Vertical Restraints Facilitating Horizontal Collusion: ‘Stretching’ Agreements in a Comparative Approach

This article discusses the approaches of the European Union (EU) and of the United States (US) to the notions of agreement and concerted practice applied to horizontal collusive consequences of vertical restraints. It concludes that networks of vertical restraints blur the differences between vertical and horizontal agreements; therefore, both options of attack are available for enforcers in the EU and the US context. If the analysed vertical restraints are adopted in parallel by agreement, they should be deemed illegal as long as they restrict competition producing collusive consequences. In the absence of explicit coordination to adopt the practice, I suggest first looking for a stretched concept of horizontal agreement or a broadly interpreted concept of concerted practice, including unilateral ‘communication’ that intentionally reduces uncertainty. Even when the analysed practices are adopted individually and not by all firms, they can represent a commitment to focal points, observable by market players, thus amounting to communication of intent. If that is not possible, I propose that an analysis of market power, incentives, coercion and induction should guide the finding of an illegal vertical agreement and ground the analysis of the consequences. The agreement/concerted practice path is an appropriate, feasible and coherent way to deal with vertical restraints facilitating horizontal tacit coordination, but that does not exclude alternative effective enforcement mechanisms

Probability, Presumptions and Evidentiary Burdens in Antitrust Analysis: Revitalizing the Rule of Reason for Exclusionary Conduct

The conservative critique of antitrust law has been highly influential and has facilitated a transformation of antitrust standards of conduct since the 1970s and led to increasingly more permissive standards of conduct. While these changes have taken many forms, all were influenced by the view that competition law was over-deterrent. Critics relied heavily on the assumption that the durability and costs of false positive errors far exceeded those of false negatives. Many of the assumptions that guided this retrenchment of antitrust rules were mistaken and advances in the law and in economic analysis have rendered them anachronistic, particularly with respect to exclusionary conduct. Continued reliance on what are now exaggerated fears of “false positives,” and failure adequately to consider the harm from “false negatives,” has led courts to impose excessive demands of proof on plaintiffs that belie both established procedural norms and sound economic analysis. The result is not better and more reasonable antitrust standards, but instead an embedded ideological preference for non-intervention that creates a tendency toward false negatives, particularly in modern markets characterized by economies of scale and network effects. In this article, we explain how these erroneous assumptions about markets, institutions, and conduct have distorted the antitrust decision-making process and produced an excessive risk of false negatives in exclusionary conduct cases involving firms attempting to achieve, maintain, or enhance dominance or substantial market power. To redress this imbalance, we integrate modern economic analysis and the teaching of decision theory with the foundational conventions of antitrust law, which has long relied on probability, presumptions, and reasonable inferences to provide more effective means for evaluating competitive effects and resolving antitrust claims

A Flexible Health Care Workforce Requires a Flexible Regulatory Environment: Promoting Health Care Competition Through Regulatory Reform

Effective competition policy is critical to the success of U.S. health care reform, including efforts to reduce health care costs, increase quality of care, and expand access to health care services. While promoting competition is necessary at every level of the rapidly evolving health care system, it is particularly important with respect to licensed professionals who provide health care services. This Article argues that the current system of health care professional regulation, born of the last century, is in numerous respects an impediment to the kinds of changes needed to fully unleash the benefits of competition among different types of health care service providers. To the contrary, the current system of licensure and related regulations tends to artificially separate professionals in ways that not only insulate them from competition now, but also generate incentives to use regulation to perpetuate and fortify such insulation in the future. Drawing on analytic principles derived from antitrust law enforcement and other regulated industries, the Article argues that, although some regulation is necessary to protect public health and safety, the legacy regulatory system likely impedes the development of innovative, alternate service models that might facilitate enhanced competition by allowing all professionals to practice to the full extent of their education, licensure, and skill. The Article concludes by proposing a range of reforms that would re-conceptualize the core characteristics and methodology of traditional health care professional regulation

Reconsidering Indirect-Purchaser Class Actions

Few issues have proven more vexing to private antitrust enforcement than those related to indirect-purchaser class actions. The current dual system of enforcement—federal and state—exacerbates the difficulty of litigating indirect-purchaser claims by layering procedural complexity on top of substantive complexity and by explicitly allowing (perhaps even incentivizing) duplicative recovery. Almost all commentators are in substantial agreement that reform is necessary, but Congress appears unlikely to take action on the issue in the near future. This Note proposes a procedural solution that would consolidate litigation in a single federal court based on the limited-fund class action model of Federal Rule of Civil Procedure 23(b)(1)(B). Under the limited-fund model, the purpose of consolidated litigation is to determine liability before turning to the apportionment of damages. This Note also advocates for a presumption that damages are appropriately allocated to purchasers on a pro rata basis, consistent with common practice in the limited-fund class action context. Proper allocation would depend on the purchaser’s position in the supply chain, with direct purchasers receiving the largest share of the recovery. This Note’s proposal provides three primary advantages: (1) it eliminates the possibility of duplicative litigation; (2) it aligns the interests of all the potential plaintiffs to better incentivize vigorous antitrust enforcement; and (3) it reduces the need for complex damages calculations

