1,720,974 research outputs found
Privileging Consolidation and Proscribing Cooperation: The Perversity of Contemporary Antitrust Law
Full text linkDemocratic and Republican administrations and the Supreme Court, in implementing antitrust law as “a consumer welfare prescription” over the past 40 years, reached a consensus on two important issues. First, antitrust enforcers and courts have presumed that corporate mergers generally advance, or at least do not threaten, consumer welfare. Second, enforcers and courts have treated horizontal collusion, among both big and small actors, as the principal evil for antitrust enforcers to root out. This deference to the consolidation of business property and hostility to horizontal agreements have concentrated power in the economy among a small elite.For antitrust law to redistribute power downward, a radical philosophical change is necessary. First, antitrust law should tightly restrict the consolidation of corporate property. Second, policymakers should recognize that collusion among powerless actors can represent socially desirable cooperation. Reconstructing antitrust law in this manner would transfer power in markets away from corporate executives and financial interests to workers, professionals, and small firms
Market Power in Power Markets: The Filed-Rate Doctrine and Competition in Electricity
Full text linkState and federal initiatives have opened the American electric power industry to competition over the past four decades. Although the process has not occurred uniformly across the country, wholesale electricity markets exist everywhere today. Independent power producers can construct generation facilities and sell their output to utilities and industrial customers through bilateral contracts. In many regions, centralized power markets now facilitate the sale of billions of dollars in electricity annually through auctions. Although market forces have replaced direct price regulation in electricity, antitrust enforcement has not expanded its role commensurately. A lack of competition has been a serious problem in many power markets and led to billions of dollars in wealth transfers from ratepayers to generators. The federal courts, however, have invoked the filed-rate doctrine to prohibit private antitrust suits against generators and other market participants accused of collusive behavior. They have held that federal and state regulation is adequate to maintain competitive markets and questioned their own ability to deter anticompetitive behavior, effectively immunizing power generators from antitrust damages liability. Congress or the Supreme Court should limit the application of the filed-rate doctrine in electricity markets and allow for the antitrust laws to be enforced against collusive conduct. Eliminating the filed-rate immunity, however, is not sufficient to create competitive power markets. Private treble-damages suits could help deter express collusion between competing generators. Yet the antitrust laws are comparatively powerless to remedy two important types of anticompetitive behavior seen in power markets. Antitrust jurisprudence in the United States does not proscribe the exercise of unilateral market power and creates high hurdles to finding liability for tacit collusion. Given the limitations of traditional private antitrust remedies, federal and state regulators must focus on creating competitive market structures. They can take three concrete steps toward this end: police generator consolidation more carefully, encourage expansion of the transmission grid, and expose more ratepayers to wholesale price signals. Applying these broader competition policy measures is necessary to redeem a restructuring project that has resulted in several episodes of serious market-power abuse and yielded uncertain benefits
Recommended from our members
The Morality of Monopolization Law
No full textCongress enacted the Sherman Act in 1890 and prohibited, among other practices, monopolization. To prove monopolization, the government and other plaintiffs must show that a firm both possessed monopoly power and engaged in bad conduct. In interpreting the spare language of the statute, the courts have identified many practices that constitute monopolization, including below-cost pricing, refusals to deal with rivals, and tying. In general, however, they have failed to explain why these practices are unfair and restricted by law. Judges have instead applied labels such as anticompetitive without articulating normative foundations for their decisions. A close examination of the case law reveals that the monopolization doctrine embodies implicit notions of unfairness. Legal precedent limits businesses\u27 abilities to use their monopoly power, financial privileges, or generally prohibited conduct to acquire or perpetuate a monopoly. With its expansive unfair methods of competition authority, the FTC can codify and strengthen existing norms on unfair conduct. The FTC should specifically restrict firms\u27 abilities to use exclusive dealing and below-cost pricing and ban the use of generally prohibited practices as unfair methods of competition. By proscribing these forms of business rivalry, the FTC would encourage businesses to grow and succeed through the fair treatment of trading partners, development of new products, and investment in new plants, facilities, and technologies
Recommended from our members
Reconsidering Brooke Group: Predatory Pricing in Light of the Empirical Learning
Full text linkWhat Iron Pipefittings Can Teach Us About Public and Private Power in the Market
Full text linkGovernment restrictions on competition, whether in the market for cars, hotel rooms, or taxicabs, have attracted a great deal of attention of late. As a basic matter, government is not exogenous to the market: a functioning state is, in reality, a precondition for modern markets. Because it establishes the rules necessary for markets to develop and potentially flourish, government unavoidably shapes the bounds and structures of the private economic sphere. And more specifically, public limitations on competition are not intrinsically hostile to the interests of ordinary Americans and can, in fact, advance vital social goals, such as full employment and public safety. Accounting for these considerations, governmental restraints should not be blindly condemned as harmful; rather, they should be examined on a case-by-case basis. Even aggressive newcomers with savvy public relations (such as Airbnb, Tesla, and Uber) and giddy talk of “disruption” should not lead us to denounce legal restrictions on these actors as a matter of reflex.
