Antitrust outline.docx

Antitrust outline.docx

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Antitrustoutline

Antitrustlaw11.22

1.Whatdoesanti-trustlawcover?

ØHorizontalrestraint:

1）prohibitingPrice-fixing;2）regulativemergers

ØVerticalrestraint:

1）Pricediscrimination;2）TyingArrangement

2.Whypromotecompetition?

ØMaximizeEconomicwelfare,benefitthecustomers:

1）productiveefficiency;2）lowpricesforconsumers;3）goodchoicesforconsumers

3.Whatarethebadresultsaboutcompetition?

ØSmallbusinessmenatadisadvantage,e.g.:

smallretailersnearWalmart;smallfarmers.

ØMonopoly:

1）ruinouscompetition;2）childlabor

CompetitiveMarket

4.NeoclassicalEconomicTheory

ØPerfectinformation

ØZerotransactioncosts

ØManyprovidersandconsumers

ØFreeentryandexit→preventmarketcanbeabused

ØActorsarerationalemaximizers—firms:

Actmaximizeprofits—consumer:

actmaximizeutility

ØFirmsandconsumersare“Pricetakers”—marketdeterminetheprice+actionsdon’taffecttheprice

ØDecliningmarginalutilityinallgoods

ØDecliningmarginalproductivityinallinputs

⏹Marginal:

theadditionorlosstothetotalfromthelastunityouinputtothemarket

MC:

changeintotalcostfromthelastunitofoutput

5.Whatisdecliningmarginalutility?

e.g.:

BicycleCo.—increasingMC&Icecream—decliningutility

6.Whatisdecliningmarginalproductivity?

e.g.:

workingontheland—decliningproductivity

7.Whatdoestheintersectionofthedemandcurveandsupplycurvestandfor?

NeoclassicalModel—competitivemarket

ØEquilibium:

S=D

ØSupplycurve:

theamountthesuppliersarewillingtosupplyatagivenprice

Demandcurve:

theamounttheconsumersarewillingtobuyatagivenprice

8.Whatarethecharacteristicsofthemonopoly?

ØInformationisnotperfect;thereistransactioncost;notmanyproviders;barrierstoentry&Exit;firmisa“pricesetter”—lessshoes>higherprice

9.Whatarethebadresultsaboutmonopoly?

ØLossefficientproduction;transferwelfarefromcustomerstoproducers;highprice

Competitionpolicy

10.ShouldChina（developingortransitionaleconomics）haveabroadcompetitionpolicy?

ØPros:

broadconsensus:

competitionisgood

--efficiency+lowprice+morechoices

ØCons:

fordevelopingortransitionaleconomics

--noteffective

--canbeabusedpolitically（ChicagoSchoolofEconomics:

marketcantakecareaboutit）

--somestabilityandmarketconstraining（encourageforeigninvestment）

--constrainingproducersfacilitatingEconomicsmonopoly

Justallowfreeentryintothedomesticmarket

11.Whatdoesacountryneedtomakeacompetitionpolicywork?

Freemarket

ØConsensusoncompetition

ØLegalinfrastructure

--welldefinedandstablepropertyright

--effectivecontractlaw

--workingcapitalmarket

--soundbankingsystem

--Robustofadministrativesystem

12.Problemsofnaturalmonopoly

e.g.:

Microsoftsystematiceconomy&gascompany

--regulateitbypublicofficers

13.Whatarethetwodivergentpoliticalforcesinglobaleconomy?

--Harmonization+nationalsovereignty

14.Whataretheprinciplesandmechanismsoftheglobaleconomy?

Principles:

transparency+freeinformation–competition+freeexchange+trust

Nationalsovereignty—dueregulation—efficiency

Mechanism:

militarycoercion;economiccoercion;economicrewards;modeling:

economydoinggreat;reciprocaladjustment;capacitybuilding

Antitrustlaw11.23

15.Whatarethedifferencesbetweenanti-trustremedialstructureinU.S.andEC?

⏹U.S.:

governmentenforcement（DOJ,FTC）

Criminalpenalties:

100millionforcompany,1millionforindividual,upto10yearsjail—DOJ:

mostarecriminal,mostserious

Privateenforcement—suedbyprivate

Trebledamages—incentivetosue

⏹EU:

governmentenforcement（Europeancommission）

Nocriminalpenalties

Notmuchprivateenforcement

Tort-individualcansueundertort

Discovery

Noincentiveoftrebledamages

⏹Subjective:

U.S.likeindividualism;competition,donotlikecentral-planning

EClessindividualism;likecentral-planning（largemarketconcentration—usedtoit,oilmonopoly）Korea,JapanmorelikeECway

16.Whatistheinteractionbtwgovernmentandindividual?

⏹Governmentlefttoprivate:

privatehasmoreincentive

⏹Follow-onsuit:

privatebenefitfromgovernmentsuit

17.SummaryofAntitrustlawsofUS

1890ShermanAct

Sec.1HorizontalAgreement（pricefixing）（broadlanguage:

Ct.constraints—reasonableness;DOJandprivatepartysuit）

Sec.2Monopolization–broadlanguage,Ct.constraint:

anti-competitiveeffects）

1914ClaytonAntitrustAct（enforcer:

DOJ;private）

Sec.2pricediscrimination

Sec.3Restrictionondeliverywithrivals

Sec.Sec.mergers

1914FederalCommissionAct（FTC）

Sec.5prohibitunfairmethodsofcompetition

18.Federalcourt（districtcourt,appealcourt,supremecourt）

Federallawdidn’tpre-emptstatelaw—statelawenforcedbystatecourt

19.PrivatePartySuit

⏹Privateindividuals

Classaction—collectiveactionproblem:

individualsnoincentive

Stategovernment:

Residentsofstate—“ParensPatriae”

⏹Whataretheelementstoprovedamagecauseofaction?

