Competing Fairly: Antitrust Law In The Marketplace Rod Thompson Andrew Leibnitz Jessica Nall November 8, 2011 Pop Quiz: Alcatraz Island in San Francisco Bay derives its name from the archaic Spanish word for what? 1. Rock 2. Fort 3. Gate 4. Pelican 5. Prison 6. The Spanish port city now known as Alicante 2 Competing Fairly: Antitrust Law In The Marketplace • Overview of Antitrust Laws & Enforcement • Horizontal Restraints: Dealings with Competitors • Vertical Restraints: Dealings with Suppliers and Customers • Case studies • Monopoly: Single Firm Conduct • Joint Ventures • Criminal Antitrust Enforcement 3 Antitrust Laws What Laws Govern Antitrust? Statutory Goals of Laws Governing Antitrust - Ensuring Healthy Competition • Agreements/Conspiracy: • concerns with agreements that could restrain trade • Monopoly: • concerns with large firm behavior that could result in monopolization • Mergers: • concerns with merger and acquisitions that could dampen competition 5 6 Antitrust Statutes • Sherman Act • Section 1 - Agreements and Conspiracy • Section 2 - Single Entity Actors & Monopolization • Clayton Act • Filled in Gaps in Sherman Act • Mergers and Price Discrimination • Private Right of Action • Federal Trade Commission (FTC) Act • Unfair Competition • State Statutes 7 Sherman Act (1890) - Section 1 – Agreements & Conspiracy • Forbids “every contract, combination, or conspiracy in restraint of trade….” • Targets joint or concerted action • which “unreasonably” restrains trade • affecting interstate or foreign commerce 8 Sherman Act - Section 2 - Monopolization • Forbids “monopolization, attempted monopolization, or conspiracy or combination to monopolize….” • Requires the acquisition or maintenance of power to control prices or foreclose access to the market. • No joint action is required. 9 Clayton Act (1914) • Section 2: prohibits forms of price discrimination • Section 3: prohibits certain tying (tie-ins) and exclusive dealing in the sale or lease of goods • Section 4: provides for private cause of action, treble damages, and attorney’s fees • Section 7: prohibits certain mergers and requires pre-notification to regulators for large acquisitions or mergers • Section 8: prohibits interlocking directorates among competing firms 10