Amicus Briefs and the Sherman Act: Why Antitrust Needs a New Deal

Power to interpret the Sherman Act, and thus power to make broad changes to antitrust policy, is currently vested in the Supreme Court. But reevaluation of existing competition rules requires economic evidence, which the Court cannot gather on its own, and technical economic savvy, which it lacks. To compensate for these deficiencies, the Court has turned to amicus briefs to supply the economic information and reasoning behind its recent changes to antitrust policy. This Article argues that such reliance on amicus briefs makes Supreme Court antitrust adjudication analogous to administrative notice-and-comment rulemaking. When the Court pays careful attention to economic evidence and arguments presented in amicus briefs, it moves the process away from a traditional Article III case or controversy and towards rulemaking under the Administrative Procedure Act (APA) where any interested party can influence the decision. In doing so, the Court sacrifices some of the epistemological benefits of Article III’s standing requirements. In the case of antitrust, those costs are probably outweighed by how much the Court benefits from hearing the amici’s economic arguments. But while the Court’s hybrid rulemaking – quasi-administrative and quasi-judicial – may improve upon the traditional judicial model, it cannot realize the full benefits of APA rulemaking. The awkwardness of using amicus curiae briefs like comments on a rulemaking suggests a more dramatic shift in authority over the Sherman Act is necessary. Power to interpret the Act in the first instance should go to an administrative agency

Foxes at the Henhouse: Occupational Licensing Boards Up Close

The dark side of occupational licensing-its tendency to raise prices to consumers with dubious effects on service quality, its enormous payout to licensees, and its ability to shut many willing workers out of the workforce-has begun to receive significant attention. But little has been said about the legal institutions that create and administer this web of professional entry and practice rules. State-level licensing boards regulate nearly one-third of American workers, yet, until now, there has been no systematic attempt to understand who serves on these boards and how they operate. This Article undertakes an ambitious and comprehensive study of all 1,790 licensing boards in the U.S. and identifies their statutory membership. The results are clear: nearly all of them are controlled by professionals holding a license issued by the board itself This self-regulation is disturbing enough if one expects at least some governmental involvement in decisions that are known to redistribute income, block labor entry, and harm consumers. But now the practitioner-dominated licensing board is not just an urgent policy problem, but a legal one. A recent Supreme Court case has placed these boards and their members in the cross hairs of federal antitrust liability, precipitating a legal crisis for the states. This Article identifies the enormous scope of the Court\u27s opinion in North Carolina State Board of Dental Examiners v. FTC, opines on the meaning of its somewhat cryptic holding, and suggests steps that states can take to reform their boards with an eye to both antitrust immunity and more reasonable occupational regulation

Antitrust Scrutiny for the Occupations: North Carolina Dental and Its Impact on U.S. Licensing Boards

The American system of occupational licensing is under attack. The current regime – which allows for almost total self-regulation – has weathered sustained criticism from consumer advocate groups, academics, politicians, and even the White House itself. But the recent U.S. Supreme Court opinion in North Carolina Board of Dental Examiners v. FTC,1 portends a sea change in how almost a third of American workers are regulated. The case has made it possible for aggrieved individuals and government enforcers to bring suits against most state licensing boards, challenging their restrictions as violating federal competition law. The case has prompted two responses: a flood of antitrust suits against boards, and a panic among states as they scramble to protect licensing boards from antitrust liability. This article describes the current system of professional regulation in the U.S., explains the North Carolina Dental opinion and its legal impact, and discusses states’ likely responses. The upshot is that in order to protect occupational licensing from antitrust suit, states will have to reform their regulatory systems in ways that will improve the fairness and efficiency of American occupational licensing laws

Cunningham v. California - CASE COMMENT

Sixth Amendment--Allocation of Fact-finding in Sentencing.--Apprendi v. New Jersey spawned a series of Supreme Court sentencing decisions which, when viewed together, are at best confusing and at worst contradictory. Commentators and courts have struggled to find a coherent governing principle uniting Apprendi, Blakely v. Washington, and United States v. Booker. The holding in Apprendi, originally described as a bright-line rule, has proved anything but. Last Term, in Cunningham v. California, the Court added another chapter to the Apprendi saga when it declared unconstitutional California\u27s Determinate Sentencing Law (DSL). Justice Ginsburg authored the majority opinion that overturned the California Supreme Court\u27s determination that the DSL did not differ in any constitutionally relevant way from the Federal Sentencing Guidelines, as revised by Booker . Although at first blush Cunningham seems to be an ode to meaningless formalism, reading between the lines of its opinions exposes a substantive debate about what the Sixth Amendment means and why it matters

