Bài giảng Business Law - Chapter 50: The Clayton Act, The Robinson-Patman Act, and Antitrust Exemptions and Immunities

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin11Administrative LawThe Federal Trade Commission Act and Consumer Protection LawsAntitrust: The Sherman ActThe Clayton Act, The Robinson-Patman Act, and Antitrust Exemptions and ImmunitiesEmployment LawEnvironmental RegulationRegulation of BusinessPARTThe Clayton Act, The Robinson-Patman Act, and Antitrust Exemptions and Immunities PAETRHC50If you think of life as like a big pie, you can try to hold the whole pie and kill yourself trying to keep it, or you can slice it up and give some to the people around you, and you still have plenty left for yourself. Jay Leno, 1999Learning ObjectivesIdentify anticompetitive behavior under the Clayton Act (§3, §7, §8)Discuss FTC and DOJ roles for proposed mergersDescribe the three types of price discriminationExplain the antitrust exemptionsClayton Act enacted to fill a perceived weaknesses of the Sherman ActOnly probability of significant anticompetitive effect required for Clayton Act violationsPrivate plaintiffs may sue for injunctive relief and treble damagesDept. of Justice and FTC share enforcement of Clayton Act to seek injunctive relief or issue cease and desist ordersOverview of The Clayton ActProhibits two potentially anticompetitive behaviors: tying agreements and exclusive dealing agreementsApplies to commodities (goods) in interstate commerceNo formal agreement requiredAct prohibited if it would substantially lessen competition or tend to create a monopolyClayton Act Section 3Tying: agreement restrains trade by requiring a buyer to purchase one product (tied product) from a seller in order to purchase another product (tying product) from same sellerExclusive dealing: agreement in which buyer required to handle seller’s product exclusively or purchase all of buyer’s requirements for a commodity from sellerTying AgreementsProhibits 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 monopolyRequires Pre-Merger Notification & Report Form filed with FTC and Justice Department so they may review and clear the mergerClayton Act Section 7To determine probable anticompetitive effect of merger, one must first determine the line of commerce (relevant product market) and section of the country (relevant geographic market) likely to be affected by the mergerDetermining Relevant MarketTo determine probable anticompetitive effect of merger, one must first determine the line of commerce (relevant product market) and section of the country (relevant geographic market) likely to be affected by the mergerFunctional interchangeability test is applied: Are the products manufactured by the merging firms reasonably interchangeable by consumers to serve the same purposes?Determining Relevant MarketHorizontal mergers – mergers among firms competing in same product and geographic markets – subjected to rigorous scrutiny since result is more concentration in the marketKey question: what will be the market share of the resulting firm?Horizontal MergersVertical mergers are between firms that previously had, or could have had, a supplier–customer relationshipDo not directly result in concentrationThreatens competition if merger forecloses competitors, increases barriers to market entry, or eliminates potential competitionCourts examine share of relevant market foreclosed to competitionVertical MergersProhibits 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 8Congress enacted the Robinson-Patman Act to stop major chain stores from using their financial power to engage in primary, secondary, and tertiary price discriminationPressures competitors and suppliersOverview of The Robinson-Patman ActPrimary: lowering prices in areas with competition and raising prices in areas without competitionSecondary: using buying power to compel lower prices from manufacturer than prices offered to smaller, independent firmsTertiary: when customer who received lower pricing from a supplier passes on savings to its customersPrice DiscriminationCost justificationPrice differentials due to cost of manufacture, sale, or deliveryChanging conditionsPrice differentials due to changing conditions in the market for or marketability of the goodsMeeting competitionPrice differentials charged in good faith to meet an equally low price of a competitorMust be a response to an individual competitive situationDefenses to Sec. 2(a) LiabilityLabor unions are not combinations or conspiracies in restraint of trade under the Clayton Act and Norris–LaGuardia ActThe business of insurance subject to state regulation are exempt from federal antitrust scrutiny under the McCarran–Ferguson ActAntitrust Exemptions Joint export activities of American companies are exempt under the Webb–Pomerene Act as long as activities do not artificially or intentionally enhance or depress U.S. pricesRegulated industries receive some antitrust immunity since regulatory agencies have power to approve industry practicesAgricultural cooperatives are exempt from antitrust liability under the Clayton Act and Capper–Volstead ActAntitrust Exemptions The state action exemption recognizes states’ rights to regulate economic activityNoerr Pennington doctrine: Sherman Act does not prohibit two or more persons from joining to petition government to obtain government action even if intended to eliminate competitionPatent law promotes innovation by granting a limited monopoly to those who invent and develop products and processesAntitrust Exemptions Thought QuestionsDo the exemptions for antitrust liability available for patents, changing conditions, and meeting competition, make sense if the goal of antitrust law is to promote competition? Is regulation a good method for promoting competition?