Posts tagged as:

antitrust

Under an environmentalist banner, the city of Los Angeles plans a scheme to wipe family-owned trash haulers and replace them with unionized monopoly providers [L.A. Times, Scott Shackford/Reason]

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Alexander Cohen on the e-books/Amazon antitrust settlement [Atlas Society]

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I was a guest Friday on Fox Business Network’s The Willis Report, with guest host Dennis Kneale, to discuss two antitrust cases in the news: Apple’s vigorous efforts to fight back against a monitor appointed as part of its e-books antitrust case [Roger Parloff/Fortune, Alison Frankel/Reuters], and the FTC’s enforcement action against music teachers for anti-competitive practices. You can watch here.

I’ll save the (highly significant) Apple-vs.-monitor case for another post. The Federal Trade Commission’s enforcement action against music teachers, skillfully told by Kim Strassel in the WSJ, demonstrates what officialdom is willing to do with the legal sledgehammer that it claims to need to take on giant corporations like Apple: it uses that weaponry against the mild-mannered piano teacher next door and her little trade association. In a sane world, when the association said its hortatory statement had never been enforced and it would delete it from now on, the FTC’s enforcers would declare victory and move on to some more important case. That they did not do so here speaks volumes about the zeal, careerism and lack of proportion that add up to runaway government. More: George Leef, Forbes.

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September 15 roundup

by Walter Olson on September 15, 2013

  • Falling tree limb injures woman, jury orders city of Savannah to pay $12 million [Insurance Journal]
  • Dept. of Interior mulls lowering threshold for federal recognition of Indian tribes [AP]
  • Section 230: “The Law that Gave Us the Modern Internet, and the Campaign to Kill It” [Derek Khanna, The Atlantic]
  • Interview with false-memory expert Elizabeth Loftus [Slate]
  • “No meaningful costs or downsides” to the Microsoft antitrust case? Really? [Tom Bowden]
  • NSA covertly intervened in standards making process to weaken encryption standards [Mike Masnick, TechDirt] After being rebuffed by public opinion in quest for dragnet surveillance programs, NSA quietly put programs in place through other channels [Jack Shafer; related, Ken at Popehat]
  • Given the limitations of litigation, better not to lament the shortcomings of the NFL concussion settlement [Howard Wasserman]

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Ronald Coase, 1910-2013

by Walter Olson on September 3, 2013

The immensely influential scholar and winner of the 1991 Nobel Prize for Economics was 102 years of age and a productive scholar to the end. An excellent short introduction to Coase’s work is found in the Concise Encyclopedia of Economics, edited by David Henderson.

Coase’s famous, seminal article The Problem of Social Cost, while the most widely cited in the law and economics canon, is also persistently misunderstood and misrepresented by both friends and foes, as Robert Ellickson shows devastatingly in this essay (h/t Jonathan Adler). Many, even most popular attempts to formulate the “Coase Theorem” veer far from what Coase intended and sometimes into the reverse, above all when they idealize the power of negotiation to overcome the problems of externalities in a highly fictional world that assumes away transactions costs.

As Coase himself pointed out: “The world of zero transactions costs has often been described as a Coasian world. Nothing could be further from the truth. It is the world of modern economic theory, one which I was hoping to persuade economists to leave.” Precisely because across a wide range of circumstances the transactions costs of negotiation are too high to permit reallocations of rights between parties, some initial assignments of liability or property rights do impair real output compared with others.

The University of Chicago’s well-meaning notice, I fear, is among those that misstate the Coase Theorem. “Coase believed the incentives of private parties to resolve disputes in their own best interests, even if there needs to be adjudication by courts, should result in an efficient, mutually beneficial solution that is always preferable to government intervention.” (No, that’s not at all what he wrote, even if one succeeds in disentangling the court adjudication from the “government intervention.”) Likewise Bloomberg: “Holding the [polluting] company liable and ordering it to pay money to an affected property holder is less likely to yield an optimal result than having the parties negotiate, he wrote.” (No, that’s not it at all either. At most, his theory implies that the optimal liability rule is fact-contingent and should not invariably be assumed to be the one that makes the smokestack owner pay)

I also have a notion that Coase’s other greatest paper, “The Nature of the Firm” made a huge difference in the real business world in ways that have not been fully reckoned. In that era and on until some time after World War Two, it was widely imagined that the telos of a firm was just to grow and grow without limit, which meant one saw elaborate attempts at vertical integration such as Henry Ford trying to grow rubber trees for tire supply, and antitrust authorities could imagine themselves the only obstacle to the eventual agglomeration of the whole economy into a small number of firms. By the time Coase’s insights had been absorbed, executives had come to see the logic of outsourcing, no one expected the hundred largest firms to account for a higher share of employment or sales or profits each year than last, and antitrust mania went into remission, at least temporarily.

