American Antitrust Institute

Promoting competition that protects consumers, businesses, and society.

Home / Work Products

by on

AAI Reviews Justice Ketanji Brown Jackson’s Antitrust and Class Action Record, Explores Competition Policy Implications of Her Supreme Court Appointment

AAI has published a commentary reviewing the newest Supreme Court justice’s career encounters with antitrust law, competition policy, and complex civil litigation generally. 

Justice Jackson has presided in Section 7 cases under the Clayton Act, cases involving technical Hart Scott Rodino violations, and antitrust discovery disputes.  She has also addressed competition policy issues in RICO and agricultural commodities cases, and she has resolved several class-certification disputes in consolidated actions brought under other federal statutes. 

During her time at the U.S. Sentencing Commission, Justice Jackson served as Vice Chair when the Commission reviewed the adequacy of the Sentencing Guidelines’ recommendations for cartel fines.  She also clerked for Justice Breyer during an important term in which the Court considered whether to hear a direct appeal of the Microsoft case and heard argument and issued a decision in the California Dental case.  In both cases, Justice Breyer issued a dissent.

The commentary notes that if Justice Jackson fits a similar mold as Justice Breyer, as many predict, she is less likely to be a strong champion of progressive antitrust and more likely to be a pragmatic moderate who carefully balances administrability considerations against the procompetitive objectives of the law.  Regardless, barring significant Court reform measures, the lopsided conservative majority on the current Court ultimately may limit her ability to meaningfully shape antitrust jurisprudence.

by on

AAI Letter to DOJ Says Merger of Ultra-Low-Cost Carriers Spirit and Frontier Risks Higher Fares and Ancillary Fees, and Lower Service Quality

AAI sent a letter to Jonathan Kanter, AAG, U.S. Department of Justice Antitrust Division to present analysis supporting the concern that the proposed merger of Spirit Airlines and Frontier Airlines eliminates important competition at the national level and in numerous airport-pair markets for scheduled air passenger service. The threatened loss of competition would likely be felt by consumers in the form of higher airfares, higher ancillary fees, and lower quality service. Moreover, AAI analysis based on publicly available information casts serious doubt on Spirit-Frontier’s efficiency claims, and notes that remedial slot and gate divestitures used in past airline mergers are unlikely to be effective. AAI’s letter urges the DOJ to carefully consider moving to block the merger.

The letter explains that the proposed merger is the first merger of two major U.S. ultra-low-cost (ULC) airlines. ULC carriers operate different airline networks and employ different revenue models than the legacy airlines that have featured in previous major mergers. Spirit and Frontier have a demonstrated track record of inconsistent exit and entry in airport-pair markets and poor service quality. Moreover, the two carriers serve price-sensitive consumers that are often traveling to and from destinations where there is no choice of airport and little choice of alternative carriers. These unique features pose novel challenges for the Antitrust Division’s review of the merger.

by on

Invigorating Antitrust Enforcement: A Conversation With Carl Shapiro

In this episode Diana Moss sits down with Carl Shapiro, Distinguished Professor of the Graduate School at the Haas School of Business and the Department of Economics at the University of California at Berkeley, to unpack the debate over the role of antitrust and how to invigorate enforcement of the antitrust laws in the United States. In framing the dialog over where antitrust should go, they create a multi-faceted conversation that reveals why competition is a broader and important public policy issue for a market-based economy and democratic society. Major themes include the controversy over indicators of declining competition, recent changes to the antitrust ideological spectrum, proposed legislative reforms to the antitrust laws, revisions to the Horizontal Merger Guidelines, and the challenges that face the Biden antitrust chiefs at the U.S. Department of Justice Antitrust Division and Federal Trade Commission. These threshold questions have critical implications for the effectiveness of antitrust enforcement moving forward in promoting competition and for protecting consumers and workers.

MODERATOR:

Diana Moss, President, American Antitrust Institute

GUEST:

Carl Shapiro is Distinguished Professor of the Graduate School at the Haas School of Business and the Department of Economics at the University of California at Berkeley. He also is the Transamerica Professor of Business Strategy Emeritus at the Haas School of Business. Shapiro served as a Senate-confirmed Member of the President’s Council of Economic Advisers during 2011-12.

For the two years immediately prior to that, he was the Deputy Assistant Attorney General for Economics at the Antitrust Division of the U.S. Department of Justice; he also held that position during 1995-96. From 1998 to 2008, Shapiro served as Director of the Institute of Business and Economic Research at UC Berkeley. He has been Editor and Co-Editor of the Journal of Economic Perspectives and is co-author, with Hal R. Varian, of Information Rules: A Strategic Guide to the Network Economy.

