Book Review: Constitutional Faith. by Sanford Levinson.

Book review: Constitutional Faith. By Sanford Levinson. Princeton: Princeton University Press. 1988. Pp. xii, 243. Reviewed by: Herbert Hovenkamp

Antitrust and Information Technologies

The relationship between antitrust policy and information was traditionally concerned with oral or written communications that had anticompetitive potential, mainly because they furthered collusion or market exclusion. Among the most difficult problems was interpreting the significance of communications that could be construed as either threats or offers to collude, or as facilitators of collusion. On the one hand, markets profit greatly from the free flow of information. On the other, particular uses of information threaten competition when they enable firms to coordinate price, output, or innovation. Of course, explicit price fixing is a use of information but so are various cartel-facilitating practices that depend on publicizing one’s price or output. As a result, the way information is communicated has been a factor in merger analysis, particularly when the fear is that the merger might facilitate collusion. A recent example of this concern is In re LIBOR-Based Financial Instruments Antitrust Litigation, which includes claims that banks used misreporting about interest rates as a device for manipulating them. U.S. courts have also confronted complaints that companies were exchanging wage and salary information to suppress or fix wages at an artificially high level. Individuals from numerous industries have made such claims, ranging from petroleum geologists, to high technology Silicon Valley employees, to law professors. Prior to the 1980s, “information” in antitrust enforcement meant mainly print media, radio, television, film, and audio recording. All were involved in antitrust disputes at one time or another, and the challenged practices ran the entire gamut of U.S. antitrust law—from vertical integration and exclusion in the 1948 United States v. Paramount Pictures, Inc. case, to unilateral refusal to deal in Lorain Journal Co. v. United States, to a series of newspaper mergers and the passage of the Newspaper Preservation Act in 1970 to protect newspaper production joint ventures. In Times-Picayune Publishing Co. v. United States, the Supreme Court refused to condemn a government-challenged tying arrangement in the newspaper publishing industry, exonerating a New Orleans newspaper publishing company’s practice of requiring that the same classified advertisements be run in its morning and evening editions. Finally, the Broadcast Music, Inc. v. Columbia Broadcasting System, Inc. decision rejected an antitrust challenge and, in the process, acknowledged the value of nonexclusive, blanket copyright licenses for recorded music. Information also plays an important role in competition policy in the regulated industries, mainly because agencies depend on accurate information typically supplied by the regulated firms. As a result, misreporting one’s own market position can serve to exclude a rival or become a device for collusion. Or, in patent law, exaggerated claims about the validity or strength of one’s own patents can become a potent exclusion device. All of these issues concerning the relationship between competition policy and information remain today. Many are more important than ever given the ubiquity of information and the speed at which it travels. This Article considers a related but nevertheless distinct issue: the relationship between competition policy and the technologies of information. Technological change can both facilitate and undermine the use of information for anticompetitive practices. The effects are heavily, although not exclusively, a result of digitization and the many products and processes that it enables. Further, information technologies account for a significant portion of the difficulties that antitrust law encounters when it addresses intellectual property (IP) rights. In addition, changes in the technologies of information affect the structures of certain products, in the process either increasing or decreasing the potential for competitive harm. Of particular importance here are the measurement of market power in heavily digital technologies; the changing role of consumer choice in digital markets, focusing here on the Google Search investigation; the impact of digitization on the opportunities for collusion, focusing on the Apple eBooks antitrust case; the role of the antitrust laws in facilitating net neutrality or other conceptions of internet competition; and the role of information in antitrust evaluation of patent practices, particularly those pertaining to FRAND licensing in markets subject to standard setting, and patent pools

The Power of Antitrust Personhood

Antitrust law addresses conspiracy, or collaborative conduct, more harshly than it does unilateral conduct. One person acting alone can get away with far more than groups of firms acting by agreement. In most cases that distinction is justified. Creating substantial market power unilaterally is difficult and relatively uncommon, but it can be created in a moment’s time by an agreement among firms. But how do antitrust tribunals determine when conduct is unilateral rather than collaborative? Often the ansawer is obvious, but sometimes it is not. Two statutory provisions were intended to be the umpire of such decisions. A section of the Sherman considered so important that it was re-enacted in the Clayton Act provides that corporations and associations authorized by state law should be treated as “persons,” or single actors. The provisions address the core problems about internal corporate structure, including the single-entity status of holding companies, the legitimacy or not of suits between shareholders or employees and their firm, or the status of professional associations. The fact that the Sherman Act’s corporate personhood provision was re-enacted virtually verbatim in the Clayton Act is significant, because the intervening quarter century had witnessed a fierce debate over the power and reach of the business corporation. The statutory definitions do not include natural persons but they must be there by implication, because the Sherman Act includes prison sentences among its punishments and only biological persons can go to prison. The personhood provisions are incomplete, however. While corporations and wholly owned subsidiaries are clearly a single person, the provisions fail to account for many situations where the precise boundaries of the corporation become ambiguous, including partial ownership, stock holders with independent business interests, or disloyal agents. Nor do they provide a solution to the problem of how to address labor disputes between an employer and its own employees. Further, and inadvertently, the statutes have encouraged certain types of industry structures that are not mandated by good competition policy, including the tendency to merge in order to avoid harsh rules about collusion, and the tendency to integrate vertically by ownership even when contractual integration might be superior

The Supreme Court as Constitutional Interpreter: Chronology Without History

A Review of The Constitution in the Supreme Court: The Second Century, 1888-1986 by David P. Curri

Anticompetitive Patent Settlements and the Supreme Court’s Actavis Decision

Reverse payment patent litigation settlements, wherein the payments flow from plaintiff brand name drug companies to defendant generic competitors, often including agreements that the generic companies will delay market entry, have evaded consistent legal treatment and divided courts for over a decade. In December 2012, the United States Supreme Court granted the Federal Trade Commission’s petition for writ of certiorari to review FTC v. Watson Pharmaceuticals. In Watson, the Eleventh Circuit found that, absent sham litigation or fraud, reverse payment settlements are legal under antitrust law as long as the settlement agreement falls within the exclusionary scope of the patent. The Watson decision was followed mere months later by the Third Circuit’s In re K-DUR decision, concluding that reverse-payment settlements should be deemed presumptively unlawful under a quick-look rule of reason approach. Because “different courts have reached different conclusions” regarding the legality of reverse-payment settlements, the Supreme Court endeavored to resolve the circuit split in FTC v. Actavis, Inc. On June 17, 2013, with Justice Breyer writing the majority opinion in a 5-3 decision, the Supreme Court reversed the Eleventh Circuit, holding that governments and private plaintiffs have a cause of action under the antitrust laws against brand name and generic pharmaceutical companies engaging in reverse payment settlements. The Court directed lower courts reviewing such claims to apply a full rule of reason analysis to drug companies’ potentially anticompetitive conduct. In the spring of 2013, in anticipation of the Court’s decision, the Minnesota Journal of Law, Science & Technology invited scholars and practitioners who have analyzed and developed the jurisprudence of reverse payment settlements to respond to FTC v. Actavis, Inc. This article is a response piece that will digest the opinion, critique both Justice Breyer’s majority opinion and Chief Justice Roberts’ dissent, and provide direction for courts and practitioners in navigating the new legal landscape of reverse-payment settlements in the wake of FTC v. Actavis, Inc