1）Material“Butfor”causation

2）Antitrustinjury—anti-competitiveinjurywhichantitrustlawisdesignedtoprevent

3）Proximatecausation—searchforbestplaintiff（directvictim（federal）,notpopularinstatewhereindirectvictimsalsocansue

4）Provedamages—hardtoprove—proximateaboutamountsaresufficient,don’tneedcertainty

⏹Injunctiverelief

DOJ,FTC—violationoflaw

Privateparties

Ct.:

morecreative;likelytogiveinjunctivethaninotherareas

⏹Privatedamages—4yearsfromaccrual

Criminal—5years-moreserious

Injunctions—LachesLaxness–4years

⏹Fraudulentconcealmentdoctrine

ContinuingconductDoctrine

20.WhatarethelimitsandexceptionstoantitrustlawinU.S.?

ØStateactiondoctrine—petitionstoimmunitydoctrine

ØImplicitexemptions

Oldlaw—latterlawsimplicitlyacceptedtotheextentnecessaryforthelawtooperate

ØExpressexceptions（statute+courtdecisions）

--coops—baseball—charities—professionalreviewbodies

ØInsurance（stateregulation）

McCarran–FergusonAct

ØLabour

Workersinunionsareexempted,doesnotcoverindividualcontractors

ØInterstatecommerce

Nowverynarrowlyconstrued

Antitrustlaw12.24

ECcompetitionpolicy

21.1951Origin.ECSC

Cartel;misuseofmarketpower;mergercomtrol

1957ECtreatycompetitionpolicyArt.81-88

Art.81prohibitiononRestrictionAgreement

Art.82abuseofdominantpower

Enforcement

22.EClevel

--Directorate（Takemostseriouscases;makegeneralpolicyrules;playanadministrativerule）

--commissionofcompetitionpolicy

Nationallevel

--nationalcompetitionauthorities（NCAs）

--nationalcourts

（Commissiontakesthecase,butinUS,DOJasaprosecutorbringinfederalcourt—thepowerinUSismorediverse

InEU,relymoreontheadministrativepart—commissionismorepowerfulthaninU.S.

Faster,quicker,moreefficiencyv.badadministrator）

23.WhataretheadvantagesanddisadvantagesoftheEUantitrustremedialstructure（relianceontheadministrativeprocedure,privatecauseofaction,criminalsanction,andremedies）?

ØUseofadministrativeprocedure

ØPrivatecauseofaction（US:

importantpart;EU:

tort—possible—rare（poordiscoveryrules;notrebledamages;loserpaidtheattorneyfees）

US:

importantwayforpeopleaddresswhenDOJdidnotsupport

EU:

moretrustinadministrative

ØNocriminalsanction（inUS,usemorethanbefore）

ØNotrebledamages

ØStateactionexceptionnarrowerinEurope

24.Initiationofclaims&remedies

A.InitiationofactionsinEC

--privatecomplaint（anonymous）

--complaintNCAs（informationexchange）

--ECcaninitiateitsownactions

B.Possibleremedies

--cease&desistorder

--behaviorial&structuralremedies

--interimmeasures

--settlement

--finesmax10%firmsgrossrevenue

--Guidelineletters

25.WhatarethejudicialreviewsofEuropeCommission’sdecisions?

ØAnnulmentproceedings

CourtofFirstInstance（CFI,fact）

ECJ（law）

ØRevisionoffines

Usuallydeceasefines—incentiveforpeopletoraise

ØSuspensionofECorder（interim）

ØClaimsagainstEuropeancommission:

abuseofpower

26.WhatarethelimitsontheECcompetitionlaw?

ØCoverspublicentitiesexceptinRoleasRegulators

ØStatecompulsiondefense

ØActofstateoffenseEUcantellnationalindividualtheyareviolatingArt.8182—notpassalawagainstnationallaws

ØSectorsexempted

--agriculture—“Fulfillingspecialculture&socialneeds”

--transport

--defenseindustry

ØPurelyIntrastatecommerceisexempted

Antitrustlaw12.26

27.WhataretheproblemsofChina?

⏹Regionalism

--toobigforpurelycentraladministration

--consciouspolicyofregionalself-sufficient

--transportation

ØInefficiency;don’tachieveeconomyofscale;excesscapacity

Solutions:

ØCompetitionpolicythatprohibitregionaldiscriminationbyregionalauthority

ØEncouragerationalmarket

⏹ProblemofSOEs&State-ownedbanks

--SOEsnotalwaysefficient

--notresponsivetoprivateownerorequity

--getbadloansfromstate-ownedbanks—threatenssolvencyofbankfinancialsystem

Solutions:

--reducesrelianceonstate-ownedenterprises

--requiresSOE&Bankscompete

⏹Problemofthestrengthoftheruleoflawandthevigoroflawenforcement

--confusioninRegulation&enforcement（centralgovernment®ionalgovernment;Dualism:

official&party）

--Roleofgovernment

“Tremble&obey”“inconsistentwithfreemarket”

--judicialhaslittlepower（civillaw+legalprofession）

Solutions:

ØCompetitionpolicywithclearconsistent&vigorousenforcement

ØProofisinthebudding

28.AML2007

Art.8Regionalism—enforcement

Art.10Vigorousenforcement

Art.13ShermanActgeneralpronouncement

Ct.toobroad—interpretitwithreason

China:

b