 

 

by on

Wisconsin Assistant AG for Antitrust Cooley Takes on the “State” of State Antitrust Enforcement

In this episode, AAI Vice President of Competition Laura Alexander and Gwendolyn Cooley, Wisconsin’s Assistant Attorney General for Antitrust and Chair of the Multistate Antitrust Task Force for the National Association of Attorneys General discuss the state of state antitrust enforcement.  The conversation covers “antitrust federalism” and the current relationship between state and federal antitrust enforcers, unique hurdles faced by state antitrust enforcers, the special expertise state enforcers bring to antitrust enforcement, and the priorities of states in enforcing state and federal antitrust laws.  State antitrust enforcers have been leading the charge on everything from non-compete clauses to privacy, and with a reinvigoration of antitrust enforcement at the federal level, new avenues for cooperation and coordination are opening up for states to take on an even bigger role.

MODERATOR:

 Laura Alexander, Vice President of Policy, American Antitrust Institute

GUEST:

Gwendolyn Cooley is the Wisconsin Assistant Attorney General for Antitrust. As Chair of the NAAG Multistate Antitrust Task Force and as Wisconsin’s Assistant Attorney General for Antitrust since 2005, Gwendolyn has extensive experience litigating antitrust cases on behalf of the State of Wisconsin- including merger enforcement, cartel prosecutions, and as the lead attorney in State of Wisconsin v. Indivior, where she leads 42 Attorneys General in their case against the manufacturer of Suboxone. Gwendolyn was on the trial team for the States’ challenge to the T-Mobile/Sprint merger. She was co-chair of the Pharmaceutical Industry Working Group in the National Association of Attorneys General Antitrust Task Force, and is a delegate to the “Future of Pharma Mergers” multi-agency initiative spearheaded by the FTC, and leads the Reimagining Pharma Attorney Generals Advisory Group. Active in the American Bar Association, she is Co-Chair of the ABA’s Antitrust Law Section State Enforcement Committee, and is the 2017 recipient of the State State Bar of Wisconsin’s annual Government Lawyers Division Service Award.

by on

AAI Senior Fellow Peter Carstensen Responds to Economic Research on Marketing of Beef Cattle, Says it Fails to Address Market Power and Buying Methods

In a recent article, Peter C. Carstensen, AAI Senior Fellow and Professor of Law Emeritus University of Wisconsin Law School, provides a critique of economic research on marketing of beef cattle. The article, “Dr. Pangloss as an Agricultural Economist,” responds to analysis included in The U.S. Beef Supply Chain: Issues and Challenges (Proceedings of Workshop of Cattle Markets, Kansas City, Missouri, June 3-4, 2021). 

In August of 2020, the then leadership of the House Agriculture Committee requested USDA to fund research on issues surrounding the marketing of beef cattle, including industry structure, barriers to entry, price discovery and methods to address deficiencies, and purchasing mandates.

Texas A&M University and its Agricultural and Food Policy Center carried out the project, which produced nine articles that present a “sustained, unreflective, Panglossian, defense of the status quo.” 

Professor Carstensen’s analysis reveals the central concern that, with minor exceptions, the articles in the proceedings fail to address the relationship between the market power of the packers and the choice of buying methods which might exploit that power by choosing the most anticompetitive method to accomplish efficiency enhancing goals.

by on

AAI Testifies at House Committee on Small Business Hearing on Fair Competition and a Level Playing Field

AAI President Diana Moss testified on March 1, 2022 at the House Committee on Small Business hearing Competition and the Small Business Landscape: Fair Competition and a Level Playing Field.

In her testimony Link, Moss noted that small business is an integral part of the U.S. economy. But indications that its role is declining poses challenging issues for legislators and policymakers.

She also summarized evidence that decades of weak antitrust enforcement in the U.S. has adversely affected competition and how small business may be implicated in this trend. Moss explained how horizontal and vertical integration that has resulted from sweeping consolidation creates and reinforces high concentration that disrupts the role of small business.

Finally, she discussed how the goals of antitrust often, but not always, align with the interests of small business, highlighting the importance of broader public policy approaches to promoting competition.