Reconsidering Indirect-Purchaser Class Actions

Few issues have proven more vexing to private antitrust enforcement than those related to indirect-purchaser class actions. The current dual system of enforcement—federal and state—exacerbates the difficulty of litigating indirect-purchaser claims by layering procedural complexity on top of substantive complexity and by explicitly allowing (perhaps even incentivizing) duplicative recovery. Almost all commentators are in substantial agreement that reform is necessary, but Congress appears unlikely to take action on the issue in the near future. This Note proposes a procedural solution that would consolidate litigation in a single federal court based on the limited-fund class action model of Federal Rule of Civil Procedure 23(b)(1)(B). Under the limited-fund model, the purpose of consolidated litigation is to determine liability before turning to the apportionment of damages. This Note also advocates for a presumption that damages are appropriately allocated to purchasers on a pro rata basis, consistent with common practice in the limited-fund class action context. Proper allocation would depend on the purchaser’s position in the supply chain, with direct purchasers receiving the largest share of the recovery. This Note’s proposal provides three primary advantages: (1) it eliminates the possibility of duplicative litigation; (2) it aligns the interests of all the potential plaintiffs to better incentivize vigorous antitrust enforcement; and (3) it reduces the need for complex damages calculations

An Enquiry Meet for the Case: Decision Theory, Presumptions, and Evidentiary Burdens in Formulating Antitrust Legal Standards

Presumptions have an important role in antitrust jurisprudence. This article suggests that a careful formulation of the relevant presumptions and associated evidentiary rebuttal burdens can provide the “enquiry meet for the case” across a large array of narrow categories of conduct confronted in antitrust to create a type of “meta” rule of reason. The article begins this project by using decision theory to analyze the types and properties of antitrust presumptions and evidentiary rebuttal burdens and the relationship between them. Depending on the category of conduct and market structure conditions, antitrust presumptions lie along a continuum from conclusive (irrebuttable) anticompetitive, to rebuttable anticompetitive, to competitively neutral, and on to rebuttable procompetitive and conclusive (irrebuttable) procompetitive presumptions. A key source of these presumptions is the likely competitive effects inferred from market conditions. Other sources are policy-based -- deterrence policy concerns and overarching policies involving the goals and premises of antitrust jurisprudence. Rebuttal evidence can either undermine the facts on which the presumptions are based or can provide other evidence to offset the competitive effects likely implied by the presumption. The evidentiary burden to rebut a presumption depends on the strength of the presumption and the availability and reliability of further case-specific evidence. These twin determinants can be combined and understood through the lens of Bayesian decision theory to explain how “the quality of proof required should vary with the circumstances.” The stronger the presumption and less reliable the case-specific evidence in signaling whether the conduct is anticompetitive versus procompetitive, the more difficult it will be for the disfavored party to satisfy the evidentiary burden to rebut the presumption. The evidentiary rebuttal burden generally is a burden of production, but also can involve the burden of persuasion, as with the original Philadelphia National Bank structural presumption, or typical procompetitive presumptions. If a presumption is rebutted with sufficient offsetting evidence to avoid an initial judgment, the presumption generally continues to carry some weakened weight in the post-rebuttal phase of the decision process. That is, a thumb remains on the scale. However, if the presumption is undermined, it is discredited and it carries no weight in the post-rebuttal decision process. The article uses this methodology to analyze various antitrust presumptions. It also analyzes the, burden-shifting rule of reason and suggests that the elements should not be rigidly sequenced in the decision process. The article also begins the project of reviewing, revising and refining existing antitrust presumptions with proposed revisions and refinements in a number of areas. The article invites other commentators to join the project by criticizing these proposals and suggesting others. These presumptions then could be applied by appellate courts and relied upon by lower court, litigants and business planners

Combining the bulk transfer formulation and surface renewal analysis for estimating the sensible heat flux without involving the parameter KB-1

The single‐source bulk transfer formulation (based on the Monin‐Obukhov Similarity Theory, MOST) has been used to estimate the sensible heat flux, H, in the framework of remote sensing over homogeneous surfaces (HMOST). The latter involves the canopy parameter, , which is difficult to parameterize. Over short and dense grass at a site influenced by regional advection of sensible heat flux, HMOST with  = 2 (i.e., the value recommended) correlated strongly with the H measured using the Eddy Covariance, EC, method, HEC. However, it overestimated HEC by 50% under stable conditions for samples showing a local air temperature gradient larger than the measurement error, 0.4 km−1. Combining MOST and Surface Renewal analysis, three methods of estimating H that avoid dependency have been derived. These new expressions explain the variability of H versus , where is the friction velocity, is the radiometric surface temperature, and is the air temperature at height, z. At two measurement heights, the three methods performed excellently. One of the methods developed required the same readily/commonly available inputs as HMOST due to the fact that the ratio between and the ramp amplitude was found fairly constant under stable and unstable cases. Over homogeneous canopies, at a site influenced by regional advection of sensible heat flux, the methods proposed are an alternative to the traditional bulk transfer method because they are reliable, exempt of calibration against the EC method, and are comparable or identical in cost of application. It is suggested that the methodology may be useful over bare soil and sparse vegetation.This research was funded by CERESS project AGL2011–30498 (Ministerio de Economía y Competitividad of Spain, cofunded FEDER), CGL2012–37416‐C04‐01 (Ministerio de Ciencia y Innovación of Spain), and CEI Iberus, 2014 (Proyecto financiado por el Ministerio de Educación en el marco del Programa Campus de Excelencia Internacional of Spain)

The Evolution and Vitality of Merger Presumptions: A Decision-Theoretic Approach

This article reviews the formulation and evolution of the Philadelphia National Bank anticompetitive presumption through the lens of decision theory and Bayes Law. It explains how the economic theory, empirical evidence and experience are used to determine a presumption and how that presumption interacts with the reliability of relevant evidence to rationally set the appropriate burden of production and burden of persuasion to rebut the presumption. The article applies this reasoning to merger presumptions. It also sketches out a number of non-market share structural factors that might be used to supplement or replace the current legal and enforcement presumptions for mergers. It also discusses the potential for conflicting presumptions and how such conflicts might best be resolved