More from Stephen Bainbridge, Lynne Kiesling, Don Boudreaux, David Henderson (a Coase contra Friedman anecdote), Kevin Bryan, David Friedman, Coase interview with Tom Hazlett excerpt via Geoffrey Manne, and Jonathan Adler with much more on what Coase actually thought about the correction of putative externalities. Don’t miss Richard Epstein’s reminiscences, either. [and cross-posted with some additional links at Cato at Liberty]

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After taking it on the chin in a lengthy opinion by federal district judge Denise Cote, “Apple may be more cautious about entering into other markets with the same zeal.” [Macworld] George Priest, distinguished antitrust specialist at Yale, isn’t on board with the action against Apple: “When firms come up with new pricing schemes that force other companies to adopt new schemes, that’s a good thing” [Daniel Fisher, Forbes] Nor is Geoffrey Manne, who points out that authors have expressed alarm at the prospect of seeing the e-book market thrown back into Amazon’s hands. Ira Stoll wonders whether a presumption is being created that outsider firms should denounce incumbent monopolies to the government rather than disrupt them through vigorous market entry, while Wayne Crews says that by finding a clear Sherman Act violation, the government is merely showing how useless the law is. A different view from Bill Dyer: “Apple is going to have a very tough row to hoe on appeal.”

Today’s Supreme Court decision in American Express Co. v. Italian Colors Restaurant is a victory for freedom of contract, a boost for arbitration as an alternative to litigation, and a step forward in the Court’s ongoing recognition that the class action is just one legal vehicle among many, not some priority express train to be favored over other traffic. The restaurant had agreed with American Express to settle disputes by way of arbitration, and to waive any rights to have future disputes handled through class actions. When a potential antitrust claim arose, it nonetheless sought to slip out of its contractual agreement and invalidate the waiver. Split along familiar ideological lines with Justice Sotomayor not participating, the court ruled 5-3 that the Second Circuit erred in striking down the waiver as inconsistent with the Federal Arbitration Act. While the Court has previously held that arbitration agreements must be construed to provide “effective vindication” of statutory claims, the class action format — which did not even exist for these purposes until decades after the Sherman Act’s passage — was not so crucial to the restaurant’s legal rights as to be unwaivable.

A dissent by Justice Kagan — both longer and more spirited than Justice Scalia’s majority opinion — seeks to extend the Court’s earlier rulings that arbitration clauses cannot thwart “effective vindication” of statutory rights by such devices as requiring overly high fees for entry into arbitration. Interestingly, the dissent outdoes the majority in claiming to favor the true spirit of arbitration as an alternative to litigation; in that respect, at least, it departs from the tone of much commentary from the Legal Left which treats arbitration as an evil corporate plot to deprive the world of the benefits of zealous litigation. It also proposes two paths of argument that the majority declines to pursue: 1) that skepticism toward contractual waivers might be especially appropriate in antitrust contexts because the alleged monopolist under scrutiny may use its putative market power to put across unfair contract terms; 2) that confidentiality clauses in Amex’s contract (not addressed by the majority) might fail the “effective vindication” test by preventing Amex customers from joining forces to collaborate on expert reports to use on their behalf in individualized assertion of their disputes.

For years, organized trial lawyers have been publicly campaigning against arbitration — which keeps money out of their pockets by diverting disputes from knock-down litigation — claiming that it is unfair and one-sided. But many studies support the view that disputants’ overall satisfaction in arbitration compares very favorably to that in litigation, in part because it is a speedier and less acrimonious process. And consumers and small businesses by millions sign away their class action rights not because they are all hoodwinked or coerced, but because at some level they have rational grounds to recognize that those class-action rights are very unlikely to pay off for them in durable future benefits (as opposed to benefits for participants in the litigation industry). Congress will be asked to overturn Supreme Court decisions like Amex v. Italian Colors and the earlier, related AT&T Mobility v. Concepcion. It should resist. (expanded from an earlier post at Cato at Liberty; and welcome SCOTUSblog readers.)

