Thanks for the comment. It seems to me that in order to arrive at a well-defined market based on a SSNIP test, economic analysis has to be applied (diversion analysis/critical loss analysis) and that this tricky business. So tricky in fact that it can be easier (in unilateral effects cases) to apply the economic analysis not first to the question of market definition but directly to the question of competitive harm, that is the prospective ability of the merged firms, rather than a hypothetical monopolist, to profitably and sustainably raise prices above pre-merger levels or reduce quality.

Other avenues to market definition aside from the theoretically-elegant SSNIP test, like surveys of business people in the industry or company documents, are notoriously unreliable.

Well, what does one consider “direct proof” in an HSR matter, where the merger has not yet been consummated? Courts are right to insist on considering prospective competitive effects within the context of a well-defined market.

It’s also a little odd to disparage economic evidence when courts seem increasingly open to economic arguments, which would seem to require economic evidence in order to be persuasive.

Competitive marketplaces protect consumers. Non-competitive marketplaces serve other interests at the expense of consumers.

(In the interest of full disclosure, I am AAI Senior Fellow and I worked on the AAI’s Real Estate Competition Project.)

The public no longer will be extorted by this organized crime association known as REALTORS. Now we will have a real choice and not have to deal with these morons who couldn’t get a real job and extort the public for ridiculous fees for doing nothing! A great day for true real estate professionals as well.

In opening, I have taken it upon myself to inter-change words to the song “I’m Proud to Be an American Where at Least I know I’m Free” to “The Lunatics Run the Asylum in the U.S.A.”

Face it, the belief of G/W has set the stage towards a general economic tail-spin. In sum, most people in the U.S.A believe G/W is real; and as such, all kinds of unpleasant things are occurring such as; out-of-control petrol prices, real estate collapse and a steeply falling dollar.

Think of the economic effects of G/W like riding a horse who suddenly spooks. It does not matter what made the horse you are riding spook; the fact is, when your horse spooks, you are left with only 3 choices;

(1) allow yourself to fall-off (bad choice, like buying a water-front house, motorhome or a new SUV);

(2) hold-on and let the horse run you off to the barn (VERY bad choice, like the antitrust suit against OPEC to stop the high gas prices);

(3) hold-on and try to head towards clear pasture (safe choice, like raising taxes to Eisenhower-era 91% on America’s wealthiest folks to fund re-building the transportation infrastructure to include high speed rails, subways, inter-urbans and lanes dedicated to light-electric cars (in sum, a transportation infrastructure tailored to an economy not hopelessly dependant on petrol).

The lunatics are the Article I, II, III riders who sit on their spooked horses galloping back towards the barn where they break their necks the moment their horse suddenly stops at the stall-door.

The lunatics lose site of the fact it is irrelevant whether G/W is really going to occur while assessing G/W’s present, devastating impact on our economy. They also lose site of the fact the price of fuel has risen to the breaking point.

Lunatics want more G/W studies, antitrust suits against OPEC and lower taxes so they can continue to support all the high-maintenance garbage they have been acquiring since post-Reagan tax cuts (mcMansions, motorhomes, motoryachts, face-lifts, tummy-tucks, 300+HP sports cars and SUVs).

And the band of loonies play on . . .

I am just curious what harm is DOJ or any US court able to cause to OPEC?

Another problem is the vagueness of the following clause: “direct, substantial, and reasonably foreseeable effect on the market, supply, price, or distribution”.

Price-fixing agreements […] are illegal “PER SE”: no defence resting on the claims that the prices fixed are reasonable, or on evidence that price competition in an industry is excessive and ruinous, will succeed. Agreements directed to controlling the flow of SURPLUS [emphasis mine] supplies into the market so as to stabilize prices will be regarded as ‘tampering’ with free price movements and hence as equivalent to price fixing. These basic rules cover the bulk of cases; and straightforward changes of price fixing probably account for the majority of all antitrust cases every year. (A.D. Neale and D.G. Goyder, “The Antitrust Laws of the U.S.A - A Study of Competition Enforced by Law”, Cambridge University Press, 1980, reprinted 1982, 3rd ed., p. 42)

Do we get the RULE OF REASON for price fixing?

As Alan Greenspan said more than 45 years ago: http://www.polyconomics.com/searchbase/06-12-98.html The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet “too much” competition is condemned as “cutthroat.” It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as “enlightened” when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.

The general antitrust thinking on horizontal agreements is that most mergers and joint agreements should be judged by an economic rule of reason, while price collusion and division-of-market agreements should remain illegal per se (D. T. Armentano, “Antitrust Policy – The Case for Repeal’, Washington, D.C., Cato Institute, 1986, p. 55)

The rule of reason is a doctrine developed by the United States Supreme Court in its interpretation of the Sherman Antitrust Act. The rule, stated and applied in the case of Standard Oil Co. of New Jersey v. United States, 221 U.S. 1 (1911), is that only combinations and contracts unreasonably restraining trade are subject to actions under the anti-trust laws and that size and possession of monopoly power are not illegal. http://en.wikipedia.org/wiki/Ruleofreason

illegal per se often refers to categories of anticompetitive behavior in antitrust law conclusively presumed to be an “unreasonable restraint on trade” and thus anticompetitive. http://en.wikipedia.org/wiki/Illegalperse

The per se approach purposely abstracts the very economic issues that may be relevant in such cases (Armentano, p. 65)

The per se approach assumes that there are no economic efficiencies associated with the price agreement and that the conspiracy restricts market production and raises the market price for oil (Armentano, p. 65-66)

Now, we get the rule of reason replacing the per se approach?

Is this the first step towards abolishing antitrust law? I do sincerely hope it.

ivocerckel AT siquijor DOT ws

As for your discussion of IP, maybe you will find this interesting: Patent Attorney On Why We Need To Rethink Intellectual Property

Mr Kaiser,

Have you read this initial decision by the FTCs own Administrative Judge?

http://www.ftc.gov/os/adjpro/d9302/040223initialdecision.pdf

You also might read the jury form which was submitted in the recent trial regarding Rambus’ JEDEC conduct. I’m sorry, I can’t find it now, but someone else might be able to post that to this blog.

• “Aeron chairs are very popular and sought-after.”

• The complaint only alleged higher prices for the chairs. No discussion about output.

• No relevant product market definition (nor geographic market definition).

• “Some retailers who wanted to sell Aerons for less by advertising a lower price attempted to do so. When a retailer advertised below HMH’s minimum price, HMH terminated the retailer’s access to the Aeron chair for one year.” [Sounds like a MAP case.]

• “HMH implemented its SRP policy to improve retail margins and by most accounts, the program did so. The few retailers who chose not to follow the SRP were either terminated or lost access to the Aeron they advertised at less than the SRP . The vast majority of retailers raised and maintained their retail price at the SRP level.” [Again, sounds like MAP and/or Colgate.]

Nicolas

I recently found your blog, I’m a law student interested in competition/antitrust, and am thoroughly enjoying reading it. Keep up the good work.

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