The description of the House Committee on Small Business overview is:

“Antitrust laws exist to promote competition and prohibit anti-competitive behavior by large firms. However, the U.S. economy has seen continued concentration among its industries since the 1970s. Although this issue is traditionally viewed through the lens of consumers, consolidated industries can be particularly harmful to small firms and new startups. This hearing will examine the history of antitrust law and the historical importance of encouraging fair competition and their potential impacts on small firms. Members will hear from a variety of experts about competition policy through the lens of American small firms.”

by on

AAI’s Encourages Surface Transportation Board to Update Reciprocal Switching Rules in Light of Ongoing Consolidation and Lack of Competition in Freight Rail

AAI filed comments in the Surface Transportation Board’s (STB’s) Notice of Public Hearing (Docket No. 711) regarding reciprocal switching. Ongoing consolidation in the U.S. rail system has diminished competitive options for shippers of critical commodities, putting more pressure on the competitive access remedies available to the STB, including: (1) the prescription of through routes, (2) terminal trackage rights, and (3) reciprocal switching. Under reciprocal switching, an incumbent carrier transports a shipper’s traffic to an interchange point, where it switches its rail cars over to the competing carrier. This enables a competing carrier to offer its own competitive single-line rate, even if its lines do not physically reach a shipper’s facility. The STB’s proposed regulations eliminate the need to show anticompetitive conduct, a change strongly supported by AAI in its comments. AAI also encourages the STB to reject arguments that the proposed reciprocal switching regulations are unduly costly and will interfere with incentives to invest in rail infrastructure.

by on

How Should Antitrust Tackle Acquisitions of Nascent Competitors? A Conversation With 2020 Jerry S. Cohen Award Winner for Antitrust Scholarship, Scott Hemphill

In this episode, Diana Moss sits down with Scott Hemphill, the Moses H. Grossman Professor of Law at the New York University School of Law, to chat about his award-winning article: Nascent Competitors (Vol. 168 (No. 7), Penn. L. Review, 2020). Hemphill co-authored the article with Timothy Wu, currently serving as Special Assistant to President Biden for Technology and Competition Policy at the National Economic Council. The article highlights major issues and debate around how antitrust enforcers and the courts go about evaluating acquisitions of nascent competitors that could violate Section 7 of the Clayton Act. Nascent competitors are firms whose prospective innovation is a “threat” to firms in a market. This threat is neutralized if a nascent rival is acquired, sometimes with serious implications for competition and consumers. Attention to acquisitions of nascent competitors has exploded across a number of sectors, including digital technology, fintech, healthcare, digital farming, and others. For business models that are driven by “growth by acquisition,” revisiting antitrust enforcement and competition policy around nascent rivals is particularly timely and important.

 

Antitrust scholarship that is considered and selected for the Jerry S. Cohen Award reflects a concern for principles of economic justice, the dispersal of economic power, the maintenance of effective limitations upon economic power or the federal statutes designed to protect society from various forms of anticompetitive activity. Scholarship reflects an awareness of the human and social impacts of economic institutions upon individuals, small businesses and other institutions necessary to the maintenance of a just and humane society–values and concerns Jerry S. Cohen dedicated his life and work to fostering.

MODERATOR:

Diana Moss, President, American Antitrust Institute

GUEST:

Scott Hemphill is the Moses H. Grossman Professor of Law at NYU School of Law and co-director of the Engelberg Center on Innovation Law and Policy. He teaches and writes about antitrust and intellectual property. His scholarship ranges broadly, from drug patents to digital platforms to the use of trademark law to thwart competition. His most recent work examines the anticompetitive acquisition of startups by dominant firms in the technology sector and probes how institutional investors might weaken competition among their portfolio companies.

Hemphill’s scholarship on tactics to delay the marketing of inexpensive generic drugs has been widely cited by the US Supreme Court and other courts. His writing has appeared in leading law reviews and peer-reviewed journals of economics, science, and law, and he has testified before the US Congress about mergers and proposals to incentivize new drug development, among other matters. Major media outlets have frequently interviewed him on antitrust and IP-related topics.

Hemphill received a PhD in economics and a JD from Stanford, where he was a Nathan Abbott Scholar, graduating first in his law school class. He also holds an AB from Harvard and an MSc in economics from the London School of Economics, where he studied as a Fulbright Scholar. Hemphill clerked for Judge Richard Posner and Supreme Court Justice Antonin Scalia. On public service leave from academia, he served as antitrust bureau chief for the New York Attorney General. Hemphill joined NYU from Columbia University, where he was a professor of law.

by on

New Article from William Comanor: The Issue of Consumer Welfare in the Government Complaints against Google & Facebook

AAI Advisory Board members William S. Comanor recently published The Issue of Consumer Welfare in the Government Complaints against Google & Facebook with Donald I. Baker in The Antitrust Bulletin.

