The Antitrust Implications of Going Private and Other Changes of Corporate Control

Public shareholders likely have suffered billions of dollars in losses in recent years as a result of collusion among potential purchasers in change-of-control transactions. Unfortunately, the federal courts have been unable to devise an appropriate antitrust approach to collusion in change-of-control transactions. This article proposes a new approach to the antitrust regulation of the market for the control of public and private companies. Collusion among purchasers in that market has occurred in nearly every American industry The proposed approach will effectively deter the three types of anticompetitive conduct most likely to occur in these circumstances: (1) express agreements to allocate bids among potential purchasers, (2) implicit bid rigging by potential purchasers, and (3) consortiums among potential purchasers to submit single bids in company auctions. This Article illustrates the advantages of the proposed approach by applying it to going private transactions, which in recent years have become the most popular—and the most controversial—of all types of acquisitions

A Proposed Antitrust Approach to the Conduct of Retailers, Dealers, and Other Resellers

The market power of retailers, resellers, and dealers has increased substantially in recent years as the result of innovations in distribution such as the superstores, mass merchandisers, and warehouse clubs. Consequently, the balance of power in many industries has begun to shift from the supplier to the resale level. Although courts have well-developed means of analyzing the competitive conduct of suppliers and consumers, they have been unable to decide how to treat resellers\u27 competitive conduct. This Article proposes the adoption of a traditional antitrust approach, the ancillary restraints analysis, to the conduct of resellers. Under this approach, courts would recognize that a reseller is engaged in a partnership with its suppliers to deliver goods and services in the most efficient manner possible. Courts should preclude restrictions that are unrelated to efficiency-enhancing objectives or are broader than required to accomplish these objectives. Such an approach will encourage resellers to act more efficiently, and will deter them from taking actions that limit the range of products and services available to consumers

Making Sense of the Rule of Reason: A New Standard for Section 1 of the Sherman Act

For most of the twentieth century, the federal courts have assumed that they must choose between two extreme methods of analyzing conduct under Section 1 of the Sherman Act:\u27 a per se rule that deems certain conduct illegal on its face; or, a rule of reason that inquires into all conceivable circumstances before determining the legality of a particular restraint. Until the 1970s, the courts were enamored of the clarity, simplicity, and deterrent effects of per se rules. As they have become more knowledgeable about economic theory in the last fifteen years, however, the courts have grown disillusioned with the absolutism of the per se rule and have been more inclined to consider efficiency justifications for competitive restraints. As a result, the courts have narrowed the scope of the per se rule and expanded applications of the rule of reason. Unfortunately, however, the modem rule of reason has no substantive content. Although the rule of reason has been characterized as the prevailing standard of [Section 1] analysis, it is curiously lacking in definition. Indeed, the federal courts have had little experience in applying the standard. Rule of reason trials were rare from the early part of the century through the 1960s because the per se rule dominated Section 1 analysis. Even in recent years, plaintiffs have been reluctant to bring a rule of reason case because its evidentiary hurdles are so difficult to meet. It is particularly burdensome for a plaintiff to provb that a defendant has sufficient market power to adversely affect competition in the relevant market