Table of Contents

The Rise and Rise of the One Percent: Getting to Thomas Piketty's Wealth Dystopia

Shi-Ling Hsu, Florida State University - College of Law

Competition Policy and the Great Depression: Lessons Learned and a New Way Forward

Alan J. Meese, William & Mary Law School

Promoting Innovation

Spencer Weber Waller, Loyola University of Chicago, School of Law - Institute for Consumer Antitrust Studies
Matthew Sag, Loyola University Chicago School of Law

NC Dental Antitrust Professors Amicus Brief

Rebecca Haw, Vanderbilt University School of Law
Einer Elhauge, Harvard Law School
Aaron S. Edlin, University of California at Berkeley, National Bureau of Economic Research (NBER)

Antitrust in Zero-Price Markets

John M. Newman, University of Memphis - Cecil C. Humphreys School of Law

Market Structure Control and Restriction of Anticompetitive M&As and 'Concentration' of Enterprises' Market Power in BRICS Countries: General Approaches (Asia - China and India, Euro-Asia - Russia and Africa - South Africa - In Focus)

Ksenia Belikova, Peoples' Friendship University of Russia


ANTITRUST: ANTITRUST LAW & POLICY eJOURNAL

"The Rise and Rise of the One Percent: Getting to Thomas Piketty's Wealth Dystopia" Free Download
FSU College of Law, Public Law Research Paper No. 698
FSU College of Law, Law, Business & Economics Paper No. 14-11

SHI-LING HSU, Florida State University - College of Law
Email:

Thomas Piketty's Capital in the Twenty-first Century, which is surely one of the very few economics treatises ever to be a best-seller, has parachuted into an intensely emotional and deeply divisive American debate: the problem of inequality in the United States. Piketty's core argument is that throughout history, the rate of return on private capital has usually exceeded the rate of economic growth, expressed by Piketty as the relation r > g. If true, this relation means that the wealthy class – who are the predominant owners of capital – will grow their wealth faster than economies grow, which means that relatively speaking, the non-wealthy will fall behind.

But even if we accept Piketty's assertion that this has been an "historical fact," why is r > g most of the time? Piketty offers a few economic factors and a few legal rules, but mostly demurs as to why the "forces of [wealth] divergence" generally overwhelm the "forces of [wealth] convergence." This review argues that legal rules and institutions exhibit an inherent bias towards some forms of private capital, and serve to inflate returns to private capital – Piketty's r. Meanwhile, not only is it more difficult to make economic growth – Piketty's g – keep pace, but it is more contentious. The result is that returns to private capital have indeed commonly exceeded the rate of economic growth. This review argues that this historical truism can be traceable to a capital-friendly bias that inheres in legal rules and institutions. This review identifies several areas of law in which this bias is particularly pronounced, and serves to inflate returns to private capital, driving it above the rate of economic growth, and exacerbating economic inequality. This review closes by arguing for a greater attention paid to funding education, which is not only an equalizing "force of convergence," but also a predicate to economic growth.

"Competition Policy and the Great Depression: Lessons Learned and a New Way Forward" Free Download
Cornell Journal of Law and Public Policy, Vol. 23, No. 2, 2013

ALAN J. MEESE, William & Mary Law School
Email:

Using the Great Depression as a case study, the Article examines the link between competition policy and macroeconomic stability. This study sheds important light on claims that protection for economic liberty and resulting free competition exacerbated the Depression as well as modern arguments that coercive interference with free-market outcomes can speed recovery from the recent Great Recession.

Many equate competition policy with antitrust law. However, this Article widens the focus beyond antitrust. This wider focus reveals that, at least before the Depression, there were two other important sources of competition policy. Thus, while antitrust law protected free competition from undue private restraint, the Dormant Commerce Clause and Due Process Clauses furthered free competition by prohibiting undue state and federal restraints on economic liberty. As of 1929, then, these three sources of law combined to create and enforce a unified and doctrinally symbiotic commitment to free competition as the norm governing American economic life.

