Antitrust Policy Presentation

What emergedisaconvergenceofeconomicsandlawwithoutparallelinpublicoversight of business.
As
economic learning changed, the contours of antitrust doctrine and enforcement policy eventually would
shift, as well.
Copyright 2012 Pearson Addison-Wesley. All rights reserved.

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telephone, telegraph, railroads

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Standard Oil was John D. Rockefeller's "oil trust." The government charged Standard Oil with violating
the Sherman Act through unreasonable restraints of trade. The government, and many popular writers,
claimed that Standard Oil had used its power to prevent other oil firms from competing with it. Standard
Oil, in this view, had become a giant firm through unfair competition.
The Supreme Court in 1911 agreed.
"Unreasonable restraints of trade or monopoly . . . meant (1) unfair, oppressive methods designed to
eliminate, damage, or destroy competitors; and (2) business practices, the purpose or necessary effect of
which was to enhance or depress prices unduly, or affect trade or distribution or transportation unduly, that
is, to the detriment of the public interest." (Quote from Martin J. Sklar, The Corporate Reconstruction of
American Capitalism, 1890-1916. The Market, the Law, and Politics (New York: Cambridge University
Press, 1988), 147.)
The Rule of Reason became the guiding principle of antitrust law after 1911. On a case-by-case basis, the
Courts would determine if a firm became large through fair or unfair means. If a company became large
through succeeding in fair competition with its rivals, the courts would allow it to remain big. If, as was
the situation in 1911 and other famous cases, the courts found that a firm such as Standard Oil had become
large unfairly, then the courts ordered them broken up.

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Predatory pricing is the act of setting prices low in an attempt to eliminate the competition.

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Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale
arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the
greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are spread out
over a larger number of goods.
Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or
services are transacted at different prices by the same provider in different markets.
economiesofscale.asp#ixzz4emq7A5cJ

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During the presidency of Franklin D. Roosevelt, the Justice Department charged Alcoa with illegal
monopolization and demanded that the company be dissolved. Trial began on June 1, 1938. The trial judge
dismissed the case four years later. The government appealed. Two years later in 1944, the Supreme Court
announced that, owing to disqualifications of several of its judges, it could not assemble a quorum to hear
the case, and Congress passed a special act allowing the case to be assigned for final decision to Hands
court,[1] the U.S. Court of Appeals for the Second Circuit. In the following year, Learned Hand wrote the
opinion for the Second Circuit.
Alcoa argued that if it was in fact deemed a monopoly, it acquired that position honestly, through
outcompeting other companies through greater efficiencies. The Department of Justice argued that, apart
from what it characterized as attempts or intent to monopolize, Alcoas mere possession of the power to
control prices and curb competition was an illegal monopoly per se under both sections 1 and 2 of the
Sherman Act.

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This is a conspiracy in which one actor (the "hub"), such as a supplier, enters into agreements with a
number of actors (the "spokes"), such as retailers, who are aware that the supplier is entering into similar
agreements with other retailers and that the success of the plan agreed to depends on the retailers all
performing in accordance with the agreements. In this case, the hub was Interstate (a motion picture
theater chain) and the spokes were various motion picture film distributors that supplied Interstate (and
other theaters) with films.
The Government sued two groups of defendants for engaging in a price-fixing conspiracy. One group of
eight defendants were distributors (such as Paramount Pictures) of motion picture films, that distributed
about 75 percent of all first-class feature films exhibited in the United States. A second group of
defendants were dominant theater owners in Texas and New Mexico, and included Interstate Circuit,
which had a monopoly of first-run theaters in various Texas cities