Critically, the present focus on public restraints should not mean that private efforts to create closed markets get a free pass. In contrast to democratic public authorities, large corporations face little accountability. Dominant firms can use predatory and other exclusionary methods to maintain their long-run supremacy and prosper through exploitation of the public. Given the awesome power of monopolistic and oligopolistic corporations, antitrust enforcers and other regulators must reassert public discipline over private empires
Build Public Renewables, Again
Full text linkA review of The Price Is Wrong: Why Capitalism Won’t Save the Planet. By Brett Christophers
Resurrecting “A Comprehensive Charter of Economic Liberty”: The Latent Power of the Federal Trade Commission
Full text linkThe Evolving Populisms of Antitrust
Full text linkToday, some antitrust commentators have called for the Supreme Court to abandon its focus on protecting consumers and focus exclusively on maximizing so-called economic efficiency, regardless of its distributional consequences. In more concrete terms, according to this school of thought, the antitrust enforcement agencies and courts should be indifferent toward whether a dollar goes to consumers in the form of savings or to producers and shareholders in the form of profits. The courts should reject this approach and strengthen the historic commitment of antitrust law to consumer populism. This article proceeds as follows. Part II discusses the Supreme Court’s rulings in the early era of antitrust: 1890–1930s. During this period, the Court articulated the antitrust laws as preserving the commercial viability and freedom of small businesses. The Court recognized the harms from cartels and monopolies and also the benefits of scale economies. Part III reviews the Supreme Court’s antitrust decisions in the mid-twentieth century. Between late 1930s and early 1970s, the Court showed concern for consumer well-being but also remained committed to the protection of small businesses. The Court during this era prized the free setting of prices and frowned on attempts to restrain the operation of the price mechanism. It also took a hostile stance to mergers, tying, and most vertical restraints. Part IV turns to the current era of antitrust jurisprudence that dates from the mid-1970s to the present. The Supreme Court has held unequivocally that the antitrust laws exist for the protection of consumers and has declined to defend businesses from vigorous competition. At the same time, the Court has shown greater faith in the benefits of big business conduct and taken a more benign view of mergers, vertical restraints, and monopolies. Part V argues that the legal regime should remain committed to consumer protection. Part VI concludes
Reviving an Epithet: A New Way Forward for the Essential Facilities Doctrine
Full text linkTracing its origins back nearly a century, the essential facilities doctrine requires the sharing of a natural monopoly asset that serves as a necessary input in another market. Failure to share such an asset can invite antitrust liability. The doctrine rests on two basic premises: first, a natural monopolist in one market should not be permitted to deny access to the critical facility to foreclose rivals in adjacent markets; second, the more radical remedy of dividing the facility among multiple owners, while mitigating the threat of monopoly leveraging, could sacrifice important efficiencies. This duty-to-deal, whereby the owner of an essential facility must share it with all comers, is a narrow exception to the longestablished antitrust rule that firms have no general obligation to share their assets with rivals. Notwithstanding its vintage, the doctrine has received sharp criticism in recent decades. In Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, the Supreme Court stated in dictum that the forced sharing of assets may conflict with the broader goal of the antitrust laws. The late Phillip Areeda, coauthor of the leading antitrust treatise, described the doctrine as “an epithet in need of limiting principles.” Others have been equally critical of its economic purpose. Nevertheless, some scholars continue to defend the doctrine as being economically rational and practically useful in this century
- …