Unfortunately, relaxation of antitrust’s anti-collusion standards in the late 1920s and early 1930s paved the way for the 1933 National Industrial Recovery Act (NIRA), FDR’s stimulus plan. In particular, the NIRA fostered collective wage and price setting and banned forms of normal competition, thereby protecting incumbent firms from more efficient rivals. Antitrust’s surprising embrace of collusive practices also presaged judicial repudiation of due process protection for economic liberty, first in Nebbia v. New York, 291 U.S. 502 (1934), and then in West Coast Hotels v. Parish, 300 U.S. 379 (1937).

While the Court unanimously overturned the NIRA in Schechter Poultry v. United States, 295 U.S. 495 (1935) Congress and many states responded by enacting various statutes interfering with free competition, some of which survive to this day. In particular, the 1935 National Labor Relations Act (NLRA) mandated collective bargaining with labor cartels known as unions, thereby displacing free competition in wage setting, while the 1938 Fair Labor Standards Act further displaced such competition by imposing minimum wages. Shortly thereafter, the Supreme Court invoked Nebbia-like reasoning when holding that neither the antitrust laws nor the dormant Commerce Clause prevents states from organizing and enforcing cartels that would otherwise unreasonably restrain interstate commerce and thus violate the Sherman Act. See Parker v. Brown, 317 U.S. 341 (1943). This “state action? exemption applied, the Court said, even though California producers exported nearly all their raisins to other states.

By the mid-1940s the pre-Depression commitment to free-market competition was a thing of the past, as states and the federal government were free to displace free-market outcomes by statute. While proponents advocated the NIRA and other coercive interference with free markets as recovery measures, both theory and empirical evidence establish that these policies, including cartelization of labor via collective bargaining, deepened and lengthened the Depression. If history is any guide, then, free competition did not cause the recent Great Recession. Moreover, policies that displace free competition by, for instance, imposing minimum wages, condemning efficient conduct as “exclusionary,? or bolstering collective bargaining will only slow recovery.

This paper ends by sketching various lessons from the New Deal experience and advocating a return to the pre-Depression commitment to free-market competition. Antitrust regulation of private markets cannot ensure free competition if states and the national government can impose price and output restrictions that would be felonies if imposed by private parties. Restoration of free competition as the national norm requires a new symbiosis, whereby state and federal efforts to displace market outcomes are tested by the same skepticism as similar efforts by private parties. Antitrust experts can assist in developing this new symbiosis by devoting more intellectual energy to expanding the domain of antitrust by, for instance, advocating the elimination of various exemptions, particularly Parker’s state action exemption that currently shelters state-created cartels from the Sherman Act.

"Promoting Innovation" Free Download

SPENCER WEBER WALLER, Loyola University of Chicago, School of Law - Institute for Consumer Antitrust Studies
Email:
MATTHEW SAG, Loyola University Chicago School of Law
Email:

The economist Joseph Schumpeter recognized two essential facts of modern capitalism: the sudden displacement of the old by the new, a process he eloquently termed “creative destruction?; and the significance of innovation over incremental improvements in allocative efficiency to long-run economic growth. The twin Schumpeterian insights are now well accepted. How these insights should be incorporated into laws regulating the marketplace, such as antitrust and intellectual property, is far less clear.

Antitrust minimalists and skeptics tend to equate Schumpeter with laissez faire. After all, if even the most entrenched market behemoths are vulnerable to seismic shifts in technology, are not all supposed monopolies merely fleeting? We disagree. This view misreads Schumpeter and misunderstands markets and business strategy. Modern businesses are well aware of the threat of disruptive outsiders and, left unchecked, will do their utmost to prevent future waves of creative destruction from threatening the status quo. We propose thinking of creative destructive and competition policy as a two-stage process rather than a single event where the victor enjoys the spoils of innovation indefinitely without legal constraints. Instead, competition law as we currently understand it would remain in place while being somewhat more forgiving as to the acquisition of market power, yet still vigilant in policing the maintenance of such power.

