The Antitrust State-Action Doctrine After Fisher v. Berkeley

In February 1986 the United States Supreme Court in Fisher v. Berkeley\u27 upheld the validity of a municipal rent control ordinance against a contention that the Sherman Act preempted the ordinance. In an eight-to-one decision, the Court effectively gave the coup de grace to its earlier attempt to apply the federal antitrust laws to municipalities and political subdivisions. It also may have finally ended the remarkable series of disingenuous state-action decisions that had become an almost regular part of the Court\u27s calendar since Goldfarb v. Virginia State Bar\u27 in 1975.Fisher holds a promise of restoring to the state-action exemption a simplicity and predictability not seen since Parker v. Brown. This Article examines the origin, history, and scope of the state-action doctrine of federal antitrust law-a doctrine exempting state legislation and other (generally regulatory) activity from invalidation by the federal antitrust laws. The Article describes the ways in which the Court increasingly confused and elaborated that doctrine. The Article examines in particular how the Court\u27s recent decisions involving the relation of federal antitrust law to municipal legislation spun a web of confusion and uncertainty from which the Court itself has been forced to withdraw; how the lower federal courts refused to apply the Court\u27s state-action precedents with which they disagreed; and how even the Congress was provoked into action to undo some of the uncertainties engendered by these decisions. The examination of the state-action doctrine attempts to identify the concerns underlying the Court\u27s recent state-action decisions and to show why the series of state-action decisions since 1975 has been a failure. The Article also attempts to delineate the proper reach of federal antitrust law and to provide a reasoned basis for its conclusions. The analysis includes an assessment of Fisher v. Berkeley and its ramifications for the relation between federal antitrust law and the regulatory laws of states and local governments. Finally, the Article proposes legislation that provides an optimum reconciliation of the free market policies underlying the federal antitrust laws and the internal governing autonomy to which the states are entitled

How Do the Social Benefits and Costs of the Patent System Stack Up in Pharmaceuticals?

This paper explores the workings of the patent system in the context of the generation of new pharmaceutical products. First it identifies the relevant characteristics of the patent system and its relation to the market. The paper concedes that, in general, the patent system is probably the best way of generating new technology, in substantial part because that system uses the market to provide both incentives and rewards. The paper also identifies downsides of this patent/market system: deadweight loss and the unresponsiveness of that patent/market system to the needs of the poor. The paper then explores the social costs and benefits of the patent system, drawing from analyses by Arrow and Kaplow. Drawing from a format developed by Kaplow, the paper develops a linear (and constant cost) model in which social costs and benefits are compared. Under the linear model, social costs remain low relative to social benefits for a substantial time period. Then the linear model is made more complex by abandoning the earlier assumptions of constant costs and linear demand. It shows how some nonlinear demand might result in very large deadweight losses, producing results significantly different from those of the linear model. The paper then considers price discrimination as a means by which producers might both increase their profits and reduce deadweight losses. The paper then explores the possibility that pharmaceutical producers might reduce global deadweight losses through price discrimination that favored third-world nations. Because international price discrimination might be discouraged by the prospect of arbitrage, the paper considers the extent to which existing laws provide means of protection against arbitrage. The paper considers contract law, patent law, and the lawfulness of potential governmental arrangements providing protection against arbitrage under the WTO and the Doha Declaration. Finally, the paper considers the possibility that global welfare would be maximized through an international treaty providing for the public and international funding of a limited class of pharmaceutical products

How Do the Social Benefits and Costs of the Patent System Stack up In Pharmaceuticals?

This paper explores the workings of the patent system in the context of the generation of new pharmaceutical products. First it identifies the relevant characteristics of the patent system and its relation to the market. The paper concedes that, in general, the patent system is probably the best way of generating new technology, in substantial part because that system uses the market to provide both incentives and rewards. The paper also identifies downsides of this patent/market system: deadweight loss and the unresponsiveness of that patent/market system to the needs of the poor. The paper then explores the social costs and benefits of the patent system, drawing from analyses by Arrow and Kaplow. Drawing from a format developed by Kaplow, the paper develops a linear (and constant cost) model in which social costs and benefits are compared. Under the linear model, social costs remain low relative to social benefits for a substantial period. Then the linear model is made more complex by abandoning the earlier assumptions of constant costs and linear demand. It shows how some nonlinear demand might result in very large deadweight losses, producing results significantly different from those of the linear model. The paper then considers price discrimination as a means by which producers might both increase their profits and reduce deadweight losses. The paper then explores the possibility that pharmaceutical producers might reduce global deadweight losses through price discrimination that favored third-world nations. Because international price discrimination might be discouraged by the prospect of arbitrage, the paper considers the extent to which existing laws provide means of protection against arbitrage. The paper considers contract law, patent law, and potential arrangements under the WTO and the Doha Declaration. Finally, the paper considers the possibility that global welfare would be maximized through an international treaty providing for the public and international funding of a limited class of pharmaceutical products

Trade and Tensions

International disputes and tensions arise in situations where one nation is seeking its own economic betterment in ways that diminish the economic welfare of other nations. Prior to World War II, most nations deployed systems of tariffs and import quotas in unveiled attempts to protect their domestic in- dustries. Today, trading tensions are often generated by a range of government activities that limit imports or subsidize exports; yet the governments that impose these measures often rationalize them as policy measures that have no protectionist or other trading objective. The earlier trading model was a mer- cantilist one. Economic welfare was seen as a zero-sum game in which each nation bettered its position when it sold more than it purchased from abroad. Because all nations could not sell more than they purchased, some nations were necessarily winners and others were losers. Under the mercantilist view, the nation that obtained the greatest surplus of exports over imports was the greatest winner

Business Associations--1964 Tennessee Survey

In Denny v. Phillips & Buttorff Corp.,\u27 the United States Court of Appeals for the Sixth Circuit affirmed a judgment of the United States Court for the Middle District of Tennessee which awarded $235,000 in fees plus$6,227.98 in expenses to counsel representing minority stockholders in a suit which had been brought to force cancellation of a purchase by the Phillips & Buttorff Corp. from the instrumentalities of the controlling stockholders of such corporation of 60,000 shares of stock in Win. R.Moore Dry Goods Company for $2,700,000. The purchase of the Moore stock had apparently been used as a means by which the controlling group in the Phillips corporation had obtained corporate funds with which to finance their acquisition of a controlling amount of stock. Although the purchase of the Moore stock was rescinded before the derivative action was tried, the court in a former opinion described the purchase transaction as constructive fraud and ordered judgment to be rendered on behalf of the corporation against the offending directors in an amount equal to interest on the$2,700,000 purchase price from the date of commencement of the action until recission. The description, by the court of appeals, of the stock purchase transaction as constructive fraud is not readily reconcilable with an apparent finding of the district court that the purchase price paid by the corporation for the Moore stock was not unfair