Prediction Markets and Law: A Skeptical Account

Enthusiasm for many minds arguments has infected legal academia. Scholars now champion the virtues of groupthink, something once thought to have only vices. It turns out that groups often outperform individuals in aggregating information, weighing alternatives, and making decisions. And although some of our legal institutions, such as Congress and juries, already harness the power of the crowd, others could be improved by multiplying the number of minds at work. Multiplying implies a simple mathematical formula for improving decisionmaking; modern many minds arguments are more sophisticated than that. They use incentive analyses, game theory, and statistics to study how and under what circumstances groups make better choices than individuals do. The models propose to solve various information problems, such as determining guilt or innocence, deciding on a course of regulation, or estimating a value that is difficult to measure directly. Most ambitious, perhaps, has been the attempt to aggregate knowledge to predict the future. Uncertainty is a painful part of reality; it is only natural that the wisdom of the crowd would be summoned to battle it. The most popular model on that front has been the information market or prediction market. (The terms can be used interchangeably.) In particular, scholars have argued that such markets may alleviate uncertainty in legal and policy analysis. This Note argues that enthusiasm for prediction markets in law is misplaced. No one thinks prediction markets are perfect; even their proponents concede that they will fail under certain circumstances. But with their concessions they give up the game, at least as applied to legal problems: the circumstances in which prediction markets are inaccurate are precisely the circumstances in which law needs them most. Part I surveys information markets - their success stories and their limitations. Part II begins by outlining the ambitions scholars have for information markets and law. Part II then develops the thesis of this Note: that the performance of prediction markets is inversely correlated with how valuable their predictions would be. This Part argues that if a future event is secret or knowledge about its likelihood is thin, if it depends on the idiosyncratic action of an individual, or if it is catastrophic but unlikely, a prediction market will probably not produce accurate information. Finally, Part III defines the niche, smaller than scholars imagine, in which prediction markets shine

The New Antitrust Federalism

Antitrust federalism, or the rule that state regulation is not subject to federal antitrust law, does as much as-and perhaps more than-its constitutional cousin to insulate state regulation from wholesale invalidation by the federal government. For most of the last century, the Court quietly tinkered away with the contours of this federalism, struggling to draw a formal boundary between state action (immune from antitrust suits) and private cartels (not). But with the Court\u27s last three antitrust cases, the tinkering has given way to reformation. What used to be a doctrine with deep roots in constitutional federalism is now a doctrine with close ties to the federal administrative state where courts sit in judgment of an agency\u27s decision-making procedure.The new antitrust federalism conditions antitrust immunity not on the fact of state regulation but on the process of that regulation. Now, only regulation created by a politically accountable process is beyond the reach of federal antitrust suits, exposing vast areas of state regulation to new antitrust scrutiny. This Article argues that the new antitrust federalism is an improvement on the old, both because the old boundary model was unworkable and because the new regime addresses the inherent capture problems at the heart of modern state regulation. But this Article also warns that if the Court does not give accountability review real bite, it may have to abandon the new antitrust federalism and opt for a nuclear option that could portend the end of antitrust federalism altogether

The Commensurability Myth in Antitrust

Modern antitrust law pursues a seemingly unitary goal: competition. In fact, competition—whether defined as a process or as a set of outcomes associated with competitive markets—is multifaceted. What are offered in antitrust cases as procompetitive and anticompetitive effects are typically qualitatively different, and trading them off is as much an exercise in judgment as mathematics. But despite the inevitability of value judgments in antitrust cases, courts have perpetuated a commensurability myth, claiming to evaluate “net” competitive effect as if the pros and cons of a restraint of trade are in the same unit of measure. The myth is attractive to courts because it appears to allow the law to avoid the murky, value-laden compromises struck by other areas of regulation. But courts have suppressed important debates about what matters most about competition by glossing over the fact that even given a narrow mandate—to protect competition—antitrust law must make contested value judgments. Debunking the commensurability myth is the first step in stimulating scholarly and judicial debates about how to balance antitrust’s inherent tradeoffs, such as price effects with qualitative consumer welfare, present with future benefits from competition, and consumer welfare among different classes of purchasers

Casting a FRAND Shadow: The Importance of Legally Defining Fair and Reasonable and How Microsoft v. Motorola Missed the Mark

High tech markets must strike an awkward balance between coordination and competition in order to achieve efficiency. The need for competition is familiar; antitrust--as well as many other legal institutions--recognizes that consumers benefit and resources are best allocated when producers face fierce competition. But at the same time, the interoperability of competing high tech products can promote both consumer and producer welfare, necessitating a level of coordination not typically associated with atomistic, competitive markets. The necessity of interoperability has been addressed privately by industry-wide standard-setting and coordination of competitors around these standards. Likewise, the competitive risks of that coordination are also addressed through private agreements; standard-setting organizations (SSOs) typically require that holders of patents essential to the standard agree by contract to license their patents to users at fair, reasonable, and non-discriminatory (FRAND) rates