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Autos roundup

by Walter Olson on April 3, 2013

  • Abuse of out-of-state motorists an issue: “The Perils of Policing for Profit: Why Tennessee should reform its civil asset forfeiture laws” [Beacon Center, earlier]
  • Manhattan: “Lawyer takes plea in $279M no-fault auto insurance fraud case” [ABA Journal]
  • “AAA Warns of ‘Dangerous’ Free Market in Parking Spaces” [Matt Yglesias, Slate via Tim Carney]
  • Negotiated rates on auto loans at dealerships might violate Obama administration’s disparate-impact guidelines [Roger Clegg]
  • Not great for Law dot com’s credibility: Corp Counsel mag throws in with “sudden acceleration” goofery; and here’s an effort to gear up acceleration claims against Ford too.
  • Ethanol group menaces Phillips with antitrust charge unless it alters franchiser rule [Alexander Cohen, Atlas]
  • “Two researchers call for installing technology to disable cellphones in moving cars” [L.A.Times via Fair Warning]

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Comcast Corp. v. Behrend

by Walter Olson on March 29, 2013

As I noted in this morning’s roundup, the Supreme Court spoke on Wednesday about class certification in an antitrust case from Philadelphia. Although a rather narrow and technical ruling it was not devoid of interest, or so I argue in a new post at Cato at Liberty.

Judges move slower than markets but faster than the economics profession, a deadly combination.

– Judge Frank Easterbrook, “Comparative Advantage and Antitrust Law” (California Law Review, 1987).

“A federal judge in Philadelphia has done what every judge in a class action should do: She required each law firm involved in a $25 million antitrust settlement to document exactly how much time they spent on the case, and how much they expect to be paid for their work.” [Daniel Fisher, Forbes]

…and so Washington, D.C. watches with some satisfaction as government agencies and congressional panels begin to take bites at the super-successful company on antitrust, tax and other grounds. [David Boaz, Cato-at-Liberty and New York Daily News]. More on the affluent culture of Washington D.C. from Andrew Ferguson [via MR]

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May 18 roundup

by Walter Olson on May 18, 2012

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April 20 roundup

by Walter Olson on April 20, 2012

  • Lawsuit claim: MERS mortgage system is just a racket to deprive court clerks of recording fees [Baton Rouge Advocate]
  • More reporting on hospital and community drug shortages [Washington Post; my post last summer]
  • Roger Pilon: How the “judicial activism” debate changed [Cato at Liberty]
  • Louisiana Gov. Bobby Jindal, spoken of as a future national political figure, has rather a lot of ties to trial lawyers [Political Desk]
  • Problems with DOJ e-book antitrust suit targeting Apple [Declan McCullagh]
  • One bogus campaign feeds into another: “ALEC Unfairly Demonized Over ‘Stand Your Ground’ Laws” [Bader, CEI "Open Market"]
  • New Point of Law discussion on class actions with Ted Frank and Brian Fitzpatrick;
  • Today’s best spam comment? “With all the thistledown floating almost on the net, it is rare to look over a locate like yours instead.”

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And the next thing you know, they sue him [Josh Wright, Mike Masnick] The blog post by Enrique Dans, who is professor of information systems at IE Business School, is here.

March 20 roundup

by Walter Olson on March 20, 2012

  • “Lawyer Who Spotted Broker Fraud Rewarded With SEC Ordeal” [Business Week via Bader]
  • Reactions to the feds’ antitrust case against e-book publishers and Apple [Yglesias, Wright, Stoll, more]
  • NYT retrospectively backs Nixon efforts to deny tax exemption to lefty groups, or maybe ire at tea party adversaries just makes the paper less than consistent [Caron, background, more]
  • House Judiciary testimony on the evils of consent decrees binding the government to pursue regulation in certain ways [Andrew Grossman]
  • “Law Firm Claims It Had No Control Over $464 Mln Fee Request” [WSJ Law Blog]
  • “California’s ethnic identity police” [Mickey Kaus]
  • Role, economic incentives of special masters in litigation overdue for reformist attention [Ted/PoL]

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At Cato at Liberty, I find that uncannily reminiscent of a famous Bastiat parody (& IEA, Tim Worstall).

More from Coyote: “left unsaid is how they would jack up their prices when at least two other companies (Bing, Mapquest) also provide mapping services online for free.” But note that the French case arose not from Google’s furnishing of its free map service to individual end customers, but from its furnishing of its map API to businesses that typically adapt it for use in their own sites; as commenters at BoingBoing and Reddit as well as news reports point out, Google has indeed introduced fees for its largest business users of this type (which has caused some of them to adapt by switching from Google’s API to OpenStreetMap, a free wiki-based map service).

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Punishing Google’s success

by Walter Olson on December 21, 2011

Rivals are pushing for the Federal Trade Commission to take more aggressive antitrust action against the search company, and have now enlisted Sens. Herb Kohl (D-Wisc.) and Mike Lee (R-Utah) in their cause. [Geoffrey Manne, Jim Miller & Dan Oliver/NRO, Coyote]

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