(2) Must be "actively regulated by state law"
(3) Does not apply to "boycotts, coercion, or intimidation

Front 89

To what 3 classes of petition does the Noerr-Pennington Doctrine not apply.

Back 89

- Does not apply to conspiring petitioners who first causing anticompetitive harm in order to get the government to make policy changes. ie. Boycotts that cause anticompetitive harm in order to "petition" the government to change policy would not be exempt.
- Does not apply to "private standard setting agencies" like electrical standard setting committees or the like. – Allied Tube and Conduit
- Does not apply to "sham petitions" who's only purpose is an attempt to interfere directly with the business relationship of a competitor through the use of the petitioning process. ie courts.

Front 90

Acronym for RPA section 2(a) violation?

Back 90

I Don’t Take CLIents

Front 91

Elements of RPA 2(a) Violation

Back 91

ANALYSIS: I Don’t Take CLIents
(1) Interstate?
(2) Discrimination in price?
(3) Two actual purchasers?
(4) [Purchasers are] Competitors?
(5) [Products are of] Like grade and quality?
(6) [Resulting in] Injury to competition?

Front 92

EFFECTS TEST FOR VERTICAL MERGER:

Back 92

(1) Within a defined "Relevant market",
(2) merger may Substantially lessen competition
(3) or may tend to create a Monopoly

Front 93

EFFECTS TEST FOR VERTICAL MERGER: Acronym

Back 93

Really Shouldn't Matter

Front 94

SUBSTANTIALITY OF RELEVANT MARKET:

Back 94

(1) Affected market must be substantial, and
(2) substantial portion of that market likely to be affected
(3) anti-competitive effects of merger measured at time of suit filing

Front 95

SUBSTANTIALITY OF RELEVANT MARKET: ACRO

Back 95

Substantial MPT

Front 96

DOJ Entry Barriers Analysis

Back 96

Timely - if entry could be accomplished within 2-years,
Likely- entry profitable at pre-merger prices
Sufficient - entry would neutralize the bad conduct.

Front 97

DOJ Entry Barriers Analysis - ACRO

Back 97

To Love Someone

Front 98

HHI index big numbers

Back 98

- Above 1800 is highly concentrated market.
- 1000-1800 moderate. And so on.

Front 99

"fundamental structural changes" factors of a horizontal merger.

Back 99

FACTORS:
(1) Concentration of the industry,
(2) Trends toward concentration, and
(3) After merger effect on the competition.

Front 100

"fundamental structural changes" factors of a horizontal merger. - Acro

Back 100

CTA - Can't Touch Absynth

Front 101

"differing cost defense"

Back 101

- provided however that if the defendant is giving differing price b/c of differing costs

Front 102

voucher

Back 102

Secular purpose: educcation is a legitimate, secular government objective.
Economic Neutrality & Primary Effect:
No governmental indoctrination
No discrimination against recipients or beneficiaries by reference to religion
No excessive entanglement.

Front 103

HOw does selman modify lemon?

Back 103

There are only two prongs now a consistent distinction between government programs that prof