Search results

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

The first contribution to this section is by Richard Schmalensee titled “Thoughts on the Chicago school legacy in U.S. antitrust.” It appears the purpose of this essay is to set up a target for the rest of the contributors to shoot at – a target that is emphatically pro-Chicago. In his essay, Schmalensee reviews some of the aspects of U.S. antitrust policy that outraged Chicago school lawyers and economists in the 1970s. He takes a brief look at some of Chicago's subsequent victories that he claims are now generally accepted as positive changes. And finally, he argues that some of Chicago's lost battles also constitute positive aspects of its legacy. His discussion is focused on four broad issues: the objectives of antitrust, the past policy toward “no-fault” concentration, the treatment of productive efficiency, and the evaluation of non-standard business conduct (pp. 11–12).

Many jurisdictions fine illegal cartels using penalty guidelines that presume an arbitrary 10% overcharge. This article surveys more than 700 published economic studies and judicial decisions that contain 2,041 quantitative estimates of overcharges of hard-core cartels. The primary findings are: (1) the median average long-run overcharge for all types of cartels over all time periods is 23.0%; (2) the mean average is at least 49%; (3) overcharges reached their zenith in 1891–1945 and have trended downward ever since; (4) 6% of the cartel episodes are zero; (5) median overcharges of international-membership cartels are 38% higher than those of domestic cartels; (6) convicted cartels are on average 19% more effective at raising prices as unpunished cartels; (7) bid-rigging conduct displays 25% lower markups than price-fixing cartels; (8) contemporary cartels targeted by class actions have higher overcharges; and (9) when cartels operate at peak effectiveness, price changes are 60–80% higher than the whole episode. Historical penalty guidelines aimed at optimally deterring cartels are likely to be too low.

The Supreme Court’s decision in Federal Trade Commission v. Actavis, Inc. is a challenge to conventional antitrust analysis. Conventional civil antitrust cases are decided by a preponderance of the evidence. This means that conduct challenged under the rule of reason is only condemned if the conduct resulted in more competitive harm in the actual world than a world without the alleged violation. Under conventional analysis, the intent of the parties also plays only a supporting role in determining whether the conduct was anticompetitive. A holder of a valid patent has a right to exclude others practicing the patented technology. And, the patent holder is not assumed to have market power because it expended resources in maintaining exclusionary rights. Actavis creates doubts about these propositions in circumstances beyond the “reverse” payment settlement of a patent suit that may have delayed an alleged infringer market entry. This chapter explores whether applying Actavis logic to antitrust litigation can result in condemnation of practices where there is little chance of an anticompetitive effect, where the patent holder likely has a valid and infringed patent, where there is little reason to believe that the patent holder has market power, and where only one party, or no parties, to an agreement have an anticompetitive intent. This chapter also investigates whether Actavis creates new problems with standing analysis, damages calculations, and the balancing of efficiencies against anticompetitive effects. Nevertheless, the lower courts have begun to extend the logic of Actavis. This is apparent in the condemnation of no-Authorized-generic settlements.

Intellectual property rights and competition policy are intimately related. In this chapter I survey the economic literature analyzing the interaction between intellectual property law and competition law and how the boundary between these two policies is drawn in practice. Recognizing that intellectual property rights and competition law can interact in many different ways, the presentation focuses on several key issues. The economic literature on the interaction between competition law and intellectual property rights shows that these regulatory systems are consistent in terms of basic principles. Significant tensions exist, however, and it is difficult to balance IPR and competition law in practice. The significant differences in approach between the United States and the European Union simply reflect the underlying reality that efforts to achieve a sensible balance do not result in policy harmonization.

The purpose of this paper is to examine the practical and legal challenges and barriers to the development of a private action in antitrust controls and to project those onto a consideration of the development of such rights of action through a case study of Brazil.

The paper provides a critical review of both the theoretical and practical barriers to the development of private rights of action, drawing upon the history of development in both the USA and in Europe and the regular considerations of policy and law making, through debate at the Organisation for Economic Co‐operation and Development. This comparative and historical analysis is projected into models of design and delivery for consideration by law makers.

Despite the different legal traditions and policy considerations of the different jurisdictions, the fundamental design of a common action pan‐jurisdictions and outwith conflict of law principles might be possible. The paper proposes a design framework to facilitate and achieve this. The case‐study of Brazil presents an interesting and recent context, and illustration, of this process.

The paper provides an historical and comparative account of the development of private rights actions in this area and provides, to the law maker, a framework and set of legal principles and practical enforcement and design guidelines. This framework and its guidelines should assist those countries seeking to introduce such rights of action in the policy area of antitrust control.

The historical and comparative approach draws together in one paper a contemporary global position in this area of law development.

While recent years have seen a remarkable relaxation of the antitrust laws, these laws are not yet dead. Moreover, what is permitted in the United States might well be illegal in the European Economic Community. American business managers therefore should proceed carefully in taking advantage of the trend to relax antitrust laws.