We focus on historical, current, and hypothetical examples from US and EU competition and intellectual property law to show how contemporary law has already incorporated many of these insights and the law can maximize consumer welfare by doing so more thoroughly. Under such a two-step approach, some areas of antitrust and IP law would expand, some would contract, but all areas of the law would more clearly promote innovation and help create real Schumpeterian antitrust.

"NC Dental Antitrust Professors Amicus Brief" Free Download

REBECCA HAW, Vanderbilt University School of Law
Email:
EINER ELHAUGE, Harvard Law School
Email:
AARON S. EDLIN, University of California at Berkeley, National Bureau of Economic Research (NBER)
Email:

Petitioner advocates a radical change in this Court’s precedent on antitrust state action immunity, which has consistently held that financially-interested market participants must be treated as private actors, regardless of whether the state makes them a state agency. Under Petitioner's logic, a state instead can, by the simple expedient of calling market actors a state agency and giving them authority to enforce their cartel, immunize that private cartel and effectively repeal the operation of federal antitrust law. This sort of inverse preemption of federal antitrust law by states has never been permitted by this Court. Petitioner mischaracterizes the cases it claims support its position, which in fact have never given state action immunity to financially-interested market participants unless they are actively supervised by disinterested government actors, and ignores or mischaracterizes other cases that plainly hold the contrary.

In recent decades, the states have created a host of new licensing boards made up of market participants with strong incentives to restrain trade. See Aaron Edlin & Rebecca Haw, Cartels By Another Name: Should Licensed Occupations Face Antitrust Scrutiny? 162 U. Penn. L. Rev. 1093 (2014). Occupational licensing, once limited to a few licensed professions, is widespread and growing -- from 5% of the U.S. workforce in the 1950s, to 15% in the 1970s, to 30% today. Occupational licensing has been abused by incumbent market participants to exclude rivals, often in unreasonable ways, and to raise prices. This disturbing trend already costs consumers billions of dollars every year and impedes job growth, and the trend would get much worse if the Court were to accept Petitioner’s argument and hold that financially-interested market participants enjoy antitrust immunity whenever the state empowers them as a state agency.

Even if the North Carolina board members were not themselves financially-interested market participants, the fact that they were all elected to their positions by financially-interested market participants should suffice to treat the board as private. After all, if a private cartel paid an employee a flat salary to fix prices for it, the fixed prices would predictably reflect the cartel’s financial interests even though the employee was not a market participant and had no direct financial interest in the prices set. Thus, election by financially-interested market participants should always be treated as sufficient to treat a board as private, although such election is not necessary for such treatment when (as here) the board members are themselves financially-interested market participants. Sufficiency, should not, however be confused with necessity. Because state boards dominated by financially-interested market participants are almost always appointed, if the Court changed current law to make election by market participants necessary to lose immunity, it would leave the foxes to guard the henhouse for a large fraction of the workforce.

"Antitrust in Zero-Price Markets" Free Download

JOHN M. NEWMAN, University of Memphis - Cecil C. Humphreys School of Law
Email:

This Article examines “zero-price markets,? where firms set the price of their goods or services at $0. Creative content, software, search functions, social media platforms, mobile applications, travel booking, navigation and mapping systems, and myriad other goods and services are now widely distributed at zero prices. But despite the exponential increase in zero-price products, scholars have paid almost no attention to how the absence of positive prices impacts traditional legal principles and methodologies.

Antitrust law in particular is firmly grounded in neoclassical economics, which is in turn based on price theory. This heavy dependence on positive prices has led antitrust-enforcement agencies to overlook potentially massive consumer-welfare harms. The dramatic consolidation of the broadcast-radio industry as a result of deregulation in the late 1990s provides one example: the U.S. Department of Justice failed even to consider potential harm to listeners, instead focusing solely on harm to advertisers. More recently, Canada’s Competition Bureau neglected to address a potential avenue of harm to consumers in evaluating a merger between two zero-price newspapers.

