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Abstract: This article examines the use of statutory and judicially created exemptions and immunities to the antitrust laws in the context of deregulated industries. Historically, certain industries were subject to a traditional-mode of regulation that limited the ability of a monopoly service provider to exit, barred competitor entry, and regulated the rates and service offered by the monopoly. Where this traditional regulation applied, certain types of industry conduct were to some degree immune from antitrust challenge. However, a new type of regulation has in large part supplanted traditional regulation. Regulated industries today are typically regulated only in the parameters under which competition takes place. Thus, the extent to which regulatory agencies are involved in regulation is limited to the establishment of competitive market mechanisms and ex post oversight of market rates. Ironically, as the level of traditional regulation has declined, so too has the role of antitrust enforcement within those industries. The irony is twofold. First, insofar as antitrust and regulation traditionally have been viewed as substitutes, it would be expected that antitrust law would fill the void left as traditional regulation declines. Second, the policies of deregulation are consistent with the policies of antitrust - namely, the creation and preservation of competition, though the competition that has been created is in part due to the statutory and regulatory framework established. The doctrines of state action, filed rate, primary jurisdiction, implied and express immunity are all implicated in the foreclosure of antitrust law from the realm of deregulated industries. This article proposes a method of unifying the doctrines of state action, express immunity, implied immunity, primary jurisdiction, and filed rate into a coherent framework that would be applicable to both regulated and deregulated industries. First, the article discusses the historical purpose of each of the doctrines. It then discusses how each doctrine has expanded beyond its original purpose, most poignantly within the confines of deregulated industries. The article next proposes new tests for each doctrine, in the hopes of creating a rational and uniform framework for the application of such doctrines in the context of regulated industries. The article argues that these doctrines, if properly implemented, would be reduced in many instances to implied immunity analysis, an analysis that is patent in older Supreme Court jurisprudence but is missing from modern exemption and immunity analysis in the context of deregulated industries. When combined with primary jurisdiction doctrine, properly applied, the dinosaurs of regulation old would no longer rule the modern deregulated earth. The article concludes that my proposed test for these immunities and exemptions would significantly narrow their scope.
antitrust, deregulation, regulated industries, state action, filed rate, immunities
Abstract: This article argues that the potential competition doctrine should be applied to determine whether a competitor waiting the periphery of the market has a disciplining effect on competition within the market. The potential competition doctrine addresses the issue of entry into a market by a firm "waiting in the wings" or on the periphery of the market. The courts have developed and modified the doctrine for over forty years. Unfortunately, the courts have created ambiguous rules that often reach dubious results. Worse, the doctrine has now become so unwieldy that some courts have simply ignored the doctrine. The article offers a new approach to dynamic markets where firms on the edge of the market may have an impact upon competition. We argue that our approach provides a more consistent test applicable across all types of antitrust violations. Moreover, our test is equally applicable to both offensive and defensive uses of the doctrine. Our approach also develops a test that focuses on the two critical elements of potential entry: the likelihood of actual entry and the magnitude of the competitive effect. As the certainty of actual entry declines, increasing evidence of current, ongoing effects in the market becomes necessary. We stress, however, that other factors affect the outcome of this axiom, such as whether the antitrust defendant is responsible for preventing entry. Finally, our approach to the concept of potential competition analyzes objective and subjective evidence. While courts and federal antitrust agencies have emphasized objective evidence in their analyses of these issues, we believe that relying on entirely objective evidence is undesirable. The article is broken into five parts (excluding the introduction). In Part I, we framed the concept of potential competition as developed in the economic literature. We also spent some time discussing the development of contestable market theory. Part II surveyed the potential competition and entry cases, the federal antitrust guidelines governing the potential competition doctrine, and the cases and administrative proceedings discuss potential competition in the context of deregulating industries. We drew from the electricity, airline, telecommunications, banking, and railroad sectors for illustration. Part III began by presenting a critique of the cases, taking into account the observations of other commentators. We then laid out the approach we advocate, explaining how we address the deficiencies of the current legal regime. In Part IV, we took our approach for a test drive by presenting various hypothetical fact patterns to explain how our approach works and how it differs from the current state of the law. Finally, we concluded in Part V with a summary of our approach.
antitrust, entry, regulated industries, contestable markets
Abstract: This article examines the nature of the effect of the U.S. Supreme Court's Empagran decision through the lens of the global vitamins cartel, using legal and economic analysis and also empirical data to describe the effect. The article commences with a discussion of the analytic approach adopted by the courts prior to the Empagran decision, with a focus on the issues of the degree to which effects on domestic commerce are necessary in order for U.S. courts to obtain jurisdiction over a matter involving foreign plaintiffs and the role of comity in the determination of jurisdiction. The article next describes the Empagran story from a legal perspective, discussing the various positions taken by the courts below and the Supreme Court, in the context of not only the issues of economic effects and comity, but also the role of foreign plaintiff private antitrust suits in deterring international cartels. The article then examines the empirical evidence related to the vitamins cartel at the heart of the Empagran matter, describing empirical research done by Author Connor and others. This research suggests a fundamental and important link between a cartel's activity here and abroad, as well as the importance of domestic antitrust enforcement on cartel recidivism. The article proposes a methodology that would harmonize the needs for vigorous antitrust enforcement to deter international cartel activity and reduce recidivism with comity issues obviously at the forefront of the Court's concerns in Empagran.