The Influence of the Areeda-Hovenkamp Treatise in the Lower Courts and What It Means for Institutional Reform in Antitrust

It is often pointed out that while the United States Supreme Court is the final arbiter in setting antitrust policy and promulgating antitrust rules, it does so too infrequently to be an efficient regulator. And since the antitrust agencies, the Federal Trade Commission ( FTC ) and the Antitrust Division of the Department of Justice ( DOJ ), rarely issue guidelines, and even more rarely issue rules or regulations, very little antitrust law is handed down from on high. Instead, circuits split, and lower courts must muddle through new antitrust problems by finding analogies in technologically and socially obsolete precedents. When faced with this void of authority, especially covering cutting-edge antitrust issues raised by new technology and business arrangements, lower courts often turn to a single treatise, Antitrust Law: An Analysis of Antitrust Principles and Their Application, by the late Philip E. Areeda and Herbert Hovenkamp. The treatise\u27s influence is such thatJustice Breyer has remarked that most practitioners would prefer to have two paragraphs of Areeda\u27s treatise on their side than three Courts of Appeals or four Supreme Court Justices. Why courts are so influenced by the treatise is no secret: It is up-todate, technologically savvy, politically middle-of-the-road, economically literate, comprehensible, and comprehensive. The monopoly that Professor Hovenkamp (as the only living editor of the treatise) has inherited and lovingly maintains is certainly the kind of which antitrust would approve: It is a monopoly thrust upon it by simply being the best. But its dominance in lower courts and, therefore, in firm decision-making, should raise concerns among those who believe it was Congress\u27s intent to put the courts, not a professor, in charge of antitrust policy. The solution, of course, is not to force the lower courts away from the Areeda-Hovenkamp treatise; in the absence of binding authority, reliance on such a fine treatise can only improve antitrust jurisprudence. But this reliance may illustrate the need for institutional reform. It suggests that something should be done to solve the bottleneck problem at the Supreme Court and to encourage the antitrust agencies to issue more rules to guide firms in their business deals and lower courts in their resolution of disputes. This Essay explores the structural and institutional causes of the void of antitrust authority, explains how the Areeda-Hovenkamp treatise fills that gap, and identifies the legitimacy problems that inhere when lower courts treat a secondary source as speaking for the Supreme Court. Finally, this Essay points out how a more economically literate bench and Chevron deference to FTC antitrust rules would help alleviate the problem

Cartels by Another Name: Should Licensed Occupations Face Antitrust Scrutiny?

It has been over a hundred years since George Bernard Shaw wrote that “[a]ll professions are a conspiracy against the laity.” Since then, the number of occupations and the percentage of workers subject to occupational licensing have exploded; nearly one-third of the U.S. workforce is now licensed, up from five percent in the 1950s. Through occupational licensing boards, states endow cosmetologists, veterinary doctors, medical doctors, and florists with the authority to decide who may practice their art. It cannot surprise when licensing boards comprised of competitors regulate in ways designed to raise their profits. The result for consumers is higher prices and less choice, as licensing raises wages by eighteen percent and bars competition from unlicensed workers. For African-style hair braiders, the result is either an illicit business or thousands of hours of irrelevant training imposed by a cosmetology board. For lawyers, the result is less competition from tax accountants, paralegals, and out-of-state lawyers. The Sherman Act’s great accomplishment has been to make cartels per se illegal and relatively scarce—unless the cartel is managed by a professional licensing board. Most jurisdictions consider such boards, as state creations, exempt from antitrust scrutiny by the state action doctrine, leaving would-be competitors and consumers no recourse against their cartel-like activity. We contend that the state action doctrine should not prevent antitrust suits against state licensing boards that are comprised of private competitors deputized to regulate and to outright exclude their own competition, often with the threat of criminal sanction. At most, state action should immunize licensing boards from the per se rule and require plaintiffs to prove their cases under the rule of reason. We argue that the Fourth Circuit’s recent decision, soon to be reviewed by the Supreme Court, to uphold a Federal Trade Commission (FTC) antitrust suit against a licensing board—denying state action immunity to a licensing board and thereby creating a circuit split—was a step in the right direction but did not go far enough. The Supreme Court should take the split as an opportunity to clarify that when competitors hold the reins to their own competition, they must answer to Senator Sherman