Abstract

Although the Consumer Welfare doctrine has served as an important feature of antitrust liability since the 1980s, the Department of Justice (DOJ) and Federal Trade Commission (FTC) have downplayed this factor in their respective Google and amended Facebook complaints. Each complaint makes a general reference to this issue, but with few detailed factual allegations. A complicating factor is that the defendants have gained dominant market positions by providing valuable digital services at little or no direct charge to consumers. In this paper, we emphasize that the services offered by the two platforms embody quality as well as price dimensions, both of which can affect consumers positively. Indeed, quality product dimensions may become even more important to consumers in a zero price environment. We construct a simple economic model using privacy as a significant quality attribute through which these issues can be explored, and then draw some appropriate policy conclusions.

by on

AAI Asks DOJ, USPTO & NIST to Restore Bipartisan Consensus on Remedies for Infringement of Standards-Essential Patents

AAI has filed public comments encouraging the Antitrust Division of the Department of Justice, the U.S. Patent & Trademark Office, and the National Institute for Standards & Technology to ratify their Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments.

AAI’s comments applaud the agencies for setting aside their joint 2019 policy statement and restoring two-decades of bipartisan consensus supporting a balanced approach to evaluating remedies for the infringement of standards-essential patents (“SEPs”) subject to a “RAND or F/RAND” licensing commitment.  The comments place the 2019 policy statement in historical context, which reveals it to be an activist departure from two decades of careful research, analysis, and learning regarding the competitive threat of patent holdup in the standards-setting context.

The 2019 statement replaced a 2013 statement that was the product of numerous hearings and reports initiated by the Bush administration in 2002 and continued during the Obama administration.  The 2013 statement was carefully balanced and neutral and met with approval in the federal courts.  But from 2017-19 the Trump Antitrust Division led a campaign to unilaterally reverse more than fifteen years of cooperative advocacy and policy development with the FTC about the competitive problem of patent holdup, culminating in the revised 2019 statement.  The 2019 statement relegated holdup to a footnote, where it was treated equivalently to patent “holdout,” in which a SEP licensee refuses to pay a FRAND license because it is more profitable to delay and impose litigation costs on the SEP owner.

In addition to recognizing the agencies’ current draft statement as a necessary and proper course correction to restore a longstanding bipartisan consensus, AAI’s comments also suggest the statement could be improved in two ways.  First, the draft policy statement should recognize the deceptive nature of holdup in the standard-setting context and the legal consequences that follow accordingly. A SEP owner unmistakably engages in deception when it makes a FRAND commitment during the standard-setting process with a specific intent to withhold a license or charge non-FRAND royalties after the standard incorporating its SEP has become entrenched. But a SEP owner also engages in a form of deception if it fully intends to keep its promise when it makes its FRAND commitment and then subsequently opts to deliberately breach the promise to exploit the monopoly power conveyed by standardization.  Both constitute willful behavior that does not support injunctive relief.

Deception undermines the necessary showing for an injunction under the Supreme Court’s holding in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), for two reasons that are not identified in the draft statement.  First, a party with “unclean hands” ordinarily is not entitled to a remedy in equity.  Second, deception has no cognizable efficiency benefits as a matter of law, and rewarding it therefore is never in the public interest.

AAI also argues that the draft policy statement should directly acknowledge the important qualitative differences between holdup and holdout.  In its scrupulous commitment to balance, the current draft statement risks false equivalency. It notes that holdup “can deter investment in and delay introduction of standardized products, raise prices, and ultimately harm consumers and small businesses,” and it notes, “[a]t the same time,” that holdout “can lessen patent holders’ incentives to participate in the [standards] development process or contribute technologies to standards voluntarily,” and consequently “patent holders may opt for closed, proprietary standards that do not offer the same benefits of interoperability and enhanced consumer choice.”

However, these two different forms of socially undesirable behavior have vastly different impacts on the competitive process.  Hold-up is integrally tied to the standardization process and the commitments made therein that can lead to the exercise of market power. Holdout, on the other hand, is simply willful patent infringement, which is an unexceptional phenomenon under patent law. A manufacturer that elects not to accept an SEP license on FRAND terms but nevertheless sells standardized products runs the same risks as manufacturers who fail to obtain a license for non-SEPs.  Accordingly, there is good reason to doubt that holdout is legally relevant to assessing appropriate SEP-infringement remedies or that it poses a meaningful practical competitive threat in the standards-setting context.

AAI Advisory Board members Michael Carrier and Jorge Contreras, who are leading experts on the intersection of antitrust and intellectual property, also filed comments supporting the revised policy statement (available here and here), and numerous other AAI Advisory Board members joined a group of 26 professors of law, economics, business, and policy who likewise provide support (available here).