Antitrust, Economics, International Law, Jurisdiction, Industrial Organization, Empagran, Extraterritoriality , Cartels, Restraints of Trade
Abstract: The primary contention of this Article is that California's failed "deregulation" experiment arose largely from the failure of California to create properly functioning market rules, lack of diligence in market oversight, and the expectation that antitrust law would cure that which it was not designed to cure: market ills cultivated by regulatory rules that legitimized anticompetitive conduct and made that conduct the norm. In the context of the regulatory environment developed in California, this Article examines the merits of allegations that Enron exercised market power in violation of antitrust laws. The article begins by examining the competitive conditions of markets and the history of the development of California's wholesale and retail markets. The article then describes how California's markets functioned, followed by a description of how the initial successes of market mechanisms later became serious market failures. The article then discusses the allegations against Enron, as well as other potential anticompetitive conduct that might have led to the collapse of the market. The article concludes that while evidence for the most part is lacking thus far as to antitrust violations by Enron, the evidence does point to failures by California's regulators, utilities, and the Federal Energy Regulatory Commission (FERC) to plan for and guard against exercises of market power. Moreover, some evidence points to potential antitrust misconduct by others, although that evidence, at the time of publication of the article, was far from conclusive. The article then suggests methods of regulation that would minimize market abuses, and what roles market regulators and antitrust enforcers would play in such a world. The implication of this analysis is fourfold. First, regulation and antitrust are complements essential to sensible regulation of power markets. As such, a regulatory failure may expose market flaws that are not remedied by antitrust enforcement. Similarly, antitrust does not protect against exercises in market power in yet-to-be created markets, and regulation is an essential protection against such exercises. Second, the nature of the market structure governs and determines the nature of conduct that is illegal under the antitrust laws. Third, the concepts of "deregulation" and "competition" are seriously misleading, and the rhetoric of deregulation should instill a notion of regulated competition such that regulators, legislators, and antitrust enforcers understand their roles as being complementary. Finally, the points considered above have serious implications for not only the deregulation of the energy industry in the future, but also the deregulation of any industry where it is hoped that market mechanisms might supplant regulation.
antitrust, deregulation, regulated industries, electricity, competition policy
Abstract: The article argues, using law & economics, that same-sex marriage would confer greater benefits to society than heterosexual marriage while not causing costs greater than those associated with heterosexual marriage. Moreover, same-sex marriage would help remedy some societal ills associated with heterosexual sexual relations. For example, allowing same-sex couples to adopt would reduce the number of unwanted children. The article takes issue with the movement towards state created civil unions, as the benefits conferred by such unions limit the mobility of those who choose to undertake such unions.
same-sex marriage, gay marriage
Abstract: This paper proposes a general framework to assist policymakers in framing the key issues and objectively weighing the relevant evidence and policy considerations for the purpose of determining whether to create, modify, or eliminate any statutory immunity to the federal antitrust laws. The framework also sets forth procedural standards for passage of immunities that could be useful to state legislatures. The two key provisions are a sunset provision (so that the effects of the statutory provision could be studied) and the requirement of a detailed legislative history. The latter requirement would greatly enhance the likelihood that the courts would make a proper determination of whether state action doctrine applies in a particular case. Should the legislative history set forth the reasons for the statute, the perceived benefits and costs of the statute, and other factors, it would be easier for the courts to determine whether the conduct at issue fits within the scope of the authorized activity under the statute, and whether the conduct is consistent with the intent of the legislature.
antitrust, immunities and exemptions, cost-benefit analysis
Abstract: This article seeks to provide a unified framework to the disparate treatment that post-employment covenants receive in federal and state courts. Plaintiffs seeking relief from (or enforcement of) such covenants in federal courts typically are subjected to an antitrust analysis known as the rule of reason: The restrictions contained in the covenant are balanced against the procompetitive benefits sought to be gained from the agreement. In contrast, in state courts such agreements have largely been subject to traditional contract analysis. Our approach synthesizes the approaches used in both federal and state courts. We believe, for example, that it is insufficient to engage in a rule of reason cost-benefit calculation if there are issues such as duress, mutual mistake and other bargaining and market failures afoot. Likewise, finding a contract valid under traditional contract analysis does not address the important societal question of whether the agreement unreasonably restrains trade. Thus, courts must engage in both analyses, first determining whether the contract is valid under traditional principles and then determining whether the contract unreasonably restrains trade.
covenants, antitrust, contracts, employment
Abstract: This article argues that the courts considering the Microsoft settlement have rewritten both the literal language of the Tunney Act and ignored the legislative intent of Congress when it adopted the Act. In one Microsoft case, the Court of Appeals for the District of Columbia ignored the Congressional intent that courts were to make their own independent evaluation of a consent decree without special deference to the Department of Justice. In the second Microsoft case, approving a claimed "consent decree" with Microsoft in 2002, the trial court committed clear error when it applied the Tunney Act to a fully litigated case. Congress clearly limited the Tunney Act to cases where no litigation had taken place and the Government's antitrust case was being settled by a proposed consent decree "before any testimony is taken." The second Microsoft case was fully litigated and resulted in findings of a violation of the law by the trial court and the Court of Appeals. Nevertheless, on remand, the trial court found the proposed decree resolving the case was a "consent decree" and applied the Tunney Act to the proceeding. The article spells out several adverse consequences of both cases, not the least of which is the judicial failure to follow the law as written and the intent of Congress. We believe these matters required the most serious attention of Congress and its committees less the precedents established create a serious problem for future antitrust enforcement, let alone respect for the will of Congress. The Tunney Act was recently modified to make it even clearer that Congress intended that no deference be granted by the courts when they consider consent decrees before them. The Congressional Record discussing the proposed legislation cites to our article as support.
antitrust, microsoft, Tunney Act, judicial review
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