That agencies well-staffed with professional antitrust analysts may have committed such errors suggests how fundamentally zero-price markets challenge traditional theories and analytical frameworks. Zero-price markets raise unanswered questions regarding market definition, market power, consumer standing, harm, and damages calculations. They also call into question the role and efficacy of antitrust — and of competition itself. In light of the critical importance of zero-price markets to the broader economy, antitrust institutions must evolve. This Article offers multiple normative proposals, including modifying the traditional “SSNIP? test for market definition, reevaluating the legal standard for market power, and several means of valuing consumer harm in zero-price market contexts.

"Market Structure Control and Restriction of Anticompetitive M&As and 'Concentration' of Enterprises' Market Power in BRICS Countries: General Approaches (Asia - China and India, Euro-Asia - Russia and Africa - South Africa - In Focus)" Free Download

KSENIA BELIKOVA, Peoples' Friendship University of Russia
Email:

The articles represents a research of general approaches of BRICS countries legislation and legal order to counteraction against such an anticompetitive market strategy as abuse of dominant market power in legal orders of China, India, Russia and South Africa. The author pays particular attention to current legislation of BRICS countries in the field of competition protection with regard to provisions related to market structure control and restrictions of anticompetitive mergers & acquisitions (further on - M&As) and “concentration? of enterprises' market power control fixed by Asian (China and India), Euro-Asian (Russia) and African (South Africa) legal orders. The analysis of substantial contents of laws on competition and monopolies of the above mentioned BRICS countries and relevant case law shows the existence of a number of conventional generally acknowledged (unified) provisions and norms. At the same time there are specific features making them different. These generally acknowledged provisions and peculiarities will be in focus in the article.

^top

About this eJournal

This eJournal distributes working and accepted paper abstracts dealing with all aspects of antitrust and competition policy, including mergers, cartels, monopolies, and price discrimination.

Submissions

To submit your research to SSRN, sign in to the SSRN User HeadQuarters, click the My Papers link on left menu and then the Start New Submission button at top of page.

Distribution Services

If your organization is interested in increasing readership for its research by starting a Research Paper Series, or sponsoring a Subject Matter eJournal, please email: RPS@SSRN.com.

Distributed by

Legal Scholarship Network (LSN), a division of Social Science Electronic Publishing (SSEP) and Social Science Research Network (SSRN)

Directors

ANTITRUST & REGULATED INDUSTRIES EJOURNALS

BERNARD S. BLACK
Northwestern University - School of Law, Northwestern University - Kellogg School of Management, European Corporate Governance Institute (ECGI)
Email: bblack@northwestern.edu

RONALD J. GILSON
Stanford Law School, Columbia Law School, European Corporate Governance Institute (ECGI)
Email: rgilson@leland.stanford.edu

Please contact us at the above addresses with your comments, questions or suggestions for LSN-Sub.

Advisory Board

Antitrust: Antitrust Law & Policy eJournal

JAMES R. ATWOOD
Covington & Burling

JONATHAN B. BAKER
Professor of Law, American University - Washington College of Law

MAXWELL M. BLECHER
Attorney at Law, Blecher and Collins

DENNIS W. CARLTON
Professor, University of Chicago - Booth School of Business, National Bureau of Economic Research (NBER)

FRANK H. EASTERBROOK
Senior Lecturer, University of Chicago Law School

NICHOLAS ECONOMIDES
Executive Director, Networks, Electronic Commerce, and Telecommunications Institute, Professor of Economics, New York University - Leonard N. Stern School of Business - Department of Economics

EINER R. ELHAUGE
Professor of Law, Harvard Law School

ELEANOR M. FOX
Professor of Law, New York University School of Law

HERBERT J. HOVENKAMP
Professor, University of Iowa - College of Law

LOUIS KAPLOW
Professor of Law, Harvard Law School, National Bureau of Economic Research (NBER)

DANIEL L. RUBINFELD
Professor, University of California at Berkeley - School of Law, National Bureau of Economic Research (NBER), NYU Law School

CARL SHAPIRO
University of California, Berkeley - Haas School of Business