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Brown Shoe Co. v. U.S. case brief
Brown Shoe Co. v. U.S. case brief summary
FACTS
The merger of two shoe firms (becoming the second largest retailer in the nation) was challenged by the
DOJ and the challenge was upheld by the Court, citing Congressional desire to promote competition
through the protection of viable, small, locally owned businesses, despite the potential for higher costs and
prices.
It is competition, not competitors, which the Act protects.
The Court stated that a strong, national chain of stores can insulate outlets from fierce competition is 11-8
specific markets.
figures on the legal landscape.
The Chicago school takes its name from the University of Chicago, with which most of its core proponents
were all affiliated at one time. These include Professor Ronald H. Coase, Judge Frank H. Easterbrook,
Professor Richard A. Epstein, Professor Daniel R. Fischel, Judge richard a. posner, and Judge Ralph K.
Winter Jr. robert h. bork, another prominent member, was a professor at Yale. The early work of the
Chicago school, produced in the 1960s, built on scholarship by Professor Aaron Director. Director's
specialty had been antitrust, the area of law that addresses Unfair Competition in business. Antitrust has a
long history, in which ideas have come and gone. Through the late 1960s, the U.S. Supreme Court took a
harsh view of restraints on trade. The Court ruled that certain anticompetitive practices were per se illegal
so harmful to competition that they need not even be evaluated on a case-by-case basis.
The Chicago school urged the Court to take another look. Scholars of the school praised economic
efficiency. If they could show, for instance, that certain restraints on trade were actually a result of efficient
competition, then why should these practices be considered illegal by courts? Underlying this view was
the contention that markets could take care of themselves without the need for heavy regulation. It was not
long before the Chicago school's ideas began to influence the Supreme Court. In 1977, the Court
abandoned its reliance on per se rules in Continental T.V. v. GTE Sylvania, 433 U.S. 36, 97 S. Ct. 2549, 53
L. Ed 2d 568, and turned instead to a rule of "reason," opening a new era in Antitrust Law.
Throughout the 1970s, the Chicago school continued to refine its economic theory in numerous essays and
treatises such as Posner's Antitrust Law (1976) and Robert H. Bork's The Antitrust Paradox (1978), both of
which attacked the idea that big business is necessarily bad. The school argued that an unrestricted market,
in which producers and consumers acted freely, will operate rationally and efficiently all by itself. The
hands-off implications of this picture had broad significance for corporate law and national policy.
Chicago school theory influenced the Reagan administration's attack on government regulation.
President ronald reagan appointed several Chicago school members to the federal bench: Posner in 1981 to
the Seventh Circuit, Winter in 1982 to the Second Circuit, and Easterbrook in 1985 to the Seventh Circuit.
Bork, a judge on the U.S. Court of Appeals for the District of Columbia Circuit, was nominated to the U.S.
Supreme Court in 1987. However, widespread protest over his views led the U.S. Senate to block his
confirmation.

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In the 1990s the Chicago school continued to provoke lively debate. Bork, despite resigning from the
The Chicago School of antitrust analysis is the most coherent and elegant ideology that antitrust has ever
experienced. One must admire its simplicity, as well as its confidence in markets and its optimism.
Nevertheless, those who found markets to be somewhat messier and Chicago economics less robust, began
in the 1980s to call for a post-Chicago antitrust policy that would take the best that the Chicago School
had to offer as a point of departure, and then develop an antitrust policy that was more sensitive to market
imperfections. This could then enable anticompetitive behavior by dominant firms, that would take the
competitive threats of mergers more seriously, and that would acknowledge the anticompetitive potential
of at least a few vertical restraints.

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Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451 (1992), is a 1992 Supreme Court
decision in which the Court held that even though an equipment manufacturer lacked significant market
power in the primary market for its equipmentcopier-duplicators and other imaging equipment
nonetheless, it could have sufficient market power in the secondary aftermarket for repair parts to be liable
under the antitrust laws for its exclusionary conduct in the aftermarket. The reason was that it was possible
that, once customers were committed to the particular brand by having purchased a unit, they were "locked
in" and no longer had any realistic alternative to turn to for repair parts.

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What emergedisaconvergenceofeconomicsandlawwithoutparallelinpublicoversight of business.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

The Supreme Court in 1911 agreed.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Brown Shoe Co. v. U.S. case brief summary

It is competition, not competitors, which the Act protects.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

Copyright 2012 Pearson Addison-Wesley. All rights reserved.

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