Bài giảng Business Law (13th edition) - Chapter 50: The clayton act, the robinson– patman act, and antitrust exemptions and immunities

Regulation of BusinessAdministrative AgenciesThe Federal Trade Commission Actand Consumer Protection LawsAntitrust: The Sherman Act11McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.Regulation of BusinessThe Clayton Act,The Robinson-Patman Act, andAntitrust Exemptions and ImmunitiesEmployment LawEnvironmental Regulation11McGraw-Hill/Irwin Business Law, 13/e© 2007 The McGraw-Hill Companies, Inc. All rights reserved.THE CLAYTON ACT, THE ROBINSON– PATMAN ACT, AND ANTITRUST EXEMPTIONS AND IMMUNITIESPAETRHC50“Competition policy is intended to ensure a fair fight, not to punish winners or protect losers.”Carl Shapiro, Information Rules (cowritten with H. Varian, 1999)Learning ObjectivesClayton Act:Section 3Section 7Section 8The Robinson-Patman ActAntitrust exceptions and exemptions50 - *Not illegal unless anticompetitive effect is substantialEnforcement of Clayton Act50 - *No criminal penalties and private plaintiffs may sue for injunctive relief, treble damagesDept. of Justice and FTC share enforcement of Clayton Act to seek injunctive relief or issue cease and desist ordersQuantitative substantiality test (Standard Oil):Courts look at the dollar amount of commerce involvedQualitative substantiality test (Tampa Electric): Courts examine the area of effective competition (total market for product within competitive region) and percentage of market the agreement coversMeaning of Not Insubstantial50 - *Prohibits two potentially anticompetitive behaviors: Tying agreement: restrains trade by requiring buyer to buy one product (tied product) in order to buy another product (tying product)Exclusive dealing agreements: buyer required to handle seller’s product exclusively or purchase all buyer’s requirements for a commodity from sellerClayton Act Section 350 - *Prohibits mergers to achieve monopolyApplies to acquisition of stock or assets of another company in any line of commerce or any activity affecting commerceAct prohibited if it would substantially lessen competition or tend to create a monopolyFunctional interchangeability testRequires Pre-Merger Notification & Report Form filed with FTC and Justice DepartmentClayton Act Section 750 - *Horizontal mergers: mergers among firms competing in same product and geographic marketsRigorous scrutiny since result is increased concentration in relevant marketVertical mergers: between firms that had, or could have had, a supplier–customer relationship and does not directly result in concentrationHorizontal Mergers50 - *Prohibits any person from serving as director or senior officer of two or more competitor corporations, each with capital, surplus, and undivided profits more than $10 millionExcludes banks and common carriersPer se standard of liabilityNo illegality if competitive overlap between firms is an insignificant part of either firm’s total salesClayton Act Section 850 - *Enacted to stop major chain stores from price discrimination:Primary: lower prices in areas with competition; higher prices in areas without competitionSecondary: using power to compel lower prices from manufacturer than offered to smaller firmsTertiary: customer who received lower pricing from supplier passes savings to its customersRobinson-Patman Act50 - *Applies only to discriminatory acts that occur with actual sale in commerceNarrower than affecting commerce test of the Sherman ActStatutory defenses to Section 2(a) liability:Cost justificationChanging conditionsMeeting competitionRobinson-Patman Act Details50 - *Labor unions: not combinations or conspiracies in restraint of trade; activities generally exempted from antitrust scrutinyAgricultural cooperatives: exempt under Clayton Act and Capper–Volstead ActJoint export activities of American firms are exempt under Webb–Pomerene Act as long as activities do not artificially or intentionally enhance or depress U.S. pricesAntitrust Exemptions 50 - *Insurance business subject to state regulation exempt under McCarran–Ferguson ActRegulated industries receive some antitrust immunity since regulatory agencies have industry oversightState action exemption recognizes states’ rights to regulate economic activity in the interest of their citizensAntitrust Exemptions 50 - *Noerr-Pennington doctrine: Sherman Act does not prohibit two or more persons from joining to petition government to obtain government action even if efforts intended to eliminate competitionPatent licensing promotes innovation by granting a limited monopoly to those who invent and develop products and processesOther Antitrust Issues50 - *Foreign Sovereign Immunities Act (FSIA): governmental actions of foreign sovereigns and their agents exempt from antitrust lawsAct of state doctrine: American courts will not judge legality of a foreign sovereign’s actSovereign compulsion doctrine: available defense if foreign sovereign compelled private party to commit acts that would otherwise violate U.S. antitrust lawsInternational Law50 - *Test Your KnowledgeTrue=A, False = BFor most Clayton Act violations, only a probability of significant anticompetitive effect is required.Clayton Act § 3 prohibits tying arrangements and price discrimination. Mergers are illegal unless approved by FTC.Regulated industries are always exempt from the Sherman Act and Clayton Act.50 - *Test Your KnowledgeTrue=A, False = BShirts, Inc. manufactures shirts in Alabama and sells to retailers in Alabama at a 15% discount due to lower delivery costs. As a result of its action, Shirts, Inc. violated the Robinson-Patman Act. Vertical mergers are between firms that previously had, or could have had, a supplier–customer relationship. 50 - *Test Your KnowledgeMultiple ChoiceMercedes Benz required all of its automobile dealers and service centers to exclusively use Mercedes authorized or approved products. Which of the following is true? (a) Mercedes violated antitrust law by engaging in an exclusive dealing agreement(b) Mercedes violated law only if the agreement may substantially lessen the competition or tend to create a monopoly 50 - *Test Your KnowledgeMultiple ChoiceTo determine the anticompetitive effect of a merger, a court must identify: the relevant product market and the relevant? (a) The relevant product market(b) The relevant geographic market(c) Both A & B(d) Both A & B plus whether any officers or directors of one company are officers and directors of the other company 50 - *Thought QuestionsDo the exemptions for antitrust liability available for patents, changing conditions, meeting competition, among others, make sense if the goal of antitrust law is to promote competition? Is regulation the best method for promoting competition?50 - *