US Merger Review: A ‘Goldilocksian’ Perspective

US merger control rests on four strong cornerstones. The first is section 7 of the Clayton Act, as amended by the Celler-Kefauver Act in 1950, which created the substantial lessening of competition standard as the test for the legality of mergers and acquisitions. The second is the Supreme Court’s 1962 decision in Philadelphia National Bank, which relied on the structure-conduct-performance paradigm from industrial organisation economics to fashion a presumption that mergers that significantly increase concentration in already concentrated industries will lessen competition, imposing on the parties the burden of rebutting the government’s structural case. The third is the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which introduced the concept of pre-merger notification, to give the agencies an opportunity to review major transactions before they are consummated. The fourth, and final, cornerstone was the publication by the Justice Department in 1982 of a completely new set of Merger Guidelines, which have been refined over time and which set forth the basic analytical framework the agencies use to evaluate mergers

An end to cooperation in competition?

Decades of cooperation between international antitrust authorities are now under threat following two controversial rulings by the US courts of appeal in New York and Washington D.C. William Kolasky examines the far-reaching implications of the Empagran and Kruman case

IP Antitrust: Keeping the Free-Market Innovation Machine Working

One of the most thoughtful books in recent years on how innovation drives economic growth is Professor William Baumol’s The Free-Market Innovation Machine. In it, Professor Baumol shows that over the past 150 years, per capita incomes in a typical free market economy have risen at unprecedented levels. He argues that the engine driving this growth is the competitive pressure a well-functioning free market economy places on firms to invest in innovation and to share new technologies with the firms that can use it most efficiently

Supreme Court in search of limiting principles

US antitrust law evolves as the common law does: through experience, not logic. US statutes are framed in broad, almost constitutional terms, leaving the courts to define how those laws should be applied to an ever-changing economy and how new learning should be integrated into their application. Yet over the years, the Supreme Court has come to hear fewer and fewer antitrust cases, allowing the lower courts to develop antitrust doctrine until a split among the lower courts requires the high court to step in to resolve the conflict. It is for this reason that the Supreme Court’s 2004 term was so noteworthy. The Court heard four antitrust cases, two of which – Verizon v Law Offices of Curtis V Trinko (124 S Ct 872 (2004)) and F Hoffmann-LaRoche Ltd v Empagran (124 S Ct 2359 (2004)) – produced important decisions that will serve to define the limits of antitrust intervention for decades. It was disappointing that the Court declined to hear another case, 3M Co v LePage’s Inc (124 S Ct 2932 (2004)), which raised issues as to the antitrust treatment of bundled discounts by dominant firms, leaving antitrust lawyers uncertain as to how to counsel clients in this area

Antitrust and Competition Law Update: Important Changes to U.S. Antitrust Statutes Become Law

On June 22, 2004, President Bush signed into law perhaps the most significant amendments to the U.S. antitrust statutes since the Hart-Scott-Rodino Antitrust Improvements Act of 1976. These changes, enacted as H.R. 1086, will have substantial implications for several areas of antitrust enforcement. These include: • limiting potential civil actions against standard-setting organizations;increasing even further incentives for antitrust wrongdoers to participate in the Antitrust Division’s corporate leniency program; increasing criminal penalties for corporations and individuals; and enhancing judicial scrutiny of antitrust consent decrees

Mario Monti’s Legacy: A U.S. Perspective

The departure of Commissioner Mario Monti from his post as the EC Commissioner for competition policy provides a good opportunity to reflect upon the achievements and perceived failures of the European Commission in the field of antitrust law over the past five years. This paper attempts to do so on the basis of six core principles of sound competition policy. Under the first principle, it is undisputable that the Commission under Commissioner Monti’s leadership has been at the forefront of the international efforts undertaken in the fight against cartels. Second, despite some weaknesses in areas such as conglomerate mergers or in its approach to the Microsoft case, the Commission’s focus now appears to be in the protection of competition, not competitors. Third, after a string of annulments of Commission merger decisions by the EC judiciary, the Commission has made substantial progress toward assuring that its decisions are based on sound economics and hard evidence (including consideration of efficiencies). Fourth, recent Commission policy confirms that the Commission is ready to limit intervention to those cases that really cause harm to the competition process. Fifth, despite some concerns arising from the reform of the merger review process, the Commission is working hard to ensure that competition laws do not become bureaucratic roadblocks to efficient transactions. Sixth, Commissioner Monti has been instrumental in promoting international initiatives designed to promote a better understanding of competition policy

The Merger of Guidelines and the Integration of Efficiencies into Antitrust Review of Horizontal Mergers

There is a widening consensus among jurisdictions with competition laws that “the basic objective of competition policy is to protect competition as the most appropriate means of ensuring the efficient allocation of resources—and thus efficientmarket outcomes—in free market economies.” 1 As this statement indicates, it is efficiency, not competition, that is the ultimate goal of the antitrust laws. One of the senior economists of the Justice Department’s Antitrust Division put it very well recently: “efficiency is the goal, competition is the process.”2 When the competitive process is allowed to run its course—unfettered by exclusionary practices or anticompetitive agreements among firms—the incentive of firms to lure away rivals’ customers by offering them lower prices, superior quality, or new product features will necessarily lead these firms to seek more efficient ways to do business. Only by devising more efficient means to produce and distribute their goods, or by finding ways to offer superior or additional features for the same cost, can firms displace sales by their competitors. Antitrust enforcement therefore assumes as its mandate the deterrence of business conduct that threatens to distort the competitive process in product and innovation markets

Worst US Antitrust Decisions...Ever - Part Two

Last month we invited a panel of three US lawyers to discuss some of the worst antitrust decisions of all time. We now conclude that series, with the second set of candidates for the \u27Hall of Shame\u27. Read the opinions carefully--we\u27ll be picking the worst of the worst in a website survey next month

The Article 82 EC Abuse Concept: What Scope is There for Modernization?

On 30 September 2004, Wilmer Cutler Pickering Hale and Dorr LLP, the University of Nyenrode, and Global Competition Review co-sponsored a seminar on the reform of Article 82 EC by the European Commission. The seminar raised a great deal of interest amongst members of the legal community and attracted a large attendance. The speakers included some of the most well-known top-level policy makers, academics, and practitioners in the field of competition law. Over the last two years, there have been numerous calls for modernization of the way in which Article 82 of the EC Treaty is applied by the European Commission and, with decentralization in mind, by 25 national competition authorities and many more national courts. Modernization in other areas has involved a greater focus on the economic effects of the relevant practice. In Article 82 EC cases, enforcement has, however, been more based on the perceived object of a criticized practice with the effect being inferred from market power. Classic positions on fidelity market power. Classic positions on fidelity rebates and the special responsibilities of dominant companies have also been reaffirmed recently by the European Court in judgments such as Michelin II, Masterfoods II, and BA/Virgin. The aim of the seminar was to look at the concepts underlying the current law in relation to rebates and tying and bundling to compare how EU and US enforcers deal with such issues and to make suggestions for possible European Commission guidelines on Article 82 EC enforcement practice